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Note. For special rules regarding failure

can also get most forms and publications

Income that a RIC receives in the

at your local IRS office.

normal course of business as a

to meet the requirements of the income

reimbursement from its investment

and asset tests, see section 851(d)(2).

advisor is qualifying income for purposes

General Instructions

Distribution requirements. The RIC’s

of the 90% test if the reimbursement is

deduction for dividends paid for the tax

includible in the RIC’s gross income.

year (as defined in section 561, but

Purpose of Form

The asset test:

without regard to capital gain dividends)

Use Form 1120-RIC, U.S. Income Tax

equals or exceeds the sum of:

1. At the end of each quarter of the

Return for Regulated Investment

•

RIC’s tax year, at least 50% of the value

90% of its investment company taxable

Companies, to report the income, gains,

of its assets must be invested in the

income determined without regard to

losses, deductions, credits, and to figure

following items:

section 852(b)(2)(D); and

the income tax liability of a regulated

•

Cash and cash items (including

90% of the excess of the RIC’s interest

investment company (RIC) as defined in

receivables);

income excludable from gross income

section 851.

•

Government securities;

under section 103(a) over its deductions

•

Who Must File

disallowed under sections 265 and

Securities of other RICs; and

•

171(a)(2).

Securities of other issuers, except

A domestic corporation that meets certain

that the investment in a single issuer of

conditions (discussed below) must file

A RIC that does not satisfy the

securities may not exceed 5% of the

Form 1120-RIC if it elects to be treated as

distribution requirements will be

value of the RIC’s assets or 10% of the

a RIC for the tax year (or has made an

subject to taxation as a C

outstanding voting securities of the issuer

CAUTION

election for a prior tax year and the

corporation.

(except as provided in section 851(e)).

election has not been terminated or

2. At the end of each quarter of the

revoked). The election is made by

Earnings and profits. The RIC must

RIC’s tax year, no more than 25% of the

computing taxable income as a RIC on

either have been a RIC for all tax years

value of the RIC’s assets may be invested

Form 1120-RIC.

ending after November 7, 1983, or, at the

in the securities of:

end of the current tax year, had no

General Requirements To

•

A single issuer (excluding

accumulated earnings and profits from

government securities or securities of

Qualify as a RIC

any non-RIC tax year.

other RICs);

The term “regulated investment company”

•

Two or more issuers controlled by

Note. For this purpose, current year

applies to any domestic corporation that:

the RIC and engaged in the same or

distributions are treated as made from the

•

Is registered throughout the tax year as

related trades or businesses; or

earliest earnings and profits accumulated

a management company or unit

•

in any non-RIC tax year. See section

One or more qualified publicly

investment trust under the Investment

traded partnerships as defined in section

852(c)(3). Also see section 852(e) for

Company Act of 1940 (ICA),

procedures that may allow the RIC to

851(h).

•

Has an election in effect under the ICA

avoid disqualification for the initial year if

See sections 851(b)(3) and 851(c) for

to be treated as a business development

the RIC did not meet this requirement.

further details.

company, or

•

Is a common trust fund or similar fund

that is neither an investment company

under section 3(c)(3) of the ICA nor a

Where To File

common trust fund as defined under

section 584(a).

File the RIC’s return at the applicable IRS address listed below.

Other Requirements

And the total assets at

In addition, the RIC must meet the (1)

If the RIC’s principal

the end of the tax year

income test, (2) asset test, and (3)

business, office, or agency

(Form 1120-RIC, page 1,

distribution requirements explained

is located in:

item D) are:

Use the following address:

below.

Connecticut, Delaware, District

Department of the Treasury

The income test: At least 90% of its

of Columbia, Georgia, Illinois,

Less than $10 million

Internal Revenue Service Center

gross income must be derived from the

Indiana, Kentucky, Maine,

Cincinnati, OH 45999-0012

following items:

Maryland, Massachusetts,

•

Dividends;

Michigan, New Hampshire,

•

Interest (including tax-exempt interest

New Jersey, New York, North

income);

Carolina, Ohio, Pennsylvania,

Department of the Treasury

•

Payments with respect to securities

Rhode Island, South Carolina,

$10 million or more

Internal Revenue Service Center

Tennessee, Vermont, Virginia,

loans (as defined in section 512(a)(5));

Ogden, UT 84201-0012

•

West Virginia, Wisconsin

Gains from the sale or other disposition

of stock or securities (as defined in ICA

Alabama, Alaska, Arizona,

section 2(a)(36)) or foreign currencies;

Arkansas, California, Colorado,

•

Other income (including gains from

Florida, Hawaii, Idaho, Iowa,

options, futures, or forward contracts)

Kansas, Louisiana, Minnesota,

Department of the Treasury

derived from the RIC’s business of

Mississippi, Missouri, Montana,

Any amount

Internal Revenue Service Center

investing in such stock, securities, or

Nebraska, Nevada, New

Ogden, UT 84201-0012

currencies; and

Mexico, North Dakota,

•

Net income derived from an interest in

Oklahoma, Oregon, South

a qualified publicly traded partnership (as

Dakota, Texas, Utah,

defined in section 851(h)).

Washington, Wyoming

Income from a partnership or trust

qualifies under the 90% test to the extent

A group of corporations with members located in more than one service center area

the RIC’s distributive share of such

will often keep all the books and records at the principal office of the managing

income is from items described above as

corporation. In this case, file the tax returns with the service center for the area in which

realized by the partnership or trust.

the principal office of the managing corporation is located.

-2-

Instructions For Form 1120-Ric - U.s. Income Tax Return For Regulated Investment Companies - Internal Revenue Service - 2010 Page 2

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