Instructions For Schedule O (Form 1120) - 2012 Page 2
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9section 801 which are members of
its testing period. Also, in order to
Stock constructively owned by that
any parent-subsidiary, brother-sister,
determine the applicable tax year of
corporation under sections 1563(e)
or combined controlled group will be
the member being tested, the group's
(1), (2), and (3).
treated as a controlled group of
testing date must be determined. See
Brother-sister group. A
corporations separate from any other
Testing date and Testing period.
brother-sister group generally is two
type of controlled group to which
or more corporations where the same
Note. If a controlled group has an
these corporations would otherwise
five or fewer persons who are
apportionment plan in effect and
belong if they were not life insurance
individuals, estates, or trusts directly
some of the members of that
companies. The life insurance
or indirectly own stock possessing:
controlled group join in filing a
companies that make up a life
At least 80% of the total combined
consolidated return, then the
insurance controlled group do not
voting power of all classes of stock
members of that consolidated group
have to be in a direct ownership
entitled to vote or at least 80% of the
are treated, together, as if they were a
relationship with each other.
total value of shares of all classes of
single member of the controlled
the stock of each corporation (the
Example. Life insurance
group. If a controlled group does not
80% test), and
companies Corporation X and
have an apportionment plan in effect
Corporation Z make up a life
More than 50% of the total
and any of the members of that group
insurance company only group, where
combined voting power of all classes
join in filing a consolidated return,
Corporation X, a life insurance
of stock entitled to vote or more than
then each member of that
company, owns all the stock of
50% of the total value of shares of all
consolidated group will be treated as
Corporation Y, a non-life insurance
classes of stock of each corporation,
a separate member of the controlled
company, and Corporation Y, a
taking into account the stock
group.
non-life insurance company owns all
ownership of each such person only
Additional member. A member of a
the stock of Corporation Z, a life
to the extent such stock ownership is
controlled group is treated as an
insurance company.
identical with respect to each such
additional member if the corporation:
corporation (the 50% test).
Exception for life-nonlife
Was a member of the controlled
consolidated group. The rule above
Brother-sister group for
group at any time during a calendar
does not apply to any life insurance
purposes of certain tax attributes.
year,
company that is a member (whether
For purposes of allocating the
Was not a member of the controlled
eligible or ineligible to join in filing a
following, a brother-sister group is
group on that testing date,
consolidated return) of a life-nonlife
defined using only the 50% test
Was a member of the controlled
affiliated group for which a section
above:
group for at least one-half the number
1504(c)(2) election is in effect.
The taxable income brackets,
of days of its testing period, and
Instead, an eligible life insurance
The additional taxes,
Is not an excluded member
company will be treated as a member
The alternative minimum tax (AMT)
(defined next).
of a life-nonlife consolidated group,
exemption amount,
Any member of a controlled group
and an ineligible life insurance
The reduction of the AMT
that is treated as an additional
company will be treated as a member
exemption amount, and
member is also treated as a
of a life-nonlife controlled group
The accumulated earnings credit.
component member of that group.
(deemed to constitute a
For purposes of determining
parent-subsidiary controlled group).
Excluded member. A corporation is
whether a corporation is a member of
treated as an excluded member of a
Component Member
a brother-sister controlled group of
controlled group of corporations on
corporations within the meaning of
A corporation qualifies as a
the December 31 testing date for its
section 1563(a)(2), stock owned by a
component member of a controlled
tax year that includes that December
person who is an individual, estate, or
group of corporations, for a tax year, if
31 testing date, if the corporation is:
trust includes:
the corporation:
A member of such group for less
Stock owned directly by such
Is not a member of the controlled
than one-half the number of days in its
person, and
group on the applicable December 31
testing period,
Stock constructively owned under
testing date (defined below), but is
Exempt from tax under section
section 1563(e).
treated as an additional member
501(a) (except a corporation which is
(defined below); or
Combined group. A combined
subject to tax on its unrelated
Is a member of the controlled group
controlled group is three or more
business taxable income under
on the applicable December 31
corporations each of which is a
section 511) or 521 for such year,
testing date and is not treated as an
member of either a parent-subsidiary
A foreign corporation not subject to
excluded member (defined below).
group or a brother-sister group, and at
tax under section 882(a) for such tax
least one of which is both the common
year,
In general, in determining if a
parent of a parent-subsidiary group
A life insurance company subject to
member of a controlled group is a
and also a member of a brother-sister
tax under section 801 other than
component member of that group, the
group.
either a life insurance company which
applicable tax year of that corporation
is a member of a life insurance
Life insurance companies only
must be tested to determine if it was a
controlled group or a life insurance
group. Two or more life insurance
member of the controlled group for at
company which is a member (whether
companies subject to tax under
least one-half of the number of days in
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