Instructions for Forms 1120 and 1120-A (2006)

Instructions for Forms 1120 and 1120-A - Introductory Material

This is archived information that pertains only to the 2006 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents

For tax years ending on or after December 31, 2006, certain corporations with total assets of $10 million or more at the end of the corporation's tax year, must electronically file Form 1120. See Electronic Filing (Form 1120 Only) on page 2.
Subchapter T cooperatives should file Form 1120-C, U. S. Income Tax Return for Cooperative Associations, instead of Form 1120 or Form 1120-A. See Form 1120-C and its instructions.
The filing address for corporations whose principal business, office, or agency is located in a foreign country or U.S. possession has changed. See Where To File on page 3.
Corporations must include in income part or all of the proceeds received from certain corporate-owned life insurance contracts issued after August 17, 2006. See section 101(j) for details.
Certain corporate farmers and ranchers may have an increased contribution limit and carryover period for donations of conservation property. See Suspension of 10% limitation for farmers and ranchers on page 9.
Cash contributions made in tax years beginning after August 17, 2006, must be supported by a dated bank record or receipt. See Substantiation requirements on page 10.
New rules and restrictions apply to certain contributions of real property interests located in a registered historic district. Also, a $500 filing fee may apply to certain deductions over $10,000. See Special rules for contributions of certain easements in registered historic districts on page 10.
The larger deductions for contributions of certain food inventory and qualified book contributions to certain schools have been extended through December 31, 2007. See Other special rules on page 10.
Corporations that paid the federal telephone excise tax on long distance or bundled service may be able to request a credit. See the instructions for line 32g on page 12.
Controlled groups must complete new Schedule O (Form 1120), Consent Plan and Apportionment Schedule for a Controlled Group, before completing Schedule J. See the Instructions for Schedule O.
The possessions tax credit under section 936 or section 30A has expired for most corporations for tax years beginning in 2006. For guidance on certain issues that may arise depending on the manner in which the business of the corporation continues to be conducted after 2005, see Notice 2005-21, 2005-11 I.R.B. 727.
For tax years beginning in 2006, a corporation that is an existing credit claimant with respect to American Samoa, may be able to claim the American Samoa economic development credit. See the Instructions for Form 5735.

Photographs of Missing Children

The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in instructions on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

Unresolved Tax Issues

If the corporation has attempted to deal with an IRS problem unsuccessfully, it should contact the Taxpayer Advocate. The Taxpayer Advocate independently represents the corporation's interests and concerns within the IRS by protecting its rights and resolving problems that have not been fixed through normal channels.

While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that the corporation's case is given a complete and impartial review.

The corporation's assigned personal advocate will listen to its point of view and will work with the corporation to address its concerns. The corporation can expect the advocate to provide:

A “fresh look” at a new or ongoing problem,
Timely acknowledgment,
The name and phone number of the individual assigned to its case,
Updates on progress,
Timeframes for action,
Speedy resolution, and
Courteous service.

When contacting the Taxpayer Advocate, the corporation should be prepared to provide the following information.

The corporation's name, address, and employer identification number.
The name and telephone number of an authorized contact person and the hours he or she can be reached.
The type of tax return and year(s) involved.
A detailed description of the problem.
Previous attempts to solve the problem and the office that was contacted.
A description of the hardship the corporation is facing and supporting documentation (if applicable).

The corporation can contact a Taxpayer Advocate as follows.

Call the Taxpayer Advocate's toll-free number: 1-877-777-4778.
Call, write, or fax the Taxpayer Advocate office in its area (see Pub. 1546 for addresses and phone numbers).
TTY/TDD help is available by calling 1-800-829-4059.
Visit the website at www.irs.gov/advocate.

Direct Deposit of Refund

To request a direct deposit of the corporation's income tax refund into an account at a U.S. bank or other financial institution, attach Form 8050, Direct Deposit of Corporate Tax Refund (see page 12).

How To Make a Contribution To Reduce Debt Held by the Public

To help reduce debt held by the public, make a check payable to “Bureau of the Public Debt.” Send it to Bureau of the Public Debt, Department G, P.O. Box 2188, Parkersburg, WV 26106-2188. Or, enclose a check with the income tax return. Contributions to reduce debt held by the public are deductible subject to the rules and limitations for charitable contributions.

How To Get Forms and Publications

Internet. You can access the IRS website 24 hours a day, 7 days a week, at www.irs.gov to:

Download forms, instructions, and publications;
Order IRS products online;
Research your tax questions online;
Search publications online by topic or keyword; and
Sign up to receive local and national tax news by email.

IRS Tax Products CD. You can order Pub. 1796, IRS Tax Products CD, and obtain:

Current year forms, instructions, and publications;
Prior year forms, instructions, and publications;
Bonus: Historical Tax Products DVD - Ships with the final release;
Tax Map: an electronic research tool and finding aid;
Tax law frequently asked questions (FAQs);
Tax Topics from the IRS telephone response system;
Fill-in, print and save features for most tax forms;
Internal Revenue Bulletins; and
Toll-free and email technical support.

The CD is released twice during the year. The first release will ship the beginning of January and the final release will ship the beginning of March.

Buy the CD from the National Technical Information Service (NTIS) at www.irs.gov/cdorders for $25 (no handling fee) or call 1-877-CDFORMS (1-877-233-6767) toll free to buy the CD for $25 (plus a $5 handling fee). Price is subject to change.

By phone and in person. You can order forms and publications by calling 1-800-TAX-FORM (1-800-829-3676). You can also get most forms and publications at your local IRS office.