Instructions for Form 1120-C
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2025
Instructions for Form 1120-C
U.S. Income Tax Return for Cooperative Associations
Section references are to the Internal Revenue Code
unless otherwise noted.
Future Developments
For the latest information about developments related to
Form 1120-C and its instructions, such as legislation
enacted after they were published, go to IRS.gov/
Form1120C.
What’s New
Increase in penalty for failure to file. For tax returns
required to be filed in 2026, the minimum penalty for
failure to file a return that is more than 60 days late has
increased to the lesser of the tax due or $525. See Late
filing of return, later.
Gain from the sale or exchange of qualified farmland
property to qualified farmers. P.L. 119-21, commonly
known as the One Big Beautiful Bill Act, created new
section 1062 regarding the gain from the sale or exchange
of qualified farmland property to qualified farmers. Section
1062 allows taxpayers to elect to pay the net income tax
attributable to the gain from the sale or exchange of
qualified farmland property to a qualified farmer in four
equal annual installments. This election is available for
sales and exchanges of qualified farmland property to a
qualified farmer in tax years beginning after July 4, 2025.
For more information, see section 1062 and new Form
1062, Deferral of Tax on Gain From the Sale or Exchange
of Qualified Farmland Property to Qualified Farmers, when
it is available.
To report the section 1062 applicable net tax liability
and the installment due in the first tax year, two lines were
added on Form 1120-C. Report the full amount of section
1062 applicable net tax liability on line 30i. Report the first
installment due in tax year 2025 on Form 1120-C, line 29.
For more information, see the instructions for line 29 and
line 30i.
Relief from additions to tax for underpayment of estimated income tax by taxpayers making an election
under section 1062. The IRS will waive a portion of the
penalty imposed under section 6655 for failure to make
estimated tax payments attributable to a qualified sale or
exchange of qualified farmland to qualified farmers for
which an election under section 1062(a) is properly made.
Taxpayers that elect under section 1062 to defer payment
of tax may calculate required estimated tax payments
using the guidance in Notice 2026-3. See Notice 2026-3,
2026-02 I.R.B. 307, available at IRS.gov/irb/
2026-02_IRB#NOT-2026-3.
Extension of relief from additions to tax underpayments applicable to the corporate alternative minimum tax (CAMT). For tax year 2025, the IRS will
Jan 15, 2026
continue to waive the penalty imposed under section 6655
for failure to make estimated tax payments attributable to
a CAMT liability. See Notice 2025-27, 2025-26 I.R.B.
1611, available at IRS.gov/irb/
2025-2026_IRB#NOT-2025-2027. Also, see the
instructions for line 32.
Electronic payments. If the cooperative has access to
U.S. banking services or electronic payment systems, it
should use direct deposit for any refunds and pay
electronically for any payments, whenever possible.
Direct deposit. Direct deposit fields have been added
to the form on lines 35c, 35d, and 35e. If there is an
overpayment on line 34, enter the amount the cooperative
wants refunded on line 35b and complete the direct
deposit information on lines 35c, 35d, and 35e. Instead of
a direct deposit of the cooperative’s refund, it can still
choose to have all or part of the overpayment credited to
next year’s estimated tax by completing line 35a. See
Line 34, later, for more information.
Making a payment. If there is a balance due on
line 33, go to IRS.gov/Payments for more information on
how to make a payment. See Tax Payments and the
instructions for line 33, later, for more details.
Certain qualified sound recording productions. P.L.
119-21 amends section 181 to include qualified sound
recording production costs as an elective expense
deduction. A cooperative can elect to deduct certain costs
of qualified sound recording productions that commence
before January 1, 2026, in tax years ending after July 4,
2025. Also, qualified sound recording productions are
eligible for the special depreciation allowance under
section 168(k) if they commence in tax years ending after
July 4, 2025. Qualified sound recording productions
acquired after January 19, 2025, are eligible for 100%
special allowance depreciation under the amendments to
section 168(k) by P.L. 119-21. Qualified sound recording
productions acquired before January 20, 2025, and
commencing in tax years ending after July 4, 2025, are
also eligible for the special depreciation allowance at the
applicable phased down percentage rates under section
168(k)(6). See sections 181 and 168(k).
Domestic research and experimental expenditures.
P.L. 119-21 adds new section 174A to the Internal
Revenue Code. Section 174A(a) allows corporations to
deduct amounts paid or incurred for domestic research
and experimental expenditures in tax years beginning
after 2024. Alternatively, under section 174A(c), a
corporation may elect to charge such expenditures to
capital account and amortize such expenditures ratably
over a period of not less than 60 months, beginning with
the month in which the corporation first realizes benefits
from such expenditures. In addition, section 70302(f) of
P.L. 119-21 provides corporations with various transition
Instructions for Form 1120-C (2025) Catalog Number 17211X
Department of the Treasury Internal Revenue Service www.irs.gov
options that may be applied to recover unamortized
amounts paid or incurred in tax years beginning after 2021
and before 2025 that were capitalized and amortized for
such tax years. See Rev. Proc. 2025-28 for information
regarding the transition options contained in section
70302(f) of P.L. 119-21, as well as the procedures to
follow to begin applying either section 174A(a) or (c) for
the corporation’s first tax year beginning after 2024.
Interim simplified method to determine applicable
corporation status. Proposed Regulations section
1.59-2(g)(2) provides that a corporation may choose to
apply the safe harbor method (simplified method) for
purposes of determining whether it is an applicable
corporation under section 59(k). Section 3.03 of Notice
2025-27 provides an optional interim simplified method for
determining applicable corporation status. See the
instructions for Schedule K, Question 20. Also, see the
instructions for Form 4626.
Interest on loans secured by rural or agricultural real
property. P.L. 119-21 enacted new section 139L. For tax
years ending after July 4, 2025, section 139L allows a
partial exclusion from the gross income of interest
received by qualified lenders on loans secured by rural or
agricultural real property. See section 139L. Also, see
Notice 2025-71, 2025-50 I.R.B. 779, available at
IRS.gov/irs/2025-50_IRB#NOT-2025-71.
Photographs of Missing Children
The Internal Revenue Service is a proud partner with the
National Center for Missing & Exploited Children®
(NCMEC). Photographs of missing children selected by
the Center may appear in instructions on pages that would
otherwise be blank. You can help bring these children
home by looking at the photographs and calling
1-800-THE-LOST (1-800-843-5678) if you recognize a
child.
The Taxpayer Advocate Service
The Taxpayer Advocate Service (TAS) is an independent
organization within the IRS that helps taxpayers and
protects taxpayer rights. TAS’s job is to ensure that every
taxpayer is treated fairly and knows and understands their
rights under the Taxpayer Bill of Rights.
As a taxpayer, the cooperative has rights that the IRS
must abide by in its dealings with the cooperative. TAS
can help the cooperative if:
• A problem is causing financial difficulty for the business;
• The business is facing an immediate threat of adverse
action; or
• The cooperative has tried repeatedly to contact the IRS
but no one has responded, or the IRS hasn’t responded
by the date promised.
TAS has offices in every state, the District of Columbia,
and Puerto Rico. The cooperative’s local advocate’s
number is in its local directory and at
TaxpayerAdvocate.IRS.gov. The cooperative can also call
TAS at 877-777-4778.
TAS also works to resolve large-scale or systemic
problems that affect many taxpayers. If the cooperative
knows of one of these broad issues, please report it to
TAS through the Systemic Advocacy Management
System at IRS.gov/SAMS.
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For more information, go to IRS.gov/Advocate.
How To Make a Contribution To
Reduce Debt Held by the Public
There are two ways to make a contribution to reduce the
debt held by the public.
• At Pay.gov, contribute online by credit card, debit card,
PayPal, Venmo, checking account, or savings account.
• Write a check payable to “Bureau of the Fiscal Service.”
In the memo section, notate that it is a gift to reduce the
debt held by the public.
Mail the check to:
Attn: Dept G
Bureau of the Fiscal Service
P.O. Box 2188
Parkersburg, WV 26106-2188
For more information on how to make this type of
contribution online, go to TreasuryDirect.gov and click on
“How do you make a contribution to reduce the debt.”
Do not add the contributions to any tax the cooperative
may owe. See the instructions for line 33 for details on
how to pay any tax the cooperative owes. Contributions to
reduce debt held by the public are deductible subject to
the rules and limitations for charitable contributions.
How To Get Forms and Publications
Internet. Access IRS.gov 24 hours a day, 7 days a week,
to:
• Download free forms, instructions, and publications
online;
• Order IRS products online;
• Research your tax questions online;
• Search publications online by topic or keyword;
• View Internal Revenue Bulletins (IRBs) published in
recent years; and
• Sign up to receive local and national tax news by email.
Tax forms and publications. The cooperative can view,
print, or download all of the forms and publications it may
need at IRS.gov/FormsPubs. Or the cooperative can go to
IRS.gov/OrderForms to place an order and have forms
mailed to it.
General Instructions
Purpose of Form
Use Form 1120-C to report income, gains, losses,
deductions, and credits and to figure the income tax
liability of the cooperative.
Who Must File
Any corporation operating on a cooperative basis under
section 1381 and allocating amounts to patrons on the
basis of business done with or for such patrons should file
Form 1120-C (including farmers’ cooperatives under
section 521 whether or not it has taxable income).
Exceptions. This does not apply to organizations which
are:
• Exempt from income tax under chapter 1 (other than
exempt farmers’ cooperatives under section 521);
Instructions for Form 1120-C (2025)
• Subject to Part II (section 591 and following),
subchapter H, chapter 1 (relating to mutual savings
banks);
• Subject to subchapter L (section 801 and following),
chapter 1 (relating to insurance companies); or
• Engaged in generating, transmitting, or otherwise
furnishing electric energy or providing telephone service
to persons in rural areas.
Where To File
If the cooperative’s principal business, office, or agency is
located in the United States, file Form 1120-C at the
following IRS center address.
Department of the Treasury
Internal Revenue Service
Ogden, UT 84201-0012
If the cooperative’s principal business, office, or agency
is located in a foreign country or a U.S. territory, file Form
1120-C at the following IRS center address.
Internal Revenue Service
P.O. Box 409101
Ogden, UT 84409
When To File
Generally, a cooperative described in section 6072(d)
must file its income tax return by the 15th day of the 9th
month after the end of its tax year.
Any cooperative not described in section 6072(d) must
generally file its tax return by the 15th day of the 4th month
after the end of its tax year. However, a cooperative with a
fiscal tax year ending June 30 must file by the 15th day of
the 3rd month after the end of its tax year. A cooperative
with a short tax year ending anytime in June will be treated
as if the short year ended on June 30, and must file by the
15th day of the 3rd month after the end of its tax year.
If the due date falls on a Saturday, Sunday, or legal
holiday, the cooperative can file on the next business day.
Private Delivery Services
Cooperatives can use certain private delivery services
(PDS) designated by the IRS to meet the “timely mailing
as timely filing” rule for tax returns. Go to IRS.gov/PDS for
the current list of designated services.
The PDS can tell you how to get written proof of the
mailing date.
For the IRS mailing address to use if you’re using a
PDS, go to IRS.gov/PDSStreetAddresses.
Note: Private delivery services can’t deliver items to P.O.
boxes. You must use the U.S. Postal Service to mail any
item to an IRS P.O. box address.
Extension of Time To File
File Form 7004, Application for Automatic Extension of
Time To File Certain Business Income Tax, Information,
and Other Returns, to request an extension of time to file.
Generally, the cooperative must file Form 7004 by the
regular due date of the return. See the Instructions for
Form 7004.
Instructions for Form 1120-C (2025)
Who Must Sign
The return must be signed and dated by:
• The president, vice president, treasurer, assistant
treasurer, or chief accounting officer; or
• Any other cooperative officer (such as tax officer)
authorized to sign.
If a return is filed on behalf of a cooperative by a
receiver, trustee, or assignee, the fiduciary must sign the
return, instead of the cooperative officer. Returns and
forms signed by a receiver or trustee in bankruptcy on
behalf of a cooperative must be accompanied by a copy of
the order or instructions of the court authorizing signing of
the return or form.
Paid Preparer Use Only section. If an employee of the
cooperative completes Form 1120-C, the paid preparer
section should remain blank. Anyone who prepares Form
1120-C but does not charge the cooperative should not
complete that section. Generally, anyone who is paid to
prepare the return must sign and complete the section.
The paid preparer must complete the required preparer
information and:
• Sign the return in the space provided for the preparer’s
signature,
• Include their Preparer Tax Identification Number (PTIN),
and
• Give a copy of the return to the taxpayer.
A paid preparer may sign original or amended returns
by rubber stamp, mechanical device, or computer
software program.
Paid Preparer Authorization
If the cooperative wants to allow the IRS to discuss its
2025 tax return with the paid preparer who signed it,
check the “Yes” box in the signature area of the return.
This authorization applies only to the individual whose
signature appears in the “Paid Preparer Use Only” section
of the cooperative’s return. It does not apply to the firm, if
any, shown in that section.
If the “Yes” box is checked, the cooperative is
authorizing the IRS to call the paid preparer to answer any
questions that may arise during the processing of its
return. The cooperative is also authorizing the paid
preparer to:
• Give the IRS any information that is missing from the
return;
• Call the IRS for information about the processing of the
return or the status of any related refund or payment(s);
and
• Respond to certain IRS notices about math errors,
offsets, and return preparation.
The cooperative is not authorizing the paid preparer to
receive any refund check, bind the cooperative to anything
(including any additional tax liability), or otherwise
represent the cooperative before the IRS.
The authorization will automatically end no later than
the due date (excluding extensions) for filing the
cooperative’s 2026 tax return. If the cooperative wants to
expand the paid preparer’s authorization or revoke the
authorization before it ends, see Pub. 947, Practice Before
the IRS and Power of Attorney.
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Assembling the Return
To ensure that the cooperative’s tax return is correctly
processed, attach all schedules and other forms after
Form 1120-C, page 5, in the following order.
1. Schedule N (Form 1120).
2. Schedule O (Form 1120).
3. Form 4626.
4. Form 4136.
5. Form 8978.
6. Form 8941.
7. Form 3800.
8. Schedule A (Form 8936).
9. Form 4255.
10. Additional schedules in alphabetical order.
11. Additional forms in numerical order.
12. Supporting statements and attachments.
Complete every applicable entry space on Form
1120-C. Do not enter “See Attached” or “Available Upon
Request” instead of completing the entry spaces. If more
space is needed on the forms or schedules, attach
separate sheets using the same size and format as the
printed forms.
If there are supporting statements and attachments,
arrange them in the same order as the schedules or forms
they support and attach them last. Show the totals on the
printed forms. Enter the cooperative’s name and employer
identification number (EIN) on each supporting statement
or attachment.
Tax Payments
Generally, the cooperative must pay any tax due in full no
later than the due date for filing its return (not including
extensions). See the instructions for line 33. If the due
date falls on a Saturday, Sunday, or legal holiday, the
payment is due on the next day that isn’t a Saturday,
Sunday, or legal holiday.
Electronic Deposit Requirement
Cooperatives must use electronic funds transfer (EFT) to
make all federal tax deposits (such as deposits of
employment, excise, and corporate income tax). An EFT
can be made using the Electronic Federal Tax Payment
System (EFTPS) or the cooperative’s IRS business tax
account. However, if the cooperative does not want to use
one of these methods, it can arrange for its tax
professional, financial institution, payroll service, or other
trusted third party to make deposits on its behalf. Also, it
may arrange for its financial institution to submit a
same-day wire payment (discussed below) on its behalf.
EFTPS is a free service provided by the Department of the
Treasury. Payments made using the cooperative’s IRS
business tax account are also free. Services provided by a
tax professional, financial institution, payroll service, or
other third party may have a fee.
To get more information about EFTPS or to enroll in
EFTPS, go to EFTPS.gov or call 800-555-4477. To
contact EFTPS using the Telecommunications Relay
Services (TRS), for people who are deaf, hard of hearing,
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or have a speech disability, dial 711 and provide the TRS
assistant the 800-555-4477 number or 800-733-4829.
For more information about making an EFT through the
cooperative’s IRS business tax account, go to IRS.gov/
BusinessAccount.
Depositing on time. EFTPS accepts same day
payments of $1 million or less if the payment is submitted
before 3:00 p.m. Eastern time on a business day. If the
cooperative’s payment is more than $1 million, the
cooperative must submit the deposit by 8:00 p.m. Eastern
time the day before the date the deposit is due.
Same-day wire payment option. If the cooperative fails
to submit a timely deposit transaction on EFTPS, it can
still make the deposit on time by using the Federal Tax
Collection Service (FTCS). To use the same-day wire
payment method, the cooperative will need to make
arrangements with its financial institution ahead of time
regarding availability, deadlines, and costs. The
cooperative’s financial institution may charge a fee for
payments made this way. To learn more about the
information the cooperative will need to provide to its
financial institution to make a same-day wire payment, go
to IRS.gov/SameDayWire.
Estimated Tax Payments
Generally, the following rules apply to the cooperative’s
payments of estimated tax.
• The cooperative must make installment payments of
estimated tax if it expects its total tax for the year (less
applicable credits) to be $500 or more.
• The installments are due by the 15th day of the 4th, 6th,
9th, and 12th months of the tax year. If any due date falls
on a Saturday, Sunday, or legal holiday, the installment is
due on the next regular business day.
• The cooperative must use electronic funds transfer to
make installment payments of estimated tax.
• If, after the cooperative figures and deposits estimated
tax, it finds that its tax liability for the year will be more or
less than originally estimated, it may have to refigure its
required installments. If earlier installments were
underpaid, the cooperative may owe a penalty. See
Estimated tax penalty, later.
• If the cooperative overpaid estimated tax, it may be able
to get a quick refund by filing Form 4466, Corporation
Application for Quick Refund of Overpayment of
Estimated Tax. See the instructions for lines 30b and 30c.
See section 6655 and Pub. 542, Corporations, for more
information on how to figure estimated taxes.
Estimated tax penalty. A cooperative that does not
make estimated tax payments when due may be subject
to an underpayment penalty for the period of
underpayment. Generally, a cooperative is subject to the
penalty if its tax liability is $500 or more and it did not
timely pay at least the smaller of:
• Its tax liability for the current year, or
• Its prior year’s tax.
Use Form 2220, Underpayment of Estimated Tax by
Corporations, to see if the cooperative owes a penalty and
to figure the amount of the penalty. If Form 2220 is
completed, enter the penalty on Form 1120-C, line 32.
See the instructions for line 32. Also see Extension of
Instructions for Form 1120-C (2025)
relief from additions to tax underpayments applicable to
the corporate alternative minimum tax (CAMT), earlier.
Interest and Penalties
Interest. Interest is charged on taxes paid late even if an
extension of time to file is granted. Interest is also charged
on penalties imposed for failure to file, negligence, fraud,
substantial valuation misstatements, substantial
understatements of tax, and reportable transaction
understatements from the due date (including extensions)
to the date of payment. The interest charge is figured at a
rate determined under section 6621.
Late filing of return. A cooperative that does not file its
tax return by the due date, including extensions, may be
penalized 5% of the unpaid tax for each month or part of a
month the return is late, up to a maximum of 25% of the
unpaid tax. The minimum penalty for a tax return required
to be filed in 2026 that is over 60 days late is the smaller of
the tax due or $525. The penalty will not be imposed if the
cooperative can show that the failure to file on time was
due to reasonable cause. See Note, later.
Late payment of tax. Generally, a cooperative that does
not pay the tax when due may be penalized 1/2 of 1% of
the unpaid tax for each month or part of a month the tax is
not paid, up to a maximum of 25% of the unpaid tax. See
Note, later.
Trust fund recovery penalty. This penalty may apply if
certain excise, income, social security, and Medicare
taxes that must be collected or withheld are not collected
or withheld or these taxes are not paid. These taxes are
generally reported on:
• Form 720, Quarterly Federal Excise Tax Return;
• Form 941, Employer’s QUARTERLY Federal Tax
Return;
• Form 943, Employer’s Annual Federal Tax Return for
Agricultural Employees;
• Form 944, Employer’s ANNUAL Federal Tax Return; or
• Form 945, Annual Return of Withheld Federal Income
Tax.
The trust fund recovery penalty may be imposed on all
persons who are determined by the IRS to have been
responsible for collecting, accounting for, or paying over
these taxes and who acted willfully in not doing so. The
penalty is equal to the full amount of the unpaid trust fund
tax. For details, including the definition of responsible
person, see the Instructions for Form 720 or Pub. 15,
Employer’s Tax Guide.
Other penalties. Other penalties can be imposed for
negligence, substantial understatement of tax, reportable
transaction understatements, and fraud. See sections
6662, 6662A, and 6663.
Note: If the cooperative receives a notice about penalties
after it files its return, send the IRS an explanation and we
will determine if the cooperative meets reasonable-cause
criteria. Do not attach an explanation when the
cooperative’s return is filed
.
Instructions for Form 1120-C (2025)
Accounting Methods
Figure taxable income using the method of accounting
regularly used in keeping the cooperative’s books and
records. In all cases, the method used must clearly reflect
income. Permissible methods include cash, accrual, or
any other method authorized by the Internal Revenue
Code.
Certain cooperatives must use an accrual method of
accounting. An exception applies for a small business
taxpayer (defined below).
See Pub. 538, Accounting Periods and Methods, for
more information.
Small business taxpayer. For tax years beginning in
2025, a cooperative qualifies as a small business taxpayer
if (a) it has average annual gross receipts of $31 million or
less for the 3 prior tax years and (b) it is not a tax shelter
(as defined in section 448(d)(3)).
A small business taxpayer can account for inventory by
(a) treating the inventory as nonincidental materials and
supplies, or (b) conforming to its treatment of inventory in
an applicable financial statement (as defined in section
451(b)(3)). If it does not have an applicable financial
statement, it can use the method of accounting used in its
books and records prepared according to its accounting
procedures.
Change in accounting method. Generally, the
cooperative must get IRS consent to change either an
overall method of accounting or the accounting treatment
of any material item for income tax purposes. To obtain
consent, the cooperative must generally file Form 3115,
Application for Change in Accounting Method, during the
tax year for which the change is requested. See the
Instructions for Form 3115 and Pub. 538 for more
information and exceptions. Also, see the Instructions for
Form 3115 for procedures that may apply for obtaining
automatic consent to change certain methods of
accounting, nonautomatic change procedures, and
reduced Form 3115 filing requirements.
Section 481(a) adjustment. If the cooperative’s
taxable income for the current tax year is figured under a
method of accounting different from the method used in
the preceding tax year, the cooperative may have to make
an adjustment under section 481(a) to prevent amounts of
income or expense from being duplicated or omitted. See
section 481(a). Also, see the Instructions for Form 3115.
If the net section 481(a) adjustment is positive, report
the ratable portion on Form 1120-C, line 9, as other
income. If the net section 481(a) adjustment is negative,
report it on Form 1120-C, line 23, as a deduction.
Accounting Period
A cooperative must figure its taxable income on the basis
of a tax year. A tax year is the annual accounting period a
cooperative uses to keep its records and report its income
and expenses. Generally, cooperatives can use a
calendar year or a fiscal year.
Change of tax year. Generally, a cooperative must get
the consent of the IRS before changing its tax year by
filing Form 1128, Application to Adopt, Change, or Retain
a Tax Year. However, exceptions may apply. See the
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Instructions for Form 1128 and Pub. 538 for more
information.
Rounding Off to Whole Dollars
The cooperative may enter decimal points and cents
when completing its return. However, the cooperative
should round off cents to whole dollars on its return,
forms, and schedules to make completing its return easier.
The cooperative must either round off all amounts on its
return to whole dollars or use cents for all amounts. To
round, drop amounts under 50 cents and increase
amounts from 50 to 99 cents to the next dollar. For
example, $8.40 rounds to $8 and $8.50 rounds to $9.
If two or more amounts must be added to figure the
amount to enter on a line, include cents when adding the
amounts and round off only the total.
Recordkeeping
Keep the cooperative’s records for as long as they may be
needed for the administration of any provision of the
Internal Revenue Code. Usually, records that support an
item of income, deduction, or credit on the return must be
kept for 3 years from the date the return is due or filed,
whichever is later. Keep records that verify the
cooperative’s basis in property for as long as they are
needed to figure the basis of the original or replacement
property.
The cooperative should keep copies of all filed returns.
They help in preparing future and amended returns and in
the calculation of earnings and profits.
Other Forms and Statements That
May Be Required
Reportable transaction disclosure statement.
Disclose information for each reportable transaction in
which the cooperative participated. Form 8886,
Reportable Transaction Disclosure Statement, must be
filed for each tax year that the federal income tax liability
of the cooperative is affected by its participation in the
transaction. The following are reportable transactions.
1. Any listed transaction that is a transaction that is the
same as or substantially similar to one of the types of
transactions that the IRS has determined to be a tax
avoidance transaction and identified by notice, regulation,
or other published guidance as a listed transaction.
2. Any transaction offered under conditions of
confidentiality for which the cooperative (or a related
party) paid an advisor a fee of at least $250,000.
3. Certain transactions for which the cooperative (or a
related party) has contractual protection against
disallowance of the tax benefits.
4. Certain transactions resulting in a loss of at least
$10 million in any single year or $20 million in any
combination of years.
5. Any transaction identified by the IRS by notice,
regulation, or other published guidance as a “transaction
of interest.”
For more information, see Regulations section
1.6011-4. Also, see the Instructions for Form 8886.
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Penalties. The cooperative may have to pay a penalty
if it is required to disclose a reportable transaction under
section 6011 and fails to properly complete and file Form
8886. Penalties may also apply under section 6707A if the
cooperative fails to file Form 8886 with its cooperative
return, fails to provide a copy of Form 8886 to the Office of
Tax Shelter Analysis (OTSA), or files a form that fails to
include all the information required (or includes incorrect
information). Other penalties, such as an accuracy-related
penalty under section 6662A, may also apply. See the
Instructions for Form 8886 for details on these and other
penalties.
Reportable transactions by material advisors.
Material advisors to any reportable transaction must
disclose certain information about the reportable
transaction by filing Form 8918 with the IRS. For details,
see the Instructions for Form 8918.
Transfers to a cooperative controlled by the transferor. Every significant transferor (as defined in Regulations
section 1.351-3(d)(1)) that receives stock of a cooperative
in exchange for property in a nonrecognition event must
include the statement required by Regulations section
1.351-3(a) on or with the transferor’s tax return for the tax
year of the exchange. The transferee cooperative must
include the statement required by Regulations section
1.351-3(b) on or with its return for the tax year of the
exchange, unless all the required information is included
in any statement(s) provided by a significant transferor
that is attached to the same return for the same section
351 exchange.
Dual consolidated losses. If a cooperative incurs a dual
consolidated loss (as defined in Regulations section
1.1503(d)-1(b)(5)), the cooperative (or consolidated
group) may need to attach a domestic use agreement
and/or annual certification, as provided in Regulations
sections 1.1503(d)-6(d) and (g).
Election to reduce basis under section 362(e)(2)(C).
If property is transferred to a cooperative in transfers
subject to section 362(e)(2), the transferor and the
transferee cooperative may elect, under section 362(e)(2)
(C), to reduce the transferor’s basis in the stock received
instead of reducing the transferee corporation’s basis in
the property transferred. Once made, the election is
irrevocable. For more information, see section 362(e)(2)
and Regulations section 1.362-4. If an election is made, a
statement must be filed in accordance with Regulations
section 1.362-4(d)(3).
Other forms and statements. See Pub. 542,
Corporations, for a list of other forms and statements that
a cooperative may need to file in addition to the forms and
statements discussed throughout these instructions.
Specific Instructions
Period Covered
File the 2025 return for calendar year 2025 and fiscal
years that begin in 2025 and end in 2026. For a fiscal or
short tax year return, fill in the tax year space at the top of
the form.
The 2025 Form 1120-C can also be used if:
Instructions for Form 1120-C (2025)
• The cooperative has a tax year of less than 12 months
that begins and ends in 2026, and
• The 2026 Form 1120-C is not available at the time the
cooperative is required to file its return.
The cooperative must show its 2026 tax year on the
2025 Form 1120-C and take into account any tax law
changes that are effective for tax years beginning after
December 31, 2025.
Note: A return for a short year beginning and ending in
2025 should not be filed before the earlier of its extended
due date or January 15, 2026.
Name and Address
Enter the cooperative’s true name (as set forth in the
charter or other legal document creating it), address, and
EIN on the appropriate lines. Enter the address of the
cooperative’s principal office or place of business. Include
the suite, room, or other unit number after the street
address. If the post office does not deliver mail to the
street address and the cooperative has a P.O. box, show
the box number instead.
Note: Do not use the address of the registered agent for
the state in which the cooperative is incorporated. For
example, if the cooperative is incorporated in Delaware or
Nevada and the cooperative’s principal office is located in
Little Rock, Arkansas, the cooperative should enter the
Little Rock address.
If the cooperative receives its mail in care of a third
party (such as an accountant or an attorney), enter on the
street address line “C/O” followed by the third party’s
name and street address or P.O. box.
If the cooperative has a foreign address, include the
city or town, state or province, country, and foreign postal
code. Do not abbreviate the country name. Follow the
country’s practice for entering the name of the state or
province and postal code.
Item A. Identifying Information
Consolidated return. Cooperatives filing a consolidated
return must check Item A, box 1, and attach Form 851,
Affiliations Schedule, and other supporting statements to
the return. Also, for the first year a subsidiary cooperative
is being included in a consolidated return, attach Form
1122 to the parent’s consolidated return. Attach a
separate Form 1122 for each new subsidiary being
included in the consolidated return.
Note: If the cooperative is a farmers’ tax exempt
cooperative and checked Item C, box 1, it cannot file a
consolidated return.
File supporting statements for each cooperative/
corporation included in the consolidated return. Do not
use Form 1120-C as a supporting statement. On the
supporting statement, use columns to show the following,
both before and after adjustments.
1. Items of gross income and deductions.
2. A computation of taxable income.
3. Balance sheets, as of the beginning and end of the
tax year.
Instructions for Form 1120-C (2025)
4. A reconciliation of income per books with income
per return.
5. A reconciliation of retained earnings.
Enter on Form 1120-C the totals for each item of
income, gain, loss, expense, or deduction, net of
eliminating entries for intercompany transactions between
cooperatives/corporations within the consolidated group.
Attach consolidated balance sheets and a reconciliation of
consolidated retained earnings.
Tip: The cooperative does not have to provide the
information requested in (3), (4), and (5) above if its total
receipts (line 1a plus lines 4 through 9) and its total assets
at the end of the tax year (Schedule L, line 13, column (d))
are less than $250,000. See Schedule K, Question 14.
For more information on consolidated returns, see the
regulations under section 1502.
Schedule M-3 (Form 1120). A cooperative with total
assets (nonconsolidated or consolidated for all
cooperatives/corporations included with the consolidated
tax group) of $10 million or more on the last day of the tax
year must file Schedule M-3 (Form 1120) instead of Form
1120-C, Schedule M-1.
Cooperatives that (a) are required to file Schedule M-3
(Form 1120) and have less than $50 million total assets at
the end of the tax year or (b) are not required to file
Schedule M-3 (Form 1120) and voluntarily file
Schedule M-3 (Form 1120) must either (i) complete
Schedule M-3 (Form 1120) entirely or (ii) complete
Schedule M-3 (Form 1120) through Part I and complete
Form 1120-C, Schedule M-1, instead of completing Parts
II and III of Schedule M-3 (Form 1120). If the cooperative
chooses to complete Schedule M-1 instead of completing
Parts II and III of Schedule M-3, the amount on
Schedule M-1, line 1, must equal the amount on
Schedule M-3, Part I, line 11. See the Instructions for
Schedule M-3 (Form 1120) for more details. Also, see the
instructions for Schedule M-1, later.
If you are filing Schedule M-3, check Item A, box 2, to
indicate that Schedule M-3 is attached.
Form 1120 filed in previous year. Check box 3 if the
cooperative filed Form 1120 in a prior year as a
subchapter T cooperative.
Item B. Employer Identification
Number (EIN)
Enter the cooperative’s EIN. If the cooperative does not
have an EIN, it must apply for one. An EIN can be applied
for in the following ways.
• Online—Go to IRS.gov/EIN. The EIN is issued
immediately once the application information is validated.
• By faxing or mailing Form SS-4, Application for
Employer Identification Number. See the Instructions for
Form SS-4.
Note: Cooperatives located in the United States or U.S.
territories can use the online application. Foreign
corporations should call 267-941-1099 (not a toll-free
number) for more information on obtaining an EIN.
7
EIN applied for but not received. If the cooperative has
not received its EIN by the time the return is due, enter
“Applied for” and the date the cooperative applied in the
space for the EIN.
For more information, see the Instructions for Form
SS-4.
Item C. Type of Cooperative
Farmers’ tax exempt cooperative. Check the “Farmers’
tax exempt cooperative” box if the cooperative applied for
and received status as a tax exempt farmers’, fruit
growers’, or like association, organized and operated on a
cooperative basis, as described in section 521.
If the cooperative has submitted Form 1028,
Application for Recognition of Exemption, but has not
received a determination letter from the IRS, enter
“Application Pending” on Form 1120-C at the top of
page 1.
Nonexempt cooperative. All other subchapter T
cooperatives, including farmers’ cooperatives without
section 521 exempt status, organized and operated as
described under Who Must File, earlier, should check the
“Nonexempt cooperative” box.
Item D. Initial Return, Final Return,
Name Change, Address Change, or
Amended Return
• If this is the cooperative’s first return, check the “Initial
return” box.
• If this is the cooperative’s final return and it will no
longer exist, file Form 1120-C and check the “Final return”
box.
• If the cooperative changed its name since it last filed a
return, check the “Name change” box. Generally, a
cooperative must also have amended its articles of
incorporation and filed the amendment with the state in
which it was incorporated.
• If the cooperative has changed its address since it last
filed a return (including a change to an “in care of”
address), check the “Address change” box.
• If the cooperative must change its originally filed return
for any year, it should file a new return including any
required attachments. Use the revision of the form
applicable to the year being amended. The amended
return must provide all the information called for by the
form and instructions, not just the new or corrected
information. Check the “Amended return” box.
Note: If a change in address or responsible party occurs
after the return is filed, use Form 8822-B, Change of
Address or Responsible Party—Business, to notify the
IRS. See the instructions for Form 8822-B for details.
Income
Except as otherwise provided in the Internal Revenue
Code, gross income includes all income from whatever
source derived.
Exception for income from qualifying shipping activities. Gross income does not include income from
qualifying shipping activities if the cooperative makes an
8
election under section 1354 to be taxed on its notional
shipping income (as defined in section 1353) at the
highest corporate rate. If the election is made, the
cooperative generally may not claim any loss, deduction,
or credit with respect to qualifying shipping activities. A
cooperative making this election may also elect to defer
gain on the disposition of a qualifying vessel.
Use Form 8902, Alternative Tax on Qualifying Shipping
Activities, to figure the tax. Include the alternative tax on
Schedule J, line 8c.
Line 1. Gross Receipts or Sales
Enter on line 1a gross receipts or sales from all business
operations, except for amounts that must be reported on
lines 4 through 9. Special rules apply to certain income, as
discussed below.
Advance payments. In general, advance payments must
be included in income in the year of receipt. For
exceptions to this general rule for cooperatives that use
the accrual method of accounting, see the following.
• To report income from long-term contracts, see section
460.
• For rules that allow a limited deferral of advance
payments beyond the current tax year, see section 451(c).
Also, see Regulations sections 1.451-8(c), (d), and (e).
For applicability dates, see Regulations section
1.451-8(h).
• For information on adopting or changing to a
permissible method for reporting advance payments for
services and certain goods by an accrual method
cooperative, see the Instructions for Form 3115.
Installment sales. Generally, the installment method
cannot be used for dealer dispositions of property. A
“dealer disposition” is any disposition of (a) personal
property by a person who regularly sells or otherwise
disposes of personal property of the same type on the
installment plan or (b) real property held for sale to
customers in the ordinary course of the taxpayer’s trade or
business.
The restrictions on using the installment method do not
apply to the following.
• Dispositions of property used or produced in the trade
or business of farming.
• Certain dispositions of timeshares and residential lots
reported under the installment method for which the
cooperative elects to pay interest under section 453(l)(3).
Enter on line 1a (and carry to line 3) the gross profit on
collections from these installment sales. Attach a
statement showing the following information for the current
and the 3 preceding years: (a) gross sales, (b) cost of
goods sold, (c) gross profits, (d) percentage of gross
profits to gross sales, (e) amount collected, and (f) gross
profit on the amount collected.
For sales of timeshares and residential lots reported
under the installment method, if the cooperative elects to
pay interest under section 453(l)(3), the cooperative’s
income tax is increased by the interest payable under
section 453(l)(3). Report this addition to the tax on
Schedule J, line 8z.
Nonaccrual experience method for service providers.
Cooperatives are not required to accrue certain amounts
Instructions for Form 1120-C (2025)
to be received from the performance of services that,
based on their experience, will not be collected if:
• The services are in the fields of health, law,
engineering, architecture, accounting, actuarial science,
performing arts, or consulting; or
• The cooperative meets the section 448(c) gross
receipts test for all prior years.
This provision does not apply to any amount if interest
is required to be paid on the amount or if there is any
penalty for failure to timely pay the amount. See
Regulations section 1.448-3 for more information on the
nonaccrual experience method, including information on
safe harbor methods.
For information on a book safe harbor method of
accounting for cooperatives that use the nonaccrual
experience method of accounting, see Rev. Proc.
2011-46, 2011-42 I.R.B. 518, available at IRS.gov/irb/
2011-42_IRB#RP-2011-46, or any successor. Also, see
the Instructions for Form 3115 for procedures to obtain
automatic consent to change to this method or make
certain changes within this method.
Cooperatives that qualify to use the nonaccrual
experience method should attach a statement to its return
showing total gross receipts, the amount not accrued
because of the application of section 448(d)(5), and the
net amount accrued. Enter the net amount on line 1a.
Line 2. Cost of Goods Sold
Complete and attach Form 1125-A, Cost of Goods Sold, if
applicable. Enter on Form 1120-C, line 2, the amount from
Form 1125-A, line 8. See Form 1125-A and its
instructions.
Line 4. Dividends and Inclusions
See the instructions for Schedule C, later. Complete
Schedule C and enter on line 4 the amount from
Schedule C, line 23, column (a).
Note: Do not report patronage dividends received on
Schedule C. Report income from patronage dividends and
per-unit retain allocations on line 9.
Line 5. Interest
Enter taxable interest on U.S. obligations and on loans,
notes, mortgages, bonds, bank deposits, corporate
bonds, tax refunds, etc. Do not offset interest expense
against interest income. Special rules apply to interest
income from certain below-market-rate loans. See section
7872 for details.
Report tax-exempt interest on Schedule K, item 10.
Also, if required, include the same amount on
Schedule M-1, line 7, or Schedule M-3 (Form 1120), Part
II, line 13, if applicable.
Note: For tax years ending after July 4, 2025, section
139L, as enacted by P.L. 119 -21, allows a qualified lender
to exclude 25% of the interest income received on any
qualified real estate loan secured by rural or agricultural
real property. See section 139L and Notice 2025-71 for
more details.
Instructions for Form 1120-C (2025)
Line 6. Gross Rents and Royalties
Enter the gross amount received from the rental of
property and royalties. Deduct expenses such as repairs,
interest, taxes, and depreciation on the applicable lines.
Line 9. Other Income
Enter any other taxable income not reported on lines 1
through 8. List the type and amount of income on an
attached statement. If the cooperative has only one item
of other income, describe it in parentheses on line 9.
Patronage dividends and per-unit retain allocations.
Include on line 9 the patronage dividends and per-unit
retain allocations listed below. Attach a statement listing
the name of each declaring association from which the
cooperative received income from patronage dividends
and per-unit retain allocations and the total amount
received from each association.
Include the items listed below.
1. Patronage dividends received in:
• Money,
• Qualified written notices of allocation, or
• Other property (except nonqualified written notices of
allocation).
2. Nonpatronage distributions received on a patronage
basis from tax-exempt farmers’ cooperatives in:
• Money;
• Qualified written notices of allocation; or
• Other property (except nonqualified written notices of
allocation), based on earnings of that cooperative either
from business done with or for the United States or any of
its agencies (or from sources other than patronage, such
as investment income).
3. Qualified written notices of allocation at their stated
dollar amounts and property at its fair market value (FMV).
4. Amounts received on the redemption, sale, or other
disposition of nonqualified written notices of allocation.
Generally, patronage dividends from purchases of
capital assets or depreciable property are not includible in
income but must be used to reduce the basis of the
assets. See section 1385(b) and the related regulations.
5. Amounts received (or the stated dollar value of
qualified per-unit retain certificates received) from the sale
or redemption of nonqualified per-unit retain certificates.
6. Per-unit retain allocations received (except
nonqualified per-unit retain certificates). See section
1385.
Note: Payments from the Commodity Credit Corporation
to a farmers’ cooperative for certain expenses of the
co-op’s farmers-producers under a “reseal” program of the
U.S. Department of Agriculture are patronage-source
income that may give rise to patronage dividends under
section 1382(b)(1).
Other. Examples of other income to report on line 9
include the following.
• Recoveries of bad debts deducted in prior years under
the specific charge-off method.
• Any amount includible in income from Form 6478,
Biofuel Producer Credit.
9
• Any amount includible in income from Form 8864,
Biodiesel, Renewable Diesel, or Sustainable Aviation
Fuels Credit.
• Refunds of taxes deducted in prior years to the extent
they reduced the amount of tax imposed. See section 111
and the related regulations. Do not offset current-year
taxes against tax refunds.
• Ordinary income from trade or business activities of a
partnership (from Schedule K-1 (Form 1065)). Do not
offset ordinary losses against ordinary income. Instead,
include the losses on line 23. Show the partnership’s
name, address, and EIN on a separate statement
attached to this return. If the amount entered is from more
than one partnership, identify the amount from each
partnership.
• The transferred loss amount identified as "Section 91
Transferred Loss Amount," which is required to be
recognized when substantially all the assets of a foreign
branch are transferred to a specified 10%-owned foreign
corporation (as defined in section 245A(b)) with respect to
which the corporation was a U.S. shareholder immediately
after the transfer. See section 91.
• The ratable portion of any net positive section 481(a)
adjustment. See Section 481(a) adjustment, earlier.
• Part or all of the proceeds received from certain
cooperative-owned life insurance contracts issued after
August 17, 2006. See section 101(j) for details. Form
8925, Report of Employer-Owned Life Insurance
Contracts, may also be required. See Form 8925 and its
instructions.
• Income from cancellation of debt (COD) for the
repurchase of a debt instrument for less than its adjusted
issue price.
• The cooperative’s share of the following income from
Form 8621, Information Return by a Shareholder of a
Passive Foreign Investment Company or Qualified
Electing Fund.
1. Ordinary earnings of a qualified electing fund
(QEF).
2. Gain or loss from marking passive foreign
investment company (PFIC) stock to market.
3. Gain or loss from sale or other disposition of section
1296 stock.
4. Excess distributions from a section 1291 fund
allocated to the current year and pre-PFIC years, if any.
See Form 8621 and the Instructions for Form 8621 for
details.
Deductions
Limitations on Deductions
Uniform capitalization rules. The uniform capitalization
rules of section 263A require cooperatives to capitalize
certain costs to inventory. Cooperatives subject to the
section 263A uniform capitalization rules are required to
capitalize:
1. Direct costs of assets produced or acquired for
resale, and
2. Certain indirect costs (including taxes) that are
properly allocable to property produced or acquired for
resale.
10
The cooperative cannot deduct the costs required to be
capitalized under section 263A until it sells, uses, or
otherwise disposes of the property (to which the costs
relate). The cooperative recovers these costs through
depreciation, amortization, or costs of goods sold.
A small business taxpayer (defined earlier) is not
required to capitalize costs under section 263A. A small
business taxpayer that wants to discontinue capitalizing
costs under section 263A must change its method of
accounting. See section 263A(i) and Regulations section
1.263A-1(j). Also, see the Instructions for Form 3115.
For more information on the uniform capitalization rules,
see Pub. 538. Also, see Regulations sections 1.263A-1
through 1.263A-3. See section 263A(d), Regulations
section 1.263A-4, and Pub. 225 for rules for property
produced in a farming business.
Transactions between related taxpayers. Generally,
an accrual basis taxpayer can only deduct business
expenses and interest owed to a related party in the year
payment is included in the income of the related party.
See sections 163(e)(3) and 267(a)(2) for the limitations on
deductions for unpaid interest and expenses.
Limitations on business interest expense. Business
interest expense may be limited. See section 163(j) and
Form 8990, Limitation on Business Interest Expense
Under Section 163(k). Also, see Limitation on deduction
and Schedule K, Question 17 and Question 18, later.
Section 291 limitations. Cooperatives may be required
to adjust deductions for depletion of iron ore and coal,
intangible drilling, exploration and development costs, and
the amortizable basis of pollution control facilities. See
section 291 to determine the amount of the adjustment.
Election to deduct business startup and organizational costs. A cooperative can elect to deduct a limited
amount of startup and organizational costs it paid or
incurred. Any remaining costs must generally be
amortized over a 180-month period. See sections 195 and
248 and the related regulations.
Time for making an election. The cooperative
generally elects to deduct startup or organizational costs
by claiming the deduction on its income tax return filed by
the due date (including extensions) for the tax year in
which the active trade or business begins. For more
details, see the Instructions for Form 4562.
If the cooperative timely filed its return for the year
without making an election, it can still make an election by
filing an amended return within 6 months of the due date
of the return (excluding extensions). Clearly indicate the
election on the amended return and enter “Filed pursuant
to section 301.9100-2” at the top of the amended return.
File the amended return at the same address the
cooperative filed its original return. The election applies
when figuring taxable income for the current tax year and
all subsequent years.
The cooperative can choose to forgo the elections
above by affirmatively electing to capitalize its startup or
organizational costs on its income tax return filed by the
due date (including extensions) for the tax year in which
the active trade or business begins.
Instructions for Form 1120-C (2025)
The election to either amortize or capitalize startup
costs is irrevocable and applies to all startup costs that are
related to the trade or business.
Report the deductible amount of startup and
organizational costs and any amortization on line 23. For
amortization that begins during the current tax year,
complete and attach Form 4562, Depreciation and
Amortization.
If the cooperative has any of the credits listed above,
figure the current-year credit before figuring the deduction
for expenses on which the credit is based. If the
cooperative capitalized any costs on which it figured the
credit, it may need to reduce the amount capitalized by the
credit attributable to these costs.
See the instructions for the form used to figure the
applicable credit for more details.
Passive activity limitations. Limitations on passive
activity losses and credits under section 469 apply to
closely held cooperatives (defined later).
Generally, the two kinds of passive activities are:
• Trade or business activities in which the cooperative did
not materially participate for the tax year; and
• Rental activities, regardless of its participation.
Cooperatives subject to the passive activity limitations
must complete Form 8810, Corporate Passive Activity
Loss and Credit Limitations, to compute their allowable
passive activity loss and credit. Before completing Form
8810, see Temporary Regulations section 1.163-8T, which
provides rules for allocating interest expense among
activities. If a passive activity is also subject to the at-risk
rules of section 465 or the tax-exempt use loss rules of
section 470, those rules apply before the passive loss
rules.
For more information, see section 469, the related
regulations, and Pub. 925, Passive Activity and At-Risk
Rules.
Closely held cooperatives. A cooperative is “closely
held” (as defined in section 469(j)(1)) if at any time during
the last half of the tax year more than 50% in value of its
outstanding stock is owned, directly or indirectly, by or for
not more than five individuals.
Certain organizations are treated as individuals for
purposes of this test. See section 542(a)(2). For rules for
determining stock ownership, see section 544 (as
modified by section 465(a)(3)).
Limitations on deductions related to property leased
to tax-exempt entities. If a cooperative leases property
to a governmental or other tax-exempt entity, the
cooperative cannot claim deductions related to the
property to the extent that they exceed the cooperative’s
income from the lease payments. This disallowed
tax-exempt use loss can be carried over to the next tax
year and treated as a deduction with respect to the
property for that tax year. See section 470(d) for
exceptions.
Reducing certain expenses for which credits are allowable. If the cooperative claims certain credits, it may
need to reduce the otherwise allowable deductions for
expenses used to figure the credit. This applies to credits
such as the following.
• Work opportunity credit (Form 5884).
• Credit for increasing research activities (Form 6765).
• Orphan drug credit (Form 8820).
• Disabled access credit (Form 8826).
• Empowerment zone employment credit (Form 8844).
• Credit for employer social security and Medicare taxes
paid on certain employee tips (Form 8846).
• Credit for small employer pension plan startup costs
(Form 8881).
• Credit for employer-provided childcare facilities and
services (Form 8882).
• Low sulfur diesel fuel production credit (Form 8896).
• Credit for employer differential wage payments (Form
8932).
• Credit for small employer health insurance premiums
(Form 8941).
• Employer credit for paid family and medical leave (Form
8994).
Instructions for Form 1120-C (2025)
Line 11. Compensation of Officers
Enter deductible officers’ compensation on line 11. Do not
include compensation deductible elsewhere on the return,
such as amounts included in cost of goods sold, elective
contributions to a section 401(k) cash or deferred
arrangement, or amounts contributed under a salary
reduction SEP agreement or a SIMPLE IRA plan.
If the cooperative’s total receipts (line 1a plus lines 4
through 9) are $500,000 or more, complete Form 1125-E,
Compensation of Officers. Enter on Form 1120-C, line 11,
the amount from Form 1125-E, line 4.
Line 12. Salaries and Wages
Enter the total salaries and wages paid for the tax year. Do
not include salaries and wages deductible elsewhere on
the return, such as amounts included in officers’
compensation, cost of goods sold, elective contributions
to a section 401(k) cash or deferred arrangement, or
amounts contributed under a salary reduction SEP
agreement or a SIMPLE IRA plan.
If the cooperative provided taxable fringe benefits to its
employees, such as personal use of a car, do not deduct
as wages the amount allocated for depreciation and other
expenses claimed on lines 18 and 23.
Caution: If the cooperative claims a credit for any wages
paid or incurred, it may need to reduce any corresponding
deduction for officers’ compensation and salaries and
wages. See Reducing certain expenses for which credits
are allowable, earlier.
Line 13. Bad Debts
Enter the total debts that became worthless in whole or in
part during the tax year. A cooperative that uses the cash
method of accounting cannot claim a bad debt deduction
unless the amount was previously included in income.
Line 14. Rents
If the cooperative rented or leased a vehicle, enter the
total annual rent or lease expense paid or incurred during
the year. Also, complete Part V of Form 4562. If the
cooperative leased a vehicle for a term of 30 days or
more, the deduction for vehicle lease expense may have
11
to be reduced by an amount includible in income called
the inclusion amount. The cooperative may have an
inclusion amount if:
And the vehicle’s FMV
on the first day of the
lease exceeded:
The lease term began:
Cars (excluding Trucks and Vans)
After 12/31/23 but before 1/1/26
. . . . . . .
$62,000
After 12/31/22 but before 1/1/24
. . . . . . .
$60,000
After 12/31/21 but before 1/1/23
. . . . . . .
$56,000
After 12/31/20 but before 1/1/22
. . . . . .
$51,000
After 12/31/17 but before 1/1/21
. . . . . . .
$50,000
After 12/31/12 but before 1/1/18
. . . . . . .
$19,000
After 12/31/23 but before 1/1/26
. . . . . . .
$62,000
After 12/31/22 but before 1/1/24
. . . . . . .
$60,000
After 12/31/21 but before 1/1/23
. . . . . . .
$56,000
After 12/31/20 but before 1/1/22
. . . . . .
$51,000
After 12/31/17 but before 1/1/21
. . . . . . .
$50,000
After 12/31/13 but before 1/1/18
. . . . . . .
$19,500
After 12/31/09 but before 1/1/14
. . . . . . .
$19,000
Trucks and Vans
See Pub. 463, Travel, Gift, and Car Expenses, for
instructions on figuring the inclusion amount. The
inclusion amount for lease terms beginning in 2025 will be
published in the Internal Revenue Bulletin in early 2025.
Line 15. Taxes and Licenses
Enter taxes paid or accrued during the tax year but do not
include the following.
• Federal income taxes.
• Foreign or U.S. territory income taxes if a foreign tax
credit is claimed.
• Taxes not imposed on the cooperative.
• Taxes, including state or local sales taxes, that are paid
or incurred in connection with an acquisition or disposition
of property (these taxes must be treated as part of the
cost of the acquired property, or in the case of a
disposition, as a reduction in the amount realized on the
disposition).
• Taxes assessed against local benefits that increase the
value of the property assessed (such as for paving, etc.).
• Taxes deducted elsewhere on the return, such as those
reflected in cost of goods sold.
See section 164(d) for information on apportionment of
taxes on real property between seller and purchaser.
Line 16. Interest
Do not offset interest income against interest expense.
The cooperative must make an interest allocation if the
proceeds of a loan were used for more than one purpose
(for example, to purchase a portfolio investment and to
acquire an interest in a passive activity). See Temporary
Regulations section 1.163-8T for the interest allocation
rules.
Do not deduct the following interest.
• Interest on indebtedness incurred or continued to
purchase or carry obligations if the interest is wholly
exempt from income tax. For exceptions, see section
12
265(b). Also, see section 139L(d) which coordinates with
section 265 regarding interest on qualified real estate
loans.
• For cash basis taxpayers, prepaid interest allocable to
years following the current tax year. For example, a cash
basis calendar year taxpayer who in 2025 prepaid interest
allocable to any period after 2025 can deduct only the
amount allocable to 2025.
• Interest and carrying charges on straddles. Generally,
these amounts must be capitalized. See section 263(g).
• Interest on debt allocable to the production of
designated property by a cooperative for its own use or for
sale. The cooperative must capitalize this interest. Also,
capitalize any interest on debt allocable to an asset used
to produce the property. See section 263A(f) and
Regulations sections 1.263A-8 through 1.263A-15 for
definitions and more information.
• Interest paid or incurred on any portion of an
underpayment of tax that is attributable to an
understatement arising from an undisclosed listed
transaction or an undisclosed reportable avoidance
transaction (other than a listed transaction) entered into in
tax years beginning after October 22, 2004.
Special rules apply to the following.
• Forgone interest on certain below-market-rate loans
(see section 7872).
• Original issue discount (OID) on certain high-yield
discount obligations. See section 163(e)(5) to determine
the amount of the deduction for OID that is deferred and
the amount that is disallowed on a high-yield discount
obligation. See section 163(e)(5)(F).
• Interest paid on a disqualified debt instrument for
indebtedness of the corporation which is payable in equity
of the issuer or a related party or equity held by the issuer
or any other person. See section 163(l)(3).
• Interest that is allocable to unborrowed policy cash
values of life insurance, endowment, or annuity contracts
issued after June 8, 1997. See section 264(f). Attach a
statement showing the computation of the deduction.
Limitation on deduction. Under section 163(j),
business interest expense is generally limited to the sum
of business interest income, 30% of the adjusted taxable
income, and floor plan financing interest. The amount of
any business interest expense that is not allowed as a
deduction for the tax year is carried forward to the
following year. If section 163(j) applies, use Form 8990 to
figure the amount of business interest expense the
corporation can deduct for the current tax year and the
amount that can be carried forward to the next year. See
the Instructions for Form 8990. Also, see Schedule K,
Question 17 and Question 18, later.
Line 17. Charitable Contributions
Enter contributions or gifts actually paid within the tax year
to or for the use of charitable and governmental
organizations described in section 170(c) and any unused
contributions carried over from prior years. Special rules
and limits apply to contributions to organizations
conducting lobbying activities. See section 170(f)(9).
Cooperatives reporting taxable income on the accrual
method can elect to treat as paid during the tax year any
contributions paid by the due date for filing the
Instructions for Form 1120-C (2025)
cooperative’s return (not including extensions) if the
contributions were authorized by the board of directors
during the tax year. Attach a declaration to the return
stating that the resolution authorizing the contributions
was adopted by the board of directors during the tax year.
The declaration must include the date the resolution was
adopted.
Limitation on deduction. Generally, the total amount
claimed cannot be more than 10% of taxable income
(line 27) computed without regard to the following.
• Any deduction for contributions.
• The special deductions on line 26b.
• The limitation under section 249 on the deduction for
bond premium.
• Any net operating loss (NOL) carryback to the tax year
under section 172.
• Any capital loss carryback to the tax year under section
1212(a)(1).
• Any deduction for income attributable to domestic
production activities of specified agricultural or
horticultural cooperatives under section 199A(g).
Carryover. Charitable contributions over the 10%
limitation cannot be deducted for the tax year but can be
carried over to the next 5 tax years. See the exception
below for farmers and ranchers and certain Native
Corporations.
Special rules apply if the cooperative has an NOL
carryover to the tax year. In figuring the charitable
contributions deduction for the current tax year, the 10%
limit is applied using the taxable income after taking into
account any deduction for the NOL.
To figure the amount of any remaining NOL carryover to
later years, taxable income must be modified (see section
172(b)). To the extent that contributions are used to
reduce taxable income for this purpose and increase an
NOL carryover, a contributions carryover is not allowed.
See sections 170(d)(2)(B).
Suspension of 10% limitation for farmers and ranchers and certain Native Corporations. Certain
cooperatives can deduct contributions of qualified
conservation property without regard to the general 10%
limit. This applies to:
• A qualified farmer or rancher (as defined in section
170(b)(1)(E)(v)) that does not have publicly traded stock,
and
• A Native Corporation (as defined in section 170(b)(2)
(C)(iii)) that contributes property that was land conveyed
under the Alaska Native Claims Settlement Act.
The total amount of the contribution claimed for the
qualified conservation property cannot exceed 100% of
the excess of the cooperative’s taxable income (as
computed above substituting “100%” for “10%”) over all
other allowable charitable contributions. Any excess
qualified conservation contributions can be carried over to
the next 15 years, subject to the 100% limitation. See
sections 170(b)(2)(B) and (C).
Cash contributions. For contributions of cash, check, or
other monetary gifts (regardless of the amount), the
cooperative must maintain a bank record or a receipt,
letter, or other written communication from the donee
organization indicating the name of the organization, the
Instructions for Form 1120-C (2025)
date of the contribution, and the amount of the
contribution.
Contributions of $250 or more. A cooperative can
deduct a contribution of $250 or more only if it gets a
written acknowledgment from the donee organization that
shows the amount of cash contributed, describes any
property contributed (but not its value), and either gives a
description and a good faith estimate of the value of any
goods or services provided in return for the contribution or
states that no goods or services were provided in return
for the contribution. The acknowledgment must be
obtained by the due date (including extensions) of the
cooperative’s return or, if earlier, the date the return is
filed. Do not attach the acknowledgment to the tax return
but keep it with the cooperative’s records.
Contributions of property other than cash. If a
cooperative contributes property other than cash and
claims over a $500 deduction for the property, it must
attach a statement to the return describing the kind of
property contributed and the method used to determine its
FMV. Complete and attach Form 8283, Noncash
Charitable Contributions, for contributions of property
(other than money) if the total claimed deduction for all
property contributed was more than $5,000. Special rules
apply to the contribution of certain property. See the
Instructions for Form 8283.
Qualified conservation contributions. Special rules
apply to qualified conservation contributions, including
contributions of certain easements on buildings located in
a registered historic district. See section 170(h) and Pub.
526, Charitable Contributions.
Other special rules. The cooperative must reduce its
deduction for contributions of certain capital gain property.
See sections 170(e)(1) and 170(e)(5).
For more information on charitable contributions,
including substantiation and recordkeeping requirements,
see section 170 and the related regulations and Pub. 526.
For special rules that apply to corporations, see Pub. 542.
Line 18. Depreciation
Include on line 18 depreciation and the cost of certain
property that the cooperative elected to expense under
section 179 from Form 4562. Include amounts not claimed
on Form 1125-A or elsewhere on the return. See Form
4562 and the Instructions for Form 4562.
Line 20. Pension, Profit-Sharing, etc., Plans
Enter the deduction for contributions to qualified pension,
profit-sharing, or other funded deferred compensation
plans. Generally, employers who maintain such a plan
must file one of the forms listed below unless exempt from
filing under regulations or other applicable guidance, even
if the plan is not a qualified plan under the Internal
Revenue Code. The filing requirement applies even if the
cooperative does not claim a deduction for the current tax
year. There are penalties for failure to file these forms and
for overstating the pension plan deduction. See sections
6652(e) and 6662(f). Also, see the instructions for the
applicable form.
• Form 5500, Annual Return/Report of Employee Benefit
Plan.
13
• Form 5500-SF, Short Form Annual Return/Report of
Small Employee Benefit Plan. File this form instead of
Form 5500 generally if there were under 100 participants
at the beginning of the plan year.
• Form 5500-EZ, Annual Return of A One-Participant
(Owners/Partners and Their Spouses) Retirement Plan or
A Foreign Plan. File this form for a plan that only covers
the owner (or the owner and spouse) or a foreign plan that
is required to file an annual return and does not file the
annual return electronically on Form 5500-SF. See the
Instructions for Form 5500-EZ.
across the top of Form 8903. Form 8903 must be attached
to the cooperative’s return. See the Instructions for Form
8903. Alternatively, specified cooperatives may create and
attach a schedule similar to Form 8903 to compute the
section 199A(g) deduction.
Note: Form 5500 and Form 5500-SF must be filed
electronically under the computerized ERISA Filing
Acceptance System (EFAST2). For more information, see
the EFAST2 website at EFAST.dol.gov.
• Amortization. See Form 4562, Part VI.
• Any energy efficient commercial buildings deduction for
Line 21. Employee Benefit Programs
Enter contributions to employee benefit programs not
claimed elsewhere on the return (for example, insurance
or health and welfare programs) that are not an incidental
part of a pension, profit-sharing, etc., plan included on
line 20.
Line 22. Section 199A(g) Deduction
Note: This deduction applies only to specified agricultural
and horticultural cooperatives (specified cooperatives).
Specified agricultural or horticultural cooperatives
(specified cooperatives) to which Part I of subchapter T
applies may qualify for a deduction under section 199A(g).
A specified cooperative is a cooperative that markets or is
engaged in the manufacturing, production, growth, or
extraction of agricultural or horticultural products.
Specified cooperatives that qualify under section 521 are
considered “exempt” cooperatives. All other specified
cooperatives are considered “nonexempt.” Special rules
apply to specified cooperatives with both patronage and
nonpatronage income and losses.
A specified cooperative’s section 199A(g) deduction
generally equals 9% of the lesser of:
1. Qualified production activity income (QPAI), or
2. Taxable income.
Note: QPAI and taxable income are computed without
regard to any deductions for patronage dividends, per-unit
retain allocations, or nonpatronage distributions under
section 1382(b) or (c).
A specified cooperative with oil-related QPAI must also
reduce the deduction by 3% of the least of the following
amounts.
• Oil-related QPAI.
• QPAI.
• Taxable income figured without the deduction.
The deduction shall not exceed 50% of the Form W-2
wages allocable to domestic production gross receipts
(DPGR) of the specified cooperative for the tax year. See
Rev. Proc. 2021-11, 2021-6 I.R.B. 833, available at
IRS.gov/irb/2021-6_IRB#REV-PROC-2021-11.
Reporting the deduction. Specified cooperatives may
use Form 8903, Domestic Production Activities
Deduction, to compute the section 199A(g) deduction.
Write “Specified Cooperative Section 199A(g) deduction”
14
Line 23. Other Deductions
Attach a statement listing by type and amount all
allowable deductions that are not deductible elsewhere on
Form 1120-C. Enter the total on line 23.
Examples of other deductions include the following.
property placed in service during the tax year. Complete
and attach Form 7205.
• Certain business startup and organizational costs
(discussed earlier under Election to deduct business
startup and organizational costs).
• Reforestation costs. The cooperative can elect to
deduct up to $10,000 of qualifying reforestation expenses
for each qualified timber property. The cooperative can
elect to amortize over 84 months any amount not
deducted. See the Instructions for Form T (Timber).
• Depletion. See sections 613 and 613A for percentage
depletion rates applicable to natural deposits. Also, see
section 291 for the limitation on the depletion deduction
for iron ore and coal (including lignite). Attach Form T
(Timber), Forest Activities Schedule, if a deduction for
depletion of timber is taken.
• Insurance premiums.
• Legal and professional fees.
• Repairs and maintenance (discussed later).
• Supplies used and consumed in the business.
• Travel, meals, and entertainment expenses. Special
rules apply (discussed later).
• Utilities.
• Ordinary losses from trade or business activities of a
partnership (from Schedule K-1 (Form 1065)). Do not
offset ordinary income against ordinary losses. Instead,
include the income on line 9. Show the partnership’s
name, address, and EIN on a separate statement
attached to this return. If the amount is from more than
one partnership, identify the amount from each
partnership.
• Any extraterritorial income exclusion (from Form 8873).
• Any net negative section 481(a) adjustment. See the
instructions for line 9.
• Dividends paid in cash on stock held by an employee
stock ownership plan (ESOP).
However, a deduction may be taken for the dividends
only if, according to the plan, the dividends are:
1. Paid in cash directly to the plan participants or
beneficiaries;
2. Paid to the plan, which distributes them in cash to
the plan participants or their beneficiaries no later than 90
days after the end of the plan year in which the dividends
are paid;
3. At the election of such participants or their
beneficiaries (a) payable as provided under (1) or (2)
above, or (b) paid to the plan and reinvested in qualifying
employer securities; or
Instructions for Form 1120-C (2025)
4. Used to make payments on a loan described in
section 404(a)(9).
See section 404(k) for more details and the limitation
on certain dividends.
Do not deduct the following.
• Amounts paid or incurred to or at the direction of a
government or governmental entity for the violation, or
investigation or inquiry into the potential violation, of a law.
See section 162(f) for more information and exceptions.
• Any amount that is allocable to a class of exempt
income. See section 265(b) for exceptions.
• Lobbying expenses. However, see exceptions
discussed later.
• Amounts paid or incurred for any settlement, payout, or
attorney fees related to sexual harassment or sexual
abuse, if such payments are subject to a nondisclosure
agreement. See section 162(q).
Repairs and maintenance. Enter the cost of repairs and
maintenance not claimed elsewhere on the return, such
as labor and supplies, that are not payments to produce or
improve tangible or real property. See Regulations section
1.263(a)-1. For example, amounts are paid for
improvements if they are for betterments to the property,
restorations of the property (such as the replacements of
major components or substantial structural parts), or if
they adapt the property to a new or different use. Amounts
paid to produce or improve property must be capitalized.
See Regulations sections 1.263(a)-2 and (a)-3.
The cooperative can deduct repair and maintenance
expenses only to the extent they relate to a trade or
business activity. See Regulations section 1.162-4. The
cooperative may elect to capitalize certain repair and
maintenance costs consistent with its books and records.
See Regulations section 1.263(a)-3(n) for information on
how to make the election.
Travel, meals, and entertainment. Subject to limitations
and restrictions discussed below, a cooperative can
deduct ordinary and necessary travel, meals, and
nonentertainment expenses paid or incurred in its trade or
business. Generally, entertainment expenses,
membership dues, and facilities used in connection with
these activities cannot be deducted. In addition, no
deduction is generally allowed for qualified transportation
fringe benefits. Special rules apply to deductions for gifts
and convention expenses. See section 274 and Pub. 463
for details.
Travel. The cooperative cannot deduct travel expenses
of any individual accompanying a cooperative officer or
employee, including a spouse or dependent of the officer
or employee, unless:
• That individual is an employee of the cooperative, and
• That individual’s travel is for a bona fide business
purpose and would otherwise be deductible by that
individual.
Meals. Generally, the cooperative can deduct only 50%
of the amount otherwise allowable for nonentertainment
related meal expenses paid or incurred in its trade or
business. Meals not separately stated from entertainment
are generally not deductible. In addition (subject to
exceptions under section 274(k)(2)):
• Meals must not be lavish or extravagant, and
Instructions for Form 1120-C (2025)
• An employee of the cooperative must be present at the
meal.
See section 274(n)(3) for a special rule that applies to
expenses for meals consumed by individuals subject to
the hours of service limits of the Department of
Transportation.
Qualified transportation fringes (QTFs). Generally,
no deduction is allowed for QTFs provided by employers
to their employees. QTFs are defined in section 132(f)(1)
and include:
• Transportation in a commuter highway vehicle between
the employee’s residence and place of employment,
• Any transit pass, and
• Qualified parking.
See section 274 and Pub. 15-B, Employer’s Tax Guide to
Fringe Benefits, for more information.
Membership dues. The cooperative can deduct
amounts paid or incurred for membership dues in civic or
public service organizations, professional organizations
(such as bar and medical associations), business
leagues, trade associations, chambers of commerce,
boards of trade, and real estate boards. However, no
deduction is allowed if a principal purpose of the
organization is to entertain or provide entertainment
facilities for members or their guests. In addition,
cooperatives cannot deduct membership dues in any club
organized for business, pleasure, recreation, or other
social purpose. This includes country clubs, golf and
athletic clubs, airline and hotel clubs, and clubs operated
to provide meals under conditions favorable to business
discussion.
Entertainment facilities. Generally, the cooperative
cannot deduct an expense paid or incurred for a facility
(such as a yacht or hunting lodge) used for an activity
usually considered entertainment, amusement, or
recreation.
Amounts treated as compensation. Generally, the
cooperative may be able to deduct otherwise
nondeductible entertainment, amusement, or recreation
expenses if the amounts are treated as compensation to
the recipient and reported on Form W-2, Wage and Tax
Statement, for an employee or on Form 1099-NEC,
Nonemployee Compensation, for an independent
contractor.
However, if the recipient is an officer, director, beneficial
owner (directly or indirectly), or other “specified individual”
(as defined in section 274(e)(2)(B) and Regulations
section 1.274-9(b)), special rules apply.
Lobbying expenses. Generally, lobbying expenses are
not deductible. These expenses include amounts paid or
incurred in connection with:
• Influencing legislation, or
• Any communication with certain federal executive
branch officials in an attempt to influence the official
actions or positions of the officials. See Regulations
section 1.162-29 for the definition of “influencing
legislation.”
Dues and other similar amounts paid to certain
tax-exempt organizations may not be deductible. If certain
in-house expenditures do not exceed $2,000, they are
deductible. See section 162(e)(4)(B).
15
Line 25a. Taxable Income Before Adjustments
and Special Deductions
At-risk rules. Generally, special at-risk rules under
section 465 apply to closely held cooperatives (see
Passive activity limitations, earlier) engaged in any activity
as a trade or business or for the production of income.
These cooperatives may have to adjust the amount on
line 25a. (See below.)
A taxpayer is generally considered “at-risk” for an
amount equal to the taxpayer’s investment in the entity.
That investment consists of money and other property
contributed to the entity and amounts borrowed on behalf
of the entity.
The at-risk rules do not apply to:
• Holding real property placed in service by the
cooperative before 1987;
• Equipment leasing under sections 465(c)(4), (5), and
(6); or
• Any qualifying business of a qualified cooperative under
section 465(c)(7).
However, the at-risk rules do apply to the holding of
mineral property.
If the at-risk rules apply, adjust the amount on this line
for any section 465(d) losses. These losses are limited to
the amount for which the cooperative is at risk for each
separate activity at the close of the tax year. If the
cooperative is involved in one or more activities, any of
which incurs a loss for the year, report the losses for each
activity separately. Attach Form 6198, At-Risk Limitations,
showing the amount at risk and gross income and
deductions for the activities with the losses.
If the cooperative sells or otherwise disposes of an
asset or its interest (either total or partial) in an activity to
which the at-risk rules apply, determine the net profit or
loss from the activity by combining the gain or loss on the
sale or disposition with the profit or loss from the activity. If
the cooperative has a net loss, it may be limited because
of the at-risk rules.
Treat any loss from an activity not allowed for the tax
year as a deduction allocable to the activity in the next tax
year.
Cooperatives are required to allocate income and
deductions between patronage- and
nonpatronage-related business. Cooperatives with gross
receipts and assets of $250,000 or more must complete
Schedule G. See the instructions for Schedule G.
Line 25b. Deductions and Adjustments From
Schedule H
Complete Schedule H. Enter on line 25b the amount from
Schedule H, line 5. See the instructions for Schedule H.
Line 25c. Taxable Income Before Net Operating
Loss and Special Deductions
Subtract line 25b from line 25a and enter the result on
line 25c.
Line 26a. Net Operating Loss Deduction
A cooperative can use the NOL incurred in one tax year to
reduce its taxable income in another tax year. Enter on
16
line 26a the total NOL carryovers from other tax years but
do not enter more than the cooperative’s taxable income
(after special deductions). Attach a statement showing the
computation of the NOL deduction. Also, complete
Schedule K, item 12, if applicable.
The cooperative must attach a statement separately
accounting for patronage- and nonpatronage-sourced
NOLs.
Note: Patronage-sourced NOLs cannot be used to
reduce nonpatronage-sourced taxable income.
The following special rules apply.
• If an ownership change (described in section 382(g))
occurs, the amount of the taxable income of a loss
cooperative that may be offset by the pre-change NOL
carryovers may be limited. See section 382 and the
related regulations. A loss cooperative must include the
information statement as provided in Regulations section
1.382-11(a) with its income tax return for each tax year
that it is a loss cooperative in which an ownership shift,
equity structure shift, or other transaction described in
Temporary Regulations section 1.382-2T(a)(2)(i) occurs. If
the cooperative makes the closing-of-the-books election,
see Regulations section 1.382-6(b).
The limitations under section 382 do not apply to
certain ownership changes after February 17, 2009, made
according to a restructuring plan under the Emergency
Economic Stabilization Act of 2008. See section 382(n).
For guidance in applying section 382 to loss
cooperatives whose instruments were acquired by
Treasury under certain programs under the Emergency
Economic Stabilization Act of 2008, see Notice 2010-2,
2010-2 I.R.B. 251.
• If a cooperative acquires control of another cooperative
(or acquires its assets in a reorganization), the amount of
pre-acquisition losses that may offset recognized built-in
gain may be limited (see section 384).
• If a cooperative elects the alternative tax on qualifying
shipping activities under section 1354, no deduction is
allowed for an NOL attributable to the qualifying shipping
activities to the extent that the loss is carried forward from
a tax year preceding the first tax year for which the
alternative tax election was made. See section 1358(b)(2).
For more details on the NOL deduction, see section
172 and the Instructions for Form 1139.
Line 26b. Special Deductions
See the instructions for Schedule C. Then complete
Schedule C and enter on line 26b the amount from
Schedule C, line 24.
Line 26c. Total NOL and Special Deductions
Combine lines 26a and 26b and enter the result on
line 26c.
Tax, Refundable Credits, and
Payments
Line 27. Taxable Income
See Schedule K, Question 14, to determine if the
cooperative needs to complete Schedule G. Taxable
Instructions for Form 1120-C (2025)
income reported on line 27 cannot be less than the
nonpatronage taxable income shown in Schedule G,
line 10, column (b).
Line 30b. Estimated Tax Payments
Note: Patronage-source losses cannot be used to offset
nonpatronage income. See the instructions for
Schedule G.
Beneficiaries of trusts. If the cooperative is the
beneficiary of a trust and the trust makes a section 643(g)
election to credit its estimated tax payments to its
beneficiaries, include the cooperative’s share of the
payment in the total for line 30b. Enter “T” and the amount
of the payment in the shaded space beside line 30b.
Minimum taxable income. The cooperative’s taxable
income cannot be less than the inversion gain of the
cooperative for the tax year if the cooperative is an
expatriated entity or a partner in an expatriated entity. See
section 7874(a).
Net operating loss (NOL). If line 27 (figured without
regard to the minimum taxable income rule stated above)
is zero or less, the cooperative may have an NOL that can
be carried back or forward as a deduction to other tax
years.
Only farming losses and losses of an insurance
company (other than a life insurance company) can be
carried back. The carryback period for these losses is 2
years. For NOLs that can be carried back, the cooperative
can elect to waive the carryback period and instead carry
the NOL forward to future tax years.
See the instructions for Schedule K, Item 12, for
information on making the election to waive the carryback
period. See the Instructions for Form 1139 for other
special rules and elections.
The NOL deduction for tax year 2025 cannot exceed
the aggregate amount of NOLs arising in tax years
beginning before January 1, 2018, carried to such year
plus the lesser of:
1. The aggregate amount of NOLs arising in tax years
beginning after December 31, 2017, carried to such tax
year; or
2. 80% of the excess, if any, of taxable income
determined without any NOL deduction, section 199A
deduction, or section 250 deduction, over any NOL
carryover to the tax year from tax years beginning before
January 1, 2018.
An exception applies for NOLs of insurance companies
other than life insurance companies. The 80% taxable
income limit does not apply to these entities. See sections
172(b) and (f).
Merchant Marine capital construction fund. To take a
deduction for amounts contributed to a capital
construction fund (CCF), reduce the amount that would
otherwise be entered on line 27 by the amount of the
deduction. On the dotted line next to the entry space,
enter “CCF” and the amount of the deduction. For more
information, see section 7518.
Line 29. First Installment of Section 1062
Applicable Net Tax Liability
Complete and attach Form 1062, Schedule(s) A (Form
1062), and a copy of the covenant if electing to defer the
payment of the net income tax attributable to the gain from
the sale or exchange of qualified farmland property during
this tax year under section 1062. Enter the amount from
Form 1062, Part III, line 15. See the Instructions for Form
1062 for more information. Also, see section 1062.
Instructions for Form 1120-C (2025)
Enter any estimated tax payments the cooperative made
for the tax year.
Line 30c. Refund Applied for on Form 4466
If the cooperative overpaid estimated tax, it may be able to
get a quick refund by filing Form 4466. The overpayment
must be at least 10% of the cooperative’s expected
income tax liability and at least $500. File Form 4466 after
the end of the cooperative’s tax year, and no later than the
due date for filing the cooperative’s tax return. Form 4466
must be filed before the cooperative files its tax return.
See the instructions for Form 4466.
Line 30e. Credit for Tax Paid on Undistributed
Capital Gains
Enter any credit from Form 2439, Notice to Shareholder of
Undistributed Long-Term Capital Gains, for the
cooperative’s share of the tax paid by a regulated
investment company (RIC) or a real estate investment
trust (REIT) on undistributed long-term capital gains
included in the cooperative’s income. Attach Form 2439.
Line 30f. Credit for Federal Tax Paid on Fuels
Enter the total income tax credit claimed on Form 4136,
Credit for Federal Tax Paid on Fuels. Attach Form 4136.
Line 30g. Section 1383 Adjustment
If the cooperative would pay less total tax by claiming the
deduction for the redemption of nonqualified written
notices of allocation or nonqualified per-unit retain
certificates in the issue year versus the current tax year,
refigure the tax for the years the nonqualified written
notices or certificates were originally issued (deducting
them in the issue year), then enter the amount of the
reduction in the issue years’ taxes on this line. Attach a
statement showing how the adjustment was figured. This
adjustment is treated as a payment, and any amount that
is more than the tax on line 28 will be refunded.
Line 30h. Elective Payment Election Amount
From Form 3800
Enter on line 30h the total net elective payment election
amount from Form 3800, Part III, line 6, column (j). See
the Instructions for Form 3800.
Line 30i. Section 1062 Applicable Net Tax
Liability
If the cooperative is electing to defer the payment of the
net income tax attributable to the gain from the sale or
exchange of qualified farmland property, complete and
attach Form 1062 and Schedule(s) A (Form 1062). Enter
the amount from Form 1062, Part III, line 14. See the
Instructions for Form 1062 for more information. Also, see
section 1062.
17
Line 30z. Other Credits and Payments
Include on line 30z any other refundable credit payments
the cooperative is claiming including the following. Attach
a statement listing the type and the amount of credit or
payment.
• Credit for tax on ozone-depleting chemicals. See
section 4682(g)(2).
• Credit under section 1341 for repayments of amounts
included in income from earlier years.
• Backup withholding. If the cooperative had federal
income tax withheld from any payments it received
because, for example, it failed to give the payer its correct
EIN, include the amount withheld in the total for line 30z.
Line 31. Total Payments, Refundable Credits,
Section 1062 Net Tax Liability, and Adjustments
Combine the amounts on lines 30a through 30z. Enter the
total on line 31.
Line 32. Estimated Tax Penalty
Generally, the cooperative does not have to file Form 2220
because the IRS can figure the penalty amount, if any, and
bill the cooperative. However, even if the cooperative does
not owe the penalty, it must complete and attach Form
2220 if:
• The annualized income or adjusted seasonal
installment method is used, or
• The cooperative is a large corporation (as defined in the
Instructions for Form 2220) computing its first required
installment based on the prior year’s tax. See the
Instructions for Form 2220.
If Form 2220 is attached, check the box on line 32 and
enter any penalty on this line.
Note: If the cooperative’s tax liability includes a CAMT
liability, the cooperative must complete and attach Form
2220. The affected cooperative must also include an
amount of estimated tax penalty on Form 1120-C, line 32,
even if that amount is zero. Failure to follow these
instructions could result in the cooperative receiving a
penalty notice that will require an abatement request to
apply any penalty relief. See Notice 2025-27.
Line 33. Amount Owed
Generally, the cooperative must pay any tax due in full no
later than the due date for filing its tax return (excluding
extensions). Payment of the tax due must be made
electronically. See Electronic Deposit Requirement,
earlier, for the payment options for the cooperative. Also,
go to IRS.gov/Payments for more detailed information.
If the cooperative cannot pay the full amount of tax
owed, it can apply for an installment agreement online.
The cooperative can apply for an installment agreement
online if:
• It cannot pay the full amount shown on line 33,
• The total amount owed is $25,000 or less, and
• The cooperative can pay the liability in full in 24 months.
To apply using the Online Payment Agreement
Application, go to IRS.gov/OPA.
conditions that must be met to enter into and maintain an
installment agreement, such as paying the liability within
24 months and making all required deposits and timely
filing tax returns during the length of the agreement.
If the installment agreement is accepted, the
cooperative will be charged a fee and it will be subject to
penalties and interest on the amount of tax not paid by the
due date of the return.
Line 34. Overpayment
Enter the amount of any overpayment that should be
refunded or applied to next year’s estimated tax.
If there is an overpayment on line 34, enter the amount
the cooperative wants refunded on line 35b. See the
instructions for line 35b, later. The cooperative can also
choose to have all or part of the overpayment credited to
next year’s estimated tax by completing line 35a. See the
instructions for line 35, later.
Line 35a. Credited to Estimated Tax
The cooperative can elect to apply all or part of the
cooperative’s overpayment to next year’s estimated taxes.
Note: This election to apply some or all of the
overpayment amount to the cooperative’s 2026 estimated
tax cannot be changed at a later date.
Line 35b. Refunded
Enter the amount to be refunded to the cooperative on
line 35b. If the cooperative has access to U.S. banking
services, it should use direct deposit for any refunds,
whenever possible. The benefits of a direct deposit
include a faster refund, the added security of a paperless
payment, and the savings of tax dollars associated with
the reduced processing costs.
Direct deposit of refund. If the cooperative wants its
refund directly deposited into its checking or savings
account at any U.S. bank or other financial institution,
complete lines 35c through 35e. See the instructions for
lines 35c, 35d, and 35e, later.
The cooperative is not eligible to request a direct
deposit if:
• The receiving financial institution is a foreign bank or a
foreign branch of a U.S. bank, or
• The cooperative has applied for an EIN but is filing its
tax return before receiving one.
Line 35c. Routing Number
The routing number must be nine digits. The first two
digits must be between 01 and 12 or 21 through 32. Ask
the cooperative’s financial institution for the correct routing
number to enter on line 35c if:
• The routing number on a deposit slip is different from
the routing number on the cooperative’s checks,
• The cooperative’s checks state they are payable
through a financial institution different from the one at
which the cooperative has the checking account, or
• The deposit is to a savings account that does not allow
the cooperative to write checks.
Under an installment agreement, the cooperative can
pay what it owes in monthly installments. There are certain
18
Instructions for Form 1120-C (2025)
Line 35d. Type of Account
Check the appropriate box for the type of account. Don’t
check more than one box. The cooperative must check
the correct box to ensure the deposit is accepted.
• Received from less-than-20%-owned domestic
corporations subject to income tax, and
• Qualified for the 50% deduction under section 243(a)
(1).
Line 35e. Account Number
• Taxable distributions from an interest charge domestic
The account number can be up to 17 characters (both
numbers and letters). Include hyphens but omit spaces
and special symbols. Enter the number from left to right
and leave any unused boxes blank. Don’t include the
check number.
If the direct deposit to the cooperative’s account is
different from the amount it expected, the cooperative will
receive an explanation in the mail about 2 weeks after the
refund is deposited.
Conditions Resulting in a Refund Check
If the IRS is unable to process the request for a direct
deposit, a refund by check will be generated instead.
Reasons for not processing a request include the
following.
• The name of the cooperative on the tax return does not
match the name on the account.
• The financial institution rejects the direct deposit
because of an incorrect routing or account number.
• The cooperative fails to indicate the type of account the
deposit is to be made to (that is, checking or savings).
Note: The IRS isn’t responsible for a lost refund if the
cooperative enters the wrong account information. Check
with the cooperative’s financial institution to get the correct
routing and account numbers and to make sure the direct
deposit will be accepted.
Schedule C. Dividends, Inclusions,
and Special Deductions
Note: Do not report income from patronage dividends on
Schedule C. Report income from patronage dividends and
per-unit retain allocations on line 9.
For purposes of the 20% ownership test on lines 1
through 7, the percentage of stock owned by the
cooperative is based on voting power and value of the
stock. Preferred stock described in section 1504(a)(4) is
not taken into account.
Consolidated returns. Cooperatives filing a
consolidated return should see Regulations sections
1.1502-13, 1.1502-26, and 1.1502-27 before completing
Schedule C.
Cooperatives filing a consolidated return must not
report as dividends on Schedule C any amounts received
from corporations within the consolidated group. Such
dividends are eliminated in consolidation rather than offset
by the dividends-received deduction.
Line 1, Column (a)
Enter dividends (except those received on certain
debt-financed stock acquired after July 18, 1984— see
section 246A) that are:
Instructions for Form 1120-C (2025)
Also, include on line 1 the following.
international sales corporation (IC-DISC) or former
domestic international sales corporation (former DISC)
that are designated as eligible for the 50% deduction and
certain dividends of Federal Home Loan Banks. See
section 246(a)(2).
• Dividends (except those received on debt-financed
stock acquired after July 18, 1984) from a RIC. The
amount of dividends eligible for the dividends-received
deduction under section 243 is limited by section 854(b).
The cooperative should receive a notice from the RIC
specifying the amount of dividends that qualify for the
deduction.
Report so-called dividends or earnings received from
mutual savings banks, etc., as interest. Do not treat them
as dividends.
Line 2, Column (a)
Enter on line 2:
• Dividends (except those received on certain
debt-financed stock acquired after July 18, 1984) that are
received from 20%-or-more-owned domestic corporations
subject to income tax and that are subject to the 65%
deduction under section 243(c), and
• Taxable distributions from an IC-DISC or former DISC
that are considered eligible for the 65% deduction.
Line 3, Column (a)
Enter the following.
• Dividends received on certain debt-financed stock
acquired after July 18, 1984, from domestic and foreign
corporations subject to income tax that would otherwise
be subject to the dividends-received deduction under
section 243(a)(1), 243(c), or 245(a). Generally,
debt-financed stock is stock that the cooperative acquired
by incurring a debt (for example, it borrowed money to buy
the stock).
• Dividends received from a RIC on debt-financed stock.
The amount of dividends eligible for the
dividends-received deduction is limited by section 854(b).
The cooperative should receive a notice from the RIC
specifying the amount of dividends that qualify for the
deduction.
Line 3, Columns (b) and (c)
Dividends received on certain debt-financed stock
acquired after July 18, 1984, are not entitled to the full
50% or 65% dividends-received deduction under section
243 or 245(a). The 50% or 65% deduction is reduced by a
percentage that is related to the amount of debt incurred
to acquire the stock. See section 246A. Also, see section
245(a) before making this computation for an additional
limitation that applies to certain dividends received from
foreign corporations. Attach a statement to Form 1120-C
showing how the amount in line 3, column (c), was
figured.
19
Line 4, Column (a)
Enter dividends received on preferred stock of a
less-than-20%-owned public utility that is subject to
income tax and is allowed the 23.3% deduction provided
in sections 244 and 247 (as affected by P.L. 113-295, Div.
A, section 221(a)(41)(A), December 19, 2014, 128 Stat.
4043) for dividends paid.
Line 5, Column (a)
Enter dividends received on preferred stock of a
20%-or-more-owned public utility that is subject to income
tax and is allowed the 26.7% deduction provided in
sections 244 and 247 (as affected by P.L. 113-295, Div. A,
section 221(a)(41)(A), December 19, 2014, 128 Stat.
4043) for dividends paid.
Line 6, Column (a)
Enter the U.S.-source portion of dividends that:
• Are received from less-than-20%-owned foreign
corporations, and
• Qualify for the 50% deduction under section 245(a). To
qualify for the 50% deduction, the cooperative must own
at least 10% of the stock of the foreign corporation by vote
and value.
Also, include dividends received from a
less-than-20%-owned foreign sales corporation (FSC)
that:
• Are attributable to income treated as effectively
connected with the conduct of a trade or business within
the United States (excluding foreign trade income), and
• Qualify for the 50% deduction under section 245(c)(1)
(B).
Line 7, Column (a)
• Are received from 20%-or-more-owned foreign
corporations, and
• Qualify for the 65% deduction under sections 243 and
245(a).
Also, include dividends received from a
20%-or-more-owned FSC that:
• Are attributable to income treated as effectively
connected with the conduct of a trade or business within
the United States (excluding foreign trade income), and
• Qualify for the 65% deduction under section 245(c)(1)
(B).
Line 8, Column (a)
Enter dividends received from wholly owned foreign
subsidiaries that are eligible for the 100% deduction under
section 245(b).
In general, the deduction under section 245(b) applies
to dividends paid out of the earnings and profits of a
foreign corporation for a tax year during which:
• All of its outstanding stock is directly or indirectly owned
by the domestic cooperative receiving the dividends, and
• All of its gross income from all sources is effectively
connected with the conduct of a trade or business within
the United States.
Line 9, Column (c)
Generally, line 9, column (c), cannot exceed the amount
on line 29 of the Worksheet for Schedule C, Lines 9 and
22. However, in a year in which an NOL occurs, the
limitation in section 246(b)(1) does not apply even if the
loss is created by the dividends-received deduction. See
sections 172(c), 172(d)(5), and 246(b).
Enter the U.S.-source portion of dividends that:
20
Instructions for Form 1120-C (2025)
Worksheet for Schedule C, Lines 9 and 22
Keep for Your Records
Use this worksheet to figure the dividends-received deduction after the section 246(b) limitation, including the section
250 deduction. Also, use this worksheet to figure the section 250 deduction after the section 246(b) limitation. Before
completing this worksheet, complete Form 1120-C, line 25a, and Schedule C, lines 1 through 8 and 10 through 13. Also,
complete Form 8993, Part III, lines 28 and 29.
1. Refigure Form 1120-C, line 25a, without any deduction under section 199A, any adjustment under
section 1059, and any capital loss carryback to the tax year under section 1212(a)(1) . . . . . . . . . . . .
1.
2. Complete Schedule C, lines 10, 11, 12, and 13, column (c), and enter the total here . . . . . . . . . . . . .
2.
3. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.
4. Multiply line 3 by 65% (0.65) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.
5. Add Schedule C, lines 2, 5, 7, and 8, column (c), and the part of the deduction in line 3, column (c),
that is attributable to dividends from 20%-or-more-owned corporations . . . . . . . . . . . . . . . . . . . . . .
5.
6. Enter the sum of the amounts on Form 8993, Part III, lines 28 and 29 . . . . . . . . . . . . . . . . . . . . . . . .
6.
7. Add lines 5 and 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.
8. Subtract line 7 from line 4. If zero or more, enter the amount from line 5, skip lines 9 through 15, and go
to line 16. If less than zero, leave line 8 blank and go to line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.
9. Divide line 5 by line 7. Enter the result as a decimal (rounded to at least three places) . . . . . . . . . . . .
9.
10. Subtract line 4 from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.
11. Multiply line 10 by line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.
12. Subtract line 11 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.
13. Subtract line 9 from 1.000
.......................................................
13.
14. Multiply line 13 by line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14.
15. Subtract line 14 from line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15.
16. Add the total amount of dividends from 20%-or-more-owned corporations that are included in
Schedule C, lines 2, 3, 5, 7, and 8, column (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16.
17. Subtract line 16 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17.
18. Multiply line 17 by 50% (0.50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18.
19. Add Schedule C, lines 1, 4, and 6, column (c), and the part of the deduction in line 3, column (c), that
is not attributable to dividends from 20%-or-more-owned corporations . . . . . . . . . . . . . . . . . . . . . . .
19.
20. Add line 15 (or, if line 15 is blank, line 6) and line 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20.
21. Subtract line 20 from line 18. If zero or more, enter the amount from line 19, skip lines 22 through 28,
and go to line 29. If less than zero, leave line 21 blank and go to line 22 . . . . . . . . . . . . . . . . . . . . . .
21.
22. Divide line 19 by line 20. Enter the result as a decimal (rounded to at least three places) . . . . . . . . . .
22.
23. Subtract line 18 from line 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23.
24. Multiply line 23 by line 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24.
25. Subtract line 24 from line 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25.
26. Subtract line 22 from 1.000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26.
27. Multiply line 23 by line 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27.
28. Subtract line 27 from line 15 (or, if line 15 is blank, line 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28.
29. Dividends-received deduction after limitation (sec. 246(b)). Add line 12 (or if line 12 is blank,
line 8) and line 25 (or, if line 25 is blank, line 19). Enter the result here and in Schedule C, line 9,
column (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29.
30. Section 250 deduction after limitation (sec. 246(b)). Enter the amount on line 28 (or, if line 28 is
blank, line 15, or, if line 28 and line 15 are blank, line 6) here and in Schedule C, line 22, column
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30.
Instructions for Form 1120-C (2025)
21
Line 10, Columns (a) and (c)
Small business investment companies operating under
the Small Business Investment Act of 1958 must enter
dividends that are received from domestic corporations
subject to income tax even though a deduction is allowed
for the entire amount of those dividends. To claim the
100% deduction in line 10, column (c), the cooperative
must file with its return a statement that it was a federal
licensee under the Small Business Investment Act of 1958
at the time it received the dividends.
Line 11, Columns (a) and (c)
Enter only dividends that qualify under section 243(b) for
the 100% dividends-received deduction described in
section 243(a)(3). Cooperatives taking this deduction are
subject to the provisions of section 1561.
The 100% deduction does not apply to affiliated group
members that are joining in the filing of a consolidated
return.
Line 12, Columns (a) and (c)
Enter in column (a) dividends from FSCs that are
attributable to foreign trade income and that are eligible for
the 100% deduction provided in section 245(c)(1)(A).
For cooperatives described in section 1381 that are
engaged in the marketing of agricultural or horticultural
products and are shareholders in an FSC, multiply the
total dividends reported in column (a) by 16/23 (or 0.6957)
for the exempt portion of the dividends that are attributable
to foreign trade income and enter the amount in column
(c). See sections 245(c)(2) and 923(a)(4) (repealed by P.
L. 106-519, section 2, November 15, 2000) for additional
information.
Line 13, Column (a)
Enter the foreign-source portion of dividends that:
• Are received from specified 10%-owned foreign
corporations (as defined in section 245A(b)), including, for
example, gain from the sale of stock of a foreign
corporation that is treated as a dividend under sections
1248(a) and (j); and
• Qualify for the section 245A deduction.
Line 14, Column (a)
Enter foreign dividends not reportable in column (a) of
lines 3, 6, 7, 8, 11, 12, or 13.
Include on line 14 the foreign-source portion of any
dividend that does not qualify for the section 245A
deduction (for example, hybrid dividends within the
meaning of section 245A(e), ineligible amounts of
dividends within the meaning of Regulations section
1.245A-5(b), dividends that fail to meet the holding period
requirement under section 246(c)(5), etc.).
Also, include on line 14 the cooperative’s share of
distributions from a section 1291 fund from Form 8621, to
the extent that the amounts are taxed as dividends under
section 301. See Form 8621 and the Instructions for Form
8621.
Attach a statement identifying the amount of each
dividend reported on line 14 and the provision pursuant to
22
which a deduction is not allowed with respect to such
dividend.
Line 15
Reserved for future use.
Line 16a, Column (a)
Enter the foreign-source portion of any subpart F
inclusions attributable to the sale or exchange by a
controlled foreign corporation (CFC) of stock in another
foreign corporation described in section 964(e)(4). This
should equal the sum of the amounts reported by the U.S.
shareholder on Form(s) 5471, Schedule I, line 1a. (Do not
include on line 16a any portion of such subpart F inclusion
that is not eligible for the section 245A deduction pursuant
to Regulations section 1.245A-5(g)(2). Include such
amounts on line 16c.)
Line 16b, Column (a)
Enter the total subpart F inclusions attributable to tiered
hybrid dividends. This should equal the sum of the
amounts reported by the U.S. shareholder on Form(s)
5471, Schedule I, line 1b.
Line 16c, Column (a)
Enter all other amounts included in income under section
951. This should equal the sum of the amounts reported
by the U.S. shareholder on Form(s) 5471, Schedule I,
lines 1c through 1h, 2, and 4.
Line 17, Column (a)
Enter amounts included in income under section 951A.
See Form 8992, Part II, line 5, and the Instructions for
Form 8992. Also, if applicable, attach Form(s) 5471.
Note: Consider the applicability of section 951A with
respect to CFCs owned by domestic partnerships in which
the cooperative has an interest.
Line 18, Column (a)
Include gross-up for taxes deemed paid under section
960.
Line 19, Column (a)
Enter taxable distributions from an IC-DISC or former
DISC that are designated as not eligible for a
dividends-received deduction.
No deduction is allowed under section 243 for a
dividend from an IC-DISC or former DISC (as defined in
section 992(a)) to the extent the dividend:
• Is paid out of the cooperative’s accumulated IC-DISC
income or previously taxed income, or
• Is a deemed distribution under section 995(b)(1).
Line 20, Column (a)
Include the following.
1. Dividends (other than capital gain distributions
reported on Schedule D (Form 1120), Captial Gains and
Losses, and exempt-interest dividends) that are received
from RICs and that are not subject to the 50% deduction.
2. Dividends from tax-exempt organizations.
Instructions for Form 1120-C (2025)
3. Dividends (other than capital gain distributions)
received from a REIT that, for the tax year of the trust in
which the dividends are paid, qualifies under sections 856
through 860.
4. Dividends not eligible for a dividends-received
deduction, which include the following.
a. Dividends received on any share of stock held for
less than 46 days during the 91-day period beginning 45
days before the ex-dividend date. When counting the
number of days the cooperative held the stock, you cannot
count certain days during which the cooperative’s risk of
loss was diminished. See section 246(c)(4) and
Regulations section 1.246-5 for more details.
b. Dividends received on any share of preferred stock
that are attributable to periods totaling more than 366 days
if such stock was held for less than 91 days during the
181-day period that began 90 days before the ex-dividend
date. When counting the number of days the cooperative
held the stock, you cannot count certain days during
which the cooperative’s risk of loss was diminished. See
section 246(c)(4) and Regulations section 1.246-5 for
more details. Preferred dividends attributable to periods
totaling less than 367 days are subject to the 46-day
holding period rule above.
c. Dividends on any share of stock to the extent the
cooperative is under an obligation (including a short sale)
to make related payments with respect to positions in
substantially similar or related property.
5. Any other taxable dividend income not properly
reported elsewhere on Schedule C.
Line 21, Column (c)
Section 247 (as affected by P.L. 113-295, Div. A, section
221(a)(41)(A), December 19, 2014, 128 Stat. 4043)
allows public utilities a deduction of 40% of the smaller of:
(a) dividends paid on their preferred stock during the tax
year or (b) taxable income computed without regard to this
deduction. In a year in which an NOL occurs, compute the
deduction without regard to section 247(a)(1)(B).
Line 22, Column (c)
Generally, line 22, column (c), cannot exceed the amount
on line 30 of the Worksheet for Schedule C, Lines 9 and
22. See the worksheet, earlier. However, in a year in which
an NOL occurs, the limitation in section 246(b)(1) does
not apply. See sections 172(c), 172(d)(5), and 246(b).
Schedule G. Allocation of Patronage
and Nonpatronage Income and
Deductions
If the cooperative’s total receipts (line 1a plus lines 4
through 9) for the tax year and its total assets at the end of
the tax year are less than $250,000, the cooperative is not
required to complete Schedule G. See Schedule K,
Question 14.
Cooperatives are required to allocate income and
deductions between patronage and nonpatronage
business. If the transaction producing the income merely
enhances the overall profitability of the cooperative, being
merely incidental to the cooperative’s operation, the
Instructions for Form 1120-C (2025)
income is from a nonpatronage source. But if the source
of income or loss is from an activity that is an integral part
of the cooperative’s business (such as inventory), then the
source may be patronage.
Special rules also apply if a cooperative has acquired
the assets of another cooperative under a section 381(a)
transaction. Cooperatives may elect to net earnings
against losses under section 1388(j) and still be eligible
for tax-exempt treatment.
Line 6a
For agricultural and horticultural cooperatives only, special
rules apply in determining and reporting the section
199A(g) deduction. See the instructions for line 22. Also,
see the Instructions for Form 8903.
Line 8, Columns (a) and (b)
Complete Schedule H before entering an amount on this
line. Allocate the amount on Schedule H, line 5, between
patronage and nonpatronage. Only farmers’ cooperatives
exempt under section 521 are allowed to take a deduction
in column (b) for nonpatronage distributions under section
1382(c).
Line 9a, Columns (a) and (b)
Compute and carry back or carry over patronage and
nonpatronage NOLs separately. Under section 1388(j)(1),
cooperatives can use losses from one or more allocation
units to offset earnings of one or more other allocation
units, as permitted by their bylaws, but only to the extent
that the earnings and losses are from business done with
or for patrons. If a cooperative exercises this option, it
must provide the information specified in section 1388(j)
(3) in a written notice to its patrons.
Line 9b, Columns (a) and (b)
Allocate the amount of total special deductions reported
on Schedule C, line 24, between patronage and
nonpatronage business.
Line 10, Columns (a) and (b)
The taxable income reported on line 27, may not be less
than the nonpatronage taxable income shown in
Schedule G, line 10, column (b).
Line 11, Column (a)
Combine columns (a) and (b) of line 10.
Note: Any patronage-source losses (line 10, column (a))
cannot be used to offset nonpatronage income (line 10,
column (b)).
Line 12, Column (a)
Enter any unused patronage loss from line 10, column (a).
Line 13, Column (b)
Enter any unused nonpatronage loss from line 10, column
(b).
23
Schedule H. Deductions and
Adjustments Under Section 1382
Line 1. Dividends Paid on Capital Stock (Section
521 Cooperatives Only)
Enter the amount actually or constructively paid as
dividends during the tax year on:
• Common stock (whether voting or nonvoting),
• Preferred stock,
• Capital retain certificates,
• Revolving fund certificates,
• Letters of advice, or
• Other documentary evidence of a proprietary interest in
the cooperative association.
See Regulations section 1.1382-3(b) for more
information.
Line 2. Nonpatronage Income Allocated to
Patrons (Section 521 Cooperatives Only)
Enter nonpatronage income allocated to patrons. Payment
may be in:
• Money,
• Qualified written notices of allocation, or
• Other property (except nonqualified written notices of
allocation).
The amounts must be paid during the payment period
that begins on the 1st day of the tax year and ends on the
15th day of the 9th month after the end of the tax year in
which the income was earned.
Nonpatronage income. Nonpatronage income
includes incidental income from sources not directly
related to:
• Marketing, purchasing, or service activities of the
cooperative; or
• Income from business done with or for the U.S.
Government, or any of its agencies.
See the instructions for line 3b for a definition of
“qualified written notice of allocation.” See section 1382(c)
(2)(B) for deductibility of amounts paid in redemption of
nonqualified written notices of allocation. See section
1388(d) for a definition of a nonqualified written notice of
allocation.
Line 3. Patronage Dividends
To be deductible, patronage dividends must be paid
during the payment period that begins on the 1st day of
the tax year in which the patronage occurs and ends on
the 15th day of the 9th month after the end of that tax year.
See sections 1382(e) and (f) for special rules for the
time when patronage occurs if products are marketed
under a pooling arrangement or if earnings are includible
in the gross income of the cooperative for a tax year after
the year in which the patronage occurred.
Patronage dividends include any amount paid to a
patron by a cooperative based on the quantity or value of
business done with or for that patron under a pre-existing
obligation to pay that amount. The amount is determined
by reference to the net earnings of the organization from
business done with or for its patrons.
24
Note: Net earnings are not reduced by dividends paid on
capital stock of the organization if there is a legally
enforceable agreement that such dividends are in addition
to amounts otherwise payable to patrons derived from
business done with or for patrons.
Patronage dividends may be paid in:
• Money;
• Qualified written notices of allocation; or
• Other property (except nonqualified written notices of
allocation).
Line 3b. Qualified written notices of allocation. A
written notice of allocation means:
• Any capital stock;
• Revolving fund certificate;
• Retain certificate;
• Certificate of indebtedness;
• Letter of advice; or
• Other written notice, that states the dollar amount
allocated to the patron by the cooperative and the part, if
any, that is a patronage dividend.
In general, a qualified written notice of allocation is a
written notice of allocation that is:
• Paid as part of a patronage dividend, in money or by
qualified check equal to at least 20% of the patronage
dividend, and
• One of the following conditions is met.
1. The patron must have at least 90 days from the date
the written notice of allocation is paid to redeem it in cash
and must receive written notice of the right of redemption
at the time the patron receives the allocation.
2. The patron must agree to have the allocation
treated as constructively received and reinvested in the
cooperative. See section 1388(c)(2) and the related
regulations for information on how this consent must be
made.
Line 3d. Nonqualified written notices of allocation. If
a written notice of allocation does not qualify, no
deduction is allowable at the time it is issued. However,
the cooperative is entitled to a deduction or refund of tax
when the nonqualified written notice of allocation is finally
redeemed if that notice was paid as a patronage dividend
during the payment period for the tax year during which
the patronage occurred. The deduction or refund is
allowed, but only to the extent that amounts paid to
redeem the nonqualified written notices of allocation are
paid in money or other property (other than written notices
of allocation) that do not exceed the stated dollar amounts
of the nonqualified written notices of allocation. See
section 1382(b) and Regulations sections 1.1382-2 and
1383.
Section 1383 provides special rules for figuring the
cooperative’s tax in the year nonqualified written notices of
allocation are redeemed. See Regulations section
1.1383-3 and the instructions for line 30g, for the
adjustment, if any, to report on line 30g.
Amounts paid to patrons are not patronage dividends if
paid:
1. Out of earnings not from business done with or for
patrons;
Instructions for Form 1120-C (2025)
2. Out of earnings from business done with or for other
patrons to whom no amounts or smaller amounts are paid
for substantially identical transactions;
3. To redeem capital stock, certificates of
indebtedness, revolving fund certificates, retain
certificates, letters of advice, or other similar documents;
or
4. Without reference to the net earnings of the
cooperative organization from business done with or for its
patrons.
Minimum Tax. Enter on line 1d the amount from Form
8991, Part IV, line 5e. See section 59A and the
Instructions for Form 8991. Also, see Schedule K,
Question 16, later.
Line 4. Section 199A(g) deduction allocated to patrons. For agricultural and horticultural cooperatives only,
cooperatives engaged in the marketing or manufacture,
production, growth, or extraction of agricultural or
horticultural products may be eligible to compute a
deduction under section 199A(g). See the instructions for
line 22.
An agricultural or horticultural cooperative, as defined
in section 199A(g), must reduce its section 1382
deduction by the amount of the section 199A(g) deduction
that was passed through to patrons.
Line 1z. Other chapter 1 tax. Enter on line 1z any other
chapter 1 tax that can be offset or reduced by
nonrefundable credits such as the foreign tax credit or
general business credit.
Note: Only include on line 4 the portion of the section
199A(g) deduction attributable to the qualified payments
reported on this schedule. Marketing cooperatives that
distribute patronage as per-unit retain allocations must
attach a statement showing the amount of the section
199A(g) deduction attributable to the per-unit retain
allocations.
Schedule J. Tax Computation
Line 1 Chapter 1 Taxes
Line 1a. Income tax. Multiply taxable income (line 27) by
21% (0.21). Enter this amount on line 1a.
Line 1b. Section 1291 tax from Form 8621. If the
cooperative was a shareholder in a PFIC and received an
excess distribution or disposed of its investment in the
PFIC during the year, enter on line 1b the increase in
taxes due under section 1291(c)(2) from Form 8621.
Do not include on line 1b any interest due under section
1291(c)(3). Instead, include the amount of interest owed
on Schedule J, line 8z.
For more information on reporting the deferred tax and
interest, see the Instructions for Form 8621.
Line 1c. Tax adjustments from Form 8978. If the
cooperative is filing Form 8978, Partner’s additional
Reporting Year Tax, to report adjustments shown on Form
8986, Push Out to Partner’s under IRC 6226(a)(2), they
received from partnerships that have been audited and
have elected to push out imputed underpayments to their
partners, include any increase in taxes due (positive
amount) from Form 8978, line 14, on Form 1120-C,
Schedule J, line 1c. Attach Form 8978. If Form 8978,
line 14, shows a decrease in tax, see Line 5z, later.
Line 1d. Base erosion minimum tax from Form 8991.
If the cooperative had gross receipts of at least $500
million in any 1 of the 3 tax years preceding the current tax
year, complete and attach Form 8991, Base Erosion
Instructions for Form 1120-C (2025)
Line 1e. Amount from Form 4255, Part I, line 3, column (q). Enter on line 1e the tax that can be reduced by
nonrefundable credits from Form 4255, Certain Credit
Recapture, Excessive Payments, and Penalties, Part I,
line 3, column (q), if applicable. See the Instructions for
Form 4255.
Line 3. Corporate Alternative Minimum Tax
Enter on line 3 the amount from Form 4626, Alternative
Minimum Tax-Corporations, Part II, line 13, if applicable.
See the Instructions for Form 4626.
Line 5. Tax Credits
Line 5a. Foreign tax credit. To find out when a
cooperative can take the credit for payment of income tax
to a foreign country or U.S. territory, see Form 1118,
Foreign Tax Credit—Corporations.
Line 5b. Credit from Form 8834. Enter any qualified
electric vehicle passive activity credits from prior years
allowed for the current tax year from Form 8834, Qualified
Electric Vehicle Credit, line 7. Attach Form 8834.
Line 5c. General business credit. Use Form 3800,
General Business Credit, to claim any general business
credits. Enter on line 5c the allowable credit from Form
3800, Part II, line 38. See the Instructions for Form 3800.
Elective allocations of credits to patrons of
subchapter T cooperatives. The cooperative may elect
to allocate any or all of certain credits among the patrons
based on the quantity or value of business done with or for
such patrons. This includes the following, if applicable.
• Biofuel producer credit (Form 6478).
• Renewable electricity, refined coal, and Indian coal
production credit (Form 8835).
• Biodiesel, renewable diesel, or sustainable aviation
fuels credit (Form 8864).
• Low sulfur diesel fuel production credit (Form 8896).
For the allocation to take effect, the cooperative must
designate the apportionment in a written notice mailed to
its patrons before the due date of the cooperative’s return.
The credit amount allocated to patrons cannot be included
on line 5c. Once made, the election cannot be revoked.
For more information, see the instructions for the
applicable credit form. Also, see the Instructions for Form
3800. For tax associated with a decrease in the credit
allocated to patrons, see Line 8z, later.
Required allocations of credits to patrons of
subchapter T cooperatives. Any excess of the certain
credits that are not used by the cooperative because of
the tax liability limitation must be passed through to the
patrons. This includes the following credits, if applicable.
25
• Investment credit (Form 3468).
• Work opportunity credit (Form 5884).
• Empowerment zone employment credit (Form 8844).
• Indian employment credit (Form 8845).
• Credit for employer differential wage payments (Form
8932).
• Credit for small employer health insurance premiums
(Form 8941).
These credits cannot be carried back or over by the
cooperative. See the applicable form and related
instructions for details. For tax associated with a recapture
of credit, see Line 8z, later.
Line 5d. Credit for prior year minimum tax. Enter any
allowable credit from Form 8827, Credit for Prior Year
Minimum Tax—Corporations, line 11. Complete and
attach Form 8827.
Line 5e. Bond credits. Enter allowable credits from
Form 8912, Credit to Holders of Tax Credit Bonds, line 12.
Line 5z. Other. Include any other applicable credits.
Attach a statement showing the computation of each item
included in the total for line 5z and identify the applicable
Code section and the type of credit.
Decrease attributable to partner’s audit liability
under section 6226. If the cooperative is filing Form
8978 to report adjustments shown on Form 8986 they
received from partnerships which have been audited and
have elected to push out imputed underpayments to their
partners, include any decrease in taxes due (negative
amount) from Form 8978, line 14, on Form 1120-C,
Schedule J, line 5z. Attach Form 8978. If Form 8978,
line 14, shows an increase in tax, see the instructions for
Schedule J, line 1c, earlier.
Line 6. Total Credits
Add lines 5a through 5e. Enter the total on line 6.
Line 8. Other Taxes and Interest
Include the following taxes and interest on lines 8a
through 8z. Enter the total on line 9.
Line 8a. Amount from Form 4255, Part I, line 3, column (r). Enter on line 8a the tax that cannot be reduced
by nonrefundable credits from Form 4255, Part I, line 3,
column (r), if applicable. See the Instructions for Form
4255.
Line 8b. Recapture of low-income housing credit. If
the cooperative disposed of property (or there was a
reduction in the qualified basis of the property) for which it
took the low-income housing credit, and the cooperative
did not follow the procedures that would have prevented
recapture of the credit, it may owe a tax. See Form 8611,
Recapture of Low-Income Housing Credit.
Line 8c. Alternative tax on qualifying shipping activities. Enter any alternative tax on qualifying shipping
activities from Form 8902. Check the box for Form 8902.
Line 8z. Other. Include on line 8z any additional taxes
and interest such as the following. Attach a statement
showing the computation of each item included in the total
for line 8z and identify the applicable Code section and
the type of tax or interest.
26
• Recapture of Indian employment credit. Generally, if an
employer terminates the employment of a qualified
employee less than 1 year after the date of initial
employment, any Indian employment credit allowed for a
prior tax year because of wages paid or incurred to that
employee must be recaptured. For details, see Form
8845, Indian Employment Credit, and section 45A.
• Recapture of new markets credit (see Form 8874, New
Markets Credit, and Form 8874-B, Notice of Recapture
Event for New Markets Credit).
• Recapture of employer-provided childcare facilities and
services credit (see Form 8882).
• Interest on deferred tax attributable to (a) installment
sales of certain timeshares and residential lots (section
453(l)(3)) and (b) certain nondealer installment obligations
(section 453A(c)).
• Interest due on deferred gain (section 1260(b)).
• Interest due under section 1291(c)(3). See Form 8621
and the Instructions for Form 8621.
Recapture of elective allocation of credit to
patrons. If the amount of any of the following elective
credits apportioned to any patron is decreased, there is a
tax imposed on the cooperative, not the patron.
• Biofuel producer credit (Form 6478). See section 40(g)
(6)(B)(iii).
• Renewable electricity, refined coal, and Indian coal
production credit (Form 8835). See section 45(e)(11)(C).
• Biodiesel, renewable diesel, or sustainable aviation
fuels credit (Form 8864). See section 40A(e)(6)(B)(iii).
• Low sulfur diesel fuel production credit (Form 8896).
See section 45H(f)(3).
For details on the recapture of the credits, see the
instructions for the applicable form.
Recapture of required excess credit allocated to
patrons. If the cooperative allocated excess credit to
patrons, any credit recapture applies as if the cooperative
had claimed the entire credit. For details, see section
46(h) (as in effect prior to enactment of the Revenue
Reconciliation Act of 1990). This applies to the following
credits.
• Investment credit (Form 3468).
• Work opportunity credit (Form 5884).
• Empowerment zone employment credit (Form 8844).
• Indian employment credit (Form 8845).
• Credit for small employer health insurance premiums
(Form 8941).
• Credit for employer differential wage payments (Form
8932).
Line 10. Deferred Taxes
Line 10a. Total tax before deferred tax. Add lines 7
and 9. Enter the total on line 10a. Include any deferred tax
on the termination of a section 1294 election applicable to
shareholders in a QEF in the amount entered on line 10a.
See the instructions for Form 8621 Part VI.
Line 10b. Deferred tax on undistributed earnings of a
QEF. Enter on line 10b any deferred tax on the
cooperative’s share of undistributed earnings of a QEF.
See the instructions for Form 8621, Part III.
Line 10z. Other deferred taxes. Enter on line 10z any
other deferred taxes. Attach a statement showing the
Instructions for Form 1120-C (2025)
computation of each item included. Specify the applicable
Code section, type of tax, and the amount of the tax.
Schedule K. Other Information
Complete all items that apply to the cooperative.
Item 2
See the list of Principal Business Activity Codes, later.
Using the list of codes and activities, determine from
which activity the cooperative derives the highest
percentage of its total receipts. Enter on lines 2a, 2b, and
2c the principal business activity code number, the
cooperative’s business activity, and a description of the
principal product or service of the cooperative. For
nonstore retailers, select the principal business activity
(PBA) code by the primary product that your
establishment sells. For example, establishments primarily
selling prescription and nonprescription drugs, select PBA
code 456110 Pharmacies & Drug Retailers.
Question 5
Check the “Yes” box for Question 5 if:
• The cooperative is a subsidiary in an affiliated group
(defined later) but is not filing a consolidated return for the
tax year with that group, or
• The cooperative is a subsidiary in a parent-subsidiary
controlled group. For a definition of a parent -subsidiary
controlled group, see the Instructions for the Schedule O
(Form 1120).
Any cooperative that meets either of the requirements
above should check the “Yes” box. This applies even if the
cooperative is a subsidiary member of one group and the
parent corporation of another.
Note: If the cooperative is an “excluded member” of a
controlled group (see definition in the Instructions for
Schedule O (Form 1120)), it is still considered a member
of a controlled group for this purpose.
Affiliated group. An affiliated group is one or more
chains of includible corporations (as defined in section
1504(b)) connected through stock ownership with a
common parent corporation. See section 1504(a). The
common parent must be an includible corporation and the
following requirements must be met.
1. The common parent must own directly stock that
represents at least 80% of the total voting power and at
least 80% of the total value of the stock of at least one of
the other includible corporations.
2. Stock that represents at least 80% of the total voting
power and at least 80% of the total value of the stock of
each of the other corporations (except for the common
parent) must be owned directly by one or more of the
other includible corporations.
For this purpose, the term “stock” generally does not
include any stock that (a) is nonvoting, (b) is
nonconvertible, (c) is limited and preferred as to dividends
and does not participate significantly in corporate growth,
and (d) has redemption and liquidation rights that do not
exceed the issue price of the stock (except for a
reasonable redemption or liquidation premium). See
section 1504(a)(4).
Instructions for Form 1120-C (2025)
Item 7
Enter the cooperative’s total assets (as determined by the
accounting method regularly used in keeping the
cooperative’s books and records) at the end of the tax
year. If there are no assets at the end of the tax year,
enter -0-.
If the cooperative is required to complete Schedule L,
enter total assets from Schedule L, line 13, column (d). If
filing a consolidated return, report total consolidated
assets for all cooperatives and corporations joining in the
return.
Question 8
Check the “Yes” box if one foreign person owned at least
25% of (a) the total voting power of all classes of stock of
the cooperative entitled to vote or (b) the total value of all
classes of stock of the cooperative.
The constructive ownership rules of section 318 apply
in determining if a cooperative is foreign owned. See
section 6038A(c)(5) and the related regulations.
If the cooperative checked “Yes,” enter on line 8a the
percentage owned by the foreign person specified in
Question 8. On line 8b, enter the name of the owner’s
country.
Note: If there is more than one 25%-or-more foreign
owner, complete lines 8a and 8b for the foreign person
with the highest percentage of ownership.
Foreign person. The term “foreign person” means:
• An individual who is not a citizen or resident of the
United States;
• An individual who is a citizen or resident of a U.S.
territory who is not otherwise a citizen or resident of the
United States;
• Any partnership, association, company, or corporation
that is not created or organized in the United States;
• Any foreign estate or trust within the meaning of section
7701(a)(31); or
• A foreign government (or one of its agencies or
instrumentalities) to the extent that it is engaged in the
conduct of a commercial activity, as described in section
892.
However, the term “foreign person” does not include
any foreign person who consents to the filing of a joint
U.S. income tax return.
Owner’s country. For individuals, the term “owner’s
country” means the country of residence. For all others, it
is the country where incorporated, organized, created, or
administered.
Requirement to file Form 5472. If the cooperative
checked “Yes,” it may have to file Form 5472, Information
Return of a 25% Foreign-Owned U.S. Corporation or a
Foreign Corporation Engaged in a U.S. Trade or Business.
Generally, a 25% foreign-owned cooperative that had a
reportable transaction with a foreign or domestic related
party during the tax year must file Form 5472. See the
Instructions for Form 5472 for filing instructions and
penalties for failure to file.
27
Item 10
Show any tax-exempt interest received or accrued.
Include any exempt-interest dividends received as a
shareholder in a mutual fund or other RIC. Also, if
required, include the same amount on Schedule M-1,
line 7 (or Schedule M-3 (Form 1120), Part II, line 13, if
applicable).
Item 12
Generally, if the cooperative has an NOL for tax year
2025, it can elect to waive the entire carryback period for
the NOL and instead carry the NOL forward to future tax
years. To do so, check the box in item 12 and file the tax
return by its due date, including extensions. Do not attach
the statement described in Temporary Regulations section
301.9100-12T. Generally, once made, the election is
irrevocable.
If the cooperative timely filed its return for the loss year
without making the election, it can make the election on an
amended return filed within 6 months of the due date of
the loss year return (excluding extensions). Attach the
election to the amended return and write “Filed pursuant
to section 301.9100-2” on the election statement. See the
Instructions for Form 1139.
Cooperatives filing a consolidated return that elect to
waive the entire carryback period for the group must
check the box in Item 12 and attach the statement
required by Regulations section 1.1502-21(b)(3) or the
election will not be valid.
Item 13
Enter the amount of the NOL carryover to the tax year
from prior years, even if some of the loss is used to offset
income on this return. The amount to enter is the total of
all NOLs generated in prior years but not used to offset
income (either as a carryback or carryover) in a tax year
prior to 2025. Do not reduce the amount by any NOL
deduction reported on line 26a.
Question 16
If the cooperative had gross receipts of at least $500
million in any 1 of the 3 preceding tax years, complete
Form 8991 and attach it to this return. For this purpose,
the cooperative’s gross receipts include the gross receipts
of all persons aggregated with the cooperative, as
specified in section 59A(e)(3). See the Instructions for
Form 8991 to determine if the cooperative is subject to the
base erosion minimum tax.
Question 17
The limitation on business interest expense applies to
every taxpayer with a trade or business, unless the
taxpayer meets certain specified exceptions. A taxpayer
may elect out of the limitation for certain businesses
otherwise subject to the business interest expense
limitation. See Question 18, later. Also, see the
Instructions for Form 8990.
Certain real property trades or businesses and farming
businesses qualify to make an election not to limit
business interest expense. This is an irrevocable election.
If you make this election, you are required to use the
alternative depreciation system to depreciate any
28
nonresidential real property, residential rental property,
and qualified improvement property for an electing real
property trade or business and any property with a
recovery period of 10 years or more for an electing
farming business. See section 168(g)(1). Also, you are not
entitled to the special depreciation allowance for that
property. For a taxpayer with more than one qualifying
business, the election is made with respect to each
business.
Check “Yes” if the taxpayer has an election in effect to
exclude a real property trade or business or a farming
business from section 163(j). For more information, see
the Instructions for Form 8990.
Question 18
Generally, a taxpayer with a trade or business must file
Form 8990 to claim a deduction for business interest. In
addition, Form 8990 must be filed by any taxpayer that
owns an interest in a partnership with current-year or
prior-year carryover excess business interest expense
allocated from the partnership.
Exclusions from filing. A taxpayer is not required to file
Form 8990 if the taxpayer is a small business taxpayer
(defined below) and does not have excess business
interest expense from a partnership. A taxpayer is also not
required to file Form 8990 if the taxpayer only has
business interest expense from the following excepted
trades or businesses.
• An electing real property trade or business.
• An electing farming business.
• Certain utility businesses.
Small business taxpayer. A small business taxpayer is
not subject to the business interest expense limitation and
is not required to file Form 8990. A small business
taxpayer is a taxpayer that (a) is not a tax shelter (as
defined in section 448(d)(3) and (b) meets the gross
receipts test of section 448(c), discussed next.
Gross receipts test. For 2025, a taxpayer meets the
gross receipts test if the taxpayer has average annual
gross receipts of $31 million or less for the 3 prior tax
years. A taxpayer’s average annual gross receipts for the 3
prior tax years is determined by adding the gross receipts
for the 3 prior tax years and dividing the total by 3. Gross
receipts include the aggregate gross receipts from all
persons treated as a single employer, such as a controlled
group of corporations, commonly controlled partnerships,
or proprietorships, and affiliated service groups. See
section 448(c) and the Instructions for Form 8990 for
additional information.
Question 19
If the cooperative is a member of a controlled group,
check the "Yes" box. Complete and attach Schedule O
(Form 1120), Consent Plan and Apportionment Schedule
for a Controlled Group. Component members of a
controlled group must use Schedule O to report the
apportionment of certain tax benefits between the
members of the group. See Schedule O and the
Instructions for Schedule O for more information.
Instructions for Form 1120-C (2025)
Question 20
Check the appropriate boxes to indicate if the cooperative
is required to file Form 4626. If the cooperative does not
meet the requirements of the safe harbor method, as
provided under Proposed Regulations section 1.59-2(g)
(2) or Notice 2025-27, Form 4626 must be completed and
attached to the cooperative’s return. See the Instructions
for Form 4626.
Corporations that qualify for a corporate alternative
minimum tax (CAMT) safe harbor should indicate "Yes" to
Question 20(c) and are not required to file Form 4626.
Corporations generally qualify for the CAMT safe harbor if
the corporation’s average annual adjusted financial
statement income (AFSI) for the 3 preceding tax years is
less than $800 million. Special rules apply to members of
a controlled group treated as a single employer with the
corporation under section 52(a) or (b) or members of a
Foreign-Parented Multinational Group.
Schedule L. Balance Sheets per
Books
The balance sheets should agree with the cooperative’s
books and records.
Cooperatives with total receipts (line 1a plus lines 4
through 9) and total assets at the end of the tax year less
than $250,000 are not required to complete Schedules L,
M-1, and M-2 if the “Yes” box on Schedule K, Question 14,
is checked.
Cooperatives with total assets nonconsolidated (or
consolidated for all cooperatives and corporations
included within the consolidated tax group) of $10 million
or more on the last day of the tax year must file
Schedule M-3 (Form 1120). However, see the instructions
for Schedule M-1, later. See the separate Instructions for
Schedule M-3 (Form 1120) for provisions that also affect
Schedule L.
If filing a consolidated return, report total consolidated
assets, liabilities, and shareholders’ equity for all
cooperatives and corporations joining in the return. See
Consolidated return, earlier.
Line 1. Cash
Include certificates of deposit as cash on this line.
Line 5. Investments
Include on this line:
• State and local government obligations, the interest on
which is excludable from gross income under section
103(a); and
• Stock in a mutual fund or other RIC that distributed
exempt-interest dividends during the tax year of the
cooperative.
Line 26. Adjustments to Shareholders’ Equity
Some examples of adjustments to report on this line
include:
• Unrealized gains and losses on securities held
“available for sale,”
• Foreign currency translation adjustments,
• The excess of additional pension liability over
unrecognized prior service cost,
Instructions for Form 1120-C (2025)
• Guarantees of employee stock (ESOP) debt.
• Compensation related to employee stock award plans.
If the total adjustment to be entered on line 26 is a
negative amount, enter the amount in parentheses.
Schedule M-1. Reconciliation of
Income (Loss) per Books With
Income per Return
In completing Schedule M-1, the following apply.
• Cooperatives with total receipts (line 1a plus lines 4
through 9) and total assets at the end of the tax year less
than $250,000 are not required to complete Schedules L,
M-1, and M-2 if the “Yes” box on Schedule K, Question 14,
is checked.
• Cooperatives with total assets nonconsolidated (or
consolidated for all cooperatives/corporations included
with the tax consolidation group) of $10 million or more on
the last day of the tax year must file Schedule M-3 (Form
1120) instead of Schedule M-1.
• A cooperative filing Form 1120-C that is not required to
file Schedule M-3 (Form 1120) may voluntarily file
Schedule M-3 instead of Schedule M-1. See the
Instructions for Schedule M-3 (Form 1120) for more
information.
• Cooperatives that (a) are required to file Schedule M-3
(Form 1120) and have less than $50 million total assets at
the end of the tax year or (b) are not required to file
Schedule M-3 (Form 1120) and voluntarily file
Schedule M-3 (Form 1120) must either (i) complete
Schedule M-3 (Form 1120) entirely, or (ii) complete
Schedule M-3 (Form 1120) through Part I and complete
Form 1120-C, Schedule M-1 instead of completing Parts II
and III of Schedule M-3 (Form 1120). If the cooperative
chooses to complete Schedule M-1, instead of completing
Parts II and III of Schedule M-3, the amount on
Schedule M-1, line 1, must equal the amount on
Schedule M-3, Part I, line 11. See the Instructions for
Schedule M-3 (Form 1120) for more information.
Line 5c. Travel and Entertainment
Include any of the following if applicable.
• Meal expenses not deductible under section 274(n).
• Entertainment expenses not deductible under section
274(a).
• Qualified transportation fringes not deductible under
section 274(a)(4).
• Expenses for the use of an entertainment facility.
• The part of business gifts over $25.
• Expenses of an individual over $2,000 that are allocable
to conventions on cruise ships.
• Employee achievement awards of nontangible property
or of tangible property over $400 ($1,600 if part of a
qualified plan).
• Nondeductible club dues.
• The part of luxury water travel expenses not deductible
under section 274(m).
• Expenses for travel as a form of education.
• Other nondeductible travel and entertainment
expenses.
29
Line 7. Tax-Exempt Interest
Report any tax-exempt interest received or accrued,
including any exempt-interest dividends received as a
shareholder in a mutual fund or other RIC. Also, report this
same amount on Schedule K, Item 10.
Paperwork Reduction Act Notice. We ask for the
information on this form to carry out the Internal Revenue
laws of the United States. You are required to give us the
information. We need it to ensure that you are complying
with these laws and to allow us to figure and collect the
right amount of tax.
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 of any Internal
Revenue law. Generally, tax returns and return information
are confidential, as required by section 6103.
30
The time needed to complete and file this form will vary
depending on individual circumstances. The estimated
burden for business taxpayers filing this form is approved
under OMB control number 1545-0123 and is included in
the estimates shown in the instructions for their business
income tax return.
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
send us comments through IRS.gov/FormComments. Or
write to the Internal Revenue Service, Tax Forms and
Publications Division, 1111 Constitution Ave. NW,
IR-6526, Washington, DC 20224. Do not send Form
1120-C to this address. Instead, see Where To File,
earlier.
Instructions for Form 1120-C (2025)
Form 1120-C
Principal Business Activity Codes
This list of principal business activities and their
associated codes is designed to classify an
enterprise by the type of activity in which it is
engaged to facilitate the administration of the
Internal Revenue Code. These principal business
activity codes are based on the North American
Industry Classification System.
Agriculture, Forestry, Fishing,
and Hunting
Crop Production
111100 Oilseed & Grain Farming
111210 Vegetable & Melon Farming
(including potatoes & yams)
111300 Fruit & Tree Nut Farming
111400 Greenhouse, Nursery, &
Floriculture Production
111900 Other Crop Farming
(including tobacco, cotton,
sugarcane, hay, peanut,
sugar beet, & all other crop
farming)
Animal Production
112111 Beef Cattle Ranching &
Farming
112112 Cattle Feedlots
112120 Dairy Cattle & Milk Production
112210 Hog & Pig Farming
112300 Poultry & Egg Production
112400 Sheep & Goat Farming
112510 Aquaculture (including
shellfish & finfish farms &
hatcheries)
112900 Other Animal Production
Forestry and Logging
113110 Timber Tract Operations
113210 Forest Nurseries & Gathering
of Forest Products
113310 Logging
Fishing, Hunting, and Trapping
114110 Fishing
114210 Hunting & Trapping
Support Activities for Agriculture
and Forestry
115110 Support Activities for Crop
Production (including cotton
ginning, soil preparation,
planting, & cultivating)
115210 Support Activities for Animal
Production (including farriers)
115310 Support Activities for Forestry
Mining
211120 Crude Petroleum Extraction
211130 Natural Gas Extraction
212110 Coal Mining
212200 Metal Ore Mining
212310 Stone Mining & Quarrying
212320 Sand, Gravel, Clay, &
Ceramic & Refractory
Minerals Mining & Quarrying
212390 Other Nonmetallic Mineral
Mining & Quarrying
213110 Support Activities for Mining
Utilities
221100 Electric Power Generation,
Transmission & Distribution
221210 Natural Gas Distribution
221300 Water, Sewage, & Other
Syst
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