Page 111 - BusinessStructures & Forms

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Also, include dividends received from a
Schedule C. Dividends, Line 3, Column (a) less-than-20%-owned FSC that:
Enter the following.
Inclusions, and Special • Dividends received on certain • Are attributable to income treated as
Deductions debt-financed stock acquired after July 18, effectively connected with the conduct of a
trade or business within the United States
For purposes of the 20% ownership test 1984, from domestic and foreign (excluding foreign trade income), and
on lines 1 through 7, the percentage of corporations subject to income tax that • Qualify for the 50% deduction under
stock owned by the corporation is based would otherwise be subject to the section 245(c)(1)(B).
dividends-received deduction under
on voting power and value of the stock. Line 7, Column (a)
Preferred stock described in section section 243(a)(1), 243(c), or 245(a).
1504(a)(4) is not taken into account. Generally, debt-financed stock is stock Enter the U.S.-source portion of dividends
that the corporation acquired by incurring
Consolidated returns. Corporations a debt (for example, it borrowed money to that:
• Are received from 20%-or-more-owned
filing a consolidated return should see buy the stock). foreign corporations, and
Regulations sections 1.1502-13, • Dividends received from a RIC on
• Qualify for the 65% deduction under
1.1502-26, and 1.1502-27 before debt-financed stock. The amount of sections 243 and 245(a).
completing Schedule C. dividends eligible for the
Corporations filing a consolidated dividends-received deduction is limited by Also, include dividends received from a
return must not report as dividends on section 854(b). The corporation should 20%-or-more-owned FSC that:
Schedule C any amounts received from receive a notice from the RIC specifying • Are attributable to income treated as
corporations within the consolidated the amount of dividends that qualify for the effectively connected with the conduct of a
group. Such dividends are eliminated in deduction. trade or business within the United States
consolidation rather than offset by the Line 3, Columns (b) and (c) (excluding foreign trade income), and
dividends-received deduction. Dividends received on certain • Qualify for the 65% deduction under
Line 1, Column (a) debt-financed stock acquired after July 18, section 245(c)(1)(B).
Enter dividends (except those received on 1984, are not entitled to the full 50% or Line 8, Column (a)
certain debt-financed stock acquired after 65% dividends-received deduction under Enter dividends received from wholly
July 18, 1984—see section 246A) that section 243 or 245(a). The 50% or 65% owned foreign subsidiaries that are
are: deduction is reduced by a percentage that eligible for the 100% deduction under
• Received from less-than-20%-owned is related to the amount of debt incurred to section 245(b).
domestic corporations subject to income acquire the stock. See section 246A. Also,
tax, and see section 245(a) before making this In general, the deduction under section
• Qualified for the 50% deduction under computation for an additional limitation 245(b) applies to dividends paid out of the
section 243(a)(1). that applies to certain dividends received earnings and profits of a foreign
corporation for a tax year during which:
from foreign corporations. Attach a
Also, include on line 1 the following. statement to Form 1120 showing how the • All of its outstanding stock is directly or
• Taxable distributions from an IC-DISC amount on line 3, column (c), was figured. indirectly owned by the domestic
or former DISC that are designated as corporation receiving the dividends, and
eligible for the 50% deduction and certain Line 4, Column (a) • All of its gross income from all sources
dividends of Federal Home Loan Banks. Enter dividends received on preferred is effectively connected with the conduct
See section 246(a)(2). stock of a less-than-20%-owned public of a trade or business within the United
• Dividends (except those received on utility that is subject to income tax and is States.
certain debt-financed stock acquired after allowed the 23.3% deduction provided in
July 18, 1984) from a regulated sections 244 and 247 (as affected by Line 9, Column (c)
investment company (RIC). The amount of P.L.113-295, Div. A, section 221(a)(41) Generally, line 9, column (c), cannot
dividends eligible for the (A), Dec. 19, 2014, 128 Stat. 4043) for exceed the amount from the Worksheet
dividends-received deduction under dividends paid. for Schedule C, line 9. However, in a year
section 243 is limited by section 854(b). Line 5, Column (a) in which an NOL occurs, this limitation
The corporation should receive a notice does not apply even if the loss is created
from the RIC specifying the amount of Enter dividends received on preferred by the dividends-received deduction. See
dividends that qualify for the deduction. stock of a 20%-or-more-owned public sections 172(d) and 246(b).
Report so-called dividends or earnings utility that is subject to income tax and is Line 10, Columns (a) and (c)
allowed the 26.7% deduction provided in
received from mutual savings banks, etc., sections 244 and 247 (as affected by Small business investment companies
as interest. Do not treat them as P.L.113-295, Div. A, section 221(a)(41) operating under the Small Business
dividends. (A), Dec. 19, 2014, 128 Stat. 4043) for Investment Act of 1958 must enter
Line 2, Column (a) dividends paid. dividends that are received from domestic
Enter on line 2: Line 6, Column (a) corporations subject to income tax even
though a deduction is allowed for the
• Dividends (except those received on Enter the U.S.-source portion of dividends
certain debt-financed stock acquired after that: entire amount of those dividends. To claim
the 100% deduction on line 10, column
July 18, 1984) that are received from • Are received from (c), the company must file with its return a
20%-or-more-owned domestic less-than-20%-owned foreign
corporations subject to income tax and corporations, and statement that it was a federal licensee
under the Small Business Investment Act
that are subject to the 65% deduction • Qualify for the 50% deduction under of 1958 at the time it received the
under section 243(c), and section 245(a). To qualify for the 50% dividends.
• Taxable distributions from an IC-DISC deduction, the corporation must own at
or former DISC that are considered least 10% of the stock of the foreign Line 11, Columns (a) and (c)
eligible for the 65% deduction. corporation by vote and value. Enter only dividends that qualify under
section 243(b) for the 100%

Instructions for Form 1120 -17-