Contents Introduction  ........................................ 1 Important Change for 1999  ............... 2 Business Taxed as a Corporation  .... 2 Nontaxable Exchange of Property for Stock ............................................. 2 Capital Contributions  ......................... 3 Paying and Filing Income Taxes  ...... 3 Estimated Tax  ................................. 3 Income Tax Returns  ....................... 4 Income and Deductions   .................... 5 Below-Market Loans  ....................... 5 Capital Losses  ................................ 5 Charitable Contributions  ................. 5 Corporate Preference Items  ........... 5 Dividends-Received Deduction ....... 5 Extraordinary Dividends .................. 6 Going Into Business  ....................... 6 Related Persons  ............................. 7 U.S. Real Property Interest  ............ 8 Figuring Taxable Income  ................... 8 Net Operating Losses  ..................... 8 At-Risk Limits  .................................. 9 Passive Activity Limits  .................... 9 Figuring Tax  ........................................ 9 Tax Rate Schedule  ......................... 9 Credits ............................................. 9 Recapture Taxes  ............................ 10 Alternative Minimum Tax (AMT)  ..... 10 Accumulated Earnings Tax  ............... 10 Distributions to Shareholders   .......... 10 Money or Property Distributions  ..... 10 Distributions of Stock or Stock Rights ....................................... 11 Constructive Distributions  ............... 11 Reporting Dividends and Other Distributions ............................. 11 Sample Returns  .................................. 12 Form 1120–A (Short Form)  ............ 12 Form 1120  ...................................... 16 How To Get More Information  .......... 22 Index  .................................................... 23 Introduction This  publication  discusses  the  general  tax laws that apply to ordinary domestic corpo- rations. It explains the tax law in plain lan- guage so that it will be easier to understand. However,   the   information   given   does   not cover every situation and is not intended to replace the law or change its meaning. Some corporations may meet the quali- fications for electing to be S corporations. For information  on  S  corporations,  see  the  in- structions for Form 1120S,  U.S. Income Tax Return for an S Corporation. See the sample filled-in Forms 1120 and 1120–A near the end of this publication. Department of the Treasury Internal Revenue Service Publication 542 Cat. No. 15072O Corporations For use in preparing 1999  Returns