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Department of the Treasury
Internal Revenue Service

Jobs Credit

> Attach to your tax return.

OMB No. 1545-0219

1987

Attachment
Sequence No. 77

Name(s) as shown on return

Identifying number

TEE sobs Credit

1 Enter the number of employees and total qualified wages paid or incurred during the tax year (up to
$6,000 for each employee for each of the first two years) for services of employees who are certified
as members of a tage eted group. Note: Second-year wages apply only to employees who began work
before January 1, 1986. See instructions for special rules on qualified summer youth employees.

Number of employees Total qualified wages
First year { Do not include sum- \ a b

Second year | mer youth employees c d
Qualified summer youth employees e f

Enter 40% of line 1b oe
Enter 25% of line 1d (for employees who began work before 1- 1 86).
Enter 85% of line 1f

Current year jobs credit—Add lines 2, 3, and 4, Enter here and include on Schedule C (Form 1040),
line 28b; Form 1120, line 13(b), page 1; or the corresponding line on other returns. (Members of a
group of trades or businesses under common control, see Specific Instructions.)

anhwn

Ifyou are a— Then enter total of current year jobs credit(s) from—
6  Flow-through jobs credits a Shareholder . ‘Schedule K-1 (Form 11208), lines 11 or12
from other entities b Partner . Schedule K-i (Form 1068), lines 124, 12e, or 13
© Beneficiary Schedule K-1 (Form 1041),line9 .
d Patron (See instructions for line 6d)

7 Total jobs credit for current year—Add lines 5 and 6 s corporations, partnerships, estates, trusts, and
cooperatives, see instructions for line 7.) .

loo

6

7

Note: /f you have a 1987 investment credit (Form 3468), credit for alcohol used as fuel (Form 64 78), research credit (Form 6765), or
low-income housing credit (Form 8586) in addition to your 1987 jobs credit or if you have a carryback or carryforward of any of these
credits, stop here and go to Form 3800, General Business Credit, to claim your 1987 jobs credit. If you have only a 1987 jobs credit,

you may continue with lines 8 through 15 to claim your credit.

GEMM Tax Liability Limitation

8 a Individuals—From Form 1040, enter amount from line 43. .
b Corporations—From Form 1120, Schedule J, enter tax from line 3 (or Form 11204 ‘A, ‘Part |, line 0)

¢ Other filers—Enter income tax before credits from return Soe . 8
9 a Individuals—From Form 1040, enter credit from line 44, Plus any orphan craga nonconventional
source fuel credits included on line 46 . .
b Corporations—From Form 1120, Schedule J, enter credits from lines 4) trou «0 (rm
1120-A filers, enter zero) . :
c¢ Other filers—See instructions for line 9c . 9
10 Income tax liability as adjusted (subtract line 9 from line 8) 10
11 Tentative minimum tax—
a Individuals—From Form 6251, enter amount from line 17.
b Corporations—From Form 4626, enter amount from line 19
c¢ Estates and trusts—From Form 8656, enter amount from line 20 : ll
12 Excess of income tax liability over tentative minimum tax—Subtract line 11 from line 10 . 12
13 a Enter smaller of line 10 or $25,000 (See instructions for line 13) . 13a
b If line 10 is more than $25,000—Enter 75% of the excess . 13b
14 Addlines 13a and 13b 14
15 Total allowed jobs credit—Enter the smallest of line 7, line 12,< or line 14. This i is your ’ General
Business Credit for 1987. Enter here and on Form 1040, line 45; Form 1120, Schedule J, line 4(e);
Form 1120-A, Part, line 2; or the proper line of other returns . 15

Instructions

(Section references are to the Internal Revenue
Code.)

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.

Changes You Should Note.— The Tax Reform
Act of 1986 changed the alternative minimum tax
rules for the general business credits. This will

require an additional tax liability imitation”
computation on lines 11 and 12.

If you have credits from passive activities, see
Form 8582-CR, Passive Activity Credit
Limitations, before completing Form 5884.
General Business Credit.—The general business
credit consists of the investment credit, jobs
credit, credit for alcohol used as fuel, research
credit, and low-income housing credit. If you have
more than one of these credits for 1987 or a
carryback or carryforward of any of these credits,
you must attach the appropriate credit forms and
summarize them on Form 3800, General

“Business Oredit. you have only @ 1987 jobs
credit, you do not have to file Form 3800 this year.
Purpose of Form.— Use Form 5884 if you had
jobs credit employees and take an income tax
credit for wages you paid or accrued for them
during the tax year.

Mutual savings institutions, regulated
investment companies, and real estate
investment trusts can take a limited credit. See
section 52(e) and the related regulations.

You can take or revoke the jobs credit any time
within 3 years from the due date of your return.
Take the credit either on your original return or
onan amended return.

Form 5884 (1987)


Form 5884 (1987)

Page 2

For more information, see Publication 572,
General Business Credit.

How to Figure the Credit.—In general, figure
your jobs credit based on the employee’s wages
subject to the Federal Unemployment Tax Act
(FUTA). Jobs credit wages, however, are limited
to $6,000 for each employee ($3,000 for each
qualified summer youth employee). Special rules
apply in the following cases:

(1) You can take a jobs credit for agricultural
employees who meet the other tests if their
services qualify under FUTA as agricultural labor
during more than half of any pay period. Base
your credit for each employee on the first $6,000
in wages subject to social security (FICA) tax you
paid or accrued for that person during the year.

(2) You can take a credit for railroad
employees who meet the other tests if their
wages qualify under the Railroad Unemployment
Insurance Act (RUIA). Base your credit for each
employee on the first $500 a month you paid or
accrued for that person during the year in wages
subject to RUIA tax,

(3) Wages for youths in a cooperative
education program are not subject to FUTA, but
include their wages in the amount you use to
figure your jobs credit. Base your obs credit for
each youth on the first $6,000 in wages you paid
or accrued for that person during the year.

Your credit is based on a percentage of the
wages for each employee in the following
targeted groups:
¢ Referrals by a vocational rehabilitation

program:

Economically disadvantaged Vietnam-era
veterans,

¢ Economically disadvantaged youths

‘© Supplemental Security Income (SSI)
recipients.

© General assistance recipients.

© Youths in a cooperative education program,
who belong to an economically

disadvantaged family.
© Economically disadvantaged ex-convicts.
© Eligible work incentive employees.
© Qualified summer youth employees, age 16

or 17, who first worked for you between

May i and September 15, 1987

In addition, to claim a jobs credit on an
employee's wages:

(1) more than half the wages received from you
must be for working in your trade or business;

(2) the employee must be certified, as
explained below, as belonging to a targeted
group;

(3) you may not claim a credit on wages that
were repaid by a Federally funded on-the-job
training program, or for which you received work
supplementation payments under the Social
Security Act;

(4) the employee cannot be your relative or
dependent (see section 51(i));

(5) the employee cannot be your rehired
employee if he or she was not a targeted group
member when employed earlier; and

(6) the employee must have worked for you for
at least 90 days (14 days for a summer youth
employee) or completed at least 120 hours of
services (20 hours for a summer youth
employee).

Certification is done by a local agency,
generally an office of the State Employment
Security Agency (Jobs Service). The agency gives
the employer a form certifying that the employee
is in a targeted group. The certification must be
completed or the employer must request, in
writing, a certification from the certifying agency
by the date the employee begins work (or within

5 days if the employer has received a written
preliminary determination that the employee is
ina targeted group)

Certification of a Youth in a Cooperative
Education Program.—The certification is
completed by the school administering the
cooperative program. The school gives the
employer a completed Form 6199, Certification
of Youth Participating in a Qualified Cooperative
Education Program.

Specific Instructions

Parti

On lines 1 through 5 figure your credit for wages
you paid or accrued. If you have credits only from
sources that shared a jobs credit (S corporations,
partnerships, estates, trusts, or cooperatives),
skip lines 1 through 5.

Whether or not you complete lines 1 through
5, enter on line 6 any credits you received from
sources that share the credit. Complete the rest
of the form to figure the credit to enter on your
income tax return.

Controlled groups: The group member
proportionately contributing the most first-year
wages (or second-year wages if no first-year
wages are involved) figures the group credit in
Part | and skips Part Il.

On separate Forms 5884, that member and
every other member of the group skips lines 1
through 4 and enters its share of the group credit
on line 5. Each member then completes lines 6
through 15 on its separate form. Each group
member attaches to its Form 5884 a schedule
showing how the group credit was divided among
all the members. The members share the credit
in the same proportion that they contributed
qualifying wages.

Line 1a.—Enter the number of employees for
whom you have first-year wages

Line 1b.—Enter the first-year wages. They are
limited to $6,000 of each employee's first-year
wages. If you paid first-year wages to any of these
employees last year, subtract those wages from
the $6,000 limit

Line 1c.—Enter the number of employees who
began work before January 1, 1986, for whom
you have second-year wages.

Line 1d.—Enter the second-year wages. ‘hey
are limited to $6,000 for each employee. If you
paid second-year wages to any of these
employees last year, subtract those wages from
the $6,000 limit for that employee.

For example, if a jobs credit employee began
working in your business on September 1, 1985,
and you are a calendar year taxpayer, you would
have figured your 1985 jobs credit based on the
first-year wages you paid between September 1
and December 31, 1985. You would have
figured your 1986 credit on the rest of the first-
year wages you paid between January 1 and
‘August 31, 1986; and on the second-year wages
paid between September 1 and December 31,
1986. Figure your 1987 credit on the rest of the
second-year wages you paid between January 1
and August 31, 1987

Line 1f.—For each qualified summer youth
employee, wages are limited to those paid for any
90-day period between May 1 and September 15,
up to $3,000. You cannot claim a credit for an
employee who was your employee in any prior
period, Also, the summer youth employee must
have worked for you at least 14 days, or
completed at least 20 hours of services.

Line 4.—Taxpayers with qualified summer
youth employees.—Include 85% of the first
$3,000 of wages paid to each qualified employee.
Line 5.—In general, you must subtract your
current year jobs credit on line 5 from the
deduction on your return for salaries and wages

you paid or owe for 1987. Ths is true even if you
cannot take the full credit this year and must
carry part of it back or forward.

An exception 1s a credit based on salaries and
wages you capitalize for depreciation. If you have
such a credit, reduce the amount on which you
figure depreciation by the part of the current
year jobs credit on line 5 that applies to the jobs
credit wages you capitalize

Another exception involves the full absorption
method of inventory costing. See the regulations
under section 280C to reduce your basis in
inventory for the jobs credit.

If either exception applies to you, attach a
statement to your return to explain why the
amount on line 5 differs from the amount you
subtract from your salary and wage deduction.
See Publication 572 for details.

Line 6.—If you have flow-through credits from
more than one entity or type of entity, add them
up and enter the total on line 6.

Line 6d.—If you belong to a cooperative that has
an excess jabs credit, the cooperative should have
given youa statement showing your share of the
excess. Include on line 6 your total excess jobs
credit from all cooperatives to which you belong.
Line 7.—Estates and trusts: The jobs credit on
line 7 is shared between the estate or trust itself
and the beneficiaries in proportion to the income
allocable to each. On the dotted line to the left of
the amount on line 7, the estate or trust should
enter its own part of the total obs credit. Please
label it "1041 PORTION” and use this amount in
Part Il to figure the jobs credit to take on Form
1041.

S corporations and partnerships: Prorate the
jobs credit on line 7 among the shareholders or
partners. Attach Form 5884 to the return and on
Schedule K-1 show the credit for each
shareholder or partner.

Cooperatives: Most tax-exempt organizations
cannot take the jobs credit; but a cooperative
described in section 1381(a) takes the jobs
credit to the extent it has tax liability. Any excess
1s shared among its patrons.

Carryoacks and carryforwards: If you cannot
use part of the credit because of the tax liability
limitations, you may carry it back 3 years, then
forward 15 years. Use Form 3800.

Part Il

Line 9c, Other filers.—Before you can clam the
jobs credit (which will be your general business
credit for 1987) agaist your income tax liability,
you must reduce this tax liability by the credits
listed below:

@ Personal credits (child and dependent care
credit, credit for elderly or disabled, residential
energy credit carryforward, and the credit for
interest on certain home mortgages)

© Foreign tax credit

‘@ Possessions corporation tax credit

‘© Orphan drug credit

¢ Nonconventional source fuel credit

Line 13. Limitation.—If the tax liability on line

10 1s $25,000 or less, your jobs credit is limited

to that tax liability. If the tax liability 1s more than

$25,000, your credit is limited to $25,000 plus

75% of the excess.

Ifa husband and wife file separate returns,
each must use $12,500 instead of $25,000. But
if one of them has no credit, then the other may
use the entire $25,000.

Controlled corporate groups must divide the
$25,000 among all component members. See
section 38(c)(4\(B).

Estates and trusts, see section 38(c)(4)(D).

U.S, Government Printing Office: 1987-183-286 23-0916750