Instructions For Form 1120-Pc - 2008 (Page 12 of 20) in pdf

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expense under section 179. See Form

paid or declared should be determined

Supplies used and consumed in the

4562 and its instructions.

according to the method of accounting

business.

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employed by the insurance company.

Travel, meals, and entertainment

Line 23. Depletion. See sections 613

expenses. Special rules apply (discussed

Dividends and similar distributions

and 613A for percentage depletion rates

on page 12).

include amounts returned or credited to

applicable to natural deposits. Also, see

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Utilities.

policyholders on cancellation or expiration

section 291 for the limitation on the

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Ordinary losses from trade or business

of policies issued by a mutual fire or flood

depletion deduction for iron ore and coal

activities of a partnership (from Schedule

insurance company:

(including lignite).

K-1 (Form 1065 or 1065-B)). Do not offset

1. Where the premium deposits for

Attach Form T (Timber), Forest

ordinary income against ordinary losses.

the policy are the same (regardless of the

Activities Schedule, if a deduction for

Instead, include the income on line 13.

length of the policy) and

depletion of timber is taken.

Show the partnership’s name, address,

2. The unabsorbed portion of the

Foreign intangible drilling costs and

and EIN on a separate statement

premium deposits not required for losses,

foreign exploration and development

attached to this return. If the amount

expenses, or establishment of reserves is

costs must either be added to the

entered is from more than one

returned or credited to the policyholder on

corporation’s basis for cost depletion

partnership, identify the amount from

cancellation or expiration of the policy.

purposes or be deducted ratably over a

each partnership.

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10-year period. See sections 263(i), 616,

Any extraterritorial income exclusion

In the case of a qualified group

and 617.

(from Form 8873, line 52).

self-insurers fund, the fund’s deduction for

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Deduction for certain energy efficient

See Pub. 535 for more information on

policyholder dividends is allowed no

commercial building property placed in

depletion.

earlier than the date the state regulatory

service. See section 179D and Notice

authority determines the amount of the

Line 24. Pension, profit-sharing, etc.,

2008-40, 2008-14 I.R.B. 725, and Notice

policyholder dividend that may be paid.

plans. Enter the deduction for

2006-52, 2006-26 I.R.B. 1175.

See section 6076 of the Technical and

contributions to qualified pension,

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Dividends paid in cash on stock held by

Miscellaneous Revenue Act of 1988.

profit-sharing, or other funded deferred

an employee stock ownership plan.

Line 30. Mutual interinsurers or

compensation plans. Employers who

However, a deduction may only be taken

reciprocal underwriters — increase in

maintain such a plan generally must file

for the dividends above if, according to

subscriber accounts. A mutual

one of the forms listed below, even if the

the plan, the dividends are:

insurance company that is an interinsurer

plan is not a qualified plan under the

a. Paid in cash directly to the plan

or reciprocal underwriter may deduct the

Internal Revenue Code. The filing

participants or beneficiaries;

increase in savings credited to subscriber

requirement applies even if the

b. Paid to the plan, which distributes them

accounts for the tax year.

corporation does not claim a deduction for

in cash to the plan participants or their

the current tax year. There are penalties

Savings credited to subscriber

beneficiaries no later than 90 days

for failure to file these forms on time and

accounts means the surplus credited to

after the end of the plan year in which

for overstating the pension plan

the individual accounts of subscribers

the dividends are paid;

deduction. See sections 6652(e) and

before the 16th day of the 3rd month

c. At the election of the participants or

6662(f).

following the close of the tax year. This is

their beneficiaries (i) payable as

true only if the corporation would be

Form 5500, Annual Return/Report of

provided under a or b above or (ii) paid

required to pay this amount promptly to a

Employee Benefit Plan. File this form for

to the plan and reinvested in qualifying

subscriber if the subscriber ended the

a plan that is not a one-participant plan

employer securities; or

contract when the corporation’s tax year

(see below).

d. Used to make payments on a loan

ends. The corporation must notify the

Form 5500-EZ, Annual Return of

described in section 404(a)(9).

subscriber as required by Regulations

One-Participant (Owners and Their

See section 404(k) for more details

section 1.823-6(c)(2)(v). The subscriber

Spouses) Retirement Plan. File this form

and the limitation on certain dividends.

must treat any savings credited to the

for a plan that only covers the owner (or

subscriber’s account as a dividend paid or

the owner and his or her spouse) but only

Do not deduct the following.

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declared.

if the owner (or the owner and his or her

Fines or penalties paid to a government

Line 31. Other deductions. Attach a

spouse) owns the entire business.

for violating any law.

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schedule, listing by type and amount, all

Lobbying expenses. However, see

Line 25. Employee benefit programs.

allowable deductions under sections

exceptions (discussed below).

Enter contributions to employee benefit

832(c)(1) and (10) (net of the annual

programs not claimed elsewhere on the

Travel, meals, and entertainment.

statement change in undiscounted unpaid

return (for example, insurance, health and

Subject to limitations and restrictions

loss adjustment expenses) that are not

welfare programs, etc.) that are not an

discussed below, a corporation can

deductible on lines 15 through 30.

incidental part of a pension, profit-sharing,

deduct ordinary and necessary travel,

Examples of other deductions include

etc., plan included on line 24.

meals, and entertainment expenses paid

the following. See Pub. 535 for details on

or incurred in its trade or business. Also,

Line 27. Additional deduction. Enter

other deductions that may apply to

special rules apply to deductions for gifts,

on line 27, the total from Form 8816, Part

corporations.

skybox rentals, luxury water travel,

II, line 5.

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The domestic production activities

convention expenses, and entertainment

Any insurance company taking the

deduction. See Form 8903.

tickets. See section 274 and Pub. 463.

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additional deduction must:

Certain business start-up and

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Travel. The corporation cannot deduct

Make special estimated tax payments

organizational costs that the corporation

travel expenses of any individual

equal to the tax benefit from the

elects to deduct. See page 9.

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accompanying a corporate officer or

deduction and

Qualified demolition and clean-up costs

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employee, including a spouse or

Establish and maintain a Special Loss

attributable to damage in the Kansas and

dependent of the officer or employee,

Discount Account. See section 847 and

Midwestern disaster areas. See Pubs.

unless:

Form 8816 for more information.

4492-A and 4492-B.

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That individual is an employee of the

Line 29. Dividends to policyholders.

Certain environmental remediation

corporation, and

Enter the total dividends and similar

costs. See section 1400N(g) and Pub.

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His or her travel is for a bona fide

distributions paid or declared to

4492-B.

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business purpose and would otherwise be

policyholders, as policyholders, except in

Certain qualified disaster expenses that

deductible by that individual.

the case of a mutual fire insurance

the corporation elects to deduct. See

company exclusively issuing perpetual

section 198A.

Meals and entertainment. Generally,

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policies. Whether dividends have been

Legal and professional fees.

the corporation can deduct only 50% of

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Instructions for Form 1120-PC

Instructions For Form 1120-Pc - 2008 Page 12

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