Summary Changes

Form 8881 (Rev. Dec. 2006)
Credit for Small Employer Pension Plan Startup Costs

Purpose:

This is the first circulated draft of the Form 8881 (Rev. Dec. 2006) for your
review and comments. Changes made to the form are explained on the attachment.

TPCC meeting: No meeting is planned, but you may request one by contacting John R. Nelson
Prior Revisions

The 2005 Form 8881 is available at:
http://www.irs.gov/pub/irs-pdf/f8881.pdf

Other products

Circulations of draft tax forms and instructions are posted at
http://taxforms.web.irs.gov/draft_products.html.
Draft publications are not available.

Comments

Please email, fax, or call, any comments by May 26, 2006.

John R. Nelson
Tax Law Specialist,
SE:W:CAR:MP:T:B:P
Phone: 202-927-9488
Fax: 202-622-3262
Email: [email protected]

Major Changes for 2006
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We deleted Part II, relating to computation of the allowable credit from the form.
Beginning in 2006, all taxpayers will be required to complete Form 3800, General
Business Credit, to make this computation.
Beginning in 2006, this form will become a continuous use form. That is, it will
be revised only as needed instead of annually.
We deleted the instructions for S corporations and partnerships. Taxpayers will
need to go to the instructions for their appropriate form (i.e, Form 1120S or 1065)
that they file for additional information.
Instructions for “Controlled Groups” will be replaced with the following:

Member of Controlled Group, Business Under Common Control, or Affiliated
Service Group.
For purposes of figuring the credit, all members of a controlled group of corporations
(as defined in section 52(a)), all members of a group of businesses under common
control (as defined in section 52(b)), and all members of an affiliated service groups
(as defined in section 414(m)), are treated as a single employer. As a member, compute your credit based on your proportionate share of qualified startup costs giving
rise to the group’s credit for small employer pension plan startup costs. Enter your
share of the credit on line 2. Attach a statement showing how your share of the credit
was figured, and write “See Attached” next to the entry space for line 2.
Note: Please disregard the instructions for “Controlled Groups” in this 1st draft. The
above language will appear in the final draft.