Professional Documents
Culture Documents
1545-0935
(Form 1120-FSC)
Department of the Treasury
Internal Revenue Service
For amount reported on line
, Schedule
Attach Schedule P to Form 1120-FSC.
, Form 1120-FSC.
2002
Name as shown on Form 1120-FSC Employer identification number
Format of tabular schedules. If a include the supplier’s cost of goods same controlled group and the related
tabular schedule is attached to Schedule sold, and the supplier’s and the FSC’s supplier) for any other sale, or group of
P, the schedule must: noninventoriable costs that relate to the sales, during the tax year that falls
● Be in spreadsheet or similar format; foreign trading gross receipts. See within the same NAICS code (or, if
● List the taxpayer’s name and EIN on Regulations section 1.471-11(c)(2)(ii). applicable, SIC code) as the subject
each numbered page; Also see Temporary Regulations section sale.
1.925(a)-1T(c)(6)(iii) for special rules
● Be formatted in columns that regarding gross receipts and total costs. Section B–23% of Combined
correspond to items A, C, and each line Taxable Income Method
item in Parts I, II, and III of Schedule P; Line 2b. Include an apportionment of
deductions that are not definitely Under this method, the related supplier
and figures an allowable transfer price to
allocable, such as interest expense and
● Show totals in each column. stewardship expenses. See Temporary charge the FSC (or an allowable
Item C–Principal Business Activity Regulations sections 1.861-11T(f) and commission to pay to the FSC) so that
Code. If applicable, use the list of 1.861-14T(f) for details on the the FSC will profit on the sale.
Principal Business Activity codes on the apportionment. The profit is limited to 23% of the
last page of the Instructions for Form FSC’s and the supplier’s combined
1120-FSC to group activities. Enter the Marginal Costing
taxable income attributable to the
six-digit number that relates to the Under the marginal costing rules, the foreign trading gross receipts from the
corresponding product or product line combined taxable income of the FSC sale. Also see item 3 (regarding
reported in item A. and its related supplier is figured by incomplete transactions) under When
Note: If the FSC used the SIC codes for subtracting from foreign trading gross Not To File on page 2.
Schedule P in prior tax years, it may receipts the direct material and direct
continue using the SIC codes for 2002. labor costs of producing a particular Section C–1.83% of Foreign
item, product, or product line. See Trading Gross Receipts Method
Part I Regulations section 1.471-11(b)(2)(ii). Under this method, the related supplier
The combined taxable income also may figures an allowable transfer price to
Section A–Combined Taxable be limited to the overall profit charge the FSC (or an allowable
Income percentage (line 10) multiplied by the line commission to pay to the FSC) so that
Under the administrative pricing rules, 4 foreign trading gross receipts. the FSC will profit on the sale.
the methods discussed below may be See Temporary Regulations section The profit is limited to 1.83% of the
used in the same tax year of the FSC for 1.925(b)-1T for more information on the FSC’s foreign trading gross receipts. It is
separate transactions (or separate marginal costing rules. Also see section further limited to twice the profit
groups of transactions). 1.925(a)-1T for information on the determined under either (a) the 23% of
Full Costing transfer pricing rules. combined taxable income method or
Foreign trading gross receipts are the Limit on FSC Income (No-loss Rules) (b) the marginal costing rules (described
gross receipts of a FSC (other than a If there is a loss on line 3 or line 12, the above). Also see item 3 (regarding
small FSC) that has met the foreign FSC may not earn a profit under either incomplete transactions) under When
management and foreign economic the 23% method or the 1.83% method. Not To File on page 2.
process rules. The receipts must be from Under the 1.83% method, the FSC’s
the sale, lease, or rental of export profit on line 17 may not exceed the full
Part II
property for use outside the United costing combined taxable income Line 20. If the transfer price from the
States or for engineering or architectural reported on line 3. The related supplier related supplier to the FSC is entered on
services for a construction project may, however, set a transfer price or more than one line on Form 1120-FSC,
located outside the United States. For rental payment or pay a commission in attach an explanation indicating the
details, see section 924 and Foreign an amount that will enable the FSC to portion of line 20 that applies to each
Trading Gross Receipts on page 3 of recover its costs, if any, even if the line.
the Instructions for Form 1120-FSC. result is a loss for the related supplier.
If the FSC is the principal in the sale If the FSC recognizes income while
Part III
of export property, the combined taxable the related supplier recognizes a loss on Line 23. If the FSC commission from the
income of the FSC and its related a sale under the section 482 method, related supplier is entered on more than
supplier is the excess of the FSC’s neither the 23% method nor the 1.83% one line on Form 1120-FSC, attach an
foreign trading gross receipts from the method may be used by the FSC and explanation indicating the portion of line
sale over the total costs of the FSC and the related supplier (or by a FSC in the 23 that applies to each line.
related supplier. These costs