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           Department of the Treasury                         Contents
           Internal Revenue Service
                                                              Future Developments . . . . . . . . . . . . . . . . . . . . . . .          2
                                                              Photographs of Missing Children                . . . . . . . . . . . . . . 2
Publication 542
(Rev. January 2024)                                           Introduction   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Cat. No. 15072O
                                                              Businesses Taxed as Corporations                   . . . . . . . . . . . . 2
                                                              Property Exchanged for Stock . . . . . . . . . . . . . . . .               3
Corporations                                                  Capital Contributions . . . . . . . . . . . . . . . . . . . . . . .        4
                                                              Filing and Paying Income Taxes . . . . . . . . . . . . . . .               5
                                                              Income Tax Return            . . . . . . . . . . . . . . . . . . . . . . . 5
                                                              Penalties      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
                                                              Estimated Tax          . . . . . . . . . . . . . . . . . . . . . . . . . . 6
                                                              U.S. Real Property Interest              . . . . . . . . . . . . . . . . . 7
                                                              Estimated Tax Worksheet . . . . . . . . . . . . . . . . . . . .            7
                                                              Accounting Methods           . . . . . . . . . . . . . . . . . . . . . . . 8
                                                              Accounting Periods         . . . . . . . . . . . . . . . . . . . . . . . . 8
                                                              Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . .      9
                                                              Income, Deductions, and Special Provisions . . . . .                       9
                                                              Costs of Going Into Business . . . . . . . . . . . . . . . .               9
                                                              Related Persons . . . . . . . . . . . . . . . . . . . . . . . . .          9
                                                              Corporate Preference Items . . . . . . . . . . . . . . . .                 10
                                                              Dividends-Received Deduction                   . . . . . . . . . . . . .   10
                                                              Extraordinary Dividends              . . . . . . . . . . . . . . . . . .   11
                                                              Below-Market Loans . . . . . . . . . . . . . . . . . . . . .               11
                                                              Charitable Contributions             . . . . . . . . . . . . . . . . . .   12
                                                              Capital Losses         . . . . . . . . . . . . . . . . . . . . . . . . .   13
                                                              Net Operating Losses . . . . . . . . . . . . . . . . . . . .               14
                                                              At-Risk Limits . . . . . . . . . . . . . . . . . . . . . . . . . .         14
                                                              Passive Activity Limits . . . . . . . . . . . . . . . . . . . .            15
                                                              Figuring Tax   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15
                                                              Tax Rates        . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15
                                                              Base Erosion Minimum Tax . . . . . . . . . . . . . . . .                   15
                                                              Corporate Alternative Minimum Tax (CAMT) . . . .                           15
                                                              Credits      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
                                                              Recapture Taxes          . . . . . . . . . . . . . . . . . . . . . . . .   15
                                                              Accumulated Earnings Tax             . . . . . . . . . . . . . . . . . .   15
                                                              Distributions to Shareholders              . . . . . . . . . . . . . . .   16
                                                              Money or Property Distributions . . . . . . . . . . . . .                  16
                                                              Distributions of Stock or Stock Rights . . . . . . . . .                   16
Get forms and other information faster and easier at:         Constructive Distributions             . . . . . . . . . . . . . . . . .   17
• IRS.gov (English)         • IRS.gov/Korean (한국어)            Reporting Dividends and Other Distributions . . . .                        17
• IRS.gov/Spanish (Español) • IRS.gov/Russian (Pусский) 
• IRS.gov/Chinese (中文)      • IRS.gov/Vietnamese (Tiếng Việt) How To Get Tax Help        . . . . . . . . . . . . . . . . . . . . . . .   19
                                                              Other Useful Forms for Corporations . . . . . . . . . .                    23
                                                              Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27

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Although we can’t respond individually to each com-
ment received, we do appreciate your feedback and will
Future Developments
consider your comments and suggestions as we revise
For the latest information about developments related to our tax forms, instructions, and publications. Do not send
Pub. 542, such as legislation enacted after it was tax questions, tax returns, or payments to the above ad-
published, go to IRS.gov/Pub542. For changes that may dress.
affect the current tax year, see the Instructions for Form Getting answers to your tax questions. If you have
1120 or the applicable instructions for the corporation’s a tax question not answered by this publication or the How
tax return. To Get Tax Help section at the end of this publication, go
to the IRS Interactive Tax Assistant page at IRS.gov/
Help/ITA where you can find topics by using the search
What's New feature or viewing the categories listed.
New corporate alternative minimum tax. For tax years Getting tax forms, instructions, and publications.
beginning after 2022, the Inflation Reduction Act of 2022 Go to IRS.gov/Forms to download current and prior-year
amended section 55 of the Internal Revenue Code to im- forms, instructions, and publications.
pose a new corporate alternative minimum tax (CAMT) Ordering tax forms, instructions, and publications.
based on the adjusted financial statement income (AFSI) Go to IRS.gov/OrderForms to order current forms, instruc-
of an applicable corporation. See Corporate Alternative tions, and publications; call 800-829-3676 to order
Minimum Tax (CAMT), later. prior-year forms and instructions. The IRS will process
Form 1120-W now historical. Form 1120-W, Estimated your order for forms and publications as soon as possible.
Tax for Corporations, and the Instructions for Form Do not resubmit requests you’ve already sent us. You can
1120-W are now historical. The 2022 revisions were the get forms and publications faster online.
last revisions of both the form and its instructions. Prior
versions are available on IRS.gov. Additional forms. A list of other forms and statements
that a corporation may need to file is included at the end
of this publication. Also, see the instructions for the corpo-
ration’s tax return for additional forms and statements that
Photographs of Missing may be required.

Children
Useful Items
The Internal Revenue Service is a proud partner with the You may want to see:
National Center for Missing & Exploited Children®
(NCMEC). Photographs of missing children selected by Publication
the Center may appear in instructions on pages that would 510 510 Excise Taxes (Including Fuel Tax Credits and
otherwise be blank. You can help bring these children Refunds)
home by looking at the photographs and calling
538
800-THE-LOST (800-843-5678) if you recognize a child. 538 Accounting Periods and Methods
544 544 Sales and Other Dispositions of Assets
550 550 Investment Income and Expenses
Introduction 925 925 Passive Activity and At-Risk Rules
This publication discusses the general tax laws that apply 946 946 How To Depreciate Property
to ordinary domestic corporations. It provides supplemen-
tal federal income tax information for corporations. It also
supplements the information provided in the Instructions
for Form 1120, U.S. Corporation Income Tax Return. How- Businesses Taxed as
ever, the information given does not cover every situation
Corporations
and is not intended to replace the law or change its mean-
ing. The rules used to determine whether a business is taxed
Comments and suggestions. We welcome your com- as a corporation changed for businesses formed after
ments about this publication and suggestions for future 1996.

editions. Business formed before 1997. A business formed be-
You can send us comments through IRS.gov/ fore 1997 and taxed as a corporation under the old rules
FormComments. Or, you can write to: will generally continue to be taxed as a corporation.
Internal Revenue Service
Tax Forms and Publications
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224

2 Publication 542 (1-2024)

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Business formed after 1996. The following businesses Personal services. Personal services include any ac-
formed after 1996 are taxed as corporations. tivity performed in the fields of accounting, actuarial sci-
ence, architecture, consulting, engineering, health (includ-
• A business formed under a federal or state law that re-
ing veterinary services), law, and the performing arts.
fers to it as a corporation, body corporate, or body po-
litic. Employee-owners. A person is an employee-owner of
• A business formed under a state law that refers to it as a personal service corporation if both of the following ap-
a joint-stock company or joint-stock association. ply.
• An insurance company. 1. That person is an employee of the corporation or per-
forms personal services for, or on behalf of, the corpo-
• Certain banks. ration (even if that person is an independent contrac-
• A business wholly owned by a state or local govern- tor for other purposes) on any day of the testing
ment. period.
• A business specifically required to be taxed as a cor- 2. That person owns any stock in the corporation at any
poration by the Internal Revenue Code (for example, time during the testing period.
certain publicly traded partnerships).
Other rules. For other rules that apply to personal
• Certain foreign businesses. service corporations, see Accounting Periods, later.

• Any other business that elects to be taxed as a corpo- Closely held corporations. A corporation is closely held
ration. if all of the following apply.
1. It is not a personal service corporation.
Limited liability company (LLC). An LLC may be clas- 2. At any time during the last half of the tax year, more
sified for federal income tax purposes as either a partner- than 50% of the value of its outstanding stock is, di-
ship, a corporation, or an entity disregarded as an entity rectly or indirectly, owned by or for five or fewer indi-
separate from its owner by applying the rules in Treasury viduals. “Individual” includes certain trusts and private
Regulations section 301.7701-3. An LLC can elect to be foundations.
treated as an association taxable as a corporation by filing
Form 8832, Entity Classification Election. See the Instruc- For rules for determining stock ownership, see section 544
tions for Form 8832. For more information about LLCs, of the Internal Revenue Code.
see Pub. 3402, Taxation of Limited Liability Companies. Other rules. For the at-risk rules that apply to closely
held corporations, see At-Risk Limits, later.
S corporations. Some corporations may meet the quali-
fications for electing to be S corporations. For information
on S corporations, see the Instructions for Form 1120-S.
Property Exchanged for Stock
Personal service corporations. A corporation is a per-
sonal service corporation if it meets all of the following re- If you transfer property (or money and property) to a cor-
quirements. poration in exchange for stock in that corporation (other
1. Its principal activity during the “testing period” is per- than nonqualified preferred stock), and immediately after-
forming personal services (defined later). Generally, ward you are in control of the corporation, the exchange is
the testing period for any tax year is the prior tax year. usually not taxable. This rule applies both to individuals
If the corporation has just been formed, the testing pe- and to groups who transfer property to a corporation. It
riod begins on the first day of its tax year and ends on also applies whether the corporation is being formed or is
the earlier of: already operating. It does not apply in the following situa-
tions.
a. The last day of its tax year, or
• The corporation is an investment company.
b. The last day of the calendar year in which its tax
• You transfer the property in a bankruptcy or similar
year begins.
proceeding in exchange for stock used to pay cred-
2. Its employee-owners substantially perform the serv- itors.
ices in (1) above. This requirement is met if more than The stock is received in exchange for the corporation's
•
20% of the corporation's compensation cost for its ac- debt (other than a security) or for interest on the cor-
tivities of performing personal services during the poration's debt (including a security) that accrued
testing period is for personal services performed by while you held the debt.
employee-owners.
See Property Exchanged for Stock in chapter 2 of Pub.
3. Its employee-owners own more than 10% of the fair 544 for more information.
market value of its outstanding stock on the last day of
the testing period.

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Both the corporation and any person involved in a
! nontaxable exchange of property for stock must Capital Contributions
CAUTION attach to their income tax returns for the year of
the exchange, the complete statement of all facts perti-
nent to the exchange required by Treasury Regulations This section explains the tax treatment of contributions
section 1.351-3. from shareholders and nonshareholders.

Paid-in capital. Generally, contributions to the capital of
Control of a corporation. To be in control of a corpora- a corporation, whether or not by shareholders, are paid-in
tion, you or your group of transferors must own, immedi- capital. These contributions are not taxable to the corpo-
ately after the exchange, at least 80% of the total com- ration. However, after December 22, 2017, the following
bined voting power of all classes of stock entitled to vote nonshareholder contributions to the capital of a corpora-
and at least 80% of the outstanding shares of each class tion are not considered nontaxable paid-in capital.
of nonvoting stock.
• Any contribution in aid of construction or any other
Loss on exchange. If you have a loss from an exchange contribution as a customer or potential customer.
and own, directly or indirectly, more than 50% of the cor- • Any contribution by any civic group.
poration's stock, you cannot deduct the loss. For more in-
formation, see Nondeductible Loss under Sales and Ex- • Any contribution by any governmental entity. However,
changes Between Related Persons in chapter 2 of Pub. see the special rule below.
544. For contributions made after December 31, 2020, a
special rule applies to contributions to the capital of water
Basis of stock or other property received. The basis and sewerage disposal utilities. Under the special rule,
of the stock you receive is generally the adjusted basis of any amount of money or property received after Decem-
the property you transfer. Increase this amount by any ber 31, 2020, as a contribution in aid of construction or a
amount treated as a dividend, plus any gain recognized contribution to the capital of a regulated public utility that
on the exchange. Decrease this amount by any cash you provides water or sewerage disposal services is eligible
received, the fair market value of any other property you for exclusion from income under section 118 of the Inter-
received, and any loss recognized on the exchange. Also nal Revenue Code.
decrease this amount by the amount of any liability the
corporation or another party to the exchange assumed Basis. The corporation's basis of property contributed to
from you, unless payment of the liability gives rise to a de- capital by a shareholder is the same as the basis the
duction when paid. shareholder had in the property, increased by any gain the
Further decreases may be required when the corpora- shareholder recognized on the exchange. However, the in-
tion or another party to the exchange assumes from you a crease for the gain recognized may be limited. For more
liability that gives rise to a deduction when paid, if the ba- information, see Basis of property transferred above and
sis of the stock would otherwise be higher than its fair section 362 of the Internal Revenue Code.
market value on the date of the exchange. This rule does The basis of property contributed to capital by a person
not apply if the entity assuming the liability acquired either other than a shareholder is zero.
substantially all of the assets or the trade or business with If a corporation receives a cash contribution from a per-
which the liability is associated. son other than a shareholder, the corporation must reduce
the basis of any property acquired with the contribution
The basis of any other property you receive is its fair
during the 12-month period beginning on the day it re-
market value on the date of the trade.
ceived the contribution by the amount of the contribution.
Basis of property transferred. A corporation that re- If the amount contributed is more than the cost of the
ceives property from you in exchange for its stock gener- property acquired, then reduce, but not below zero, the
ally has the same basis you had in the property, increased basis of the other properties held by the corporation on
by any gain you recognized on the exchange. However, the last day of the 12-month period in the following order.
the increase for the gain recognized may be limited. For 1. Depreciable property.
more information, see section 362 of the Internal Revenue
Code. 2. Amortizable property.
If property is transferred to a corporation subject to sec- 3. Property subject to cost depletion but not to percent-
tion 362(e)(2) of the Internal Revenue Code, the transferor age depletion.
and the acquiring corporation may elect, under section
362(e)(2)(C), to reduce the transferor's basis in the stock 4. All other remaining properties.
received instead of reducing the acquiring corporation's Reduce the basis of property in each category to zero
basis in the property transferred. Once made, the election before going on to the next category.
is irrevocable. For more information, see section 362(e)(2) There may be more than one piece of property in each
and Treasury Regulations section 1.362-4. If an election is category. Base the reduction of the basis of each property
made, a statement must be filed in accordance with Treas- on the following ratio.
ury Regulations section 1.362-4(d)(3).

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                                                                     return must generally file by the 15th day of the 4th month 
                    Basis of each piece of property
                                                                     after  the  short  period  ends.  A  corporation  that  has  dis-
              Bases of all properties (within that category)         solved must generally file by the 15th day of the 4th month 
                                                                     after the date it dissolved.
If the corporation wishes to make this adjustment in some            However,  a  corporation  with  a  fiscal  tax  year  ending 
other way, it must get IRS approval. The corporation files a         June 30 must file by the 15th day of the 3rd month after 
request for approval with its income tax return for the tax          the end of its tax year. A corporation with a short tax year 
year in which it receives the contribution.                          ending anytime in June will be treated as if the short pe-
                                                                     riod ended June 30 and must file by the 15th day of the 
                                                                     3rd month after the end of its tax year.
Filing and Paying Income                                             If the due date falls on a Saturday, Sunday, or legal holi-
                                                                     day, the due date is extended to the next business day.
Taxes
                                                                     Extension of time to file.  File Form 7004, Application 
The federal income tax is a pay-as-you-go tax. A corpora-            for Automatic Extension of Time To File Certain Business 
tion  must  generally  make  estimated  tax  payments  as  it        Income Tax, Information, and Other Returns, to request an 
earns or receives income during its tax year. After the end          extension of time to file a corporation’s income tax return. 
of the year, the corporation must file an income tax return.         The  IRS  will  grant  the  extension  if  the  corporation  com-
This section will help you determine when and how to pay             pletes the form properly, files it, and pays any tax due by 
and file corporate income taxes.                                     the original due date for the return.
                                                                     Form 7004 does not extend the time for paying the tax 
    For certain corporations affected by federally de-               due on the return. Interest, and possibly penalties, will be 
TIP clared  disasters  such  as  hurricanes,  the  due               charged on any part of the final tax due not shown as a 
    dates for filing returns, paying taxes, and perform-             balance  due  on  Form  7004.  The  interest  is  figured  from 
ing  other  time-sensitive  acts  may  be  extended.  The  IRS       the original due date of the return to the date of payment.
may also forgive the interest and penalties on any under-            For  more  information,  see  the  Instructions  for  Form 
paid tax for the length of any extension. For more informa-          7004.
tion, visit IRS.gov/DisasterTaxRelief.
                                                                     How to pay your taxes.      A corporation must pay its tax 
                                                                     due in full no later than the due date for filing its tax return 
Income Tax Return                                                    (not including extensions).
This section will help you determine when and how to re-             Electronic  Federal  Tax  Payment  System  (EFTPS). 
port a corporation's income tax.                                     Corporations must generally use EFTPS to make deposits 
                                                                     of  all  tax  liabilities  (including  social  security,  Medicare, 
Who must file.      Unless exempt under section 501 of the           withheld income, excise, and corporate income taxes). For 
Internal Revenue Code, all domestic corporations in exis-            more  information  on  EFTPS  and  enrollment,  visit 
tence for any part of a tax year (including corporations in          www.eftps.gov.
bankruptcy) must file an income tax return whether or not 
they have taxable income.
                                                                     Penalties
Which form to file. A domestic entity electing to be clas-                   Generally,  if  the  corporation  receives  a  notice 
sified  as  an  association  taxable  as  a  corporation  must       !       about interest and penalties after it files its return, 
generally file Form 1120, U.S. Corporation Income Tax Re-            CAUTION send  the  IRS  an  explanation  and  we  will  deter-
turn, to report its income, gains, losses, deductions, cred-         mine  if  the  corporation  meets  reasonable-cause  criteria. 
its, and to figure its income tax liability. Certain organiza-       Do not attach an explanation when the corporation's re-
tions and entities must, or may elect to, file special returns.      turn  is  filed.  See  the  instructions  for  your  income  tax  re-
For more information, see Special Returns for Certain Or-            turn.
ganizations in the Instructions for Form 1120.
Electronic  filing. Corporations  can  generally  electroni-         Late filing of return. A corporation that does not file its 
cally  file  (e-file)  Form  1120  and  certain  related  forms,     tax return by the due date, including extensions, may be 
schedules, and attachments. However, for returns filed on            penalized 5% of the unpaid tax for each month or part of a 
or after January 1, 2024, corporations that file 10 or more          month the return is late, up to a maximum of 25% of the 
returns are required to efile. However, these corporations           unpaid tax. If the corporation is charged a penalty for late 
can request a waiver of the electronic filing requirements.          payment  of  tax  (discussed  next)  for  the  same  period  of 
For more information on electronic filing, see the Instruc-          time, the penalty for late filing is reduced by the amount of 
tions for Form 1120, or the applicable instructions for your         the penalty for late payment. A minimum penalty applies 
income tax return.                                                   for a return that is over 60 days late. The minimum penalty 
                                                                     amount may be adjusted for inflation. See the Instructions 
When  to  file.     Generally,  a  corporation  must  file  its  in- for Form 1120 (or the instructions for your applicable re-
come tax return by the 15th day of the 4th month after the           turn) for the minimum penalty amount for the current tax 
end of its tax year. A new corporation filing a short-period         year.  The  penalty  will  not  be  imposed  if  the  corporation 

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can show the failure to file on time was due to a reasona- Example 2. Your corporation's tax year ends June 30.
ble cause. Installment payments are due on October 15, December
15, March 15, and June 15.
Note. If the corporation is charged a penalty for late If any due date falls on a Saturday, Sunday, or legal hol-
payment of tax (discussed next) for the same period of iday, the installment is due on the next business day.
time, the penalty for late filing is reduced by the amount of
the penalty for late payment. How to figure each required installment. The Estima-
ted Tax Worksheet, later, can be used to figure each re-
Late payment of tax. A corporation that does not pay quired installment. Form 1120-W, Estimated Tax for Cor-
the tax when due may be penalized half of 1% of the un- porations, is now historical. Prior versions are available on
paid tax for each month or part of a month the tax is not IRS.gov
paid, up to a maximum of 25% of the unpaid tax. The pen- You generally use one of the following two methods to
alty will not be imposed if the corporation can show that figure each required installment. You should use the
the failure to pay on time was due to a reasonable cause. method that yields the smallest installment payments. In
these discussions, “return” generally refers to the corpora-
Trust fund recovery penalty. If federal income, social
tion's original return. However, an amended return is con-
security, or Medicare taxes that a corporation must with-
sidered the original return if it is filed by the due date (in-
hold from employee wages are not withheld or are not de-
cluding extensions) of the original return.
posited or paid to the U.S. Treasury, the trust fund recov-
ery penalty may apply. The penalty is the full amount of Method 1. Each required installment is 25% of the in-
the unpaid trust fund tax. This penalty may apply to you if come tax the corporation will show on its return for the cur-
these unpaid taxes cannot be immediately collected from rent year.
the business.
Method 2. Each required installment is 25% of the in-
The trust fund recovery penalty may be imposed on all
come tax shown on the corporation's return for the previ-
persons who are determined by the IRS to be responsible
ous year.
for collecting, accounting for, and paying these taxes, and
To use Method 2:
who acted willfully in not doing so.
A responsible person can be an officer or employee of 1. The corporation must have filed a return for the previ-
a corporation, an accountant, or a volunteer director/ ous year,
trustee. A responsible person may also include one who
2. The return must have been for a full 12 months, and
signs checks for the corporation or otherwise has authority
to cause the spending of business funds. 3. The return must have shown a positive tax liability (not
“Willfully” means voluntarily, consciously, and intention- zero).
ally. A responsible person acts willfully if the person knows
Also, if the corporation is a large corporation, it can use
the required actions are not taking place or recklessly dis-
Method 2 to figure the first installment only.
regards obvious and known risks to the government’s right
to receive trust fund taxes. Large corporations. A large corporation is a corporation
For more information on withholding and paying these that had, or whose predecessor had, taxable income of $1
taxes, see Pub. 15 (Circular E), Employer's Tax Guide. million or more for any of the 3 tax years immediately pre-
ceding the current tax year, or if less, the number of years
Other penalties. Other penalties can be imposed for
the corporation has been in existence. For this purpose,
negligence, substantial understatement of tax, reportable
taxable income is modified to exclude net operating loss
transaction understatements, and fraud. See sections
and capital loss carrybacks or carryovers.
6662, 6662A, and 6663 of the Internal Revenue Code.
Annualized income installment method and/or adjus-
Estimated Tax ted seasonal installment method. If the corporation's
income is expected to vary during the year because, for
Generally, a corporation must make installment payments example, it operates its business on a seasonal basis, it
if it expects its estimated tax for the year to be $500 or may be able to lower the amount of one or more required
more. If the corporation does not pay the installments installments by using the annualized income installment
when they are due, it could be subject to an underpay- method and/or the adjusted seasonal installment method.
ment penalty. This section will explain how to avoid this For example, a ski shop, which receives most of its in-
penalty. come during the winter months, may be able to benefit
from using one or both of these methods in figuring one or
When to pay estimated tax. Installment payments are
more of its required installments. See sections 6655(e)(2)
due by the 15th day of the 4th, 6th, 9th, and 12th months
and 6655(e)(3) of the Internal Revenue Code.
of the corporation's tax year.
Refiguring required installments. If after the corpora-
Example 1. Your corporation's tax year ends Decem-
tion figures and deposits its estimated tax it finds that its
ber 31. Installment payments are due on April 15, June
tax liability for the year will be more or less than originally
15, September 15, and December 15.
estimated, it may have to refigure its required installments
to see if an underpayment penalty may apply. An

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immediate  catch-up  payment  should  be  made  to  reduce      3. The corporation is a large corporation figuring its first 
any penalty resulting from the underpayment of any earlier        required installment based on the prior year's tax.
installments.
                                                                How to pay estimated tax.                              A corporation is generally re-
Underpayment penalty. If the corporation does not pay           quired to use EFTPS to pay its taxes. See                                                                         Electronic Fed-
a required installment of estimated tax by its due date, it     eral Tax Payment System (EFTPS), earlier.
may be subject to a penalty. The penalty is figured sepa-
rately for each installment due date. Therefore, the corpo-     Quick refund of overpayments.                                                       A corporation that has 
ration may owe a penalty for an earlier due date, even if it    overpaid its estimated tax for the tax year may be able to 
paid enough tax later to make up the underpayment. This         apply for a quick refund. Use Form 4466, Corporation Ap-
is true even if the corporation is due a refund when its re-    plication  for  Quick  Refund  of  Overpayment  of  Estimated 
turn is filed.                                                  Tax, to apply for a quick refund of an overpayment of esti-
                                                                mated tax. A corporation can apply for a quick refund if the 
Form  2220.     Use  Form  2220,  Underpayment  of  Esti-       overpayment is:
mated Tax by Corporations, to determine if a corporation 
is  subject  to  the  penalty  for  underpayment  of  estimated • At least 10% of its expected tax liability, and
tax and to figure the amount of the penalty.                    • At least $500.
If  the  corporation  is  charged  a  penalty,  the  amount  of 
                                                                Use Form 4466 to figure the corporation's expected tax li-
the penalty depends on the following three factors.
                                                                ability and the overpayment of estimated tax.
1. The amount of the underpayment.
                                                                File  Form  4466  after  the  end  of  the  corporation’s  tax 
2. The period during which the underpayment was due             year, but before the corporation files its income tax return. 
   and unpaid.                                                  Do not file Form 4466 before the end of the corporation's 
3. The interest rate for underpayments published quar-          tax year. An extension of time to file the corporation's in-
   terly by the IRS in the Internal Revenue Bulletin.           come  tax  return  will  not  extend  the  time  for  filing  Form 
                                                                4466. The IRS will act on the form within 45 days from the 
A corporation generally does not have to file Form 2220         date you file it.
with its income tax return because the IRS will figure any 
penalty and bill the corporation. However, even if the cor-
                                                                U.S. Real Property Interest
poration does not owe a penalty, complete and attach the 
form to the corporation's tax return if any of the following 
                                                                If a domestic corporation acquires a U.S. real property in-
apply.
                                                                terest from a foreign person or firm, the corporation may 
1. The annualized income installment method was used            have to withhold tax on the amount it pays for the property. 
   to figure any required installment.                          The  amount  paid  includes  cash,  the  fair  market  value  of 
                                                                other  property,  and  any  assumed  liability.  If  a  domestic 
2. The adjusted seasonal installment method was used            corporation  distributes  a  U.S.  real  property  interest  to  a 
   to figure any required installment.                          foreign person or firm, it may have to withhold tax on the 

Estimated Tax Worksheet                                                                          Keep for Your Records
Note. This worksheet may be used as a guide in figuring the required estimated tax installments. 
1. Enter the expected taxable income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                1.  
2. Multiply line 1 by the maximum tax rate that is in effect for the applicable tax year. For example, in 2023 the maximum 
   rate is 21%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         2.  
3. Tax credits. For information on tax credits the corporation can take, see the instructions for Form 1120, Schedule J, 
   Part I, lines 5a through 5e, or the instructions for the applicable lines and schedule of the corporation’s income tax 
   return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     3.  
4. Subtract line 3 from line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            4.  
5. Other taxes. For information on other taxes the corporation may owe, see the instructions for Form 1120, Schedule J, 
   or the instructions for the applicable lines and schedule of the corporation's income tax return . . . . . . . . . . . . . . . . . .                                           5.  
6. Total tax. Add lines 4 and 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               6.  
7. Enter any credit for federal tax paid on fuels and other refundable credits. For information on other refundable credits, 
   see the instructions for Form 1120, Schedule J, or the instructions for the applicable line of the corporation’s income tax 
   return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     7.  
8. Subtract line 7 from line 6. If the result is less than $500, the corporation is not required to make estimated tax 
   payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         8.  
9. Enter the tax shown on the corporation’s prior year’s tax return. If the tax is zero or the tax year was for less than 12 
   months, skip this line and enter the amount from line 8 on line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               9.  
10. Enter the smaller of line 8 or line 9. If the corporation is required to skip line 9, enter the amount from line 8 . . . . . . . .                                            10.  
11. Required installments. Enter 25% of line 10. If the corporation uses the annualized income installment method, or 
   adjusted seasonal installment method, or is a large corporation, an additional computation may be needed  . . . . . . .                                                        11.  

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fair market value of the property. A corporation that fails to age of completion method described in section 460 of the
withhold may be liable for the tax and any penalties and Internal Revenue Code.
interest that apply. For more information, see section 1445
of the Internal Revenue Code; Pub. 515, Withholding of Mark-to-market accounting method. Generally, deal-
Tax on Nonresident Aliens and Foreign Entities; Form ers in securities must use the mark-to-market accounting
8288, U.S. Withholding Tax Return for Dispositions by For- method described in section 475 of the Internal Revenue
eign Persons of U.S. Real Property Interests; and Form Code. Under this method, any security held by a dealer as
8288-A, Statement of Withholding on Dispositions by For- inventory must be included in inventory at its fair market
eign Persons of U.S. Real Property Interests. value. Any security not held as inventory at the close of
the tax year is treated as sold at its fair market value on
the last business day of the tax year. Any gain or loss must
be taken into account in determining gross income. The
Accounting Methods gain or loss taken into account is treated as ordinary gain
or loss.
An accounting method is a set of rules used to determine Dealers in commodities and traders in securities and
when and how income and expenses are reported. Taxa- commodities can elect to use the mark-to-market account-
ble income should be determined using the method of ac- ing method.
counting regularly used in keeping the corporation's books
and records. In all cases, the method used must clearly Change in accounting method. A corporation can
show taxable income. change its method of accounting used to report taxable in-
Generally, permissible methods include: come (for income as a whole or for the treatment of any
material item). The corporation must file Form 3115, Appli-
• Cash, cation for Change in Accounting Method. See the Instruc-
• Accrual, or tions for Form 3115 and Pub. 538 for more information
and exceptions.
• Any other method authorized by the Internal Revenue
Code. Section 481(a) adjustment. If the corporation's taxa-
ble income for the current tax year is figured under a
Accrual method. Generally, a corporation, other than a method of accounting different from the method used in
qualified personal service corporation (as defined in sec- the preceding tax year, the corporation may have to make
tion 448(d)(2) of the Internal Revenue Code), must use an an adjustment under section 481(a) of the Internal Reve-
accrual method of accounting if it is not a small business nue Code to prevent amounts of income or expense from
taxpayer (as defined in section 448(c) of the Internal Rev- being duplicated or omitted. The section 481(a) adjust-
enue Code). A corporation engaged in farming operations ment period is generally 1 year for a net negative adjust-
must also use an accrual method, unless it qualifies as a ment and 4 years for a net positive adjustment. However,
small business taxpayer. exceptions to the general section 481(a) adjustment pe-
riod may apply. Also, in some cases, a corporation can
Under an accrual method of accounting, you generally
elect to modify the section 481(a) adjustment period. The
report income in the year it is earned and deduct or capi-
corporation may have to complete the appropriate lines of
talize expenses in the year incurred. The purpose of an
Form 3115 to make an election. See the Instructions for
accrual method of accounting is to match income and ex-
Form 3115 for more information and exceptions.
penses in the correct year.
See Pub. 538 for additional information and special
rules. Accounting Periods
Expenses. Generally, an accrual basis taxpayer can
deduct accrued expenses in the tax year when: A corporation must figure its taxable income on the basis
of a tax year. A tax year is the annual accounting period a
1. All events that determine the liability have occurred, corporation uses to keep its records and report its income
2. The amount of the liability can be figured with reason- and expenses. Generally, a corporation can use either a
able accuracy, and calendar year or a fiscal year as its tax year. Unless spe-
cial rules apply, a corporation generally adopts a tax year
3. Economic performance takes place with respect to by filing its first federal income tax return using that tax
the expense. year. For more information, see Pub. 538.
There are exceptions to the economic performance rule
Personal service corporation. A personal service cor-
for certain items, including recurring expenses. See sec-
poration must use a calendar year as its tax year unless:
tion 461(h) of the Internal Revenue Code and the related
regulations for the rules for determining when economic • It elects to use a 52-53-week tax year that ends with
performance takes place. reference to the calendar year or tax year elected un-
der section 444 of the Internal Revenue Code;
Percentage of completion method. Long-term con-
tracts (except for certain real property construction con-
tracts) must generally be accounted for using the percent-

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• It can establish a business purpose for a different tax Related Persons
year and obtains approval of the IRS (see the
Instructions for Form 1128 and Pub. 538); or A corporation that uses an accrual method of accounting
• It elects under section 444 to have a tax year other cannot deduct business expenses and interest owed to a
than a calendar year. Use Form 8716, Election To related person who uses the cash method of accounting
Have a Tax Year Other Than a Required Tax Year, to until the corporation makes the payment and the corre-
make the election. sponding amount is includible in the related person's
gross income. Determine the relationship as of the end of
If a personal service corporation makes a section 444 the tax year for which the expense or interest would other-
election, its deduction for certain amounts paid to em- wise be deductible. If a deduction is denied, the rule will
ployee-owners may be limited. See Schedule H (Form continue to apply even if the corporation's relationship with
1120), Section 280H Limitations for a Personal Service the person ends before the expense or interest is includi-
Corporation (PSC), to figure the maximum deduction. ble in the gross income of that person. These rules also
deny the deduction of losses on the sale or exchange of
Change of tax year. Generally, a corporation must get
property between related persons.
the consent of the IRS before changing its tax year by fil-
ing Form 1128, Application To Adopt, Change, or Retain a Related persons. For purposes of this rule, the following
Tax Year. However, under certain conditions, a corporation persons are related to a corporation.
can change its tax year without getting the consent. For
more information, see Form 1128 and Pub. 538. 1. Another corporation that is a member of the same
controlled group (as defined in section 267(f) of the
Internal Revenue Code).
Recordkeeping 2. An individual who owns, directly or indirectly, more
than 50% of the value of the outstanding stock of the
A corporation should keep its records for as long as they corporation.
may be needed for the administration of any provision of
3. A trust fiduciary, if the trust or the grantor of the trust
the Internal Revenue Code. Usually records that support
owns, directly or indirectly, more than 50% of the
items of income, deductions, or credits on the return must
value of the outstanding stock of the corporation.
be kept for 3 years from the date the return is due or filed,
whichever is later. Keep records that verify the corpora- 4. An S corporation, if the same persons own more than
tion's basis in property for as long as they are needed to 50% in value of the outstanding stock of each corpo-
figure the basis of the original or replacement property. ration.
The corporation should keep copies of all filed returns. 5. A partnership, if the same persons own more than
They help in preparing future and amended returns and in 50% in value of the outstanding stock of the corpora-
the calculation of earnings and profits. tion and more than 50% of the capital or profits inter-
est in the partnership.
6. Any employee-owner, if the corporation is a personal
Income, Deductions, and service corporation (see Personal service corpora-
tion, earlier), regardless of the amount of stock owned
Special Provisions by the employee-owner.
Rules on income and deductions that apply to individuals Ownership of stock. To determine whether an indi-
also apply, for the most part, to corporations. However, the vidual directly or indirectly owns any of the outstanding
following special provisions apply only to corporations. stock of a corporation, the following apply.
1. Stock owned, directly or indirectly, by or for a corpora-
Costs of Going Into Business tion, partnership, estate, or trust, is treated as being
owned proportionately by or for its shareholders, part-
When you go into business, treat all eligible costs you in- ners, or beneficiaries.
cur to get your business started as capital expenses. 2. An individual is treated as owning the stock owned,
However, a corporation can elect to deduct a limited directly or indirectly, by or for the individual's family.
amount of start-up or organizational costs. Any costs not Family includes only brothers and sisters (including
deducted can be amortized. half brothers and half sisters), a spouse, ancestors,
Start-up costs are costs for creating an active trade or and lineal descendants.
business or investigating the creation or acquisition of an 3. Any individual owning (other than by applying (2)
active trade or business. Organizational costs are the di- above) stock in a corporation, is treated as also own-
rect costs of creating the corporation. ing the stock owned directly or indirectly by that indi-
vidual's partner.
For more information on deducting or amortizing
start-up and organizational costs, see the instructions for 4. To apply (1), (2), or (3) above, stock constructively
your income tax return. owned by a person under (1) is treated as actually

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owned by that person. But stock constructively owned Note. This deduction is not subject to the limit on de-
by an individual under (2) or (3) is not treated as ac- duction for dividends related to dividends from domestic
tually owned by the individual for applying either (2) or corporations, discussed below.
(3) to make another person the constructive owner of
that stock. Dividends from domestic corporations. A corporation
can deduct, within certain limits, 50% of the dividends re-
Reallocation of income and deductions. Where it is ceived if the corporation receiving the dividend owns less
necessary to clearly show income or prevent tax evasion, than 20% of the corporation distributing the dividend. If
the IRS can reallocate gross income, deductions, credits, the corporation owns 20% or more of the distributing cor-
or allowances between two or more organizations, trades, poration's stock, it can, subject to certain limits, deduct
or businesses owned or controlled directly, or indirectly, by 65% of the dividends received.
the same interests.
Ownership. For these rules, ownership is based on
Complete liquidations. The disallowance of losses from the amount of voting power and value of the paying corpo-
the sale or exchange of property between related persons ration's stock (other than certain preferred stock) that the
does not apply to liquidating distributions. receiving corporation owns.

More information. For more information about the rela- Small business investment companies. Small busi-
ted person rules, see Pub. 544. ness investment companies can deduct 100% of the divi-
dends received from taxable domestic corporations.

Corporate Preference Items Dividends from regulated investment companies.
Regulated investment company dividends received are
A corporation must make special adjustments to certain subject to certain limits. Capital gain dividends received
items before it takes them into account in determining its from a regulated investment company do not qualify for
taxable income. These items are known as “corporate the deduction. For more information, see section 854 of
preference items” and they include the following. the Internal Revenue Code.
• Gain on the disposition of section 1250 property.
For more information, see Section 1250 Property un- No deduction allowed for certain dividends. Corpora-
der Depreciation Recapture in chapter 3 of Pub. 544. tions cannot take a deduction for dividends received from
the following entities.
• Percentage depletion for iron ore and coal (in-
cluding lignite). 1. A real estate investment trust (REIT).
• Amortization of pollution control facilities. For 2. A corporation exempt from tax under section 501 or
more information, see section 291(a)(4) of the Internal 521 of the Internal Revenue Code either for the tax
Revenue Code. year of the distribution or the preceding tax year.
• Mineral exploration and development costs. 3. A corporation whose stock was held less than 46 days
For more information on corporate preference items, see during the 91-day period beginning 45 days before the
section 291 of the Internal Revenue Code. stock became ex-dividend with respect to the divi-
dend. “Ex-dividend” means the holder has no rights to
the dividend.
Dividends-Received Deduction
4. A corporation whose dividends were received on any
A corporation can deduct a percentage of certain divi- share of preferred stock that are attributable to peri-
dends received during its tax year. This section discusses ods totaling more than 366 days if such stock was
the general rules that apply. The deduction is figured on held for less than 91 days during the 181-day period
Form 1120, Schedule C, or the applicable schedule of that began 90 days before the ex-dividend date.
your income tax return. For more information, see the In-
5. Any corporation, if your corporation is under an obli-
structions for Form 1120, or the instructions for your appli-
gation (pursuant to a short sale or otherwise) to make
cable income tax return.
related payments with respect to positions in substan-
Dividends from foreign corporations. Generally, 100% tially similar or related property.
of the foreign-source portion of dividends (and items trea-
Dividends on deposits. Dividends on deposits or with-
ted as dividends) from 10%-owned foreign corporations
drawable accounts in domestic building and loan associa-
may be deducted. The stock with respect to which such
tions, mutual savings banks, cooperative banks, and simi-
dividends are received must meet a special 365-day hold-
lar organizations are interest, not dividends. They do not
ing period and does not include certain “hybrid” dividend
qualify for this deduction.
payments. See Form 1120, Schedule C (or the applicable
schedule of your income tax return), for details regarding Limit on deduction for dividends. The total deduction
this deduction. Also see the Instructions for Form 1120 or for dividends received or accrued is generally limited (in
the instructions for your applicable income tax return. the following order) to:

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1. 65% of the difference between taxable income and Extraordinary Dividends
the 100% deduction allowed for dividends received
from affiliated corporations, or by a small business in- If a corporation receives an extraordinary dividend on
vestment company, for dividends received or accrued stock held 2 years or less before the dividend announce-
from 20%-owned corporations; then ment date, it must generally reduce its basis in the stock
by the nontaxed part of the dividend. The nontaxed part is
2. 50% of the difference between taxable income (re-
any dividends-received deduction allowable for the divi-
duced by total dividends received from 20%-owned
dends.
corporations) and the 100% deduction allowed for div-
idends received from affiliated corporations, or by a Extraordinary dividend. An extraordinary dividend is
small business investment company, for dividends re- any dividend on stock that equals or exceeds a certain
ceived or accrued from less-than-20%-owned corpo- percentage of the corporation's adjusted basis in the
rations (reducing taxable income by the total divi- stock. The percentages are:
dends received from 20%-owned corporations).
1. 5% for stock preferred as to dividends, or
Figuring the limit. In figuring the limit, determine taxa-
ble income without the following items. 2. 10% for other stock.
1. The net operating loss deduction. Treat all dividends received that have ex-dividend dates
within an 85-consecutive-day period as one dividend.
2. The deduction under section 199A for income attribut- Treat all dividends received that have ex-dividend dates
able to domestic production activities of specified ag- within a 365-consecutive-day period as extraordinary divi-
ricultural or horticultural cooperatives. dends if the total of the dividends exceeds 20% of the cor-
3. The deduction allowed by sections 243(a)(1) and poration's adjusted basis in the stock.
245(a) of the Internal Revenue Code.
Disqualified preferred stock. Any dividend on disquali-
4. The deduction allowed by section 250 of the Internal fied preferred stock is treated as an extraordinary dividend
Revenue Code. regardless of the period of time the corporation held the
stock.
5. Any adjustment due to the nontaxable part of an ex-
Disqualified preferred stock is any stock preferred as to
traordinary dividend (see Extraordinary Dividends,
dividends if any of the following apply.
later).
1. The stock when issued has a dividend rate that de-
6. Any capital loss carryback to the tax year. clines (or can reasonably be expected to decline) in
Effect of net operating loss. If a corporation has a the future.
net operating loss (NOL) for a tax year, the limit of 65% (or 2. The issue price of the stock exceeds its liquidation
50%) of taxable income does not apply. To determine rights or stated redemption price.
whether a corporation has an NOL, figure the divi-
dends-received deduction without the 65% (or 50%) of 3. The stock is otherwise structured to avoid the rules for
taxable income limit. extraordinary dividends and to enable corporate
shareholders to reduce tax through a combination of
Example 1. A corporation loses $75,000 from opera- dividends-received deductions and loss on the dispo-
tions. It receives $100,000 in dividends from a sition of the stock.
20%-owned corporation. Its taxable income is $25,000
($100,000 – $75,000) before the deduction for dividends More information. For more information on extraordinary
received. If it claims the full dividends-received deduction dividends, see section 1059 of the Internal Revenue
of $65,000 ($100,000 × 65%) and combines it with an op- Code.
erations loss of $75,000, it will have an NOL of ($40,000).
Therefore, the 65% of taxable income limit does not apply. Below-Market Loans
The corporation can deduct the full $65,000.
If a corporation receives a below-market loan and uses
Example 2. Assume the same facts as in Example 1, the proceeds for its trade or business, it may be able to
except that the corporation only loses $30,000 from oper- deduct the forgone interest as well as any interest the cor-
ations. Its taxable income is $70,000 before the deduction poration actually paid or accrued.
for dividends received. After claiming the dividends-re-
A below-market loan is a loan on which no interest is
ceived deduction of $65,000 ($100,000 × 65%), its taxa-
charged or on which interest is charged at a rate below the
ble income is $5,000. Because the corporation will not
applicable federal rate. A below-market loan is generally
have an NOL after applying a full dividends-received de-
treated as an arm's-length transaction in which the bor-
duction, its allowable dividends-received deduction is limi-
rower is considered as having received both the following.
ted to 65% of its taxable income, or $45,500 ($70,000 ×
65%). • A loan in exchange for a note that requires payment of
interest at the applicable federal rate.
• An additional payment in an amount equal to the for-
gone interest.

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The borrower treats the additional payment as a gift, divi- 4. Any deduction for income attributable to domestic
dend, contribution to capital, payment of compensation, or production activities of specified agricultural or horti-
other payment, depending on the substance of the trans- cultural cooperatives.
action.
5. Any net operating loss carryback to the tax year.
Foregone interest. For any period, forgone interest is 6. Any capital loss carryback to the tax year.
equal to:
Carryover of excess contributions. You can carry
1. The interest that would be payable for that period if in- over, within certain limits, to each of the subsequent 5
terest accrued on the loan at the applicable federal years any charitable contributions made during the current
rate and was payable annually on December 31, mi- year that exceed the 10% limit. You lose any excess not
nus used within that period. Do not deduct a carryover of ex-
2. Any interest actually payable on the loan for the pe- cess contributions in the carryover year until after you de-
riod. duct contributions made in that year (subject to the 10%
limit). You cannot deduct a carryover of excess contribu-
More information. For more information on below-mar- tions to the extent it increases a net operating loss carry-
ket loans, including information on demand loans, gift over.
loans, and term loans, see section 7872 of the Internal
Revenue Code, the related regulations, and chapter 1 of Farmers, ranchers, or Native Corporations. Corpora-
Pub. 550, Investment Income and Expenses. tions that are farmers, ranchers, or Native Corporations,
see section 170(b)(2) of the Internal Revenue Code for
special rules that may affect the deduction limit.
Charitable Contributions
Cash contributions. A corporation must maintain a re-
A corporation can claim a limited deduction for charitable cord of any contribution of cash, check, or other monetary
contributions made in cash or other property. The contri- contribution, regardless of the amount. The record can be
bution is deductible if made to, or for the use of, a qualified a bank record, receipt, letter, or other written communica-
organization. For more information on qualified organiza- tion from the donee indicating the name of the organiza-
tions, see Pub. 526, Charitable Contributions. Also, see tion, the date of the contribution, and the amount of the
Tax-Exempt Organization Search at IRS.gov/Charities, the contribution. Keep the record of the contribution with the
online search tool for finding information on organizations other corporate records. Do not attach the records to the
eligible to receive tax-deductible contributions. corporation's return. For more information on cash contri-
Note. You cannot take a deduction if any of the net butions, see Pub. 526.
earnings of an organization receiving contributions benefit Gifts of $250 or more. Generally, no deduction is al-
any private shareholder or individual. lowed for any contribution of $250 or more unless the cor-
poration gets a written acknowledgement from the donee
Cash method corporation. A corporation using the organization. The acknowledgement should show the
cash method of accounting deducts contributions in the amount of cash contributed, a description of the property
tax year paid. contributed (but not its value), and either gives a descrip-
tion and a good faith estimate of the value of any goods or
Accrual method corporation. A corporation using an
services provided in return for the contribution or states
accrual method of accounting can choose to deduct un-
that no goods or services were provided in return for the
paid contributions for the tax year the board of directors
contribution. The acknowledgement must be obtained by
authorizes them if it pays them by the due date for filing
the due date (including extensions) of the return, or, if ear-
the corporation’s tax return (not including extensions).
lier, the date the return was filed. Keep the acknowledge-
Make the choice by reporting the contribution on the cor-
ment with other corporate records. Do not attach the ac-
poration's return for the tax year. Attach a declaration stat-
knowledgement to the return.
ing that the board of directors adopted the resolution dur-
ing the tax year. The declaration must include the date the Contributions of property other than cash. If a corpo-
resolution was adopted. ration (other than a closely held or a personal service cor-
poration) claims a deduction of more than $500 for contri-
Limitations on deduction. A corporation cannot deduct
butions of property other than cash, a schedule describing
charitable contributions that exceed 10% of its taxable in-
the property and the method used to determine its fair
come for the tax year. Figure taxable income for this pur-
market value must be attached to the corporation's return.
pose without the following.
In addition, the corporation should keep a record of:
1. The deduction for charitable contributions.
• The approximate date and manner of acquisition of
2. The dividends-received deduction. the donated property, and
3. The deduction allowed under section 249 of the Inter- • The cost or other basis of the donated property held
nal Revenue Code for bond premium. by the donor for less than 12 months prior to contribu-
tion.

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Closely held and personal service corporations must of the donated inventory or property. This deduction may
complete and attach Form 8283, Noncash Charitable be allowed for certain contributions of the following.
Contributions, to their returns if they claim a deduction of
• Certain inventory and other property made to a donee
more than $500 for noncash contributions. For all other
organization and used solely for the care of the ill, the
corporations, if the deduction claimed for donated prop-
needy, and infants. Special rules apply to qualified
erty exceeds $5,000, complete Form 8283 and attach it to
contributions of “apparently wholesome food” (see
the corporation's return.
section 170(e)(3)(C) of the Internal Revenue Code).
A corporation must obtain a qualified appraisal for all
deductions of property claimed in excess of $5,000. A • Scientific property constructed by the corporation
qualified appraisal is not required for the donation of cash, (other than an S corporation, personal holding com-
publicly traded securities, inventory, and any qualified ve- pany, or personal service corporation) and donated no
hicles sold by a donee organization without any significant later than 2 years after substantial completion of the
intervening use or material improvement. The appraisal construction. The property must be donated to a quali-
should be maintained with other corporate records and fied organization and its original use must be by the
only attached to the corporation's return when the deduc- donee for research, experimentation, or research
tion claimed exceeds $500,000 ($20,000 for donated art training within the United States in the area of physical
work). or biological science.
See Form 8283 for more information.
Contributions to organizations conducting lobbying
Qualified conservation contributions. If a corpora- activities. Contributions made to an organization that
tion makes a qualified conservation contribution, the cor- conducts lobbying activities are not deductible if:
poration must provide information regarding the legal in-
terest being donated, the fair market value of the • The lobbying activities relate to matters of direct finan-
cial interest to the donor's trade or business, and
underlying property before and after the donation, and a
description of the conservation purpose for which the • The principal purpose of the contribution was to avoid
property will be used. For more information, see section federal income tax by obtaining a deduction for activi-
170(h) of the Internal Revenue Code. ties that would have been nondeductible under the
lobbying expense rules if conducted directly by the do-
Contributions of used vehicles. A corporation is al-
nor.
lowed a deduction for the contribution of used motor vehi-
cles, boats, and airplanes. The deduction is limited, and More information. For more information on charitable
other special rules apply. For more information, see Pub. contributions, including substantiation and recordkeeping
526. requirements, see section 170 of the Internal Revenue
Reduction for contributions of certain property. Code, the related regulations, and Pub. 526.
For a charitable contribution of property, the corporation
must reduce the contribution by the sum of: Capital Losses
• The ordinary income and short-term capital gain that
A corporation can deduct capital losses only up to the
would have resulted if the property were sold at its fair
amount of its capital gains. In other words, if a corporation
market value; and
has an excess capital loss, it cannot deduct the loss in the
• For certain contributions, the long-term capital gain current tax year. Instead, it carries the loss to other tax
that would have resulted if the property were sold at its years and deducts it from any net capital gains that occur
fair market value. in those years.
The reduction for the long-term capital gain applies to: A capital loss is carried to other years in the following
• Contributions of tangible personal property for use by order.
an exempt organization for a purpose or function unre-
1. 3 years prior to the loss year.
lated to the basis for its exemption;
• Contributions of any property to or for the use of cer- 2. 2 years prior to the loss year.
tain private foundations except for stock for which mar- 3. 1 year prior to the loss year.
ket quotations are readily available; and
4. Any loss remaining is carried forward for 5 years.
• Contributions of any patent, certain copyrights, trade-
mark, trade name, trade secret, know-how, software When you carry a net capital loss to another tax year, treat
(that is a section 197 intangible), or similar property, or it as a short-term loss. It does not retain its original identity
applications or registrations of such property. as long term or short term.

Larger deduction. A corporation (other than an S cor- Example. A calendar year corporation has a net
poration) may be able to claim a deduction equal to the short-term capital gain of $3,000 and a net long-term capi-
lesser of (a) the basis of the donated inventory or property tal loss of $9,000. The short-term gain offsets some of the
plus half of the inventory’s or property's appreciation (gain long-term loss, leaving a net capital loss of $6,000. The
if the donated inventory or property was sold at fair market corporation treats this $6,000 as a short-term loss when
value on the date of the donation), or (b) two times basis carried back or forward.

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The corporation carries the $6,000 short-term loss 2. A corporation must make different modifications to its
back 3 years. In year 1, the corporation had a net taxable income in the carryback or carryforward year
short-term capital gain of $8,000 and a net long-term capi- when figuring how much of the NOL is used and how
tal gain of $5,000. It subtracts the $6,000 short-term loss much is carried over to the next year.
first from the net short-term gain. This results in a net capi-
3. A corporation uses different forms when claiming an
tal gain for year 1 of $7,000. This consists of a net
NOL deduction.
short-term capital gain of $2,000 ($8,000 − $6,000) and a
net long-term capital gain of $5,000. 4. A corporation is not subject to section 461, which lim-
its the amount of losses from the trades or businesses
S corporation status. A corporation may not carry a
of noncorporate taxpayers.
capital loss from, or to, a year for which it is an S corpora-
tion. For more information, including how to figure the NOL
deduction for the current tax year and any carryback or
Rules for carryover and carryback. When carrying a carryforward, see the Instructions for Form 1139, and the
capital loss from 1 year to another, the following rules ap- instructions for the corporation's tax return.
ply.
• When figuring the current year's net capital loss, you At-Risk Limits
cannot combine it with a capital loss carried from an-
other year. In other words, you can carry capital losses The at-risk rules limit your losses from most activities to
only to years that would otherwise have a total net your amount at risk in the activity. The at-risk limits apply
capital gain. to certain closely held corporations (other than S corpora-
• If you carry capital losses from 2 or more years to the tions).
same year, deduct the loss from the earliest year first. The amount at risk generally equals:
• You cannot use a capital loss carried from another • The money and the adjusted basis of property contrib-
year to produce or increase a net operating loss in the uted by the taxpayer to the activity, and
year to which you carry it back.
• The money borrowed for the activity.
Refunds. When you carry back a capital loss to an earlier
tax year, refigure your tax for that year. If your corrected Closely held corporation. For the at-risk rules, a corpo-
tax is less than the tax you originally owed, use either ration is a closely held corporation if, at any time during
Form 1139, Corporate Application for Tentative Refund, or the last half of the tax year, more than 50% in value of its
Form 1120X, Amended U.S. Corporation Income Tax Re- outstanding stock is owned directly or indirectly by, or for,
turn, to apply for a refund. five or fewer individuals.
To figure if more than 50% in value of the stock is
Form 1139. A corporation can get a refund faster by owned by five or fewer individuals, apply the following
using Form 1139. It cannot file Form 1139 before filing the rules.
return for the corporation's capital loss year, but it must file
Form 1139 no later than 1 year after the year it sustains 1. Stock owned, directly or indirectly, by or for a corpora-
the capital loss. tion, partnership, estate, or trust is considered owned
proportionately by its shareholders, partners, or bene-
Form 1120X. If the corporation does not file Form ficiaries.
1139, it must file Form 1120X to apply for a refund. The
corporation must file the Form 1120X within 3 years of the 2. An individual is considered to own the stock owned,
due date, including extensions, for filing the return for the directly or indirectly, by or for their family. Family in-
year in which it sustains the capital loss. cludes only brothers and sisters (including half broth-
ers and half sisters), a spouse, ancestors, and lineal
descendants.
Net Operating Losses
3. If a person holds an option to buy stock, they are con-
A corporation generally figures and deducts a net operat- sidered to be the owner of that stock.
ing loss (NOL) the same way an individual, estate, or trust
does. For more information on these general rules, includ- 4. When applying (1) or (2) above, stock considered
ing the sequencing rule for when the corporation carries owned by a person under (1) or (3) above is treated
two of more NOLs to the same year, see Pub. 536, Net as actually owned by that person. Stock considered
Operating Losses (NOLs) for Individuals, Estates, and owned by an individual under (2) is not treated as
Trusts. owned by the individual for again applying (2) to con-
sider another the owner of that stock.
A corporation's NOL generally differs from individual,
estate, and trust NOLs in the following ways. 5. Stock that may be considered owned by an individual
under either (2) or (3) above is considered owned by
1. A corporation can take different deductions when fig- the individual under (3).
uring an NOL.
More information. For more information on the at-risk
limits, see Pub. 925, Passive Activity and At-Risk Rules.

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Passive Activity Limits may exclude the CAMT tax liability when calculating the
required annual tax payment on Form 2220. See the in-
The passive activity rules generally limit your losses from structions for the 2023 Form 2220.
passive activities to your passive activity income. Gener-
ally, you are in a passive activity if you have a trade or Credits
business activity in which you do not materially participate
during the tax year, or you have a rental activity. A corporation's tax liability is reduced by allowable credits.
The passive activity rules apply to personal service cor- The following list includes some of the credits available to
porations and closely held corporations other than S cor- corporations.
porations. • Foreign tax credit (see Form 1118).
Corporations subject to the passive activity limitations • Any qualified electric vehicle passive activity credit
must complete Form 8810. For more information on the from prior years allowed for the current year from Form
passive activity limits, see the Instructions for Form 8810 8834. See Form 8810, Corporate Passive Activity
and Pub. 925. Loss and Credit Limitations, to see if a credit is al-
lowed for the current year for personal service corpo-
rations and closely held corporations.
Figuring Tax • General business credit (see Form 3800 and the In-
structions for Form 3800).
After you figure a corporation's taxable income, you figure
its tax. This section discusses the tax rates, credits, and • Credit for prior year minimum tax, if applicable (see
recapture taxes. Form 8827).
• Bond credits (see Form 8912).
Tax Rates • Refundable credits. See the instructions for the corpo-
ration's income tax return for a list of refundable cred-
Corporations, including qualified personal service corpo- its that may be allowed for the current tax year.
rations, figure their tax by multiplying taxable income by
21% (0.21). If the corporation is a member of a controlled
group, the corporation must also complete Schedule O Recapture Taxes

(Form 1120), Consent Plan and Apportionment Schedule A corporation's tax liability is increased if it recaptures
for a Controlled Group, to report the apportionment of cer- credits it has taken in prior years. The following list in-
tain tax benefits between the members of the group. See cludes some credits a corporation may need to recapture.
Schedule O (Form 1120) and the Instructions for Sched-
ule O (Form 1120) for more information. • Investment credit (see the Instructions for Form 4255).
• Low-income housing credit (see the Instructions for
Base Erosion Minimum Tax Form 8611).
• New markets credit (see the Instructions for Form
If a corporation has gross receipts of at least $500 million
8874).
in any 1 of the 3 tax years preceding the current tax year, a
tax equal to the base erosion minimum tax amount for the • Employer-provided childcare facilities and services
tax year may be imposed. This tax is reported using Form credit (see the Instructions for Form 8882).
8991. See the Instructions for Form 8991 for additional in- • Indian employment credit (see the Instructions for
formation. Form 8845).
See the Instructions for Form 3800 for additional credits
Corporate Alternative Minimum Tax that may be subject to recapture. Also see the instructions
(CAMT) for the corporation's tax return.

For tax years beginning after 2022, section 55 of the Inter-
nal Revenue Code imposes a new corporate alternative
minimum tax (CAMT) based on the adjusted financial Accumulated Earnings Tax
statement income of an applicable corporation. Unless a
A corporation can accumulate its earnings for a possible
filing exclusion applies, a corporation must use Form
expansion or other bona fide business reasons. However,
4626, Alternative Minimum Tax—Corporations, to deter-
if a corporation allows earnings to accumulate beyond the
mine whether it is an applicable corporation, and if classi-
reasonable needs of the business, it may be subject to an
fied as an applicable corporation, to calculate CAMT. See
accumulated earnings tax of 20%. If the accumulated
Form 4626 and the Instructions for Form 4626. Also, see
earnings tax applies, interest applies to the tax from the
the Instructions for Form 1120 or the instructions for the
date the corporate return was originally due, without ex-
applicable corporation's tax return.
tensions.
Note. For tax year 2023 for purposes of figuring any To determine if the corporation is subject to this tax, first
penalty for underpayment of tax, applicable corporations treat an accumulation of $250,000 or less generally as

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within the reasonable needs of most businesses. Treat an Money or Property Distributions
accumulation of $150,000 or less as within the reasonable
needs of a business whose principal function is perform- Most distributions are in money, but they may also be in
ing services in the fields of accounting, actuarial science, stock or other property. For this purpose, “property” gener-
architecture, consulting, engineering, health (including ally does not include stock in the corporation or rights to
veterinary services), law, and the performing arts. acquire this stock. However, see Distributions of Stock or
Stock Rights, later.
In determining if the corporation has accumulated earn-
ings and profits beyond its reasonable needs, value the A corporation generally does not recognize a gain or
listed and readily marketable securities owned by the cor- loss on the distributions covered by the rules in this sec-
poration and purchased with its earnings and profits at net tion. However, see Gain from property distributions, later.
liquidation value, not at cost.
Amount distributed. The amount of a distribution is gen-
Reasonable needs of the business include the follow- erally the amount of any money paid to the shareholder
ing. plus the fair market value (FMV) of any property transfer-
• Specific, definite, and feasible plans for use of the red to the shareholder. However, this amount is reduced
earnings accumulation in the business. (but not below zero) by the following liabilities.
• The amount necessary to redeem the corporation's • Any liability of the corporation the shareholder as-
stock included in a deceased shareholder's gross es- sumes in connection with the distribution.
tate, if the amount does not exceed the reasonably an- • Any liability to which the property is subject immedi-
ticipated total estate and inheritance taxes and funeral ately before, and immediately after, the distribution.
and administration expenses incurred by the share-
holder's estate. The FMV of any property distributed to a shareholder be-
comes the shareholder's basis in that property.
The absence of a bona fide business reason for a cor-
poration's accumulated earnings may be indicated by Gain from property distributions. A corporation will
many different circumstances, such as a lack of regular recognize a gain on the distribution of property to a share-
distributions to its shareholders or withdrawals by the holder if the FMV of the property is more than its adjusted
shareholders classified as personal loans. However, ac- basis. This is generally the same treatment the corpora-
tual moves to expand the business generally qualify as a tion would receive if the property were sold. However, for
bona fide use of the accumulations. this purpose, the FMV of the property is the greater of the
following amounts.
The fact that a corporation has an unreasonable accu-
mulation of earnings is sufficient to establish liability for • The actual FMV.
the accumulated earnings tax unless the corporation can • The amount of any liabilities the shareholder assumed
show the earnings were not accumulated to allow its indi- in connection with the distribution of the property.
vidual shareholders to avoid income tax.
If the property was depreciable or amortizable, the cor-
poration may have to treat all or part of the gain as ordi-
nary income from depreciation recapture. For more infor-
Distributions to Shareholders mation on depreciation recapture and the sale of business
property, see Pub. 544.
This section discusses corporate distributions of money,
stock, or other property to a shareholder with respect to
the shareholder's ownership of stock. However, this sec- Distributions of Stock or Stock Rights

tion does not discuss the special rules that apply to the Distributions by a corporation of its own stock are com-
following distributions. See the applicable sections of the monly known as “stock dividends.” Stock rights (also
Internal Revenue Code. known as “stock options”) are distributions by a corpora-
• Distributions in redemption of stock (section 302). tion of rights to acquire its stock. Distributions of stock div-
idends and stock rights are generally tax free to share-
• Distributions in complete liquidation of the corporation
holders. However, if any of the following apply to their
(sections 331 through 346).
distribution, stock and stock rights are treated as property,
• Distributions in corporate organizations (section 351). as discussed under Money or Property Distributions, ear-
Also, see Property Exchanged for Stock, earlier. lier.
• Distributions in corporate reorganizations (sections 1. Any shareholder has the choice to receive cash or
354 through 368). other property instead of stock or stock rights.
• Certain distributions to 20% corporate shareholders 2. The distribution gives cash or other property to some
(section 301(e)). shareholders and an increase in the percentage inter-
est in the corporation's assets or earnings and profits
to other shareholders.

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3. The distribution is in convertible preferred stock and Unreasonable rents. If a corporation rents property from
has the same result as in (2). a shareholder and the rent is unreasonably more than the
shareholder would charge to a stranger for use of the
4. The distribution gives preferred stock to some com-
same property, the excessive part of the rent may be trea-
mon stock shareholders and gives common stock to
ted as a distribution to the shareholder.
other common stock shareholders.
5. The distribution is on preferred stock. (An increase in Unreasonable salaries. If a corporation pays an em-
the conversion ratio of convertible preferred stock ployee who is also a shareholder a salary that is unrea-
made solely to take into account a stock dividend, sonably high considering the services actually performed
stock split, or similar event that would otherwise result by the shareholder-employee, the excessive part of the
in reducing the conversion right is not a distribution on salary may be treated as a distribution to the share-
preferred stock.) holder-employee.

The term “stock” includes rights to acquire stock and the
term “shareholder” includes a holder of rights or converti- Reporting Dividends and Other
ble securities. Distributions

Constructive stock distributions. You must treat cer- A corporate distribution to a shareholder is generally trea-
tain transactions that increase a shareholder's proportion- ted as a distribution of earnings and profits. Any part of a
ate interest in the earnings and profits or assets of a cor- distribution from either current or accumulated earnings
poration as if they were distributions of stock or stock and profits is reported to the shareholder as a dividend.
rights. These constructive distributions are treated as Any part of a distribution that is not from earnings and
property if they have the same result as a distribution de- profits is applied against and reduces the adjusted basis
scribed in (2), (3), (4), or (5) above. Constructive distribu- of the stock in the hands of the shareholder. To the extent
tions are described later. the balance is more than the adjusted basis of the stock,
This treatment applies to a change in your stock's con- the shareholder has a gain (usually a capital gain) from
version ratio or redemption price, a difference between the sale or exchange of property.
your stock's redemption price and issue price, a redemp- For information on shareholder reporting of corporate
tion that is not treated as a sale or exchange of your stock, distributions, see Pub. 550.
and any other transaction having a similar effect on a
shareholder's interest in the corporation. Form 1099-DIV. File Form 1099-DIV, Dividends and Dis-
tributions, with the IRS for each shareholder to whom the
Expenses of issuing a stock dividend. You cannot de- corporation has paid dividends and other distributions on
duct the expenses of issuing a stock dividend. These ex- stock of $10 or more during a calendar year. A corporation
penses include printing, postage, cost of advice sheets, must generally send Forms 1099-DIV to the IRS with Form
fees paid to transfer agents, and fees for listing on stock 1096, Annual Summary and Transmittal of U.S. Informa-
exchanges. The corporation must capitalize these costs. tion Returns, by February 28 (March 31 if filing electroni-
cally) of the year following the year of the distribution. For
Constructive Distributions more information, see the General Instructions for Certain
Information Returns (Forms 1096, 1097, 1098, 1099,
The following sections discuss transactions that may be 3921, 3922, 5498, and W-2G).
treated as distributions. Generally, the corporation must furnish Forms
1099-DIV to shareholders by January 31 of the year fol-
Below-market loans. If a corporation gives a share- lowing the close of the calendar year during which it made
holder a loan on which no interest is charged or on which the distributions. However, the corporation may furnish the
interest is charged at a rate below the applicable federal Form 1099-DIV to shareholders after November 30 of the
rate, the interest not charged may be treated as a distribu- year of the distributions if it has made its final distributions
tion to the shareholder. For more information, see Be- for the year. The corporation may furnish the Form
low-Market Loans, earlier. 1099-DIV to shareholders anytime after April 30 of the
year of the distributions if it gives the Form 1099-DIV with
Corporation cancels shareholder's debt. If a corpora-
the final distributions for the calendar year.
tion cancels a shareholder's debt without repayment by
If any regular due date falls on a Saturday, Sunday, or
the shareholder, the amount canceled is treated as a dis-
legal holiday, file by the next business day. A business day
tribution to the shareholder.
is any day that is not a Saturday, Sunday, or legal holiday.
Transfers of property to shareholders for less than Backup withholding. Dividends may be subject to
FMV. A sale or exchange of property by a corporation to a backup withholding. For more information on backup with-
shareholder may be treated as a distribution to the share- holding, see the General Instructions for Certain Informa-
holder. For a shareholder who is not a corporation, if the tion Returns.
FMV of the property on the date of the sale or exchange
exceeds the price paid by the shareholder, the excess is Form 5452. File Form 5452, Corporate Report of Nondi-
treated as a distribution to the shareholder. vidend Distributions, if nondividend distributions were
made to shareholders.

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A calendar tax year corporation must file Form 5452 year earnings and profits figured in (2) as a distribu-
with its income tax return for the tax year in which the non- tion of accumulated earnings and profits.
dividend distributions were made. A fiscal tax year corpo-
4. If accumulated earnings and profits are reduced to
ration must file Form 5452 with its income tax return due
zero, the remaining part of each distribution is applied
for the first fiscal year ending after the calendar year in
against and reduces the adjusted basis of the stock in
which the nondividend distributions were made.
the hands of the shareholders. To the extent that the
Current year earnings and profits. If a corporation's balance is more than the adjusted basis of the stock,
earnings and profits for the year (figured as of the close of it is treated as a gain from the sale or exchange of
the year without reduction for any distributions made dur- property.
ing the year) are more than the total amount of distribu-
Example. You are the only shareholder of a corpora-
tions made during the year, all distributions made during
tion that uses the calendar year as its tax year. In January,
the year are treated as distributions of current year earn-
you use the worksheet in the Form 5452 instructions to fig-
ings and profits. If the total amount of distributions is more
ure your corporation's current year earnings and profits for
than the earnings and profits for the year, see Accumula-
the previous year. At the beginning of the year, the corpo-
ted earnings and profits, later.
ration's accumulated earnings and profits balance was
Example. You are the only shareholder of a corpora- $20,000. During the year, the corporation made four
tion that uses the calendar year as its tax year. In January, $4,000 distributions to you ($4,000 × 4 = $16,000). At the
you use the worksheet in the Form 5452 instructions to fig- end of the year (before subtracting distributions made dur-
ure your corporation's current year earnings and profits for ing the year), the corporation had $10,000 of current year
the previous year. During the year, the corporation made earnings and profits.
four $1,000 distributions to you. At the end of the year (be- Since the corporation's current year earnings and prof-
fore subtracting distributions made during the year), the its ($10,000) were less than the distributions it made dur-
corporation had $10,000 of current year earnings and ing the year ($16,000), part of each distribution is treated
profits. as a distribution of accumulated earnings and profits.
Since the corporation's current year earnings and prof- Treat the distributions as follows.
its ($10,000) were more than the amount of the distribu- 1. Divide the current year earnings and profits ($10,000)
tions it made during the year ($4,000), all of the distribu- by the total amount of distributions made during the
tions are treated as distributions of current year earnings year ($16,000). The result is 0.625.
and profits.
The corporation must issue a Form 1099-DIV to you to 2. Multiply each $4,000 distribution by the 0.625 figured
report the $4,000 distributed to you during the previous in (1) to get the amount ($2,500) of each distribution
year as dividends. The corporation must use Form 1096 to treated as a distribution of current year earnings and
report this information to the IRS. The corporation does profits.
not deduct these dividends on its income tax return. 3. The remaining $1,500 of each distribution is treated
as a distribution from accumulated earnings and prof-
Accumulated earnings and profits. If a corporation's
its. The corporation distributed $6,000 ($1,500 × 4) of
current year earnings and profits (figured as of the close of
accumulated earnings and profits.
the year without reduction for any distributions made dur-
ing the year) are less than the total distributions made dur- The remaining $14,000 ($20,000 − $6,000) of accumula-
ing the year, part or all of each distribution is treated as a ted earnings and profits is available for use in the following
distribution of accumulated earnings and profits. Accumu- year.
lated earnings and profits are earnings and profits the cor- The corporation must issue a Form 1099-DIV to you to
poration accumulated before the current year. report the $16,000 distributed to you during the previous
If the total amount of distributions is less than current year as dividends. The corporation must use Form 1096 to
year earnings and profits, see Current year earnings and report this information to the IRS. The corporation does
profits above. not deduct these dividends on its income tax return.
Used with current year earnings and profits. If the Used without current year earnings and profits. If
corporation has current year earnings and profits, figure the corporation has no current year earnings and profits,
the use of accumulated and current earnings and profits figure the use of accumulated earnings and profits as fol-
as follows. lows.
1. Divide the current year earnings and profits by the to- 1. If the current year earnings and profits balance is neg-
tal distributions made during the year. ative, prorate the negative balance to the date of each
distribution made during the year.
2. Multiply each distribution by the percentage figured in
(1) to get the amount treated as a distribution of cur- 2. Figure the available accumulated earnings and profits
rent year earnings and profits. balance on the date of each distribution by subtract-
ing the prorated amount of current year earnings and
3. Start with the first distribution and treat the part of
profits from the accumulated balance.
each distribution greater than the allocated current

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3. Treat each distribution as a distribution of these adjus- The corporation must issue a Form 1099-DIV to you to
ted accumulated earnings and profits. report $12,000 of the $16,000 distributed to you during the
previous year as dividends. The corporation must use
4. If adjusted accumulated earnings and profits are re-
Form 1096 to report this information to the IRS. The cor-
duced to zero, the remaining distributions are applied
poration does not deduct these dividends on its income
against and reduce the adjusted basis of the stock in
tax return. However, the corporation must attach Form
the hands of the shareholders. To the extent that the
5452 to this return to report the nondividend distribution.
balance is more than the adjusted basis of the stock,
it is treated as a gain from the sale or exchange of For more information about figuring earnings and
property. TIP profits, see the Worksheet for Figuring Current
Year Earnings and Profits in the Form 5452 in-
Example. You are the only shareholder of a corpora- structions.
tion that uses the calendar year as its tax year. In January,
you use the worksheet in the Form 5452 instructions to fig-
ure your corporation's current year earnings and profits for
the previous year. At the beginning of the year, the corpo- How To Get Tax Help
ration's accumulated earnings and profits balance was
$20,000. During the year, the corporation made four If you have questions about a tax issue; need help prepar-
$4,000 distributions to you on March 31, June 30, Sep- ing your tax return; or want to download free publications,
tember 30, and December 31. At the end of the year (be- forms, or instructions, go to IRS.gov to find resources that
fore subtracting distributions made during the year), the can help you right away.
corporation had a negative $10,000 current year earnings
and profits balance. Using online tools to help prepare your return. Go to
Since the corporation had no current year earnings and IRS.gov/Tools for the following.
profits, all of the distributions are treated as distributions of • The Online EIN Application IRS.gov/EIN ( ) helps you
accumulated earnings and profits. Treat the distributions get an employer identification number (EIN) at no
as follows. cost.
1. Prorate the negative current year earnings and profits • The Tax Calendar TAX.gov/calendar ( ) helps you track
balance to the date of each distribution made during important business tax dates and deadlines right from
the year. The negative $10,000 can be spread evenly your desktop.
by prorating a negative $2,500 to each distribution.
• The FATCA FFI List Search and Download Tool
2. The following table shows how to figure the available (IRS.gov/fatca-ffilist) makes it easier to find out if a
accumulated earnings and profits balance on the date Foreign Financial Institution has registered with
of each distribution. FATCA.
• The Electronic Federal Tax Payment System IRS.gov/ (
March 31 Distribution EFTPS) is a free tax payment system that allows you
Accumulated earnings and profits. . . . . . . . . . . . . . $20,000 to pay your federal taxes online or by phone with
Prorated current year earnings and profits. . . . . . . . . ($2,500) EFTPS.
Accumulated earnings and profits available. . . . . . . . $17,500
Amount of distribution treated as a dividend. . . . . . . ($4,000) Getting answers to your tax questions. On
IRS.gov, you can get up-to-date information on
June 30 Distribution current events and changes in tax law.
Accumulated earnings and profits. . . . . . . . . . . . . . $13,500 • IRS.gov/Help: A variety of tools to help you get an-
Prorated current year earnings and profits. . . . . . . . . ($2,500) swers to some of the most common tax questions.
Accumulated earnings and profits available. . . . . . . . $11,000
Amount of distribution treated as a dividend. . . . . . . ($4,000) • IRS.gov/ITA: The Interactive Tax Assistant, a tool that
will ask you questions and, based on your input, pro-
September 30 Distribution vide answers on a number of tax law topics.
Accumulated earnings and profits. . . . . . . . . . . . . . $7,000 • IRS.gov/Forms: Find forms, instructions, and publica-
Prorated current year earnings and profits. . . . . . . . . ($2,500) tions. You will find details on the most recent tax
Accumulated earnings and profits available. . . . . . . . $4,500
Amount of distribution treated as a dividend. . . . . . . ($4,000) changes and hundreds of interactive links to help you
find answers to your questions.
December 31 Distribution • You may also be able to access tax information in your
Accumulated earnings and profits. . . . . . . . . . . . . . $500 e-filing software.
Prorated current year earnings and profits. . . . . . . . . ($2,500)
Accumulated earnings and profits available. . . . . . . . ($2,000)
Amount of distribution treated as a dividend. . . . . . . $0 Need someone to prepare your tax return? There are
Nondividend amount (reduction of stock basis or gain various types of tax return preparers, including tax prepar-
from sale/exchange of property). . . . . . . . . . . . . . . $4,000 ers, enrolled agents, certified public accountants (CPAs),
Year-end accumulated earnings and profits. . . . . . . . ($2,000) attorneys, and many others who don’t have professional
credentials. If you choose to have someone prepare your

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tax return, choose that preparer wisely. A paid tax pre- future accessibility products and services available in al-
parer is: ternative media formats (for example, braille, large print,
audio, etc.). The Accessibility Helpline does not have ac-
• Primarily responsible for the overall substantive accu-
cess to your IRS account. For help with tax law, refunds, or
racy of your return,
account-related issues, go to IRS.gov/LetUsHelp.
• Required to sign the return, and
Note. Form 9000, Alternative Media Preference, or
• Required to include their preparer tax identification
Form 9000(SP) allows you to elect to receive certain types
number (PTIN).
of written correspondence in the following formats.
Although the tax preparer always signs the return,
• Standard Print.
! you're ultimately responsible for providing all the
CAUTION information required for the preparer to accurately • Large Print.
prepare your return. Anyone paid to prepare tax returns for • Braille.
others should have a thorough understanding of tax mat-
ters. For more information on how to choose a tax pre- • Audio (MP3).
parer, go to Tips for Choosing a Tax Preparer on IRS.gov. • Plain Text File (TXT).
• Braille Ready File (BRF).
Employers can register to use Business Services On-
line. The Social Security Administration (SSA) offers on- Disasters. Go to IRS.gov/DisasterRelief to review the
line service at SSA.gov/employer for fast, free, and secure available disaster tax relief.
online W-2 filing options to CPAs, accountants, enrolled
agents, and individuals who process Form W-2, Wage Getting tax forms and publications. Go to IRS.gov/
and Tax Statement, and Form W-2c, Corrected Wage and Forms to view, download, or print all of the forms, instruc-
Tax Statement. tions, and publications you may need. Or, you can go to
IRS.gov/OrderForms to place an order.
IRS social media. Go to IRS.gov/SocialMedia to see the
various social media tools the IRS uses to share the latest Getting tax publications and instructions in eBook
information on tax changes, scam alerts, initiatives, prod- format. You can also download and view popular tax
ucts, and services. At the IRS, privacy and security are our publications and instructions on mobile devices as
highest priority. We use these tools to share public infor- eBooks at IRS.gov/eBooks.
mation with you. Don’t post your taxpayer identification IRS eBooks have been tested using Apple's iBooks for
number (TIN) or other confidential information on social iPad. Our eBooks haven’t been tested on other dedicated
media sites. Always protect your identity when using any eBook readers, and eBook functionality may not operate
social networking site. as intended.
The following IRS YouTube channels provide short, in-
formative videos on various tax-related topics in English, Reporting and resolving your tax-related identity
Spanish, and ASL. theft issues.
• Youtube.com/irsvideos. • Tax-related identity theft happens when someone
steals your personal information to commit tax fraud.
• Youtube.com/irsvideosmultilingua. Your taxes can be affected if your TIN is used to file a
• Youtube.com/irsvideosASL. fraudulent return or to claim a refund or credit.
Watching IRS videos. The IRS Video portal • The IRS doesn’t initiate contact with taxpayers by
email, text messages, telephone calls, or social media
(IRSVideos.gov) contains video and audio presentations
channels to request personal or financial information.
for individuals, small businesses, and tax professionals.
This includes requests for personal identification num-
Online tax information in other languages. You can bers (PINs), passwords, or similar information for
find information on IRS.gov/MyLanguage if English isn’t credit cards, banks, or other financial accounts.
your native language. • Go to IRS.gov/IdentityTheft, the IRS Identity Theft
Central webpage, for information on identity theft and
Free Over-the-Phone Interpreter (OPI) Service. The
data security protection for taxpayers, tax professio-
IRS is committed to serving taxpayers with limited-English
nals, and businesses. If your TIN has been lost or sto-
proficiency (LEP) by offering OPI services. The OPI Serv-
len or you suspect you’re a victim of tax-related iden-
ice is a federally funded program and is available at Tax-
tity theft, you can learn what steps you should take.
payer Assistance Centers (TACs), most IRS offices, and
every VITA/TCE return site. OPI Service is accessible in Making a tax payment. Payments of U.S. tax must be
more than 350 languages. remitted to the IRS in U.S. dollars. Digital assets are not
Accessibility Helpline available for taxpayers with
disabilities. Taxpayers who need information about ac-
cessibility services can call 833-690-0598. The Accessi-
bility Helpline can answer questions related to current and

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accepted. Go to IRS.gov/Payments for information on how The Taxpayer Advocate Service (TAS)
to make a payment using any of the following options.
Is Here To Help You
• IRS Direct Pay: Pay your tax bill or estimated tax pay-
ment directly from your checking or savings account at What Is TAS?
no cost to you.
TAS is an independent organization within the IRS that
• Debit or Credit Card, or Digital Wallet: Choose an ap- helps taxpayers and protects taxpayer rights. Their job is
proved payment processor to pay online or by phone. to ensure that every taxpayer is treated fairly and that you
• Electronic Funds Withdrawal: Schedule a payment know and understand your rights under the Taxpayer Bill
when filing your federal taxes using tax return prepara- of Rights.
tion software or through a tax professional.
How Can You Learn About Your Taxpayer
• Electronic Federal Tax Payment System: Best option
Rights?
for businesses. Enrollment is required.
• Check or Money Order: Mail your payment to the ad- The Taxpayer Bill of Rights describes 10 basic rights that
dress listed on the notice or instructions. all taxpayers have when dealing with the IRS. Go to
TaxpayerAdvocate.IRS.gov to help you understand what
• Cash: You may be able to pay your taxes with cash at
these rights mean to you and how they apply. These are
a participating retail store.
your rights. Know them. Use them.
• Same-Day Wire: You may be able to do same-day
wire from your financial institution. Contact your finan- What Can TAS Do for You?
cial institution for availability, cost, and time frames.
TAS can help you resolve problems that you can’t resolve
Note. The IRS uses the latest encryption technology to with the IRS. And their service is free. If you qualify for
ensure that the electronic payments you make online, by their assistance, you will be assigned to one advocate
phone, or from a mobile device using the IRS2Go app are who will work with you throughout the process and will do
safe and secure. Paying electronically is quick, easy, and everything possible to resolve your issue. TAS can help
faster than mailing in a check or money order. you if:
What if I can’t pay now? Go to IRS.gov/Payments for • Your problem is causing financial difficulty for you,
more information about your options. your family, or your business;
• Apply for an online payment agreement IRS.gov/ ( • You face (or your business is facing) an immediate
OPA) to meet your tax obligation in monthly install- threat of adverse action; or
ments if you can’t pay your taxes in full today. Once • You’ve tried repeatedly to contact the IRS but no one
you complete the online process, you will receive im- has responded, or the IRS hasn’t responded by the
mediate notification of whether your agreement has date promised.
been approved.
• Use the Offer in Compromise Pre-Qualifier to see if How Can You Reach TAS?
you can settle your tax debt for less than the full
amount you owe. For more information on the Offer in TAS has offices in every state, the District of Columbia,
Compromise program, go to IRS.gov/OIC. and Puerto Rico. To find your advocate's number:
• Go to TaxpayerAdvocate.IRS.gov/Contact-Us;
Understanding an IRS notice or letter you’ve re-
ceived. Go to IRS.gov/Notices to find additional informa- • Download Pub. 1546, The Taxpayer Advocate Service
tion about responding to an IRS notice or letter. Is Your Voice at the IRS, available at IRS.gov/pub/irs-
pdf/p1546.pdf;
Contacting your local IRS office. Keep in mind, many
questions can be answered on IRS.gov without visiting an • Call the IRS toll free at 800-TAX-FORM
(800-829-3676) to order a copy of Pub. 1546;
IRS TAC. Go to IRS.gov/LetUsHelp for the topics people
ask about most. If you still need help, IRS TACs provide • Check your local directory; or
tax help when a tax issue can’t be handled online or by Call TAS toll free at 877-777-4778.
•
phone. All TACs now provide service by appointment, so
you’ll know in advance that you can get the service you
need without long wait times. Before you visit, go to How Else Does TAS Help Taxpayers?

IRS.gov/TACLocator to find the nearest TAC and to check TAS works to resolve large-scale problems that affect
hours, available services, and appointment options. Or, on many taxpayers. If you know of one of these broad issues,
the IRS2Go app, under the Stay Connected tab, choose report it to them at IRS.gov/SAMS.
the Contact Us option and click on “Local Offices.”

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Low Income Taxpayer Clinics (LITCs)                            a small fee for eligible taxpayers. To find an LITC near you, 
                                                               go  to TaxpayerAdvocate.IRS.gov/about-us/Low-Income-
LITCs are independent from the IRS. LITCs represent indi-      Taxpayer-Clinics-LITC or see IRS Pub. 4134, Low Income 
viduals whose income is below a certain level and need to      Taxpayer Clinic List.
resolve  tax  problems  with  the  IRS,  such  as  audits,  ap-
peals, and tax collection disputes. In addition, LITCs can 
provide information about taxpayer rights and responsibili-
ties in different languages for individuals who speak Eng-
lish as a second language. Services are offered for free or 

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Other Useful Forms for Corporations

Other Useful Forms
Form Use this form to—
W-2 and W-3—Wage and Tax Statement; and Report wages, tips, and other compensation, and withheld income, social
Transmittal of Wage and Tax Statements security, and Medicare taxes for employees.
W-2G—Certain Gambling Winnings Report gambling winnings from horse racing, dog racing, jai alai, lotteries,
keno, bingo, slot machines, sweepstakes, wagering pools, etc.
926—Return by a U.S. Transferor of Property to a Report certain transfers to foreign corporations under section 6038B.
Foreign Corporation
940—Employer's Annual Federal Unemployment Report and pay FUTA tax if the corporation either:
(FUTA) Tax Return
1. Paid wages of $1,500 or more in any calendar quarter during the
calendar year (or the preceding calendar year), or
2. Had one or more employees working for the corporation for at least
some part of a day in any 20 different weeks during the calendar year (or
the preceding calendar year).
941—Employer's QUARTERLY Federal Tax Return Report quarterly income tax withheld on wages and employer and employee
social security and Medicare taxes.
943—Employer's Annual Federal Tax Return for Report income tax withheld and employer and employee social security and
Agricultural Employees Medicare tax on farmworkers.
944—Employer's ANNUAL Federal Tax Return File annual Form 944 instead of filing quarterly Forms 941, if the IRS notified
you in writing.
945—Annual Return of Withheld Federal Income Tax Report income tax withheld from nonpayroll payments, including pensions,
annuities, individual retirement arrangements (IRAs), gambling winnings, and
backup withholding.
952—Consent To Extend the Time To Assess Tax Extend the period of assessment of all income taxes of the receiving
Under Section 332(b) corporation on the complete liquidation of a subsidiary under section 332.
965-B—Corporate and Real Estate Investment Trust This form must be completed by a taxpayer for every tax year for which the
(REIT) Report of Net 965 Tax Liability and Electing taxpayer has any net 965 tax liability outstanding and not fully paid at any
REIT Report of 965 Amounts point during the tax year. See the Instructions for Form 965-B.
966—Corporate Dissolution or Liquidation Report the adoption of a resolution or plan to dissolve the corporation or
liquidate any of its stock.
1042 and 1042-S—Annual Withholding Tax Return Report withheld tax on payments or distributions made to nonresident alien
for U.S. Source Income of Foreign Persons; and individuals, foreign partnerships, or foreign corporations to the extent these
Foreign Person's U.S. Source Income Subject to payments or distributions constitute gross income from sources within the
Withholding United States that is not effectively connected with a U.S. trade or business.
In addition, a publicly traded partnership is required to withhold on
distributions of effectively connected income to its foreign partners. See Pub.
515, Withholding of Tax on Nonresident Aliens and Foreign Entities.
1042-T—Annual Summary and Transmittal of Forms Transmit paper Forms 1042-S to the IRS.
1042-S
1096—Annual Summary and Transmittal of U.S. Transmit paper Forms 1098, 1099, 5498, and W-2G to the IRS.
Information Returns

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Other Useful Forms
Form                                                 Use this form to—
1097-BTC, 1098, 1098-C, 1098-E, 1098-F, 1098-T,      Report the following: 
1099-A, B, C, CAP, G, H, DIV, INT, K, LTC, MISC,     • Tax credits to bond holders;
NEC, OID, PATR, Q, R, S, SA, 3921, and 3922.         • Mortgage interest;
                                                     • Contributions of certain motor vehicles, boats, and airplanes;
                                                     • Student loan interest;
Important: Every corporation must file Forms         • Fines, penalties, and other amounts;
1099-MISC (or 1099-NEC for nonemployee               • Certain tuition payments;
compensation) if, in the course of its trade or      • Acquisitions or abandonments of secured property;
business, it makes payments of rents, services,      • Proceeds from broker and barter exchange transactions;
commissions, or other fixed or determinable income   • Cancellation of debts;
(see section 6041) totaling $600 or more to any one  • Changes in corporate control and capital structure;
person during the calendar year.                     • Certain government payments;
                                                     • Advance payments of health coverage insurance premiums;
Also use these returns to report amounts received    • Dividends and distributions;
as a nominee for another person. For more details,   • Interest payments;
see the General Instructions for Certain Information • Merchant card and third-party network payments;
Returns (1097, 1098, 1099, 3921, 3922, 5498, and     • Payments of long-term care and accelerated death benefits;
W-2G).                                               • Miscellaneous income payments to certain fishing boat crew members, 
                                                       to providers of health and medical services, of rent or royalties, of 
                                                       nonemployee compensation, etc.;
                                                     • Original issue discount;
                                                     • Distributions received from cooperatives;
                                                     • Distributions from certain qualified education programs;
                                                     • Distributions from pensions, annuities, retirement or profit-sharing plans, 
                                                       IRAs, insurance contracts, etc.;
                                                     • Proceeds from real estate transactions;
                                                     • Distributions from an HSA, Archer MSA, or Medicare Advantage MSA;
                                                     • Exercise of incentive stock options; and
                                                     • Transfer of stock acquired through employee stock purchase plans.
1122—Authorization and Consent of Subsidiary         Include a subsidiary in a consolidated return. Attach this form to the parent's 
Corporation To Be Included in a Consolidated         consolidated return. Attach a separate Form 1122 for each subsidiary being 
Income Tax Return                                    included in the consolidated return.
1138—Extension of Time for Payment of Taxes by a  Request an extension of time for payment of tax for the immediately 
Corporation Expecting a Net Loss Carryback           preceding tax year if the corporation expects a net operating loss for the 
                                                     current year.
3520—Annual Return To Report Transactions With       Report ownership of and certain transactions with foreign trusts, including 
Foreign Trusts and Receipt of Certain Foreign Gifts  receipt of certain large gifts. See Schedule N (Form 1120), Question 5.
3520-A—Annual Information Return of Foreign Trust  Report information about the foreign trust, its U.S. beneficiaries, and any U.S. 
With a U.S. Owner                                    person who is treated as an owner of any portion of the foreign trust.
5471—Information Return of U.S. Persons With         Satisfy the reporting requirements of sections 6038 and 6046, and the related 
Respect to Certain Foreign Corporations              regulations, as well as report amounts related to section 965. Form 5471 and 
                                                     the related schedules are used by certain U.S. persons who are officers, 
                                                     directors, or shareholders in certain foreign corporations. See the Instructions 
                                                     for Form 5471.
5498—IRA Contribution Information                    Report contributions (including rollover contributions) to any IRA, including a 
                                                     SEP, SIMPLE, or Roth IRA, and to report Roth IRA conversions, IRA 
                                                     recharacterizations, and the fair market value (FMV) of the account.
5498-ESA—Coverdell ESA Contribution Information Report contributions (including rollover contributions) to a Coverdell 
                                                     education savings account (ESA).
5498-SA—HSA, Archer MSA, or Medicare                 Report contributions and rollovers to an HSA or Archer MSA and the FMV of 
Advantage MSA Information                            an HSA, Archer MSA, or Medicare Advantage MSA. For more information, 
                                                     see the general and specific instructions for Forms 1098, 1099, 5498, and 
                                                     W-2G. 
5713—International Boycott Report                    Report operations in, or related to, a “boycotting” country, government, 
                                                     company, or national of a country and to figure the loss of certain tax benefits.

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Other Useful Forms
Form Use this form to—
8023—Elections Under Section 338 for Make elections under section 338 for a “target” corporation if the purchasing
Corporations Making Qualified Stock Purchases corporation has made a qualified stock purchase of the target corporation.
8027—Employer's Annual Information Return of Tip Report receipts from large food or beverage operations, tips reported by
Income and Allocated Tips employees, and allocated tips.
8275—Disclosure Statement Disclose items or positions, except those contrary to a regulation, that are not
otherwise adequately disclosed on a tax return. The disclosure is made to
avoid the parts of the accuracy-related penalty imposed for disregard of rules
or substantial understatement of tax. Also use Form 8275 for disclosures
relating to preparer penalties for understatements due to unrealistic positions
or disregard of rules.
8275-R—Regulation Disclosure Statement Disclose any item on a tax return for which a position has been taken that is
contrary to Treasury regulations.
8281—Information Return for Publicly Offered Report the issuance of public offerings of debt instruments (obligations).
Original Issue Discount Instruments
8300—Report of Cash Payments Over $10,000 Report the receipt, in the course of a trade or business, of more than $10,000
Received in a Trade or Business in cash or foreign currency in one transaction or a series of related
transactions.
8594—Asset Acquisition Statement Under Section Report a sale of assets that make up a trade or business if goodwill or going
1060 concern value attaches, or could attach, to such assets and if the buyer's
basis is determined only by the amount paid for the assets. Both the seller
and buyer must use this form.
8806—Information Return for Acquisition of Control Report an acquisition of control or a substantial change in the capital
or Substantial Change in Capital Structure structure of a domestic corporation.
8842—Election To Use Different Annualization Elect one of the annualization periods in section 6655(e)(2) for figuring
Periods for Corporate Estimated Tax estimated tax payments under the annualized income installment method.
8849—Claim for Refund of Excise Taxes Claim a refund of certain excise taxes.
8858—Information Return of U.S. Persons With Satisfy reporting requirements that apply if the corporation directly or
Respect to Foreign Disregarded Entities (FDEs) and indirectly owns a foreign disregarded entity or a foreign branch. A separate
Foreign Branches (FBs) Form 8858 is required for each foreign branch or foreign disregarded entity.
See the Instructions for Form 8858.

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Other Useful Forms
Form Use this form to—
8865—Return of U.S. Person With Respect to Report an interest in a foreign partnership. A domestic corporation may have
Certain Foreign Partnerships to file Form 8865 if it:
1. Controlled a foreign partnership (owned more than a 50% direct or
indirect interest in the partnership).
2. Owned at least a 10% direct or indirect interest in a foreign partnership
while U.S. persons controlled that partnership.
3. Had an acquisition, disposition, or change in proportional interest of a
foreign partnership that:
a. Increased its direct interest to at least 10% or reduced its direct
interest of at least 10% to less than 10%, or
b. Changed its direct interest by at least a 10% interest.
4. Contributed property to a foreign partnership in exchange for a
partnership interest if:
a. Immediately after the contribution, the corporation directly or
indirectly owned at least a 10% interest in the foreign partnership, or
b. The FMV of the property the corporation contributed to the foreign
partnership in exchange for a partnership interest exceeds $100,000
when added to other contributions of property made to the foreign
partnership during the preceding 12-month period.
The domestic corporation may also have to file Form 8865 to report certain
dispositions by a foreign partnership of property it previously contributed to
that partnership if it was a partner at the time of the disposition. For more
details, including penalties for failing to file Form 8865, see the Instructions
for Form 8865.
8873—Extraterritorial Income Exclusion Figure the amount of extraterritorial income excluded from gross income for
the tax year (generally repealed for post-2004 income). See the Instructions
for Form 8873.
8876—Excise Tax on Structured Settlement Report and pay the 40% excise tax imposed under section 5891.
Factoring Transactions
8883—Asset Allocation Statement Under Section Report information about transactions involving the deemed sale of corporate
338 assets under section 338.
8886—Reportable Transaction Disclosure Statement Disclose information for each reportable transaction in which the corporation
participated. Attach Form 8886 to the corporation's income tax return for each
tax year in which it participated in a reportable transaction. The corporation
may have to pay a penalty if it is required to file Form 8886 and does not do
so. Other penalties may also apply. For more details, see the Instructions for
Form 8886.
8918—Material Advisor Disclosure Statement Disclose certain information about a reportable transaction to the IRS.
Material advisors who file Form 8918 will receive a reportable transaction
number from the IRS. This number must be provided to all taxpayers and
material advisors for whom the material advisor acts as a material advisor.
Other reporting requirements apply. See the Instructions for Form 8918.
8990—Limitation on Business Interest Expense Figure the amount of business interest expense the corporation can deduct
Under Section 163(j) and the amount to carry forward to the next year. See the Instructions for
Form 8990.
8991—Tax on Base Erosion Payments of Taxpayers Determine an applicable taxpayer's base erosion minimum tax amount for the
With Substantial Gross Receipts year. See the Instructions for Form 8991.
8992—U.S. Shareholder Calculation of Global Figure a U.S. shareholder's GILTI inclusion for years in which they are U.S.
Intangible Low-Taxed Income (GILTI) shareholders of controlled foreign corporations (CFCs). See the Instructions
for Form 8992.
8993—Section 250 Deduction for Foreign-Derived Figure the amount of the eligible deduction for FDII and GILTI under section
Intangible Income (FDII) and Global Intangible 250.
Low-Taxed Income (GILTI)

26 Publication 542 (1-2024)

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                    To help us develop a more useful index, please let us know if you have ideas for index entries.
Index               See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.
 
                                     Electronic filing 5
A                                    Estimated tax 6                  P
Accounting methods      8            Extraordinary dividends 11       Paid-in capital 4
  Accrual method    8                                                 Passive activity limits          15
  Change in accounting method:       F                                Paying estimated tax    7
  Section 481(a) adjustment  8       Figuring:                        Penalties:
  Mark-to-market accounting            Tax 15                          Estimated tax  7
  method    8                        Foreign tax credit 15             Late filing of return 5
  Percentage of completion method  8 Form  6                           Late payment of tax   6
Accounting periods    8                1096  17                        Other 6
Accumulated earnings tax  15           1099-DIV  17                    Trust fund recovery   6
Assistance (See Tax help)              1118  15                       Personal service corporation                         3
At-risk limits 14                      1120  5                        Preference items 10
                                       1120X 14                       Publications (See Tax help)
B                                      1139  14
Backup withholding    17               2220  7                        R
Base erosion minimum tax     15        3800  15                       Recapture taxes:
Below-market loans    11               4255  15                        Childcare facilities and services 
                                       4626  15                        credit   15
C                                      5452  17                        Indian employment credit                          15
Capital contributions   4              7004  5                         Investment credit 15
Capital losses   13                    8611  15                        Low-income housing credit                         15
Charitable contributions  12           8827  15                        New markets credit    15
Closely held corporation  3            8832  3                         Qualified electric vehicle credit                    15
  At-risk limits 14                    8834  15                       Recordkeeping   9
Corporate Alternative Minimum          8845  15                       Related persons  9
  Tax 15                               8874  15                       Retained earnings  15
Corporate preference items   10        8882  15
Corporations, businesses taxed         8912  15                       S
  as 2                                                                Small business taxpayer            8
Credits:                             G                                Start-up costs  9
  Foreign tax  15                    Going into business 9
  General business credit 15                                          T
  Prior year minimum tax  15         I                                Tax help 19
                                     Income tax returns 5             Tax rates 15
D
                                                                      Tax, figuring 15
Distributions:                       L
  Money or property   16             Loans, below-market   11
  Other  17
  Reporting 17                       N
  Stock or stock rights 16
                                     Net operating losses  14
  To shareholders   16
                                     Nontaxable exchange of property 
Dividends-received deduction    10     for stock 3

E                                    O
EFTPS, Electronic Federal Tax        Other useful forms 23
  Payment System      5

Publication 542 (1-2024)                                                                                                    27

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