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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
due to damage, imperfections, shopwear,
etc., within the meaning of Regulations
section 1.471-2(c). The goods may be
valued at the current bona fide selling
price, minus direct cost of disposition (but
not less than scrap value). Bona fide
selling price means actual offering of
goods during a period ending not later
than 30 days after inventory date.
If this is the first year the Last-in,
First-out (LIFO) inventory method was
either adopted or extended to inventory
goods not previously valued under the
LIFO method provided in section 472,
attach Form 970, Application To Use LIFO
Inventory Method, or a statement with the
information required by Form 970. Also
check the LIFO box on line 9c. On line 9d,
enter the amount or the percent of total
closing inventories computed under
section 472. Estimates are acceptable.
If the IC-DISC changed or extended its
inventory method to LIFO and had to write
up the opening inventory to cost in the
year of election, report the effect of the
write-up as other income (Schedule B,
line 2j or 3f), proportionately over a 3-year
period that begins with the year of the
LIFO election.
Schedule B
Gross Income
If an income item falls into two or more
categories, report each part on the
applicable line. For example, if interest
income consists of qualified interest from
a foreign international sales corporation
and nonqualifying interest from a domestic
obligation, enter the qualified interest on
an attached statement for line 2g and the
nonqualifying interest on an attached
statement for line 3f.
For gain from selling qualified export
assets, attach a separate statement in
addition to the forms required for lines 2h
and 2i.
Nonaccrual experience method for
service providers. Accrual method
corporations are not required to accrue
certain amounts to be received from the
performance of services that, on the basis
of their experience, will not be collected, if:
•
The services are in the fields of health,
law, engineering, architecture, accounting,
actuarial science, performing arts, or
consulting; or
•
The corporation's average annual gross
receipts for any prior 3-tax-year period
does not exceed $26 million. For more
details, see section 448(d)(5).
This provision does not apply to any
amount if interest is required to be paid on
the amount or if there is any penalty for
failure to timely pay the amount. See
Regulations section 1.448-2 for
information on the nonaccrual experience
method, including information on safe
harbor methods. For information on a
book safe harbor method of accounting for
corporations that use the nonaccrual
experience method of accounting, see
Rev. Proc. 2011-46, 2011-42 I.R.B. 518,
as modified by Rev. Proc. 2016-29,
2016-21 I.R.B. 880. Also see the
Instructions for Form 3115 for procedures
to obtain automatic consent to change to
this method or make certain changes
within this method.
Corporations that qualify to use the
nonaccrual experience method should
attach a statement showing total gross
receipts, the amount not accrued as a
result of the application of section 448(d)
(5), and the net amount accrued. Enter the
amount on the applicable line of
Schedule B.
Commissions: Special Rule
Note. “United States,” as used in the
following instructions, includes Puerto
Rico and U.S. possessions, as well as the
50 states and the District of Columbia.
If the IC-DISC received commissions
on selling or renting property or furnishing
services, list in column (b) the gross
receipts from the sales, rentals, or
services on which the commissions arose,
and in column (c), list the commissions
earned. In column (d), report receipts from
noncommissioned sales or rentals of
property or furnishing of services, as well
as all other receipts.
For purposes of completing lines 1a
and 1b, related purchasers are members
of the same controlled group (as defined
in section 993(a)(3)) as the IC-DISC. All
other purchasers are unrelated.
A qualified export sale or lease must
meet a use test and a destination test in
order to qualify.
The use test applies at the time of the
sale or lease. If the property is used
predominantly outside the United States
and the sale or lease is not for ultimate
use in the United States, it is a qualified
export sale or lease. Otherwise, if a
reasonable person would believe that the
property will be used in the United States,
the sale or lease is not a qualified export
sale or lease. For example, if property is
sold to a foreign wholesaler and it is
known in trade circles that the wholesaler,
to a substantial extent, supplies the U.S.
retail market, the sale would not be a
qualified export sale, and the receipts
would not be qualified export receipts.
Regardless of where title or risk of loss
shifts from the seller or lessor, the property
must be delivered under one of the
following conditions to meet the
destination test.
1. Within the United States to a carrier
or freight forwarder for ultimate delivery
outside the United States to a buyer or
lessee.
2. Within the United States to a buyer
or lessee who, within 1 year of the sale or
lease, delivers it outside the United States
or delivers it to another person for ultimate
delivery outside the United States.
3. Within or outside the United States
to an IC-DISC that is not a member of the
same controlled group (as defined in
section 993(a)(3)) as the seller or lessor.
4. Outside the United States by
means of the seller's delivery vehicle
(ship, plane, etc.).
5. Outside the United States to a
buyer or lessee at a storage or assembly
site if the property was previously shipped
from the United States by the seller or
lessor.
6. Outside the United States to a
purchaser or lessee if the property was
previously shipped by the seller or lessor
from the United States and if the property
is located outside the United States
pursuant to a prior lease by the seller or
lessor, and either (a) the prior lease
terminated at the expiration of its term (or
by the action of the prior lessee acting
alone), (b) the sale occurred or the term of
the subsequent lease began after the time
at which the term of the prior lease would
have expired, or (c) the lessee under the
subsequent lease is not a related person
(a member of the same controlled group
as defined in section 993(a)(3) or a
relationship that would result in a
disallowance of losses under section 267
or section 707(b)) immediately before or
after the lease with respect to the lessor,
and the prior lease was terminated by the
action of the lessor (acting alone or
together with the lessee).
Line-by-Line Instructions
Line 1a. Enter the IC-DISC's qualified
export receipts from export property sold
to foreign, unrelated buyers for delivery
outside the United States. Do not include
amounts entered on line 1b.
Line 1b. Enter the IC-DISC's qualified
export receipts from export property sold
for delivery outside the United States to a
related foreign entity for resale to a
foreign, unrelated buyer, or an unrelated
buyer when a related foreign entity acts as
commission agent.
Line 2a. Enter the gross amount received
from leasing or subleasing export property
to unrelated persons for use outside the
United States.
Receipts from leasing export property
may qualify in some years and not in
Instructions for Form 1120-IC-DISC (Rev. 12-2021)
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