Fillable Form Form 972 (2016)

What is Form 972?

Form 972, Consent of Shareholder to Include Specific Amount in Gross Income is a form issued by the IRS to allow shareholders to let their corporations know that they intend to make a portion of their share (the consent dividend) taxable. In doing so, the corporation can list that as a consent dividend deduction on their income tax return.

Filling out IRS Form 972, in essence, allows the consent dividend to become a part of the gross income of the shareholder even though the dividend has not been distributed or paid.

Shareholders who are filing the 972 form must submit the form to their corporations who then must file Form 973, Corporation Claim for Deduction for Consent Dividends along with all completed copies of form 972 in their next income tax return. Note that the shareholders must file their form 972 in the same year that the corporation will file their income tax return.

How to fill out Form 972?

Shareholders who are interested in filing form 972 can download and print a PDF version of the form from the official IRS government website that they can fill out manually. Alternatively, you can fill it out electronically on PDFRun.

Name of Shareholder

Input your complete name here.

Identifying Number

If you are filling out this form as an individual, input your social security number. If you are filling out this form on behalf of a company or group, input your employer identification number instead.

Number, street, and room or suite no.

Input your complete address here. If your Post Office does not deliver to the street address and you have a P.O. box, input the box number instead of the street number.

City or town, state or province, country, and ZIP or foreign postal code

Input the city, town, state or province, country, and ZIP code or foreign postal code of the address you listed above.

Item 1

This section of the form details your consent dividend. You will have to identify the exact amount that you consent to be included in your own gross tax income if this amount would differ from the amount shown later in Schedule A, Item 4, attach a statement explaining the reason for the discrepancy.

After that, identify for how long you will maintain this consent. Input the month, day, and year of the beginning date and the date where the consent would end.

Then, identify the corporation whose stock you wish to consent into your gross income by inputting their complete and legal name and full address.

Schedule A - Statement of Shares in Each Class of Stock Owned by the Shareholder on the Last Day of the Corporation’s Tax Year

Item 2

Input the last day of the corporation’s tax year. The year in question must be the same year you are planning to file this form.

This day will be used to identify the value of the stock you are going to input in Item 3.

Item 3

Here is where you detail all the stocks and how much of these stocks you are consenting to be included in your gross income and will be deducted from the corporation’s income tax. You must identify the stocks’ class, number of shares, certificate numbers, and amount.

Class of Stock

In general, there are two classes of stock that you can identify your stocks: Class A or Class B.

Class A stocks, also known as Common stocks, are the most common stocks as they are stocks that were bought from a public market such as Nasdaq. These stocks can be made into dividends, however, the distribution is heavily dependent on the profit the company generates.

Class B, stocks, or Preferred Stock, is a much more personalized version of stock. These are often given out to certain types of investors and unlike the Class A stocks, their dividends are not dependent on the profits, it is a fixed value instead. In addition, Class B stocks are not standardized, There are different subclasses of the Class B stock, each with its own benefit.

• Cumulative Shares: This type allows the shareholder the right to accumulate deferred dividend payments.
• Non-Cumulative Shares: This type grants no back payment of deferred dividend payments.
• Participating: This type allows the fixed dividends to change into higher-than-normal dividends when profits are higher-than-normal.
• Convertible: This type gives the shareholder the option to convert shares into Common Stock if desired.

Aside from Class A and Class B there is also a newer Class F stock. This class is a newer breed that stems from Class B and is practically the same in terms of dividends. However, the difference is more on their influence in a company — a concept that must be discussed separately from this.

Number of Shares

Input the number of shares that you own for each stock.

Certificate Numbers

Input the legal number of your stock ownership certificate for each stock.

Amount of Consent distribution allocable to each class of stock owned

Input the amount from these stocks that you are consenting to allocate to your gross income.

Item 4

Here is where you input the total amount of consent distribution as you have listed in Item 3

Signature

Consenting Shareholder

Affix your signature on this line. The form must be signed by the shareholder, however, if the shareholder is a:

• Partnership, any one of the partners can sign this form;
• Trust or Estate, a fiduciary or any officer representing the estate or trust can sign the form; or
• Corporate shareholder, the form can be signed by the president of the corporation, the vice-president, treasurer, assistant treasurer, chief accounting officer, tax officer, or any other officers that are authorized to deal with the corporation’s financial affairs.

In addition to this, a shareholder’s attorney can also affix their signature in place of the shareholder granted that they are granted the ability to do so by a power of attorney. If they do have this power, the document proving so must be attached to Form 972 upon submission to the corporation and should be kept attached when the corporation goes to file Form 973.

Title

Input your current and professional title here.

Date

Enter the month, day, and year of signing.