《税收概述》（英文版） chapter 3 The Corporate

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1 Chapter 3: The Corporate Income Tax

THE CORPORATE INCOME TAX Tax years Accounting methods Taxable income tax liability Controlled groups Compensation planning Filing requirements

2 THE CORPORATE INCOME TAX Tax years Accounting methods Taxable income & tax liability Controlled groups Compensation planning Filing requirements

Selecting a Tax Year (1of2) lllll New corp elects tax year by filing return First return may be for short-period Some corporations restricted S-corporation uses calendar year Affiliated group member must be same as parent PSCs usually calendar year 3

3 Selecting a Tax Year (1 of 2) New corp elects tax year by filing return First return may be for short-period Some corporations restricted –S-corporation uses calendar year –Affiliated group member must be same as parent –PSCs usually calendar year

Selecting a Tax Year (2of2) Changing the tax year Usually requires IRS approval Automatic approval if ))No change within last 10 years >)Short period does not have a NOL ) Annualized short period is at least 80% of last years income Special status does not change >No S election in the following year 4

4 Selecting a Tax Year (2 of 2) Changing the tax year –Usually requires IRS approval –Automatic approval if »No change within last 10 years »Short period does not have a NOL »Annualized short period is at least 80% of last years income »Special status does not change »No S election in the following year

Accounting Methods Accrual GAAP and normal for c corps Cash Qualified PSC, or Gross under S5M >)Usually service type business >)Inventories cannot be significant Family farm

5 Accounting Methods Accrual –GAAP and normal for C corps Cash –Qualified PSC, or Gross under $5M »Usually service type business »Inventories cannot be significant –Family farm

Tax formula General( of 3 Gross Income Minus: Deductions and losses Minus: Special Deductions Taxable Income (Regular and AMT) Times: Appropriate Rate Equals: Regular Tax Liability before credits 6

6 Tax Formula: General (1 of 3) Gross Income Minus: Deductions and Losses Minus: Special Deductions Taxable Income (Regular and AMT) Times: Appropriate Rate Equals: Regular Tax Liability before credits

Tax formula General(2 of 3) Regular Tax Liability before credits Less: Foreign tax credit Less: Other Credits Plus: Credit recapture Equals: Regular tax liability 7

7 Tax Formula: General (2 of 3) Regular Tax Liability before credits Less: Foreign tax credit Less: Other Credits Plus: Credit recapture Equals: Regular tax liability

Tax Formula: General(3 of 3) Regular Tax Liability Plus: AMT Liability Plus: Special Taxes(if any) Minus: Estimated Payments Equals: Refund or tax due 8

8 Tax Formula: General (3 of 3) Regular Tax Liability Plus: AMT Liability Plus: Special Taxes (if any) Minus: Estimated Payments Equals: Refund or tax due

Tax Formula: AMT( of 2 Taxable Income before NOL adjust Plus: Tax preference items Plus/minus: Adjustments to income Plus/minus: ACE adjustment factor Minus, AMT NOL deduction Equals: AMT taxable income Minus: Statutory exemption Equals: AMT Tax Base 9

9 Tax Formula: AMT (1 of 2) Taxable Income before NOL adjust Plus: Tax preference items Plus/minus: Adjustments to income Plus/minus: ACE adjustment factor Minus: AMT NOL deduction Equals: AMT taxable income Minus: Statutory exemption Equals: AMT Tax Base

Tax Formula: AMT (2 of 2 AMT Tax Base Times: AMT Rate Equals: Tentative AMT before Credits Minus: AMT foreign tax credit Minus, AMT Investment credit Minus: Regular tax liability Equals: AMT Liability 10

10 Tax Formula: AMT (2 of 2) AMT Tax Base Times: AMT Rate Equals: Tentative AMT before Credits Minus: AMT foreign tax credit Minus: AMT Investment Credit Minus: Regular tax liability Equals: AMT Liability