Reforestation costs the corporation can elect to

•
Reforestation costs. The corporation
can elect to deduct up to $10,000 of
qualifying reforestation expenses for each
qualified timber property. The corporation
can elect to amortize over 84 months any
amount not deducted. See Pub. 535.
•
Insurance premiums.
•
Legal and professional fees.
•
Supplies used and consumed in the
business.
•
Travel, meals, and entertainment
expenses. Special rules apply (discussed
below).
•
Utilities.
•
Ordinary losses from trade or business
activities of a partnership (from
Schedule K-1 (Form 1065)). Do not offset
ordinary income against ordinary losses.
Instead, include the income on line 10.
Show the partnership's name, address,
and EIN on a separate statement attached
to this return. If the amount is from more
than one partnership, identify the amount
from each partnership.
•
Any extraterritorial income exclusion
(from Form 8873).
•
Any net negative section 481(a)
adjustment. See Section 481(a)
adjustment , earlier.
•
Any applicable deduction under section
179D for costs of energy efficient
commercial building property.
•
Dividends paid in cash on stock held by
an employee stock ownership plan.
However, a deduction may be taken for
these dividends only if, according to the
plan, the dividends are:
1. Paid in cash directly to the plan
participants or beneficiaries;
2. Paid to the plan, which distributes
them in cash to the plan participants or
their beneficiaries no later than 90 days
after the end of the plan year in which the
dividends are paid;
3. At the election of such participants
or their beneficiaries (a) payable as
provided under (1) or (2) above, or (b)
paid to the plan and reinvested in
qualifying employer securities; or
-14-
Instructions for Form 1120

4. Used to make payments on a loan
described in section 404(a)(9).
See section 404(k) for more details and
the limitation on certain dividends.
Do not deduct expenses such as the
following.
•
Fines or penalties paid to a government
for violating any law. However, see
exceptions discussed below.
•
Any amount that is allocable to a class
of exempt income. See section 265(b) for
exceptions.
•
Lobbying expenses. However, see
exceptions discussed below.
•
Amounts paid or incurred for any
settlement, payout, or attorney fees
related to sexual harassment or sexual
abuse, if such payments are subject to a
nondisclosure agreement. See new
section 162(q).
Travel, meals, and entertainment.
Subject to limitations and restrictions
discussed below, a corporation can
deduct ordinary and necessary travel,
meal, and non-entertainment expenses
paid or incurred in its trade or business.
Generally, entertainment expenses,
membership dues, and facilities used in
connection with these activities cannot be
deducted. Also, special rules apply to
deductions for gifts, luxury water travel,
and convention expenses. See section
274 and Pub. 463 for details.