Form 8697 PDF Details

Navigating the complexities of tax obligations and calculations can seem daunting, especially when dealing with the aftermath of completed long-term contracts. This is where Form 8697 steps in, serving as a crucial component for taxpayers in the United States who need to compute interest under the look-back method for completed long-term contracts. As outlined by the Internal Revenue Service (IRS) and revised in March 1998, this form plays a pivotal role in ensuring that taxpayers—whether individuals, corporations, partnerships, estates, or trusts—accurately report and rectify any discrepancies between estimated and actual income from such contracts. Essentially, Form 8697 requires a meticulous adjustment of taxable income to reflect the real numbers, followed by an intricate computation of interest owed to or by the IRS based on these adjustments. With sections dedicated to both the Regular Method and the Simplified Marginal Impact Method, the form accommodates differing taxpayer needs and scenarios, providing a structured pathway to compliance. It stipulates a clear process for reporting, from detailing the taxable income or loss for prior years to adjusting this income to mirror the true contract outcomes. Moreover, it outlines when and how to file, emphasizing its separate status from the usual tax return and underlining its importance with the potential for either additional interest payments or refunds. Through this form, the IRS aims to maintain financial integrity and fairness in the tax system, especially in the sphere of long-term contracting, making Form 8697 a critical instrument for eligible taxpayers.

QuestionAnswer
Form NameForm 8697
Form Length2 pages
Fillable?No
Fillable fields0
Avg. time to fill out30 sec
Other namesEIN, Taxable, K-1, AMT

Form Preview Example

Form 8697

 

 

Interest Computation Under the Look-Back

 

OMB No. 1545-1031

(Rev. March 1998)

 

 

M ethod for Completed Long-Term Contracts

 

 

 

 

 

 

Attachment

Department of the Treasury

 

 

▶ See separate instructions. ▶ Please print or type.

 

 

 

 

 

 

 

 

Sequence No. 97

Internal Revenue Service

 

 

 

 

 

 

 

 

 

 

 

 

For the filing year beginning

, and ending

 

. See page 3 of the instructions.

Name

 

 

 

A

Identifying number

 

 

 

 

 

 

Fill In Your

 

Number, street, and apt., room, or suite no. If a P.O. box, see page 3 of the instructions.

B

Check applicable box to show type of taxpayer:

Address Only If

 

 

 

 

 

 

 

 

 

You Are Filing This

 

 

 

 

 

Corporation

S corporation

Form Separately

 

City or town, state, and ZIP code

 

Individual

 

Partnership

and Not With Your

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax Return

 

 

 

 

 

Estate or trust

 

CIf you were an owner of an interest in a pass-through entity (such as a partnership or an S corporation) that holds one or more long-term contracts to which this interest computation relates, enter the name and employer identification number of the entity. Attach a schedule if there is more than one such entity.

Name of entity

Employer identification number

Part I Regular Method

 

 

Date of each prior year to which interest

 

1 Taxable income (or loss) for the prior year(s) shown on tax

 

 

computation relates:

 

 

(d)

 

 

 

 

 

 

return (or as previously adjusted) before net operating loss

 

(a)

 

(b)

 

(c)

 

 

 

Totals

or capital loss carrybacks (other than carrybacks that must

 

 

 

 

Year ended

 

Year ended

 

Year ended

(Add columns (a),

be taken into account to properly compute interest under

 

 

 

mo.

yr.

mo.

yr.

mo.

yr.

(b), and (c).)

section 460). See page 3 of the instructions. If you were

 

 

 

 

 

 

 

required to file Form 8697 for an earlier year, enter adjusted

 

 

 

 

 

 

 

taxable income for the prior year(s) from line 3, Form 8697,

 

 

 

 

 

 

 

for the most recent filing year that affects the prior year(s)

 

 

 

 

 

 

 

2Adjustment to income to reflect the difference between:

(a)the amount of income required to be allocated for post-February 1986 contracts completed or adjusted during the tax year based on the actual contract price and costs, and (b) the amount of income reported for such contracts based on estimated contract price and costs. See page 3 of the instructions and attach a schedule listing each separate contract, unless you were an owner of an interest in a pass-through entity reporting this amount from Schedule K-1 or a similar statement

3Adjusted taxable income for look-back purposes. Combine lines 1 and 2

4Income tax liability on line 3 amount using tax rates in effect for the prior year(s). See page 3 of the instructions

5Income tax liability shown on return (or as previously adjusted) for the prior year(s). See page 3 of the instructions. If you were required to file Form 8697 for an earlier year, enter the amount required to be reported on line 4, Form 8697, for the most recent filing year that affects the prior year(s)

6Increase (or decrease) in tax for the prior year(s) on which interest is due (or is to be refunded). Line 4 minus line 5

7Interest due on increase, if any, shown on line 6. See page 3 of the instructions for computation

8Interest to be refunded on decrease, if any, shown on line 6. See page 3 of the instructions for computation

9Net amount of INTEREST TO BE REFUNDED TO YOU. If line 8, column (d), exceeds line 7, column (d), enter the excess. File Form 8697 separately; DO NOT attach it to your tax return. See page 4 of the instructions

10Net amount of INTEREST YOU OWE. If line 7, column (d), exceeds line 8, column (d), enter the excess. Attach Form 8697 to your tax return. See page 4 of the instructions for where to include this amount on your return

For Privacy Act and Paperwork Reduction Act Notice, see page 6 of the instructions.

Cat. No. 64598V

Form 8697 (Rev. 3-98)

Form 8697 (Rev. 3-98)

 

 

 

 

 

 

Page 2

 

Simplified Marginal Impact Method

 

 

 

 

 

 

 

Part II

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Date of each prior year to which interest

 

1 Adjustment to regular taxable income to reflect the

 

 

computation relates:

 

 

(d)

difference between: (a) the amount of such income required

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

to be allocated for post-February 1986 contracts

 

(a)

 

(b)

 

(c)

Totals

completed or adjusted during the tax year based on actual

 

Year ended

 

Year ended

 

Year ended

(Add columns (a),

contract price and costs, and (b) the amount of such

mo.

yr.

mo.

yr.

mo.

yr.

(b), and (c).)

income reported for such contracts based on estimated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

contract price and costs. See page 5 of the instructions

 

 

 

 

 

 

 

and attach a schedule listing each separate contract,

 

 

 

 

 

 

 

unless you were an owner of an interest in a pass-through

 

 

 

 

 

 

 

entity reporting this amount from Schedule K-1 or a similar

 

 

 

 

 

 

 

statement

 

 

 

 

 

 

 

2Increase (or decrease) in regular tax for prior year(s). Multiply line 1 in each column by the applicable regular tax rate. See page 5 of the instructions

Note: For prior years beginning before 1987, skip lines 3 and 4 and enter on line 5 the amount from line 2.

3Adjustment to alternative minimum taxable income to reflect the difference between: (a) the amount of such income required to be allocated for post-February 1986 contracts completed or adjusted during the tax year based on actual contract price and costs, and (b) the amount of such income reported for such contracts based on estimated contract price and costs. See page 5 of the instructions and attach a schedule listing each separate contract, unless you were an owner of an interest in a pass-through entity reporting this amount from Schedule K-1 or a similar statement

4Increase (or decrease) in alternative minimum tax (AMT) for prior year(s). Multiply line 3 in each column by the applicable AMT rate. See page 5 of the instructions

5Enter the amount from line 2 or line 4, whichever is greater. See page 5 of the instructions if either amount is negative

Pass- through entities: Skip line 6 and enter on line 7 the amount from line 5.

6Overpayment ceiling. For each column in which line 5 is a negative number, enter your total tax liability for the prior year, as adjusted for past applications of the look-back method, and after net operating loss, capital loss, and credit carryovers and carrybacks to that year. For each column in which line 5 is a positive number, leave line 6 blank and enter on line 7 the amount from line 5

7Increase (or decrease) in tax for the prior year(s) on which interest is due (or is to be refunded). Enter the amount from line 5 or line 6, whichever is smaller. Treat both numbers as positive when making this comparison, but enter the amount as a negative number

8Interest due on increase, if any, shown on line 7. See page 5 of the instructions for computation

9Interest to be refunded on decrease, if any, shown on line 7. See page 5 of the instructions for computation

10Net amount of INTEREST TO BE REFUNDED TO YOU. If line 9, column (d), exceeds line 8, column (d), enter the excess. File Form 8697 separately; DO NOT attach it to your tax return. See page 5 of the instructions

11Net amount of INTEREST YOU OWE. If line 8, column (d), exceeds line 9, column (d), enter the excess. Attach Form 8697 to your tax return. See page 5 of the instructions for where to include this amount on your return

Sign Here Only If

 

Under penalties of perjury, I declare that I have examined this form, including accompanying schedules and statements, and to the best of

 

my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which

You Are Filing This

 

 

preparer has any knowledge.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Form Separately

 

 

 

 

 

 

 

 

 

 

 

and Not With Your

 

 

 

 

 

 

 

 

 

 

 

Tax Return

 

 

 

 

 

 

 

 

 

 

 

 

 

 

▶ Signature(s)

 

 

▶ Date

 

 

 

 

 

 

 

 

Preparer’s

▶

 

 

Date

 

 

 

 

Preparer’s social security number

Pai d

 

 

 

 

Check if

 

 

signature

 

 

 

 

 

 

 

 

self-employed ▶

 

Preparer’s

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Firm’s name (or yours

 

 

 

 

 

 

EIN ▶

 

 

if self-employed) and

 

 

 

 

 

 

 

 

Use Only

 

▶

 

 

 

 

 

 

 

address

 

 

 

 

 

 

ZIP code ▶

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Stage # 4 of filling in EIN

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Part number 5 in completing EIN

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