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Form 8902: Alternative Tax on Qualifying Shipping Activities
IRS Form 8902 is used for filing an Alternative Tax on Qualifying Shipping Activities by qualifying vessel operators. This form reports election status and figures the alternative tax, which may involve blending rates from 35% to 21%.
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IRS Form 8902 - Alternative Tax on Qualifying Shipping Activities
IRS Form 8902 is used for filing an Alternative Tax on Qualifying Shipping Activities by qualifying vessel operators. This form reports election status and figures the alternative tax, which may involve blending rates from 35% to 21%.
Risk Radar
Scan points- 1Ensure Line H correctly sums G(1), G(2)(a), and G(3)(a) without including any associated losses, deductions, or credits.
- 2Failing to attach Form 8902 to the corporation's Form 1120 or Form 1120-F.
- 3Entering an election by a controlled group but forgetting it applies to all members of that group.
- 4Not including amounts from G(2)(b) and G(3)(b) in gross income on the corporation's return.
- 5Forgetting to attach separate sheets if the corporation operates more than four qualifying vessels.
Plain English
This form lets a corporation elect to pay its shipping taxes differently because of special rules under section 1354(a). It is used to either make this election or report when the election ends. The form calculates how much alternative tax must be paid based on the vessel's activities.
Submission Date
- Filing date: 2018-04-13 23:00:11
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when a qualifying vessel operator is making an alternative tax election under section 1354(a) or reporting the termination of such an election.
- Do not use it when a corporation has no valid election in effect, unless you are filing to make one or report its termination.
- Check Form 1120 or Form 1120-F instead when attaching the form as part of your primary corporate income tax return.
Deadline or filing window
A corporation must make the alternative tax election on or before the due date of its income tax return. If revoking an election, filing on or before the 15th day of the 3rd month makes it effective on the 1st day of that tax year, while later filings are effective the 1st day of the following tax year.
Checklist
What you need before filling it out
Core Qualifying Activities (Line G(1))
Gross income from core qualifying activities · Form 8902
Qualifying Secondary Activities (Line G(2))
Gross income derived from secondary activities · Form 8902
Definition: Qualifying Vessel Operator
Any corporation that operates one or more qualifying vessels and meets the shipping activity requirement · Instructions p.1
Election Type A (Part I)
Corporation previously made a valid section 1354 election effective for tax years beginning [ ] ending [ ] · Form 8902
Definition: Core Qualifying Activities
Activities in operating qualifying vessels in U.S. foreign trade · Instructions p.2
Tax Rate Blending Rule
Figure and apportion alternative tax by blending the 35% rate with the 21% rate · Instructions p.1 (Line 30)
Before you submit
- 1Verify that the form is attached to the corporation’s Form 1120 or Form 1120-F.
- 2If reporting an election, confirm the purpose aligns with making an alternative tax election under section 1354(a) or reporting a termination.
- 3Enter the gross income from core qualifying activities on Line G(1) and attach the required schedule.
- 4Calculate and enter the amount of secondary activities that does not exceed 20% of line G(1) onto Line G(2)(a).
- 5For electing groups, ensure all rules are applied as if the group were one entity when completing Lines G(1) and G(2).
- 6Calculate the alternative tax amount by multiplying Line 29 by the highest rate of tax specified in section 11.
- 7Enter the final calculated alternative tax amount onto Line 30, then transfer it to the 'Other taxes' line of Form 1120, Schedule J, or Form 1120-F, Schedule J.
- 8Check the box on Form 8902 indicating that this form has been filed.
How to file this form
- 1Complete Part I of Form 8902 by selecting the appropriate election status (A, B, or C) and filling in the corresponding tax year start and end dates.
- 2Enter the corporation's gross income from core qualifying activities on Line G(1), attaching a supporting schedule.
- 3Calculate and enter the gross income derived from qualifying secondary activities on Line G(2), ensuring it is 20% or less of the Line G(1) total.
- 4Attach Form 8902 to your corporation's Form 1120 or Form 1120-F before sending.
Known limitations
- 1The rules for qualifying vessel operators apply to a partner in a partnership as if that partner operated vessels and conducted activities through the partnership.
- 2A similar rule applies to other pass-through entities when applying Form 8902 rules.
- 3For an electing group, the general rules are applied as if the group were one entity, and the 0.1% limitation is allocated among the corporations in the group.
Field map
Compact field-by-field guide
Entity Info
1 items
Name and taxpayer ID of the entity claiming the credit.
Credit Info
1 items
Type of credit or incentive being claimed.
Calculation
2 items
The base amount used to calculate the credit.
Calculated credit amount after applying formulas and limitations.
Certification
1 items
Detailed breakdown supporting the credit calculation.
Signatures
1 items
Sign and date the form.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current edition is Revision April 2018, and readers can find the latest information regarding Form 8902 and its instructions at IRS.gov/Form8902.
What changed or needs a fresh check
- Edition date — confirm the revision reads April 2018.
- Tax rate change — confirm awareness of the reduced highest corporate tax rate from 35% to 21%, effective for tax years beginning after December 31, 2017.
- Attachment requirement — confirm you are attaching Form 8902 to your corporation's Form 1120 or Form 1120-F.
- Election type check (Part I) — confirm which box (A, B, or C) accurately describes the current election status.
Quick Facts
Downloads
After you file
- 1Retain books or records relating to Form 8902 or its instructions for as long as their contents may become material in the administration of any Internal Revenue law.
- 2Attach Form 8902 to the corporation's Form 1120 or Form 1120-F when filing.
- 3If a corporation has fiscal years beginning before January 1, 2018, and ending after December 31, 2017, it must figure and apportion its alternative tax by blending the 35% rate with the 21% rate (see instructions for line 30).
- 4Do not include the amount entered on Line H (Gross Income From Qualifying Shipping Activities Excluded From Gross Income on the Corporation's Income Tax Return) in gross income on the corporation's Form 1120 or Form 1120-F, nor any item of loss, deduction, or credit with respect to that excluded income.
Sources
- SRCInstructions p.1 — Form 8902 is used by qualifying vessel operators to make an alternative tax election under section 1354(a) or report the termination of such an election.
- SRCInstructions p.1 — The corporation must file Form 8902 if it is making an alternative tax election, reporting a termination, or has a valid election in effect to report information and figure the alternative tax.
- SRCInstructions p.1 — A 'qualifying vessel operator' is any corporation that operates one or more qualifying vessels and meets the shipping activity requirement.
- SRCInstructions p.3 — The amount on Line H (Gross Income From Qualifying Shipping Activities Excluded) must not be included in gross income on the corporation's Form 1120 or Form 1120-F, nor any related loss, deduction, or credit.
- SRCForm p.1 — Form 8902 must be attached to the corporation’s income tax return.
- SRCInstructions p.1 — Corporations with fiscal years beginning before January 1, 2018, and ending after December 31, 2017, must blend the 35% rate (before Jan 1, 2018) with the 21% rate (after Dec 31, 2017).
- SRCInstructions p.2 — For an electing group, the rules are applied as if the group were one entity, and the 0.1% limitation is allocated among the corporations in the group.
Common confusion points
Who must file this form?
A qualifying vessel operator must file Form 8902 if they are making an alternative tax election under section 1354(a) or reporting the termination of such an election.
→ Confirm the filer meets the 'qualifying vessel operator' definition.
What is a 'qualifying vessel operator'?
It means any corporation that operates one or more qualifying vessels and meets the shipping activity requirement.
→ Check that the company operates at least one qualifying vessel AND meets the shipping activity requirement.
How do I file this form?
Attach Form 8902 to your corporation's Form 1120 or Form 1120-F.
→ Ensure the attachment is made directly to the main corporate tax return.
What happens if my company has a fiscal year spanning 2017 and 2018?
The corporation must figure and apportion its alternative tax by blending the 35% rate (before Jan 1, 2018) with the 21% rate (after Dec 31, 2017).
→ Verify this calculation aligns with the instructions for Line 30.
What is Line H?
It requires entering the total of lines G(1), G(2)(a), and G(3)(a) on Form 8902.
→ Confirm this amount should be excluded from gross income reported on your corporation's Form 1120 or Form 1120-F.
What is the limit for incidental activities?
On Line G(3)(b), you enter the gross income from incidental activities that exceeds 0.1% of line G(1).
→ Ensure a schedule showing computations for lines G(3)(a) and (b) is attached.
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- Not stated in the official source — verify on the agency site (General error correction procedures apply; Form 8902 itself does not specify a correcting form.)
Questions about IRS Form 8902
What is IRS Form 8902 used for?
This form lets a corporation elect to pay its shipping taxes differently because of special rules under section 1354(a). It is used to either make this election or report when the election ends. The form calculates how much alternative tax must be paid based on the vessel's activities.
Who must file IRS Form 8902?
A qualifying vessel operator must file Form 8902 if it is making an alternative tax election under section 1354(a) or reporting the termination of such an election. It is also used to report information and figure the alternative tax for a corporation that already has a valid election in effect.
What information does IRS Form 8902 require?
The form collects details across several parts, including Part I (Election or Termination), which covers Section 1354 Election status; Part III (Vessel Information), detailing specific vessels; and Part IV (Notional Shipping Income), calculating income based on vessel metrics like Dead weight tons.
When is IRS Form 8902 due?
A corporation must make the alternative tax election on or before the due date (including extensions of time to file) of the income tax return for the year the election is made. Revocation of an election generally takes effect on the 1st day of a tax year, depending on when it is filed.
Where do I file IRS Form 8902?
Form 8902 must be filed by attaching it to the corporation's Form 1120 or Form 1120-F. The source does not specify a separate mailing address for filing.
How do I complete IRS Form 8902?
First, complete Part I regarding the election status. Next, for each qualifying vessel, fill out a separate column in Part III with details like ownership type (O, L, or CL) and use type (BB, TC, or OI). Finally, calculate the Notional Shipping Income on Part IV before attaching it to the corporation's Form 1120 or Form 1120-F.
What happens if IRS Form 8902 is filed incorrectly?
The form is used to figure the alternative tax, and failure to correctly report information means the corporation may be subject to the standard corporate tax rates instead of the elected alternative rate.
Who must file this form?
A qualifying vessel operator must file Form 8902 if they are making an alternative tax election under section 1354(a) or reporting the termination of such an election. Confirm the filer meets the 'qualifying vessel operator' definition.
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