SCHEDULE J- FORM 1120
Point
1:Let’s check if the corporation is a member of a Controlled group, If “YES”,
we need to file Schedule O
Who needs to file schedule o?
A corporation which is a component member of a controlled
group must use Schedule O (Form 1120) for reporting the apportionment of taxable income, income
tax, and certain tax benefits between all component members of the group.
What is base erosion minimum tax?
In “Point 3”
of Schedule J, Base Erosion Tax is calculated, so let’s see what this is.
The base
erosion and anti-abuse tax, known as BEAT, was enacted in 2017 to discourage
U.S. and foreign corporations from avoiding tax liability by shifting profits
out of the U.S. BEAT works as a minimum tax of 10% that applies to certain multinational
companies that make “base erosion payments” to foreign related parties. (Mainly
with Gross Receipts of $500 million or more).
Form 8991 Needs to be Filed
for the same.
What is FOREIGN TAX CREDIT?
Point 5a
of Schedule J of Form 1120, talks about Foreign Tax Credit.
It is used to claim a credit for income taxes paid to a
foreign country on which U.S. taxes are also paid on the same income. For
Claiming “Foreign Tax Credit” we must file Form 1118
What is FORm 8834?
Point 5(b)
of Schedule J Form 1120 deals with the following:
Form 8834 is used to claim electric vehicle passive activity tax
credits from prior tax years. We should use Form 8834 in conjunction with Form
8582-CR to calculate passive activity credits. Passive activity credits are
carried-over credits from previous years in which you couldn’t claim the
credits due to passive activity rules.
If
your vehicle qualifies, you'll receive a credit equal to 10% of the cost of
each qualified plug-in electric vehicle with a maximum credit of $2,500 per
vehicle. Keep in mind that you must be the original purchaser of the vehicle to
qualify.
IN THE NEXT BLOG WILL DISCUSS ABOUT POINT 5C "GENERAL BUSINESS CREDITS"
COMPILED BY
CA. HARSIMRAN KAUR
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