Instructions For Form 1120-Pc - 2002 (Page 4 of 20) in pdf

this form to compute the passive activity

preceding the tax year for which the

identified as a listed transaction by notice,

loss and credit allowed under section 469.

election is made. See section 1504(c)(2)

regulation, or other published guidance.

•

and Regulations section

See Notice 2001-51, 2001-34 I.R.B. 190,

Form 8816, Special Loss Discount

Account and Special Estimated Tax

1.1502-47(d)(12).

for transactions identified by the IRS as

Payments for Insurance Companies. This

listed transactions. The listed transactions

File supporting statements for each

identified in this notice will be updated in

form must be filed by any insurance

corporation included in the consolidated

company that elects to take an additional

future published guidance.

return. Do not use Form 1120-PC as a

deduction under section 847.

supporting statement. On the supporting

See Temporary Regulations section

•

Form 8842, Election To Use Different

statement, use columns to show the

1.6011-4T for details, including:

Annualization Periods for Corporate

following, both before and after

1. Definitions of reportable

Estimated Tax. Corporations use Form

adjustments:

transaction, listed transaction, and

•

8842 for each year they want to elect one

Items of gross income and deductions.

substantially similar.

•

of the annualization periods in section

A computation of taxable income.

2. Form and content of the disclosure

•

6655(e)(2) for figuring estimated tax

Balance sheets as of the beginning and

statement.

payments under the annualized income

end of the tax year.

3. Filing requirements for the

•

installment method.

A reconciliation of income per books

disclosure statement.

•

Form 8849, Claim for Refund of Excise

with income per return.

•

Taxes. Corporations use this form to

For reportable transactions entered

A reconciliation of retained earnings.

claim a refund of certain excise taxes.

into after December 31, 2002, use Form

Enter the totals for the consolidated

•

8886, Reportable Transaction Disclosure

Form 8865, Return of U.S. Persons

group on Form 1120-PC. Attach

Statement, to disclose information for

With Respect to Certain Foreign

consolidated balance sheets and a

Partnerships. A domestic corporation may

each reportable transaction in which the

reconciliation of consolidated retained

corporation participated, directly or

have to file Form 8865 if it:

earnings. For more information on

indirectly. Form 8886 must be filed for

1. Controlled a foreign partnership

consolidated returns, see the regulations

each tax year that the Federal income tax

(i.e., owned more than a 50% direct or

under section 1502.

liability of the corporation is affected by its

indirect interest in the partnership).

Note. If a nonlife insurance company is a

participation in the transaction. The

2. Owned at least a 10% direct or

member of an affiliated group, file Form

following are reportable transactions.

indirect interest in a foreign partnership

1120-PC as an attachment to the

•

Any transaction that is the same as or

while U.S. persons controlled that

consolidated return in lieu of filing

substantially similar to tax avoidance

partnership.

supporting statements. Across the top of

transactions identified by the IRS.

3. Had an acquisition, disposition, or

page 1 of Form 1120-PC, write

•

Any transaction offered under

change in proportional interest of a

“Supporting Statement to Consolidated

conditions of confidentiality.

foreign partnership that:

•

Return.”

Any transaction for which the

a. Increased its direct interest to at

corporation has contractual protection

Statements

least 10% or reduced its direct interest of

against disallowance of the tax benefits.

at least 10% to less than 10%.

•

Any transaction resulting in a loss of at

NAIC annual statement. Regulations

b. Changed its direct interest by at

least $10 million in any single year or $20

section 1.6012-2(c) requires that the

least a 10% interest.

million in any combination of years.

NAIC annual statement be filed with Form

4. Contributed property to a foreign

•

Any transaction resulting in a book-tax

1120-PC. A penalty for the late filing of a

partnership in exchange for a partnership

difference of more than $10 million on a

return may be imposed for not including

interest if:

gross basis.

the annual statement when the return is

•

a. Immediately after the contribution,

Any transaction resulting in a tax credit

filed.

the corporation owned, directly or

of more than $250,000, if the corporation

Tax shelter disclosure statement. For

indirectly, at least a 10% interest in the

held the asset generating the credit for

each reportable tax shelter transaction

foreign partnership or

less than 45 days.

entered into prior to January 1, 2003, in

b. The fair market value of the

See the Instructions for Form 8886 for

which the corporation participated,

property the corporation contributed to the

more details.

directly or indirectly, the corporation must

foreign partnership, when added to other

Stock ownership in foreign

attach a disclosure statement to its return

contributions of property made to the

corporations. Attach the statement

for each tax year that its Federal income

foreign partnership during the preceding

required by section 551(c) if the

tax liability is affected by its participation

12-month period, exceeds $100,000.

corporation:

in the transaction. In addition, for the first

Also, the domestic corporation may

tax year a disclosure statement is

1. Owned 5% or more in value of the

have to file Form 8865 to report certain

attached to its return, the corporation

outstanding stock of a foreign personal

dispositions by a foreign partnership of

must send a copy of the disclosure

holding company and

property it previously contributed to that

statement to the Internal Revenue

2. Was required to include in its gross

partnership if it was a partner at the time

Service, LM:PFTG:OTSA, Large &

income any undistributed foreign personal

of the disposition. For more details,

Mid-Size Business Division, 1111

holding company income from a foreign

including penalties for failing to file Form

Constitution Ave., NW, Washington, DC

personal holding company.

8865, see Form 8865 and its separate

20224. If a transaction becomes a

instructions.

Transfers to a corporation controlled

reportable transaction after the

•

Form 8883, Asset Allocation Statement

by the transferor. If a person receives

corporation files its return, it must attach a

Under Section 338. Corporations file this

stock of a corporation in exchange for

statement to the following year’s return

form to report information about

property, and no gain or loss is

(whether or not its tax liability is affected

transactions involving the deemed sale of

recognized under section 351, the person

for that year). The corporation is

corporate assets under section 338.

(transferor) and the transferee must each

considered to have indirectly participated

attach to their tax returns the information

if it participated as a partner in a

Consolidated Return

required by Regulations section 1.351-3.

partnership or if it knows or has reason to

know that the tax benefits claimed were

If an affiliated group of corporations

Assembling the Return

derived from a reportable transaction.

includes one or more domestic life

To ensure that the corporation’s tax return

insurance companies taxed under section

Disclosure is required for a reportable

is correctly processed, attach all

801, the common parent may elect to

transaction that is a listed transaction. A

schedules and other forms after page 8,

treat those companies as includible

transaction is a listed transaction if it is

Form 1120-PC and in the following order:

corporations. The life insurance

the same as or substantially similar to a

companies must have been members of

transaction that the IRS has determined

1. Schedule N (Form 1120).

the group for the 5 tax years immediately

to be a tax avoidance transaction and has

2. Form 8302.

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Instructions for Form 1120-PC

Instructions For Form 1120-Pc - 2002 Page 4

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