Instructions for IRS Form 1120-C "U.S. Income Tax Return for Cooperative Associations"

This document contains official instructions for IRS Form 1120-C, U.S. Income Tax Return for Cooperative Associations - a tax form released and collected by the Internal Revenue Service (IRS), a subdivision of the U.S. Department of the Treasury.

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Download Instructions for IRS Form 1120-C "U.S. Income Tax Return for Cooperative Associations"

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2017
Department of the Treasury
Internal Revenue Service
Instructions for Form 1120-C
U.S. Income Tax Return for Cooperative Associations
Future Developments
exemption DRD") for the
Section references are to the Internal
Revenue Code unless otherwise noted.
foreign-source portion of dividends
For the latest information about
received from the foreign corporation.
Contents
Page
developments related to Form 1120-C
This applies to distributions after
Future Developments
. . . . . . . . . . .
1
and its instructions, such as
December 31, 2017. See new section
What’s New . . . . . . . . . . . . . . . . . .
1
legislation enacted after they were
245A.
Photographs of Missing Children . . . .
2
published, go to IRS.gov/Form1120c.
The Taxpayer Advocate Service . . . . .
2
Treatment of deferred foreign
How To Make a Contribution To
What’s New
income upon transition to
Reduce Debt Held by the
participation exemption system of
Public . . . . . . . . . . . . . . . . . . .
2
Tax rates for fiscal year filers. P.L.
taxation. U.S. shareholders of
How To Get Forms and
115-97 replaced the graduated
specified foreign corporations (as
Publications . . . . . . . . . . . . . . .
2
corporate tax structure with a flat 21%
defined under section 965(e), as
General Instructions . . . . . . . . . . . . .
2
corporate tax rate and repealed the
Purpose of Form . . . . . . . . . . . . . . .
2
amended by P.L. 115-97) may have
corporate alternative minimum tax
Who Must File . . . . . . . . . . . . . . . .
2
an inclusion under section 965 based
(AMT), effective for tax years
Where To File . . . . . . . . . . . . . . . . .
3
on the post-1986 deferred foreign
beginning after December 31, 2017.
When To File . . . . . . . . . . . . . . . . .
3
income of the specified foreign
However, under section 15,
Who Must Sign . . . . . . . . . . . . . . . .
3
corporations determined as of
cooperatives with fiscal tax years
Assembling the Return . . . . . . . . . . .
3
November 2, 2017 or December 31,
beginning before January 1, 2018,
Tax Payments . . . . . . . . . . . . . . . .
4
2017. The U.S shareholders may
and ending after December 31, 2017,
Estimated Tax Payments . . . . . . . . .
4
elect to pay the liability under section
figure and apportion their tax
Interest and Penalties . . . . . . . . . . . .
4
965 on the post-1986 deferred foreign
(including the AMT) by blending the
Accounting Methods . . . . . . . . . . . .
5
income in eight installments. See
rates in effect before January 1, 2018,
Accounting Period . . . . . . . . . . . . . .
5
section 965, as amended. Also, for
with the rate in effect after December
Rounding Off To Whole Dollars . . . . .
5
further guidance see
Section 965
31, 2017. See
Blended tax rate for
Recordkeeping . . . . . . . . . . . . . . . .
5
Frequently asked
Questions.
fiscal year filers
and
AMT for fiscal
Other Forms and Statements That
May Be Required . . . . . . . . . . .
5
Disaster relief. Disaster tax relief
year filers
in the instructions for
Specific Instructions . . . . . . . . . . . . .
6
enacted for those impacted by
Schedule J, later.
Period Covered
. . . . . . . . . . . . . . .
6
Hurricane Harvey, Irma, or Maria
Increase in penalty for failure to
Name and Address . . . . . . . . . . . . .
6
includes a provision modifying the
file. For tax years beginning in 2017,
Item A. Identifying Information . . . . . .
7
limit on the deduction for charitable
the minimum penalty for failure to file
Item B. Employer Identification
contributions made after August 22,
a return that is over 60 days late has
Number (EIN) . . . . . . . . . . . . . .
7
2017, and before January 1, 2018
increased to the smaller of the tax due
Item C. Type of Cooperative . . . . . . .
7
(after October 7, 2017, and before
or $210. See
Late filing of
return, later.
Item D. Initial Return, Final Return,
January 1, 2019, for relief efforts in
Name Change, Address
the California wildfire disaster area).
Alternative tax for cooperatives
Change, or Amended Return . . . .
7
See
Temporary suspension of 10%
with qualified timber gains. The
Income . . . . . . . . . . . . . . . . . . . . .
8
limitation for certain disaster-related
alternative tax for cooperatives with
Deductions . . . . . . . . . . . . . . . . .
10
contributions
in the instructions for
qualified timber gain has been
Tax, Refundable Credits, and
line 17, later. In addition, an employer
Payments . . . . . . . . . . . . . . .
16
extended. Therefore, for tax years
who continued to pay or incur wages
Schedule C. Dividends and
beginning in 2017, if a cooperative
Special Deductions . . . . . . . . .
17
after the employer's business became
has both a net capital gain and a
Schedule G. Allocation of
inoperable because of damage from
qualified timber gain, a maximum
Patronage and Nonpatronage
Hurricane Harvey, Irma, or Maria may
23.8% alternative tax may apply. See
Income and Deductions . . . . . .
20
be eligible for an employee retention
the instructions for Schedule J, line 2,
Schedule H. Deductions and
credit. See Form 5884-A, Credits for
later.
Adjustments Under Section
1382
. . . . . . . . . . . . . . . . . .
20
Affected Disaster Area Employers,
Deduction for foreign-source
Schedule J. Tax Computation . . . . .
22
and its instructions. For more
portion of dividends received by
Schedule K. Other Information . . . . .
24
information on these and other
domestic corporations from
Schedule L. Balance Sheets per
disaster relief provisions, see Pub.
specified 10%-owned foreign
Books . . . . . . . . . . . . . . . . . .
25
976.
corporations. Certain domestic
Schedule M-1. Reconciliation of
Income (Loss) per Books With
corporations that are U.S.
Film, television, and live theatrical
Income per Return . . . . . . . . . .
25
shareholders of specified 10%-owned
productions. A cooperative can elect
Index . . . . . . . . . . . . . . . . . . . . .
30
foreign corporations are allowed a
to deduct certain costs of qualified
100% deduction ("participation
film, television, and live theatrical
Mar 30, 2018
Cat. No. 17211X
2017
Department of the Treasury
Internal Revenue Service
Instructions for Form 1120-C
U.S. Income Tax Return for Cooperative Associations
Future Developments
exemption DRD") for the
Section references are to the Internal
Revenue Code unless otherwise noted.
foreign-source portion of dividends
For the latest information about
received from the foreign corporation.
Contents
Page
developments related to Form 1120-C
This applies to distributions after
Future Developments
. . . . . . . . . . .
1
and its instructions, such as
December 31, 2017. See new section
What’s New . . . . . . . . . . . . . . . . . .
1
legislation enacted after they were
245A.
Photographs of Missing Children . . . .
2
published, go to IRS.gov/Form1120c.
The Taxpayer Advocate Service . . . . .
2
Treatment of deferred foreign
How To Make a Contribution To
What’s New
income upon transition to
Reduce Debt Held by the
participation exemption system of
Public . . . . . . . . . . . . . . . . . . .
2
Tax rates for fiscal year filers. P.L.
taxation. U.S. shareholders of
How To Get Forms and
115-97 replaced the graduated
specified foreign corporations (as
Publications . . . . . . . . . . . . . . .
2
corporate tax structure with a flat 21%
defined under section 965(e), as
General Instructions . . . . . . . . . . . . .
2
corporate tax rate and repealed the
Purpose of Form . . . . . . . . . . . . . . .
2
amended by P.L. 115-97) may have
corporate alternative minimum tax
Who Must File . . . . . . . . . . . . . . . .
2
an inclusion under section 965 based
(AMT), effective for tax years
Where To File . . . . . . . . . . . . . . . . .
3
on the post-1986 deferred foreign
beginning after December 31, 2017.
When To File . . . . . . . . . . . . . . . . .
3
income of the specified foreign
However, under section 15,
Who Must Sign . . . . . . . . . . . . . . . .
3
corporations determined as of
cooperatives with fiscal tax years
Assembling the Return . . . . . . . . . . .
3
November 2, 2017 or December 31,
beginning before January 1, 2018,
Tax Payments . . . . . . . . . . . . . . . .
4
2017. The U.S shareholders may
and ending after December 31, 2017,
Estimated Tax Payments . . . . . . . . .
4
elect to pay the liability under section
figure and apportion their tax
Interest and Penalties . . . . . . . . . . . .
4
965 on the post-1986 deferred foreign
(including the AMT) by blending the
Accounting Methods . . . . . . . . . . . .
5
income in eight installments. See
rates in effect before January 1, 2018,
Accounting Period . . . . . . . . . . . . . .
5
section 965, as amended. Also, for
with the rate in effect after December
Rounding Off To Whole Dollars . . . . .
5
further guidance see
Section 965
31, 2017. See
Blended tax rate for
Recordkeeping . . . . . . . . . . . . . . . .
5
Frequently asked
Questions.
fiscal year filers
and
AMT for fiscal
Other Forms and Statements That
May Be Required . . . . . . . . . . .
5
Disaster relief. Disaster tax relief
year filers
in the instructions for
Specific Instructions . . . . . . . . . . . . .
6
enacted for those impacted by
Schedule J, later.
Period Covered
. . . . . . . . . . . . . . .
6
Hurricane Harvey, Irma, or Maria
Increase in penalty for failure to
Name and Address . . . . . . . . . . . . .
6
includes a provision modifying the
file. For tax years beginning in 2017,
Item A. Identifying Information . . . . . .
7
limit on the deduction for charitable
the minimum penalty for failure to file
Item B. Employer Identification
contributions made after August 22,
a return that is over 60 days late has
Number (EIN) . . . . . . . . . . . . . .
7
2017, and before January 1, 2018
increased to the smaller of the tax due
Item C. Type of Cooperative . . . . . . .
7
(after October 7, 2017, and before
or $210. See
Late filing of
return, later.
Item D. Initial Return, Final Return,
January 1, 2019, for relief efforts in
Name Change, Address
the California wildfire disaster area).
Alternative tax for cooperatives
Change, or Amended Return . . . .
7
See
Temporary suspension of 10%
with qualified timber gains. The
Income . . . . . . . . . . . . . . . . . . . . .
8
limitation for certain disaster-related
alternative tax for cooperatives with
Deductions . . . . . . . . . . . . . . . . .
10
contributions
in the instructions for
qualified timber gain has been
Tax, Refundable Credits, and
line 17, later. In addition, an employer
Payments . . . . . . . . . . . . . . .
16
extended. Therefore, for tax years
who continued to pay or incur wages
Schedule C. Dividends and
beginning in 2017, if a cooperative
Special Deductions . . . . . . . . .
17
after the employer's business became
has both a net capital gain and a
Schedule G. Allocation of
inoperable because of damage from
qualified timber gain, a maximum
Patronage and Nonpatronage
Hurricane Harvey, Irma, or Maria may
23.8% alternative tax may apply. See
Income and Deductions . . . . . .
20
be eligible for an employee retention
the instructions for Schedule J, line 2,
Schedule H. Deductions and
credit. See Form 5884-A, Credits for
later.
Adjustments Under Section
1382
. . . . . . . . . . . . . . . . . .
20
Affected Disaster Area Employers,
Deduction for foreign-source
Schedule J. Tax Computation . . . . .
22
and its instructions. For more
portion of dividends received by
Schedule K. Other Information . . . . .
24
information on these and other
domestic corporations from
Schedule L. Balance Sheets per
disaster relief provisions, see Pub.
specified 10%-owned foreign
Books . . . . . . . . . . . . . . . . . .
25
976.
corporations. Certain domestic
Schedule M-1. Reconciliation of
Income (Loss) per Books With
corporations that are U.S.
Film, television, and live theatrical
Income per Return . . . . . . . . . .
25
shareholders of specified 10%-owned
productions. A cooperative can elect
Index . . . . . . . . . . . . . . . . . . . . .
30
foreign corporations are allowed a
to deduct certain costs of qualified
100% deduction ("participation
film, television, and live theatrical
Mar 30, 2018
Cat. No. 17211X
The Taxpayer Advocate
productions that begin before January
the cooperative may owe.
1, 2018. However, certain film,
Contributions to reduce debt held by
Service
television, or live theatrical
the public are deductible subject to
The Taxpayer Advocate Service
productions acquired and placed in
the rules and limitations for charitable
(TAS) is an independent
service after September 27, 2017 (for
contributions.
organization within the IRS that helps
which a deduction would have been
taxpayers and protects taxpayer
How To Get Forms
allowable under section 181 without
rights. TAS's job is to ensure that
and Publications
regard to the dollar limitation), are
every taxpayer is treated fairly and
eligible for the special depreciation
knows and understands their rights
Internet. You can access the IRS
allowance under section 168(k). See
under the
Taxpayer Bill of
Rights.
website 24 hours a day, 7 days a
the Instructions for Form 4562.
week, at IRS.gov to:
As a taxpayer, the cooperative has
Entertainment expenses,
Download forms, instructions, and
rights that the IRS must abide by in its
membership dues, and facilities.
publications;
dealings with the cooperative. TAS
No deduction is allowed for certain
Order IRS products online;
can help the cooperative if:
entertainment expenses, membership
Research your tax questions online;
Problems are causing financial
dues, and facilities used in connection
Search publications online by topic
difficulty for the business.
with these activities for amounts
or keyword;
The business is facing an
incurred or paid after December 31,
Use the online Internal Revenue
immediate threat of adverse action.
2017. See
Travel, meals, and
Code, regulations, or other official
The cooperative has tried
entertainment, later.
guidance;
repeatedly to contact the IRS but no
View Internal Revenue Bulletins
Net operating loss. The general
one has responded, or the IRS hasn't
(IRBs) published in the last few years;
2-year net operating loss (NOL)
responded by the date promised.
and
carryback rule does not apply to
The TAS tax toolkit at
Sign up to receive local and
NOLs arising in tax years ending after
TaxpayerAdvocate.IRSgov
can help
national tax news by email.
December 31, 2017. Exceptions apply
the corporation understand these
to certain farming losses and NOLs of
Tax forms and publications. The
rights.
property and casualty insurance
cooperative can download or print all
companies. See
Net operating loss
of the forms and publications it may
TAS has offices in every state, the
(NOL), later.
need on IRS.gov/FormsPubs.
District of Columbia, and Puerto Rico.
The cooperative's local advocate's
Otherwise, the cooperative can go to
Principal Business Activity Codes.
number is in its local directory and at
IRS.gov/OrderForms
to place an
The Principal Business Activity Codes
TaxpayerAdvocate.IRSgov. The
order and have forms mailed to it.
(PBA’s), located at the end of these
cooperative can also call TAS at
The cooperative should receive its
instructions, have been updated and
1-877-777-4778.
order within 10 business days.
revised to reflect updates to the North
American Industry Classification
TAS also works to resolve
General Instructions
System (NAICS).
large-scale or systemic problems that
affect many taxpayers. If the
At the time these instructions
Purpose of Form
cooperative knows of one of these
went to print, several credits
!
broad issues, please report it to TAS
Use Form 1120-C, U.S. Income Tax
and deductions available to
CAUTION
through the Systemic Advocacy
Return for Cooperative Associations,
corporations expired December 31,
Management System at
IRS.gov/
to report income, gains, losses,
2016. To find out if legislation
Sams.
deductions, credits, and to figure the
extended the credits and deductions
income tax liability of the cooperative.
and made them available for 2017, go
For more information go to
to IRS.gov/Extenders.
IRS.gov/Advocate.
Who Must File
How To Make a
Any corporation operating on a
Photographs of Missing
cooperative basis under IRC section
Contribution To Reduce
Children
1381 and allocating amounts to
Debt Held by the Public
The Internal Revenue Service is a
patrons on the basis of business done
proud partner with the
National Center
To help reduce debt held by the
with or for such patrons should file
for Missing & Exploited Children®
public, make a check payable to
Form 1120-C (including farmers'
(NCMEC). Photographs of missing
“Bureau of the Public Debt.” Send it
cooperatives under section 521
children selected by the Center may
to:
whether or not it has taxable income).
appear in instructions on pages that
Exceptions. This does not apply to
Bureau of the Public Debt
would otherwise be blank. You can
organizations which are:
Department G
help bring these children home by
Exempt from income tax under
P.O. Box 2188
looking at the photographs and calling
chapter 1 (other than exempt farmers'
Parkersburg, WV 26106-2188
1-800-THE-LOST (1-800-843-5678) if
cooperatives under section 521);
you recognize a child.
Subject to Part II (section 591 and
Or the cooperative can enclose a
following), subchapter H, chapter 1
check with its income tax return. Do
(relating to mutual savings banks);
not add the contributions to any tax
-2-
Subject to subchapter L (section
For the IRS mailing address to use
Paid Preparer Authorization
801 and following), chapter 1 (relating
if you’re using PDS, go to
IRS.gov/
If the cooperative wants to allow the
to insurance companies); or
PDSStreetAddresses.
IRS to discuss its 2017 tax return with
Engaged in generating,
the paid preparer who signed it, check
Private delivery services can't
transmitting, or otherwise furnishing
the “Yes” box in the signature area of
deliver items to P.O. boxes.
!
electric energy or providing telephone
the return. This authorization applies
You must use the U.S. Postal
service to persons in rural areas.
CAUTION
only to the individual whose signature
Service to mail any item to an IRS
appears in the “Paid Preparer Use
P.O. box address.
Where To File
Only” section of the cooperative's
If the cooperative's principal business,
Extension of Time To File
return. It does not apply to the firm, if
office, or agency is located in the
any, shown in that section.
File Form 7004, Application for
United States, file Form 1120-C at the
Automatic Extension of Time To File
If the “Yes” box is checked, the
following address:
Certain Business Income Tax,
cooperative is authorizing the IRS to
Information, and Other Returns, to
Department of the Treasury
call the paid preparer to answer any
request an extension of time to file.
Internal Revenue Service Center
questions that may arise during the
Generally, the cooperative must file
Ogden, UT 84201-0012
processing of its return. The
Form 7004 by the regular due date of
cooperative is also authorizing the
the return. See the Instructions for
If the cooperative's principal
paid preparer to:
Form 7004.
Give the IRS any information that is
business, office, or agency is located
missing from the return,
in a foreign country or a U.S.
Who Must Sign
possession, file Form 1120-C at the
Call the IRS for information about
The return must be signed and dated
following address:
the processing of the return or the
by:
status of any related refund or
Internal Revenue Service Center
The president, vice president,
payment(s), and
P.O. Box 409101
treasurer, assistant treasurer, chief
Respond to certain IRS notices
Ogden, UT 84409
accounting officer; or
about math errors, offsets, and return
Any other cooperative officer (such
preparation.
When To File
as tax officer) authorized to sign.
The cooperative is not authorizing
A cooperative described in section
If a return is filed on behalf of a
the paid preparer to receive any
6072(d) generally must file its income
cooperative by a receiver, trustee, or
refund check, bind the cooperative to
tax return by the 15th day of the 9th
assignee, the fiduciary must sign the
anything (including any additional tax
month after the end of its tax year.
return, instead of the cooperative
liability), or otherwise represent the
officer. Returns and forms signed by a
cooperative before the IRS.
Any cooperative not described in
receiver or trustee in bankruptcy on
section 6072(d) must generally file its
The authorization will automatically
behalf of a cooperative must be
tax return by the 15th day of the 4th
end no later than the due date
accompanied by a copy of the order
month after the end of its tax year.
(excluding extensions) for filing the
or instructions of the court authorizing
However, a cooperative with a fiscal
cooperative's 2018 tax return. If the
signing of the return or form.
tax year ending June 30 must file by
cooperative wants to expand the paid
the 15th day of the 3rd month after the
If an employee of the cooperative
preparer's authorization or revoke the
end of its tax year. A cooperative with
completes Form 1120-C, the paid
authorization before it ends, see Pub.
a short tax year ending anytime in
preparer space should remain blank.
947, Practice Before the IRS and
June will be treated as if the short year
Anyone who prepares Form 1120-C
Power of Attorney.
ended on June 30, and must file by
but does not charge the cooperative
the 15th day of the 3rd month after the
should not complete that section.
Assembling the Return
end of its tax year.
Generally, anyone who is paid to
To ensure that the cooperative's tax
prepare the return must sign it and fill
If the due date falls on a Saturday,
return is correctly processed, attach
in the “Paid Preparer Use Only” area.
Sunday, or legal holiday, the
all schedules and other forms after
cooperative can file on the next
The paid preparer must complete
Form 1120-C, page 5, in the following
business day.
the required preparer information and:
order.
Sign the return in the space
1. Schedule N (Form 1120).
Private Delivery Services
provided for the preparer's signature.
2. Schedule D (Form 1120).
Cooperatives can use certain private
Give a copy of the return to the
delivery services (PDS) designated by
3. Schedule O (Form 1120).
taxpayer.
the IRS to meet the “timely mailing as
4. Form 4626.
A paid preparer may sign
timely filing” rule for tax returns. Go to
5. Form 1125-A.
original or amended returns
IRS.gov/PDS
for the current list of
TIP
by rubber stamp, mechanical
6. Form 4136.
designated services.
device, or computer software
7. Form 8941.
The PDS can tell you how to get
program.
8. Form 3800.
written proof of the mailing date.
9. Additional schedules in
alphabetical order.
-3-
10. Additional forms in numerical
See the instructions for lines 29b
Depositing on time. For deposits
order.
and 29c.
made by EFTPS to be on time, the
11. Supporting statements and
cooperative must submit the deposit
Estimated tax penalty. A
attachments.
by 8 p.m. Eastern time the day before
cooperative that does not make
the date the deposit is due. If the
estimated tax payments when due
Complete every applicable entry
cooperative uses a third party to make
may be subject to an underpayment
space on Form 1120-C. Do not enter
deposits on its behalf, they may have
penalty for the period of
“See Attached” or “Available Upon
different cutoff times.
underpayment. Generally, a
Request” instead of completing the
cooperative is subject to the penalty if
Same-day wire payment option. If
entry spaces. If more space is needed
its tax liability is $500 or more and it
the cooperative fails to submit a
on the forms or schedules, attach
did not timely pay at least the smaller
deposit transaction on EFTPS by 8
separate sheets using the same size
of:
p.m. Eastern time the day before the
and format as the printed forms.
Its tax liability for the current year,
date a deposit is due, it can still make
If there are supporting statements
or
the deposit on time by using the
and attachments, arrange them in the
Its prior year's tax.
Federal Tax Collection Service
same order as the schedules or forms
(FTCS). To use the same-day wire
Use Form 2220, Underpayment of
they support and attach them last.
payment method, the cooperative will
Estimated Tax by Corporations, to
Show the totals on the printed forms.
need to make arrangements with its
see if the cooperative owes a penalty
Enter the cooperative's name and EIN
financial institution ahead of time
and to figure the amount of the
on each supporting statement or
regarding availability, deadlines, and
penalty. If Form 2220 is completed,
attachment.
costs. The cooperative's financial
enter the penalty on line 30. See the
institution may charge a fee for
instructions for line 30.
Tax Payments
payments made this way. To learn
Interest and Penalties
Generally, the cooperative must pay
more about the information the
any tax due in full no later than the
cooperative will need to provide to its
If the cooperative receives a
due date for filing its return (not
financial institution to make a
notice about penalties after it
!
including extensions). If the due date
same-day wire payment, go to
files its return, send the IRS
falls on a Saturday, Sunday, or legal
IRS.gov/SameDayWire.
CAUTION
an explanation and we will determine
holiday, the payment is due on the
if the cooperative meets reasonable
Estimated Tax Payments
next day that isn't a Saturday,
cause criteria. Do not attach an
Sunday, or legal holiday. See the
Generally, the following rules apply to
explanation when the cooperative's
instructions for line 31.
the cooperative's payments of
return is filed.
estimated tax.
Electronic Deposit
The cooperative must make
Requirement
Interest. Interest is charged on taxes
installment payments of estimated tax
paid late even if an extension of time
Cooperatives must use electronic
if it expects its total tax for the year
to file is granted. Interest is also
funds transfer to make all federal tax
(less applicable credits) to be $500 or
charged on penalties imposed for
deposits (such as deposits of
more.
failure to file, negligence, fraud,
employment, excise, and corporate
The installments are due by the
substantial valuation misstatements,
income tax). Generally, electronic
15th day of the 4th, 6th, 9th, and 12th
substantial understatements of tax,
funds transfers are made using the
months of the tax year. If any due date
and reportable transaction
Electronic Federal Tax Payment
falls on a Saturday, Sunday, or legal
understatements from the due date
System (EFTPS). However, if the
holiday, the payment of the
(including extensions) to the date of
cooperative does not want to use
installment is due on the next regular
payment. The interest charge is
EFTPS, it can arrange for its tax
business day.
figured at a rate determined under
professional, financial institution,
The cooperative must use
section 6621.
payroll service, or other trusted third
electronic funds transfer to make
party to make deposits on its behalf.
Late filing of return. A cooperative
installment payments of estimated
Also, it may arrange for its financial
that does not file its tax return by the
tax.
institution to submit a same-day wire
due date, including extensions, may
Use Form 1120-W as a worksheet
payment (discussed below) on its
be penalized 5% of the unpaid tax for
to compute estimated tax. See the
behalf. EFTPS is a free service
each month or part of a month the
Instructions for Form 1120-W.
provided by the Department of the
return is late, up to a maximum of 25%
Penalties may apply if the
Treasury. Services provided by a tax
of the unpaid tax. The minimum
cooperative does not make required
professional, financial institution,
penalty for a return that is over 60
estimated tax payment deposits. See
payroll service, or other third party
days late is the smaller of the tax due
Estimated tax penalty below.
may have a fee.
or $210. The penalty will not be
If the cooperative overpaid
imposed if the cooperative can show
estimated tax, it may be able to get a
To get more information about
that the failure to file on time was due
quick refund by filing Form 4466,
EFTPS or to enroll in EFTPS, visit
to reasonable cause. See
Caution
Corporation Application for Quick
www.eftps.gov
or call 1-800-555-4477
above.
Refund of Overpayment of Estimated
(TTY/TDD 1-800-733-4829).
Tax.
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IRS consent to change either an
schedules. If the cooperative does
Late payment of tax. A cooperative
overall method of accounting or the
round to whole dollars, it must round
that does not pay the tax when due
accounting treatment of any material
all amounts. To round, drop amounts
generally may be penalized
of 1%
1 2
item. To do so, the cooperative
under 50 cents and increase amounts
of the unpaid tax for each month or
generally must file Form 3115,
from 50 to 99 cents to the next dollar.
part of a month the tax is not paid, up
Application for Change in Accounting
For example, $1.39 becomes $1 and
to a maximum of 25% of the unpaid
Method. See the Instructions for Form
$2.50 becomes $3.
tax. See
Caution
above.
3115 and Pub. 538 for more
If two or more amounts must be
Trust fund recovery penalty. This
information and exceptions. Also see
added to figure the amount to enter on
penalty may apply if certain excise,
Rev. Proc. 2017-30, 2017-18 I.R.B.
a line, include cents when adding the
income, social security, and Medicare
1131; or any successor.
amounts and round off only the total.
taxes that must be collected or
Section 481(a) adjustment. If the
withheld are not collected or withheld,
Recordkeeping
cooperative's taxable income for the
or these taxes are not paid. These
current tax year is figured under a
Keep the cooperative's records for as
taxes are generally reported on:
method of accounting different from
long as they may be needed for the
Form 720, Quarterly Federal Excise
the method used in the preceding tax
administration of any provision of the
Tax Return;
year, the cooperative may have to
Internal Revenue Code. Usually,
Form 941, Employer's
make an adjustment under section
records that support an item of
QUARTERLY Federal Tax Return;
481(a) to prevent amounts of income
income, deduction, or credit on the
Form 943, Employer's Annual
or expense from being duplicated or
return must be kept for 3 years from
Federal Tax Return for Agricultural
omitted. The section 481(a)
the date the return is due or filed,
Employees;
adjustment period is generally 1 year
whichever is later. Keep records that
Form 944, Employer's ANNUAL
for a net negative adjustment and 4
verify the cooperative's basis in
Federal Tax Return; or
years for a net positive adjustment.
property for as long as they are
Form 945, Annual Return of
However, in some cases, a
needed to figure the basis of the
Withheld Federal Income Tax.
cooperative can elect to modify the
original or replacement property.
The trust fund recovery penalty
section 481(a) adjustment period. The
may be imposed on all persons who
The cooperative should keep
cooperative may have to complete the
are determined by the IRS to have
copies of all filed returns. They help in
appropriate lines of Form 3115 to
been responsible for collecting,
preparing future and amended returns
make an election. See the Instructions
accounting for, or paying over these
and in the calculation of earnings and
for Form 3115 for more information
taxes, and who acted willfully in not
profits.
and exceptions.
doing so. The penalty is equal to the
Other Forms and
If the net section 481(a) adjustment
unpaid trust fund tax. See the
is positive, report it on Form 1120-C,
Statements That May
Instructions for Form 720, Pub. 15
line 9, as other income. If the net
(Circular E), Employer's Tax Guide; or
Be Required
section 481(a) adjustment is negative,
Pub. 51 (Circular A), Agricultural
report it on Form 1120-C, line 23, as a
Employer's Tax Guide, for details,
Reportable transaction disclosure
deduction.
including the definition of responsible
statement. Disclose information for
persons.
each reportable transaction in which
Accounting Period
the cooperative participated. Form
Other penalties. Other penalties can
A cooperative must figure its taxable
8886, Reportable Transaction
be imposed for negligence,
income on the basis of a tax year. A
Disclosure Statement, must be filed
substantial understatement of tax,
tax year is the annual accounting
for each tax year that the federal
reportable transaction
period a cooperative uses to keep its
income tax liability of the cooperative
understatements, and fraud. See
records and report its income and
is affected by its participation in the
sections 6662, 6662A, and 6663.
expenses. Generally, cooperatives
transaction. The following are
can use a calendar year or a fiscal
reportable transactions.
Accounting Methods
year.
1. Any listed transaction, which is
Figure taxable income using the
a transaction that is the same as or
Change of tax year. Generally, a
method of accounting regularly used
substantially similar to one of the
cooperative must get the consent of
in keeping the cooperative's books
types of transactions that the IRS has
the IRS before changing its tax year
and records. In all cases, the method
determined to be a tax avoidance
by filing Form 1128, Application to
used must clearly show taxable
transaction and identified by notice,
Adopt, Change, or Retain a Tax Year.
income. Permissible methods include:
regulation, or other published
However, under certain conditions,
Cash,
guidance as a listed transaction.
exceptions may apply. See the
Accrual, or
Instructions for Form 1128 and Pub.
Any other method authorized by the
2. Any transaction offered under
538 for more information.
Internal Revenue Code.
conditions of confidentiality for which
the cooperative (or a related party)
Rounding Off To
See Pub. 538, Accounting Periods
paid an advisor a fee of at least
Whole Dollars
and Methods, for more information.
$250,000.
Change in accounting method.
The cooperative can round off cents
3. Certain transactions for which
to whole dollars on its return and
Generally, the cooperative must get
the cooperative (or a related party)
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