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Formulario 8697 Instrucciones

Instrucciones para el formulario 8697, Computación de Interes bajo el método Look-Back para contratos completos a largo plazo

Rev. noviembre 2018

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  • Formulario 8697 - Computación de intereses bajo el método Look-Back para contratos completos a largo plazo
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Department of the Treasury  
Internal Revenue Service  
Instructions for Form 8697  
(Rev. November 2018)  
Interest Computation Under the Look-Back Method for Completed Long-Term  
Contracts  
Section references are to the Internal Revenue  
Code unless otherwise noted.  
subsequent to the year of completion, in computing look-back interest depends  
which the contract price or contract  
costs are adjusted for one or more of  
these long-term contracts from a prior  
year.  
on whether the ownership change is  
due to a constructive completion  
transaction or a step-in-the shoes  
transaction. For guidance regarding  
these transactions, see Regulations  
section 1.460-4(g). In the case of  
constructive completion transactions,  
the old taxpayer treats the contract as  
completed in the transaction year and  
applies the look-back method to the  
pre-transaction years. The new  
General Instructions  
Future Developments  
Pass-Through Entities  
For the latest information about  
developments related to Form 8697 and  
its instructions, such as legislation  
enacted after they were published, go to  
A pass-through entity (partnership, S  
corporation, or trust) that is not closely  
held must apply the look-back method  
at the entity level to any contract for  
which at least 95% of the gross income  
is from U.S. sources. A pass-through  
entity is considered closely held if, at  
any time during any tax year for which  
there is income under the contract, 50%  
or more (by value) of the beneficial  
interests in the entity is held (directly or  
indirectly) by or for five or fewer  
taxpayer is treated as entering into a  
new contract and applies the look-back  
method to the post-transaction years  
upon the contract's completion. In the  
case of step-in-the-shoes transactions,  
the new taxpayer applies the look-back  
method to both the pre- and post-  
transaction years. See Regulations  
section 1.460-6(g) for additional  
guidance.  
What's New  
The tax rate used for the interest  
computation for individuals,  
corporations, and certain pass-through  
entities has changed. See the  
instructions for Part II, line 2, later.  
The 2-year carryback rule will  
persons. For this purpose, rules similar  
to the constructive ownership rules of  
section 1563(e) apply. For a  
generally not apply to net operating  
losses (NOLs) arising in tax years  
ending after 2017. Exceptions apply to  
NOLs for farmers and non-life insurance  
companies. See section 172(b) as  
amended by P.L. 115-97, section  
13302.  
mid-contract change in taxpayer  
Exception for Certain  
resulting in the conversion of a C  
Construction Contracts  
corporation into an S corporation, the  
look-back method is applied at the entity  
level with respect to contracts entered  
into prior to the conversion regardless of  
whether the S corporation is considered  
closely held. See the section discussing  
The look-back method does not apply to  
the regular taxable income from:  
For tax years beginning after 2017,  
Any home construction contract (as  
the alternative minimum tax for  
corporations has been repealed.  
defined in section 460(e)(5)(A)) or  
Any other construction contract  
entered into by a taxpayer: (a) who  
estimates the contract will be completed  
within 2 years from the date the contract  
begins and (b) whose average annual  
gross receipts for the 3 tax years  
Purpose of Form  
If you are an owner of an interest in a  
pass-through entity in which a long-term  
contract was being accounted for under  
the percentage of completion method or  
the percentage of completion  
Use Form 8697 to figure the interest due  
or to be refunded under the look-back  
method of section 460(b)(2) on certain  
long-term contracts that are accounted  
for under either the percentage of  
completion method or the percentage of  
completion-capitalized cost method. For  
guidance concerning these methods,  
see Regulations section 1.460-4. For  
details and computational examples  
illustrating the use of the look-back  
method, see Regulations section  
1.460-6.  
preceding the tax year in which the  
contract is entered into do not exceed  
$10 million. The annual gross receipts is  
increased to $25 million (adjusted for  
inflation) for contracts entered into after  
2017. See section 460(e).  
capitalized cost method and the  
pass-through entity is not subject to the  
look-back method at the entity level, you  
must file this form for your tax year that  
ends with or includes the end of the  
entity's tax year in which the contract  
was completed or adjusted in a  
However, the look-back method does  
apply to the alternative minimum taxable  
income from any such contract that is  
not a home construction contract and,  
therefore, must be accounted for using  
the percentage of completion method  
for alternative minimum tax purposes.  
See section 56(a)(3) for details.  
post-completion tax year. The  
pass-through entity will provide on  
Schedule K-1 the information you need  
to complete this form.  
Who Must File  
General Rule  
Mid-Contract Change in  
Taxpayer  
If prior to the completion of a long-term  
contract accounted for using the  
You must file Form 8697 for each tax  
year in which you completed a  
Small Contract Exception  
long-term contract entered into after  
February 28, 1986, that you accounted  
for using either the percentage of  
The look-back method does not apply to  
any contract completed within 2 years of  
the contract start date if the gross price  
of the contract (as of contract  
completion) does not exceed the  
smaller of:  
percentage of completion method or the  
percentage of completion capitalized  
cost method, there is a transaction that  
makes another taxpayer responsible for  
accounting for income from the same  
contract, the taxpayer responsible for  
completion method or the percentage of  
completion-capitalized cost method for  
federal income tax purposes. You also  
must file Form 8697 for any tax year,  
Oct 22, 2018  
Cat. No. 10703K  
   
$1 million or  
All others:  
Filing Instructions  
If You Owe Interest (or No  
Interest Is To Be Refunded to  
You)  
Attach Form 8697 to your income tax  
return. The signature section of Form  
8697 does not have to be completed by  
you or the paid preparer.  
1% of the taxpayer's average annual  
Department of Treasury  
Internal Revenue Service  
Cincinnati, OH 45999-0001  
gross receipts for the 3 tax years before  
the tax year of contract completion.  
See section 460(b)(3)(B) for details.  
Complete the signature section of  
Form 8697 following the instructions for  
the signature section of your income tax  
return. If you file a joint return, the  
De Minimis Exception  
You may elect not to apply the  
look-back method in certain de minimis  
cases for completed contracts. The  
look-back method does not apply in the  
following cases if the election is made.  
signature of both spouses is required on  
Form 8697. If additional Forms 8697 are  
For individuals, include any interest  
due in the amount to be entered for total needed to show more than 2  
tax (after credits and other taxes) on  
your return (for example, 2018 Form  
1040, line 15). Write on the dotted line  
to the left of the entry space “From Form  
8697” and the amount of interest due.  
redetermination years, sign only the first  
1. In the completion year if, for each  
prior contract year, the cumulative  
taxable income (or loss) actually  
Form 8697.  
File Form 8697 by the date you are  
required to file your income tax return  
(including extensions). Keep a copy of  
Form 8697 and any attached schedules  
for your records.  
reported under the contract is within  
10% of the cumulative look-back  
income (or loss). Cumulative look-back  
income (or loss) is the amount of  
taxable income (or loss) that you would  
have reported if you had used actual  
contract price and costs instead of  
estimated contract price and costs.  
For partnerships (that are not closely  
held), write “From Form 8697” and  
include any interest due in the bottom  
margin of the tax return. Attach a check  
or money order for the full amount made  
payable to “United States Treasury.”  
Write the partnership's employer  
Filing a Corrected Form  
8697  
You must file a corrected Form 8697  
only if the amount shown on Part I,  
line 6, or Part II, line 7, for any prior year  
changes as a result of an error you  
made, an income tax examination, or  
the filing of an amended tax return.  
2. In a post-completion year if, as of  
the close of the post-completion year,  
the cumulative taxable income (or loss)  
under the contract is within 10% of the  
cumulative look-back income (or loss)  
under the contract as of the close of the  
most recent year in which the look-back  
method was applied to the contract (or  
would have been applied if the election  
had not been made).  
identification number (EIN), daytime  
phone number, and “Form 8697  
Interest” on the check or money order.  
For S corporations that are not  
closely held, include any interest due in  
the amount to be entered for additional  
taxes (for example, 2018 Form 1120S,  
line 22c). Write on the dotted line to the  
When completing Part I, line 1, of the  
corrected Form 8697, follow the  
instructions on the form but do not enter  
the adjusted taxable income from Part I,  
left of the entry space “From Form 8697” line 3, of the original Form 8697. When  
and the amount of interest due. A  
closely held S corporation would also  
follow these procedures following a  
conversion from a C corporation for the  
contracts entered into prior to the  
conversion. See the rules related to  
earlier.  
completing Part I, line 5 (or Part II,  
line 6), of the corrected Form 8697, do  
not include the interest due, if any, from  
Part I, line 10 (or Part II, line 11), of the  
original Form 8697 that was included in  
your total tax when Form 8697 was filed  
with your tax return.  
For purposes of item 2, discounting  
under section 460(b)(2) does not apply.  
To make the election, attach a  
statement to your timely filed income tax  
return (determined with extensions) for  
the first tax year of the election. Write at  
the top of the statement  
If both the original and corrected  
“NOTIFICATION OF ELECTION  
Forms 8697 show an amount on the line  
for interest you owe, file an amended  
income tax return.  
For closely held pass-through  
UNDER SECTION 460(b)(6).” Include  
on the statement your name, identifying  
number, and the effective date of the  
election. Also identify the trades or  
businesses that involve long-term  
contracts. Once made, the election  
applies to all contracts completed  
during the election year and all later tax  
years, and may not be revoked without  
IRS consent. See Regulations section  
1.460-6(j) for more details. If you timely  
filed your return without making the  
election, you may make the election on  
an amended return filed no later than 6  
months after the due date of your tax  
return (excluding extensions). Write  
“Filed pursuant to section 301.9100” at  
the top of the amended return.  
entities, look-back interest is applied at  
the owner level and not the entity level.  
If both the original and corrected  
Forms 8697 show an amount on the line  
for interest to be refunded to you, write  
“Amended” in the top margin of the  
corrected Form 8697, and file it  
separately.  
For corporations, include the amount  
of interest due on the appropriate line of  
Form 1120, Schedule J, Part I (for  
example, 2018 Form 1120, Schedule J,  
line 9c).  
If your original Form 8697 shows an  
Look-back interest owed is not  
subject to the estimated tax penalty.  
See Regulations section 1.460-6(f)(2).  
amount on the line for interest you owe  
and the corrected Form 8697 shows an  
amount on the line for interest to be  
refunded to you, you must:  
If Interest Is To Be Refunded to  
You  
1. File an amended income tax  
return showing $0 interest from Form  
8697 and  
Do not attach Form 8697 to your income  
tax return. Instead, file Form 8697  
separately with the IRS at the applicable  
address listed below.  
2. File the corrected Form 8697  
separately (but do not write “Amended”  
at the top of the form because this is the  
first Form 8697 that you will file  
separately).  
Individuals:  
Department of Treasury  
Internal Revenue Service  
Philadelphia, PA 19255-0001  
If the original Form 8697 shows an  
amount on the line for interest to be  
-2-  
     
refunded to you and the corrected Form  
8697 shows an amount on the line for  
interest you owe, you must:  
1. File the corrected Form 8697  
separately (with “Amended” written at  
the top) showing $0 interest to be  
refunded and  
2. File an amended income tax  
return and attach a copy of the  
corrected Form 8697.  
including tax years before the change  
order was agreed to.  
10% of the total contract price at that  
time,  
2. The net undiscounted value of  
increases or decreases in contract costs  
occurring from the time of the last  
application of the look-back method  
exceeds the smaller of $1 million or  
10% of the total actual contract costs at  
that time,  
Post-Completion Adjustments  
General Rule  
If the contract price or costs are revised  
to reflect amounts properly taken into  
account after the contract completion  
date for any reason, you must apply the  
look-back method in the year such  
amounts are properly taken into  
3. The taxpayer goes out of  
existence,  
Attachments  
4. The taxpayer reasonably believes  
account, even if no other contract is  
completed in that year. Generally, the  
amount of each such post-completion  
adjustment to total contract price or  
contract costs is discounted, solely for  
look-back purposes, from its value at  
the time the amount is taken into  
account in computing taxable income to  
its value at the time the contract was  
completed. The discount rate for this  
purpose is the federal midterm rate  
under section 1274(d) in effect at the  
time the amount is properly taken into  
account.  
If you need more space, attach separate  
sheets to the back of Form 8697. Put  
your name and identifying number on  
each sheet.  
the contract is finally settled and closed,  
or  
5. None of the above conditions  
(1–4) are met by the end of the 5th tax  
year that begins after the last previous  
application of the look-back method.  
Applying the Look-Back  
Method Under Special  
Situations  
To elect the delayed reapplication  
method, attach a statement to your  
timely filed income tax return  
10% Method  
(determined with extensions) for the first  
tax year of the election. Indicate on the  
statement that you are making an  
election under Regulations section  
1.460-6(e) to use the delayed  
For purposes of the percentage of  
completion method, a taxpayer may  
elect to postpone recognition of income  
and expense under a long-term contract  
entered into after July 10, 1989, until the  
first tax year as of the end of which at  
least 10% of the estimated total contract  
costs have been incurred. For purposes  
of the look-back method, the recognition  
of income and expense must be  
However, you may elect not to  
discount post-completion adjustments  
for any contract. The election not to  
discount is made on a  
reapplication method. Once made, the  
election is binding for all long-term  
contracts for which you would reapply  
the look-back method in the absence of  
the election in the year of the election  
and all later years, unless the IRS  
consents to a revocation of the election.  
See Regulations section 1.460-6(e) for  
more details.  
contract-by-contract basis and is  
binding with respect to all  
post-completion adjustments that arise  
with respect to that contract. To make  
this election, attach a statement to your  
timely filed income tax return  
postponed for such contracts until the  
first tax year as of the end of which at  
least 10% of the actual total contract  
costs have been incurred. Therefore,  
income and expense will be allocated to  
a different tax year if the first tax year  
that the 10% threshold is exceeded  
based on actual costs differs from the  
first tax year that the 10% threshold is  
exceeded based on estimated costs.  
The election to use the 10% method  
applies to all long-term contracts  
(determined with extensions) for the first  
tax year after completion in which you  
take into account any adjustment to the  
contract price or contract costs. Indicate  
on the statement that you are making an  
election not to discount post-completion  
adjustments under Regulations section  
1.460-6(c)(1)(ii)(C)(2) and identify the  
contracts to which the election applies.  
Specific Instructions  
All filers must complete the information  
at the top of the form above Part I  
according to the following instructions.  
Then, complete either Part I or Part II as  
appropriate. Also sign the form at the  
bottom of page 2 if interest is to be  
refunded to you. A signature is not  
required if you are filing the form with  
your tax return.  
entered into during the tax year for  
which the election is made and all later  
years. See section 460(b)(5) for more  
details.  
Delayed Reapplication Method  
For purposes of reapplying the  
look-back method after the year of  
contract completion, you may elect the  
delayed reapplication method to  
minimize the number of required  
reapplications of the look-back method.  
Under this method, the look-back  
method is reapplied after the contract  
completion year (or after a later  
reapplication of the look-back method)  
only when one of the following  
Change Orders  
Filing Year  
A change order for a contract is not  
treated as a separate contract for  
Fill in the filing year line at the top of the  
form to show the tax year in which the  
contracts for which this form is being  
filed were completed or adjusted in a  
post-completion year. If you were an  
owner of an interest in a pass-through  
entity that has completed or adjusted  
one or more contracts, enter your tax  
year that ends with or includes the end  
of the entity's tax year in which the  
contracts were completed or adjusted.  
purposes of applying the look-back  
method unless the change order would  
be treated as a separate contract under  
the rules for severing and aggregating  
contracts provided in Regulations  
section 1.460-1(e). Therefore, if a  
change order is not treated as a  
conditions is met for that contract:  
separate contract, that portion of the  
actual contract price and contract costs  
attributable to the change order must be  
taken into account in allocating contract  
income to all tax years of the contract,  
1. The net undiscounted value of  
increases or decreases in the contract  
price occurring from the time of the last  
application of the look-back method  
exceeds the smaller of $1 million or  
Name  
Enter the name shown on your federal  
income tax return for the filing year. If  
-3-  
you are an individual filing a joint return,  
also enter your spouse's name as  
shown on Form 1040.  
Line 2  
Line 3  
In each column, show a net increase to  
income as a positive amount and a net  
decrease to income as a negative  
amount.  
If line 3 results in a negative amount, it  
represents a look-back net operating  
loss (NOL). The adjustment in line 2  
either created, increased, or decreased  
the net operating loss. The change in  
the amount of the net operating loss  
would be carried back or forward to the  
appropriate tax year and the  
Address  
Enter your address only if you are filing  
this form separately. Include the  
In figuring the net adjustment to be  
entered in each column on line 2, be  
sure to take into account any other  
income and expense adjustments that  
apartment, suite, room, or other unit  
number after the street address. If the  
Post Office does not deliver mail to the  
hypothetical tax would be recomputed  
in the carryback/forward year. See  
Regulations section 1.460-6(c)(3)(v).  
However, the computation period for  
computing interest on NOLs is different.  
See the exceptions listed on lines 7 and  
8 below.  
street address and you have a P.O. box, may result from the increase (or  
show the box number instead.  
decrease) to income from long-term  
contracts (for example, a change to  
adjusted gross income affecting medical  
expenses under section 213). If there  
are no adjustments besides the  
Item A—Identifying  
Number  
If you are an individual, enter your social  
security number. Other filers must use  
their EIN.  
look-back adjustments, the sum of all  
line 2 amounts should be zero and  
reflected in column 2(c). If there are  
additional adjustments that result from  
the application of the look-back, leave  
column 2(c) blank and reflect the  
amounts in the schedule below as  
described in item 3.  
Note. The 2-year carryback rule does  
not apply to net operating losses arising  
in tax years ending after 2017. An  
exception applies to farmers and  
non-life insurance companies. See  
section 172(b) as amended by P.L.  
115-97, section 13302.  
Part I—Regular Method  
Use Part I only if you are not electing, do  
not have an election in effect, or are not  
required to use the simplified marginal  
impact method as described in the  
instructions for Part II, later.  
Lines 4 and 5  
Include the following on an attached  
schedule.  
1. Identify each completed  
long-term contract by contract number,  
job name, or any other reasonable  
method used in your records to identify  
each contract.  
2. For each contract, report in  
columns for each prior year: (a) the  
amount of income previously reported  
based on estimated contract price and  
costs and (b) the amount of income  
allocable to each prior year based on  
actual contract price and costs. Total  
the columns for each prior year and  
show the net adjustment to income from  
long-term contracts.  
3. Identify any other adjustments  
that result from a change in income from  
long-term contracts and show the  
amounts in the columns for the affected  
years so that the net adjustment shown  
in each column on the attached  
schedule agrees with the amounts  
shown on line 2.  
Reduce the tax liability to be entered on  
lines 4 and 5 by allowable credits (other  
than refundable credits, for example,  
the credit for taxes withheld on wages,  
the earned income credit, the credit for  
federal tax on fuels, etc.), but do not  
take into account any credit carrybacks  
to the prior year in computing the  
Filing year column  
Enter the filing year listed at the top of  
this form.  
Columns (a) and (b)  
Enter at the top of each column the  
ending month and year for:  
Each prior tax year in which you were  
amount to enter on lines 4 and 5 (other  
than carrybacks that resulted from or  
were adjusted by the redetermination of  
your income from a long-term contract  
for look-back purposes). Include on  
lines 4 and 5 any taxes (such as  
required to report income from the  
completed long-term contract(s) and  
Any other tax year affected by such  
years.  
Note. If there were more than 2 prior  
years, attach additional Forms 8697 as  
needed. On the additional Forms 8697,  
enter your name, identifying number,  
and tax year. Complete lines 1 through  
8 (as applicable), but do not enter totals  
in column (c). Enter totals only in  
alternative minimum tax for individuals)  
required to be taken into account in the  
computation of your tax liability (as  
originally reported or as redetermined).  
Lines 7 and 8  
For the increase or decrease in tax for  
each prior year, interest due or to be  
refunded must be computed at the  
applicable interest rate and  
column (c) of the first Form 8697.  
Line 1  
Do not reduce taxable income or  
compounded on a daily basis, generally  
from the due date (not including  
extensions) of the return for the prior  
year until the earlier of:  
increase a loss on line 1 by any  
carryback of a net operating loss, capital  
loss, or net section 1256 contracts loss,  
except to the extent that carrybacks  
must be taken into account to properly  
compute interest under section 460.  
An owner of an interest in a  
pass-through entity is not required to  
provide the detail listed in 1 and 2 above  
with respect to prior years. The entity  
should provide the line 2 amounts with  
Schedule K-1 or on a separate  
The due date (not including  
extensions) of the return for the filing  
year or  
The date the return for the filing year  
Note. The 2-year carryback rule does  
not apply to net operating losses arising  
in tax years ending after 2017. An  
exception applies to farmers and  
non-life insurance companies. See  
section 172(b) as amended by P.L.  
115-97, section 13302.  
statement for its tax year in which the  
contracts are completed or adjusted.  
is filed and any income tax due for that  
year has been fully paid.  
Note. Taxpayers reporting line 2  
amounts from more than one  
Exceptions:  
The time period for determining  
Schedule K-1 (or a similar statement)  
must attach a schedule detailing by  
entity the net change to income from  
long-term contracts.  
interest may be different in cases  
involving loss or credit carrybacks or  
carryovers in order to properly reflect  
the time period during which the  
-4-  
 
taxpayer or IRS had use of the  
hypothetical underpayment or  
overpayment. See Regulations section  
1.460-6(c)(4)(ii) and (iii) for additional  
information.  
same for the accrual period which is  
generally one year. The applicable  
interest rates for non-corporate  
taxpayers are shown in Table 1 (for  
interest accrual periods beginning after  
Jan. 1, 2008).  
use the simplified marginal impact  
method. Under the simplified method,  
prior year hypothetical underpayments  
or overpayments in tax are figured using  
an assumed marginal tax rate, which is  
generally the highest statutory rate in  
effect for the prior year under section 1  
(for an individual) or section 11 (for a  
corporation). This method eliminates the  
need to refigure your tax liability based  
on actual contract price and actual  
contract costs each time the look-back  
method is applied.  
If a net operating loss, capital loss,  
net section 1256 contracts loss, or  
credit carryback is being increased or  
decreased as a result of the adjustment  
made to net income from long-term  
contracts, the interest due or to be  
refunded must be computed on the  
increase or decrease in tax attributable  
to the change to the carryback only from  
the due date (not including extensions)  
of the return for the prior year that  
generated the carryback and not from  
the due date of the return for the year in  
which the carryback was absorbed. See  
section 6611(f).  
The applicable interest rates for  
corporate taxpayers for the first $10,000  
are shown in Table 2. The applicable  
interest rates for corporate taxpayers for  
amounts in excess of $10,000 are  
shown in Table 3.  
To elect the simplified marginal  
impact method, attach a statement to  
your timely filed income tax return  
(determined with extensions) for the first  
tax year of the election. Indicate on the  
statement that you are making an  
election under Regulations section  
1.460-6(d) to use the simplified marginal  
impact method. Once made, the  
election applies to all applications of the  
look-back method in the year of the  
election and all later years, unless the  
IRS consents to a revocation of the  
election.  
Following the conversion of a C  
corporation into an S corporation, the  
look-back method is applied at the entity  
level (1120S) with respect to contracts  
entered into prior to the conversion. See  
Regulations section 1.460-6(g)(3)(iv).  
For the C corporation years, the  
In the case of a decrease in tax on  
taxpayer would apply the rates reflected  
in Table 2 for the first $10,000 and apply  
the rates in Table 3 for the amounts in  
excess of $10,000.  
line 6, if a refund has been allowed for  
any part of the income tax liability shown  
on line 5 for any year as a result of a net  
operating loss, capital loss, net section  
1256 contracts loss, or credit carryback  
to such year, and the amount of the  
refund exceeds the amount on line 4,  
interest is allowed on the amount of  
such excess only until the due date (not  
including extensions) of the return for  
the year in which the carryback arose.  
Line 9  
You, earlier, for where to file Form 8697.  
Additional interest to be refunded for  
periods after the filing date of Form  
8697, if any, will be computed by the  
IRS and included in your refund. Report  
the amount on line 9 (or the amount  
refunded by the IRS if different) as  
interest income on your income tax  
return for the tax year in which it is  
received or accrued.  
Columns (a), (b), and (c)  
Enter at the top of each column the  
ending month and year for each prior  
tax year in which you were required to  
report income from the completed  
long-term contract.  
Note. If a different method of interest  
computation must be used to produce  
the correct result in your case, use that  
method and attach an explanation of  
how the interest was computed.  
Note. If there were more than 3 prior  
tax years, attach additional Forms 8697  
as needed. On the additional Forms  
8697, enter your name, identifying  
number, and tax year. Complete lines 1  
through 9 (as applicable), but do not  
enter totals in column (d). Enter totals  
only in column (d) of the first Form 8697.  
Line 10  
Applicable Interest Rates  
Instructions, earlier, for how to report  
this amount on your tax return.  
The overpayment rate designated under  
section 6621 is used to calculate the  
interest for both hypothetical  
Corporations (other than S  
overpayments and underpayments. The  
applicable interest rates are published  
quarterly in revenue rulings in the  
Internal Revenue Bulletin available at  
Line 1  
corporations) may deduct this amount  
(or the amount computed by the IRS if  
different) as interest expense for the tax  
year in which it is paid or incurred. For  
individuals and other taxpayers, this  
interest is not deductible.  
In each column, show a net increase to  
income as a positive amount and a net  
decrease to income as a negative  
amount.  
However, for contracts completed in  
tax years ending after August 5, 1997,  
an interest rate is determined for each  
interest accrual period. The interest  
accrual period starts on the day after the  
return due date (not including  
On an attached schedule:  
Identify each completed long-term  
Estimated Tax Penalty  
contract by contract number, job name,  
or any other reasonable method used in  
your records to identify each contract;  
and  
Look-back interest owed is not subject  
to the estimated tax penalty. See  
Regulations section 1.460–6(f)(2)(i).  
See the instructions for the 2018 Form  
2210, line 2, for individuals and 2018  
Form 2220, line 2(b), for corporations.  
extensions) for each prior tax year and  
ends on the return due date for the  
following tax year. The interest rate in  
effect for the entire interest accrual  
period is the overpayment rate  
For each contract, report in columns  
for each prior year: (a) the amount of  
income previously reported based on  
estimated contract price and costs and  
(b) the amount of income allocable to  
each prior year based on actual contract  
price and costs. Total the columns for  
each prior year and show the net  
adjustment to income from long-term  
contracts.  
Part II—Simplified  
determined under section 6621(a)(1)  
applicable on the first day of the interest  
accrual period.  
Marginal Impact Method  
Part II is used only by pass-through  
entities required to apply the look-back  
method at the entity level (see Who  
Must File, earlier) and taxpayers  
Even though the interest rates  
change quarterly, for look-back  
purposes the interest rate stays the  
electing (or with an election in effect) to  
-5-  
       
An owner of an interest in a  
Line 5  
pass-through entity is not required to  
provide the detailed schedule listed  
above for prior years. The entity should  
provide the line 1 amounts with  
Number of days in tax year before 7/1/87  
Number of days in tax year  
If both lines 2 and 4 are negative, enter  
whichever amount is greater. Treat both  
numbers as positive when making this  
comparison, but enter the amount as a  
negative number. (If the amount on one  
line is negative, but the amount on the  
other line is positive, enter the positive  
amount.)  
ϫ
12%  
c. Tax years beginning after  
June 30, 1987, and ending  
before 1993 . . . . . . . . . . .  
d. For tax years beginning  
before 1993 that include  
January 1, 1993, the rate is  
34% plus the following:  
Schedule K-1 or on a separate  
statement for its tax year in which the  
contracts are completed or adjusted.  
34%  
Note. Taxpayers reporting line 1  
amounts from more than one  
Lines 8 and 9  
Schedule K-1 (or a similar statement)  
must attach a schedule detailing by  
entity the net change to income from  
long-term contracts.  
For the increase (or decrease) in tax for  
each prior year, interest due or to be  
refunded must be computed at the  
applicable interest rate and  
Number of days in tax year after 12/31/92  
Number of days in tax year  
ϫ
1%  
compounded on a daily basis from the  
due date (not including extensions) of  
the return for the prior year until the  
earlier of:  
Line 2  
Multiply the amount on line 1 by the  
applicable regular tax rate for each prior  
year shown in column (a), (b), or (c).  
The applicable regular tax rate is as  
follows:  
e. Tax years beginning after  
1992, and ending before  
2018 . . . . . . . . . . . . . . . .  
f. Tax years beginning after  
2017 . . . . . . . . . . . . . . . .  
The due date (not including  
35%  
21%  
extensions) of the return for the filing  
year or  
1. Individuals and pass-through entities  
in which, at all times during the year,  
more than 50% of the interests in the  
entity are held by individuals directly or  
through other pass-through entities:  
The date the return for the filing year  
is filed and any income tax due for that  
year has been fully paid.  
Line 3  
instructions for Part I, lines 7 and 8,  
earlier.  
See the instructions for Part II, line 1,  
earlier, and complete line 3 in the same  
manner, using only income and  
deductions allowed for alternative  
minimum tax (AMT) purposes.  
a. Tax years beginning  
Line 10  
See the instructions for Part I, line 9,  
earlier.  
before 1987 . . . . . . . . .  
b. Tax years beginning in  
1987 . . . . . . . . . . . . . .  
c. Tax years beginning in  
1988, 1989, or 1990 . . .  
d. Tax years beginning in  
1991 or 1992 . . . . . . . .  
e. Tax years beginning in  
1993 through 2000 . . . .  
f. Tax years beginning in  
2001 . . . . . . . . . . . . . .  
g. Tax years beginning in  
2002 . . . . . . . . . . . . . .  
h. Tax years beginning in  
2003 through 2012 . . . .  
i. Tax years beginning in  
2013 through 2017 . . . .  
j. Tax years beginning in  
2018 or later . . . . . . . . .  
50%  
38.5%  
28%  
Note. For tax years beginning after  
2017, the alternative minimum tax for  
corporations has been repealed.  
Line 11  
See the instructions for Part I, line 10,  
earlier.  
31%  
Line 4  
Multiply the amount on line 3 by the  
applicable AMT rate, which is as  
follows:  
Table 1  
Interest Rates for Non-corporate  
Taxpayers  
39.6%  
39.1%  
38.6%  
35%  
1. Individuals and pass-through entities  
in which, at all times during the year,  
more than 50% of the interests in the  
entity are held by individuals directly or  
through other pass-through entities:  
From  
1/1/08  
4/1/08  
7/1/08  
10/1/08  
1/1/09  
4/1/09  
1/1/11  
4/1/11  
10/1/11  
1/1/12  
1/1/13  
1/1/16  
4/1/16  
1/1/17  
4/1/18  
Through  
3/31/08  
6/30/08  
9/30/08  
12/31/08  
3/31/09  
12/31/10  
3/31/11  
9/30/11  
12/31/11  
12/31/12  
12/31/15  
3/31/16  
12/31/16  
3/31/18  
9/30/18  
Rate  
7%  
6%  
5%  
6%  
5%  
4%  
3%  
4%  
3%  
3%  
3%  
3%  
4%  
4%  
5%  
Table Page  
67  
65  
63  
65  
15  
13  
11  
13  
11  
59  
11  
59  
61  
13  
15  
621  
619  
617  
619  
569  
567  
565  
567  
565  
613  
565  
613  
615  
567  
569  
39.6%  
37%  
a. Tax years beginning in  
1987 through 1990 . . . .  
b. Tax years beginning in  
1991 or 1992 . . . . . . . .  
c. Tax years beginning in  
1993 or later . . . . . . . . .  
21%  
24%  
28%  
2. Corporations (other than S  
corporations) and pass-through entities  
not included in 1 above:  
2. Corporations (other than S  
a. Tax years ending before July  
corporations) and pass-through entities  
1, 1987 . . . . . . . . . . . . . .  
b. For tax years beginning  
before July 1, 1987, that include  
July 1, 1987, the rate is 34%  
plus the following:  
46%  
not included in 1 above:  
a. Tax years ending before  
2018 . . . . . . . . . . . . . . . .  
b. Tax years beginning after  
2017 . . . . . . . . . . . . . . . .  
20%  
0%  
-6-  
   
Table 2  
4/16/2017 – 4/15/2018: 3% for the 1st because of tax treaties they have with  
Interest Rates for Corporate  
Increases or Decreases in Tax  
of $10,000 or Less  
$10,000 (1.5% for any amount  
the United States. We also may disclose  
this information to federal and state  
agencies to enforce federal nontax  
criminal laws and to combat terrorism.  
exceeding $10,000).  
The interest rate and accrual period  
for the 2016 redetermination year would  
be:  
From  
1/1/08  
4/1/08  
7/1/08  
10/1/08  
1/1/09  
4/1/09  
1/1/11  
4/1/11  
10/1/11  
1/1/12  
1/1/13  
1/1/16  
4/1/16  
1/1/17  
4/1/18  
Through  
3/31/08  
6/30/08  
9/30/08  
12/31/08  
3/31/09  
12/31/10  
3/31/11  
9/30/11  
12/31/11  
12/31/12  
12/31/15  
3/31/16  
12/31/16  
3/31/18  
9/30/18  
Rate  
6%  
5%  
4%  
5%  
4%  
3%  
2%  
3%  
2%  
2%  
2%  
2%  
3%  
3%  
4%  
Table Page  
The time needed to complete and file  
this form will vary depending on  
individual circumstances. The estimated  
burden for individual taxpayers filing this  
form is approved under OMB control  
number 1545-0074 and is included in  
the estimates shown in the instructions  
for their individual income tax return.  
The estimated burden for all other  
taxpayers who file this form is shown  
below.  
65  
63  
61  
63  
13  
11  
9
619  
617  
615  
617  
567  
565  
563  
565  
563  
611  
563  
611  
613  
565  
567  
4/16/2017 – 4/15/2018: 3% for the 1st  
$10,000 (1.5% for any amount  
exceeding $10,000).  
Privacy Act and Paperwork Reduc-  
tion Act Notice. We ask for the  
11  
9
information on this form to carry out the  
Internal Revenue laws of the United  
States. We need this information to  
ensure that you are complying with  
these laws and to figure and collect or  
refund the correct amount of interest.  
57  
9
57  
59  
11  
13  
Recordkeeping  
Part I . . . . . . . . . . . .  
Part II . . . . . . . . . . . .  
Section 460 provides special rules  
for computing interest under the  
look-back method for completed  
long-term contracts. Section 6001 and  
its regulations require you to file a return  
or statement with us for any tax you are  
liable for. Section 6109 and its  
8 hr., 36 min.  
9 hr., 19 min.  
Table 3  
Interest Rates for Corporate  
Increases or Decreases in Tax  
Exceeding $10,000  
Learning about the  
law or the form  
Part I . . . . . . . . . . . .  
Part II . . . . . . . . . . . .  
2 hr., 22 min.  
2 hr., 5 min.  
From  
1/1/08  
4/1/08  
7/1/08  
10/1/08  
1/1/09  
4/1/09  
1/1/11  
4/1/11  
10/1/11  
4/1/16  
1/1/17  
4/1/18  
Through  
3/31/08  
6/30/08  
9/30/08  
12/31/08  
3/31/09  
12/31/10  
3/31/11  
9/30/11  
3/31/16  
12/31/16  
3/31/18  
9/30/18  
Rate  
4.5%  
3.5%  
2.5%  
3.5%  
2.5%  
1.5%  
.5%  
Table Page  
62  
60  
58  
60  
10  
8
616  
614  
612  
614  
564  
562  
regulations require you to put your  
identifying number on what you file. If  
you do not provide the information we  
ask for, or provide fraudulent  
Preparing, copying,  
assembling, and  
sending the form to  
the IRS  
Part I . . . . . . . . . . . .  
Part II . . . . . . . . . . . .  
information, you may forfeit any refund  
of interest otherwise owed to you and/or  
be subject to penalties.  
2 hr., 37 min.  
2 hr., 19 min.  
1.5%  
.5%  
8
56  
8
562  
1.5%  
1.5%  
2.5%  
610  
562  
564  
You are not required to provide the  
information requested on a form that is  
subject to the Paperwork Reduction Act  
unless the form displays a valid OMB  
control number. Books or records  
relating to a form or its instructions must  
be retained as long as their contents  
may become material in the  
If you have comments concerning the  
accuracy of these time estimates or  
suggestions for making this form  
simpler, we would be happy to hear  
from you. You can send us comments  
from IRS.gov/FormComments. Or you  
can send your comments to Internal  
Revenue Service, Tax Forms and  
Publications Division, 1111 Constitution  
Ave. NW, IR-6526, Washington, DC  
20224. Don't send the tax form to this  
office. Instead, see Filing Instructions,  
earlier.  
10  
Example of Applicable Interest  
Rates for Look-back Interest.  
A C corporation taxpayer completed  
contracts subject to look-back interest  
during the 2017 calendar year. The  
contracts were started in 2015, so 2015  
and 2016 are redetermination years.  
The corporate tax return due date,  
without extensions, for all years is April  
15.  
administration of any Internal Revenue  
law. Generally, tax returns and return  
information are confidential, as required  
by section 6103.  
We may give this information to the  
Department of Justice for civil or  
For computing look-back interest, the criminal litigation, and to other federal  
interest rates and accrual period for the  
2015 redetermination year would be:  
agencies as authorized by law. We may  
give it to cities, states, the District of  
4/16/2016 – 4/15/2017: 3% for the 1st Columbia, and U.S. commonwealths or  
$10,000 (1.5% for any amount  
exceeding $10,000).  
possessions to carry out their tax laws.  
We may give it to foreign governments  
-7-