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Tax Rate Schedule

852(b)(3)(D) plus adjustments and tax

If the fund is filing Form 8844,

preference items is more than the smaller of

Empowerment Zone and Renewal Community

$40,000 or the fund’s allowable exemption

Employment Credit, or Form 8884, New York

If the investment company taxable income

(line 26, page 1) is:

amount (from Form 4626). See Form 4626 for

Liberty Zone Business Employee Credit, check

details.

the “Form(s)” box, write the form number in the

Of the

space provided, and include the allowable

Exemption for small corporations. A fund is

But not

amount

credit on line 4c.

treated as a small corporation exempt from the

Over —

over —

Tax is:

over —

AMT for its tax year beginning in 2003 if that

If the fund is required to file Form 3800,

year is the fund’s first tax year in existence

General Business Credit, check the “Form

$50,000

15%

(regardless of its gross receipts) or:

3800” box and include the allowable credit on

50,000

75,000

$ 7,500 + 25%

50,000

line 4c. If the fund is not required to file Form

1. It was treated as a small corporation

75,000

100,000

13,750 + 34%

75,000

3800, check the “Form(s)” box, write the form

exempt from the AMT for all prior tax years

100,000

335,000

22,250 + 39%

100,000

number in the space provided, and include on

beginning after 1997 and

335,000 10,000,000

113,900 + 34%

335,000

line 4c the allowable credit from the applicable

2. Its average annual gross receipts for the

10,000,000 15,000,000

3,400,000 + 35% 10,000,000

form listed below.

3-tax-year period (or portion thereof during

•

15,000,000 18,333,333

5,150,000 + 38% 15,000,000

Investment Credit (Form 3468).

which the fund was in existence) ending before

•

18,333,333

- - - - -

35%

Work Opportunity Credit (Form 5884).

its tax year beginning in 2003 did not exceed

•

Credit for Alcohol Used as Fuel (Form 6478).

$7.5 million ($5 million if the fund had only 1

•

2. A fund that is a personal holding

Credit for Increasing Research Activities

prior tax year).

company or that is not in compliance with

(Form 6765).

•

Regulations section 1.852-6 is taxed at a flat

Low-Income Housing Credit (Form 8586).

Line 3d

•

rate of 35% on its investment company taxable

Orphan Drug Credit (Form 8820).

•

income.

Deferred tax under section 1291. If the fund

Disabled Access Credit (Form 8826).

•

was a shareholder in a passive foreign

Enhanced Oil Recovery Credit (Form 8830).

•

investment company (PFIC), and the fund

Renewable Electricity Production Credit

Tax Computation Worksheet for Members

received an excess distribution or disposed of

(Form 8835).

of a Controlled Group (keep for your records)

•

its investment in the PFIC during the year, it

Indian Employment Credit (Form 8845).

•

must include the increase in taxes due under

Credit for Employer Social Security and

Note: Each member of a controlled group must

section 1291(c)(2) in the total for line 3d,

Medicare Taxes Paid on Certain Employee

compute the tax on its investment company taxable

Schedule J. On the dotted line to the left of line

Tips (Form 8846).

income using this worksheet (except funds that are

•

3d, Schedule J, write “Section 1291” and the

Credit for Contributions to Selected

personal holding companies or that are not in

amount.

Community Development Corporations (Form

compliance with Regulations section 1.852-6, see

8847).

Do not include on line 3d any interest due

item 2 of Line 3a above.)

•

Welfare-to-Work Credit (Form 8861).

under section 1291(c)(3). Instead, show the

•

1. Enter investment company taxable

New Markets Credit (Form 8874).

amount of interest owed in the bottom margin

•

income (line 26, page 1) . . . . . . . .

Credit for Small Employer Pension Plan

of page 1, Form 1120-RIC, and write “Section

Startup Costs (Form 8881).

1291 interest.” For details, see Form 8621,

2. Enter line 1 or the fund’s share of the

•

Credit for Employer-Provided Child Care

$50,000 taxable income bracket,

Return by a Shareholder of a Passive Foreign

whichever is less . . . . . . . . . . . . .

Facilities and Services (Form 8882).

Investment Company or Qualified Electing

Fund.

3. Subtract line 2 from line 1 . . . . . . .

Line 4d –Credit for Prior

Additional tax under section 197(f). A fund

Year Minimum Tax

4. Enter line 3 or the fund’s share of the

that elects to pay tax on the gain from the sale

$25,000 taxable income bracket,

of an intangible under the related person

To figure the minimum tax credit and any

whichever is less . . . . . . . . . . . . .

exception to the anti-churning rules should

carryforward of that credit, use Form 8827,

include any additional tax due under section

Credit for Prior Year Minimum Tax —

5. Subtract line 4 from line 3 . . . . . . .

197(f)(9)(B) in the total for line 3d. On the

Corporations. Also see Form 8827 if any of the

6. Enter line 5 or the fund’s share of the

dotted line to the left of line 3d, write “Section

fund’s 2002 nonconventional source fuel credit

$9,925,000 taxable income bracket,

197” and the amount. For more information,

or qualified electric vehicle credit was

whichever is less . . . . . . . . . . . . .

see Pub. 535.

disallowed solely because of the tentative

7. Subtract line 6 from line 5 . . . . . . .

minimum tax limitation. See section 53(d).

Line 4a –Foreign Tax Credit

8. Multiply line 2 by 15% . . . . . . . . . .

Line 6 –Personal

To find out when a fund can take this credit for

9. Multiply line 4 by 25% . . . . . . . . . .

payment of income tax to a foreign country or

Holding Company Tax

U.S. possession, see Form 1118, Foreign Tax

10. Multiply line 6 by 34% . . . . . . . . . .

A fund is taxed as a personal holding company

Credit — Corporations. The fund may not claim

under section 542 if:

11. Multiply line 7 by 35% . . . . . . . . . .

this credit if an election under section 853 was

•

At least 60% of its adjusted ordinary gross

made for the tax year. See Item 10, Schedule

12. If the taxable income of the controlled

income for the tax year is personal holding

K, on page 12.

group exceeds $100,000, enter this

company income and

•

member’s share of the smaller of: 5%

At any time during the last half of the tax

Line 4b

of the taxable income in excess of

year more than 50% in value of its outstanding

If the fund can take either of the following

$100,000, or $11,750. (see the

stock is owned, directly or indirectly, by five or

credits, check the appropriate box(es) and

instructions for line 2b above) . . . . .

fewer individuals.

include the amount of the credits in the total for

See Schedule PH (Form 1120), U.S.

13. If the taxable income of the controlled

line 4b.

Personal Holding Company (PHC) Tax, for

group exceeds $15 million, enter this

Nonconventional source fuel credit. A credit

member’s share of the smaller of 3%

definitions and details on how to figure the tax.

is allowed for the sale of qualified fuels

of the taxable income in excess of $15

produced from a nonconventional source.

Line 7 –Other Taxes

million, or $100,000. (see the

Section 29 contains a definition of qualified

instructions for line 2b above) . . . . .

Include any of the following taxes and interest

fuels, provisions for figuring the credit, and

in the total on line 7. Check the appropriate

14. Total. Add lines 8 through 13. Enter

other special rules. Attach a separate schedule

box(es) for the form, if any, used to compute

here and on line 3a, Schedule J . . . .

to the return showing the computation of the

the total.

credit.

Recapture of Investment Credit

Qualified electric vehicle credit. Use Form

Line 3c – Alternative Minimum Tax

8834, Qualified Electric Vehicle Credit, if the

If the fund disposed of investment credit

(AMT)

corporation can claim a credit for the purchase

property or changed its use before the end of

Unless the fund is treated as a small

of a new qualified electric vehicle. Vehicles that

its useful life or recovery period, it may owe a

corporation exempt from the AMT, it may owe

qualify for this credit are not eligible for the

tax. See Form 4255, Recapture of Investment

the AMT if it has any of the adjustments and

deduction for clean-fuel vehicles under section

Credit.

tax preference items listed on Form 4626,

179A.

Recapture of Low-Income Housing

Alternative Minimum Tax — Corporations. The

Line 4c –General Business Credit

Credit

fund must file Form 4626 if its investment

company taxable income (or loss) and retained

Enter on line 4c the fund’s total general

If the fund disposed of property (or there was a

capital gains not designated under section

business credit.

reduction in the qualified basis of the property)

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Instructions For Form 1120-Ric - U.s. Income Tax Return For Regulated Investment Companies - 2003 Page 10

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