Looking for a Form 1120 Templates? Download it for free!

recordkeeping requirements, see the

Examples of non-deductible expenses

Part II — Tax on

regulations under section 170 and Pub.

include:

•

526, Charitable Contributions.

Amounts paid or incurred in connection

Undistributed Net Capital

with influencing federal or state legislation

Contributions to organizations

(but not local legislation) or

Gain Not Designated

conducting lobbying activities.

•

Amounts paid or incurred in connection

Contributions made to an organization

Under Section 852(b)(3)(D)

with any communication with certain

that conducts lobbying activities are not

federal executive branch officials in an

deductible if:

Alternative tax on qualified timber

attempt to influence the official actions or

•

The lobbying activities relate to matters

gains. If the RIC is a partner in a

positions of the officials. See Regulations

of direct financial interest to the donor’s

partnership, had a net gain, and received

section 1.162-29 for the definition of

trade or business and

a distributive share of a qualified timber

“influencing legislation.”

•

The principal purpose of the

gain (as defined in section 1201(b)(2))

contribution was to avoid federal income

Dues and other similar amounts paid

from the partnership for the period that

tax by obtaining a deduction for activities

to certain tax-exempt organizations may

began before May 23, 2009, the RIC may

that would have been nondeductible

not be deductible. See section 162(e)(3).

be eligible for an alternative tax rate

under the lobbying expense rules if

Certain in-house lobbying expenditures

under section 1201(b)(1) on the portion of

conducted directly by the donor.

that do not exceed $2,000 are deductible.

its taxable income attributable to the

For information on contributions to

qualified timber gain. Enter the alternative

For more information on other

charitable organizations that conduct

tax, if any, on line 4, Part II. Attach a

deductions that may apply to RICs, see

lobbying activities, see section 170(f)(9).

statement showing the computation of the

Pub. 535.

Pension, profit-sharing, etc., plans.

tax. You may use Part II of the 2009 Form

Tax and Payments

Enter contributions to qualified pension,

1120-RIC as a guide.

profit-sharing, or other funded-deferred

Line 28b. Estimated tax payments.

compensation plans. Employers who

Enter any estimated tax payments the

maintain such a plan generally must file

Schedule A—Deduction

RIC made for the tax year.

Form 5500, Annual Return/Report of

for Dividends Paid

Employee Benefit Plan, even if the plan is

Line 28f. Credit from Form 2439. Enter

not a qualified plan under the Internal

the credit from Form 2439 for the RIC’s

Column (a) is used to determine the

Revenue Code. The filing requirement

share of the tax paid by another RIC or a

deduction for dividends paid resulting

applies even if the RIC does not claim a

Real Estate Investment Trust (REIT) on

from income derived from ordinary

deduction for the current tax year. There

undistributed long-term capital gains

dividends.

are penalties for failure to file these forms

included in the RIC’s income. Attach

on time and for overstating the pension

Form 2439 to Form 1120-RIC.

Column (b) is used to determine the

plan deduction. See sections 6652(e) and

Line 28g. Credit for federal tax on

deduction for dividends paid resulting

6662(f).

fuels. Complete and attach Form 4136,

from income derived from capital gain

Travel, meals, and entertainment.

Credit for Federal Tax Paid on Fuels, if

dividends.

Subject to certain limitations and

the RIC qualifies to take this credit.

restrictions, the RIC can deduct ordinary

Section 561 (taking into account

Line 28h. Refundable credits from

and necessary travel, meals, and

sections 852(b)(7), 852(c)(3)(B), and

Forms 3800 and 8827. If the RIC

entertainment expenses incurred in its

855(a)) determines the deduction for

elected to claim certain unused research

trade or business.

dividends paid. Do not take into account

or minimum tax credits instead of any

Travel. The RIC cannot deduct travel

exempt-interest dividends defined in

additional first-year special depreciation

expenses of any individual accompanying

section 852(b)(5) or any amount reported

allowance for eligible property, see the

a corporate officer or employee unless:

for the tax year on Form 2438, line 9b.

instructions for Forms 3800 and 8827.

•

That individual is an employee of the

See Regulations section 1.852-11 for

Enter on line 28h the amounts from line

RIC and

information on post-October currency or

17c of Form 3800 and line 8c of Form

•

His or her travel is for a bona fide

capital losses.

8827, if applicable.

business purpose that would otherwise be

deductible by that individual.

Line 3. Dividends, both ordinary and

The RIC must use the refundable

capital gain, declared and payable to

credits from Forms 3800 and 8827

Meals and entertainment. Generally,

shareholders of record in October,

to reduce any built-in gains tax

the RIC can deduct only 50% of the

CAUTION

November, or December are treated as

derived from property that it owned when

amount otherwise allowable for meals

paid by the RIC and received by each

it was a C corporation, before the credits

and entertainment expenses paid or

shareholder on December 31 of that

can be used to reduce RIC taxable

incurred in its trade or business.

calendar year provided that they are

income. See the instructions for line h of

Amounts treated as compensation.

actually paid in January of the following

the Built-in Gains Tax Worksheet

Generally, the RIC may be able to deduct

calendar year. Enter on line 3 all such

Instructions earlier.

otherwise nondeductible entertainment,

dividends not already included on line 1

Line 28i. Backup withholding. If the

amusement or recreation expenses if the

or 2.

RIC had income tax withheld from any

amounts are treated as compensation to

payments it received, because, for

the recipient and reported on Form W-2

Line 6. Enter the foreign tax paid

example, it failed to give the payer its

for an employee or on Form 1099-MISC

deduction allowed as an addition to the

correct EIN, include the amount withheld

for an independent contractor.

dividends paid deduction under section

in the total for line 28i. Enter the amount

853(b)(1)(B). See the instructions for Item

However, if the recipient is an officer,

withheld and the words “Backup

10 of Schedule K for information on the

director, or beneficial owner (directly or

Withholding” in the blank space above the

election available under section 853(a).

indirectly) of more than 10% of any class

line 28i.

of stock, the deductible expense is

Line 7. If the RIC elects under Section

Line 29. Estimated tax penalty. A RIC

limited. See section 274(e)(2) and Notice

853A to pass through credits from

2005-45, 2005-24 I.R.B. 1228.

that does not make estimated tax

qualified tax credit bonds to shareholders,

payments when due may be subject to an

See section 274 and Pub. 463 for a

increase the dividends paid deduction by

underpayment penalty for the period of

more extensive discussion of these

the amount of the credits distributed to

underpayment. See the instructions for

topics.

shareholders. To make the election, see

Form 2220, Underpayment of Estimated

the instructions for Item 11, under

Lobbying expenses. Generally,

Tax by Corporations, for more

Schedule K — Other Information.

lobbying expenses are not deductible.

information.

-10-

Instructions For Form 1120-Ric - U.s. Income Tax Return For Regulated Investment Companies - Internal Revenue Service - 2011 Page 10

Related Articles

Related forms

Related Categories