Form 8404 Interest Charge on DISC-Related

Deferred Tax Liability

OMB No. 1545-0939

Department of the Treasury

Internal Revenue Service
䊳 File Form 8404 separate from your income tax return. See Where to File below. 2000
A Check applicable box to Name of shareholder B Shareholder’s identifying
show type of taxpayer: number

Address (number, street, room, suite, or P.O. box number)

Corporation
C IC-DISC’s identifying
Individual number
City, state, and ZIP code
Trust or
Decedent’s estate
D Shareholder’s tax year for which interest charge is required to be paid (see instructions) E Name of IC-DISC for which identifying number in item C is reported:

Note: See line-by-line instructions.

1 Taxable income or loss on tax return (actual or estimated) 1
2 Deferred DISC income from line 10, Part III, Schedule K (Form 1120-IC-DISC) 2
3 Section 995(f)(2) adjustments to line 1 income or loss 3
4 Combine lines 1, 2, and 3. If zero or a loss, do not file this form 4
5 Tax liability on line 4 amount 5
6 Tax liability per return (actual or estimated) 6
7 DISC-related deferred tax liability. Subtract line 6 from line 5. 7
8 Base period T-bill rate factor 8
9 Interest charge due. Multiply line 7 by line 8. (See instruction on Paying the Interest Charge.) 9
Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge
and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Sign
Here 䊳 Signature and Title (if any)
䊳 Date
䊳
Date Check if Preparer’s SSN or PTIN
Preparer’s self-
Paid signature employed 䊳
Preparer’s
䊳
Firm’s name (or yours if EIN
Use Only self-employed), address,
and ZIP code Phone no. ( )

General Instructions return. File the form in a separate envelope Amended Form 8404. You are required to
than that of your income tax return. Keep a file an amended Form 8404 only if the
See Privacy Act and Paperwork Reduction copy for your records. amount of the DISC-related deferred tax
Act Notice on page 2. Paying the Interest Charge. You must pay liability (line 7) changes as a result of audit
the interest charge shown on line 9 by the adjustments, changes you make by the filing
Section references are to the Internal
date your Federal income tax for the tax year of an amended return, or if estimates were
Revenue Code unless otherwise noted.
is required to be paid. For individuals, the used on your original Form 8404 and changes
Purpose of Form. Shareholders of Interest were made to these estimates when you filed
interest is due on the 15th day of the 4th
Charge Domestic International Sales your tax return. See proposed Regulations
month following the close of the tax year. For
Corporations (IC-DISCs) use Form 8404 to section 1.995(f)-1(j)(4) for details.
corporations, the interest is due on the 15th
figure and report their interest owed on
day of the 3rd month following the close of
DISC-related deferred tax liability.
the tax year. Specific Instructions
Who Must File. You must file Form 8404 if: A. Type of Taxpayer. Check the applicable
Attach a check or money order made
(a) you are a shareholder of an IC-DISC; box to indicate your status as a taxpayer.
payable to “United States Treasury” for the
(b) the IC-DISC reports deferred DISC income
full amount of the interest charge. Do not Partnerships and S corporations distribute
to you on line 10, Part III of Schedule K
combine the interest charge with any other their share of deferred DISC income to
(Form 1120-IC-DISC); and
tax or interest due. Write your identification partners and shareholders and the partners
(c) the addition of this income would result in
number and “Form 8404—Interest Due” on and shareholders complete Form 8404.
increased taxable income if it were included
your payment. Do not use Form 8109,
on your tax return for the tax year. Name and Address. Enter the name and
Federal Tax Deposit Coupon.
When To File. File Form 8404 at the time you address as shown on your tax return from
If the interest charge is not paid by the due which the income or loss on line 1 of Form
are required to file your Federal income tax
date, interest, compounded daily, at the rate 8404 is obtained. If the return is a joint return,
return (excluding extensions) for your tax year
specified under section 6621, will be imposed also enter your spouse’s name as shown on
that ends with or in which the IC-DISC’s tax
on the amount of unpaid interest from the Form 1040.
year ends.
due date until the date the interest is paid.
For example, you are a fiscal year Payment of estimated tax is not required for B. Identifying Number. Individuals must
corporation with a July 1, 2000, to the interest charge. See proposed enter their social security number. Other filers
June 30, 2001, tax year and you are a Regulations section 1.995(f)-1(j)(3) for other must enter their employer identification
shareholder in an IC-DISC with a July 1, details. number.
2000, to June 30, 2001, tax year that reports C. IC-DISC’s Identifying Number. Enter the
For corporations (other than S
deferred DISC income to you for its year identifying number of the IC-DISC from the
corporations), the annual interest charge is
ending June 30, 2001. Because your tax year Schedule K (Form 1120-IC-DISC) on which
deductible as an interest expense for the tax
ends with the IC-DISC’s tax year, you are the line 2 deferred DISC income was reported
year it is paid or accrued. See proposed
required to file Form 8404 on or before to you. If income is reported to you from
Regulations section 1.995(f)-1(j)(2) for details
September 15, 2001 (21⁄2 months after your more than one IC-DISC, enter each IC-DISC’s
on the tax year of deductibility. For other
tax year ends). identifying number in item C, each IC-DISC’s
filers, this interest is not deductible.
Where To File. File Form 8404 with the name in item E, and report the combined
Internal Revenue Service Center where you income on line 2.
are required to file your Federal income tax
Cat. No. 62423Z Form 8404 (2000)
Form 8404 (2000) Page 2
D. Tax Year. Enter in item D the calendar Line 3. Enter the net amount of all section Line 8. The base period T-bill rate is defined
year or the beginning and ending dates of the 995(f)(2) adjustments to taxable income. See in section 995(f)(4). The base period T-bill rate
tax year shown on your tax return for which Special Computation Rules, above, for is compounded daily based on the number of
the interest charge is figured. details on the income (loss) and expense days in the shareholder’s tax year to
adjustments to be made. If more than one determine the base period T-bill rate factor.
Special Computation Rules adjustment is involved, attach a schedule The base period T-bill rate factor for 2000
listing each item and show the computation is .061406747 for a 366-day tax year and
Carrybacks. The determination of the of the net amount.
shareholder’s DISC-related deferred tax .061233934 for a 365-day tax year. Enter the
liability on lines 1 through 7 shall be made Lines 5 and 6. The tax liability on lines 5 and appropriate factor on line 8 of Form 8404.
without taking into account any net operating 6 (with and without the deferred DISC See Rev. Rul. 2000-52, 2000-48 I.R.B. 516
loss (NOL) or capital loss carryback; or credit income) means the amount of tax imposed on for a short tax year or a 52-53 week tax year.
carryback to the tax year. the IC-DISC shareholder for the tax year by
Chapter 1 of the Internal Revenue Code
Carryovers. The determination of the (other than taxes listed below) reduced by Privacy Act and Paperwork Reduction Act
shareholder’s tax liability (line 5) for the tax allowable credits (other than credits listed Notice. We ask for the information on this
year is made by disregarding any loss, below). form to carry out the Internal Revenue laws of
deduction, or credit to the extent that such the United States. We need it to figure and
loss, deduction, or credit may be carried See Special Computation Rules on collect the right amount of tax. Section 995(f)
(either back or forward) by the shareholder to carrybacks and carryovers that may affect the of the Internal Revenue Code requires
any other tax year. line 5 computation. taxpayers to pay over to the IRS interest on
Note: If the tax year is the last tax year to The following taxes are not taken into DISC-Related Deferred Tax Liability. This form
which the amount of carryforward (of loss, account: is used to determine the amount of tax that
deduction, or credit) may be carried, the line you owe. Sections 6001 and 6011 require you
● Alternative minimum tax. to provide the requested information if the tax
3 adjustments and line 5 tax shall be figured
with regard to the full amount of such ● Any other provisions described in section applies to you. Section 6109 requires you to
carryforward. 26(b)(2) (relating to certain other taxes treated provide your social security number or other
as not imposed by identifying number. Routine uses of this
For example, a shareholder had a NOL Chapter 1). information include disclosing it to the
carryover to 2001 of $12,000; $10,000 Department of Justice for civil and criminal
income to which $10,000 of the NOL can be The following credits are not taken into
account: litigation and to other federal agencies, as
applied; $2,000 allowable NOL carryover to provided by law. We may disclose the
2002; and $5,000 deferred DISC income for ● Section 31 (taxes withheld on wages). information to cities, states, the District of
2001. In this case, for purposes of figuring Columbia, and U.S. Commonwealths or
● Section 32 (earned income credit).
line 5, the allowed NOL is $10,000. Note: If possessions to administer their tax laws. We
2001 were the last tax year to which the ● Section 34 (fuels credit). may disclose the information to foreign
$12,000 NOL could be carried, the full For individuals or corporations, figure the governments pursuant to tax treaties. We
$12,000 NOL would be allowed for purposes line 6 tax liability from Form 1040, U.S. may disclose the information to the
of figuring line 5 tax liability. The additional Individual Income Tax Return, or Form 1120, Department of the Treasury and contractors
$2,000 loss would be entered on line 3. U.S. Corporation Income Tax Return. (For for tax administration purposes. If you do not
Other Adjustments. In figuring line 3 other filers, enter amounts from file this information required by law or provide
adjustments, take into account any income corresponding lines of other income tax incomplete or fraudulent information, you may
and expense adjustments that do not result in returns.) If you have not yet filed your return, be subject to interest, penalties, and/or
amounts that may be carried back or forward estimate the line 6 tax liability based on all criminal prosecution.
to other tax years. For example, in the case information available to you. You are not required to provide the
of an IC-DISC shareholder who is an For 2000, for individuals and corporations, information requested on a form that is
individual, the amount of medical expenses figure the line 6 tax liability using the items subject to the Paperwork Reduction Act
allowable as a deduction under section 213 shown below as reported on the unless the form displays a valid OMB control
must be redetermined for purposes of line 3 corresponding lines of Forms 1040 and 1120. number. Books or records relating to a form
adjustments. However, the amount allowable (For tax years beginning before or after 2000, or its instructions must be retained as long as
as a charitable deduction under section 170 figure the line 6 tax liability by matching the their contents may become material in the
is not redetermined because this adjustment item descriptions to the lines of Forms 1040 administration of any Internal Revenue law.
could result in a carryback or carryover. and 1120 for that year.) Generally, tax returns and return information
See proposed Regulations sections are confidential, as required by section 6103.
2000 2000
1.995(f)-1(d)(1) through (8) for other details Form 1040 Form 1120 The time needed to complete and file this
regarding these and other special Line Line form will vary depending on individual
computation rules. Tax less nonrefundable circumstances. The estimated average time
credits 51 8, Sch. J is:
Line-by-Line Instructions Plus: (1) Advance earned Recordkeeping 4 hr., 4 min.
Line 1. Enter on line 1 the taxable income or income credit Learning about the
loss from your Federal income tax return for payments 55
law or the form 2 hr., 17 min.
your tax year that ends with or in which the (2) Recapture taxes
IC-DISC’s tax year ends. If you have not yet (except Form 8828) * 10, Sch. J Preparing, copying
filed your tax return, estimate your income or (3) Prior year minimum and sending the form
loss based on all information available to you. tax credit 49c 6e, Sch. J to the IRS 2 hr., 27 min.
(See Amended Form 8404 on page 1.) Less: (1) Alternative minimum If you have comments concerning the
tax 41 4, Sch. J accuracy of these time estimates or
Line 2. Enter the deferred DISC income from
line 10, Part III of Schedule K (Form (2) Credit for tax paid on suggestions for making this form simpler, we
undistributed capital would be happy to hear from you. You can
1120-IC-DISC), for the IC-DISC tax year that gains (Form 2439) 64 32f, pg. 1
ends with or within your tax year. write to the Tax Forms Committee, Western
*Caution: Only use the portion of line 57 attributable Area Distribution Center, Rancho Cordova,
to recapture from investment tax and low income CA 95743-0001.
housing credits.
Do not send the form to this office.
Instead, see Where To File on page 1.