フォーム1120-IC-DISC インフォメーション
フォーム1120-IC-DISC、利息料国内国際販売株式会社リターンの指示
2021年12月改訂
関連フォーム
- フォーム1120-IC-DISC - 利息料金 国内国際販売株式会社 返品
Department of the Treasury
Internal Revenue Service
Instructions for
Form 1120-IC-DISC
(Rev. December 2021)
Interest Charge Domestic International
Sales Corporation Return
Section references are to the Internal Revenue
Code unless otherwise noted.
the photographs and calling
1-800-THE-LOST (1-800-843-5678) if you
recognize a child.
See section 441(h) and its regulations for
more information.
Its election to be treated as an IC-DISC
•
Contents
Page
is in effect for the tax year.
General Instructions
and related regulations for details.
Purpose of Form
Distribution to meet qualification re-
quirements.
Form 1120-IC-DISC is an information
return filed by interest charge domestic
international sales corporations
(IC-DISCs), former DISCs, and former
IC-DISCs.
An IC-DISC that does not meet the
•
Other Forms and Statements That
gross receipts test or qualified export
asset test during the tax year will still be
considered to have met them if, after the
tax year ends, the IC-DISC makes a pro
rata property distribution to its
What Is an IC-DISC?
An IC-DISC is a domestic corporation that
has elected to be an IC-DISC and its
election is still in effect. The IC-DISC
election is made by filing Form 4876-A,
Election To Be Treated as an Interest
Charge DISC.
shareholders and specifies at the time that
this is a distribution to meet the
qualification requirements.
If the IC-DISC did not meet the gross
•
receipts test, the distribution equals the
part of its taxable income attributable to
gross receipts that are not qualified export
gross receipts.
Generally, an IC-DISC is not taxed on
its income. Shareholders of an IC-DISC
are taxed on its income when the income
is actually (or deemed) distributed. In
addition, section 995(f) imposes an
interest charge on shareholders for their
share of DISC-related deferred tax liability.
See Form 8404, Interest Charge on
DISC-Related Deferred Tax Liability, for
details.
If the IC-DISC did not meet the qualified
•
export asset test, the distribution equals
the fair market value (FMV) of the assets
that are not qualified export assets on the
last day of the tax year.
Schedule K (Form
If the IC-DISC did not meet either test,
•
the distribution generally equals the sum
of both amounts.
Schedule P (Form
Regulations section 1.992-3 explains
To be an IC-DISC, a corporation must
be organized under the laws of a state or
the District of Columbia and meet the
following tests.
how to figure the distribution.
Interest on late distribution. If the
IC-DISC makes a distribution after Form
1120-IC-DISC is due, interest must be
paid to the United States Treasury. The
interest charge is 41/2% of the distribution
times the number of tax years that begin
after the tax year to which the distribution
relates until the date the IC-DISC made
the distribution.
Future Developments
For the latest information about
developments related to Form
1120-IC-DISC and its instructions, such as
legislation enacted after they were
published, go to IRS.gov/
At least 95% of its gross receipts during
•
the tax year are qualified export receipts.
At the end of the tax year, the adjusted
•
basis of its qualified export assets is at
least 95% of the sum of the adjusted basis
of all of its assets.
It has only one class of stock, and its
•
What’s New
outstanding stock has a par or stated
value of at least $2,500 on each day of the
tax year (or, for a new corporation, on the
last day to elect IC-DISC status for the
year and on each later day).
If the IC-DISC must pay this interest,
send the payment to the Internal Revenue
Service Center where you filed Form
1120-IC-DISC within 30 days of making
the distribution. On the payment, write the
IC-DISC's name, address, and employer
identification number (EIN); the tax year;
and a statement that the payment
Schedule C, line 14, formerly related to
section 965(a), which is no longer
applicable for tax years after 2020, is now
reserved for future use.
It maintains separate books and
•
Photographs of Missing
Children
records.
Its tax year must conform to the tax year
•
of the principal shareholder who has the
highest percentage of voting power. If two
or more shareholders have the highest
percentage of voting power, the IC-DISC
must elect a tax year that conforms to that
of any one of the principal shareholders.
represents the interest charge under
Regulations section 1.992-3(c)(4).
The IRS is a proud partner with the
Children® (NCMEC). Photographs of
missing children selected by the Center
may appear in instructions on pages that
would otherwise be blank. You can help
bring these children home by looking at
Who Must File
The corporation must file Form
1120-IC-DISC if it elected, by filing Form
Dec 30, 2021
Cat. No. 11476W
4876-A, to be treated as an IC-DISC and
its election is in effect for the tax year.
reducing the acquiring corporation's basis
in the property transferred. Once made,
the election is irrevocable. For more
information, see section 362(e)(2) and
Regulations section 1.362-4. If an election
is made, a statement must be filed in
accordance with Regulations section
1.362-4(d)(3).
Who Must Sign
The return must be signed and dated by:
The president, vice president, treasurer,
•
If the corporation is a former DISC or
former IC-DISC, it must file Form
1120-IC-DISC in addition to any other
return required.
assistant treasurer, chief accounting
officer; or
Any other corporate officer (such as tax
•
officer) authorized to sign.
A former DISC is a corporation that
was a DISC on or before December 31,
1984, but failed to qualify as a DISC after
December 31, 1984, or did not elect to be
an IC-DISC after 1984; and at the
If a return is filed on behalf of a
corporation by a receiver, trustee, or
assignee, the fiduciary must sign the
return, instead of the corporate officer.
Returns and forms signed by a receiver or
trustee in bankruptcy on behalf of a
corporation must be accompanied by a
copy of the order or instructions of the
court authorizing signing of the return or
form.
Form 8992. Use Form 8992 to figure the
domestic corporation's GILTI under
section 951A and attach it to Form
1120-IC-DISC.
beginning of the current tax year, it had
undistributed income that was previously
taxed or it had accumulated DISC income.
Form 8993. Use Form 8993 to figure the
amount of the eligible deduction for FDII
and GILTI under section 250 and attach it
to Form 1120-IC-DISC.
A former IC-DISC is a corporation that
was an IC-DISC in an earlier year but did
not qualify as an IC-DISC for the current
tax year; and at the beginning of the
current tax year, it had undistributed
income that was previously taxed or
accumulated IC-DISC income. See
section 992 and related regulations.
Other forms and statements. See the
Instructions for Form 1120 and Pub. 542
for a list of other forms and statements a
corporation may need to file in addition to
the forms and statements discussed
throughout these instructions.
If an employee of the corporation
completes Form 1120-IC-DISC, the paid
preparer's space should remain blank.
Anyone who prepares Form
1120-IC-DISC but does not charge the
corporation should not complete that
section. Generally, anyone who is paid to
prepare Form 1120-IC-DISC must sign it
and fill in the “Paid Preparer Use Only”
area.
A former DISC or former IC-DISC need
not complete lines 1 through 8 on page 1
and the schedules for figuring taxable
income, but must complete Schedules J,
L, and M of Form 1120-IC-DISC and
Schedule K (Form 1120-IC-DISC). Write
“Former DISC” or “Former IC-DISC”
across the top of the return.
Assembling the Return
To ensure that the corporation's tax return
is correctly processed, attach all
schedules and other forms after the last
page of Form 1120-IC-DISC, and in the
following order.
The paid preparer must complete the
required preparer information and:
1. Schedule N (Form 1120).
2. Form 4136.
3. Schedule D (Form 1120).
4. Form 8992.
Sign the return in the space provided
•
for the preparer's signature, and
When To File
Give a copy of the return to the
•
File Form 1120-IC-DISC by the 15th day
of the 9th month after the IC-DISC's tax
year ends. No extensions are allowed. If
the due date falls on a Saturday, Sunday,
or a legal holiday, the corporation may file
on the next business day.
taxpayer.
5. Form 8993.
Note. A paid preparer may sign original or
amended returns by rubber stamp,
mechanical device, or computer software
program.
6. Additional schedules in
alphabetical order.
7. Additional forms in numerical order.
Complete every applicable entry space
on Form 1120-IC-DISC. Do not enter “See
Attached” or “Available Upon Request”
instead of completing the entry spaces. If
more space is needed on the forms or
schedules, attach separate statements
using the same size and format as the
printed forms. If there are supporting
statements and attachments, arrange
them in the same order as the schedules
or forms they support and attach them
last. Show the totals on the printed forms.
Enter the corporation's name and EIN on
each supporting statement or attachment.
Other Forms and
Statements That May Be
Required
Where To File
If you are using the U.S. Postal Service,
file Form 1120-IC-DISC at the following
address:
Informing Shareholders
Department of the Treasury
Internal Revenue Service Center
Kansas City, MO 64999
Shareholders who are foreign per-
sons. The corporation should inform
shareholders who are nonresident alien
individuals or foreign corporations, trusts,
or estates that if they have gains from
disposal of stock in the IC-DISC, former
DISC, or former IC-DISC, or distributions
from accumulated IC-DISC income,
including deemed distributions, they must
treat these amounts as effectively
connected with the conduct of a trade or
business conducted through a permanent
establishment in the United States and
derived from sources within the United
States.
Private delivery services (PDSs).
Corporations may use certain PDSs
designated by the IRS to meet the “timely
mailing as timely filing” rule for tax returns.
Accounting Methods
Figure taxable income using the method of
accounting regularly used in keeping the
IC-DISC's books and records. In all cases,
the method used must clearly show
The PDS can tell you how to get written
proof of the mailing date.
For the IRS mailing address to use if
you’re using a PDS, go to IRS.gov/
taxable income. Permissible methods
include cash, accrual, or any other method
authorized by the Internal Revenue Code.
Election to reduce basis under section
362(e)(2)(C). If property is transferred to
a corporation subject to section 362(e)(2),
the transferor and the acquiring
Private delivery services cannot
Generally, the following rules apply. For
more information, see Pub. 538,
deliver items to P.O. boxes. You
!
CAUTION
must use the U.S. Postal Service
corporation may elect, under section
362(e)(2)(C), to reduce the transferor's
basis in the stock received instead of
Accounting Periods and Methods.
to mail any item to an IRS P.O. box
address.
Instructions for Form 1120-IC-DISC (Rev. 12-2021)
-2-
An IC-DISC must use the accrual
shareholders have the highest percentage
property, but only if there is a recognized
gain.
5. Dividends (or amounts includible in
gross income under section 951) with
respect to stock of a related foreign export
corporation (defined later).
•
method of accounting if its average annual of voting power, the IC-DISC must have a
gross receipts for the 3 prior tax years
exceed $26 million. However, see
providers, later.
tax year that conforms to the tax year of
any such shareholder. See section 441(h).
See Pub. 538 for more information on
accounting periods and tax years.
Unless it is a small business taxpayer
•
6. Interest on any obligation that is a
(defined below), an IC-DISC must use the
accrual method for sales and purchases of
later.
qualified export asset.
Rounding Off to Whole
Dollars
7. Gross receipts for engineering or
architectural services for construction
projects outside the United States.
8. Gross receipts for the performance
of managerial services in furtherance of
the production of other qualified export
receipts of an IC-DISC.
The IC-DISC may round off cents to whole
dollars on its return and schedules. If the
IC-DISC does round to whole dollars, it
must round all amounts. To round, drop
amounts under 50 cents and increase
amounts from 50 to 99 cents to the next
dollar (for example, $1.39 becomes $1
and $2.50 becomes $3).
A member of a controlled group may
•
not use an accounting method that would
distort any group member's income,
including its own. For example, an
IC-DISC acts as a commission agent for
property sales by a related corporation
that uses the accrual method and pays the
IC-DISC its commission more than 2
months after the sale. In this case, the
IC-DISC should not use the cash method
of accounting because that method
materially distorts its income.
For more information, see Regulations
section 1.993-1.
Qualified export assets. Qualified
If two or more amounts must be added
to figure the amount to enter on a line,
include cents when adding the amounts
and round off only the total.
export assets are any of the following.
2. Assets used primarily in connection
with the sale, lease, rental, storage,
handling, transportation, packaging,
assembly, or servicing of export property,
or the performance of engineering or
architectural services described in item 7
managerial services in furtherance of the
production of qualified export receipts
described in items 1, 2, 3, and 7, earlier.
3. Accounts receivable and evidences
of indebtedness produced by transactions
items 1–4, 7, and 8, earlier.
Small business taxpayer. A small
business taxpayer is a taxpayer that (a)
has average annual gross receipts of $26
million or less for the 3 prior tax years, and
(b) is not a tax shelter (as defined in
section 448(d)(3)). See section 471(c).
Recordkeeping
Keep the IC-DISC's records for as long as
they may be needed for the administration
of any provision of the Internal Revenue
Code. Usually, records that support an
item of income, deduction, or credit on the
return must be kept for 3 years from the
date the return is due or filed, whichever is
later. Keep records that verify the
A small business taxpayer can adopt or
change its accounting method to account
for inventories (a) in the same manner as
materials and supplies that are
IC-DISC's basis in property for as long as
they are needed to figure the basis of the
original or replacement property.
nonincidental, or (b) to conform to its
treatment of inventories in an applicable
financial statement (as defined in section
451(b)(3)). If it does not have an
4. Temporary investments, such as
money and bank deposits, in an amount
reasonable to meet the IC-DISC's needs
for working capital.
The IC-DISC should keep copies of all
filed returns. They help in preparing future
and amended returns and in the
applicable financial statement, it can use
the method of accounting used in its
books and records prepared according to
its accounting procedures. See section
471(c)(1).
calculation of earnings and profits.
Definitions
loan (defined later).
Change in accounting method. To
change its method of accounting used to
report taxable income, for income as a
whole or for the treatment of any material
item, the IC-DISC must file Form 3115,
Application for Change in Accounting
Method.
The following definitions are based on
sections 993 and 994.
foreign export corporation (defined later).
7. Certain obligations that are issued,
guaranteed or insured by the U.S.
Export-Import Bank or the Foreign Credit
Insurance Association and that the
IC-DISC acquires from such bank or
association or from the person who sold or
bought the goods or services from which
the obligations arose.
8. Certain obligations held by the
IC-DISC that were issued by a domestic
corporation organized to finance export
property sales under an agreement with
the Export-Import Bank under which the
domestic corporation makes export loans
that the Export-Import Bank guarantees.
Note. “United States,” as used in the
following instructions, includes Puerto
Rico and U.S. possessions, as well as the
50 states and the District of Columbia.
See the Instructions for Form 3115 and
Section 993
Pub. 538 for more information and
exceptions. Also see Rev. Proc. 2018-31,
2018-22 I.R.B. 637 (or any successor).
Qualified export receipts. Qualified
export receipts are any of the following.
1. Gross receipts from selling,
exchanging, or otherwise disposing of
export property.
2. Gross receipts from leasing or
renting export property that the lessee
uses outside the United States.
3. Gross receipts from supporting
services related to any qualified sale,
exchange, lease, rental, or other
disposition of export property by the
IC-DISC.
Accounting Periods
An IC-DISC must figure its taxable income
on the basis of a tax year. A tax year is the
annual accounting period an IC-DISC
uses to keep its records and report its
income and expenses. Generally,
IC-DISCs may use a calendar year or a
fiscal year.
9. Amounts (other than reasonable
working capital) on deposit in the United
States used to acquire qualified export
assets within the time provided by
Regulations section 1.993-2(j).
Note. The tax year of an IC-DISC must be
the same as the tax year of the principal
shareholder which, at the beginning of the
IC-DISC tax year, has the highest
4. Gross receipts from selling,
See Regulations section 1.993-2 for
more information.
exchanging, or otherwise disposing of
qualified export assets that are not export
percentage of voting power. If two or more
Instructions for Form 1120-IC-DISC (Rev. 12-2021)
-3-
qualified export assets listed in items 3
and
10% of the IC-DISC's export promotion
expenses attributable to the receipts;
Export property. Export property must
be:
2. 50% of the IC-DISC's and the
seller's combined taxable income from
qualified export receipts on the property,
derived from the IC-DISC's sale of the
property plus 10% of the IC-DISC's export
promotion expenses attributable to the
receipts; or
3. Taxable income based on the sale
price actually charged, provided that
under section 482 the price actually
charged clearly reflects the taxable
income of the IC-DISC and the related
person.
1. Made, grown, or extracted in the
United States by a person other than an
IC-DISC;
2. Neither excluded under section
993(c)(2) nor declared in short supply
under section 993(c)(3);
3. Held mainly for sale, lease, or rent
in the ordinary course of a trade or
business, by or to an IC-DISC for direct
use, consumption, or disposition outside
the United States;
4. Property not more than 50% of the
FMV of which is attributable to articles
imported into the United States; and
5. Neither sold nor leased by or to
another IC-DISC that, immediately before
or after the transaction, either belongs to
the same controlled group (defined in
section 993(a)(3)) as your IC-DISC or is
related to your IC-DISC in a way that
would result in losses being denied under
section 267.
The adjusted basis of the qualified
•
export assets in items 1–4 of Qualified
export assets, earlier, that the foreign
corporation held at the end of the tax year
is at least 95% of the adjusted basis of all
assets it held at the end of such tax year.
2. A real property holding
company is a related foreign export
corporation if:
The IC-DISC directly owns more than
•
50% of the total voting power of the
foreign corporation's stock, and
Its exclusive function is to hold title to
•
Schedule P (Form 1120-IC-DISC),
Intercompany Transfer Price or
Commission, explains the intercompany
pricing rules in more detail.
real property located outside the United
States for the exclusive use (under lease
or otherwise) of the IC-DISC and
applicable foreign law forbids the IC-DISC
to hold title to the property.
Section 994(c), Export
Promotion Expenses
3. An associated foreign
corporation is a related foreign export
corporation if:
These are expenses incurred to help
distribute or sell export property for use or
distribution outside the United States.
These expenses do not include income
tax, but do include 50% of the cost of
shipping the export property on
The IC-DISC or a controlled group of
•
corporations to which the IC-DISC
See Regulations section 1.993-3 for
details.
belongs owns less than 10% of the total
voting power of the foreign corporation's
stock (section 1563 defines a controlled
group in this sense, and sections 1563(d)
and (e) define ownership), and
A producer's loan. A producer's loan
U.S.-owned and U.S.-operated aircraft or
ships in those cases where U.S. law or
regulations do not require that the export
property be shipped on such aircraft or
ships.
must meet all the following terms.
1. Satisfy the requirements of sections
The IC-DISC's ownership of the foreign
•
993(d)(2) and (3).
corporation's stock or securities
reasonably furthers transactions that lead
to qualified export receipts for the
IC-DISC.
2. Not raise the unpaid balance due
the IC-DISC on all of its producer's loans
above the level of accumulated IC-DISC
income it had at the start of the month in
which it made the loan.
3. Be evidenced by a note, or other
written evidence of indebtedness, with a
stated maturity date no more than 5 years
after the date of the loan.
Deficits in Earnings and Profits
A deficit in earnings and profits is
See Regulations section 1.993-5 for
more information about related foreign
export corporations.
chargeable in the following order.
1. First, to any earnings and profits
other than accumulated IC-DISC income
or previously taxed income.
Gross receipts. Gross receipts are the
IC-DISC's total receipts from selling,
leasing, or renting property that the
corporation holds for sale, lease, or rent in
the ordinary course of its trade or business
and gross income from all other sources.
For commissions on selling, leasing, or
renting property, include gross receipts
from selling, leasing, or renting the
property on which the commissions arose.
See Regulations section 1.993-6 for more
information.
2. Second, to any accumulated
IC-DISC income.
4. Be made to a person engaged in a
U.S. trade or business of making, growing,
or extracting export property.
3. Third, to previously taxed income.
Do not apply any deficit in earnings and
profits against accumulated IC-DISC
income that, as a result of the
5. Be designated as a producer's loan
when made.
corporation's revoking its election to be
treated as an IC-DISC (or other
disqualification), is deemed distributed to
the shareholders. See section 995(b)(2)
(A).
For more information, see Schedule Q
(Form 1120-IC-DISC), Borrower's
Certificate of Compliance With the Rules
for Producer's Loans, and Regulations
section 1.993-4.
Section 994, Intercompany
Pricing Rules
A related foreign export corporation.
A related foreign export corporation
includes the following.
1. A foreign international sales
corporation is a related foreign export
corporation if:
Penalties
If a related person described in section
482 sells export property to the IC-DISC,
use the intercompany pricing rules to
figure taxable income for the IC-DISC and
the seller. These rules generally do not
permit the related person to price at a loss.
Under intercompany pricing, the
The IC-DISC may have to pay the
following penalties unless it can show that
it had reasonable cause for not providing
information or not filing a return.
$100 for each instance of not providing
•
The IC-DISC directly owns more than
•
required information, up to $25,000 during
the calendar year.
50% of the total voting power of the
foreign corporation's stock;
IC-DISC's taxable income from the sale
(regardless of the price actually charged)
may not exceed the greatest of:
$1,000 for not filing a return.
•
For the tax year that ends with or within
•
See section 6686 for other details.
If you receive a notice about penalty
the IC-DISC's tax year, at least 95% of the
foreign corporation's gross receipts
consists of the qualified export receipts
described in items 1–4 of Qualified export
receipts, earlier, and interest on the
1. 4% of qualified export receipts on
and interest after you file Form
the IC-DISC's sale of the property plus
1120-IC-DISC, send us an explanation
and we will determine if you meet
Instructions for Form 1120-IC-DISC (Rev. 12-2021)
-4-
reasonable-cause criteria. Do not attach
an explanation when you file Form
1120-IC-DISC.
United States or U.S. possessions can
use the online application. Foreign
corporations should call 267-941-1099
(not a toll free number) for more
Question G(1)
For rules of stock attribution, see section
267(c). If the owner of the voting stock of
the IC-DISC was an alien individual or a
foreign corporation, partnership, trust, or
estate, check the “Yes” box in the “Foreign
owner” column and enter the name of the
owner's country, in parentheses, in the
address column. “Owner's country” for
individuals is their country of residence;
for other foreign entities, it is the country in
which organized or otherwise created, or
in which administered.
Trust fund recovery penalty. This
penalty may apply if certain excise,
income, social security, and Medicare
taxes that must be collected or withheld
are not collected or withheld, or these
taxes are not paid. These taxes are
generally reported on:
information on obtaining an EIN. See the
Instructions for Form SS-4.
EIN applied for but not received. If the
corporation has not received its EIN by the
time the return is due, enter "Applied For"
and the date the corporation applied in the
space for the EIN. However, if the
Form 720, Quarterly Federal Excise
•
Tax Return;
Form 941, Employer's QUARTERLY
corporation is filing its return electronically,
an EIN is required at the time the return is
filed. An exception applies to subsidiaries
of corporations whose returns are filed
with the parent's electronically filed
•
Federal Tax Return;
Form 944, Employer's Annual Federal
Taxable Income
•
Tax Return; or
An IC-DISC must figure its taxable income
although it does not pay most taxes. An
IC-DISC is exempt from the corporate
income tax and accumulated earnings tax.
Form 945, Annual Return of Withheld
consolidated Form 1120. These
•
Federal Income Tax.
subsidiaries should enter "Applied For" in
the space for the EIN on their returns. The
subsidiaries' returns are identified under
the parent corporation's EIN.
The trust fund recovery penalty may be
imposed on all persons who are
determined by the IRS to have been
responsible for collecting, accounting for,
and paying over these taxes, and who
acted willfully in not doing so. The penalty
is equal to the full amount of the unpaid
trust fund tax. See the Instructions for
Form 720 or Pub. 15 (Circular E),
Employer's Tax Guide, for details,
including the definition of responsible
persons.
An IC-DISC may not claim the general
business credit or the credit for fuel
produced from a nonconventional source.
In addition, these credits may not be
passed through to shareholders of the
corporation.
For more information, see the
Instructions for Form SS-4.
Item E—Total Assets
Enter the IC-DISC's total assets (as
determined by the accounting method
regularly used in keeping the IC-DISC's
books and records) at the end of the tax
year. If there are no assets at the end of
the tax year, enter -0-.
Line 6a. Net Operating Loss (NOL)
Deduction
The NOL deduction is the amount of the
NOL carryover and NOL carryback. The
2-year carryback rule does not apply to
NOLs arising in tax years ending after
December 31, 2017. Exceptions apply to
NOLs of certain farming losses and NOLs
of insurance companies (other than life
insurance companies). See section 172(b)
for details.
Other penalties. Other penalties may be
imposed for negligence, substantial
understatement of tax, reportable
Item F—Initial Return, Final Return,
Name Change, Address Change,
or Amended Return
transaction understatements, and fraud.
See sections 6662, 6662A, and 6663.
If this is the IC-DISC's initial or final
•
Specific Instructions
Entity Information
Period Covered
Enter the tax year in the space provided at
the top of the form. For a calendar year,
enter the last two digits of the calendar
year in the first entry space. For a fiscal or
short tax year return, fill in the tax year
space at the top of the form.
return, check the applicable box in item F
at the top of the form.
The following special rules apply. The
corporation may elect under section
965(n) to reduce the amount of the NOL
for a tax year and the amount of taxable
income reduced by NOL carryovers or
carrybacks to such tax year. See section
965(n) for more information.
If the IC-DISC has changed its address
•
since it last filed a return, check the box for
“Address change.”
Note. If a change in address or
responsible party occurs after the return is
filed, use Form 8822-B, Change of
Address or Responsible Party —
Business, to notify the IRS. See the
instructions for Form 8822-B for details.
Line 7. Taxable Income
If the IC-DISC uses either the gross
receipts method or combined taxable
income method to figure the IC-DISC's
taxable income attributable to any
transactions involving products or product
lines, attach Schedule P (Form
1120-IC-DISC). Show in detail the
IC-DISC's taxable income attributable to
each such transaction or group of
transactions.
Address
If the IC-DISC changed its name since it
•
Include the suite, room, or other unit
number after the street address. If the
Post Office does not deliver mail to the
street address and the corporation has a
P.O. box, show the box number instead.
last filed a return, check the box for “Name
change.” Generally, an IC-DISC must also
have amended its articles of incorporation
and filed the amendment with the state in
which it was incorporated.
To correct an error on a Form
•
Item C—Employer Identification
Number (EIN)
1120-IC-DISC already filed, file an
amended Form 1120-IC-DISC and check
the “Amended return” box. If the amended
return changes the income or distributions
of income to shareholders, an amended
Schedule K (Form 1120-IC-DISC) must be
filed with the amended Form
Net operating loss (NOL). If line 7
(figured without regard to the items listed
above under minimum taxable income) is
zero or less, the corporation may have an
NOL that can be carried back or forward
as a deduction to other tax years.
Enter the corporation's EIN. If the
corporation does not have an EIN, it must
apply for one. An EIN may be applied for:
Online – Go to IRS.gov/EIN. The EIN is
•
issued immediately once the application
information is validated.
1120-IC-DISC and given to each
shareholder. Write “AMENDED” across
the top of the corrected Schedule K you
give to each shareholder.
Generally, a corporation first carries back
an NOL attributable to farming losses 2
tax years. However, the corporation can
elect to waive the carryback period and
By faxing or mailing Form SS-4,
•
Application for Employer Identification
Number. Corporations located in the
Instructions for Form 1120-IC-DISC (Rev. 12-2021)
-5-
instead carry the farming NOL forward to
future tax years. See the Instructions for
Form 1139 for other special rules and
elections.
million or less (indexed for inflation) for the
3 preceding tax years, and (b) is not a tax
shelter (as defined in section 448(d)(3)).
See section 471(c).
A small business taxpayer is not
required to capitalize costs under section
263A. See section 263A(i).
For details, see Regulations section
1.263A-3(d).
Note. The NOL is limited to 80% of
taxable income (determined without
regard to the net operating loss) for losses
arising in tax years beginning after
December 31, 2017.
Enter amounts paid for merchandise
during the tax year on line 2. The amount
the IC-DISC may deduct for the tax year is
figured on line 8.
Enter on line 4 the balance of section
263A costs paid or incurred during the tax
year not includible on lines 2, 3, and 5.
All filers not using the cash method of
accounting should see Section 263A
uniform capitalization rules, later, before
completing Schedule A.
Line 5. Other Costs
Enter on line 5 any costs paid or incurred
during the tax year not entered on lines 2
through 4.
Line 8. Refundable Credit for
Federal Tax Paid on Fuels
Enter the credit from Form 4136.
If the IC-DISC uses intercompany
pricing rules (for purchases from a related
supplier), use the transfer price figured in
Part II of Schedule P (Form
Schedule A
Cost of Goods Sold
Line 7. Inventory at End of Year
See Regulations sections 1.263A-1
through 1.263A-3 for details on figuring
the amount of additional section 263A
costs to be included in ending inventory. If
the IC-DISC accounts for inventoriable
items in the same manner as
1120-IC-DISC).
Generally, inventories are required at the
beginning and end of each tax year if the
purchase or sale of merchandise is an
income-producing factor. See Regulations
section 1.471-1. If inventories are
If the IC-DISC acts as another person's
commission agent on a sale, do not enter
any amount in Schedule A for the sale.
See Schedule P (Form 1120-IC-DISC).
required, you must generally use an
accrual method of accounting for sales
and purchases of inventory items.
nonincidental materials and supplies,
enter on line 7 the portion of your raw
materials and merchandise purchased for
resale that was included in the total on
line 6 but was not sold during the year.
Line 1. Inventory at Beginning of
Year
Exceptions for certain taxpayers. A
small business taxpayer (defined below)
can adopt or change its accounting
method to account for inventories in the
same manner as materials and supplies
that are nonincidental, or conform to its
treatment of inventories in an applicable
financial statement (as defined in section
451(b)(3)) (or the method of accounting
used in its books and records prepared in
accordance with its accounting
If the IC-DISC is changing its method of
accounting for the current tax year, it must
refigure last year's closing inventory using
the new method of accounting and enter
the result on line 1. If there is a difference
between last year's closing inventory and
the refigured amount, attach an
Lines 9a Through 9f. Inventory
Valuation Methods
Inventories may be valued at:
Cost,
•
Cost or market value (whichever is
•
explanation and take it into account when
figuring the IC-DISC's section 481(a)
adjustment.
lower), or
Any other method approved by the IRS
•
that conforms to the requirements of the
applicable regulations cited later.
procedures, if applicable financial
statements are not used). See section
471(c)(1).
If you account for inventories in the
same manner as nonincidental materials
and supplies, inventory costs for raw
materials purchased for use in producing
finished goods and merchandise
Line 4. Additional Section 263A
Costs
An entry is required on this line only for
IC-DISCs that have elected a simplified
method of accounting.
However, if the IC-DISC is using the
cash method of accounting, it is required
to use cost.
IC-DISCs that use erroneous valuation
methods must change to a method
permitted for federal income tax purposes.
Use Form 3115 to make this change. See
the Instructions for Form 3115. Also see
Pub. 538.
For IC-DISCs that have elected the
simplified production method, additional
section 263A costs are generally those
costs, other than interest, that were not
capitalized under the IC-DISC's method of
accounting immediately prior to the
effective date of section 263A but are now
required to be capitalized under section
263A. For details, see Regulations section
1.263A-2(b).
purchased for resale are deductible in the
year the finished goods or merchandise
are sold (but not before the year you paid
for the raw materials or merchandise, if
you are also using the cash method).
Under this accounting method, you can
currently deduct expenditures for direct
labor and all indirect costs that would
otherwise be included in inventory costs.
See the instructions for lines 2 and 7.
A small business taxpayer claiming
exemption from the requirement to keep
inventories is changing its method of
accounting for purposes of section 481.
For additional guidance on this method of
accounting, see Pub. 538. For guidance
on adopting or changing to this method of
accounting, see Form 3115 and its
instructions.
On line 9a, check the method(s) used
for valuing inventories. Under lower of cost
or market, the term “market” (for normal
goods) means the current bid price
prevailing on the inventory valuation date
for the particular merchandise in the
volume usually purchased by the
taxpayer. If section 263A applies to the
taxpayer, the basic elements of cost must
reflect the current bid price of all direct
costs and all indirect costs properly
allocable to goods on hand at the
inventory date.
For IC-DISCs that have elected the
simplified resale method, additional
section 263A costs are generally those
costs incurred with respect to the following
categories.
Off-site storage or warehousing.
Purchasing.
•
•
•
Handling, such as processing,
assembling, repackaging, and
transporting.
Inventory may be valued below cost
when the merchandise is unsalable at
normal prices or unusable in the normal
way because the goods are subnormal
Small business taxpayer. A small
business taxpayer is a taxpayer that (a)
has average annual gross receipts of $26
General and administrative costs
•
(mixed service costs).
-6-
Instructions for Form 1120-IC-DISC (Rev. 12-2021)
due to damage, imperfections, shopwear,
etc., within the meaning of Regulations
section 1.471-2(c). The goods may be
valued at the current bona fide selling
price, minus direct cost of disposition (but
not less than scrap value). Bona fide
selling price means actual offering of
goods during a period ending not later
than 30 days after inventory date.
method, including information on safe
harbor methods. For information on a
book safe harbor method of accounting for
corporations that use the nonaccrual
experience method of accounting, see
Rev. Proc. 2011-46, 2011-42 I.R.B. 518,
as modified by Rev. Proc. 2016-29,
2016-21 I.R.B. 880. Also see the
following conditions to meet the
destination test.
1. Within the United States to a carrier
or freight forwarder for ultimate delivery
outside the United States to a buyer or
lessee.
2. Within the United States to a buyer
or lessee who, within 1 year of the sale or
lease, delivers it outside the United States
or delivers it to another person for ultimate
delivery outside the United States.
3. Within or outside the United States
to an IC-DISC that is not a member of the
same controlled group (as defined in
section 993(a)(3)) as the seller or lessor.
4. Outside the United States by
means of the seller's delivery vehicle
(ship, plane, etc.).
5. Outside the United States to a
buyer or lessee at a storage or assembly
site if the property was previously shipped
from the United States by the seller or
lessor.
6. Outside the United States to a
purchaser or lessee if the property was
previously shipped by the seller or lessor
from the United States and if the property
is located outside the United States
pursuant to a prior lease by the seller or
lessor, and either (a) the prior lease
terminated at the expiration of its term (or
by the action of the prior lessee acting
alone), (b) the sale occurred or the term of
the subsequent lease began after the time
at which the term of the prior lease would
have expired, or (c) the lessee under the
subsequent lease is not a related person
(a member of the same controlled group
as defined in section 993(a)(3) or a
relationship that would result in a
Instructions for Form 3115 for procedures
to obtain automatic consent to change to
this method or make certain changes
within this method.
If this is the first year the Last-in,
First-out (LIFO) inventory method was
either adopted or extended to inventory
goods not previously valued under the
LIFO method provided in section 472,
attach Form 970, Application To Use LIFO
Inventory Method, or a statement with the
information required by Form 970. Also
check the LIFO box on line 9c. On line 9d,
enter the amount or the percent of total
closing inventories computed under
section 472. Estimates are acceptable.
Corporations that qualify to use the
nonaccrual experience method should
attach a statement showing total gross
receipts, the amount not accrued as a
result of the application of section 448(d)
(5), and the net amount accrued. Enter the
amount on the applicable line of
Schedule B.
Commissions: Special Rule
If the IC-DISC changed or extended its
inventory method to LIFO and had to write
up the opening inventory to cost in the
year of election, report the effect of the
write-up as other income (Schedule B,
line 2j or 3f), proportionately over a 3-year
period that begins with the year of the
LIFO election.
Note. “United States,” as used in the
following instructions, includes Puerto
Rico and U.S. possessions, as well as the
50 states and the District of Columbia.
If the IC-DISC received commissions
on selling or renting property or furnishing
services, list in column (b) the gross
receipts from the sales, rentals, or
services on which the commissions arose,
and in column (c), list the commissions
earned. In column (d), report receipts from
noncommissioned sales or rentals of
property or furnishing of services, as well
as all other receipts.
Schedule B
Gross Income
If an income item falls into two or more
categories, report each part on the
applicable line. For example, if interest
income consists of qualified interest from
a foreign international sales corporation
and nonqualifying interest from a domestic
obligation, enter the qualified interest on
an attached statement for line 2g and the
nonqualifying interest on an attached
statement for line 3f.
For purposes of completing lines 1a
and 1b, related purchasers are members
of the same controlled group (as defined
in section 993(a)(3)) as the IC-DISC. All
other purchasers are unrelated.
disallowance of losses under section 267
or section 707(b)) immediately before or
after the lease with respect to the lessor,
and the prior lease was terminated by the
action of the lessor (acting alone or
together with the lessee).
For gain from selling qualified export
assets, attach a separate statement in
addition to the forms required for lines 2h
and 2i.
A qualified export sale or lease must
meet a use test and a destination test in
order to qualify.
Line-by-Line Instructions
The use test applies at the time of the
sale or lease. If the property is used
predominantly outside the United States
and the sale or lease is not for ultimate
use in the United States, it is a qualified
export sale or lease. Otherwise, if a
Nonaccrual experience method for
service providers. Accrual method
corporations are not required to accrue
certain amounts to be received from the
performance of services that, on the basis
of their experience, will not be collected, if:
Line 1a. Enter the IC-DISC's qualified
export receipts from export property sold
to foreign, unrelated buyers for delivery
outside the United States. Do not include
amounts entered on line 1b.
Line 1b. Enter the IC-DISC's qualified
export receipts from export property sold
for delivery outside the United States to a
related foreign entity for resale to a
foreign, unrelated buyer, or an unrelated
buyer when a related foreign entity acts as
commission agent.
reasonable person would believe that the
property will be used in the United States,
the sale or lease is not a qualified export
sale or lease. For example, if property is
sold to a foreign wholesaler and it is
known in trade circles that the wholesaler,
to a substantial extent, supplies the U.S.
retail market, the sale would not be a
qualified export sale, and the receipts
would not be qualified export receipts.
The services are in the fields of health,
•
law, engineering, architecture, accounting,
actuarial science, performing arts, or
consulting; or
The corporation's average annual gross
•
receipts for any prior 3-tax-year period
does not exceed $26 million. For more
details, see section 448(d)(5).
Line 2a. Enter the gross amount received
from leasing or subleasing export property
to unrelated persons for use outside the
United States.
This provision does not apply to any
amount if interest is required to be paid on
the amount or if there is any penalty for
failure to timely pay the amount. See
Regulations section 1.448-2 for
Regardless of where title or risk of loss
shifts from the seller or lessor, the property
must be delivered under one of the
Receipts from leasing export property
may qualify in some years and not in
information on the nonaccrual experience
Instructions for Form 1120-IC-DISC (Rev. 12-2021)
-7-
others, depending on where the lessee
uses the property. Enter only receipts that
qualify during the tax year. (Use
appropriate lines of Form 3115 to make
the election. See the Instructions for Form
3115 for more information.
Include any net positive section 481(a)
adjustment on Schedule B, line 2j or 3f
(depending on whether the inventory,
when sold, will generate qualified export
receipts). If the net section 481(a)
adjustment is negative, report it on
Schedule E, line 2g.
dividends-received deduction under
section 243 is limited by section 854(b).
The corporation should receive a notice
from the RIC specifying the amount of
dividends that qualify for the deduction.
Schedule E to deduct expenses such as
repairs, interest, taxes, and depreciation.)
Line 2b. A service connected to a sale or
lease is related to it if the service is usually
furnished with that type of sale or lease in
the trade or business where it took place.
A service is subsidiary if it is less important
than the sale or lease.
Report so-called dividends or earnings
received from mutual savings banks, etc.,
as interest. Do not treat them as
dividends.
Line 3b. Enter receipts from selling
products subsidized under a U.S. program
if they have been designated as excluded
receipts.
Line 2, Column (a)
Enter on line 2:
Line 2c. Include receipts from
engineering or architectural services on
foreign construction projects abroad or
proposed for location abroad. These
services include feasibility studies, design
and engineering, and general supervision
of construction, but do not include
services connected with mineral
exploration.
Dividends (except those received on
•
certain debt-financed stock acquired after
July 18, 1984) that are received from
20%-or-more-owned domestic
Line 3c. Enter receipts from selling or
leasing property or services for use by any
part of the U.S. government if law or
regulations require U.S. products or
services to be used.
corporations subject to income tax and
that are eligible for the 65% deduction
under section 243(c), and
Taxable distributions from an IC-DISC
•
Line 3d. Enter receipts from any IC-DISC
that belongs to the same controlled group
(as defined in section 993(a)(3)).
Line 2d. Include receipts for export
management services provided to
unrelated IC-DISCs.
or former DISC that are considered
eligible for the 65% deduction.
Line 3e. Nonqualified dividends and
Line 2e. Qualified dividends and
Line 3, Column (a)
Enter the following.
inclusions from Schedule C, line 20a.
inclusions from Schedule C, line 19a.
Line 3f. Include in an attached statement
any nonqualifying gross receipts not
reported on lines 3a through 3e. Do not
offset an income item against a similar
expense item.
The IC-DISC may have to report a
section 481(a) adjustment on line 3f. See
Section 481(a) adjustment, earlier, for
additional information.
Dividends received on certain
•
Line 2f. Include interest received on any
debt-financed stock acquired after July 18,
1984, from domestic and foreign
loan that qualifies as a producer's loan.
Line 2g. Enter interest on any qualified
export asset other than interest on
corporations subject to income tax and
that would otherwise be subject to the
dividends-received deduction under
section 243(a)(1), 243(c), or 245(a).
Generally, debt-financed stock is stock
that the corporation acquired by incurring
a debt (for example, it borrowed money to
buy the stock).
producer's loans. For example, include
interest on accounts receivable from sales
in which the IC-DISC acted as a principal
or agent and interest on certain obligations
issued, guaranteed, or insured by the
Export-Import Bank or the Foreign Credit
Insurance Association.
Schedule C
Dividends received from a RIC on
•
Dividends, Inclusions, and
debt-financed stock. The amount of
dividends eligible for the
Line 2h. On Schedule D (Form 1120),
Capital Gains and Losses, report in detail
every sale or exchange of a capital asset,
even if there is no gain or loss.
In addition to Schedule D (Form 1120),
attach a separate statement figuring gain
from the sale of qualified export assets.
Special Deductions
dividends-received deduction is limited by
section 854(b). The corporation should
receive a notice from the RIC specifying
the amount of dividends that qualify for the
deduction.
For purposes of the 20% ownership test
on lines 1 through 7, the percentage of
stock owned by the corporation is based
on voting power and value of the stock.
Preferred stock described in section
1504(a)(4) is not taken into account.
Line 2i. Enter the net gain or loss from
line 18, Part II, Form 4797, Sales of
Business Property.
In addition to Form 4797, attach a
separate statement figuring gain from the
sale of qualified export assets.
Line 3, Columns (b) and (c)
Dividends received on certain
Line 1, Column (a)
Enter dividends (except those received on
certain debt-financed stock acquired after
July 18, 1984—see section 246A) that:
debt-financed stock acquired after July 18,
1984, are not entitled to the full 50% or
65% dividends-received deduction. The
50% or 65% deduction is reduced by a
percentage that is related to the amount of
debt incurred to acquire the stock. See
section 246A. Also see section 245(a)
before making this computation for an
additional limitation that applies to
Are received from
•
Line 2j. Enter any other qualified export
receipts for the tax year not reported on
lines 2a through 2i.
less-than-20%-owned domestic
corporations subject to income tax, and
Qualify for the 50% deduction under
•
section 243(a)(1).
Section 481(a) adjustment. The
IC-DISC may have to make an adjustment
under section 481(a) to prevent amounts
of income or expense from being
Also include the following on line 1.
dividends received from foreign
Taxable distributions from an IC-DISC
•
corporations. Attach a statement to Form
1120-IC-DISC showing how the amount
on line 3, column (c), was figured.
or former DISC that are designated as
being eligible for the 50% deduction and
certain dividends of Federal Home Loan
Banks. See section 246(a)(2).
duplicated or omitted. This section 481(a)
adjustment period is generally 1 year for a
net negative adjustment and 4 years for a
net positive adjustment. However, an
IC-DISC may elect to use a 1-year
Line 4, Column (a)
Enter dividends received on the preferred
stock of a less-than-20%-owned public
utility that is subject to income tax and is
Dividends received (except those
•
received on certain debt-financed stock
acquired after July 18, 1984) from a
regulated investment company (RIC). The
amount of dividends eligible for the
adjustment period if the net section 481(a)
adjustment for the change is less than
$25,000. The IC-DISC must complete the
Instructions for Form 1120-IC-DISC (Rev. 12-2021)
-8-
3. Add lines 2, 5, 7, and 8, column
(c), and the part of the deduction
on line 3, column (c), that is
allowed the deduction provided in section
247 for dividends paid.
Lines 12a, 12b, and 12c, Column
(a)
attributable to dividends received
from 20%-or-more-owned
Enter Subpart F inclusions derived from
Line 5, Column (a)
the sale by a CFC.
corporations
.
.
.
.
.
.
.
.
.
.
Enter dividends received on preferred
stock of a 20%-or-more-owned public
utility that is subject to income tax and is
allowed the deduction under section 247
for dividends paid.
Line 12a: Enter the foreign-source
•
4. Enter the smaller of line 2 or
portion of any Subpart F inclusions
attributable to the sale or exchange by a
CFC of stock in another foreign
corporation described in section 964(e)
(4). This should equal the U.S.
line 3. If line 3 is larger than
line 2, do not complete the rest of
this worksheet. Instead, enter the
amount from line 4 in the margin
next to line 9 of Schedule C and
on line 6b, page 1, Form
shareholder's pro rata share of the amount
reported on Form 5471, Information
Return of U.S. Persons With Respect to
Certain Foreign Corporations, Schedule I,
line 1a.
Line 6, Column (a)
1120-IC-DISC
.
.
.
.
.
.
.
.
.
Enter the U.S.-source portion of dividends
5. Enter the total amount of
dividends received from
20%-or-more-owned
that:
Are received from
•
corporations that are included on
lines 2, 3, 5, 7, and 8 of column
less-than-20%-owned foreign
corporations, and
Line 12b: Enter the pro rata share of
•
Subpart F inclusions attributable to hybrid
dividends of tiered corporations under
section 245A(e)(2). This should equal the
U.S. shareholder's pro rata share of the
amount reported on Form(s) 5471,
Schedule I, line 1b.
(a)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Qualify for the 50% deduction under
•
6. Subtract line 5 from line 1
7. Multiply line 6 by 50%
section 245(a). To qualify for the 50%
deduction, the corporation must own at
least 10% of the stock of the foreign
corporation by vote and value.
(0.50)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
8. Subtract line 3 above from
column (c) of line 9
9. Enter the smaller of line 7 or
line 8
.
.
.
.
Line 12c: Enter all other amounts
•
.
.
.
.
.
.
.
.
.
.
.
.
Line 7, Column (a)
included in income under section 951,
which should equal the U.S. shareholder's
pro rata share of the sum of the amounts
on lines 1(c), 1(d), 1(e), 1(f), 2, 3, and 4 of
Schedule I of Form(s) 5471.
10. Dividends-received deduction
after limitation. Add lines 4 and
9. (If this is less than line 9 of
Schedule C, enter the smaller
amount on line 6b, page 1, Form
1120-IC-DISC, and in the margin
next to line 9 of
Enter the U.S.-source portion of dividends
that are received from
20%-or-more-owned foreign corporations
and that qualify for the 65% deduction
under section 245(a).
Line 13, Column (a)
Schedule C.)
.
.
.
.
.
.
.
.
.
Line 8, Column (a)
Enter amounts included in income under
the section 951A GlLTI provision from
Form 8992, Part II, line 5. If you also have
a Form 5471 reporting requirement,
please attach Form 5471.
Enter dividends received from wholly
owned foreign subsidiaries that are
eligible for the 100% deduction under
section 245(b).
Line 10, Column (a)
Enter the foreign-source portion of
dividends that:
Are received from specified
•
Line 14, Column (a)
Reserved for future use.
In general, the deduction under section
245(b) applies to dividends paid out of the
earnings and profits of a foreign
10%-owned foreign corporations (as
defined in section 245A(b)), including gain
from the sale of stock of a foreign
corporation for a tax year during which:
corporation that is treated as a dividend
for purposes of applying section 245A
under section 1248(a) and (j); and
Line 14, Column (c)
Reserved for future use.
All of its outstanding stock is owned
•
(directly or indirectly) by the domestic
corporation receiving the dividends, and
Qualify for the 100% deduction under
•
All of its gross income from all sources
•
section 245A excluding any hybrid
dividends.
Line 15, Column (a)
Include the following.
is effectively connected with the conduct
of a trade or business within the United
States.
Dividends (other than capital gain
•
Line 11, Column (a)
distributions reported on Schedule D
(Form 1120) and exempt-interest
dividends) that are received from RICs
and that are not subject to the 50%
deduction.
Enter foreign dividends not reportable on
Line 9, Column (c)
line 3, 6, 7, 8, or 10 of column (a).
Generally, line 9, column (c), may not
exceed the amount from the following
worksheet. However, in a year in which an
NOL occurs, this limitation does not apply
even if the loss is created by the
Include on line 11 any hybrid dividends
•
from a controlled foreign corporation
(CFC). Hybrid dividends are generally
dividends received from a CFC that would
otherwise be reported on line 10 except
the CFC receives a deduction (or other tax
benefit) with respect to any income, war
profits, or excess profits taxes imposed by
any foreign country or possession of the
United States.
Dividends from tax-exempt
•
organizations.
Dividends (other than capital gain
•
distributions) received from a real estate
investment trust that, for the tax year of the
trust in which the dividends are paid,
qualifies under sections 856 through 860.
dividends-received deduction. See
sections 172(d) and 246(b).
Line 9, Column (c) Worksheet
Dividends not eligible for a
•
dividends-received deduction, which
Also include on line 11 the corporation's
•
1. Refigure line 5, page 1, Form
1120-IC-DISC, without any
adjustment under section 1059
and without any capital loss
carryback to the tax year under
include the following.
share of distributions from a section 1291
fund from Form 8621, to the extent that
the amounts are taxed as dividends under
section 301. See Form 8621 and the
Instructions for Form 8621.
1. Dividends received on any share of
stock held for less than 46 days during the
91-day period beginning 45 days before
the ex-dividend date. When counting the
number of days the corporation held the
section 1212(a)(1)
2. Multiply line 1 by 65%
(0.65)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Instructions for Form 1120-IC-DISC (Rev. 12-2021)
-9-
stock, you may not count certain days
during which the corporation's risk of loss
was diminished. See section 246(c)(4)
and Regulations section 1.246-5 for more
details.
2. Dividends attributable to periods
totaling more than 366 days that the
IC-DISC received on any share of
Tangible personal property produced
by a corporation includes a film, sound
recording, videotape, book, or similar
property.
IC-DISCs subject to the section 263A
uniform capitalization rules are required to
capitalize:
Golden parachute payments. A portion
of the payments made by a corporation to
key personnel that exceeds their usual
compensation may not be deductible. This
occurs when the corporation has an
agreement (golden parachute) with these
key employees to pay them these excess
amounts if control of the corporation
changes. See section 280G and
1. Direct costs of assets produced or
preferred stock held for less than 91 days
during the 181-day period that began 90
days before the ex-dividend date. When
counting the number of days the IC-DISC
held the stock, you may not count certain
days during which the IC-DISC's risk of
loss was diminished. See section 246(c)
(4) and Regulations section 1.246-5 for
more details. Preferred dividends
acquired for resale, and
Regulations section 1.280G-1. Also see
2. Certain indirect costs (including
taxes) that are properly allocable to
property produced or property acquired for
resale.
Election to deduct business start-up
and organizational costs.
A
corporation can elect to deduct a limited
amount of start-up and organizational
costs it paid or incurred. Any remaining
costs must generally be amortized over a
180-month period. See sections 195 and
248 and the related regulations.
For inventory, some of the indirect
expenses that must be capitalized are:
Administration expenses;
Taxes;
•
•
•
•
•
attributable to periods totaling less than
367 days are subject to the 46-day holding
period rule in item 1.
Depreciation;
Insurance;
Time for making an election. The
corporation generally elects to deduct
start-up or organizational costs by
claiming the deduction on its income tax
return filed by the due date (including
extensions) for the tax year in which the
active trade or business begins. However,
for start-up or organizational costs paid or
incurred before September 9, 2008, the
corporation is required to attach a
statement to its return to elect to deduct
such costs.
For more details, including special
rules for costs paid or incurred before
September 9, 2008, see the Instructions
for Form 4562. Also see Pub. 535,
Business Expenses.
Compensation paid to officers
3. Dividends on any share of stock to
attributable to services;
the extent the IC-DISC is under an
Rework labor; and
•
•
obligation (including a short sale) to make
related payments with respect to positions
in substantially similar or related property.
Contributions to pension, stock bonus,
and certain profit-sharing, annuity, or
deferred compensation plans.
Any other taxable dividend income not
•
properly reported elsewhere on
Schedule C.
Regulations section 1.263A-1(e)(3)
specifies other indirect costs that relate to
production or resale activities that must be
capitalized and those that may be
currently deductible.
Interest expense paid or incurred
during the production period of designated
property must be capitalized and is
governed by special rules. For more
details, see Regulations sections
1.263A-8 through 1.263A-15.
The costs required to be capitalized
under section 263A are not deductible
until the property (to which the costs
relate) is sold, used, or otherwise
disposed of by the corporation. The
corporation recovers these costs through
depreciation, amortization, or cost of
goods sold.
Line 17, Column (c)
Enter the section 250 deduction claimed
for FDII and GILTI. This should equal the
sum of lines 8 and 9 of Form 8993, Part IV.
Line 19, Column (a)
Qualified dividends are dividends that
qualify as qualified export receipts. They
include all dividends (or amounts)
If the corporation timely filed its return
for the year without making an election, it
can still make an election by filing an
amended return within 6 months of the
due date of the return (excluding
includible in gross income (under section
951) that are attributable to stock of
related foreign export corporations. See
993, earlier, for more details.
extensions). Clearly indicate the election
on the amended return and write "Filed
pursuant to section 301.9100-2" at the top
of the amended return. File the amended
return at the same address the corporation
filed its original return. The election
applies when figuring taxable income for
the current tax year and all subsequent
years.
The corporation can choose to forgo
the elections above by affirmatively
electing to capitalize its start-up or
organizational costs on its income tax
return filed by the due date (including
extensions) for the tax year in which the
active trade or business begins.
Schedule E
Deductions
Limitations on Deductions
earlier) is not required to capitalize costs
under section 263A. A small business
taxpayer that wants to discontinue
capitalizing costs under section 263A
must change its method of accounting.
See section 263A(i). Also see Change in
accounting method, earlier.
For more details on the uniform
capitalization rules, see Regulations
sections 1.263A-1 through 1.263A-3 and
Pub. 538.
Section 263A uniform capitalization
rules. The uniform capitalization rules of
section 263A require corporations to
capitalize, or include in inventory, certain
costs incurred in connection with the
following.
The production of real property and
•
tangible personal property held in
inventory or held for sale in the ordinary
course of business.
Transactions between related taxpay-
ers. Generally, an accrual basis taxpayer
may only deduct business expenses and
interest owed to a related party in the year
the payment is included in the income of
the related party. See sections 163(e)(3)
and 267(a)(2) for limitations on deductions
for unpaid interest and expenses.
Note. The election to either amortize or
capitalize start-up costs is irrevocable and
applies to all start-up costs that are related
to the trade or business.
Real property or personal property
•
(tangible and intangible) acquired for
resale.
Report the deductible amount of
The production of real property and
•
start-up and organizational costs and any
amortization on line 2g of Schedule E. For
amortization that begins during the current
tangible personal property by a
corporation for use in its trade or business
or in an activity engaged in for profit.
Instructions for Form 1120-IC-DISC (Rev. 12-2021)
-10-
tax year, complete and attach Form 4562,
Depreciation and Amortization.
deferred arrangement, or amounts
contributed under a salary reduction SEP
agreement or a SIMPLE IRA plan.
Regulations sections 1.263A-8 through
1.263A-15 for definitions and more
information.
Limitations on deductions related to
property leased to tax-exempt entities.
If an IC-DISC leases property to a
See the Instructions for Form 1125-E
for more information on officers'
Special rules apply to the following.
Forgone interest on certain
•
governmental or other tax-exempt entity, it
may not claim deductions related to the
property to the extent that they exceed the
IC-DISC's income from the lease
compensation, including any special rules
and limitations that may apply.
below-market-rate loans (see section
7872).
Original issue discount on certain
•
The IC-DISC determines who is an
officer under the laws of the state where it
is incorporated.
high-yield discount obligations. See
section 163(e) to figure the disqualified
portion.
payments (tax-exempt-use loss). Amounts
disallowed may be carried over to the next
tax year and treated as a deduction with
respect to the property for that tax year.
See section 470 for exceptions.
Interest which is allocable to
•
unborrowed policy cash values of life
insurance, endowment, or annuity
Line 1m. Other Export Promotion
Expenses
Enter any other allowable export
promotion expenses not claimed
elsewhere on the return.
Contributions. See the Instructions for
Form 1120 and Pub. 542 for limitations
that apply to contributions.
contracts issued after June 8, 1997. See
section 264(f). Attach a statement
showing the computation of the deduction.
Line 1. Export Promotion
Expenses
Line 2d. Charitable Contributions
Note. Do not deduct fines or penalties
imposed on the IC-DISC.
For more information on charitable
contributions, including substantiation and
recordkeeping requirements, see section
170 and the related regulations and Pub.
526, Charitable Contributions. For
Enter export promotion expenses on lines
1a through 1m. Export promotion
expenses are an IC-DISC's ordinary and
necessary expenses paid or incurred to
obtain qualified export receipts. Do not
include income taxes. Enter on lines 2a
through 2g any part of an expense not
incurred to obtain qualified export
receipts.
Line 2b. Taxes and Licenses
Enter taxes paid or accrued during the tax
year, but do not include the following.
limitations on deduction and other special
rules that apply to corporations, see the
Instructions for Form 1120 and Pub. 542.
Taxes not imposed on the corporation.
Taxes, including state or local sales
•
•
taxes, that are paid or incurred in
connection with an acquisition or
disposition of property (these taxes must
be treated as part of the cost of the
acquired property or, in the case of a
disposition, as a reduction in the amount
realized on the disposition).
Line 2e. Freight
Enter freight expense not deducted on
Line 1d. Salaries and Wages
line 1h as export promotion expense.
Enter the total salaries and wages paid for
the tax year. Do not include salaries and
wages deductible elsewhere on the return,
such as amounts included in officers'
compensation, cost of goods sold,
Line 2g. Other Expenses
Enter any other allowable deduction not
Taxes assessed against local benefits
•
claimed on line 1 or lines 2a through 2f.
that increase the value of the property
assessed (such as for paving, etc.).
elective contributions to a section 401(k)
cash or deferred arrangement, or amounts
contributed under a salary reduction SEP
agreement or a SIMPLE IRA plan.
Taxes deducted elsewhere on the
The IC-DISC may have to report a
negative section 481(a) adjustment on
earlier, for additional information.
•
return, such as those reflected in cost of
goods sold.
If the corporation provided taxable
See section 164(d) for apportionment
of taxes on real property between seller
and purchaser.
fringe benefits to its employees,
!
Generally, a deduction may not be
taken for any amount that is allocable to a
class of exempt income. See section
265(b) for exceptions.
CAUTION
such as personal use of a car, do
not deduct as wages the amount allocated
for depreciation and other expenses
claimed on lines 1c and 1m.
Line 2c. Interest
Do not deduct the following interest.
Note. Do not deduct fines or penalties
Interest on indebtedness incurred or
•
paid to a government for violating any law.
Line 1h. Freight
continued to purchase or carry obligations
if the interest is wholly exempt from
income tax. For exceptions, see section
265(b).
For more information on other
deductions that may apply to corporations,
see Pub. 535.
Enter 50% of the freight expenses (except
insurance) for shipping export property
aboard U.S. flagships and U.S.-owned
and U.S.-operated aircraft in those cases
where you are not required to use U.S.
ships or aircraft by law or regulations.
For cash basis taxpayers, prepaid
•
Schedule J
interest allocable to years following the
current tax year (for example, a cash basis
calendar year taxpayer who in the current
tax year prepaid interest allocable to any
period after the current tax year may
deduct only the amount allocable to the
current tax year).
Part I—Deemed Distributions
Under Section 995(b)(1)
Line 1i. Compensation of Officers
Line 2. Recognized Gain on
Section 995(b)(1)(B) Property
Enter deductible officers' compensation
on line 1i. Attach a statement showing the
name, social security number, and amount
of compensation paid to all officers. Do
not include compensation deductible
elsewhere on the return, such as amounts
included in cost of goods sold, elective
contributions to a section 401(k) cash or
Interest on debt allocable to the
Enter gain recognized during the tax year
on the sale or exchange of property, other
than property which in the hands of the
IC-DISC was a qualified export asset,
previously transferred to the IC-DISC in a
transaction in which the transferor realized
gain but did not recognize the gain in
•
production of designated property by a
corporation for its own use. The
corporation must capitalize this interest.
Also capitalize any interest on debt
allocable to an asset used to produce the
property. See section 263A(f) and
Instructions for Form 1120-IC-DISC (Rev. 12-2021)
-11-
whole or in part. See section 995(b)(1)(B).
Show the computation of the gain on a
separate statement. Include no more of
the IC-DISC's gain than the amount of
gain the transferor did not recognize on
the earlier transfer.
Line 14. Earnings and Profits
Line 1. Export Receipts
Attach a computation showing the
earnings and profits for the tax year. See
section 312 for rules on figuring earnings
and profits for the purpose of the section
995(b)(1) limitation.
If there were no commission sales, leases,
rentals, or services for the tax year, enter
on Part II, line 1, the total of lines 1c and
2k, column (e), of Schedule B.
If there were commission sales, leases,
rentals, or services for the tax year, the
total qualified export receipts to be
entered on Part II, line 1, are figured as
follows (section 993(f)):
Line 3. Recognized Gain on
Section 995(b)(1)(C) Property
Enter gain recognized on the sale or
exchange of property described in section
995(b)(1)(C). Show the computation of the
gain on a separate statement. Do not
include any gain included in the
Line 17. Foreign Investment
Attributable to Producer Loans
Line 17a. For shareholders other than
C corporations. To figure the amount for
line 17a, attach a computation showing (1)
the IC-DISC's foreign investment in
producer's loans during the tax year; (2)
accumulated earnings and profits
(including earnings and profits for the
current tax year) minus the amount on Part
I, line 15; and (3) accumulated IC-DISC
income. Enter the smallest of these
amounts (but not less than zero) on
line 17a.
Line 1, Export Receipts
Worksheet
computation of line 2. Include only the
amount of the IC-DISC's gain that the
transferor did not recognize on the earlier
transfer and that would have been treated
as ordinary income if the property had
been sold or exchanged rather than
transferred to the IC-DISC. Do not include
gain on the sale or exchange of IC-DISC
stock-in-trade or other property that either
would be included in inventory if on hand
at the end of the tax year or is held
primarily for sale in the normal course of
business.
1. Add lines 1c and 2k, column (b),
Schedule B
.
.
.
.
.
.
.
.
.
.
.
2. Add lines 1c and 2k, column (d),
Schedule B
3. Add lines 1 and 2. Enter on
Schedule J, Part II, line 1
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Line 17b. For C corporation sharehold-
ers. To figure the amount for line 17b,
attach a computation showing (1) the
IC-DISC's foreign investment in producer's
loans during the tax year; (2) accumulated
earnings and profits (including earnings
and profits for the current tax year) minus
the amount on Part I, line 16; and (3)
accumulated IC-DISC income. Enter the
smallest of these amounts (but not less
than zero) on line 17b.
Line 3. Controlled Group
Allocation
If the IC-DISC is a member of a controlled
group (as defined in section 993(a)(3))
that includes more than one IC-DISC, only
one $10 million limit is allowed to the
group. If an allocation is required, a
Line 4. Income Attributable to
Military Property
statement showing each member's portion
of the $10 million limit must be attached to
Form 1120-IC-DISC. See Proposed
Enter 50% of taxable income attributable
to military property (section 995(b)(1)(D)).
Show the computation of this income. To
figure taxable income attributable to
military property, use the gross income
attributable to military property for the year
and the deductions properly allocated to
that income. See Regulations section
1.995-6.
Regulations section 1.995-8(f) for details.
For purposes of lines 17a and 17b,
foreign investment in producer's loans is
the smallest of (1) the net increase in
foreign assets by members of the
Lines 4 and 5. Proration of $10
Million Limit
controlled group (defined in section 993(a)
(3)) to which the IC-DISC belongs, (2) the
actual foreign investment by the group's
domestic members, or (3) the IC-DISC's
outstanding producer's loans to members
of the controlled group.
The $10 million limit (or the controlled
group member's share) is prorated on a
daily basis. Thus, for example, if, for its
2019 calendar tax year, an IC-DISC has a
short tax year of 73 days, and it is not a
member of a controlled group, the limit
that would be entered on Part II, line 5, is
$2 million (73/365 times $10 million).
Line 9. Deemed Distributions to C
Corporations
Line 9 provides for the computation of the
one-seventeenth deemed distribution of
section 995(b)(1)(F)(i). Line 9 only applies
to shareholders of the IC-DISC that are C
corporations.
Net increase in foreign assets and
actual foreign investment are defined in
sections 995(d)(2) and (3).
See Regulations section 1.995-5 for
additional information on figuring foreign
investment attributable to producer's
loans.
Line 7. Taxable Income
Enter the taxable income attributable to
line 6, qualified export receipts. The
IC-DISC may select the qualified export
receipts to which the line 5 limitation is
allocated.
Line 10. International Boycott
Income
Lines 20 and 21. The percentages on
lines 20 and 21 must add up to 100%.
An IC-DISC is deemed to distribute any
income that resulted from cooperating with
an international boycott (section 995(b)(1)
(F)(ii)). See Form 5713 to figure this
deemed distribution and for reporting
requirements for any IC-DISC with
Line 22. Allocate the line 22 amount to
shareholders that are individuals,
partnerships, S corporations, trusts, and
estates.
See Proposed Regulations section
1.995-8 for details on determining the
IC-DISC's taxable income attributable to
qualified export receipts in excess of the
$10 million amount. Special rules are
provided for allocating the taxable income
attributable to any related and subsidiary
services, and for the ratable allocation of
the taxable income attributable to the first
transaction selected by the IC-DISC that
exceeds the $10 million amount.
Part II—Section 995(b)(1)(E)
Taxable Income
operations related to a boycotting country.
Line 11. Illegal Bribes, etc.
Generally, any taxable income of the
IC-DISC attributable to qualified export
receipts that exceed $10 million will be
deemed distributed.
An IC-DISC is deemed to distribute the
amount of any illegal payments, such as
bribes or kickbacks, that it pays, directly or
indirectly, to government officials,
employees, or agents (section 995(b)(1)
(F)(iii)).
Deductions must be allocated and
apportioned according to the rules of
Regulations section 1.861-8. The
Instructions for Form 1120-IC-DISC (Rev. 12-2021)
-12-
selection of the excess receipts by the
IC-DISC is intended to permit the IC-DISC
to allocate the $10 million limitation to the
qualified export receipts of those
Line 4a. Previously Taxed Income
Schedule L
Report on line 4a all actual distributions of
previously taxed income. Also, include any
distributions of pre-1985 accumulated
DISC income that are nontaxable (see the
instructions for Schedule L, line 12, later).
Enter on the dotted line to the left of the
line 4a amount the dollar amount of the
distribution that is nontaxable pre-1985
DISC income and identify it as such. Do
not include distributions of pre-1985 DISC
income that are made under section
995(b)(2) because of prior year
Balance Sheets per Books
The balance sheet should agree with the
IC-DISC's books and records. Include
certificates of deposits as cash on line 1.
transactions occurring during the tax year
that permit the greatest amount of taxable
income to be allocated to the IC-DISC
under the intercompany pricing rules of
section 994.
Line 12. Accumulated Pre-1985
DISC Income
To avoid double counting of the
If the corporation was a qualified DISC as
of December 31, 1984, the accumulated
pre-1985 DISC income will generally be
treated as previously taxed income
(exempt from tax) when distributed to
DISC shareholders after December 31,
1984.
deemed distribution, if an amount of
taxable income for the tax year attributable
to excess qualified export receipts is also
deemed distributed under either line 1, 2,
3, or 4 of Part I, such amount of taxable
income is only includible on that line of
Part I, and must be subtracted from the
amount otherwise reportable on Part II,
line 7, and carried to Part I, line 5. See
Proposed Regulations section 1.995-8(d).
revocations or disqualifications.
Part V—Deferred DISC Income
Under Section 995(f)(3)
In general, deferred DISC income is:
Exception. The exemption does not
apply to distributions of accumulated
pre-1985 DISC income of an IC-DISC or
former DISC that was made taxable under
section 995(b)(2) because of a prior
revocation of the DISC election or
disqualification of the DISC. For more
details on these distributions, see
Temporary Regulations section
1.921-1T(a)(7).
1. Accumulated IC-DISC income (for
periods after 1984) of the IC-DISC as of
the close of the computation year, over
After filing the IC-DISC's current year
tax return, the allocation of the $10 million
limitation and the computation of the line 7
deemed distribution may be changed by
filing an amended Form 1120-IC-DISC
only under the conditions specified in
Proposed Regulations section 1.995-8(b)
(1).
2. The amount of
distributions-in-excess-of-income for the
tax year of the IC-DISC following the
computation year.
Note. For purposes of item 2,
distributions-in-excess-of-income means
the excess (if any) of:
Line 13. Accumulated IC-DISC
Income
Accumulated IC-DISC income (for periods
after 1984) is accounted for this line. The
balance of this account is used in figuring
deferred DISC income in Part V of
Schedule J.
Actual distributions to shareholders out
•
Part III—Deemed Distributions
Under Section 995(b)(2)
of accumulated IC-DISC income, over
The amount of IC-DISC income (as
•
defined in section 996(f)(1)) for the tax
year following the computation year.
If the corporation is a former DISC or a
former IC-DISC that revoked IC-DISC
status or lost IC-DISC status for failure to
satisfy one or more of the conditions
specified in section 992(a)(1) for the
current tax year, each shareholder is
deemed to have received a distribution
taxable as a dividend on the last day of the
current tax year. The deemed distribution
equals the shareholder's prorated share of
the DISC's or IC-DISC's income
Note. For purposes of items 1 and 2, see
section 995(f) and Proposed Regulations
section 1.995(f)-1 for a definition of
Schedule N
Export Gross Receipts
of the IC-DISC and Related U.S.
Persons
Line 1. Product Code and
Percentage
computation year, examples, and other
details on figuring deferred DISC income.
The amount on Part V, line 3, is
allocated to each shareholder on Part III,
line 10, of Schedule K (Form
1120-IC-DISC).
accumulated during the years just before
DISC or IC-DISC status ended. The
shareholder will be deemed to receive the
distribution in equal parts on the last day
of each of the 10 tax years of the
Shareholders of an IC-DISC must file
Form 8404 if the IC-DISC reports deferred
DISC income on Schedule K, Part III,
line 10.
Enter on line 1a the code number and
percentage of total export gross receipts
for the product or service that accounts for
the largest portion of the IC-DISC's export
gross receipts. The product codes are at
the end of these instructions. On line 1b,
enter the same information for the
corporation following the year of the
termination or disqualification of the
IC-DISC (but in no case over more than
twice the number of years the corporation
was a DISC or IC-DISC).
Schedule K (Form
1120-IC-DISC)
Shareholder's Statement of
IC-DISC's next largest product or service.
Part IV—Actual Distributions
IC-DISC Distributions
Example. An IC-DISC has export
gross receipts of $10 million. Selling
agricultural chemicals accounts for $4.5
million (45% (0.45)) of that amount, which
is the IC-DISC's largest product or service.
The IC-DISC should enter “287” (the
product code for agricultural chemicals)
and “45%” on line 1a.
Line 1. Distributions To Meet
Qualification Requirements Under
Section 992(c)
If the corporation is required to pay
interest under section 992(c)(2)(B) on the
amount of a distribution to meet the
qualification requirements of section
992(c), report this interest on Schedule E,
line 2c. Also include the amount on
Schedule J, Part IV, line 1, and show the
computation of the interest on an attached
statement.
Attach a separate Copy A, Schedule K
(Form 1120-IC-DISC), to Form
1120-IC-DISC for each shareholder who
received an actual or deemed distribution
during the tax year or to whom the
corporation reported deferred DISC
income for the tax year.
Selling industrial chemicals accounts
for $2 million (20% (0.20) of the $10
million total) and is the IC-DISC's
second-largest product or service. The
IC-DISC should enter “281” (the product
Instructions for Form 1120-IC-DISC (Rev. 12-2021)
-13-
code for industrial inorganic and organic
chemicals) and “20%” on line 1b.
Complete column (a) to report the
IC-DISC's export gross receipts from all
sources (including the United States) for
the current tax year.
or prior year carryover, excess business
interest expense allocated from the
partnership.
Line 2. Definitions
Exclusions from filing. A taxpayer is
not required to file Form 8990 if the
taxpayer is a small business taxpayer and
does not have excess business interest
expense from a partnership. A taxpayer is
also not required to file Form 8990 if the
taxpayer only has business interest
expense from these excepted trades or
businesses:
Column (b). Export gross receipts of
related IC-DISCs. Complete column (b)
to report related IC-DISCs' export gross
receipts from all sources (including the
United States).
Export gross receipts are receipts from
any of the following.
Providing engineering or architectural
•
services for construction projects located
outside the United States.
Selling for direct use, consumption, or
•
Column (c). Export gross receipts of
all other related U.S. persons.
Complete column (c) to report other
related U.S. persons' export gross
receipts from all sources except the
United States.
disposition outside the United States,
property (such as inventory) produced in
the United States.
An electing real property trade or
•
business,
Renting this property to unrelated
•
An electing farming business, or
•
•
persons for use outside the United States.
Providing services involved in such a
Certain utility businesses.
•
sale or rental.
Small business taxpayer. A small
Line 3. Related U.S. Persons
Enter on line 3 the name, address, and
identifying number of related U.S. persons
in your controlled group.
Providing export management services.
•
business taxpayer is not subject to the
business interest expense limitation and is
not required to file Form 8990. A small
business taxpayer is a taxpayer that (a) is
not a tax shelter (as defined in section
448(d)(3)), and (b) meets the gross
receipts test of section 448(c), discussed
next.
For commission sales, export gross
receipts include the total receipts on which
the IC-DISC earned the commission.
Schedule O
Other Information
Question 6. Boycott of Israel. If
question 6a, 6b, or 6c is checked “Yes,”
the IC-DISC must file Form 5713 and is
also deemed to distribute part of its
income. See Form 5713 for more
information.
For purposes of line 2, Schedule N
only, no reduction is to be made for
receipts attributable to military property.
Therefore, an IC-DISC's export gross
receipts for purposes of line 2 include the
total of the amounts from Schedule B,
columns (b) and (d) of lines 1c, 2a, 2b, 2c,
and 2d.
Gross receipts test. A taxpayer
meets the gross receipts test if the
taxpayer has average annual gross
receipts of $26 million or less for the 3
prior tax years. A taxpayer's average
annual gross receipts for the 3 prior tax
years is determined by adding the gross
receipts for the 3 prior tax years and
dividing the total by 3. Gross receipts
include the aggregate gross receipts from
all persons treated as a single employer,
such as a controlled group of
Question 7. Limitation on business in-
terest expense. For tax years beginning
after 2017, the limitation on business
interest expense applies to every taxpayer
with a trade or business, unless the
taxpayer meets certain specified
Related persons are:
An individual, partnership, estate, or
•
trust that controls the IC-DISC;
A corporation that controls the IC-DISC
•
or is controlled by it; or
A corporation controlled by the same
•
exceptions. A taxpayer may elect out of
the limitation for certain businesses
otherwise subject to the business interest
expense limitation.
corporations, commonly controlled
partnerships, or proprietorships, and
affiliated service groups. See section
448(c) and the Instructions for Form 8990
for additional information.
person or persons who control the
IC-DISC.
Control means direct or indirect
ownership of more than 50% of the total
voting power of all classes of stock
entitled to vote. See section 993(a)(3).
Certain real property trades or
businesses and farming businesses
qualify to make an election not to limit
business interest expense. This is an
irrevocable election. If you make this
election, you are required to use the
alternative depreciation system to
depreciate any property with a recovery
period of 10 years or more. Also, you are
not entitled to the special depreciation
allowance for that property. For a taxpayer
with more than one qualifying business,
the election is made with respect to each
business.
Check “Yes” if the taxpayer has an
election in effect to exclude a real property
trade or business or a farming business
from section 163(j). For more information,
see section 163(j) and the Instructions for
Form 8990.
Question 9. Tax-exempt interest.
Report any tax-exempt interest received
or accrued. Include any exempt-interest
dividends received as a shareholder in a
mutual fund or other RIC.
U.S. person is:
A citizen or resident of the United
•
States, which includes the Commonwealth
of Puerto Rico and possessions of the
United States;
Question 10. Foreign owner. If the
answer to question 10(a) or 10(b) is "Yes,"
enter on line 10(b)a the percentage
owned. On line 10(b)b, enter the owner's
country, and on line 10(b)c, if Form 5472,
Information Return of a 25%
A domestic corporation or partnership;
•
or
•
An estate or trust (other than a foreign
estate or trust as defined in section
7701(a)(31)).
Foreign-Owned U.S. Corporation
Engaged in a U.S. Trade or Business, is
filed by the corporation, enter the number
of Forms 5472 attached.
Export Gross Receipts
Column (a). All IC-DISCs should
complete column (a) in line 2. If two or
more IC-DISCs are related persons, only
the IC-DISC with the largest export gross
receipts should complete columns (b) and
(c). If an IC-DISC acts as a commission
agent for a related person, attribute the
total amount of the transaction to the
IC-DISC.
Schedule P (Form
1120-IC-DISC)
Question 8. Form 8990. Generally, a
taxpayer with a trade or business must file
Form 8990 to claim a deduction for
Intercompany Transfer Price or
Commission
Complete and attach a separate
business interest. In addition, Form 8990
must be filed by any taxpayer that owns an
interest in a partnership with current year,
Schedule P (Form 1120-IC-DISC) for each
transaction or group of transactions to
Instructions for Form 1120-IC-DISC (Rev. 12-2021)
-14-
which you apply the intercompany pricing
rules of section 994(a)(1) and (2).
Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United
States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to
figure and collect the right amount of tax.
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 administration of any Internal Revenue law. Generally, tax returns and return information are confidential,
as required by section 6103.
The time needed to complete and file Form 1120-IC-DISC, Schedule K (Form 1120-IC-DISC), and Schedule P (Form
1120-IC-DISC), will vary depending on individual circumstances. The estimated burden for business taxpayers filing these forms is
approved under OMB control number 1545-0123.
If you have comments concerning the accuracy of these time estimates or suggestions for making these forms simpler, we would
be happy to hear from you. You can send us comments through IRS.gov/FormComments. Or you can write to: Internal Revenue
Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Don't send the tax forms to this
Instructions for Form 1120-IC-DISC (Rev. 12-2021)
-15-
Form 1120-IC-DISC Codes for Principal Business Activity
This list of principal business activities and their associated codes is
designed to classify an enterprise by the type of activity in which it is
engaged to facilitate the administration of the Internal Revenue
Code. These principal business activity codes are based on the
North American Industry Classiꢀcation System. Certain activities,
such as manufacturing, do not apply to an IC-DISC.
total gross receipts is derived. Total receipts means all income (line
1, page 1).
On page 6, Schedule O, line 1, enter the principal business activity
and principal product or service that account for the largest
percentage of total receipts. For example, if the principal activity is
“Wholesale Trade Durable Goods: Machinery, Equipment, &
Supplies,” the principal product or service may be “Engines and
Turbines.”
Using the list below, enter on page 1, item B, the code number for
the speciꢀc industry group from which the largest percentage of
Code
Code
Wholesale Trade
Code
Merchandise Wholesalers, Durable
Goods
423100 Motor Vehicle & Motor
Vehicle Parts & Supplies
423200 Furniture & Home Furnishings
423300 Lumber & Other Construction
Materials
423400 Professional & Commercial
Equipment & Supplies
Rental and Leasing
Code
Rental and Leasing Services
532100 Automotive Equipment Rental
& Leasing
532210 Consumer Electronics &
Appliances Rental
532281 Formal Wear & Costume
Rental
532282 Video Tape & Disc Rental
532283 Home Health Equipment
Rental
532284 Recreational Goods Rental
532289 All Other Consumer Goods
Motion Picture and Sound
Recording Industries
424210 Drugs & Druggists’ Sundries
424300 Apparel, Piece Goods, &
Notions
424400 Grocery & Related Products
424500 Farm Product Raw Materials
424600 Chemical & Allied Products
424700 Petroleum & Petroleum
Products
424800 Beer, Wine, & Distilled
Alcoholic Beverage
424910 Farm Supplies
424920 Book, Periodical, &
Newspapers
424930 Flower, Nursery Stock, &
Florists’ Supplies
512100 Motion Picture & Video
Industries (except video
rental)
512200 Sound Recording Industries
Broadcasting (except Internet)
515100 Radio & Television
Broadcasting
515210 Cable & Other Subscription
Programming
423500 Metal & Mineral (except
Petroleum)
Telecommunications
517000 Telecommunications
(including paging, cellular,
satellite, cable & other
program distribution,
423600 Household Appliances &
Electrical & Electronic Goods
423700 Hardware, & Plumbing &
Heating Equipment, & Supplies
423800 Machinery, Equipment, &
Supplies
Rental
532310 General Rental Centers
532400 Commercial & Industrial
Machinery & Equipment
Rental & Leasing
424940 Tobacco & Tobacco Products
424950 Paint, Varnish, & Supplies
424990 Other Miscellaneous
Nondurable Goods
resellers, other
telecommunications, &
internet service providers)
423910 Sporting & Recreational Goods
& Supplies
Professional Services
Architectural, Engineering, and
Related Services
541310 Architectural Services
541320 Landscape Architecture
Services
Information
Publishing Industries (except
Internet)
511110 Newspaper Publishers
511120 Periodical Publishers
511130 Book Publishers
511140 Directory & Mailing List
Publishers
511190 Other Publishers
511210 Software Publishers
Data Processing Services
518210 Data Processing, Hosting, &
Related Services
423920 Toy & Hobby Goods & Supplies
423930 Recyclable Materials
423940 Jewelry, Watch, Precious
Stone, & Precious Metals
423990 Other Miscellaneous Durable
Goods
Other Information Services
519100 Other Information Services
(including news syndicates,
541330 Engineering Services
libraries, internet publishing & 541340 Drafting Services
Merchandise Wholesalers,
Nondurable Goods
424100 Paper & Paper Products
broadcasting)
541350 Building Inspection Services
541360 Geophysical Surveying &
Mapping Services
541370 Surveying & Mapping (except
Geophysical) Services
541380 Testing Laboratories
Other Professional Services
541600 Management, Scientiꢀc, &
Technical Consulting Services
Schedule P (Form 1120-IC-DISC) Codes for Principal Business Activity
(These codes are used only with Schedule P (Form 1120-IC-DISC)).
Using the list below, enter on each Schedule P, the code for the
speciꢀc industry group and the product or product line for which the
Schedule P is completed.
These codes for the Principal Business Activity are designed to
classify enterprises by the type of activity in which they are engaged
to facilitate the administration of the Internal Revenue Code. Certain
activities such as manufacturing do not apply to an IC-DISC.
Code
Transportation,
Retail Trade
Finance, Insurance, and Real
Estate
5040 Sporting, recreational,
photographic, and hobby
goods, toys, and supplies
5050 Metals and minerals, except
petroleum and scrap
5060 Electrical goods
5070 Hardware, plumbing and heating
equipment
Communication, Electric,
Gas, and Sanitary Services
Code
Building materials, hardware, garden Code
supply, mobile home dealers,
Code
Transportation
4400 Water transportation
4700 Other transportation services
Credit agencies other than banks
6199 Other credit agencies
general merchandise, and food
stores
5220 Building materials dealers
5251 Hardware stores
5265 Garden supplies and mobile
home dealers
5300 General merchandise stores
5410 Grocery stores
Services
Business services
7389 Export management services
Electric, gas, and sanitary services
4910 Electric services
4920 Gas production and distribution
4930 Combination utility services
5098 Other durable goods
Nondurable
Auto repair and services;
miscellaneous repair services
7500 Lease or rental of motor
vehicles
5110 Paper and paper products
5129 Drugs, drug proprietaries, and
druggists’ sundries
5130 Apparel, piece goods, and
notions
5140 Groceries and related products
5150 Farm-product raw materials
5160 Chemicals and allied products
5170 Petroleum and petroleum
products
5180 Alcoholic beverages
5190 Miscellaneous nondurable
goods
5490 Other food stores
Wholesale Trade
Durable
5008 Machinery, equipment, and
supplies
5010 Motor vehicles and automotive
equipment
5020 Furniture and home furnishings
5030 Lumber and construction
materials
Automotive dealers and service
stations
5515 Motor vehicle dealers
5541 Gasoline service stations
5598 Other automotive dealers
5600 Apparel and accessory stores
5700 Furniture and home furnishings
stores
Amusement and recreation services
7812 Motion picture production,
distribution, and services
Other services
8911 Architectural and engineering
services
8930 Accounting, auditing, and
bookkeeping
8980 Miscellaneous services
5800 Eating and drinking places
Miscellaneous retail stores
5912 Drug stores and proprietary
stores
5921 Liquor stores
5995 Other miscellaneous retail stores
-16-
Schedule N Product Code System
(These codes are used only with Schedule N, page 6, Form 1120-IC-DISC.)
Using the list below, enter on line 1 of Schedule N the product code number and percent of export gross receipts as explained in
the Specific Instructions.
This product code system is divided into two categories—nonmanufactured product groups and services, and manufactured
product groups.
Code
Code
Code
Nonmanufactured Product Groups and Services
Furniture and fixtures
Fabricated metal products (except ordnance,
machinery and transportation)
Grains, including soybeans
Vegetables and melons
Fruit and tree nuts
Greenhouse, nursery, and ꢀoriculture
Cotton
Other crops (including sugar beets, peanuts,
spices, hops, and vegetable seeds)
Livestock
Household furniture
Ofꢁce furniture
Public building and related furniture
Other furniture and ꢁxtures
011
012
013
014
015
019
251
252
253
259
Metal cans
341
Cutlery, hand tools, and general hardware
342
Heating apparatus (except electric) and plumbing
343
ꢁxtures
Paper and allied products
Fabricated structural metal products
344
Screw machine products and bolts, nuts, screws,
rivets, and washers
345
Pulp
Newsprint
Business machine paper
Stationery and ofꢁce supplies (including pens
and pencils)
261
262
263
264
021
022
023
024
029
101
102
103
110
130
147
Poultry and eggs
Metal stampings
Coated and engraved metal products
Other fabricated metal products
346
347
349
Fishery products and services (including shellꢁsh)
Fur bearing animals and unꢁnished hides
Other animal products
Paperboard (including containers and boxes)
Paper bags and coated and treated paper
(including wallpaper and gift wrap)
Other paper and allied products
265
266
Machinery (except electrical and electronic)
Iron ores
Precious metals (including gold and silver)
Other ores
Coal mining products
Secondary petroleum and natural gas products
Nonmetallic mineral products and services
(including limestone, sulfur, and fertilizer)
Sand, gravel, and clay
Export management services
Computer software
Engines and turbines
351
352
353
269
Farm machinery and equipment
Construction, mining, and materials handling
machinery and equipment
Printed media
Metalworking machinery and equipment
Special industry machinery (except metalworking
machinery)
354
355
Newspapers
Periodicals
Books
Greeting cards
Manifold business forms
Other printed media
271
272
273
274
275
279
148
730
737
780
850
988
990
General industrial machinery and equipment
Service industry machinery
Other machinery (except electrical and electronic)
356
357
359
Motion picture distribution
Engineering and architectural services
Leasing--other property (except aircraft)
Other nonmanufactured products
Chemicals and allied products
Electrical and electronic machinery, equipment, and
supplies
Industrial inorganic and organic chemicals
Plastics materials, synthetic resins, synthetic
rubber, and synthetic ꢁbers
281
282
Electric power transmission and distribution
equipment (including transformers, motors and
generators)
361
Manufactured Product Groups
Ordnance and accessories
Drugs
283
284
Electrical ofꢁce equipment (including
photocopying machines and calculators)
Household appliances
Electric lighting and wiring equipment
Audio and video equipment (except
communication types)
362
Soap, detergents, and cleaning preparations,
perfumes, cosmetics, and toiletries
Paints, varnishes, lacquers, enamels, and allied
products
Guns, howitzers, mortars, and related equipment
Ammunition (except small arms)
Sighting and ꢁre control equipment
Small arms
Small arms ammunition
Other ordnance and accessories
191
192
194
195
196
199
363
364
365
285
Gum and wood chemicals
Agricultural chemicals
Other chemicals and allied products
286
287
289
Communication equipment
Semiconductors, capacitors, resistors, and other
electronic components
366
367
Food and kindred products
Refined petroleum and related products
Meat products
Dairy products
Fruits, vegetables, and seafood
Grain mill products
Bakery products
201
202
203
204
205
206
207
208
209
Computer and peripheral equipment
Other electrical and electronic machinery,
equipment, and supplies
368
369
Reꢁned petroleum
Paving and rooꢁng materials
Other petroleum and related products
291
295
299
Transportation equipment
Sugar
Rubber and plastics products
Motor vehicles and motor vehicle equipment
Aircraft and aircraft parts and equipment
Leased aircraft
Ships and nautical equipment
Railroad equipment
Motorcycles, bicycles, and parts
Tanks and tank components
Other transportation equipment
371
372
373
374
375
376
378
379
Confectionery and related products
Beverages
Other food and kindred products
Tires and inner tubes
Rubber footwear
Reclaimed rubber
Fabricated rubber products
Other rubber and plastics products
301
302
303
306
309
Tobacco products
Cigarettes
Cigars
211
212
213
Leather and leather products
Tobacco (chewing and smoking) and snuff
Tanned and ꢁnished leather
Industrial leather belting and packing
Boot and shoe cut stock and ꢁndings
Leather footwear
Leather gloves and mittens
Leather luggage
311
312
313
314
315
316
317
Professional, scientific, and controlling instruments;
photographic and optical goods; watches and clocks
Textile mill products
Broad woven cotton fabrics
221
222
223
224
225
226
227
228
229
Engineering, laboratory, and scientiꢁc and
research instruments and associated equipment
Instruments for measuring, controlling, and
indicating physical characteristics
Optical instruments, lenses, binoculars,
microscopes, telescopes, and prisms
Surgical, medical, and dental instruments and
supplies
381
382
383
384
Broad woven synthetic ꢁbers and silk fabrics
Broad woven wool fabrics
Narrow fabrics
Knit fabrics
Dyed and ꢁnished textiles
Carpets and rugs
Leather handbags and other personal leather
goods
Other leather and leather products
319
Stone, clay, glass, and concrete products
Yarns and threads
Other textile goods
Flat glass
321
322
323
324
325
326
327
328
329
Ophthalmic goods
Photographic equipment and supplies
Watches and clocks
385
386
387
Glass and glassware, pressed and blown
Glass products, made or purchased glass
Cement, hydraulic
Apparel and other finished goods
Men’s and boys’ clothing and furnishings
Women’s, children’s and infants’ clothing and
accessories (including fur goods and millinery)
Footwear (except rubber and leather)
Other apparel and accessories
231
233
Structural clay products
Other manufactured products
Pottery and related products
Concrete, gypsum, and plaster products
Cut stone and stone products
Abrasive, asbestos, and other nonmetallic mineral
products
Jewelry, silverware, and plated ware
Musical instruments
Toys, amusement, sporting, and athletic goods
Artists’ materials
Costume jewelry, costume novelties, buttons,
and other notions (except precious metal)
Other manufactured products
391
393
394
395
396
238
239
Lumber and wood products (except furniture)
Logs and log products
241
243
Primary and secondary nonfabricated metal products
Lumber construction materials (including
millwork, veneer, plywood and prefabricated
structural wood products)
399
Iron and steel products
331
332
339
Nonferrous metal products
Other primary and secondary nonfabricated metal
products
Wooden containers
Other lumber and wood products
244
249
-17-