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Form 1120-IDP: 1120-IC-DISC (Schedule P)
IRS Form 1120-IC-DISC (Schedule P) is used to show the computation of taxable income for intercompany pricing rules under section 994(a)(1) and (2). This schedule applies when reporting transactions for a calendar or fiscal year.
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IRS Form 1120-IDP - 1120-IC-DISC (Schedule P)
IRS Form 1120-IC-DISC (Schedule P) is used to show the computation of taxable income for intercompany pricing rules under section 994(a)(1) and (2). This schedule applies when reporting transactions for a calendar or fiscal year.
Risk Radar
Scan points- 1Ensure you attach a separate Schedule P for every transaction or group of transactions covered.
- 2Filing without attaching a separate Schedule P for each transaction group.
- 3Not checking the box to indicate if the schedule is for a Single or Group of transactions.
- 4Failing to include appropriate apportionment deductions on line 2d (Part I).
- 5Omitting required details in Part I, such as the Employer identification number.
Plain English
This form helps track how different parts of one company (related suppliers and IC-DISCs) price their goods or services to each other. It shows the IRS exactly how much taxable income is derived from these internal sales or commissions, ensuring pricing rules are followed.
Submission Date
- Filing date: 2017-09-16 08:02:48
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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Glossary Terms
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What this form is for
- Use this form when applying intercompany pricing rules under section 994(a)(1) and (2) for a transaction or group of transactions.
- Do not use it when the section 482 method is used, as the schedule should not be completed in that scenario.
- Check Form 1120-IC-DISC instead when reporting Part II or Part III amounts on the main form.
Form selector
Use this form or another form?
Property sold but not resold during the year
The transfer price must equal the related supplier’s cost of goods sold.
✓ Check that Part I, Section A is completed for this situation.
Using the 4% gross receipts method with special rule application
If applying the special rule, check box line 22 and attach a separate statement showing the computation.
✓ Check that you have attached the required supporting statement.
Incomplete transactions where IC-DISC resells property later
Do not complete Schedule P for the year of sale; recompute and report it in the year the IC-DISC resells the property.
✓ Check that the transaction is being reported in the correct fiscal/calendar year.
Using marginal costing rules
Complete Section A-1 only if marginal costing is used for determining taxable income on a sale.
✓ Check that you have correctly apportioned deductions like interest and stewardship expenses.
Deadline or filing window
Schedule P must be attached to Form 1120-IC-DISC covering the specified calendar or fiscal year. The source does not state a specific filing deadline, but users should confirm the due date via www.irs.gov/Form1120ICDISC.
Checklist
What you need before filling it out
Part I (General)
Amount for specific transaction/group · Line 1 or Line 4 on Form 1120-IC-DISC
Part II: Transfer Price
Gross receipts from transaction · Line 24
Part II: Transfer Price
Final Transfer Price Amount · Line 26
Part III: Commission
IC-DISC taxable income · Line 27
Part III: Commission
Final Commission Amount · Line 30
Limitation Rule (50-50 method)
Maximum Taxable Income Limit · Stated on Part II/III rules
4% Method Limitation
Maximum Taxable Income Limit · Stated on Part II/III rules
Before you submit
- 1Ensure a separate Schedule P is attached for every transaction or group of transactions requiring reporting.
- 2Confirm that Part I specifies whether the filing covers a Single transaction or Group of transactions.
- 3Verify the Employer identification number matches the name shown on Form 1120-IC-DISC.
- 4If using Part II, confirm Line 26 (Transfer price) is calculated as Line 24 minus Line 25d.
- 5If using Part III, confirm Line 30 (Commission) is calculated by adding Lines 27 through 29.
- 6Check box line 22 if the 4% method is used and the special rule for transfer prices/commissions applies.
- 7If applying the 50-50 or 4% methods, ensure deductions not directly allocable are appropriately apportioned on Line 2d.
How to file this form
- 1Complete Part I by entering the applicable transaction details and identifying if it is a Single or Group of transactions.
- 2Fill out Part II (Transfer Price) by calculating Gross receipts (Line 24), listing reductions (Lines 25a-c), and determining the final Transfer price on Line 26.
- 3Complete Part III (Commission) by detailing IC-DISC taxable income (Line 27) and related expenses/commission components (Lines 28-29) to find the total Commission on Line 30.
- 4Attach this Schedule P to Form 1120-IC-DISC, ensuring it aligns with the transaction or group of transactions being reported for the specified year.
- 5Submit the completed Schedule P along with Form 1120-IC-DISC while retaining a copy for your records.
Known limitations
- 1Schedule P (Form 1120-IC-DISC) must be attached for each transaction or group of transactions to which intercompany pricing rules under section 994(a)(1) and (2) are applied.
- 2If the Section 482 method is used, do not complete Schedule P (Form 1120-IC-DISC).
- 3For incomplete transactions, do not complete Schedule P (Form 1120-IC-DISC); the transfer price must be recomputed for the year of resale and reported then.
- 4If marginal costing rules apply, Section A-1 of Schedule P (Form 1120-IC-DISC) is completed only if marginal costing is not used.
- 5The schedule can be completed for a 'Single transaction' or a 'Group of transactions'.
Field map
Compact field-by-field guide
Entity Info
2 items
Full legal name of the corporation and its Employer Identification Number.
Current mailing address and date of incorporation.
Income
3 items
Total revenue from business operations before deducting costs.
Direct costs attributable to producing goods sold by the corporation.
Gross receipts minus cost of goods sold and returns/allowances.
Deductions
1 items
Sum of all business expenses including compensation, rent, interest, taxes, and depreciation.
Tax
2 items
Total income minus total deductions.
Tax calculated on taxable income using the applicable corporate tax rate, minus any credits.
Signatures
1 items
An authorized corporate officer must sign and date the return.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current edition is dated September 2017, and the source directs users to www.irs.gov/Form1120ICDISC for the latest information.
What changed or needs a fresh check
- Edition date — confirm the revision date reads 09/2017.
- OMB Number — confirm the OMB No. is 1545-0123.
- Form Title — confirm the official title is Schedule P (Form 1120-IC-DISC).
- Reporting Period — confirm you are reporting for a calendar year OR fiscal year beginning [Year] and ending [Year].
- Method Used — confirm whether the schedule covers a Single transaction or Group of transactions.
- Special Rule Application — if using the 4% method, confirm if box line 22 is checked.
Quick Facts
Downloads
After you file
- 1Retain the completed Schedule P (Form 1120-IC-DISC) and Form 1120-IC-DISC for future reference.
- 2The form must be accompanied by a separate schedule for each transaction or group of transactions that requires intercompany pricing rules application.
- 3Confirm the revision date reads September 2017 on Schedule P (Form 1120-IC-DISC) if filing this edition.
- 4If using the group basis, all transactions for that product or product line must be grouped together.
- 5Keep documentation supporting the chosen method: 50-50, 4% gross receipts, or Section 482.
Sources
- SRCInstructions p.1 — The schedule is for a single transaction or group of transactions.
- SRCForm p.1 — Line 19 requires multiplying line 18 by 4% (0.04).
- SRCForm p.1 — Line 20 requires multiplying line 2c by 10% (0.10).
- SRCForm p.1 — Line 23 is the IC-DISC taxable income, which is the smaller of line 21 or line 22.
- SRCForm p.2 — Schedule P shows the computation for transfer price from a related supplier to an IC-DISC (Part II) or the IC-DISC commission from a related supplier (Part III).
- SRCForm p.2 — The standard methods are based on ensuring taxable income does not exceed 50% of combined taxable income OR 4% of qualified export receipts.
- SRCForm p.2 — If marginal costing rules apply, the 4% gross receipts method is referenced in Part I, Section A instructions below.
- SRCForm p.2 — The transfer price must equal the related supplier’s cost of goods sold if the IC-DISC does not resell the property during the year (for 50-50 and 4% methods).
Common confusion points
What is the difference between using 'Single transaction' versus 'Group of transactions'?
The form requires selecting one option to categorize the pricing application.
→ Select based on whether you are reporting one item/grouping or multiple items/groups.
When must I use Schedule P (Form 1120-IC-DISC)?
Use it to show the computation of taxable income for intercompany pricing rules under section 994(a)(1) and (2).
→ Check if your transactions fall under these specific IRS sections.
How do I calculate the final IC-DISC taxable income?
It is the smaller amount between line 21 (sum of lines 19 and 20) or line 22.
→ Ensure you correctly calculated both components before comparing them on line 23.
What are the three main methods for determining transfer price/commission?
The source outlines the 50-50 method, the 4% gross receipts method, and the Section 482 method.
→ Verify which calculation methodology applies to your specific transaction(s).
If I use the 4% method, where does the 10% figure come from?
It is 10% of the IC-DISC's export promotion expenses attributable to the qualified export receipts.
→ Locate and confirm the relevant export promotion expense amount.
Must I list a Principal Business Activity code number?
Only if it is used; otherwise, you can omit it on Schedule P (Form 1120-IC-DISC).
→ Check your internal documentation to see if this code has been assigned.
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- If using the Section 482 method, do not complete Schedule P (Form 1120-IC-DISC) and rely on Part II/Part III calculations.
Questions about IRS Form 1120-IDP
What is IRS Form 1120-IDP used for?
This form helps track how different parts of one company (related suppliers and IC-DISCs) price their goods or services to each other. It shows the IRS exactly how much taxable income is derived from these internal sales or commissions, ensuring pricing rules are followed.
Who must file IRS Form 1120-IDP?
A corporation must use Schedule P (Form 1120-IC-DISC) when intercompany pricing rules under section 994(a)(1) and (2) are applied to a transaction or group of transactions.
What information does IRS Form 1120-IDP require?
The form collects details such as the employer identification number, the product line reported, and whether it is for a single transaction or a group. Part II calculates the transfer price from a related supplier to IC-DISC, while Part III details the IC-DISC commission.
When is IRS Form 1120-IDP due?
Schedule P must be completed for each transaction or group of transactions applicable during the calendar year or fiscal year beginning 20 and ending 20. The specific filing deadline is not stated in this excerpt.
Where do I file IRS Form 1120-IDP?
The form should be attached to Form 1120-IC-DISC, and users can go to www.irs.gov/Form1120ICDISC for the latest information on routing.
How do I complete IRS Form 1120-IDP?
First, check if the form is for a Single transaction or Group of transactions. Then, complete Part I with identifying information. If applicable, calculate Part II (Transfer Price) by subtracting expenses from gross receipts to find line 26. Finally, fill out Part III (IC-DISC Commission) using lines 27 through 30.
What happens if IRS Form 1120-IDP is filed incorrectly?
If Schedule P is not completed or attached correctly, the intercompany pricing rules under sections 994(a)(1) and (2) may not be properly shown in the computation of taxable income.
What is the difference between using 'Single transaction' versus 'Group of transactions'?
The form requires selecting one option to categorize the pricing application. Select based on whether you are reporting one item/grouping or multiple items/groups.
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