U.S. Income Tax Return OMB No. 1545-0129

for Certain Political Organizations Form 1120-POL

For Paperwork Reduction Act Notice, see instructions on page 2.

Department of the Treasury

Internal Revenue Service

For calendar year 1996 or other tax year beginning , 1996, and ending , 19 .

Note: If you are a section 501(c) organization or a separate segregated fund described in section 527(f)(3), check here ©

Name of organization Employer identification number

Number, street, and room or suite no. (If a P.O. box, see page 4 of instructions.) Candidates for U.S. Congress Only

If this is a principal campaign committee, and it is the

ONLY political committee, check here

City or town, state, and ZIP code If this is a principal campaign committee, but is NOT

the only political committee, check here and attach a

Please print or type

copy of designation (See instructions on page 2.)

The books are in care of © Enter name of candidate ©

The books are located at © Telephone No. ©

Check if:

1 Dividends (attach schedule) 1

2 Interest 2

3 Gross rents 3

4 Gross royalties 4

5 Capital gain net income (attach Schedule D (Form 1120)) 5

Income

6 Net gain or (loss) from Form 4797, Part II, line 20 (attach Form 4797) 6

7 Other income and nonexempt function expenditures (see instructions) 7

8 Total income. Add lines 1 through 7 8

9 Salaries and wages 9

10 Repairs and maintenance 10

11 Rents 11

12 Taxes and licenses 12

13 Interest 13

14 Depreciation (attach Form 4562) 14

15 Other deductions (attach schedule) 15

16 Total deductions. Add lines 9 through 15 16

Deductions

17 Taxable income before specific deduction of $100 (see instructions). Section 501(c) organizations show:

a Amount of net investment income ©

b Aggregate amount expended for an exempt function (attach schedule) © 17c

18 Specific deduction of $100 (not allowed for newsletter funds defined under section 527(g)) 18

19 Taxable income. Subtract line 18 from line 17c (If line 19 is zero or less, do not file Form 1120-POL.) 19

20 Income tax (see instructions) 20

21 Tax credits (Attach all applicable forms.) (see instructions) 21

22 Total tax. Subtract line 21 from line 20 22

23 Payments: a Tax deposited with Form 7004 23a

Tax

b Credit from regulated investment companies (attach Form 2439) 23b

c Credit for Federal tax on fuels (attach Form 4136) 23c

d Total. Add lines 23a through 23c 23d

24 Tax due. Subtract line 23d from line 22. See instructions on page 3 for depository method of payment 24

25 Overpayment. Subtract line 22 from line 23d 25

1 At any time during the 1996 calendar year, did the organization have an interest in or a signature or other authority over a

financial account (such as a bank account, securities account, or other financial account) in a foreign country? (See instructions.)

If “Yes,” enter the name of the foreign country ©

During the tax year, did the organization receive a distribution from, or was it the grantor of, or transferor

to, a foreign trust?

2

Additional

Information

If ‘‘Yes,’’ see page 4 for other forms the organization may have to file.

3 Enter the amount of tax-exempt interest received or accrued during the tax year © $

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge Please and belief, it is 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 Preparer’s social security no. Preparer’s

signature

Check if

self-employed ©

Firm’s name (or

yours, if self-employed)

and address

EIN ©

ZIP code ©

Cat. No. 11523K

© ©

©

©

Paid

Preparer’s

Use Only

4 Date organization formed ©

Form 1120-POL (1996)

5a

c d

b

(1) Final return (2) Change of address (3) Amended return

Yes No

Yes No

96
Form 1120-POL (1996) Page 2

Section references are to the Internal

Revenue Code unless otherwise noted.

Paperwork Reduction

Act Notice

The time needed to complete and file this

form will vary depending on individual

circumstances. The estimated average time

is:

Recordkeeping 15 hr., 32 min.

Learning about the

law or the form 6 hr., 23 min.

Preparing the form 15 hr., 18 min.

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

write to the Tax Forms Committee, Western

Area Distribution Center, Rancho Cordova,

CA 95743-0001. DO NOT send the tax form

to this address. Instead, see When and

Where To File below.

Form 1120-POL is used to report the taxable

income and income tax liability of political

organizations.

Who Must File

A political organization must file Form

1120-POL if the organization has any political

organization taxable income. 

When and Where 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.

Extension.—File Form 7004, Application for

Automatic Extension of Time To File

Corporation Income Tax Return, to request a

6-month extension of time to file.

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.

Copying, assembling,

and sending the

form to the IRS 2 hr., 25 min.

A political organization 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. Political

organizations include principal campaign

committees, newsletter funds, and certain

tax-exempt organizations.

Principal campaign committee.—A principal

campaign committee is the political

committee designated by a candidate for U.S.

Congress as his or her principal campaign

committee for purposes of section 302(e) of

the Federal Election Campaign Act of 1971

and section 527(h).

If a candidate for U.S. Congress elects to

make a designation under section 527(h), he

or she must designate the principal campaign

committee by attaching a copy of the

Statement of Candidacy to Form 1120-POL.

This can be either the Federal Election

Commission’s Form 2 or an equivalent

statement filed with the Federal Election

Commission. The designation may also be

made by attaching a signed statement with

the following information:

● The candidate’s name and address.

● The candidate’s party affiliation and office

sought.

● The district and state in which the office is

sought.

● The name and address of the principal

campaign committee.

Note: If the candidate for U.S. Congress has

a designation in effect from an earlier year,

attach a copy of the earlier year’s designation

to this year’s Form 1120-POL and check the

appropriate box on the form. See Regulations

section 1.527-9. If a candidate for U.S.

Congress has only one political campaign

committee, no designation is required.

However, be sure to check the appropriate

box on Form 1120-POL.

Newsletter fund.—A newsletter fund 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. The fund

is maintained exclusively for the preparation

and circulation of the individual’s newsletter.

Separate segregated fund.—A separate

segregated fund maintained by a section

501(c) organization (exempt from tax under

section 501(a)) is treated as a political

organization. For more information, see

section 527(f) and Regulations section

1.527-2(b).

Newsletter fund taxable income.—Taxable

income of a newsletter fund is figured in the

same manner as taxable income of a political

organization except that the specific

deduction of $100 is not allowed.

Political Organizations

Net investment income, for this purpose, is

the excess of (1) 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 (2) the

deductions directly connected with the

production of this income.

● The candidate’s identifying number.

If the due date falls on a Saturday, Sunday,

or legal holiday, the organization may file on

the next business day.

Purpose of Form

Taxable Income of $100 or Less

Exempt Function

The exempt function of a political

organization is the function of influencing or

attempting to influence the selection, the

nomination, election, or appointment of any

individual to any Federal, state, local public

office, or office of a political organization, or

the election of Presidential or Vice

Presidential electors, whether or not the

individuals or electors are selected,

nominated, elected, or appointed. The term

“exempt function” also means the making of

expenditures relating to the individual’s office,

once selected, nominated, elected, or

appointed, but only if the expenditures would

be deductible by an individual under section

162(a).

Exempt Function Income

Exempt function income is the total of all

amounts received from the following sources

(to the extent that they are separately

segregated only for use for an exempt

function):

1. Contributions of money and property.

2. Membership dues, fees, or assessments

paid by a member of a political party.

3. Proceeds from a political fundraising, or

entertainment event, or from the sale of

political campaign materials, if those amounts

are not received in the active conduct of a

trade or business.

4. Proceeds from the conduct of a bingo

game, as described in section 513(f)(2).

Taxable Income

Political organization taxable income is the

excess of (1) gross income for the tax year

(excluding exempt function income) over

(2) deductions directly connected with the

earning of gross income. Taxable income is

figured with the following adjustments:

1. A specific deduction of $100 is allowed

(but not for newsletter funds).

2. The net operating loss deduction is not

allowed.

3. The dividends-received deduction and

other special deductions for corporations are

not allowed. See section 527(c)(2).

A political organization, other than a

newsletter fund, is not required to file Form

1120-POL if its taxable income before the

specific deduction of $100 is $100 or less.

Newsletter funds cannot claim the specific

deduction of $100.

Exempt organizations that are not political

organizations.—Taxable income for an

exempt section 501(c) organization that is not

a political organization is the lesser of (1) the

amount spent for an exempt function during

the tax year either directly or indirectly

through another organization or (2) the net

investment income of the organization for the

tax year. This income is subject to the

adjustments under Taxable Income on this

page.

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 Code section

6103.

General Instructions

File Form 1120-POL with the Internal

Revenue Service Center, Ogden, UT 84201.
Form 1120-POL (1996) Page 3

Who Must Sign

If an organization officer completed Form

1120-POL, the Paid Preparer’s space should

remain blank. Anyone who prepares Form

1120-POL but does not charge the

organization should not sign the return.

Generally, anyone who is paid to prepare the

return must sign it and fill in the Paid

Preparer’s Use Only area.

The paid preparer must complete the

required preparer information and:

● Sign the return, by hand, in the space

provided for the preparer’s signature

(signature stamps and labels are not

acceptable).

● Give a copy of the return to the taxpayer.

Accounting Methods and

Periods

Figure taxable income using the method of

accounting regularly used in keeping the

organization’s books and records. Permissible

methods include the cash, accrual, or any

other method authorized by the Internal

Revenue Code. In all cases, the method used

must clearly show taxable income.

Generally, an accrual basis taxpayer can

deduct accrued expenses in the tax year in

which (1) all events that determine the liability

have occurred, (2) the amount of the liability

can be figured with reasonable accuracy, and

(3) economic performance takes place with

respect to the expense. There are exceptions

to the economic performance rule for certain

items, including recurring expenses. See

section 461(h) and the related regulations for

the rules for determining when economic

performance takes place.

Generally, the organization may only

change the method of accounting used to

report taxable income (for income as a whole

or for any material item) by getting consent

on Form 3115, Application for Change in

Accounting Method. For more information,

get Pub. 538, Accounting Periods and

Methods.

Rounding Off to Whole

Dollars

The organization may show amounts on the

return and accompanying schedules as whole

dollars. 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.

Depository Method of Tax

Payment

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,

gross valuation overstatements, and

substantial understatement of tax from the

due date (including extensions) to the date of

payment. The interest charge is figured at a

rate determined under section 6621.

Penalty for late filing of return.—An

organization 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,

Penalty for late payment of tax.—An

organization that does not pay the tax when

due may have to pay a penalty of 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. The penalty will not

be imposed if the organization can show that

the failure to pay on time was due to

reasonable cause.

Specific Instructions

The return must be signed and dated by the

president, vice president, treasurer, assistant

treasurer, chief accounting officer, or any

other organization officer (such as tax officer)

authorized to sign. Receivers, trustees, and

assignees must also sign and date any return

filed on behalf of an organization.

Change in accounting period.—Generally,

before changing an accounting period, the

Commissioner’s approval must be obtained

(Regulations section 1.442-1) by filing Form

1128, Application To Adopt, Change, or

Retain a Tax Year. Also see Pub. 538.

Attachments

Complete every applicable entry space on

Form 1120-POL. Do not write “See attached”

instead of completing the entry spaces. If you

need more space on the forms or schedules,

attach separate sheets using the same size

and format as on the printed forms. Show the

totals on the printed forms. Attach these

separate sheets after all the schedules and

forms. Be sure to put the organization’s name

and EIN on each sheet.

Attach Form 4136, Credit for Federal Tax

Paid on Fuels, after page 1 of Form

1120-POL. Attach schedules in alphabetical

order and other forms in numerical order after

Form 4136.

Other penalties.—Other penalties can be

imposed for negligence, substantial

understatement of tax, and fraud. See

sections 6662 and 6663.

Under the accrual method, an amount is

includible in income when all the events have

occurred that fix the right to receive the

income and the amount can be determined

with reasonable accuracy. See Regulations

section 1.451-1(a) for details.

File the 1996 return for calendar year 1996

and fiscal years that begin in 1996 and end in

1997. For a fiscal year, fill in the tax year

spaces at the top of the form.

Period Covered

Note: The 1996 Form 1120-POL may also be

used if (1) the organization has a tax year of

less than 12 months that begins and ends in

1997 and (2) the 1997 Form 1120-POL is not

available at the time the organization is

required to file its return. However, the

organization must show its 1997 tax year on

the 1996 Form 1120-POL and incorporate any

tax law changes that are effective for tax

years beginning after 1996.

The organization must pay the tax due in full

no later than the 15th day of the 3rd month

after the end of the tax year. Some

organizations (described below), are required

to electronically deposit all depository taxes,

including organization income tax payments.

Electronic deposit requirement.—If the

organization’s total deposits of social

security, Medicare, and withheld income

taxes were more than $50,000 in 1995, it

must make electronic deposits for all

depository tax liabilities that occur after June

30, 1997. If the organization was required to

deposit by electronic funds transfer in prior

years, continue to do so in 1997. The

Electronic Federal Tax Payment System

(EFTPS) must be used to make electronic

deposits. If the organization is required to

make deposits by electronic funds transfer

and fails to do so, it may be subject to a 10%

penalty. Organizations that are not required to

make electronic deposits may voluntarily

participate in EFTPS. For information on

EFTPS, call 1-800-945-8400 or

1-800-555-4477. (These numbers are for

EFTPS information only.)

Form 8109, Federal Tax Deposit Coupon.—

If the organization does not use EFTPS,

deposit organization income tax payments

(and estimated tax payments) with Form

8109. Do not send deposits directly to an IRS

office. Mail or deliver the completed Form

8109 with the payment to a qualified

depositary for Federal taxes or to the Federal

Reserve bank (FRB) servicing the

organization’s geographic area. Make checks

or money orders payable to that depositary or

FRB. To help ensure proper crediting, write

the organization’s EIN, the tax period to

which the deposit applies, and “Form

1120-POL” on the check or money order.

Records of these deposits will be sent to the

IRS.

A penalty may be imposed if the deposits

are mailed or delivered to an IRS office rather

than to an authorized depositary or FRB. For

more information on deposits, see the

instructions in the coupon booklet (Form

8109) and Pub. 583, Starting a Business and

Keeping Records.

Caution: If the organization owes tax when it

files Form 1120-POL, do not include the

payment with the tax return. Instead, mail or

deliver the payment with Form 8109 to a

qualified depositary or FRB, or use EFTPS, if

applicable.

up to a maximum of 25% of the unpaid tax.

The minimum penalty for a return that is more

than 60 days late is the smaller of the tax due

or $100. The penalty will not be imposed if

the organization can show that the failure to

file on time was due to reasonable cause.

Organizations that file late must attach a

statement explaining the reasonable cause.

Final return, change of address, amended

return.—If the organization ceases to exist,

check the “Final return” box.

Note: If a change in address occurs after the

return is filed, the organization should use

Form 8822, Change of Address, to notify the

IRS of the new address.

Address.—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 organization has a P.O. box,

show the box number instead of the street

address.

If the organization has changed its address

since it last filed a return, check the box for

“Change of address.”

To amend a previously filed Form

1120-POL, file a corrected Form 1120-POL

and check the “Amended return” box.
Form 1120-POL (1996) Page 4

1.

2.

3. Subtract line 2 from line 1

4. Enter line 3 or $25,000,

whichever is less

5. Subtract line 4 from line 3

6.

Line 7, Other income and nonexempt

function expenditures.—Enter the total

income from other sources, such as exempt

function income that was not properly

segregated for exempt functions and income

received in the ordinary course of a trade or

business. Also include on this line the total

expenditures that were made from exempt

function income that were not for an exempt

function and resulted in a direct or indirect

financial benefit to the political organization.

Also include on line 7 those expenditures that

were illegal. Attach a schedule listing all

income and expenditures included on line 7.

See Regulations section 1.527-5 for examples

of these types of expenditures.

7.

8.

9.

10.

Note: Estimated tax, alternative minimum tax,

and environmental tax do not apply to political

organizations.

Line 21, Tax credits.—The organization may

qualify for the following credits:

Foreign tax credit. See Form 1118, Foreign

Tax Credit—Corporations.

Possessions tax credit. See Form 5712,

Election To Be Treated as a Possessions

Corporation Under Section 936, and Form

5735, Possessions Corporation Tax Credit

(Under Sections 936 and 30A).

Line 17, Taxable income before specific

deduction of $100.—Political organizations,

newsletter funds, and separate segregated

funds: Subtract line 16 from line 8 and enter

the result on line 17(c). 

Alcohol fuel credit. See Form 6478, Credit

for Alcohol Used as Fuel, and section 40.

Research credit. See Form 6765, Credit for

Increasing Research Activities, and section 41.

Line 20, Income tax.—The rate of tax

imposed depends on whether the political

organization is a principal campaign

committee as defined in section 527(h). The

tax rate is lower for a principal campaign

committee.

Disabled access credit. See Form 8826,

Disabled Access Credit, and section 44.

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.

Political organization not a principal

campaign committee.—An organization that

is not a principal campaign committee

computes its tax on political organization

taxable income as follows: Multiply line 19 by

35% and enter the result on line 20.

Enter the total amount of these credits on

line 21 and attach the appropriate forms.

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. No deduction is

allowed for general administrative or indirect

expenses.

Principal campaign committee (section

527(h)).—A political organization that is a

principal campaign committee of a candidate

for U.S. Congress computes its tax in the

same manner as provided in section 11(b) for

corporations. Compute the tax as follows:

Enhanced oil recovery credit. See Form

8830, Enhanced Oil Recovery Credit, and

section 43.

Enter line 1 or $50,000,

whichever is less

Enter taxable income (line 19,

Form 1120-POL)

Employer identification number (EIN).—

Show the correct EIN in the space provided.

If the organization does not have an EIN, it

should apply for one on Form SS-4,

Application for Employer Identification

Number. Form SS-4 can be obtained at

Social Security Administration (SSA) offices or

by calling 1-800-TAX-FORM. If the

organization has not received its EIN by the

time the return is due, write “Applied for” in

the space provided for the EIN. See Pub. 583

for more information.

Additional Information

Question 1

Foreign financial accounts.—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 1996 calendar

year the organization had an interest in or

signature or other authority over a bank,

securities, 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

calendar 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 would

answer “Yes” to item 1 above.

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

financial account in a foreign country.

If “Yes” is checked for this question, file

Form TD F 90-22.1 by June 30, 1997, with

the Department of the Treasury at the

address shown on the form. Because Form

TD F 90-22.1 is not a tax return, do not file it

with Form 1120-POL.

You can get Form TD F 90-22.1 from an

IRS Distribution Center or by calling

1-800-TAX-FORM (1-800-829-3676).

Also, if “Yes” is checked for this question,

enter the name of the foreign country or

countries. Attach a separate sheet if

necessary.

Question 3

In the space provided, show any tax-exempt

interest received or accrued. Include any

exempt-interest dividends received as a

shareholder in a mutual fund or other

regulated investment company.

Qualified electric vehicle credit. See Form

8834, Qualified Electric Vehicle Credit, and

section 30.

Renewable electricity production credit. See

Form 8835, Renewable Electricity Production

Credit, and section 45.

Enter line 5 or $9,925,000,

whichever is less

Subtract line 6 from line 5

Multiply line 2 by 15%

Multiply line 4 by 25%

Multiply line 6 by 34%

11. Multiply line 7 by 35%

12. If line 1 is greater than

$100,000, enter the smaller of:

5% of taxable income in

excess of $100,000, or

$11,750

13. If line 1 is greater than $15

million, enter the smaller of:

3% of taxable income in

excess of $15 million or

$100,000

14. Add lines 8 through 13. Enter

here and on line 20, Form

1120-POL

Exempt organizations that are not

political organizations: Complete lines 17a

and 17b if the organization made exempt

function expenditures that were not from a

separate segregated fund. Enter the lesser of

line 17a or 17b on line 17c. See Exempt

organizations that are not political

organizations on page 2 for a description of

the amounts to enter on these lines.

Line 22.—If the political organization must

recapture any of the qualified electric vehicle

credit, include the amount of the recapture in

the total for line 22. On the dotted line next to

the entry space, write “QEV recapture” and

the amount. See Regulations section 1.30-1

for details on how to figure the recapture.

Also include ordinary income from the trade

or business activities of a partnership (from

Schedule K-1 (Form 1065), line 1).

Question 2

If the political organization received a

distribution from foreign trust after August 20,

1996, it must provide additional information.

Generally, for this purpose, a loan of cash or

marketable securities is considered to be a

distribution. Get Pub. 553, Highlights of 1996

Tax Changes, for details.

Note: Investment credit and work opportunity

credit do not apply to political organizations.