Instructions For Form 8621 December 2011 (Page 10 of 10) in pdf

first terminate the most recently made

tax is due. That amount is determined

For corporations, enter the amount

election.

by multiplying the amount entered on

of section 1294 interest at the bottom

line 3 by a fraction, of which the

right margin of Form 1120, page 1 and

An election may be terminated in

numerator is the amount entered on

label it as “Sec. 1294 interest.” Also

whole or in part depending on the event

line 6 and the denominator is the

include this amount in your check or

causing the termination. Examples are

amount entered on line 2. The deferred

money order payable to the United

as follows.

•

tax is due by the due date of the

States Treasury. If you would otherwise

A distribution of earnings will

shareholder’s income tax return

receive a refund, reduce the refund by

terminate an election to the extent the

(without regard to extensions) for the

the interest due.

election is attributable to the earnings

year of termination.

distributed.

For individuals, enter the interest

•

A loan, pledge, or guarantee by the

When the election is terminated,

from line 8 at the bottom right margin of

QEF made directly or indirectly to the

corporations include the deferred tax as

Form 1040, page 1, and label it as

electing shareholder or related person

part of the total for Form 1120,

“Sec. 1294 interest.” Also include this

will terminate an election to the extent

Schedule J, line 10. Also enter the

amount in your check or money order

of the undistributed earnings equal to

deferred tax to the left of line 10 and

payable to the United States Treasury.

the amount loaned, secured, or

label it as “Sec. 1294 deferred tax.”

If you would otherwise receive a refund,

guaranteed.

For individuals, enter the deferred

•

reduce the amount of the refund by the

A disposition of stock will terminate

tax as part of the total for Form 1040,

amount of interest due.

all elections with respect to the

line 63. Also enter the deferred tax to

undistributed earnings attributable to

the left of line 63, and label it as “Sec.

Lines 9 and 10. Complete lines 9 and

that stock.

1294 deferred tax.”

10 only if you have partially terminated

•

A change in status of the QEF will

Line 8. Enter the interest accrued on

your section 1294 election. Enter on

terminate all elections.

the deferred tax. Interest accrues

line 9 the part of the deferred tax

For more information, see

beginning on the due date (without

outstanding after the partial termination

Regulations section 1.1294-1T(e).

regard to extensions) of your tax return

of the section 1294 election. This

Line 7. Enter the deferred tax due

for the tax year in which the section

amount should equal line 3 minus line

from the termination of the section 1294

1294 election is made, and ending with

election. The deferred tax entered on

the due date (without regard to

Enter on line 10 the accrued interest

line 3 is due if the election was

extensions) of your tax return for the

remaining after the partial termination of

completely terminated. If the election

tax year of the termination. Interest is

the section 1294 election. This amount

was only partially terminated, a

computed using the rates and methods

should equal line 4 minus line 8.

proportionate amount of the deferred

under section 6621.

Disclosure, Privacy Act, and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the

Internal Revenue laws of the United States. Sections 6001, 6011, 6012(a), 6103, and 6109, and their regulations, require you

to provide this information. We need this information to ensure that you are complying with the Internal Revenue laws and to

allow us to figure and determine the right amount of tax.

Section 6109 requires that you provide your identifying number on the return. This is so we know who you are and can

process your return and other papers. You must fill in all parts of the tax form that apply to you. If you do not file a return

under circumstances requiring its filing, do not provide the information we ask for, or provide fraudulent information, you may

be charged penalties and be subject to criminal prosecution.

Generally, tax returns and return information are confidential, as required by section 6103. However, section 6103 allows

or requires the Internal Revenue Service to disclose or give the information shown on your tax return to others as described

in the Code. For example, we may disclose your tax information to the Department of Justice for civil and criminal litigation.

We may also disclose this information to cities, states, the District of Columbia, and U.S. possessions and commonwealths

for use in administering their tax laws, to federal and state agencies to enforce federal nontax criminal laws, or to federal law

enforcement and intelligence agencies to combat terrorism.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless

the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long

as their contents may become material in the administration any Internal Revenue law.

The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden for

individual taxpayers filing this form is approved under OMB control number 1545-0074 and is included in the estimates shown

in the instructions for their individual income tax return. The estimated burden for all other taxpayers who file this form is

shown below.

Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15 hr., 4 min.

Learning about the law or the form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11 hr., 13 min.

Preparing and sending the form to the IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20 hr., 21 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we

would be happy to hear from you. You can write to the Internal Revenue Service, Tax Products Coordinating Committee,

SE:W:CAR:MP:T:M:S, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send the tax form to this office.

Instead, see When and Where To File on page 1.

-10-

Instructions For Form 8621 December 2011 Page 10

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