Instructions For Form 1120-Pc - 2008 (Page 16 of 20) in pdf

b. Dividends attributable to periods

for reinsurance. See Regulations section

increase its unearned premiums by the

totaling more than 366 days that the

1.832-4.

amount of such acquisition expenses

corporation received on any share of

prior to making the computation on lines

Lines 2a and 4a. Include on lines 2a

preferred stock held for less than 91 days

2d and 4d. See section 832(b)(7)(E).

and 4a:

during the 181-day period that began 90

Line 6. Transitional adjustments apply to

1. All life insurance reserves, as

days before the ex-dividend date. When

companies which become taxable under

defined in section 816(b) (but determined

counting the number of days the

section 831(a). See section 832(b)(7)(D).

under section 807) and

corporation held the stock, you cannot

2. All unearned premiums of a Blue

count certain days during which the

Cross or Blue Shield organization to

corporation’s risk of loss was diminished.

Schedule F—Losses

which section 833 applies.

See section 246(c)(4) and Regulations

Incurred

section 1.246-5 for more details.

Lines 2b and 4b. Include on lines 2b

Preferred dividends attributable to periods

and 4b, 90% of unearned premiums for

Line 1. Losses paid. Enter the total

totaling less than 367 days are subject to

insurance against default in the payment

losses paid on insurance contracts during

the 46-day holding period rule above.

of principal or interest on securities

the tax year less salvage and reinsurance

c. Dividends on any share of stock to

described in section 165(g)(2)(C) (relating

recovered during the tax year.

the extent the corporation is under an

to worthless securities) with maturities of

Lines 2a and 4a. Unpaid losses on life

obligation (including a short sale) to make

more than 5 years.

insurance contracts. Unpaid losses

related payments with respect to positions

Lines 2c and 4c. The amount of

must be adjusted for recoveries of

in substantially similar or related property.

discounted unearned premiums at the

reinsurance. The amounts of expected

5. Any other taxable dividend income

end of any tax year must be the present

recoveries should be estimated based on

not properly reported above.

value of those premiums (as of such time

the facts in each case and the

and separately with respect to premiums

Line 17. Dividends received on

corporation’s experience with similar

received in each calendar year)

debt-financed stock acquired after July

cases. See Regulations section

determined by using:

18, 1984, are not entitled to the full 70%

1.832-4(b).

or 80% dividends-received deduction.

1. The amount of the undiscounted

Lines 2b and 4b. Discounted unpaid

The 70% or 80% deduction is reduced by

unearned premiums at such time;

losses outstanding. Enter all

a percentage that is related to the amount

2. The applicable interest rate; and

discounted unpaid losses as defined in

of debt incurred to acquire the stock. See

3. The applicable statutory premium

section 846.

section 246A. Also, see section 245(a)

recognition pattern.

Section 846 provides that the amount

before making this computation for an

Lines 2d and 4d. Include on lines 2d

of discounted unpaid losses must be

additional limitation that applies to

and 4d, 80% of the total of all unearned

figured separately by each line of

dividends received from foreign

premiums not reported on lines 2a

business (multiple peril lines must be

corporations. Attach a schedule showing

through 2c, or 4a through 4c,

treated as a single line of business) and

how the amount on line 17 was figured.

respectively.

by each accident year and must be equal

Line 23, column (b). Generally, line 23,

to the present value of those losses

A reciprocal or interinsurer required

column (b), cannot exceed the amount

determined by using the:

under state law to reflect unearned

from the worksheet below. However, in a

premiums on its annual statement net of

1. Amount of the undiscounted unpaid

year in which an NOL occurs, this

premium acquisition expenses should

losses,

limitation does not apply even if the loss

is created by the dividends-received

deduction. See sections 172(d) and

Worksheet for Schedule C, line 23

Keep for Your Records

246(b).

1. Refigure the amount from Schedule A, line 35 or Schedule B, line

19, whichever applies, without any domestic production activities

Schedule E—Premiums

deduction, any adjustment under section 1059, and without any

Earned

capital loss carryback to the tax year under section 1212(a)(1) . .

2. Enter the sum of the amounts from line 22, column (b) (without

Definitions

regard to wholly owned foreign subsidiary dividends) and line 9,

column (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Undiscounted unearned premiums

3. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

means the unearned premiums shown in

the annual statement filed for the year

4. Multiply line 3 by 80% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ending with or in the tax year.

5. Add lines 16, 19, 21, and 22 (without regard to FSC dividends),

column (b), and the portion of the deduction on line 17, column

Applicable interest rate means the

annual rate determined under section

(b), that is attributable to dividends received from

846(c)(2) for the calendar year the

20%-or-more-owned corporations . . . . . . . . . . . . . . . . . . . . . .

premiums are received.

6. Enter the smaller of line 4 or line 5. If line 5 is greater than line 4,

stop here; enter the amount from line 6 on line 23, column (b),

Applicable statutory premium

recognition pattern means the statutory

and do not complete the rest of this worksheet . . . . . . . . . . . . .

premium recognition pattern in effect for

7. Enter the total amount of dividends received from

the calendar year the premiums are

20%-or-more-owned corporations that are included on lines 2, 3,

received, and is based on the statutory

5, 7, and 8 (without regard to FSC dividends), column (b) . . . . .

premium recognition pattern which

8. Subtract line 7 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

applies to premiums received by the

9. Multiply line 8 by 70% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

corporation in that calendar year. For

10. Subtract line 5 from line 23, column (b) (without regard to FSC

purposes of the preceding sentence,

dividends) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

premiums received during any calendar

11. Enter the smaller of line 9 or line 10 . . . . . . . . . . . . . . . . . . . . .

year will be treated as received in the

middle of such year.

12. Dividends-received deduction after limitation (section

246(b)). Add lines 6 and 11. Enter the result here and on line 23,

Line 1. Enter gross premiums written on

column (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

insurance contracts during the tax year,

less return premiums and premiums paid

-16-

Instructions for Form 1120-PC

Instructions For Form 1120-Pc - 2008 Page 16

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