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Transfers to a corporation controlled

Eligibility. A RIC is entitled to take

3. Any deferred COD income that has

by the transferor. Every significant

into account its distributive share of

not been included in income in the current

transferor (as defined in Regulations

or prior tax years.

partnership items on a monthly basis if:

section 1.351-3(d) that receives stock of a

•

4. Any deferred original issue discount

The RIC is entitled to hold itself out as

corporation in exchange for property in a

(OID) deduction allowed as a deduction in

a money market fund, or an equivalent of

nonrecognition event must include the

the current tax year.

a money market fund.

statement required by Regulations

5. Any deferred OID deduction that is

•

The RIC provides a statement to the

section 1.351-3(a)) on or with the

allowed as a deduction in the current tax

partnership that it consents to the

year because of an accelerated event

transferor’s tax return for the tax year of

partnership’s election to close its books

the exchange. The transferee corporation

described in section 108(i)(5)(D).

monthly and that the RIC will include in its

6. Any deferred OID deduction that

must include the statement required by

taxable income its distributive share of

has not been deducted in the current or

Regulations section 1.351-3(b) on or with

partnership items in a manner consistent

prior tax years.

its return for the tax year of the exchange,

with the election. See Rev. Proc. 2003-84

unless all the required information is

for the required contents of the statement

In addition, include a copy of the

included in any statement(s) provided by

of consent.

election statement the RIC filed to make

a significant transferor that is attached to

•

The RIC provides the statement of

the election to defer the income. For more

the same return for the same section 351

consent to the custodian or manager of

information on deferring the income, see

exchange. If the transferor or transferee

the partnership by the last day of the

the instructions for line 7. For more

corporation is a controlled foreign

second month after the month in which

information regarding the annual

corporation, each U.S. shareholder

the RIC acquires the partnership interest.

information statement, see Rev. Proc.

(within the meaning of section 951(b))

•

The partnership is eligible under Rev.

2009-37, 2009-36 I.R.B. 309.

must include the required statement on or

Proc. 2003-84 to make the monthly

with its return.

Other forms and statements. See Pub.

closing election and the election is

542, Corporations, for a list of other forms

effective by the second month after the

Distributions under section 355. Every

and statements a corporation may need

corporation that makes a distribution of

month in which the RIC acquires the

to file in addition to the forms and

partnership interest.

stock or securities of a controlled

statements discussed throughout these

corporation, as described in section 355

instructions.

Statement of consent. The consent to a

(or so much of section 356 as it relates to

partnership’s monthly closing election is

section 355), must attach the statement

effective for the month in which the RIC

required by Regulations section 1.355-5

Specific Instructions

acquires the partnership interest, unless

to its return for the year of the distribution.

the RIC requests that the consent be

If the distributing corporation is a

effective for either of the two immediately

controlled foreign corporation, each U.S.

Period Covered

following calendar months. In addition to

shareholder (within the meaning of

timely providing the partnership with the

File the 2011 return for calendar year

section 951(b)), must include the

statement of consent, the statement

2011 and fiscal years that begin in 2011.

statement on or with its return.

should be filed with Form 1120-RIC for

For a fiscal year return, fill in the tax year

Dual consolidated losses. If a

the first tax year in which the consent is

space at the top of the form.

domestic corporation incurs a dual

effective. The monthly closing consent

Note. The 2011 Form 1120-RIC may

consolidated loss (as defined in

(and the partnership’s election) may be

also be used if:

Regulations section 1.1503-2(c)(5)), the

revoked only with the consent of the

•

The RIC has a tax year of less than 12

corporation (or consolidated group) may

Commissioner. However, the RIC’s

months that begins and ends in 2012; and

need to attach an elective relief

consent becomes ineffective on any day

•

The 2012 Form 1120-RIC is not

agreement and/or an annual certification

when the RIC ceases to be an eligible

available at the time the RIC is required to

as provided in Regulations section

partner and the partnership’s monthly

file its return.

1.1503-2(g)(2).

closing election is terminated as of the

The RIC must show its 2012 tax year

first day of any month the partnership is

Notice to shareholders. A RIC must

information on the 2011 Form 1120-RIC

no longer eligible for the election under

notify its shareholders within 60 days after

and take into account any tax law

Rev. Proc. 2003-84. For more details, see

the close of its tax year of the distribution

changes that are effective for tax years

the Revenue Procedure.

made during the tax year that qualifies for

beginning after December 31, 2011.

the dividends-received deduction under

Annual information statement for

section 243. For purposes of the

elections under section 108(i). If the

Name and Address

dividends-received deduction, a capital

RIC made an election in 2009 or 2010 to

Enter the RIC’s true name (as set forth in

gain dividend received from a RIC is not

defer income from cancellation of debt

the charter or other legal document

treated as a dividend. The capital gain

(COD) in connection with the

creating it), address, and EIN on the

dividend is treated as a long-term capital

reacquisition of an applicable debt

appropriate lines. Enter the address of the

gain by the shareholder.

instrument, the RIC must attach a

RIC’s principal office or place of business.

statement to its return beginning with the

Consent to partnership election to

Include the suite, room, or other unit

tax year following the tax year for which

close its books monthly. Certain

number after the street address. If the

the RIC made the election, and ending

post office does not deliver mail to the

money market funds that obtain an

the first tax year all income deferred has

interest in an eligible partnership that

street address and the RIC has a P.O.

been included in income. The statement

box, show the box number instead.

invests in assets exempt from taxation

must be labeled ‘‘Section108(i)

under section 103 may be qualified to pay

Note. Do not use the address of the

Information Statement’’ and must clearly

exempt-interest dividends to their

registered agent for the state in which the

identify, for each applicable debt

shareholders. To qualify for payment of

RIC is incorporated. For example, if a

instrument to which an election under

exempt-interest dividends, a RIC must

business is incorporated in Delaware or

section 108(i) applies, the following.

meet the quarterly net asset value (NAV)

Nevada and the RIC’s principal office is

1. Any deferred COD income that is

requirements under section 852(b)(5). To

located in Little Rock, AR, the RIC should

included in income in the current tax year.

maintain the required NAV at the end of

enter the Little Rock address.

2. Any deferred COD income that has

each quarter, the RIC may take into

account on a monthly basis its distributive

been accelerated because of an event

If the RIC receives its mail in care of a

described in section 108(i)(5)(D) and

share of partnership items if the eligible

third party (such as an accountant or an

partnership makes a proper election to

must be included in income in the current

attorney), enter on the street address line

close its books at the end of each month.

tax year. Include a description and the

“C/O” followed by the third party’s name

See Rev. Proc. 2003-84 for details.

date of the acceleration event.

and street address or P.O. box.

-6-

Instructions For Form 1120-Ric - U.s. Income Tax Return For Regulated Investment Companies - Internal Revenue Service - 2011 Page 6

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