OMB No. 1545-0219

1989

Attachment
Sequence No. 77

Identifying number

vom DOO4

Department of the Treasury
Internal Revenue Service

Name(s) as shown on return

Jobs Credit

> Attach to your return.

Current Year Jobs Credit

1 Enter the total qualified wages paid or incurred during the tax year for services of employees who are
certified as members of a targeted group. (Note: The employee must begin working fo for yous on or before
September 30, 1990. See instructions for special rules.) . . . » Ld

2 Current year jobs credit—Enter 40% of line 1 here. You must subtract this amount from the deduction
‘on your return for salaries and wages. (Members of a group of trades or businesses under common con-

trol, see instructions.) . . . . . 2. So ee ee ee LZ
Tf you are a— Then enter total of current year jobs credit(s) rom—
3. Flow-through jobs credits @ Shareholder . ‘Schedule K-l (Form 11208), lines 114, Ile, or 12
from other ontities b Partner. Schedule K-1 (Form 1065), lines 12d, 12, or 13, 3
© Beneficiary Schedule K-1 (Form 1041), line 12. :
d Patron (See instructions for line 3d)
4 Total jobs credit for current year—Add lines 2 and 3 (8. corporations, partnerships, estates, trusts, and
cooperatives, see instructions.) . . . . 4

See instructions for filing requirements of Form 3800

GEM Tax Liability Limitation

5a Individuals—Enter amount from Form 1040, line 40 . oo
b Corporations—Enter amount from Form 1120, Schedule J, line 3 (or Form 1120- A, Part , line 1). 5
c Other filers—Enter regular tax before credits from your return .

6 Credits that reduce regular tax before the jobs credit:

a Credit for child and dependent care expenses (Form 2441). . . . . .| 6a

b Credit for the elderly or the disabled (Schedule R,Form1040). . . . .| 6b

c Foreign tax credit (Form1116orForm1118) ........ . .{6¢

d Possessions tax credit (Form5735). . . . ......... .{6d

e Mortgage interest credit (Form8396). .......... . .| 6e

f Credit for fuel fromanonconventionalsource . . . . . . . . . .L6f

g Orphan drug credit (Form6765). . . . 6g

h Total credits that reduce regular tax before the jobs credit (add lines 6a through 6g ...... . 6h
7 Net regular tax (subtractline6hfromline5). . 2 2 1 we ee ee LZ

8 Tentative minimum tax:
a Individuals—Enter amount from Form 6251, line 17 see ee
b Corporations—Enter amount from Form 4626, line13. |. rr 8
c Estates and trusts—Enter amount from Form 8656, Part III, line 10 .
9 Net income tax:
a Individuals—Add line 7 above, and line 19 of Form 6251. Enter the total

b Corporations—Add line 7 above, and line 16 of Form 4626. Enterthetotal. . . . 2. 2. . 9
¢ Other filers—See instructions Fo
10 If line 7 is more than $25,000, enter 25% of the excess 5 (see instructions) toe 10

11 Subtract line 8 or line 10, whichever is greater, from line 9. Enter the result. If less than ze zero, enter zero 11

12 Total allowed jobs credit—Enter the smaller of line 4 or line 11. This is your General Business Credit
for 1989. Enter here and on Form 1040, line 44; Form 1120, Schedule J, line 4e; Form 1120-A, Part |,
line 2a; or the appropriate line of otherincometaxreturns . . 12

General 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.

The time needed to complete and file this
form will vary depending on individual
circumstances. The estimated average time is:

Recordkeeping . » 3hrs., 50 min.
Learning about the

lawor the form . . 35 min.
Preparing and

sending the form

toIRS. so... 41min.

Ifyou have comments concerning the
accuracy of these time estimates or

sstions for making this form more simple,

we would be happy to hear from you. You can
write to either IRS or the Office of Management
and Budget at the addresses listed in the
instructions of the tax return with which this

form is filed.

Items You Should Note

@ The targeted jobs credit only applies to qualified
wages paid or accrued to employees who begin
work for the employer on or before September 30,
1 .

Form 5884 (1989)


Form 5884 (1989)

Page 2

‘© For an economically disadvantaged youth
employee, the youth must be at least age 18 but
less than age 23 on the date hired.

For a summer youth employee, the credit 1s 40,
percent of qualified wages.

¢ Ifany of the credit claimed on this form is from
a passive activity, you must stop at line 4 and go
to Form 3800, General Business Credit, to claim
your 1989 jobs credit

Who Must File Form 3800, 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 1989, a carryback or
carryforward of any of these credits, or a jobs
credit from a passive activity, you must attach
the appropriate credit forms and summarize
them on Form 3800. If you have only a 1989 jobs
credit and the credit 1s not from a passive activity,
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 claim or elect not to claim the jobs
credit any time within 3 years from the due date
of your return on either your original return or on
an amended return

For more information, see Pub. 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 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 in wages
subject to RUIA tax paid or accrued for that
person during the year

(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 jobs 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 work for you between May 1 and
September 15.

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(1));

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

(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), and

(7) the wages cannot be for services of
replacement workers during a strike or walkout

Certification 1s 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 ina 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 in
a 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
Part!

Line 1.—Enter the first-year wages paid to
qualified employees. The wages are limited to
$6,000 of first-year wages paid. The wages for
qualified summer youth employees are limited to
$3,000. If you paid first-year wages to a qualified
employee last year subtract those wages from
the $6,000 limit.

If you were allocated a jobs credit from a flow-
through entity, see instructions for line 3.

For example, if a jobs credit employee began
working in your business on September 1, 1988,
and you are a calendar year taxpayer you would
have figured your 1988 jobs credit based on the
first-year wages you paid between September 1
and December 31, 1988. You would have figured
your 1989 credit on the rest of the first-year
wages you paid between January 1 and August
31, 1989

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 service.

Controlled groups: The group member
proportionately contributing the most first-year
wages figures the group credit in Part | and skips
Part Il See sections 52(a) and 1563.

On separate Forms 5884, that member and
every other member of the group should skip line
1 and enter their share of the group credit on line
2 Each member then completes lines 3 through
12 on its separate form. Each group member
must attach 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 2.—In general, you must subtract your
current year jobs credit on line 2 from the
deduction on your return for salaries and wages
you paid or owe for 1989. This 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 2 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 2 differs from the amount you
subtract from your salary and wage deduction.
See Pub. 572 for details.

Line 3.—Enter the amount of credit that was
allocated to you as a shareholder partner
beneficiary, or patron of a cooperative.

Line 4.—If you have a credit from a passive
activity, stop here and go to Form 3800.

Estates and trusts: The jobs credit on line 4 is
allocated between the estate or trust and the
beneficiaries in proportion to the income
allocable to each. On the dotted line to the left of
the amount on line 4, the estate or trust should
enter its part of the total jobs credit. Label it

1041 PORTION’ and use this amount in Part II
to figure the jobs credit to take on Form 1041.

S corporations and partnerships: Prorate the
jobs credit on line 4 among the shareholders or
partners. Attac!i 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 is
shared among its patrons.

Carrybacks 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.

See section 383 for the limitation on the
amount of any excess general business tax
credits of a loss corporation for any tax year
ending after a post-1986 ownership change that
may be used in a post-change year

Part Il

Line 9c. Other filers.—Enter the sum of line 7
and your alternative minimum tax from
whichever alternative minimum tax form you file.
Line 10. Limitation.—See section 38(c)(3) for
special rules for married couples filing separate
returns, for controlled corporate groups, and for
estates and trusts

‘YrU 8, GOVERNMENT PRINTING OFFICE: 1989- 245-524