Fillable Form 851 - Affiliations Schedule (Page 4 of 4) in pdf

Form 851 (Rev. 10-2016)

Page

Instructions

Part I

Item (e). The term “equitable owners” of

stock means those that essentially have all

Portion of overpayment credits and

Section references are to the Internal Revenue

the rights to enjoy the benefits of stock

estimated tax payments. Enter for the

Code unless otherwise noted.

ownership without actually holding the stock,

common parent corporation and for each

Future Developments

for example, beneficiaries of a trust.

subsidiary corporation the amount of:

For the latest information about developments

Part IV

• Overpayments of tax from the prior tax year

related to Form 851 and its instructions, such

that each corporation elected to credit to the

Question 1. For purposes of question 1 only,

as legislation enacted after they were

current year's tax, and

disregard certain preferred stock as described

published, go to

• Estimated tax payments made by each

in section 1504(a)(4).

corporation.

Purpose of Form

Question 3. The term “arrangement”

The total must be the same as the amounts

includes, but is not limited to, phantom stock,

Use Form 851 to:

entered on the lines for overpayments and

stock appreciation rights, an option, warrant,

1. Identify the common parent corporation

estimated tax payments on the consolidated

conversion feature, or similar arrangements.

and each member of the affiliated group;

income tax return.

Item 3a. Show the percentage of the value of

2. Report the amount of overpayment

Tax deposited with Form 7004. Enter for the

the outstanding stock that the person(s) could

credits, estimated tax payments, and tax

common parent the tax deposited with Form

acquire.

deposits attributable to each corporation; and

7004, Application for Automatic Extension of

Item 3b. If the arrangement was associated

3. Determine that each subsidiary

Time To File Certain Business Income Tax,

with voting stock, show the percentage of

corporation qualifies as a member of the

Information, and Other Returns, that is

outstanding voting stock that the person(s)

affiliated group.

attributable to each corporation. The total

could acquire.

must be the same as the amount entered on

Who Must File

Item 3c. If the arrangement was associated

the “Tax deposited with Form 7004” line on

The parent corporation must file Form 851 for

with the acquisition of voting power without

the consolidated income tax return.

itself and for corporations in the affiliated

the acquisition of the related stock, show the

Part II

group. File Form 851 by attaching it to the

percentage of voting power that the person(s)

consolidated tax return for the group.

could acquire.

Principal business activity (PBA) and PBA

Item 3d. Give a brief description of any

Code No. Enter the PBA and the PBA code

Affiliated Group

arrangement (defined above) by which a

number for the common parent corporation

An affiliated group is one or more chains of

person that is not a member of the affiliated

and for each subsidiary corporation. Use the

includible corporations connected through

group could acquire any stock, or acquire any

activity for the specific industry group from

stock ownership with a common parent

voting power without acquiring stock, in the

which the largest percentage of each

corporation. See sections 1504(a) and (b). The

corporation.

corporation's total receipts is based.

common parent must be an includible

A list of the PBAs and code numbers is

corporation and the following requirements

Paperwork Reduction Act Notice

located in the Instructions for Form 1120.

must be met.

Nondividend distributions. Nondividend

We ask for the information on this form to

1. The common parent must own directly

distributions are any distributions (other than

carry out the Internal Revenue laws of the

stock that represents at least 80% of the total

stock dividends and distributions in exchange

United States. You are required to give us the

voting power and at least 80% of the total

for stock) made to shareholders during the

information. We need it to ensure that you are

value of the stock of at least one of the other

tax year for which the consolidated tax return

complying with these laws and to allow us to

includible corporations.

is filed that were in excess of the

figure and collect the right amount of tax.

2. Stock that represents at least 80% of

corporation's current and accumulated

You are not required to provide the

the total voting power, and at least 80% of

earnings and profits. See sections 301 and

information requested on a form that is

the total value of the stock of each of the

316 and Form 5452, Corporate Report of

subject to the Paperwork Reduction Act

other corporations (except for the common

Nondividend Distributions.

unless the form displays a valid OMB control

parent) must be owned directly by one or

number. Books or records relating to a form

Part III

more of the other includible corporations.

or its instructions must be retained as long as

For this purpose, the term “stock” generally

Question (c). For this purpose, the term

their contents may become material in the

doesn't include any stock that:

“transfer” includes transactions in which (1) a

administration of any Internal Revenue law.

1. Is nonvoting,

shareholder-member ceases to own a share

Generally, tax returns and return information

of subsidiary stock in a transaction in which

2. Is nonconvertible,

are confidential, as required by section 6103.

the shareholder-member recognizes income,

3. Is limited and preferred as to dividends

The time needed to complete and file this

gain, deduction, or loss on the stock; (2) a

and doesn't participate significantly in

form will vary depending on individual

shareholder-member and the subsidiary

corporate growth, and

circumstances. The estimated burden for

cease to be members of the same

4. Has redemption and liquidation rights

business taxpayers filing this form is

consolidated group; and (3) a nonmember

that don't exceed the issue price of the stock

approved under OMB control number

acquires the share from a member. If any type

(except for a reasonable redemption or

1545-0123 and is included in the estimates

of transfer occurs and the share's basis would

liquidation premium).

shown in the instructions for their business

otherwise exceed its value at the time of the

income tax return.

Address

transfer, certain adjustments to members'

If you have comments concerning the

bases in shares of the subsidiary's stock and

Include the suite, room, or other unit number

accuracy of these time estimates or

to the subsidiary's attributes may be required.

after the street address. If the post office

suggestions for making this form simpler, we

See Regulations section 1.1502-36.

does not deliver mail to the street address

would be happy to hear from you. See the

Question (d). If a share of subsidiary stock

and the corporation has a P.O. box, show the

instructions for the tax return with which this

becomes worthless within the meaning of

box number instead.

form is filed.

section 165 (taking into account the

Corporation Numbers

provisions of Regulations section

When listing information in Parts II, III, and IV,

1.1502-80(c)) during the group's taxable year,

use the same number for the common parent

certain adjustments to shareholder-members'

corporation and for each subsidiary

bases in shares of the subsidiary's stock

corporation as the number listed in Part I.

and/or to the subsidiary's attributes may be

required. See Regulations sections 1.1502-19

(b)(1)(iv) (if the basis of the share is equal to or

less than zero) and 1.1502-36 (if the basis of

the share is greater than zero).

Form 851 - Affiliations Schedule Page 4

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