Instructions For Form 1120-Pc - 2008 (Page 18 of 20) in pdf

tax year because of section 832(b)(5)(B)

value of all classes of stock of the

Item 12

when the decrease is caused by the

corporation.

Enter the amount of the NOL carryover to

deductions under sections 243, 244, and

the tax year from prior years, even if

The constructive ownership rules of

245. Enter the result on line 8b.

some of the loss is used to offset income

section 318 apply in determining if a

on this return. The amount to enter is the

corporation is foreign owned. See section

total of all NOLs generated in prior years

6038A(c)(5) and the related regulations.

Schedule I—Other

but not used to offset income (either as a

Enter on line 6a the percentage owned

carryback or carryover) to a tax year prior

Information

by the foreign person specified in

to 2008. Do not reduce the amount by

The following instructions apply to page 7,

question 6. On line 6b, enter the name of

any NOL deduction reported on Schedule

Form 1120-PC. Complete all items that

the owner’s country.

A, line 36b.

apply to the corporation.

Note. If there is more than one

Question 4

25%-or-more foreign owner, complete

Schedule L—Balance

lines 6a and 6b for the foreign person with

Check the “Yes” box if:

•

the highest percentage of ownership.

The corporation is a subsidiary in an

Sheet per Books

affiliated group (defined below), but is not

Foreign person. The term “foreign

Note. All insurance companies required

filing a consolidated return for the tax year

person” means:

to file Form 1120-PC must complete

with that group, or

•

A foreign citizen or nonresident alien,

•

Schedule L.

The corporation is a subsidiary in a

•

An individual who is a citizen of a U.S.

parent-subsidiary controlled group. For a

possession (but who is not a U.S. citizen

The balance sheet should agree with

definition of parent-subsidiary controlled

or resident),

the corporation’s books and records.

group, see the instructions for Schedule

•

A foreign partnership,

O (Form 1120).

•

If filing a consolidated return, report

A foreign corporation,

•

total consolidated assets, liabilities, and

Any corporation that meets either of

Any foreign estate or trust within the

shareholder’s equity for all corporations

the requirements above should check the

meaning of section 7701(a)(31), or

•

joining in the return. See Consolidated

“Yes” box. This applies even if the

A foreign government (or one of its

Return on page 5.

corporation is a subsidiary member of one

agencies or instrumentalities) to the

group and the parent corporation of

extent that it is engaged in the conduct of

Corporations with total assets

another.

a commercial activity as described in

(non-consolidated or consolidated for all

section 892.

corporations included within the tax

Note. If the corporation is an “excluded

consolidation group) of $10 million or

member” of a controlled group (see

Owner’s country. For individuals, the

more on the last day of the tax year must

section 1563(b)(2)), it is still considered a

term “owner’s country” means the country

complete Schedule M-3 (Form 1120-PC)

member of a controlled group for this

of residence. For all others, it is the

instead of Schedule M-1. See the

purpose.

country where incorporated, organized,

separate instructions for Schedule M-3

created, or administered.

Affiliated group. An affiliated group is

(Form 1120-PC) for provisions that also

one or more chains of includible

Requirement to file Form 5472. If the

affect Schedule L.

corporations (section 1504(a)) connected

corporation checked “Yes”, it may have to

through stock ownership with a common

Line 1. Cash. Include certificates of

file Form 5472, Information Return of a

parent corporation. The common parent

deposit as cash on this line.

25% Foreign-Owned U.S. Corporation or

must be an includible corporation and the

a Foreign Corporation Engaged in a U.S.

Line 5. Tax-exempt securities. Include

following requirements must be met.

Trade or Business. Generally, a 25%

on this line:

1. The common parent must own

•

foreign-owned corporation that had a

State and local government obligations,

directly stock that represents at least 80%

reportable transaction with a foreign or

the interest on which is excludable from

of the total voting power and at least 80%

domestic related party during the tax year

gross income under section 103(a) and

of the total value of the stock of at least

•

must file Form 5472. See Form 5472 for

Stock in a mutual fund or other RIC that

one of the other includible corporations.

filing instructions and penalties for failure

distributed exempt-interest dividends

2. Stock that represents at least 80%

to file.

during the tax year of the corporation.

of the total voting power and at least 80%

Item 10

Line 18. Insurance liabilities. Include

of the total value of the stock of each of

on this line:

the other corporations (except for the

Show any tax-exempt interest received or

•

Undiscounted unpaid losses.

common parent) must be owned directly

accrued. Include any exempt-interest

•

Loss adjustment expenses.

by one or more of the other includible

dividends received as a shareholder in a

•

Unearned premiums.

corporations.

mutual fund or other RIC.

See section 846 for more information.

Item 11

For this purpose, the term “stock”

generally does not include any stock that

Line 27. Adjustments to shareholders’

If the corporation has an NOL for its 2008

(a) is nonvoting, (b) is nonconvertible, (c)

tax year, it can elect under section

equity. Some examples of adjustments

is limited and preferred as to dividends

172(b)(3) to waive the entire carryback

to report on this line include:

•

and does not participate significantly in

period for the NOL and instead carry the

Unrealized gains and losses on

corporate growth, and (d) has redemption

NOL forward to future tax years. To do

securities held “available for sale.”

•

and liquidation rights that do not exceed

so, check the box on line 11 and file the

Foreign currency translation

the issue price of the stock (except for a

tax return by its due date, including

adjustments.

•

reasonable redemption or liquidation

The excess of additional pension

extensions. Do not attach the statement

premium). See section 1504(a)(4). See

liability over unrecognized prior service

described in Temporary Regulations

section 1563(d)(1) for the definition of

cost.

section 301.9100-12T. Once made, the

•

stock for purposes of determining stock

Guarantees of employee stock (ESOP)

election is irrevocable. See Pub. 542,

ownership above.

debt.

section 172, and Form 1139 for more

•

Compensation related to employee

details.

Question 6

stock award plans.

Check the “Yes” box if one foreign person

Corporations filing a consolidated

owned at least 25% of (a) the total voting

return must also attach the statement

If the total adjustment to be entered on

power of all classes of stock of the

required by Regulations section

line 27 is a negative amount, enter the

corporation entitled to vote, or (b) the total

1.1502-21(b)(3).

amount in parentheses.

-18-

Instructions for Form 1120-PC

Instructions For Form 1120-Pc - 2008 Page 18

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