Instructions for Form 500ec - Electric Cooperative Modified Net Income Tax Return 2018

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Instructions for Preparing 2018 Form 500EC,
Virginia Cooperative Modified Net Income Tax Return
Fiscal Year Filers or Short Year Filers: Complete this line
actual tax liability (Line 10 divided by Line 8a is
only if your taxable year is not from January 1 to December 31.
greater than 10%), then determine the number
of months or fraction thereof past the original
Complete the required information as requested in spaces
due date the return is being filed. Multiply the
provided at the top of Page 1. Be sure that name, address,
number of months or fraction thereof times
federal employer identification number, etc., are correctly
2%, not to exceed 12%, then multiply that
reported. Check the “Final Return” box if no further Virginia
percentage by Line 10 and enter on Line 11.
income tax return is required for any taxable year.
(c)
Late payment penalty: Any balance of tax due
NOTE: It may be beneficial to compute the nonmember share
not paid with the return is subject to a 6% per
of expenses by using Method 1 (Lines 18-22) or Method 2
month late payment penalty, not to exceed
(Lines 23-25) prior to completing the return.
30%. The total of the late payment and late
filing penalties cannot exceed 30%.
Line Instructions
Line 12 Interest: Enter the amount due at the underpayment
rate established by Section 6621 of the Internal
Line 1
Enter the total revenue received from electricity
Revenue Code, plus 2%, from the due date of the
sales in Virginia.
return until payment. This underpayment rate is
Line 2
Enter the total revenue received from electricity
subject to quarterly adjustment. When penalty is
sales to members in Virginia.
entered under 11(a) above, interest is added from
the due date to the date of payment.
Line 3
Subtract Line 2 from Line 1.
Line 13 Additional charge: Enter the amount from Line 17,
Line 4
Enter the nonmember share of ordinary and
Form 500C.
necessary expenses from Line 22 or Line 25.
Line 14 Total due: Enter the total of Lines 10, 11, 12, and 13.
Line 5
Modified net income: Subtract Line 4 from Line 3.
This is the total amount due and must be paid when
Line 6
Tax: Multiply the modified net income on Line 5
the return is filed. Enclose Form 500V with payment
by 6%.
due.
Line 7
Enter the total tax credits (nonrefundable and
Line 15 Overpayment: Enter the amount of overpayment if
refundable credits) from Schedule 500CR, Section 2,
Line 9 is larger than Line 8a.
Line 1B and Section 4, Line 1A. See special
Line 16 Amount to be credited to 2019: Enter the amount
instructions at the end of these instructions for
of overpayment (from Line 15) you want credited
credit amount adjustment prior to finishing the
to your 2019 estimated tax, if any.
computation on Schedule 500CR.
Line 17 Amount to be refunded: Subtract Line 16 from
Line 8
Modified net income tax: Subtract Line 7 from Line 6.
Line 15 and enter the amount to be refunded.
Also, enter on Line 5 of Schedule 500MT.
Line 8a Enter the amount from Line 12, Schedule 500MT.
Nonmember Ordinary and Necessary Expenses
Line 9
Payments and credits:
METHOD 1
(a) Enter the total amount of estimated income tax
paid for 2018.
Line 18 Enter expenses entirely attributable to electricity
sales to nonmembers in Virginia. Please enclose
(b) Enter any extension payment made or any
a schedule itemizing all expenses included in this
other payment not included in (a).
figure.
Line 9
Add Lines 9(a) and 9(b).
Line 19 Enter other expenses not entirely attributable to
Line 10 Tax due: Subtract Line 9 from Line 8a (if applicable).
electricity sales to either members or nonmembers
This is the balance of the tax due.
in Virginia.
Line 11 Penalty:
Line 20 Compute and enter nonmember electricity sales
(a) Late filing penalty: If the return is filed after the
ratio: nonmember electricity sales in Virginia divided
automatic 6-month extended due date, enter
by total electricity sales in Virginia.
30% of Line 10; or
Line 21 Amount of other expenses allocated to electricity
(b) Extension penalty: If the return is filed during
sales to nonmembers in Virginia. Multiply Line 19
the automatic 6-month extension period and
by Line 20.
the balance of tax due exceeds 10% of the
Va. Dept. of Taxation 2601093 Rev. 09/18
Instructions for Preparing 2018 Form 500EC,
Virginia Cooperative Modified Net Income Tax Return
Fiscal Year Filers or Short Year Filers: Complete this line
actual tax liability (Line 10 divided by Line 8a is
only if your taxable year is not from January 1 to December 31.
greater than 10%), then determine the number
of months or fraction thereof past the original
Complete the required information as requested in spaces
due date the return is being filed. Multiply the
provided at the top of Page 1. Be sure that name, address,
number of months or fraction thereof times
federal employer identification number, etc., are correctly
2%, not to exceed 12%, then multiply that
reported. Check the “Final Return” box if no further Virginia
percentage by Line 10 and enter on Line 11.
income tax return is required for any taxable year.
(c)
Late payment penalty: Any balance of tax due
NOTE: It may be beneficial to compute the nonmember share
not paid with the return is subject to a 6% per
of expenses by using Method 1 (Lines 18-22) or Method 2
month late payment penalty, not to exceed
(Lines 23-25) prior to completing the return.
30%. The total of the late payment and late
filing penalties cannot exceed 30%.
Line Instructions
Line 12 Interest: Enter the amount due at the underpayment
rate established by Section 6621 of the Internal
Line 1
Enter the total revenue received from electricity
Revenue Code, plus 2%, from the due date of the
sales in Virginia.
return until payment. This underpayment rate is
Line 2
Enter the total revenue received from electricity
subject to quarterly adjustment. When penalty is
sales to members in Virginia.
entered under 11(a) above, interest is added from
the due date to the date of payment.
Line 3
Subtract Line 2 from Line 1.
Line 13 Additional charge: Enter the amount from Line 17,
Line 4
Enter the nonmember share of ordinary and
Form 500C.
necessary expenses from Line 22 or Line 25.
Line 14 Total due: Enter the total of Lines 10, 11, 12, and 13.
Line 5
Modified net income: Subtract Line 4 from Line 3.
This is the total amount due and must be paid when
Line 6
Tax: Multiply the modified net income on Line 5
the return is filed. Enclose Form 500V with payment
by 6%.
due.
Line 7
Enter the total tax credits (nonrefundable and
Line 15 Overpayment: Enter the amount of overpayment if
refundable credits) from Schedule 500CR, Section 2,
Line 9 is larger than Line 8a.
Line 1B and Section 4, Line 1A. See special
Line 16 Amount to be credited to 2019: Enter the amount
instructions at the end of these instructions for
of overpayment (from Line 15) you want credited
credit amount adjustment prior to finishing the
to your 2019 estimated tax, if any.
computation on Schedule 500CR.
Line 17 Amount to be refunded: Subtract Line 16 from
Line 8
Modified net income tax: Subtract Line 7 from Line 6.
Line 15 and enter the amount to be refunded.
Also, enter on Line 5 of Schedule 500MT.
Line 8a Enter the amount from Line 12, Schedule 500MT.
Nonmember Ordinary and Necessary Expenses
Line 9
Payments and credits:
METHOD 1
(a) Enter the total amount of estimated income tax
paid for 2018.
Line 18 Enter expenses entirely attributable to electricity
sales to nonmembers in Virginia. Please enclose
(b) Enter any extension payment made or any
a schedule itemizing all expenses included in this
other payment not included in (a).
figure.
Line 9
Add Lines 9(a) and 9(b).
Line 19 Enter other expenses not entirely attributable to
Line 10 Tax due: Subtract Line 9 from Line 8a (if applicable).
electricity sales to either members or nonmembers
This is the balance of the tax due.
in Virginia.
Line 11 Penalty:
Line 20 Compute and enter nonmember electricity sales
(a) Late filing penalty: If the return is filed after the
ratio: nonmember electricity sales in Virginia divided
automatic 6-month extended due date, enter
by total electricity sales in Virginia.
30% of Line 10; or
Line 21 Amount of other expenses allocated to electricity
(b) Extension penalty: If the return is filed during
sales to nonmembers in Virginia. Multiply Line 19
the automatic 6-month extension period and
by Line 20.
the balance of tax due exceeds 10% of the
Va. Dept. of Taxation 2601093 Rev. 09/18
Line 22 Nonmember share of expenses using Method 1:
Tax Credit Adjustment Worksheet
Line 18 plus Line 21. (Enter here and on Line 4).
METHOD 2
1) Enter the amount of qualifying
Line 23 Compute and enter nonmember electricity sales
credit from the appropriate Part
Ratio: nonmember electricity sales divided by total
of Schedule 500CR. (Do not
electricity sales.
include any carryover credit on
this line.) ....................................
Line 24 Total expenses attributed to all electricity sales in
2) Enter the nonmember ratio of
Virginia.
electricity sales for the taxable
Line 25 Nonmember share of expenses using Method 2:
year. ...........................................
Line 23 times Line 24.(Enter here and on Line 4 ).
3) Multiply Line 1 by Line 2. This is
the current year credit amount...
Special Instructions for Tax Credit Adjustment
4) Enter carryover credit from prior
in Connection with Schedule 500CR
years. (Must be the prorated
amount). If 1st year, enter 0.......
Each income tax credit available to the electric co-op must be
5) Add Lines 3 and 4. This is the
prorated by the nonmember ratio of electricity sales for the
credit allowable this year. Enter
taxable year in computing the allowable amount on Schedule
here and on the appropriate line
500CR. You may use the worksheet below to compute the
of the claimed credit on Schedule
proper amount to enter on Schedule 500CR (each credit
500CR. ......................................
must be prorated separately). The carryover amount for
each credit should be computed in the appropriate part of
Schedule 500CR.

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