1120-FSC U.S. Income Tax Return of a Foreign Sales Corporations;

2006 Form 1120-FSC, U.S. Income Tax Return
of a Foreign Sales Corporation

Purpose:

This is the first circulated proof of the 2006 Form 1120-FSC.
See below for a discussion of the major changes.

TPCC Meeting:

None, but may be arranged if requested.

Prior Revisions:

The 2005 Form 1120-FSC may be accessed at:
http://www.irs.gov/pub/irs-pdf/f1120fsc.pdf.

Instructions:

The 2006 Instructions for Form 1120-FSC will be circulated at
a later date. The 2005 Instructions for Form 1120-FSC are
available at: http://www.irs.gov/pub/irs-pdf/i1120fsc.pdf.

Other Products:

Circulations of draft tax forms and instructions are posted at:
http://taxforms.web.irs.gov/draft_products.html.

Comments:

Please email, phone, or mail any comments by Friday,
September 15, 2006. Requests or suggestions for revisions
to the product made by phone must be followed up in writing
via email or mail.

Doris E. Williams
Tax Law Specialist
SE:W:CAR:MP:T:B:C
Phone: 202-622-8192 (VMS)
202-283-0413 (NCFB)
Email: [email protected]

Major Changes to the 2006 Form 1120-FSC
•
•

We added a new line 2h (under the Tax and Payments section of page 1) to
reflect the credit for telephone excise taxes paid based on Notice 2006-50.
As a result, we revised subsequent lines in this section.
On page 5, we revised Schedule J, Tax Computation, to conform to changes
made on the 2006 Form 1120 by:
1. Adding a reference to new Schedule O (Form 1120) on line 1.
2. Deleting line 2. This information will be incorporated into the new
Schedule O (Form 1120) in a manner that reflects forthcoming
revised regulations under section 1563.
3. Renumbering subsequent lines.

3
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Form

I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 1120-FSC, PAGE 1 of 6
MARGINS: TOP 13mm (1⁄ 2 "), CENTER SIDES. PRINTS: HEAD TO FOOT
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 216mm (81⁄ 2 ") 3 838mm (33"), WRAP-IN FOLD TO: 216mm (81⁄ 2 ") 3 279mm (11")
PERFORATE: ON FOLDS
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Action

Date

Signature

O.K. to print
Revised proofs
requested

U.S. Income Tax Return of a Foreign Sales Corporation OMB No. 1545-0935

1120-FSC

For calendar year 2006 or other tax year beginning

, 2006,

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and ending
© See separate instructions. Please type or print.

Department of the Treasury
Internal Revenue Service

A Foreign country or U.S.
possession of incorporation
(see instructions)

Name

B Check type of election made:

Number, street, and room or suite no. (see instructions)

2006

, 20

C Employer identification number

D Date incorporated

E Total assets (see instructions)

FSC
Small FSC
Enter the effective date of
the election:
F

Check applicable boxes:

City or town, state, and ZIP code

(1)

Final return

(2)

$

Name change

(3)

Address change

(4)

Amended return

FSC Information

1 Principal shareholder. Complete for the shareholder that was the principal shareholder at the beginning of the FSC’s tax year. If two or more shareholders
own equal amounts of stock, complete for the shareholder that has the same tax year as the FSC (see instructions).
b Identification number

a

Name

c

Address (number, street, and room or suite no., city or town, state, ZIP code, or country)

d Total assets (corporations only)

e

Percentage of voting stock of the
f
principal shareholder
%

h Foreign owner? (check one)

$

Tax year ends (month and year) g

Service Center where tax return is filed

©

2 Parent-subsidiary controlled group. Is the FSC a subsidiary in a parent-subsidiary controlled group?

Yes

No

Yes

No

If “Yes,” and the principal shareholder (described in 1 above) is not the common parent of the group, complete
lines 2a through 2g below for the common parent (see instructions).
a

Name of common parent

b Identification number

c

Address (number, street, and room or suite no., city or town, state, ZIP code, or country)

d Total assets (consolidated, if applicable)

e

Percentage of voting stock of the common parent

$
f

Tax year end (month and year)

g Service Center where tax return is filed

%

3 Administrative pricing rules
a Check the applicable box(es) to show the pricing rule(s) used to determine taxable income on transactions resulting in foreign trading gross receipts.
(1)

1.83% of foreign trading gross receipts

(2)

(3)

23% of combined taxable income

Marginal costing

Transactions at arm’s length with unrelated supplier(s)
(5)
(4)
Section 482 method
b If the FSC and the related supplier(s) meet the payment rules of Temporary Regulations section 1.925(a)-1T(b)(2)(ii) and elect to use the administrative
©
pricing rules, check here

Tax and Payments (see instructions)
1
2
a
b
c
e
f
g
h
i
3
4
5
6

Total tax (Schedule J, line 6)
Payments:
2a
2005 overpayment credited to 2006
2b
2006 estimated tax payments
Less 2006 refund applied for on
) d Bal © 2d
2c (
Form 4466
2e
Tax deposited with Form 7004
2f
Credit for Federal tax paid on fuels (attach Form 4136)
2g
U.S. income tax paid or withheld at source (attach Form 1042-S)
2h
Credit for federal telephone excise tax paid (attach Form 8913)
Add lines 2d through 2h
©
Estimated tax penalty. Check if Form 2220 is attached
Tax due. If line 2i is smaller than the total of lines 1 and 3, enter amount owed
Overpayment. If line 2i is larger than the total of lines 1 and 3, enter amount overpaid
Enter amount of line 5 you want: Credited to 2007 estimated tax ©
Refunded

Sign
Here

1

©

2i
3
4
5
6

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true,
correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

©

Paid
Preparer’s
Use Only

Signature of officer
Preparer’s
signature

©

Firm’s name (or
yours if self-employed),
address, and ZIP code

Date

©

Title
Date

©

For Privacy Act and Paperwork Reduction Act Notice, see instructions.

May the IRS discuss this return with
the preparer shown below (see
instructions)?
Yes
No

Preparer’s SSN or PTIN

Check if
self-employed
EIN
Phone no.
Cat. No. 11531K

(

)
Form

1120-FSC

(2006)

3
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 1120-FSC, PAGE 2 of 6
MARGINS: TOP 13mm (1⁄ 2 "), CENTER SIDES. PRINTS: HEAD TO FOOT
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 216mm (81⁄ 2 ") 3 838mm (33"), WRAP-IN FOLD TO: 216mm (81⁄ 2 ") 3 279mm (11")
PERFORATE: ON FOLDS
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 1120-FSC (2006)

Schedule A

Page

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(a) Using administrative pricing rules

1
2
3
4
5
6
7
8
9a

b
c
d
e
f

2

Cost of Goods Sold Related to Foreign Trading Gross Receipts (see instructions)

(b) Not using administrative pricing rules

1
2
3
4
5
6
7

Inventory at beginning of year
Purchases
Cost of labor
Additional section 263A costs (attach schedule)
Other costs (attach schedule)
Total. Add lines 1 through 5
Inventory at end of year
Cost of goods sold. Subtract line 7 from line 6. Enter here and on
8
line 7 of Schedule B. Small FSCs, see instructions for Schedule A
Cost as described in Regulations section 1.471-3
Check all methods used for valuing closing inventory: (1)
(2)
Lower of cost or market as described in Regulations section 1.471-4
(3)
Other (Specify method used and attach explanation.) ©
Check if there was a writedown of subnormal goods as described in Regulations section 1.471-2(c)
Check if the LIFO inventory method was adopted this tax year for any goods. (If checked, attach Form 970.)
If the LIFO inventory method was used for this tax year, enter percentage (or amounts) of closing
9d
inventory computed under LIFO
If property is produced or acquired for resale, do the rules of section 263A apply to the FSC?
Yes
Was there any change in determining quantities, cost, or valuations between opening and closing inventory?
Yes
If “Yes,” attach explanation

©
©

No
No

Additional Information (see instructions). Note: Small FSCs, complete lines 1 through 8f only.
1

See the instructions and enter the FSC’s:
a Business activity code no. ©
b Business activity ©
c Product or service

Enter the amount of tax-exempt interest received or
accrued during the tax year © $

3

At any time during the tax year was the FSC engaged in
a trade or business in the United States?
During the tax year, did the FSC own any foreign entity
that was disregarded as an entity separate from its
owner under Regulations sections 301.7701-2 and
301.7701-3?
If “Yes,” attach a statement listing the name, country
under whose laws the entity was organized, and EIN
(if any) of each such entity.

5

Small FSCs only: Check the applicable box if during the tax
year the small FSC was a member of a controlled group of
corporations that included a
DISC or a
FSC.

9

Foreign management rules (does not apply to small FSCs):
a Did all formally convened meetings of the board of directors
and of the shareholders occur outside the U.S.?
b (1) Were all cash dividends, legal and accounting fees, salaries
of officers, and salaries or fees of members of the board of
directors disbursed from bank accounts maintained outside
the United States? (If “Yes,” these accounts are considered
to be the FSC’s principal bank accounts.)
(2)

At all times during the tax year, did the FSC maintain its
principal bank accounts in a qualifying foreign country or
U.S. possession (see instructions)?

Name of bank(s)

If “Yes,” see the instructions for required attachment.

Account number(s)

If the FSC has an NOL for the tax year and is electing to
©
forego the carryback period, check here

7

Enter the available NOL carryover from prior tax years.
(Do not reduce it by any deduction on Schedule B, Part
© $
II, line 19a.)
FSC qualification rules (see instructions):
a Enter the largest number of shareholders the FSC had at
any time during the tax year ©

b Did the FSC have any preferred stock outstanding at
any time during the tax year?
c During the tax year, did the FSC maintain an office in a
qualifying foreign country or U.S. possession in which a
complete set of books and records was maintained?
d During the tax year did the FSC maintain the records
required under section 6001 at a location within the U.S.?
e At all times during the tax year, did the FSC have at
least one non-U.S. resident on its board of directors?

Yes No

g Check the applicable box if during the tax year the FSC was
a member of a controlled group of corporations that
included a
DISC or a
small FSC.

During the tax year, did the FSC own at least a 10%
interest, directly or indirectly, in any foreign partnership?

6

8

f

©

2

4

Yes No

10

©
©

Foreign economic process rules (does not apply to small FSCs):

a Check the applicable box if the FSC is electing to group transactions
from its sales activities (Regulations section 1.924(d)-1(c)(5)):
Customer grouping

Contract grouping

Product or product line grouping

Product or product line subgroupings

b Check the applicable box(es) to indicate how the FSC met the foreign direct
costs requirement (see instructions):
The FSC (or any person under contract with the FSC) met the
50% test of section 924(d)(1).
The FSC (or any person under contract with the FSC) met the alternative
85% test of section 924(d)(2). Check to indicate the subparagraphs of
section 924(e) for which this alternative test was met:
(e)(1)

(e)(2)

(e)(3)

(e)(4)

(e)(5)

c If box (e)(5) is checked, enter which of the five methods listed in
Regulations section 1.924(e)-1(e)(1)(i) through (v) describes how the
FSC bears the economic risk of nonpayment ©
d Check the applicable box if the FSC is electing to group its foreign direct
costs on one of the following (Regulations section 1.924(d)-1(e)):
Customer grouping
Contract grouping
Product or product line grouping
Form

1120-FSC

(2006)

3
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 1120-FSC, PAGE 3 of 6
MARGINS: TOP 13mm (1⁄ 2 "), CENTER SIDES. PRINTS: HEAD TO FOOT
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 216mm (81⁄ 2 ") 3 838mm (33"), WRAP-IN FOLD TO: 216mm (81⁄ 2 ") 3 279mm (11")
PERFORATE: ON FOLDS
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Page

Form 1120-FSC (2006)

3

Schedule B Taxable Income or (Loss) (see instructions)
Part I—Net Income Attributable to Nonexempt Foreign Trade Income

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(b) Not using
administrative
pricing rules

(a) Using administrative
pricing rules

1
2
3

Sale, exchange, or other disposition of export property. (Enter 50% of
military property sales. Include the other 50% on Schedule F, line 1.)
Lease or rental of export property for use outside the United States

Services related and subsidiary to:
a Sale, exchange, or other disposition of export property. (Enter 50% of
services related to the sale or other disposition of military property.
Include the other 50% on Schedule F, line 1.)
b Lease or rental of export property
4 Engineering or architectural services for construction projects outside the U.S.
5 Managerial services for an unrelated FSC or IC-DISC (see instructions)
6a Total foreign trading gross receipts. Add lines 1 through 5
Small FSCs: Complete lines 6b through 6h.
6b
$5,000,000
b Small FSC limitation (section 924(b)(2)(B))
6c
c Controlled group member’s share of line 6b
d Enter 1. (Short tax year: Divide the number of days in
the short tax year by the number of days in the full tax
year. Enter as a decimal less than 1.00000.)
e Multiply line 6b or line 6c (whichever applies) by line 6d
f Total of line 6a, columns (a) and (b)
Note: See the instructions for line 6f if commission
income is included on line 6a.

1
2

3a
3b
4
5
6a

00

6d
6e
6f

g Enter the smaller of line 6e or line 6f. Note: If line 6f
exceeds line 6e, enter the excess on line 7 of Schedule F 6g
h Allocate the amount from line 6g to columns (a) and (b) (see instructions)
Cost of goods sold (Schedule A, line 8). (Small FSCs, enter only the part of
cost of goods sold from the receipts on line 6h above. See instructions for
Schedule A.)
8 Foreign trade income. Subtract line 7 from line 6a or line 6h (whichever applies)
9a Exemption percentage from Schedule E, line 3d
b Exemption percentage from Schedule E, line 2d
10 Exempt foreign trade income. Multiply line 8, column (a) by line 9a and
line 8, column (b) by line 9b
11 Nonexempt foreign trade income. Subtract line 10 from line 8
12 Deductions attributable to nonexempt foreign trade income. Enter amount
from Schedule G, line 18
13 Net income attributable to nonexempt foreign trade income. Subtract line
12 from line 11
14 Net income attributable to nonexempt foreign trade income from Schedule
F, line 6
15 Total net income attributable to nonexempt foreign trade income. Add
lines 13 and 14

6h

7

7
8
9a
9b

%
%

10
11
12
13
14
15

Part II—Taxable Income or (Loss)
16

Taxable income from foreign trade income. Enter total of line 15, columns (a) and (b), minus any
nontaxable income included in line 15, column (b). Attach a schedule that shows the computation
of the taxable and nontaxable income included on line 15, column (b)
17 Taxable nonforeign trade income from Schedule F, line 19
18 Taxable income or (loss) before net operating loss deduction and dividends-received deduction.
Add lines 16 and 17
19a
19a Net operating loss deduction (attach schedule)
19b
b Dividends-received deduction (attach schedule)
c Add lines 19a and 19b
20 Taxable income or (loss). Subtract line 19c from line 18. (See instructions for Schedule J to
figure the tax on this income.)

16
17
18

19c
20
Form

1120-FSC

(2006)

3
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 1120-FSC, PAGE 4 of 6
MARGINS: TOP 13mm (1⁄ 2 "), CENTER SIDES. PRINTS: HEAD TO FOOT
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 216mm (81⁄ 2 ") 3 838mm (33"), WRAP-IN FOLD TO: 216mm (81⁄ 2 ") 3 279mm (11")
PERFORATE: ON FOLDS
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 1120-FSC (2006)

Page

Schedule E

4

Exemption Percentages Used in Figuring Exempt Foreign Trade Income (see instructions)
Note: If all shareholders of the FSC are C corporations, enter .30000 on line 2d and .65217 on line 3d and skip all other lines.
If all shareholders of the FSC are other than C corporations, enter .32000 on line 2d and .69565 on line 3d and skip all other lines.
1

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Percentage (round to at least five decimal places) of voting stock owned by shareholders that
are C corporations
2 Exemption percentage for foreign trade income determined by not using the administrative pricing rules:
a Difference between section 923(a)(2) and section 291(a)(4)(A) percentage
b Section 923(a)(2) percentage

c Multiply line 1 by line 2a
d Exemption percentage. Subtract line 2c from line 2b. Enter here and on Schedule B, line 9b,
and on Schedule G, line 16b
3 Exemption percentage for foreign trade income determined using administrative pricing rules:
a Difference between section 923(a)(3) fraction and section 291(a)(4)(B) fraction (16/23 – 15/23 =
1/23) shown as a decimal

1

2a

.02000

2b

.32000

2c

2d

3a

.04348

b Section 923(a)(3) fraction (16/23) shown as a decimal

3b

.69565

c Multiply line 1 by line 3a
d Exemption percentage. Subtract line 3c from line 3b. Enter here and on Schedule B, line 9a,
and on Schedule G, line 16a

3c

Schedule F

1
2
3
4
5
6

3d

Net Income From Nonexempt Foreign Trade Income and Taxable Nonforeign Trade Income
(see instructions)
Part I—Net Income From Nonexempt Foreign Trade Income

Enter 50% of total receipts from the sale, exchange, or other disposition of
military property and related services
International boycott income
Illegal bribes and other payments
Total. Add lines 1, 2, and 3
Cost of goods sold and other costs related to above income
(attach schedule)
Net income from nonexempt foreign trade income. Subtract line 5 from
line 4. Enter here and on Schedule B, line 14, columns (a) and (b)

(a) Using administrative
pricing rules

(b) Not using administrative
pricing rules

1
2
3
4
5
6

Part II—Taxable Nonforeign Trade Income
7

Small FSCs: If line 6f, Schedule B, is greater than line 6e, Schedule B, enter the excess here

7

8

Interest

8

9

Dividends (attach schedule—see instructions)

9

10

Carrying charges

10

11
12
13

Royalties
Other investment income
Receipts excluded under section 924(f) on the basis of use, subsidized receipts, and receipts
from related parties
Income from excluded property under sections 927(a)(2) and (3)
Income from transactions that did not meet the Foreign economic process rules (see
instructions). (See Foreign Trading Gross Receipts in the instructions.)
Other income
Total. Add lines 7 through 16
Enter deductions allocated or apportioned to line 17 income. (Attach schedule. Small FSCs also
include the cost of goods sold deduction attributable to the amount entered on line 7 above)
Taxable nonforeign trade income. Subtract line 18 from line 17. Enter here and on
Schedule B, line 17

11
12

14
15
16
17
18
19

13
14
15
16
17
18
19
Form

1120-FSC

(2006)

3
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 1120-FSC, PAGE 5 of 6
MARGINS: TOP 13mm (1⁄ 2 "), CENTER SIDES. PRINTS: HEAD TO FOOT
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 216mm (81⁄ 2 ") 3 838mm (33"), WRAP-IN FOLD TO: 216mm (81⁄ 2 ") 3 279mm (11")
PERFORATE: ON FOLDS
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Page 5
Deductions Allocated or Apportioned to Foreign Trade Income Other Than Foreign Trade Income Reported
on Schedule F (See instructions for limitations on deductions before completing lines 1 through 14.)

Form 1120-FSC (2006)

Schedule G

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1

Foreign direct costs described in section 924(e):
Advertising and sales promotion
Certain processing and arranging costs
Certain transportation costs
Certain determination and transmittal costs
Assumption of credit risk
Total foreign direct costs. Add lines 1a through 1e
2 Advertising
3 Interest
4 Depreciation from Form 4562 (less any depreciation claimed elsewhere on
this return) (attach Form 4562)
5 Salaries and wages
6 Rents
7 Sales commissions
8 Warehousing
9 Freight
10 Compensation of officers
11 Bad debts
12 Pension, profit-sharing, etc., plans
13 Employee benefit programs
14 Other deductions (attach list)
15 Total deductions. Add lines 1f through 14
16a Exemption percentage from Schedule E, line 3d
b Exemption percentage from Schedule E, line 2d
a
b
c
d
e
f

17

18

2

(b) Not using administrative
pricing rules

1a
1b
1c
1d
1e
1f
2
3

4
5
6
7
8
9
10
11
12
13
14
15
16a
16b

Deductions attributable to exempt foreign trade income. Multiply line 15,
column (a) by line 16a and enter the result in column (a). Multiply line 15,
column (b) by line 16b and enter the result in column (b)

17

Deductions allocated or apportioned to nonexempt foreign trade
income other than foreign trade income reported on Schedule
F. Subtract line 17 from line 15. Enter here and on Schedule B,
line 12, columns (a) and (b)

18

Schedule J
1

(a) Using administrative
pricing rules

%
%

Tax Computation (see instructions)

Check if the FSC is a member of a controlled group (see section 927(d)(4)) (attach Schedule O
(Form 1120))

©

Income tax. Check this box if the FSC is a qualified personal service corporation as defined in
©
section 448(d)(2) (see instructions).

2

3

Alternative minimum tax (attach Form 4626)

3

4

Add lines 2 and 3

4

5

Foreign tax credit (attach Form 1118)

5

6

Total tax. Subtract line 5 from line 4. Enter here and on line 1, page 1

6
Form

1120-FSC

(2006)

3
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 1120-FSC, PAGE 6 of 6
MARGINS: TOP 13mm (1⁄ 2 ”), CENTER SIDES. PRINTS: HEAD TO FOOT
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 216mm (81⁄ 2 ”) x 838mm (33"), WRAP-IN FOLD TO: 216mm (81⁄ 2 ”) x 279mm (11”)
PERFORATE: ON FOLDS
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 1120-FSC (2006)

Schedule L

Page

Balance Sheets per Books
(a)

Assets
1

Cash

2a Trade notes and accounts receivable
b Commissions receivable
c Less allowance for bad debts
3

Inventories

4

U.S. government obligations

5

Tax-exempt securities (see instructions)

6

Other current assets (attach schedule)

7

Loans to shareholders

8

Mortgage and real estate loans

9

Other investments (attach schedule)

10a

Buildings and other depreciable assets

b Less accumulated depreciation
11a

Beginning of tax year

Depletable assets

b Less accumulated depletion
12

Land (net of any amortization)

13a

Intangible assets (amortizable only)

b Less accumulated amortization
14
Other assets (attach schedule)
15
Total assets

Liabilities and Shareholders’ Equity
16

Accounts payable

17

Mtges., notes, bonds payable in less than 1 year

18

Transfer prices payable

19

Other current liabilities (attach schedule)

20

Loans from shareholders

21

Mtges., notes, bonds payable in 1 year or more

22

Other liabilities (attach schedule)

23

Capital stock

24

Additional paid-in capital

25

Retained earnings—Appropriated (attach schedule)

26

Retained earnings—Unappropriated

27
28
29

Adjustments to shareholders’ equity (attach schedule)
Less cost of treasury stock
Total liabilities and shareholders’ equity

6

End of tax year
(b)

(c)

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(

)

(

)

(

)

(

)

(

)

(

)

(

)

(

)

(

)

(d)

(

)

Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return (see instructions)
1
2

Net income (loss) per books

3

Excess of capital losses over capital gains

a Tax-exempt interest

4

Income subject to tax not recorded
on books this year (itemize):

b Exempt foreign trade
income
$

5

Expenses recorded on books this year
not deducted on this return (itemize):

7

Federal income tax per books

a Depreciation

8

Income recorded on books this year not
included on this return (itemize):

Deductions on this return not charged
against book income this year (itemize):
Depreciation

$

$

$

b Deductions attributable to
exempt foreign trade income $
c Travel and entertainment
6

$

Add lines 1 through 5

Schedule M-2

Add lines 7 and 8
Taxable income (line 18, Schedule B)—
line 6 less line 9

Analysis of Unappropriated Retained Earnings per Books (Line 26, Schedule L)

1

Balance at beginning of year

2

Net income (loss) per books

3

Other increases (itemize):

4

9
10

Add lines 1, 2, and 3

5

Distributions:

a Cash
b Stock
c Property

6
7
8

Other decreases (itemize):
Add lines 5 and 6
Balance at end of year (line 4 less line 7)
Form

Printed on recycled paper

1120-FSC

(2006)