Form 1120-POL (1986)

Page 4

IRS for crediting to the organization's
account. See the instructions contained in
the coupon book for more information.

To get more deposit forms, use the
reorder form (Form 8109A) provided in the
coupon book.

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

K, 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.)

Uniess 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.

L. 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.

M. Attachments.—!In order to process the
return, we ask that you complete every
applicable entry space on Form 1120-POL.
Please do not write “See attached” instead
of completing the entry spaces. If more
space is needed on forms or schedules,
attach separate sheets to the back of Form
1120-POL. Attach schedules in alphabetical
order and forms in numerical order. Also put
the taxpayer's name and employer
identification number (EIN) on each sheet,
N. 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
fill in 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 and Order Blanks for
Preparers of Federal Income Tax Returns,
for more details.

O. 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 (EIN).

An organization that does not have an
EIN should apply for one on Form SS-4,
Application for Employer Identification
Number. Obtain this form 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.

P. Penalties.—Avoid penalties and
interest by correctly filing 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 charge on unpaid tax at a rate
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 is 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) is the lesser of
the underpayment of tax or $100.

@ A political organization that fails to pay
the tax when due generally may be subject
to a penalty of 2% a month or fraction of a
month, up to a 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.—If
deposits are overstated, the organization may
be subject to a penalty. See section 6656(b).
Q. Estimated Tax, Minimum Tax,
Employee Stock Ownership Credit,
Investment Credit and Jobs Credit.—
These items do not apply to political
organizations defined in section 527.

R. Credits. —The organization may qualify
for the following credits:

# U.S. Government Printing Office: 1987~181-447/40110

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

Research credit. See Form 6765, Credit
for Increasing Research Activities.

Possessions tax credit. See Form 5712,
Election to be Treated as a Possessions
Corporation Under Section 936, for rules on
how to elect to claim the possessions tax
credit (section 936). Compute the credit on
Form 5735, Computation of Possessions
Corporation Tax Credit Allowed Under
Section 936.

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

Alcohol fuel credit. The organization may
be able to take a credit for alcohol used as a
fuel. See Form 6478, Credit for Alcohol
Used as Fuel, and section 40(a).

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

S. 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 signature
or other authority over a bank account,
securities account, or other financial
account ina 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 is 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” is checked for Question 1, file
Form TD F 90-22.1 by June 30, 1987, 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.


1120-POL U.S. Income Tax Return OMB No, 1545-0129
Fe : + :
om for Certain Political Organizations
Department of the Treasury > For Paperwork Reduction Act Notice, see instructions on page 2 4 9 8 6
Internal Revenue Service > To be filed by those organizations having taxable income (line 19)
For calendar year 1986 or other tax year beginning 1986 and ending 19
Note: If you are a section 501(c) organization (see instruction A3) or a separate segregated fund described in section 527(f)(3), check here ® [|_|
Name of organization Employer identification number (see instruction 0)
2) Number and street Date organization formed
5
'B) City or town, state, and ZIP code (See instruction B2)
3 If this is a principal campaign committee, and this is
8 the ONLY political committee, check here
eo If this is a principal campaign committee, but is NOT
the only political committee, check here and attach a
copy of designation. a
Enternameofcandidate > ieee eee e eee eeee The books are in care of
Locatedat Benne Telephone No. >
1 Dividends (attach schedule)
2 Interest.
w| 3 Gross rents
E 4 Gross royalties
2 5 Capital gain net income ‘attach Schedule D (Form 1120) .
6 Net gain or (loss) from Part II, Form 4797 (attach Form 4797)
7 Other income (see "‘Note”’ in instruction D—attach schedule)
8 Total income (add lines 1 through 7)
9 Salaries and wages
10 Repairs .
11 Rents
12 Taxes
13 Interest

Deductions
an
)

Depreciation from! Form 4562 {attach Form 4562).

Other deductions (attach schedule)

Total deductions (add lines 9 through 15) . :
Taxable income before specific deduction of $100 (line 8 less line 16). ‘section 501(c) organizations show:

a amount of net investment income (see instruction A3(bY(ii)) . . . >
b an aggregate amount expended for an exempt function (attach schedule) >. MM
andenteronline17,thelesserofaorb . . . . . (32
18 Less specific deduction of $100 (not allowed for newsletter funds defined under section 527) . (18
19 Taxable income (subtract line 18 from line 17) __- ae re : _ 119
20 Income tax (seeinstructionB). . 6 6 6 ee ee LO
21 Credits (see instruction R) . 21
ye) 22 Total tax (subtract line 21 from line 20), 22

42/23 Credits: 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 | for depositary method of of payment . 124
25 Overpayment (subtract line 22 fromline23) . . wo. [25

Foreign Financial
Accounts and
Foreign Trusts

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
foreign country (such as a bank account, securities account, or other financial account)? (See instruction S) LJ Yes No
If “Yes,” write the name of the foreign country >
2 Were you the grantor of, or transferor to, a foreign trust which existed during the current tax year,
whether or not you have any beneficial interest init?. . . . . » » «LD Yes CINo
If "Yes," you may have to file Form 3520, 3520-A, or 926.

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) is based on all information of which preparer has any knowledge.
Sign | >
Here | Signature of officer Date Title
Date Check if Preparer’s social security no.
‘ Preparer's ack if

Paid | Syrature’ D stem yO “=
Preparer’s

Firm s name (or
Use Only | yours. if self-employed) > E1 No D

and address ZIP code



Form 1120-POL (1986) .

Page 2

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. Who Must File Form 1120-POL.—

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 taxable
income (defined in C below).

2. Anewsletter fund (as described in
section 527(g)) must file Form 1120-POL if
it has political organization taxable income.
Taxable income is the same as described in
C below, with these modifications:

(a) the $100 specific deduction is not

allowed, and

(b) the exempt function consists solely

of the preparation and circulation of the
newsletter.

For further information, see section
527(g) and Regulations section 1.527-7.
Note: The Tax Reform Act of 1986 added a
new definition of “candidate” to section
527(g). See section 527(g)(3) for more
information.

3. (a) 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
(defined in E below), and

(ii) have taxable income.

(b) For a section 501(c) organization,
taxable income is the lesser of:

(i) the amount expended during the tax
year for an exempt function (defined
in E below), or

(ii) 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 C2
below.

Section 501(c) organizations exclude
those items taken into account for the tax
imposed by section 511.

(c) If a section 501(c) organization sets
up a separate segregated fund (section
527(f)(3)), the taxable income of the fund is
determined as described in C below.

For more information, see section 527(f)
and Regulations section 1.527-6
B. Income Tax.—The tax imposed depends
on whether the political organization is
considered a principal campaign committee
(defined in instruction B2 below).

1. Political organization not a principal
campaign committee.—Calendar year
1986 taxpayers and fiscal year filers whose
tax year ends on or before June 30, 1987:
Multiply line 19 by 46% to figure your tax
under section 527(b)(1). Calendar year
filers may use Schedule D (Form 1120) to
compute alternative tax on capital gains if it
applies. Fiscal year filers, see “Alternative
Tax and Fiscal Year Filers,” below. Enter the
lesser of alternative tax or the tax imposed
by section 527(b)(1) on Form 1120-POL,
line 20.

Taxpayers with fiscal years which
include July 1, 1987: Compute your tax as
follows:

a. Line 19 x 46%.

b. Line 19 x 34%.
number of days in tax
year before 7/1/87
total number of days

in tax year

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

total number of days
in tax year

e. Addlinescandd .

Enter on line 20, Form 1120-POL, the
lesser of alternative tax or the amount on
line e, above.

Alternative Tax and Fiscal Year Filers:

Due to changes made by the Tax Reform
Act of 1986, all fiscal year filers (regardless
of when their tax year ends) must use a
special computation for computing alter-
native tax under sec. 1201. For all fiscal
year 1986-87 filers who are not principal
campaign committees, alternative tax is the
sum of (a) a tax computed on taxable in-
come reduced by the net capital gain using
the highest rate of tax specified in sec.
11(b), and (b) a tax computed on the net
capital gain using the applicable alternative
tax rate. (To compute (b), see the
worksheet under “Net Capital Gain and
Alternative Tax," below.)

2. Principal campaign committee
(section 527(h)).—A principal campaign
committee means the political committee
designated only 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.

\f 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

c. Lineax

d. Linebx

(1) name and address of the candidate
for Congress;

(2) taxpayer identification number;

(3) party affiliation and the office sought;

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

(5) name and address of the principal
campaign committee.
Note: This designation must be attached to
Form 1120-POL and may be made only by a
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 is only one political committee
with respect to a candidate, no designation
is required. However, be sure to check the
appropriate box on the form.

A principal campaign committee is
subject to a lower rate of tax than other
political organizations.

Note: The Tax Reform Act of 1986 changed
the rates of tax and the tax brackets
applicable to principal campaign
committees. The Act also changed the
method of computing alternative tax on
capital gains. As a result, all filers whose tax
years begin in 1986 and end in 1987 must
use the Fiscal Year Tax Computation
Schedule below to compute their tax.
Calendar year 1986 filers, use the following
schedule:

If the amount
on line 19 is: ofthe
But not amount

Over— — over— The tax is— over—

0 $25,000 15% 0
$25,000 50,000 $3,750 + 18% $25,000
50,000 75,000 8,250 + 30% 50,000
75,000 100,000 15,750 + 40% 75,000
100,000 25,750 + 46% 100,000

For taxable income over $1,000,000, an
additional tax is imposed at the rate of 5%
of the excess over $1,000,000, or $20,250,
whichever is less. Calendar year 1986 filers
may compute alternative tax on Schedule D
(Form 1120) to see if it is less than the tax
figured at the graduated rates above. Enter
the lesser of alternative tax or the tax
figured at the graduated rates on line 20.

Fiscal year 1986-87 filers may not use
Schedule D to compute alternative tax. For
principal campaign committee fiscal year
filers, alternative tax is the sum of (a) a tax
computed on taxable income reduced by
the net capital gain, using the applicable tax
brackets and rates, and (b) a tax computed
‘on the net capital gain using the applicable
alternative tax rate, (See the worksheet
under “Net Capital Gain and Alternative
Tax" below for this part of the
computation.) If a political organization has
net capital gain, it should use the
alternative method (sec. 1201) to see if the
resulting tax Is less than the tax figured
using the regular method.


Form 1120-POL (1986)

Page 3

Fiscal Year Tax Computation Schedule

Part |. Tax Computation for Period Before
July 1, 1987
1. Taxable income from line 19

2. Net capital gain (If alternative
tax applies, enter net capital
gain (excess of net long-term
Capital gain over net short-term
capital loss). If alternative tax
does not apply, enter zero.) .
Subtract line 2 from line! .

Enter the smaller of line 3 or
$25,000 .
Subtract line 4 from tine 3.
Enter the smaller of line 5 or
$25,000

‘Subtract line 6 from line 7 :

Enter the smaller of fine 7 or
$25,000

Subtract line B from tine 7.
10. Enter the smaller of line 9 or
$25,000

11. Subtract line 10 from tine 9
12. 15% of line 4

13. 18% of line 6

14, 30% of line 8

15. 40% of line 10 .

16. 46% of line 11

17. Ifline 3 1s greater than
$1,000,000, enter the lesser of
5% of the excess over
$1,000,000, or $20,250

18. Add lines 12 through 17. :_—_—
Caution: /f you are a fiscal year filer whose
tax year ends before July 1, 1987, do not
complete Part Il of this worksheet. Enter the
amount from Part I, line 18 in Part Ill, line
31 and fill in the rest of Part Ill.
Part II. Tax Computation for Period After
June 30, 1987
19. Enter amount fromline3 .
20. Enter the smaller of line 19 or

$50,0¢ .
21 Sroveet line 20 trom tine 19
22. Enter the smaller of line 21 or

5,000 :

© eV an aw

23. Subtract line 22 from line 21

24. 15% of line 20 .

25. 25% of line 22 .

26. 34% of line 23 .

27. Hf line 191s greater than
$100,000, enter the lesser of
5% of the excess over
$100,000, or $11,750 .

28. Add lines 24 through 27.

Part Ill. Tax Computation

Number of days in tax
year before July 1, 1987
Number of days in tax
year
Number of days in tax
year after June 30, 1987
Number of days in tax
year

31. Add lines 29 and 30

32. Alternative tax on net capital gain
(if alternative tax applies, see “Net
Capital Gain and Alternative Tax,”
below. If alternative tax does not
apply, enter zero.) a

33. Add lines 31 and 32 and enter
this amount on line 20 of Form
1120-POL .

Net Capital Gain and ‘Alternative Tax.—
Figure the alternative tax on the capital gain
portion of your income as follows:

1. Enter the net capital gain from line
10a, Schedule D (Form 1120). .

2. Enter the amount from line 10b,
Schedule D. Caution: If this amount
1s larger than the amount on line 1,
enter the amount from line 1 here’.

29. Line 18 x

30. Line 28 x

3. Subtract line 2 from line 1.
4. 28% of line 2
5. 34% of line 3
6. Addlines4and5 . —__—_
The amount on line 6s the tax on the
capital gain portion of your income if
alternative tax applies.

C. Taxable Income.—

Note: Generally, campaign contributions
are not includible in income; expenditures
for campaign purposes are not deductible.
(See instruction D below.)

Taxable income is the excess of:

1. gross income for the tax year
(excluding any exempt function income
defined 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) a net operating loss deduction
(section 172) is not allowed; and

(c) a deduction under Part Vill of
subchapter B (special deductions for
corporations) is not allowed.

See Regulations sections 1.527-4 and
1.527-5.
fae those organizations claiming a
deduction for automobiles and other “listed
property,” complete Part Il! of Form 4562,
Depreciation and Amortization, regardless
of when the property was placed in service.
If the organization provides taxable fringe
benefits to its employees, such as the
personal use of autos, do not deduct as
wages the amount allocated for
depreciation and other expenses that you
claim on your return.

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

1. contributions of money or other
property;

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

3. proceeds from a political fundraising or
entertainment event, or proceeds from the
sale of political campaign materials, that are
not received in the ordinary course of any
trade or business; or

4. proceeds from the conducting of any
bingo game as defined in section 513(f)(2),
to the extent this amount is segregated for
use only for the exempt function of the
political organization

See Regulations section 1.527-3.

Note: /ncome received in the course of an
ordinary trade or business is to be included
online 7, “other income,” page 1.

£. Exempt Function.—For purposes of
section 527, the term ‘‘exempt function”
means the 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).

F, Where To File.—

Ifthe political organiza- Use the following Inter-

tion’s main office nal Revenue Servi
located in Center address
Vv Vv

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,

Mississippi, South Carolina Atlanta, GA 31102

Kansas, Louisiana, New Mexico,

Onlanoma, Texas Austin, TX 73301

Kentucky, Michigan,

Ohno nce Virgie Cincinnati, OH 45999

Illinois, lowa, Missouri,

Woconeet Kansas City, MO 64999,

Arkansas, Indiana, North

Carolina, Tennessee, Virginia Memphis, TN 37501

Alaska, Arizona, California
(counties of Alpine, Amador,
Butte, Calaveras, 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 counties),

Hawaii Fresno, CA 93888

Delaware, District of
Columbia, Maryland,
Pennsylvania

Philadelphia, PA 19255

G. 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.

H. Period Covered.—File the 1986 return
for calendar year 1986 and fiscal years that
begin in 1986 and end in 1987. For a fiscal
year, fill in the tax year space at the top of
the form.

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

Deposit organization income tax
payments with a Federal Tax Deposit
Coupon (Form 8109). 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