Instructions For Form 1120-Pc - 2008 (Page 6 of 20) in pdf

Schedule M-3 (Form 1120-PC)

formats, and filing addresses for making

tax by using the Tax Rate Schedule

the respective elections under section

below.

A nonlife insurance company with total

953(c)(3)(C) or section 953(d).

assets (non-consolidated or consolidated

Note. Once either election is made, it will

Tax Rate Schedule

for all companies included within a tax

apply to the tax year for which made and

consolidation group) of $10 million or

If the amount on line 1 or line 2, Form 1120-PC,

all subsequent tax years unless revoked

more on the last day of the tax year must

page 1 is:

with the consent of the IRS. Also, any

complete Schedule M-3 (Form 1120-PC),

loss of a foreign corporation electing to be

Net Income (Loss) Reconciliation for U.S.

Of the

treated as a domestic insurance company

Property and Casualty Insurance

But not

amount

Over —

over —

Tax is:

over —

under section 953(d) will be treated as a

Companies With Total Assets of $10

dual-consolidated loss and may not be

Million or More, instead of Schedule M-1.

$50,000

15%

used to reduce the taxable income of any

50,000

75,000

$ 7,500 + 25%

50,000

A corporation filing Form 1120-PC that is

75,000

100,000

13,750 + 34%

75,000

other member of the affiliated group for

not required to file Schedule M-3 (Form

100,000

335,000

22,250 + 39%

100,000

this tax year or any other tax year.

1120-PC) may voluntarily file Schedule

335,000

10,000,000

113,900 + 34%

335,000

M-3 (Form 1120-PC) instead of Schedule

Note. If a section 953(d) election is

10,000,000

15,000,000

3,400,000 + 35% 10,000,000

M-1.

15,000,000

18,333,333

5,150,000 + 38% 15,000,000

made, include the additional tax required

18,333,333

- - - - -

35%

to be paid, on line 13, page 1. On the

If you are filing Schedule M-3 (Form

dotted line to the left of line 13, page 1,

1120-PC), check box 3 of Item A at the

write “Section 953(d)” and the amount.

top of page 1 of Form 1120-PC. See the

Deferred tax under section 1291. If the

Attach a schedule showing the

Instructions for Schedule M-3 (Form

corporation was a shareholder in a

computation. See section 953(d) for more

1120-PC) for more details.

passive foreign investment company

details.

(PFIC) and received an excess

Note. If you do not file Schedule M-3

distribution or disposed of its investment

(Form 1120-PC) with Form 1120-PC,

Item E. Final Return, Name

in the PFIC during the year, it must

seeReconciliation under Statements on

include the total increase in taxes due

page 3.

Change, Address Change,

under section 1291(c)(2) in the amount

or Amended Return

entered on line 4. On the dotted line next

Item B. Employer

to line 4, enter “Section 1291” and the

Indicate a final return, name change,

Identification Number (EIN)

amount.

address change, or amended return by

Enter the corporation’s EIN. If the

checking the appropriate box.

Do not include on line 4 any interest

corporation does not have an EIN, it must

due under section 1291(c)(3). Instead,

Note. If a change of address occurs after

apply for one. An EIN can be applied for:

show the amount of interest owed in the

the return is filed, use Form 8822,

•

Online — Click on the EIN link at www.

bottom margin of page 1 and enter

Change of Address, to notify the IRS of

irs.gov/businesses/small. The EIN is

“Section 1291 interest.” See Form 8621.

the new address.

issued immediately once the application

Additional tax under section 197(f). A

information is validated.

Taxable Income

corporation that elects to pay tax on the

•

By telephone at 1-800-829-4933 on

gain from the sale of an intangible under

Monday through Friday from 7:00 a.m. to

Line 1, Taxable income, and line 2,

the related person exception to the

10:00 p.m. in the corporation’s local time

Taxable investment income. If the

anti-churning rules should include any

zone.

corporation is a small company as

additional tax due under section

•

By mailing or faxing Form SS-4,

defined in section 831(b)(2) and elects

197(f)(9)(B) in the total for line 4. On the

Application for Employer Identification

under section 831(b)(2)(A)(ii) to be taxed

dotted line next to line 4, enter “Section

Number.

on taxable investment income, complete

197” and the amount.

Schedule B (ignore Schedule A) and

If the corporation has not received its

Line 5. Enter amount of tax that a

enter the amount from Schedule B, line

EIN by the time the return is due, enter

reciprocal must include. A mutual

21, on line 2, page 1. All other

“Applied for” and the date you applied in

insurance company that is an interinsurer

corporations should complete Schedule A

the space for the EIN. For more details,

or reciprocal underwriter may elect, under

(ignore Schedule B) and enter on line 1,

see the Instructions for Form SS-4.

section 835, to limit the deduction for

page 1, the amount from Schedule A, line

Note. Only corporations located in the

amounts paid or incurred to a qualifying

37.

United States or U.S. possessions can

attorney-in-fact to the amount of the

use the online application.

Tax Computation and

deductions of the attorney-in-fact

allocable to the income received by the

Payments

Item D. Section 953

attorney-in-fact from the reciprocal. If this

election is made, any increase in taxable

Elections

Line 3

income of a reciprocal as a result of this

If the corporation is a member of a

Check the applicable box if the

limitation is taxed at the highest rate of

controlled group, it must check the box on

corporation is a foreign corporation and

tax specified in section 11(b).

line 3. Complete and attach Schedule O

elects under:

Make no entry on line 5 if the mutual

(Form 1120). Members of a controlled

1. Section 953(c)(3)(C) to treat its

insurance company’s taxable income

group must use Schedule O to report the

related person insurance income as

before including the section 835(b)

apportionment of taxable income, income

effectively connected with the conduct of

amount is $100,000 or more. Otherwise,

tax, and certain tax benefits between the

a trade or business in the United States

this tax is 35% of the section 835(b)

members of the group. See Schedule O

amount. If an entry is made on line 5,

and its instructions for more information.

2. Section 953(d) to be treated as a

attach a statement showing how the tax

domestic corporation.

Line 4

was computed.

If the corporation is a member of a

Generally, a foreign corporation

Reciprocal underwriters making the

controlled group, enter the corporation’s

making either election must file its return

section 835(a) election are allowed a

tax from Part III of Schedule O (Form

with the Internal Revenue Service Center,

credit on line 14h for the amount of tax

1120).

P.O. Box 409101, Ogden, UT 84409. See

paid by the attorney-in-fact that is related

Notice 87-50, 1987-2 C.B. 357, and Rev.

Most corporations that are not

to the income received by the

Proc. 2003-47, 2003-28 I.R.B. 55, for the

members of a controlled group and are

attorney-in-fact from the reciprocal in the

procedural rules, election statement

not filing a consolidated return figure their

tax year.

-6-

Instructions for Form 1120-PC

Instructions For Form 1120-Pc - 2008 Page 6

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