Form 1120-POL (1987)

Page 4

Net Capital Gain and Alternative Tax.—If
your organization's tax year begins before
July 1, 1987, and your organization has a net
capital gain on line 10, Schedule D (Form
1120), the alternative tax computation may
apply. Alternative tax 1s the sum of (1) a
partial tax on taxable income less the net
capital gain, and (2) a tax computed at the
rate of 34% on the net capital gain. Compute
the partial tax using Schedule A (if your
organization Is not a principal campaign
committee) or Schedule B (if your
organization is a principal campaign
committee). Compute the alternative tax on
Part IV, Schedule D (Form 1120), and enter
the lesser of the alternative tax or the regular
tax on line 20, Form 1120-POL.

Political organization not a principal
campaign committee.—Calendar year
1987 filers and other filers whose tax year
begins before July 1, 1987: Compute your
tax as follows:

Schedule A

1. Taxable income from line 19,
Form 1120-POL.

2. Net capital gain (if alternative
tax applies, enter the net

capital gain from line 10,

Schedule D (Form 1120); if

alternative tax does not apply,

enter zero). .

Subtract line 2 from line 1.

Line 3 x 46%

Line 3 x 34%

number of days in tax

year before 7-1-87

total number of
days in tax year

baahed

bal

line4x

number of days in tax
year after 6-30-87

total number of

days in tax year
Add lines 6 and 7. Enter here
and on line 20 of Form
1120-POL. If alternative tax
applies, enter on line 12,
Schedule D (Form 1120) .

Fiscal year filers whose tax year begins
after June 30, 1987: Multiply line 19, Form
1120-POL by 34% to figure your tax under
section 527(b)(1). Enter the result on line
20, Form 1120-POL.

Principal campaign committee (section
527(h)).—Calendar year filers and other
filers whose tax year begins before July 1,
1987: Compute your tax by completing
Schedule B, Parts |, Il, Ill, and, if alternative
tax applies, Part IV, ‘Schedule D (Form
1120).

Fiscal year filers whose tax year begins
after June 30, 1987: Compute your tax by
completing Schedule B, Part Il, only; enter
the amount from line 30, Schedule B, on
line 20, Form 1120-POL.

Schedule B

Part |. Tax Computation for Period Before
July 1, 1987:

1. Taxable income from line 19,
Form 1120-POL

~

Line 5 x

2. Net capital gain (if alternative
tax applies, enter net capital
gain from line 10, Schedule D

(Form 1120); if alternative tax

does not apply, enter zero)
Subtract line 2 from line 1

Enter the smailer of line 3 or
$25,000... .

Subtract line 4 from line 3

Enter the smaller of line 5 or
$25,000 toe :

Subtract line 6 from line 5

Enter the smaller of line 7 or
$25,000

‘9. Subtract line 8 from line 7

10. Enter the smaller of line 9 or
$25,000

11. Subtract line 10 from line 9.
12. Line 4x 15% .

13. Line 6 x 18% .

14. Line 8 x 30%

15. Line 10 x 40%

16. Line 11 x 46%

17. If line 3 1s greater than
$1,000,000, enter the lesser
of: 5% of the excess aver
$1,000,000; or $20,250

18. Add lines 12 through 17

Fall od

ae

PN

Bo

Part Il. Tax Computation for Period After
June 30, 1987:
19. Taxable income from line 19,

Form1120-POL . a
20. Net capital gain (if alternative

tax applies, enter net capital

gain from line 10, Schedule D

(Form 1120); if alternative tax

does not apply, enter zero). —______
21. Subtract line 20 from line 19. —____

22. Enter the smaller of line 21 or
$50,

23. subwact line 22 from line ‘21.
24. Enter the smaller of line 23 or

$25,000 oe
25. Subtract line 24 from line 23 oe
26. Line 22 x 15%.
27. Line 24 x 25%

28. Line 25 x 34%

29. If line 21 1s greater than
$100,000, enter the lesser of:
5% of the excess over
$100,000; or $11,750

30. Add lines 26 through 29 .

Part III. Tax Computation:

number of days in tax
year before 7-1-87

total number of
days in tax year

31. Line 18x

number of days in tax
year after 6-30-87

total number of
days in tax year
33. Add lines 31 and 32. Enter
here and on line 20, Form
1120-POL. If alternative tax
applies, enter on line 12,
Schedule D (Form 1120) .
Note: Estimated tax, alternative minmum
tax, and environmental tax do not apply to
political organizations.

32. Line 30 x

Line 21, Credits.—The organization may
qualify for any of the following credits:

Foreign tax credit. See Form 1118,
Computation of Foreign Tax Credit—
Corporations.

Possessions tax credit. See Form 5712,
Election to be Treated as a Possessions
Corporation Under Section 936, and Form
5735, Computation of Possessions Tax
Credit Allowed Under Section 936.

Research credit. See Form 6765, Credit
for Increasing Research Activities, and
section 41.

Credit for fuel produced from a
nonconventional source. See section 29 for
a definition of qualified fuels, provisions for
figuring the credit, and other special rules.

Alcohol fuel credit. See Form 6478, Credit
for Alcohol Used as Fuel, and section 40.

Enter the total amount of credits on line
21 and attach the appropriate forms.

Note: /nvestment credit and jobs credit do
not apply to political organizations.

Additional Information

Foreign Financial Accounts and Foreign
Trusts.—

Question 1: Check the “Yes” box if either
1 or 2 below applies to the organization.
Otherwise check the “No” box.

1. At any time during the year the
organization had an interest in or other
authority over a bank account, securities
account, or other financial account in a
foreign country, AND.

The combined value of the accounts was
more than $10,000 at any time during the
year; AND

@ The account was NOT with a U.S. military
banking facility operated by a U.S. financial
institution.

2. The organization owns more than 50%
of the stock in any corporation that owns
‘one or more foreign bank accounts.

Get form TD F 90-22.1, Report of
Foreign Bank and Financial Accounts, to
see if the organization 1s considered to have
an interest in or signature or other authority
over a bank account, securities account, or
other financial account in a foreign country

if “Yes” 1s checked for Question 1, file
form TD F 90-22.1 by June 30, 1988, with
the Department of the Treasury at the
address shown on the form. Form TD F 90-
22.1 is not a tax return, so do not attach it
to Form 1120-POL.

Form TD F 90-22.1 can be obtained from
IRS Forms Distribution Centers.

Also, if you checked “Yes,” write the
name of the foreign country or countries.
Attach additional sheets if more space is
needed.

Question 2: Check the “Yes” box if the
organization was a grantor of, ora
transferor to, a foreign trust that existed
during this tax year.

#U.S.GPO:1987-0-183-208


on 120-POL U.S. Income Tax Return — OMB No. 1545.0129

for Certain Political Organizations

Department of the Treasury > For Paperwork Reduction Act Notice, see instructions on page 2 1 i) 8 7
Internal Revenue Service > To be filed by those organizations having taxable income (line 19)
For calendar year 1987 or tax year beginning , 1987, and ending :
Note: If you are a section 501(c) organization (see instruction B3) or a separate segregated fund described in section 527(f)(3), check here> __]
«p | Name of organization Employer identification number
S$
3 Number and street Date organization formed ~
x
5 | City or town, state, and ZIP code (See instruction C4)
a the ONLY pottical committee, ccm vo be CI
2 If this is a principal campaign committee, but is NOT.
2 the only politcal committe, check here and attach a
copy of designation. >
Enter name of candidate > _ The books are in care of >
Located at Pm __ Telephone No. >
Check applicable boxes: (1)_C) Final return (2) [J Change in address (3) L)_ Amended return
1 Dividends (attach schedule)... ee en | 1
2 Interest. 2 2. soe . oe Bo oe 2
| 3 Gross rents [3
=| 4 Gross royalties . 4
=] 5 Capital gain net income (attach Schedule D (Form 1120)) Do te 5
6 Net gain or (loss) from Part Il, Form 4797 (attach Form 4797) . . Do. Lb
7 Other income (see instructions) . woe So See 7
8 Total income (add lines 1 through D 8
9 Salariesandwages . . Loe foe . re a: oe a
10 Repairs. . Se L0
11 Rents woe cone cone rn : . : toe . 11
12 Taxes Loe oe oo Le So 12
2) 13 Interest... ee. |
2 14 Depreciation from Form 4562 (attach Form 4562). Lo ho . . toe 14
$/15 Other deductions (attach schedule). . oo . toe . 15
B]16 Total deductions (add lines 9 through 15)... 6
17 Taxable income before specific deduction of $100 (see instructions). Section 501) organizations show
a amount of net investment income. . . : an
b aggregate amount expended for an exempt function (attach schedule) [Ze
18 Less specific deduction of $100 (not allowed for newsletter funds defined under section 52718) « . 18
19 Taxable income (subtract line 18fromline17c)_ . . . . se _. 119
20 Income tax (see instructions). . . . rs . Soe eee £20
21 Credits (see instructions). . Loe Lo So . . L2a
x|22 Total tax (subtract line 21 from line 20) Soe . oo 22
18]23 Payments: a Tax deposited with Form 7004... . —
b Credit from regulated investment companies (attach Form 2439) 23
24 Tax due (subtract line 23 from line 22). See instruction D2 for depositary method of payment . . . | 24 _
25 Overpayment (subtract line 22 fromline23). 0... woe. | 5
1 At any time during the tax year, did you have an interest in or a signature or other authority over a financial account in a
38 foreign country (such as a bank account, securities account, or other financial account)? (See instructions.) [J Yes LINo
53 If “Yes,” write the name of the foreign country eee
= E 2 Were you the grantor of, or transferor to, a foreign trust which existed during the current tax year
Se whether or not you have any beneficial interest init? . Bo » » -L) Yes CONo

If “Yes,” you may have to file Form 3520, 3520-A, or 926.
3 Enter the amount of tax-exempt interest received or accrued during the tax year $

Under penalties of perjury, | declare that | have examined this return, including accompanying schedules and statements, and to the best of my knowledge and

Please | belief, itis true, correct, and complete. Declaration of preparer (other than taxpayer) 1s based on all information of which preparer has any knowledge.

Sign
Here » saaure of officer —_ Date » Title
; Date Checkif Preparer’s social security no.
Preparer's
Paid | Strate tiger > 2 Li
Preparer’s

Use Only | yours, if self-employed)

Firm's name (or > ELNO.
and address ZIP code D>



Form 1120-POL (1987)

Page 2

General Instructions

(Section references are to the Internal
Revenue Code unless otherwise noted.)
Paperwork Reduction Act Notice.—We
ask for this information to carry out the
Internal Revenue laws of the United States.
We need it to ensure that taxpayers are
complying with these laws and to allow us to
figure and collect the right amount of tax.
You are required to give us this information.
A. Purpose of Form.—Form 1120-POL is
used to report the taxable income and
income tax liability of political organizations,
newsletter funds, and certain exempt
organizations.
B. Filing Form 1120-POL.—Who Must File
1. A political organization, that is, a party,
committee, association, fund (including a
separate segregated fund described in
section 527(f)(3) set up by a section 501(c)
organization), or other organization,
organized and operated primarily for the
purpose of accepting contributions or
making expenditures, or both, to influence
the selection, nomination, election, or
appointment of any individual to any public
office or office in a political organization, or
the election of Presidential or Vice-
Presidential electors, must file Form 1120-
POL if such organization has any political
organization taxable income.

2. A newsletter fund, that Is, a fund
established and maintained by an individual
who holds, has been elected to, or is a
candidate (as defined in section 527(g)(3))
for nomination or election to any Federal,
state, or local elective public office for use
by such individual exclusively for the
preparation and circulation ofsuch
individual's newsletter, must file Form
1120-POL if it has political organization
taxable income.

3. Under section 527(f), certain
organizations described in section 501(c)
and exempt from tax under section 501(a)
must file Form 1120-POL if they:

(i) expend any amount during the tax
year directly or through another
organization for an exempt function
(as defined in instruction C3 below),
and

(ii) have political organization taxable
income.

Note: A separate segregated fund
maintained by a section 501(c) organization
is treated as a separate entity and is taxed
like an ordinary political committee. For
more information, see section 527(f),
Regulations section 1.527-6, and the
definitions in instruction C below.

When To File

In general, an organization must file Form
1120-POL by the 15th day of the 3rd month
after the end of the tax year.

Extensions. —File Form 7004, Application
for Automatic Extension of Time To File
Corporation Income Tax Return, to request
an automatic 6-month extension of time to
file Form 1120-POL.

Period Covered.—File the 1987 return for
calendar year 1987 and for fiscal years that
begin in 1987 and end in 1988. For a fiscal
year return, fill in the tax year space at the
top of the form.

Where To File

If the political Use the following
organization's main Internal Revenue

office is located in: Service Center address

v v

New Jersey, New York (New
York City and counties of
Nassau, Rockland, Suffolk,
and Westchester)

Holtsville, NY 00501

New York (all other counties),
Connecticut, Maine,
Massachusetts, Minnesota,
New Hampshire, Rhode
Island, Vermont

Andover, MA 05501

Alabama, Florida, Georgia,

Mississipp1, South Carolina Atlanta, GA 39901

Kansas, Louisiana, New

Mexico, Oklahoma, Texas Austin, TX 73301

Kentucky, Michigan, Ohio,

West Virginia Cincinnati, OH 45999

Illinois, lowa, Missouri,

Wisconsin Kansas City, MO 64999

Arkansas, Indiana, North

Carolina, Tennessee, Virginia Memphis, TN 37501

Alaska, Arizona, California
(Counties of Alpine, Amador,
Butte, Calveras, Colusa, Contra
Costa, Del Norte, El Dorado,
Glenn, Humboldt, Lake, Lassen,
Marin, Mendocino, Modoc,
Napa,’ Nevada, Placer, Plumas,
Sacramento, San Joaquin,
Shasta, Sierra, Siskiyou, Solano,
Sonoma, Sutter, Tehama,
Trinity, Yolo, and Yuba),
Colorado, Idaho, Montana,
Nebraska, Nevada, North
Dakota, Oregon, South Dakota,
Utah, Washington, Wyoming

Ogden, UT 84201

California (all other Fresno, CA 93888

counties), Hawaii

Delaware, District of
Columbia, Maryland,
Pennsylvania

Philadelphia, PA 19255

Signature

The return must be signed and dated by the
president, vice-president, treasurer,
assistant treasurer, chief accounting
officer, or any other officer (such as tax
officer) authorized to sign. A receiver,
trustee, or assignee must sign and date any
return required to be filed on behalf of an
organization.

If an organization officer filled in Form
1120-POL, the Paid Preparer’s space under
“Signature of officer” should remain blank.
If someone prepares Form 1120-POL and
does not charge the organization, that
person should not sign the return. Certain
others who prepare Form 1120-POL should
not sign. For example, a regular, full-time
employee of the organization, such as a
clerk, secretary, etc., does not have to sign.

Generally, anyone who is paid to prepare
Form 1120-POL must sign the return and
fillin the other blanks in the Paid Preparer's
Use Only area of the return.

The preparer required to sign the return
MUST complete the required preparer
information and:

Sign it, by hand, in the space provided for
the preparer’s signature. (Signature stamps
or labels are not acceptable.)

@ Give a copy of Form 1120-POL to the
taxpayer in addition to the copy filed with
IRS.

Tax return preparers should be familiar
with their responsibilities. See Publication
1045, Information for Tax Practitioners, for
more details.

C. Definitions

1. Political Organization Taxable
Income.—a. For political organizations (as
defined in instruction B1 above), including
separate segregated funds, taxable income
is the excess of:

(1) gross income for the tax year
(excluding any exempt function income as
defined in instruction C2 below) over

(2) the deductions allowed that are
directly connected with the production of
gross income (excluding exempt function
income) computed with the following
modifications:

(a) a specific deduction of $100 is

allowed;
(b) no net operating loss deduction
(section 172) is allowed; and

(c) no deduction under Part VIII of
subchapter B (special deductions for
corporations) is allowed.

See Regulations sections 1.527-4 and
1.527-5.

b. For newsletter funds, taxable income is
computed as shown above except that the
specific deduction of $100 is not allowed

c. For section 501(c) organizations,
taxable income ts the lesser of:

(1) the amount expended during the tax
year directly or through another
organization for an exempt function (as
defined in instruction C3 below), or

(2) the net investment income of the
organization for the tax year. Net investment
income, for this purpose, means the gross
amount of interest, dividends, rents, and
royalties plus the excess (if any) of gains
from the sale or exchange of assets over the
losses from the sale or exchange of assets,
over the deductions directly connected with
the production of this income.

Both of these amounts are computed
with the modifications described in
instruction C1a(2) above.

Note: /n computing political organization
taxable income, section 501(c)
organizations should exclude those items
taken into account for the tax imposed by
section 511.

2. Exempt Function Income.—Exempt
function income is any amount received as:

a. contributions of money or other
property;

b. membership dues, fees, or assessments
from members of the political organization;

c. proceeds from a political fundraising or
entertainment event, or proceeds from the
sale of political campaign materials, if such
amounts are not received in the course of a
trade or business; or

d. proceeds from conducting a bingo
game as defined in section 513(f)(2).

These amounts are exempt function
income only to the extent that they are
segregated for use only for the exempt
function of the political organization.

See Regulations section 1.527-3.

3. Exempt Function.—a. For political
organizations other than newsletter funds,
the term “exempt function” means the



Form 1120-POL (1987)

Page 3

function of influencing or attempting to
influence the selection, nomination, election,
or appointment of any individual to any
Federal, state, or local public office or office
in a political organization, or the election of
Presidential or Vice-Presidential electors,
whether or not the individual or electors are
selected, nominated, elected, or appointed
See Regulations section 1.527-2(c).

b. For newsletter funds, the “exempt
function” consists solely of the preparation
and circulation of the newsletter.

4. Principal Campaign Committee.—A
principal campaign committee is the political
committee designated by a candidate for
Congress as his or her principal campaign
committee for purposes of section 302(e) of
the Federal Election Campaign Act of 1971.

If a candidate for Congress elects to make
a designation under section 527(h), he or she
shall designate his or her principal campaign
committee by attaching a copy of his or her
Statement of Candidacy to Form 1120-POL.
This can be either the Federal Election
Commission Form 2, or an equivalent
statement filed with the Federal Election
Commission. This designation may also be
made by attaching a signed statement
containing the following information:

(1) the name and address of the
candidate;

(2) the candidate's taxpayer
identification number;

(3) the candidate's party affiliation and
the office sought;

(4) the district and state in which the
office is sought; and

(5) the name and address of the principal
campaign committee.

Note: This designation must be attached to

Form 1120-POL and may be made only bya
candidate for Congress. If a designation is in
effect from an earlier tax year, attach a copy
of the earlier designation to this year’s Form
1120-POL and check the appropriate box on
the form. See Regulations section 1.527-9.

If there 1s only one political committee
with respect to a candidate, no designation
is required. However, be sure to check the
appropriate box on page 1 of Form 1120-
POL.

D. Figuring and Paying the Tax

1. Accounting

Accounting Methods.—Taxable income
must be computed using the method of
accounting regularly used in keeping the
organization's books and records. In all
cases, the method used must clearly reflect
taxable income. (See section 446.)

Unless the law specifically permits
otherwise, the organization may change the
method of accounting used to report taxable
income in earlier years (for income as a
whole or for any material item) only by first
getting consent on Form 3115, Application
for Change in Accounting Method. Also see
Publication 538, Accounting Periods and
Methods.

Change in Accounting Period.—Before
changing an accounting period, the
Commissioner's approval must be obtained
(Regulations section 1.442-1). Approval can
be applied for by filing Form 1128,
Application for Change in Accounting
Period. Also see Publication 538.

2. Depositary Method of Tax
Payment.—The organization must pay the
tax due in full within 24 months after the
end of the tax year.

Deposit organization income tax payments
with a Federal Tax Deposit Coupon (Form
8109). Be sure to darken the “1120” box on
the coupon. If you do not receive these
coupons, please contact your IRS district
office. Make these tax deposits with either a
financial institution qualified as a depositary
for Federal taxes or the Federal Reserve
Bank or Branch (FRB) servicing the
geographic area where the organization is
located. Do not submit deposits directly to an
IRS office; otherwise, the organization may
be subject to a failure to deposit penalty.
Records of deposits will be sent to IRS for
crediting to the organization's account. See
the instructions contained in the coupon
book for more information.

In order for us to better process your
deposits, please write your employer
identification number, the type of tax paid,
and the tax period to which the deposit
applies on your check.

For more information concerning
deposits, see Publication 583, Information
for Business Taxpayers.

3. Penalties.—Avoid penalties and
interest by filing correctly and paying the tax
when due. The organization may have to
pay the following penalties unless it can
show that failure to file or to pay was due to
reasonable cause and not willful neglect.
(These penalties are in addition to the
interest charged on unpaid tax at a rate
determined under section 6621.)

A political organization that fails to file its
tax return when due (including any
extensions of time for filing) may be subject
to a penalty of 5% a month or fraction of a
month, up to a maximum of 25%, for each
month the return ts not filed. (The penalty is
imposed on the net amount due.) The
minimum penalty for failure to file a tax
return within 60 days of the due date for
filing (including extensions) 1s the lesser of
the underpayment of tax or $100.

A political organization that fails to pay
the tax when due may be subject toa
penalty of 2% a month or fraction of a
month, up toa maximum of 25%, for each
month the tax is not paid. (The penalty is
imposed on the net amount due.)

Penalty for Overstated Tax Deposits. —\f
deposits are overstated, the organization may
be subject to a penalty. See section 6656(b).

- ———

Specific Instructions

Attachments.—To assist us in processing
the return, we ask that you complete every
applicable entry space on Form 1120-POL.
Please do not write “See attached” in lieu of
completing the entry spaces.

If more space is needed on forms or
schedules, attach separate sheets to the
back of Form 1120-POL. Indicate at the top
of each attachment the form number or
schedule letter of the form or schedule being
continued. Show the information called for in
the same order as on the printed form. Be
sure to show totals on the printed forms.

Please use sheets that are the same size
as the forms and schedules. Attach these
separate sheets after all the forms and

schedules. Also put the organization's name
and employer identification number (EIN)
on each sheet.

Rounding Off to Whole-Dollar
Amounts.—Money items may be shown on
the return and accompanying schedules as
whole-dollar amounts. To do so, drop any
amount less than 50 cents and increase any
amount from 50 cents through 99 cents to
the next higher dollar.

Employer Identification Number.—All
political organizations (including separate
segregated funds described in section
527(f)(3) and newsletter funds) must use
an employer identification number.

An organization that does not have an EIN
should apply for one on Form SS-4,
Application for Employer Identification
Number. This form may be obtained at most
IRS or Social Security Administration
offices. Send Form SS-4 to the same
Internal Revenue Service Center to which
Form 1120-POL is mailed. If the EIN has
not been received by the filing time for
Form 1120-POL, write “Applied for” in the
space for the EIN.

Final Return, Change of Address,
Amended Return.—If this is a final return,
or the organization’s address has changed
since the previous return was filed, or you
are filing an amended return, check the
appropriate block.

Income and Deductions. —Campaign
contributions and other exempt function
income are not includible in income;
likewise, campaign expenditures and other
exempt function expenditures are not
deductible. Generally, to be deductible in
computing political organization taxable
income, expenses must be directly
connected with the production of political
organization taxable income. In those cases
where expenses are attributable to the
production of both exempt function income
and political organization taxable income,
the expenses should be allocated on a
reasonable and consistent basis; only the
portion allocable to the production of
political organization taxable income may be
deducted.

Line 7, Other income.—Enter the total
income from other sources, such as income
received in the course of an ordinary trade
or business. Attach a schedule listing all
income included on line 7.

Lines 17(a) and 17(b), Taxable
income.—Complete these lines only if your
organization is a section 501(c)
organization. For a description of the
amounts to be entered on these lines, see
the definition of taxable income for section
501(c) organizations in instruction Cle
above.

Line 17(c), Taxable income.—Political
organizations, newsletter funds, and
separate segregated funds: Subtract line 16
from line 8 and enter the result on line 17(c).
Section 501(c) organizations enter on line
17(c) the lesser of line 17(a) or line 17(b).
Line 20, Income tax.—The rate of tax
imposed depends on: (a) whether the
political organization is a principal campaign
committee as defined in section 527(h) and
instruction C4 above; (b) the taxable year of
the organization; and (c) whether or not the
alternative tax applies.