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                                                                                                          Department of the Treasury
                                                                                                          Internal Revenue Service
Instructions for Form 8697

(Rev. November 2018)
Interest Computation Under the Look-Back Method for Completed Long-Term 
Contracts

Section references are to the Internal Revenue subsequent to the year of completion, in     computing look-back interest depends 
Code unless otherwise noted.                   which the contract price or contract         on whether the ownership change is 
                                               costs are adjusted for one or more of        due to a constructive completion 
General Instructions                           these long-term contracts from a prior       transaction or a step-in-the shoes 
                                               year.                                        transaction. For guidance regarding 
                                                                                            these transactions, see Regulations 
Future Developments                            Pass-Through Entities                        section 1.460-4(g). In the case of 
For the latest information about 
developments related to Form 8697 and          A pass-through entity (partnership, S        constructive completion transactions, 
its instructions, such as legislation          corporation, or trust) that is not closely   the old taxpayer treats the contract as 
enacted after they were published, go to       held must apply the look-back method         completed in the transaction year and 
IRS.gov/Form8697.                              at the entity level to any contract for      applies the look-back method to the 
                                               which at least 95% of the gross income       pre-transaction years. The new 
                                               is from U.S. sources. A pass-through         taxpayer is treated as entering into a 
What's New                                     entity is considered closely held if, at     new contract and applies the look-back 
• The tax rate used for the interest           any time during any tax year for which       method to the post-transaction years 
computation for individuals,                   there is income under the contract, 50%      upon the contract's completion. In the 
corporations, and certain pass-through         or more (by value) of the beneficial         case of step-in-the-shoes transactions, 
entities has changed. See the                  interests in the entity is held (directly or the new taxpayer applies the look-back 
instructions for Part II, line 2, later.       indirectly) by or for five or fewer          method to both the pre- and post- 
• The 2-year carryback rule will               persons. For this purpose, rules similar     transaction years. See Regulations 
generally not apply to net operating           to the constructive ownership rules of       section 1.460-6(g) for additional 
losses (NOLs) arising in tax years             section 1563(e) apply. For a                 guidance.
ending after 2017. Exceptions apply to         mid-contract change in taxpayer 
NOLs for farmers and non-life insurance        resulting in the conversion of a C           Exception for Certain 
companies. See section 172(b) as               corporation into an S corporation, the       Construction Contracts
amended by P.L. 115-97, section                look-back method is applied at the entity    The look-back method does not apply to 
13302.                                         level with respect to contracts entered      the regular taxable income from:
• For tax years beginning after 2017,          into prior to the conversion regardless of   • Any home construction contract (as 
the alternative minimum tax for                whether the S corporation is considered      defined in section 460(e)(5)(A)) or
corporations has been repealed.                closely held. See the section discussing     • Any other construction contract 
                                               Mid-Contract Change in Taxpayer.             entered into by a taxpayer: (a) who 
Purpose of Form                                If you are an owner of an interest in a      estimates the contract will be completed 
Use Form 8697 to figure the interest due       pass-through entity in which a long-term     within 2 years from the date the contract 
or to be refunded under the look-back          contract was being accounted for under       begins and (b) whose average annual 
method of section 460(b)(2) on certain         the percentage of completion method or       gross receipts for the 3 tax years 
long-term contracts that are accounted         the percentage of completion                 preceding the tax year in which the 
for under either the percentage of             capitalized cost method and the              contract is entered into do not exceed 
completion method or the percentage of         pass-through entity is not subject to the    $10 million. The annual gross receipts is 
completion-capitalized cost method. For        look-back method at the entity level, you    increased to $25 million (adjusted for 
guidance concerning these methods,             must file this form for your tax year that   inflation) for contracts entered into after 
see Regulations section 1.460-4. For           ends with or includes the end of the         2017. See section 460(e).
details and computational examples             entity's tax year in which the contract 
                                                                                              However, the look-back method does 
illustrating the use of the look-back          was completed or adjusted in a 
                                                                                            apply to the alternative minimum taxable 
method, see Regulations section                post-completion tax year. The 
                                                                                            income from any such contract that is 
1.460-6.                                       pass-through entity will provide on 
                                                                                            not a home construction contract and, 
                                               Schedule K-1 the information you need 
                                                                                            therefore, must be accounted for using 
Who Must File                                  to complete this form.
                                                                                            the percentage of completion method 
General Rule                                   Mid-Contract Change in                       for alternative minimum tax purposes. 
You must file Form 8697 for each tax           Taxpayer                                     See section 56(a)(3) for details.
year in which you completed a                  If prior to the completion of a long-term    Small Contract Exception
long-term contract entered into after          contract accounted for using the             The look-back method does not apply to 
February 28, 1986, that you accounted          percentage of completion method or the       any contract completed within 2 years of 
for using either the percentage of             percentage of completion capitalized         the contract start date if the gross price 
completion method or the percentage of         cost method, there is a transaction that     of the contract (as of contract 
completion-capitalized cost method for         makes another taxpayer responsible for       completion) does not exceed the 
federal income tax purposes. You also          accounting for income from the same          smaller of:
must file Form 8697 for any tax year,          contract, the taxpayer responsible for 

Oct 22, 2018                                               Cat. No. 10703K

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• $1 million or Filing Instructions • All others:
• 1% of the taxpayer's average annual
gross receipts for the 3 tax years before If You Owe Interest (or No Department of Treasury
the tax year of contract completion. Interest Is To Be Refunded to Internal Revenue Service
Cincinnati, OH 45999-0001
See section 460(b)(3)(B) for details. You)
Attach Form 8697 to your income tax Complete the signature section of
De Minimis Exception return. The signature section of Form Form 8697 following the instructions for
You may elect not to apply the 8697 does not have to be completed by the signature section of your income tax
look-back method in certain de minimis you or the paid preparer. return. If you file a joint return, the
cases for completed contracts. The signature of both spouses is required on
look-back method does not apply in the For individuals, include any interest Form 8697. If additional Forms 8697 are
following cases if the election is made. due in the amount to be entered for total needed to show more than 2
tax (after credits and other taxes) on redetermination years, sign only the first
1. In the completion year if, for each your return (for example, 2018 Form Form 8697.
prior contract year, the cumulative 1040, line 15). Write on the dotted line File Form 8697 by the date you are
taxable income (or loss) actually to the left of the entry space “From Form required to file your income tax return
reported under the contract is within 8697” and the amount of interest due. (including extensions). Keep a copy of
10% of the cumulative look-back
income (or loss). Cumulative look-back For partnerships (that are not closely Form 8697 and any attached schedules
income (or loss) is the amount of held), write “From Form 8697” and for your records.
taxable income (or loss) that you would include any interest due in the bottom
have reported if you had used actual margin of the tax return. Attach a check Filing a Corrected Form
contract price and costs instead of or money order for the full amount made 8697
estimated contract price and costs. payable to “United States Treasury.” You must file a corrected Form 8697
2. In a post-completion year if, as of Write the partnership's employer only if the amount shown on Part I,
the close of the post-completion year, identification number (EIN), daytime line 6, or Part II, line 7, for any prior year
the cumulative taxable income (or loss) phone number, and “Form 8697 changes as a result of an error you
under the contract is within 10% of the Interest” on the check or money order. made, an income tax examination, or
cumulative look-back income (or loss) For S corporations that are not the filing of an amended tax return.
under the contract as of the close of the closely held, include any interest due in When completing Part I, line 1, of the
most recent year in which the look-back the amount to be entered for additional corrected Form 8697, follow the
method was applied to the contract (or taxes (for example, 2018 Form 1120S, instructions on the form but do not enter
would have been applied if the election line 22c). Write on the dotted line to the the adjusted taxable income from Part I,
had not been made). left of the entry space “From Form 8697” line 3, of the original Form 8697. When
For purposes of item 2, discounting and the amount of interest due. A completing Part I, line 5 (or Part II,
under section 460(b)(2) does not apply. closely held S corporation would also line 6), of the corrected Form 8697, do
follow these procedures following a not include the interest due, if any, from
To make the election, attach a conversion from a C corporation for the Part I, line 10 (or Part II, line 11), of the
statement to your timely filed income tax contracts entered into prior to the original Form 8697 that was included in
return (determined with extensions) for conversion. See the rules related to your total tax when Form 8697 was filed
the first tax year of the election. Write at Mid-Contract Change in Taxpayer, with your tax return.
the top of the statement earlier. • If both the original and corrected
“NOTIFICATION OF ELECTION Forms 8697 show an amount on the line
UNDER SECTION 460(b)(6).” Include For closely held pass-through for interest you owe, file an amended
on the statement your name, identifying entities, look-back interest is applied at income tax return.
number, and the effective date of the the owner level and not the entity level. If both the original and corrected
•
election. Also identify the trades or For corporations, include the amount Forms 8697 show an amount on the line
businesses that involve long-term of interest due on the appropriate line of for interest to be refunded to you, write
contracts. Once made, the election Form 1120, Schedule J, Part I (for “Amended” in the top margin of the
applies to all contracts completed example, 2018 Form 1120, Schedule J, corrected Form 8697, and file it
during the election year and all later tax line 9c). separately.
years, and may not be revoked without • If your original Form 8697 shows an
IRS consent. See Regulations section Look-back interest owed is not amount on the line for interest you owe
1.460-6(j) for more details. If you timely subject to the estimated tax penalty. and the corrected Form 8697 shows an
filed your return without making the See Regulations section 1.460-6(f)(2). amount on the line for interest to be
election, you may make the election on If Interest Is To Be Refunded to refunded to you, you must:
an amended return filed no later than 6 1. File an amended income tax
months after the due date of your tax You
return (excluding extensions). Write Do not attach Form 8697 to your income return showing $0 interest from Form
“Filed pursuant to section 301.9100” at tax return. Instead, file Form 8697 8697 and
the top of the amended return. separately with the IRS at the applicable 2. File the corrected Form 8697
address listed below. separately (but do not write “Amended”
• Individuals: at the top of the form because this is the
first Form 8697 that you will file
Department of Treasury separately).
Internal Revenue Service • If the original Form 8697 shows an
Philadelphia, PA 19255-0001 amount on the line for interest to be

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refunded to you and the corrected Form      including tax years before the change      10% of the total contract price at that 
8697 shows an amount on the line for        order was agreed to.                       time,
interest you owe, you must:                                                              2. The net undiscounted value of 
                                            Post-Completion Adjustments
1. File the corrected Form 8697                                                        increases or decreases in contract costs 
separately (with “Amended” written at                                                  occurring from the time of the last 
the top) showing $0 interest to be          General Rule                               application of the look-back method 
refunded and                                If the contract price or costs are revised exceeds the smaller of $1 million or 
2. File an amended income tax               to reflect amounts properly taken into     10% of the total actual contract costs at 
return and attach a copy of the             account after the contract completion      that time,
corrected Form 8697.                        date for any reason, you must apply the      3. The taxpayer goes out of 
                                            look-back method in the year such          existence,
Attachments                                 amounts are properly taken into 
                                            account, even if no other contract is        4. The taxpayer reasonably believes 
If you need more space, attach separate                                                the contract is finally settled and closed, 
                                            completed in that year. Generally, the 
sheets to the back of Form 8697. Put                                                   or
                                            amount of each such post-completion 
your name and identifying number on                                                      5. None of the above conditions
                                            adjustment to total contract price or 
each sheet.                                                                            (1–4) are met by the end of the 5th tax 
                                            contract costs is discounted, solely for 
                                            look-back purposes, from its value at      year that begins after the last previous 
Applying the Look-Back                      the time the amount is taken into          application of the look-back method.
Method Under Special                        account in computing taxable income to 
Situations                                  its value at the time the contract was       To elect the delayed reapplication 
                                            completed. The discount rate for this      method, attach a statement to your 
10% Method                                  purpose is the federal midterm rate        timely filed income tax return 
For purposes of the percentage of           under section 1274(d) in effect at the     (determined with extensions) for the first 
completion method, a taxpayer may           time the amount is properly taken into     tax year of the election. Indicate on the 
elect to postpone recognition of income     account.                                   statement that you are making an 
and expense under a long-term contract                                                 election under Regulations section 
entered into after July 10, 1989, until the However, you may elect not to              1.460-6(e) to use the delayed 
first tax year as of the end of which at    discount post-completion adjustments       reapplication method. Once made, the 
least 10% of the estimated total contract   for any contract. The election not to      election is binding for all long-term 
costs have been incurred. For purposes      discount is made on a                      contracts for which you would reapply 
of the look-back method, the recognition    contract-by-contract basis and is          the look-back method in the absence of 
of income and expense must be               binding with respect to all                the election in the year of the election 
postponed for such contracts until the      post-completion adjustments that arise     and all later years, unless the IRS 
first tax year as of the end of which at    with respect to that contract. To make     consents to a revocation of the election. 
least 10% of the actual total contract      this election, attach a statement to your  See Regulations section 1.460-6(e) for 
costs have been incurred. Therefore,        timely filed income tax return             more details.
income and expense will be allocated to     (determined with extensions) for the first 
a different tax year if the first tax year  tax year after completion in which you 
that the 10% threshold is exceeded          take into account any adjustment to the    Specific Instructions
based on actual costs differs from the      contract price or contract costs. Indicate All filers must complete the information 
first tax year that the 10% threshold is    on the statement that you are making an    at the top of the form above Part I 
exceeded based on estimated costs.          election not to discount post-completion   according to the following instructions. 
The election to use the 10% method          adjustments under Regulations section      Then, complete either Part I or Part II as 
applies to all long-term contracts          1.460-6(c)(1)(ii)(C)(2) and identify the   appropriate. Also sign the form at the 
entered into during the tax year for        contracts to which the election applies.   bottom of page 2 if interest is to be 
which the election is made and all later                                               refunded to you. A signature is not 
years. See section 460(b)(5) for more       Delayed Reapplication Method               required if you are filing the form with 
details.                                    For purposes of reapplying the             your tax return.
Change Orders                               look-back method after the year of 
                                            contract completion, you may elect the     Filing Year
A change order for a contract is not                                                   Fill in the filing year line at the top of the 
                                            delayed reapplication method to 
treated as a separate contract for                                                     form to show the tax year in which the 
                                            minimize the number of required 
purposes of applying the look-back                                                     contracts for which this form is being 
                                            reapplications of the look-back method. 
method unless the change order would                                                   filed were completed or adjusted in a 
                                            Under this method, the look-back 
be treated as a separate contract under                                                post-completion year. If you were an 
                                            method is reapplied after the contract 
the rules for severing and aggregating                                                 owner of an interest in a pass-through 
                                            completion year (or after a later 
contracts provided in Regulations                                                      entity that has completed or adjusted 
                                            reapplication of the look-back method) 
section 1.460-1(e). Therefore, if a                                                    one or more contracts, enter your tax 
                                            only when one of the following 
change order is not treated as a                                                       year that ends with or includes the end 
                                            conditions is met for that contract:
separate contract, that portion of the                                                 of the entity's tax year in which the 
actual contract price and contract costs    1. The net undiscounted value of 
attributable to the change order must be    increases or decreases in the contract     contracts were completed or adjusted.
taken into account in allocating contract   price occurring from the time of the last 
income to all tax years of the contract,    application of the look-back method        Name
                                            exceeds the smaller of $1 million or       Enter the name shown on your federal 
                                                                                       income tax return for the filing year. If 

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you are an individual filing a joint return, Line 2 Line 3
also enter your spouse's name as In each column, show a net increase to If line 3 results in a negative amount, it
shown on Form 1040. income as a positive amount and a net represents a look-back net operating
decrease to income as a negative loss (NOL). The adjustment in line 2
Address amount. either created, increased, or decreased
Enter your address only if you are filing the net operating loss. The change in
this form separately. Include the In figuring the net adjustment to be the amount of the net operating loss
apartment, suite, room, or other unit entered in each column on line 2, be would be carried back or forward to the
number after the street address. If the sure to take into account any other appropriate tax year and the
Post Office does not deliver mail to the income and expense adjustments that hypothetical tax would be recomputed
street address and you have a P.O. box, may result from the increase (or in the carryback/forward year. See
show the box number instead. decrease) to income from long-term Regulations section 1.460-6(c)(3)(v).
contracts (for example, a change to However, the computation period for
Item A—Identifying adjusted gross income affecting medical computing interest on NOLs is different.
Number expenses under section 213). If there See the exceptions listed on lines 7 and
are no adjustments besides the 8 below.
If you are an individual, enter your social look-back adjustments, the sum of all
security number. Other filers must use line 2 amounts should be zero and Note. The 2-year carryback rule does
their EIN. reflected in column 2(c). If there are not apply to net operating losses arising
additional adjustments that result from in tax years ending after 2017. An
Part I—Regular Method the application of the look-back, leave exception applies to farmers and
Use Part I only if you are not electing, do column 2(c) blank and reflect the non-life insurance companies. See
not have an election in effect, or are not amounts in the schedule below as section 172(b) as amended by P.L.
required to use the simplified marginal described in item 3. 115-97, section 13302.
impact method as described in the
instructions for Part II, later. Include the following on an attached Lines 4 and 5
schedule. Reduce the tax liability to be entered on
Filing year column lines 4 and 5 by allowable credits (other
1. Identify each completed
Enter the filing year listed at the top of than refundable credits, for example,
long-term contract by contract number,
this form. the credit for taxes withheld on wages,
job name, or any other reasonable
Columns (a) and (b) method used in your records to identify the earned income credit, the credit for
Enter at the top of each column the each contract. federal tax on fuels, etc.), but do not
take into account any credit carrybacks
ending month and year for: 2. For each contract, report in to the prior year in computing the
• Each prior tax year in which you were columns for each prior year: (a) the amount to enter on lines 4 and 5 (other
required to report income from the amount of income previously reported than carrybacks that resulted from or
completed long-term contract(s) and based on estimated contract price and were adjusted by the redetermination of
• Any other tax year affected by such costs and (b) the amount of income your income from a long-term contract
years. allocable to each prior year based on for look-back purposes). Include on
actual contract price and costs. Total lines 4 and 5 any taxes (such as
Note. If there were more than 2 prior the columns for each prior year and alternative minimum tax for individuals)
years, attach additional Forms 8697 as show the net adjustment to income from required to be taken into account in the
needed. On the additional Forms 8697, long-term contracts. computation of your tax liability (as
enter your name, identifying number, 3. Identify any other adjustments originally reported or as redetermined).
and tax year. Complete lines 1 through that result from a change in income from
8 (as applicable), but do not enter totals long-term contracts and show the Lines 7 and 8
in column (c). Enter totals only in amounts in the columns for the affected For the increase or decrease in tax for
column (c) of the first Form 8697. years so that the net adjustment shown each prior year, interest due or to be
Line 1 in each column on the attached refunded must be computed at the
schedule agrees with the amounts applicable interest rate and
Do not reduce taxable income or
shown on line 2. compounded on a daily basis, generally
increase a loss on line 1 by any
from the due date (not including
carryback of a net operating loss, capital An owner of an interest in a extensions) of the return for the prior
loss, or net section 1256 contracts loss, pass-through entity is not required to year until the earlier of:
except to the extent that carrybacks provide the detail listed in 1 and 2 above The due date (not including
must be taken into account to properly with respect to prior years. The entity •
extensions) of the return for the filing
compute interest under section 460. should provide the line 2 amounts with year or
Schedule K-1 or on a separate
Note. The 2-year carryback rule does statement for its tax year in which the • The date the return for the filing year
is filed and any income tax due for that
not apply to net operating losses arising contracts are completed or adjusted. year has been fully paid.
in tax years ending after 2017. An
exception applies to farmers and Note. Taxpayers reporting line 2 Exceptions:
non-life insurance companies. See amounts from more than one • The time period for determining
section 172(b) as amended by P.L. Schedule K-1 (or a similar statement) interest may be different in cases
115-97, section 13302. must attach a schedule detailing by involving loss or credit carrybacks or
entity the net change to income from carryovers in order to properly reflect
long-term contracts. the time period during which the

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taxpayer or IRS had use of the same for the accrual period which is use the simplified marginal impact
hypothetical underpayment or generally one year. The applicable method. Under the simplified method,
overpayment. See Regulations section interest rates for non-corporate prior year hypothetical underpayments
1.460-6(c)(4)(ii) and (iii) for additional taxpayers are shown in Table 1 (for or overpayments in tax are figured using
information. interest accrual periods beginning after an assumed marginal tax rate, which is
• If a net operating loss, capital loss, Jan. 1, 2008). generally the highest statutory rate in
net section 1256 contracts loss, or effect for the prior year under section 1
credit carryback is being increased or The applicable interest rates for (for an individual) or section 11 (for a
decreased as a result of the adjustment corporate taxpayers for the first $10,000 corporation). This method eliminates the
made to net income from long-term are shown in Table 2. The applicable need to refigure your tax liability based
contracts, the interest due or to be interest rates for corporate taxpayers for on actual contract price and actual
refunded must be computed on the amounts in excess of $10,000 are contract costs each time the look-back
increase or decrease in tax attributable shown in Table 3. method is applied.
to the change to the carryback only from
the due date (not including extensions) Following the conversion of a C To elect the simplified marginal
of the return for the prior year that corporation into an S corporation, the impact method, attach a statement to
generated the carryback and not from look-back method is applied at the entity your timely filed income tax return
the due date of the return for the year in level (1120S) with respect to contracts (determined with extensions) for the first
which the carryback was absorbed. See entered into prior to the conversion. See tax year of the election. Indicate on the
section 6611(f). Regulations section 1.460-6(g)(3)(iv). statement that you are making an
• In the case of a decrease in tax on For the C corporation years, the election under Regulations section
line 6, if a refund has been allowed for taxpayer would apply the rates reflected 1.460-6(d) to use the simplified marginal
any part of the income tax liability shown in Table 2 for the first $10,000 and apply impact method. Once made, the
on line 5 for any year as a result of a net the rates in Table 3 for the amounts in election applies to all applications of the
operating loss, capital loss, net section excess of $10,000. look-back method in the year of the
1256 contracts loss, or credit carryback election and all later years, unless the
to such year, and the amount of the Line 9 IRS consents to a revocation of the
refund exceeds the amount on line 4, See If Interest Is To Be Refunded to election.
interest is allowed on the amount of You, earlier, for where to file Form 8697. Columns (a), (b), and (c)
such excess only until the due date (not Additional interest to be refunded for
including extensions) of the return for periods after the filing date of Form Enter at the top of each column the
the year in which the carryback arose. 8697, if any, will be computed by the ending month and year for each prior
IRS and included in your refund. Report tax year in which you were required to
Note. If a different method of interest the amount on line 9 (or the amount report income from the completed
computation must be used to produce refunded by the IRS if different) as long-term contract.
the correct result in your case, use that interest income on your income tax Note. If there were more than 3 prior
method and attach an explanation of return for the tax year in which it is tax years, attach additional Forms 8697
how the interest was computed. received or accrued. as needed. On the additional Forms
8697, enter your name, identifying
Applicable Interest Rates Line 10 number, and tax year. Complete lines 1
The overpayment rate designated under See If You Owe Interest under Filing through 9 (as applicable), but do not
section 6621 is used to calculate the Instructions, earlier, for how to report enter totals in column (d). Enter totals
interest for both hypothetical this amount on your tax return. only in column (d) of the first Form 8697.
overpayments and underpayments. The Corporations (other than S
applicable interest rates are published corporations) may deduct this amount Line 1
quarterly in revenue rulings in the (or the amount computed by the IRS if In each column, show a net increase to
Internal Revenue Bulletin available at different) as interest expense for the tax income as a positive amount and a net
IRS.gov. year in which it is paid or incurred. For decrease to income as a negative
individuals and other taxpayers, this amount.
However, for contracts completed in interest is not deductible.
On an attached schedule:
tax years ending after August 5, 1997, • Identify each completed long-term
an interest rate is determined for each Estimated Tax Penalty contract by contract number, job name,
interest accrual period. The interest Look-back interest owed is not subject or any other reasonable method used in
accrual period starts on the day after the to the estimated tax penalty. See your records to identify each contract;
return due date (not including Regulations section 1.460–6(f)(2)(i). and
extensions) for each prior tax year and See the instructions for the 2018 Form • For each contract, report in columns
ends on the return due date for the 2210, line 2, for individuals and 2018 for each prior year: (a) the amount of
following tax year. The interest rate in Form 2220, line 2(b), for corporations. income previously reported based on
effect for the entire interest accrual estimated contract price and costs and
period is the overpayment rate (b) the amount of income allocable to
Part II—Simplified
determined under section 6621(a)(1) each prior year based on actual contract
applicable on the first day of the interest Marginal Impact Method
price and costs. Total the columns for
accrual period. Part II is used only by pass-through each prior year and show the net
entities required to apply the look-back adjustment to income from long-term
Even though the interest rates method at the entity level (see Who contracts.
change quarterly, for look-back Must File, earlier) and taxpayers
purposes the interest rate stays the electing (or with an election in effect) to

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An owner of an interest in a Line 5
pass-through entity is not required to Number of days in tax year before 7/1/87 12% If both lines 2 and 4 are negative, enter
provide the detailed schedule listed Number of days in tax year whichever amount is greater. Treat both
above for prior years. The entity should numbers as positive when making this
provide the line 1 amounts with comparison, but enter the amount as a
Schedule K-1 or on a separate c. Tax years beginning after
statement for its tax year in which the June 30, 1987, and ending negative number. (If the amount on one
contracts are completed or adjusted. before 1993 34% line is negative, but the amount on the
d. For tax years beginning other line is positive, enter the positive
Note. Taxpayers reporting line 1 before 1993 that include amount.)
amounts from more than one January 1, 1993, the rate is Lines 8 and 9
Schedule K-1 (or a similar statement) 34% plus the following: For the increase (or decrease) in tax for
must attach a schedule detailing by each prior year, interest due or to be
entity the net change to income from refunded must be computed at the
long-term contracts. Number of days in tax year after 12/31/92 1% applicable interest rate and
Line 2 Number of days in tax year compounded on a daily basis from the
Multiply the amount on line 1 by the due date (not including extensions) of
applicable regular tax rate for each prior e. Tax years beginning after the return for the prior year until the
earlier of:
year shown in column (a), (b), or (c). 1992, and ending before
The applicable regular tax rate is as 2018 35% • The due date (not including
extensions) of the return for the filing
follows: f. Tax years beginning after year or
1. Individuals and pass-through entities 2017 21% The date the return for the filing year
•
in which, at all times during the year, is filed and any income tax due for that
more than 50% of the interests in the year has been fully paid.
entity are held by individuals directly or Line 3 See Applicable Interest Rates in the
through other pass-through entities:
See the instructions for Part II, line 1, instructions for Part I, lines 7 and 8,
earlier, and complete line 3 in the same earlier.
a. Tax years beginning manner, using only income and
before 1987 50% deductions allowed for alternative Line 10
b. Tax years beginning in minimum tax (AMT) purposes. See the instructions for Part I, line 9,
1987 38.5% earlier.
c. Tax years beginning in Note. For tax years beginning after
1988, 1989, or 1990 28% 2017, the alternative minimum tax for Line 11
d. Tax years beginning in corporations has been repealed. See the instructions for Part I, line 10,
earlier.
1991 or 1992 31% Line 4
e. Tax years beginning in
Multiply the amount on line 3 by the
1993 through 2000 39.6% Table 1
applicable AMT rate, which is as
f. Tax years beginning in Interest Rates for Non-corporate
follows: Taxpayers
2001 39.1%
g. Tax years beginning in 1. Individuals and pass-through entities From Through Rate Table Page
2002 38.6% in which, at all times during the year, 1/1/08 3/31/08 7% 67 621
h. Tax years beginning in more than 50% of the interests in the 4/1/08 6/30/08 6% 65 619
2003 through 2012 35% entity are held by individuals directly or 7/1/08 9/30/08 5% 63 617
i. Tax years beginning in through other pass-through entities: 10/1/08 12/31/08 6% 65 619
1/1/09 3/31/09 5% 15 569
2013 through 2017 39.6% 4/1/09 12/31/10 4% 13 567
j. Tax years beginning in a. Tax years beginning in 1/1/11 3/31/11 3% 11 565
2018 or later 37% 1987 through 1990 21% 4/1/11 9/30/11 4% 13 567
10/1/11 12/31/11 3% 11 565
b. Tax years beginning in 1/1/12 12/31/12 3% 59 613
1991 or 1992 24% 1/1/13 12/31/15 3% 11 565
2. Corporations (other than S c. Tax years beginning in 1/1/16 3/31/16 3% 59 613
corporations) and pass-through entities 1993 or later 28% 4/1/16 12/31/16 4% 61 615
1/1/17 3/31/18 4% 13 567
not included in 1 above: 4/1/18 9/30/18 5% 15 569

2. Corporations (other than S
a. Tax years ending before July corporations) and pass-through entities
1, 1987 46% not included in 1 above:
b. For tax years beginning
before July 1, 1987, that include a. Tax years ending before
July 1, 1987, the rate is 34% 2018 20%
plus the following: b. Tax years beginning after
2017 0%

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Table 2 • 4/16/2017 – 4/15/2018: 3% for the 1st because of tax treaties they have with
Interest Rates for Corporate $10,000 (1.5% for any amount the United States. We also may disclose
Increases or Decreases in Tax exceeding $10,000). this information to federal and state
of $10,000 or Less The interest rate and accrual period agencies to enforce federal nontax
From Through Rate Table Page for the 2016 redetermination year would criminal laws and to combat terrorism.
1/1/08 3/31/08 6% 65 619 be: The time needed to complete and file
4/1/08 6/30/08 5% 63 617 • 4/16/2017 – 4/15/2018: 3% for the 1st this form will vary depending on
7/1/08 9/30/08 4% 61 615 $10,000 (1.5% for any amount individual circumstances. The estimated
10/1/08 12/31/08 5% 63 617 exceeding $10,000). burden for individual taxpayers filing this
1/1/09 3/31/09 4% 13 567
4/1/09 12/31/10 3% 11 565 form is approved under OMB control
1/1/11 3/31/11 2% 9 563 Privacy Act and Paperwork Reduc- number 1545-0074 and is included in
4/1/11 9/30/11 3% 11 565 tion Act Notice. We ask for the the estimates shown in the instructions
10/1/11 12/31/11 2% 9 563 information on this form to carry out the for their individual income tax return.
1/1/12 12/31/12 2% 57 611 Internal Revenue laws of the United The estimated burden for all other
1/1/13 12/31/15 2% 9 563 States. We need this information to taxpayers who file this form is shown
1/1/16 3/31/16 2% 57 611 ensure that you are complying with below.
4/1/16 12/31/16 3% 59 613
1/1/17 3/31/18 3% 11 565 these laws and to figure and collect or
4/1/18 9/30/18 4% 13 567 refund the correct amount of interest.
Recordkeeping
Section 460 provides special rules Part I 8 hr., 36 min.
Table 3 for computing interest under the Part II 9 hr., 19 min.
Interest Rates for Corporate look-back method for completed
Increases or Decreases in Tax long-term contracts. Section 6001 and Learning about the
Exceeding $10,000 its regulations require you to file a return law or the form
or statement with us for any tax you are Part I 2 hr., 22 min.
From Through Rate Table Page liable for. Section 6109 and its Part II 2 hr., 5 min.
1/1/08 3/31/08 4.5% 62 616 regulations require you to put your Preparing, copying,
4/1/08 6/30/08 3.5% 60 614 identifying number on what you file. If assembling, and
7/1/08 9/30/08 2.5% 58 612
10/1/08 12/31/08 3.5% 60 614 you do not provide the information we sending the form to
1/1/09 3/31/09 2.5% 10 564 ask for, or provide fraudulent the IRS
4/1/09 12/31/10 1.5% 8 562 information, you may forfeit any refund Part I 2 hr., 37 min.
1/1/11 3/31/11 .5% – – of interest otherwise owed to you and/or Part II 2 hr., 19 min.
4/1/11 9/30/11 1.5% 8 562 be subject to penalties.
10/1/11 3/31/16 .5% – –
4/1/16 12/31/16 1.5% 56 610 You are not required to provide the
1/1/17 3/31/18 1.5% 8 562
4/1/18 9/30/18 2.5% 10 564 information requested on a form that is If you have comments concerning the
subject to the Paperwork Reduction Act accuracy of these time estimates or
unless the form displays a valid OMB suggestions for making this form
Example of Applicable Interest control number. Books or records simpler, we would be happy to hear
Rates for Look-back Interest. relating to a form or its instructions must from you. You can send us comments
A C corporation taxpayer completed be retained as long as their contents from IRS.gov/FormComments. Or you
contracts subject to look-back interest may become material in the can send your comments to Internal
during the 2017 calendar year. The administration of any Internal Revenue Revenue Service, Tax Forms and
contracts were started in 2015, so 2015 law. Generally, tax returns and return Publications Division, 1111 Constitution
and 2016 are redetermination years. information are confidential, as required Ave. NW, IR-6526, Washington, DC
The corporate tax return due date, by section 6103. 20224. Don't send the tax form to this
office. Instead, see Filing Instructions,
without extensions, for all years is April We may give this information to the earlier.
15. Department of Justice for civil or
For computing look-back interest, the criminal litigation, and to other federal
interest rates and accrual period for the agencies as authorized by law. We may
2015 redetermination year would be: give it to cities, states, the District of
• 4/16/2016 – 4/15/2017: 3% for the 1st Columbia, and U.S. commonwealths or
$10,000 (1.5% for any amount possessions to carry out their tax laws.
exceeding $10,000). We may give it to foreign governments

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