rom DOO4

Department of the Treasury
Internal Revenue Service

Jobs Credit

> Attach to your return.

OMB No. 1545-0219

Attachment
Sequence No. 77

Name(s) as shown on return

Identifying number

GEG 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 1
2 ~~ Enter 40% (.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 control, see
instructions.) wo 2
you are a— | Then enter total of current year jobs credit(s) from—
3 Flow-through aShareholder . Schedule K-1 (Form 11208), lines 12d, 12e, or 13.
jobs credits from b Partner Schedule K-1 (Form 1065), lines 13d, 13e, or 14 3
other entities aaten Winton statement fom cooperate | ut
4 Current year jobs credit. Add lines 2 ‘and 3. (S corporations, partnerships, estates, trusts, and
cooperatives, see instructions.) 4
Tax Li ity Limitation (See Who Must ‘File Form | 3800, General Business Credit, to see if you complete
Part Il or file Form 3800.)
5a_ Individuals. Enter amount from Form 1040, line 40 .
b Corporations. Enter amount from Form 1120, Schedule J, line 3 (or Form 1120-A, Part |, line 1) . 5
¢ 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 (Form 1040)) 6b
¢ Foreign tax credit (Form 1116 or Form 1118) 6c
d- Possessions tax credit (Form 5735) 6d
e Mortgage interest credit (Form 8396) . 6e
f Credit for fuel from a nonconventional source . Sf
g Orphan drug credit (Form 6765) 6g
h Add lines 6a through 6g . . 6h
7 Net regular tax. Subtract line 6h from ‘ine 5. 7
8 Tentative minimum tax (see instructions):
a Individuals. Enter amount from Form 6251, line 20
b Corporations. Enter amount from Form 4626, line 14. 8
¢ Estates and trusts. Enter amount from Form 8656, line 37 .
9 Net income tax:
a Individuals. Add line 7 above and line 22 of Form 6251. Enter the total .
b Corporations. Add line 7 above and line 16 of Form 4626. Enter the total 9
¢ Other filers. See instructions rs
10 If line 7 is more than $25,000, enter 25% (.25) of the excess (see instructions) . . [10
141 Subtract line 8 or line 10, whichever is greater, from line 9. Enter the result. If less than zero, enter -O- | 14
12 Jobs credit allowed for current year. Enter the smaller of line 4 or line 11. This is your General
Business Credit for 1991. 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 other income tax returns 12

Paperwork Reduction Act Notice.—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.

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

Recordkeeping. 3 hr., 50 min.
Learning about the law
or the form , 35 min.

Preparing and sending
the form to the IRS 41 min.
If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form more
simple, we would be happy to hear from you.
You can write to both the IRS and the Office
of Management and Budget at the addresses
listed in the instructions of the tax return with
which this form is filed.
Item You Should Note
© The targeted jobs credit has been extended
through June 30, 1992. If this date is
extended, the IRS will use the media to
inform you.

General Instructions

(Section references are to the Internal
Revenue Code.)

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.

Cat. No. 13570D

Form 5884 (1991)


Form 5884 (1991)

Page 2

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.

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, low-income
housing credit, enhanced oil recovery credit,
and disabled access credit. If you have more
than one of these credits for 1991, a carryback
or carryforward of any of these credits, or a
jobs credit from a passive activity, attach the
appropriate credit forms and summarize them
on Form 3800. The tax liability limitation is also
figured on Form 3800. If you have only a 1991
jobs credit and the credit is not from a passive
activity, complete Part Il. You do not have to
file Form 3800 this year.

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:

4. 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 and Medicare taxes 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
$6,000 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 youths.

© Economically disadvantaged Vietnam-era
veterans.

© 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(i));

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 service (20 hours for a summer
youth employee); and

7. The wages cannot be for services of
replacement workers during a strike or
walkout.

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
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.

For example, if a jobs credit employee
began working in your business on
September 1, 1990, and you are a calendar
year taxpayer, you would have figured your
1990 jobs credit based on the first-year
wages you paid between September 1 and
December 31, 1990. You would figure your
1991 credit on the rest of the first-year wages
you paid between January 1 and August 31,
1991.

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 its share of the group credit
‘on line 2. Each member then completes lines
3 and 4, and 5 through 12 (or Form 3800, if
required) 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.

If you were allocated a jobs credit from a
flow-through entity, skip lines 1 and 2 for that
credit and enter it on jine 3.

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 accrued for 1991. This is
true even if you cannot take the full credit this
year and must carry part of it back or
forward.

An exception to this rule applies if you
capitalized any salaries and wages on which
you figured the credit. In this case, reduce
your depreciable basis by the amount of the
jobs credit on those salaries and wages.

Another exception involves the full
absorption method of inventory costing which
requires you 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.

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 (or Form 3800, if required) to
figure the jobs credit to claim on Form 1041.

S corporations and partnerships.—Prorate
the jobs credit on line 4 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 is shared among its
patrons.

Part Il

Line 8. Tentative minimum tax.—Complete
the appropriate alternative minimum tax form
through the tentative minimum tax line and
transfer the result to this line.

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.—See section 38(c)(2) for special
rules for married couples filing separate
returns, for controlled corporate groups, and
for estates and trusts.

Note: /f 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
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.