Contains verified Section 179/bonus depreciation annual limits tables (2007-2026+), Form 8949 adjustment code catalog (W/B/T/O/S/N/H with box selection A-F), and Form 1118 separate limitation category rules (GILTI/branch/passive/general with carryback-carryforward). MACRS property classes, mid-quarter convention triggers, capital loss carryback (3yr) and carryforward (5yr), wash sale rule for corporations, Form 5472 foreign-ownership ($25K penalty), IRC 267/482 transfer pricing methods (CUP/RPM/CPM/profit split), APA procedures, 1099-DIV/1099-B reconciliation, digital asset compliance (crypto/1099-DA/DeFi/staking). Consult when preparing any Form 1120 supporting schedule, choosing depreciation elections, computing capital gains netting, evaluating foreign tax credit limitations, documenting intercompany pricing, or classifying digital asset transactions.
Operational skill for preparing supporting schedules and specialized forms that attach to the federal Form 1120 corporate tax return. Covers depreciation, capital transactions, foreign tax credits, intercompany compliance, investment reporting, and digital assets.
Allows immediate deduction of qualifying tangible personal property, QIP, and certain real property improvements (roofs, HVAC, fire protection, security systems). Limited by three caps: dollar limit ($1,250,000 for 2025), investment phase-out threshold ($3,130,000 for 2025), and taxable income from active trades or businesses. Excess carries forward indefinitely. SUV limit ($31,300 for 2025) applies to vehicles over 6,000 lbs GVW classified as SUVs.
For C-corporations, the taxable income limitation is computed at the corporate level (before the Section 179 deduction). Section 179 is a tax election only -- book depreciation follows GAAP straight-line, creating a temporary book-tax difference.
Applies to MACRS property with recovery period of 20 years or less, QIP, computer software, and water utility property. Both new and used property eligible (used property since 9/27/2017 under TCJA).
Key 2025 rule: P.L. 119-21 restored 100% bonus for property acquired and placed in service after January 19, 2025. Property acquired before that date but placed in service in 2025 follows the 40% rate. Elect-out is per-class, per-year, irrevocable.
Phase-down trajectory: 100% (2017-2022), 80% (2023), 60% (2024), 100% restored post-1/19/2025, 20% (2026), 0% (2027+) absent new legislation.
GDS (default) uses 200% DB for 3-20 year property and straight-line for 27.5+ year property. ADS required for foreign-use property, tax-exempt use/bond-financed property, and Section 163(j) electing real property trades. Key classes:
Passenger automobiles, transportation property with personal use potential, and entertainment/recreation property. Must exceed 50% qualified business use for accelerated depreciation or Section 179. Investment use does not count toward the 50% threshold. If business use drops to 50% or below, recapture excess depreciation and switch to ADS straight-line. Annual auto depreciation caps apply regardless of MACRS class ($20,400 with bonus / $12,400 without for 2024).
Part I (short-term, held 1 year or less): Box A (1099-B with basis reported, no adjustments), Box B (1099-B without basis), Box C (no 1099-B). Part II (long-term, held more than 1 year): Boxes D/E/F mirror A/B/C.
Adjustment codes in column (f): W (wash sale), B (incorrect basis), T (wrong holding period), O (other), S (gross vs. net proceeds), N (noncovered security), H (short sale holding period). Multiple codes can combine on one line.
C-corporations receive no preferential capital gains rate -- all gains taxed at the flat 21% rate (post-TCJA). The short-term/long-term distinction matters only for netting gains against losses and tracking carryback/carryforward character.
Capital losses deduct only against capital gains -- no deduction against ordinary income (individuals get $3,000; corporations get none). Net capital loss carries back 3 years, then forward 5 years, always treated as short-term in the destination year.
Form 8949 totals flow to Schedule D Part I (lines 1a/1b/2) and Part II (lines 8a/8b/9). Schedule D adds installment sales (Form 6252), like-kind exchanges (Form 8824), pass-through gains/losses, capital gain distributions, and carryovers. Line 17 net result flows to Form 1120 Line 8 (if positive; zero if net loss).
Box A/D transactions with no adjustments can skip Form 8949 and report directly on Schedule D.
Depreciable/real business property held >1 year: net Section 1231 gain is long-term capital gain (flows to Schedule D); net Section 1231 loss is ordinary (fully deductible, bypasses capital loss limitation). Apply the 5-year lookback -- current 1231 gains recharacterized as ordinary to the extent of unrecaptured 1231 losses from prior 5 years. Depreciation recapture (Section 1245 for personal property, Section 1250 + Section 291 additional 20% for corporate real property) applies before 1231 netting.
Applies to corporations. Loss disallowed when substantially identical security repurchased within 30 days before/after sale (61-day window). Disallowed loss adds to replacement security basis; holding period tacks on. Report with code W on Form 8949. Related party purchases (>50% ownership) can trigger wash sales for corporations.
A separate Form 1118 is required for each applicable category:
Limitation per category: (foreign-source taxable income in category / worldwide taxable income) x U.S. tax. Eligible taxes: income, war profits, excess profits taxes paid or accrued to foreign countries; taxes deemed paid under Section 960 for CFC inclusions. Section 78 gross-up: deemed-paid taxes added to gross income to properly compute the limitation numerator.
Passive income reclassified to general category when the effective foreign tax rate exceeds the highest U.S. corporate rate (21% post-TCJA).
Dividends, interest, rents, and royalties from a CFC to a 10% U.S. shareholder are classified by the CFC's underlying earnings category, not automatically passive.
Excess credits: carry back 1 year, then forward 10 years (same category). Exception: GILTI category credits have no carryback or carryforward. OFL/SLL accounts track situations where foreign losses offset U.S.-source income, requiring future recapture.
Redetermine credit when: accrued taxes differ from amounts paid, taxes unpaid within 24 months of year-end, foreign taxes refunded, or CFC inclusions change.
Disallows 10% of foreign income taxes on PTEP distributions attributable to prior Section 951A inclusions.
Related parties include: individual and >50%-owned corporation, two corporations in the same controlled group (>50% common ownership), corporation and partnership with >50% common owners. Constructive ownership rules (IRC 267(c)) expand ownership through family, partnerships, estates/trusts, corporations (50%+ shareholders), and options.
Losses on related-party sales are disallowed (not deferred). Recovery only when the buyer sells to an unrelated third party -- buyer's gain reduced by previously disallowed loss (not below zero). If the buyer later sells at a loss to an unrelated party, the disallowed loss is permanently lost.
When an accrual-basis corporation accrues an expense to a cash-basis related party, deduction deferred until actually paid and includible in the payee's income. Common