Instructions For Form 1120-Pc - 2006 (Page 5 of 20) in pdf

have to pay a penalty if it is required to

transferee may make the election by

File supporting statements for each

file Form 8886 and does not do so. The

attaching the statement as provided in

corporation included in the consolidated

following are reportable transactions.

Notice 2005-70, 2005-41 I.R.B. 694, to

return. Do not use Form 1120-PC as a

their tax returns filed by the due date

supporting statement. On the supporting

1. Any listed transaction, which is a

(including extensions) for the tax year in

statement, use columns to show the

transaction that is the same as or

which the transaction occurred. Once

following, both before and after

substantially similar to tax avoidance

made, the election is irrevocable. See

adjustments.

transactions identified by the IRS.

section 362(e)(2)(C) and Notice 2005-70.

2. Any transaction offered under

1. Items of gross income and

conditions of confidentiality for which the

Other forms and statements. See Pub.

deductions.

corporation paid an advisor a fee of at

542 for a list of other forms and

2. A computation of taxable income.

least $250,000.

statements a corporation may need to file

3. Balance sheets as of the beginning

3. Certain transactions for which the

in addition to the forms and statements

and end of the tax year.

corporation has contractual protection

discussed throughout these instructions.

4. A reconciliation of income per

against disallowance of the tax benefits.

books with income per return.

4. Certain transactions resulting in a

5. A reconciliation of retained

loss of at least $10 million in any single

Specific Instructions

earnings.

year or $20 million in any combination of

years.

Period Covered

Enter on Form 1120-PC the totals for

5. Certain transactions resulting in a

each item of income, gain, loss, expense,

tax credit of more than $250,000, if the

Generally, file the 2006 return for

or deduction, net of eliminating entries for

corporation held the asset generating the

calendar year 2006. However, if an

intercompany transactions between

credit for 45 days or less.

insurance company joins in the filing of a

corporations within the consolidated

consolidated return, it may adopt the tax

Penalties. The corporation may have

group. Attach consolidated balance

year of the common parent corporation

to pay a penalty if it is required to disclose

sheets and a reconciliation of

even if that year is not a calendar year.

a reportable transaction under section

consolidated retained earnings.

For a fiscal or short tax year return, fill in

6011 and fails to properly complete and

the tax year space at the top of the form.

file Form 8886. The penalty is $50,000

For more information on consolidated

($200,000 if the reportable transaction is

returns, see the regulations under section

Name and Address

a listed transaction) for each failure to file

1502.

Print or type the corporation’s true name

Form 8886 with its corporate return or for

(as set forth in the charter or other legal

Note. If a nonlife insurance company is a

failure to provide a copy of Form 8886 to

document creating it), address, and EIN

member of an affiliated group, file Form

the Office of Tax Shelter Analysis

on the appropriate lines. Include the suite,

1120-PC as an attachment to the

(OTSA). Other penalties, such as an

room, or other unit number after the street

consolidated return in lieu of filing

accuracy-related penalty under section

address. If the post office does not deliver

supporting statements. Across the top of

6662A, may also apply. See the

mail to the street address and the

page 1 of Form 1120-PC, write

Instructions for Form 8886 for details.

corporation has a P.O. box, show the box

“Supporting Statement to Consolidated

Reportable transactions by material

number instead.

Return.”

advisors. Until further guidance is

If the corporation receives its mail in

issued, material advisors who provide

Common parent of a life-nonlife

care of a third party (such as an

material aid, assistance, or advice with

consolidated group. If the corporation is

accountant or an attorney), enter on the

respect to any reportable transaction,

the common parent of a life-nonlife

street address line “C/O” followed by the

must use Form 8264, Application for

consolidated group, attach a statement to

third party’s name and street address or

Registration of a Tax Shelter, to disclose

the return that includes the name and

P.O. box.

reportable transactions in accordance

employer identification number (EIN) of

with interim guidance provided in Notice

Item A. Identifying

the common parent and indicates that this

2004-80, 2004-50 I.R.B. 963; Notice

corporation is the common parent of a

2005-17, 2005-8 I.R.B. 606; and Notice

Information

life-nonlife consolidated group. See

2005-22, 2005-12 I.R.B. 756.

Temporary Regulations section

Consolidated Return

Transfers to a corporation controlled

1.1502-47T(s) for more details.

by the transferor. If a person receives

If an affiliated group of corporations

stock of a corporation in exchange for

includes one or more domestic life

Schedule M-3 (Form 1120-PC)

property, and no gain or loss is

insurance companies taxed under section

A nonlife insurance company with total

recognized under section 351, the person

801, the common parent may elect to

assets (non-consolidated or consolidated

(transferor) and the transferee must each

treat those companies as includible

for all companies included within a tax

attach to their tax returns the statements

corporations. The life insurance

consolidation group) of $10 million or

required by Temporary Regulations

companies must have been members of

more on the last day of the tax year must

section 1.351-3T.

the group for the 5 tax years immediately

complete new Schedule M-3 (Form

Dual consolidated losses. If a domestic

preceding the tax year for which the

1120-PC), Net Income (Loss)

corporation incurs a dual consolidated

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

Reconciliation for U.S. Property and

loss (as defined in Regulations section

and Regulations section

Casualty Insurance Companies With

1.1503-2(c)(5)), the corporation (or

1.1502-47(d)(12).

Total Assets of $10 Million or More,

consolidated group) may need to attach

Corporations filing a consolidated

instead of Schedule M-1. A corporation

an elective relief agreement and/or an

return must attach Form 851, Affiliations

filing Form 1120-PC that is not required to

annual certification as provided in

Schedule, and other supporting

file Schedule M-3 (Form 1120-PC) may

Regulations section 1.1503-2(g)(2).

statements to the return. Also, for the first

voluntarily file Schedule M-3 (Form

Election to reduce basis under section

year a subsidiary corporation is being

1120-PC) instead of Schedule M-1.

362(e)(2)(C). The transferor and

included in a consolidated return, attach

transferee in certain section 351

Form 1122, Authorization and Consent of

If you are filing Schedule M-3 (Form

transactions can make a joint election

Subsidiary Corporation To Be Included in

1120-PC), check the “Schedule M-3

under section 362(e)(2)(C) to limit the

a Consolidated Income Tax Return, to the

required” box at the top of page 1 of Form

transferor’s basis in the stock received

parent’s consolidated return. Attach a

1120-PC. See the Instructions for

instead of the transferee’s basis in the

separate Form 1122 for each subsidiary

Schedule M-3 (Form 1120-PC) for more

transferred property. The transferor and

being included in the consolidated return.

details.

-5-

Instructions for Form 1120-PC

Instructions For Form 1120-Pc - 2006 Page 5

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