1120 Schedule O Instructions for Form 1120 Scedule O

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Instructions for Schedule O
(Form 1120)

Department of the Treasury
Internal Revenue Service

(Rev. December 2018)

Consent Plan and Apportionment Schedule for a Controlled Group

DRAFT AS OF
October 18, 2018

Section references are to the Internal
Revenue Code unless otherwise noted.

Future Developments

For the latest information about
developments related to Schedule O
(Form 1120) and its instructions, such
as legislation enacted after they were
published, go to IRS.gov/Form1120.

What’s New

Schedule O (Form 1120) and the
Instructions for Schedule O (Form
1120) have been revised to reflect the
replacement of the graduated
corporate tax structure with a flat 21%
corporate tax rate and the repeal of
the corporate alternative minimum tax.
These changes are effective for tax
years beginning after December 31,
2017.

General Instructions
Purpose of Schedule

A corporation that is a component
member (defined below) of a
controlled group must use
Schedule O to report the
apportionment of certain tax benefits
between all component members of
the group. These members will be
subject to limitations on the use of
certain tax benefits for their applicable
tax year. See Apportionment of
tax-benefit items, later.

Also use Schedule O to indicate
that the member filing this return
consents to and represents that all the
other component members of the
controlled group:
• Are adopting an apportionment
plan, effective for the current tax year;
• Are amending the existing
apportionment plan;
• Are terminating the existing
apportionment plan and not adopting
a new plan;
• Are terminating the existing
apportionment plan and adopting a
new plan;

Oct 11, 2018

• Have no apportionment plan in
effect and are not adopting an
apportionment plan; or
• Already have an apportionment
plan in effect.

Use Schedule O (Form 1120)
(Rev. December 2012) to
CAUTION amend an existing
apportionment plan for tax years
beginning before January 1, 2018.

!

Who Must File

A corporation must file Schedule O
with its income tax return, amended
return, or claim for refund for each tax
year that the corporation is a
component member of a controlled
group, even if (1) no apportionment
plan is in effect, or (2) the amounts
apportioned have not changed from
the previous tax year. See Definitions
and Special Rules, later.

Consolidated groups. If any of the
component members of a controlled
group also are members of a
consolidated group, then the common
parent of that consolidated group
must file, as part of its consolidated
income tax return, one Schedule O on
behalf of the members of that
consolidated group. No subsidiary of
that consolidated group should file
Schedule O on its own behalf. The
Schedule O should contain the
required consolidated information for
all members of the consolidated
group. See Identifying Information,
later.
Exception. If all of the members of
a parent–subsidiary controlled group
that are required to file a U.S. tax
return join in filing the same
consolidated tax return, then the
parent of that group does not have to
file Schedule O on behalf of the
group.

Completing and Filing
Schedule O
In completing Schedule O, the
following apply.
Cat. No. 48211V

• The filing of Schedule O by a
component member provides the
required information as to the status
of the group's apportionment plan.
Such information must indicate, when
applicable, whether all the component
members of the controlled group are
adopting, amending, or terminating an
apportionment plan.
• If all such members complete the
required written agreement setting
forth the terms of the adopted or
amended apportionment plan or an
agreement to terminate a previously
adopted plan, then each member of
that group may rely on this agreement
as the member's basis for
representing on its Schedule O that
the other component members of the
group also have consented to
adopting, amending, or terminating
the apportionment plan.
• The agreement must be signed by
a person authorized to sign on behalf
of each component member of the
controlled group and retained. No
member should attach this agreement
(or a copy of it) to their federal income
tax returns. Each component member
must keep, as part of its records,
either the original or a copy of the
signed agreement. The agreement
must contain the group's
apportionment methodology (for
example, percentages) for each
tax-benefit item that is apportioned.

Definitions and Special
Rules
Types of Controlled Groups
Parent–subsidiary group. A
parent–subsidiary group is one or
more chains of corporations
connected through stock ownership
with a common parent corporation if:
• Stock possessing at least 80% of
the total combined voting power of all
classes of stock entitled to vote or at
least 80% of the total value of shares
of all classes of stock of each of the
corporations, except the common
parent corporation, is directly or

indirectly owned by one or more of the
other corporations; and
• The common parent corporation
directly or indirectly owns stock
possessing at least 80% of the total
combined voting power of all classes
of stock entitled to vote or at least
80% of the total value of shares of all
classes of stock of at least one of the
other corporations, excluding, in
computing such voting power or
value, stock owned directly by such
other corporations.
For purposes of determining
whether a corporation is a member of
a parent–subsidiary controlled group
within the meaning of section 1563(a)
(1), stock owned by a corporation
means:
• Stock owned directly by the
corporation, and
• Stock constructively owned by that
corporation under sections 1563(e)
(1), (2), and (3).

corporations each of which is a
member of either a parent–subsidiary
group or a brother–sister group, and
at least one of which is both the
common parent of a parent–
subsidiary group and also a member
of a brother–sister group.
Life insurance companies only
group. Two or more life insurance
companies subject to tax under
section 801 which are members of
any parent–subsidiary, brother–sister,
or combined controlled group will be
treated as a controlled group separate
from any other type of controlled
group to which these corporations
would otherwise belong if they were
not life insurance companies. The life
insurance companies that make up a
life insurance controlled group do not
have to be in a direct ownership
relationship with each other.

testing date and is not treated as an
excluded member (defined below).
In general, in determining if a
member of a controlled group is a
component member of that group, the
applicable tax year of that corporation
must be tested to determine if it was a
member of the controlled group for at
least half the number of days in its
testing period. Also, in order to
determine the applicable tax year of
the member being tested, the group's
testing date must be determined. See
Testing date and Testing period, later.

DRAFT AS OF
October 18, 2018

Brother–sister group. A brother–
sister group generally is two or more
corporations where the same five or
fewer persons who are individuals,
estates, or trusts directly or indirectly
own stock possessing:
• At least 80% of the total combined
voting power of all classes of stock
entitled to vote or at least 80% of the
total value of shares of all classes of
the stock of each corporation (the
80% test), and
• More than 50% of the total
combined voting power of all classes
of stock entitled to vote or more than
50% of the total value of shares of all
classes of stock of each corporation,
taking into account the stock
ownership of each such person only
to the extent such stock ownership is
identical with respect to each such
corporation (the 50% test).
For purposes of allocating the
accumulated earnings credit, a
brother–sister group is defined using
only the 50% test above.
For purposes of determining
whether a corporation is a member of
a brother–sister controlled group
within the meaning of section 1563(a)
(2), stock owned by a person who is
an individual, estate, or trust includes:
• Stock owned directly by such
person, and
• Stock constructively owned under
section 1563(e).
Combined group. A combined
controlled group is three or more

Example. Life insurance
companies Corporation X and
Corporation Z make up a life
insurance company only group, where
Corporation X, a life insurance
company, owns all the stock of
Corporation Y, a non-life insurance
company, and Corporation Y, a
non-life insurance company owns all
the stock of Corporation Z, a life
insurance company.
Exception for life–nonlife
consolidated group. The rule above
does not apply to any life insurance
company that is a member (whether
eligible or ineligible to join in filing a
consolidated return) of a life–nonlife
affiliated group for which a section
1504(c)(2) election is in effect.
Instead, an eligible life insurance
company will be treated as a member
of a life–nonlife consolidated group,
and an ineligible life insurance
company will be treated as a member
of a life–nonlife controlled group
(deemed to constitute a parent–
subsidiary controlled group).

Component Member

A corporation qualifies as a
component member of a controlled
group, for a tax year, if the
corporation:
• Is not a member of the controlled
group on the applicable December 31
testing date (defined below), but is
treated as an additional member
(defined below); or
• Is a member of the controlled group
on the applicable December 31
-2-

Note. If a controlled group has an
apportionment plan in effect and
some of the members of that
controlled group join in filing a
consolidated return, then the
members of that consolidated group
are treated together as if they were a
single member of the controlled
group. If a controlled group does not
have an apportionment plan in effect
and any of the members of that group
join in filing a consolidated return,
then each member of that
consolidated group will be treated as
a separate member of the controlled
group.

Additional member. A member of a
controlled group is treated as an
additional member if the corporation:
• Was a member of the controlled
group at any time during a calendar
year,
• Was not a member of the controlled
group on that testing date,
• Was a member of the controlled
group for at least one-half the number
of days of its testing period, and
• Is not an excluded member
(defined next).
Any member of a controlled group
that is treated as an additional
member also is treated as a
component member of that group.
Excluded member. A corporation is
treated as an excluded member of a
controlled group on the December 31
testing date for its tax year that
includes that December 31 testing
date, if the corporation is:
• A member of such group for less
than one-half the number of days in its
testing period,
• Exempt from tax under section
501(a) (except a corporation which is
subject to tax on its unrelated
business taxable income under
section 511) or 521 for such year,

• A foreign corporation not subject to
tax under section 882(a) for such tax
year,
• A life insurance company subject to
tax under section 801 other than
either a life insurance company which
is a member of a life insurance
controlled group or a life insurance
company which is a member (whether
eligible or ineligible) of a life–nonlife
affiliated group for which a section
1504(c)(2) election is in effect,
• Not a franchised corporation as
defined in section 1563(f)(4), or
• An S corporation, as defined in
section 1361.
Any member of a controlled group
that is treated as an excluded member
is not a component member, but is a
member of the group. However, no
tax-benefit items should be
apportioned to an excluded member.
If an excluded member of the group
owns a controlling interest in a
corporation that meets the entity
status requirements for being a
component member, that corporation
is a component member of the group.

controlled group which includes
Corporations Y and Z and which has a
testing date of December 31, 2018.
However, Corporation X is not a
component member, additional
member, or excluded member of that
group for that testing period.
Corporations Y and Z therefore are
not required to include any
information about Corporation X in
their respective 2018 Schedules O,
filed with their 2018 income tax
returns. Further, Corporation X does
not have to file Schedule O with its
2018 income tax return for the
controlled group that includes
Corporations Y and Z.

December 31 date, the last day of its
short tax year is deemed to function
as the December 31 testing date for
that member only. For a member on a
full fiscal tax year, the portion of its tax
year beginning on the December 31
testing date and ending on the last
day of its tax year is not taken into
account for determining its status
either as a component member or as
an excluded member. In determining
how many days comprise a member's
testing period, the group takes into
account the day that the member is
sold, but does not take into account
either the day that such member is
acquired or the member's December
31 testing date.

DRAFT AS OF
October 18, 2018

Example. Domestic corporation P
owns all of the stock of domestic
corporation S. Domestic corporation S
owns all of the stock of foreign
corporation F. Foreign corporation F
owns all of the stock of domestic
corporation X. Corporations P, S, and
X are component members of a
controlled group.
Exception. A corporation that (1)
was included in a controlled group at
any time during its tax year, (2) was
not included in that controlled group
on the group's December 31 testing
date, and (3) was not included in the
controlled group for at least half the
number of days of its testing period, is
not treated as a component member,
additional member, or excluded
member.
Example. For years prior to 2018,
Corporation X has been a component
member of controlled group XYZ.
Corporations X, Y, and Z do not file
consolidated tax returns. Corporation
X is on a calendar tax year. On
February 28, 2018, Corporation X was
sold to an unrelated party that is not a
member of any consolidated group.
Corporation X remained in existence
throughout its entire 2018 calendar
year. For the period from January 1,
2018, through February 28, 2018,
Corporation X is a member of that

Testing date. The testing date is the
date for determining whether amounts
of certain tax benefits otherwise
available to a corporation will be
limited in their use with regard to a
particular tax year of a component
member of a controlled group. Each
member of the group uses a
December 31 date, when possible, as
its testing date, whether such member
uses a calendar, or fiscal, tax year.
When a member of a controlled group
qualifies as a component member of
that group on a particular December
31 date, it will be required to limit its
use of certain specified tax benefits
with regard to a tax year that includes
a December 31 date. Each member of
the group uses the December 31 date
included within that member's tax year
as its testing date, whether such
member uses a calendar or fiscal tax
year. However, if a component
member of a controlled group has a
short tax year that does not include a
December 31 date, then the last day
of that short tax year will be the testing
date for that member. See Special
allocation rules for a short tax year,
later. Each member of a controlled
group will apply those limitations to
that tax year that is governed by the
applicable December 31 testing date
applied to that group.
Testing period. The testing period is
the time period for determining
whether a particular member of a
controlled group qualifies either as a
component member or as an
excluded member. The testing period
begins on the first day of that
member's tax year and ends on the
day before its testing date. However,
for a component member having a
short tax year not including a
-3-

Overlapping Groups

If a corporation is a component
member of more than one controlled
group with respect to any tax year,
that corporation will be treated as a
component member of only one
controlled group. The determination
as to the group of which such
corporation is a component member
will be made under regulations
prescribed by the Secretary.

Excluded Stock

To be a member of a controlled group,
a corporation cannot be connected
through stock ownership based on
“excluded stock.” Excluded stock
includes:
• Nonvoting stock which is limited
and preferred as to dividends,
• Treasury stock, and
• Stock which is treated as excluded
stock under section 1563(c)(2)(A) for
a parent–subsidiary controlled group
or section 1563(c)(2)(B) for a brother–
sister controlled group.

Apportionment Plan

An apportionment plan is an
agreement between the component
members of a controlled group for
apportioning certain corporate tax
benefits among the members of that
group. By contrast, a tax-sharing
agreement is an agreement entered
into between members of an affiliated
group of corporations which have
joined in the filing of a consolidated
tax return. Such an agreement
generally provides that the members
of the affiliated group will compensate
each other for certain tax benefits
incurred by members separately and
shared by all members on the
consolidated tax return.

An apportionment plan becomes
effective for a controlled group when it
is adopted by all the component
members of that group for their tax
years which are subject to the same
December 31 testing date. Once the
members of a controlled group adopt
an apportionment plan, it remains in
effect until it is terminated.

the accumulated earnings credit,
according to the terms of that plan.
The component members of a group
are not required to apportion equally
any tax-benefit item among each of
them. Nor is any component member
required to adopt the same
percentage of apportionment for each
tax-benefit item. A group therefore
may apportion all, some, or none of
the amount of any these tax-benefit
items to a component member.
However, except for a member with a
short tax year that does not include a
December 31 testing date, the total
amount of a tax-benefit item
apportioned to all the component
members of the group cannot be more
than the total amount of a tax item that
would be allowed to a corporation that
is not subject to the limitations
imposed on the members of a
controlled group. See Special
allocation rules for a short tax year
below.

cannot use the group's apportionment
method for determining the amount of
a tax-benefit item to be apportioned to
it for its short tax year, even though
that method has been adopted by the
group under its existing
apportionment plan. Rather, the
short-year member must divide the full
amount of the tax-benefit item by the
number of component members in the
controlled group as of the last day of
that member's short tax year. That
amount is the amount of that
tax-benefit item to be allocated to that
member (and only to that member).
The remaining component members
will, in accordance with the terms of
their apportionment plan, apportion a
full amount of each specified
tax-benefit item between those
corporations which are the
component members of the group as
of the ensuing December 31 testing
date.
See section 1561 and the related
regulations for additional details
regarding apportionment plans.

DRAFT AS OF
October 18, 2018

Amending or terminating an apportionment plan. An
apportionment plan is amended when
the same component members (for
example, when no component
members have left or joined the group
during their testing periods governed
by the applicable December 31
testing date) make any different
apportionment of the specified
tax-benefit items among themselves.
An apportionment plan is
terminated when each component
member of the controlled group
consents or is deemed to consent to
the termination of that plan. Each such
member is deemed to have
consented to the termination of the
plan for a tax year if:
• The controlled group ceased to
remain in existence (within the
meaning of section 1563) as of the
testing date for that calendar year,
• A corporation that was a
component member of the group on
the testing date in the preceding tax
year is not a component member on
the testing date in the current tax year,
or
• A corporation that was not a
component member of the group on
the testing date in the preceding tax
year is a component member on the
testing date in the current tax year.
Exception. If the members of a
consolidated group are treated as if
they are one component member,
then changes as to the members
which belong to that consolidated
group (as long as that consolidated
group remains in existence within the
meaning of Regulations section
1.1502-75(d)) will not serve to
terminate the group's apportionment
plan.

Apportionment of Tax-Benefit
Items
Apportionment plan in effect. If the
component members of a controlled
group have an apportionment plan in
effect, they must apportion the
specified tax-benefit items, such as

No apportionment plan in effect. If
no apportionment plan is adopted or
in effect, the component members of
a controlled group must divide the
amount of any tax-benefit item equally
among themselves (without regard to
whether any members also are
members of a consolidated return
group).
Special allocation rules for a short
tax year. Special allocation rules
apply to the accumulated earnings
credit, if a component member has a
short tax year that does not include a
December 31 date. A corporation's
tax year will end before the last day of
its annual tax year and will have a
short tax year if:
• The corporation is sold to a
consolidated group, or
• The corporation is merged or
liquidated, including a deemed
liquidation resulting from a section
338 election.
Example. For years prior to 2018,
Corporation X has been a member of
controlled group XYZ and has a
calendar tax year. On May 31, 2018,
Corporation X is liquidated.
Corporation X has a short tax year
that begins on January 1, 2018, and
ends on May 31, 2018. Corporation X
therefore applies the special
allocation rule to the accumulated
earnings credit.
Determining the amount to be
apportioned. A short-year member
-4-

Exceptions. This special allocation
rule does not apply if a component
member has a short tax year that
includes the December 31 testing
date in its short tax year. For example,
Corporation Y is a fiscal year taxpayer
with a tax year ending on September
30. On January 31, 2018, Corporation
Y is liquidated. Corporation Y's tax
year beginning on October 1, 2017,
and ending on January 31, 2018, is
not a short tax year within the
meaning of section 1561(b). Thus, the
normal apportionment rules apply.
This special allocation rule also
does not apply if a member of a
controlled group has a short tax year
and is a member of a consolidated
group. Instead, such corporation's
income for the short tax year is
included in the consolidated return
filed by the consolidated group for that
corporation's tax year.

Specific Instructions
Identifying Information
Component member filing Schedule O. On page 1, enter the name
and employer identification number
(EIN) of the component member filing
this Schedule O.
In Part II, column (a), line 1, enter
the component member's name and

EIN. In column (b), enter the
member's tax year ending date
(Yr-Mo).
Other component members of the
controlled group. For Part II,
column (a), lines 2 through 10, and
column (b), enter the corresponding
information for each of the other
component members of the controlled
group, in the same manner as the
member filing this Schedule O. If more
space is needed, attach additional
sheets.

check box 3a. By checking box 3a,
this corporation is consenting to the
adoption of an apportionment plan
and also is representing that the other
component members of the group
also are consenting to the adoption of
that plan. See Completing and Filing
Schedule O, earlier.

Even though X will not be a member
of the group on its December 31,
2018, testing date, it is treated as an
additional member of the group on
that date. Consequently, for 2018 the
XYZ controlled group must apportion
the tax-benefit items according to the
terms of its apportionment plan.
Therefore, X, Y, and Z would each
check box 3c on its 2018 Schedule O.

DRAFT AS OF
October 18, 2018

Consolidated groups. If several
component members also are
members of a single consolidated
group, then with respect to those
members, in Part II, column (a) and
column (b), enter only the information
of the common parent of the
consolidated group.

If any component members of

TIP the controlled group also are

members of a consolidated
group, the parent of such
consolidated group should file only
one Schedule O on behalf of all such
members of the controlled group.
Such form must contain the required
information for each such member.
See Regulations section 1.1561-3(a)
(2).

Part I. Apportionment Plan
Information
Line 1. Type of controlled group. A
component member of a controlled
group must check the applicable box
to indicate the type of group. For more
information, see Types of Controlled
Groups, earlier.
For a brother–sister controlled
group, check box 1b whether that
group is a brother–sister group for
purposes of applying only the 50%
test or for purposes of applying both
the 80% and 50% tests.
Line 2. Member status. If a
corporation was not a component
member of the group for each day of
its tax year, check box 2b and provide
the required information. If the taxable
year of this corporation does not
include a December 31 date, a
special allocation rule applies. See
Special allocation rules for a short tax
year, earlier.
Line 3. Consent and represent. If
all the component members consent
to adopt an apportionment plan,

If all the component members
consent to amend an apportionment
plan, check box 3b. By checking
box 3b, this corporation is consenting
to the amendment of an
apportionment plan and also is
representing that the other component
members of the group are consenting
to the amendment of that plan.
However, to amend a plan both of the
following conditions must be satisfied.
• The controlled group already has
an apportionment plan in effect, and
• There has been no change in the
component-member composition of
the group from the previous taxable
year.
If the component members of a
group are either adopting a new
apportionment plan or amending an
existing apportionment plan that
involves prior tax years of those
component members, at least one
year must remain on each of the
statutes of limitations for assessing a
tax deficiency against all of the
component members of the group for
such prior tax years. See the
instructions, below.

If the apportionment plan for the
component members of a controlled
group is terminated:
• Check box 3c if the remaining
component members choose not to
adopt (or are not able to adopt) a new
apportionment plan, or
• Check box 3d if the remaining
component members choose to adopt
a new apportionment plan.
With regard to box 3c, the
remaining component members will
not be able to adopt a new
apportionment plan if, for example,
such component members have left
the group.
Example. For years prior to 2018,
Corporation X has been a member of
controlled group XYZ and has a
calendar tax year. Corporations X, Y,
and Z are component members of a
controlled group and each has a
calendar tax year. On August 31,
2018, X is sold to an unrelated party.
-5-

If box 3c or 3d is checked,
complete Part II under either of the
following circumstances.
• If a corporation that is joining or
leaving the group still qualifies as a
component member for its tax year,
complete Part II according to the
terms of any applicable
apportionment plan.
• If a corporation that is joining or
leaving the group will not qualify as a
component member for its tax year,
then, following the corporation's name
in column (a), enter the notation “(E)”
for excluded member. In Part II,
column (b), enter the ending date of
the tax year (Yr-Mo) and enter -0- in
the remaining columns, as applicable.
Note. Do not check more than one
box on line 3. If a corporation does not
adopt an apportionment plan, amend
a previous apportionment plan, or
terminate an existing apportionment
plan, then skip line 3 and go to line 5.

Line 4. Reason for termination of
existing apportionment plan.
Check box 4a if all the component
members of a controlled group are
consenting to terminate the
apportionment plan. Check box 4b if:
• The controlled group has ceased to
remain in existence within the
meaning of section 1563,
• A corporation that was a
component member of the group on
the testing date for the preceding tax
year is no longer a component
member in the current tax year, or
• A corporation that was not a
component member of the group on
the testing date for the preceding tax
year is a component member for the
current tax year.
Line 5. Status of apportionment
plan. Check the applicable box to
indicate the status of any
apportionment plan of the controlled
group.
• Check box 5a if the controlled
group does not have an

apportionment plan in effect and is not
adopting one.
• Check box 5b if the controlled
group already has an apportionment
plan in effect and is not amending or
terminating this plan.
If box 5a is checked, then the
component members must share all
tax benefits equally, and tax-benefit
information is to be reported in Part II.

provide apportionment information
with regard to the other component
members of the group. Instead, only
provide the identifying information (for
example, name, EIN, and ending date
of the tax year) for these other
members. See Special allocation
rules for a short tax year, earlier.

an apportionment plan or have an
apportionment plan in effect.
Note. If any component member of a
controlled group is the type of service
corporation described in section
535(c)(2)(B), the amount to be
apportioned among the component
members is $150,000 (rather than
$250,000).

DRAFT AS OF
October 18, 2018

Line 6. Statute of limitations. An
apportionment plan may not be
adopted or amended for a tax year of
a component member unless there is
at least one year remaining in the
statutory period (including any
extensions) for assessing a deficiency
against the corporation for that tax
year, but only where the tax liability for
such tax year of that corporation
would be increased by adopting such
plan.
If there is less than one year
remaining in the statutory period, the
corporation must have entered into an
agreement with the IRS extending the
statutory period for the limited
purpose of assessing any deficiency
against that corporation for a tax year
affected by the adoption or the
amendment of an apportionment plan.
See Regulations section 1.1561-3(c)
(2).
Note. To amend a plan for a tax year
prior to the 2018 tax year, use
Schedule O (Form 1120) (Rev.
December 2012).
Line 7. If a component member of a
controlled group has a short tax year
that does not include a December 31
date, check box 7. If a corporation
checks box 7, it does not have to

Part II. Apportionments

Brother–sister controlled group.
For purposes of apportioning the
amounts included in column (c),
determine the component members of
a brother–sister controlled group,
using only the 50% test as provided in
section 1563(a)(2). For purposes of
apportioning the amounts included in
column (d) and, except as provided
elsewhere in the Internal Revenue
Code, in column (e), determine the
component members of a brother–
sister controlled group using both the
50% and 80% tests as provided in
section 1563(f)(5). See Brother–sister
group, earlier.
Column (a). If a corporation qualifies
as a component member of a brother–
sister controlled group, solely
because it satisfies only the 50%
ownership affiliation test, insert the
notation “(50)” after that corporation's
name. If a corporation is a component
member of that group because it
satisfies both the 50% and 80%
ownership affiliation tests, no notation
is necessary.
Column (c). The component
members of a controlled group may
allocate the $250,000 accumulated
earnings credit unequally if they adopt

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Column (d). For purposes of
determining whether the component
members of a controlled group are
subject to a penalty for failure to pay
the correct amount of estimated tax
under section 6655(g), those
component members of a controlled
group must combine their taxable
incomes for their tax years that were
subject to the same December 31
testing date. If that amount is at least
$1 million for any tax year during the
testing period (as defined in section
6655(g)(2)(B)(i)), those members
must then divide that $1 million
amount equally unless they have an
apportionment plan in effect.
Column (e). Enter each component
member's share of any other
tax-benefit items not included in
column (c) or (d). Provide the
applicable Internal Revenue Code
section followed by the amount
apportioned to that member.

Note. Do not include on Schedule O
an apportionment among the
component members of any
deduction for certain depreciable
property for which a section 179
expense election has been made.
Report this apportionment as required
under section 179. See Regulations
section 1.179-2(b)(7).