Instructions For Form 1120-Pc - 2006 (Page 6 of 20) in pdf

Do not include on line 4 any interest

Item E. Final Return, Name

Item B. Employer

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

Change, Address Change,

show the amount of interest owed in the

Identification Number (EIN)

bottom margin of page 1 and enter

or Amended Return

Enter the corporation’s EIN. If the

“Section 1291 interest.” For details, see

corporation does not have an EIN, it must

Indicate a final return, name change,

Form 8621.

apply for one. An EIN can be applied for:

address change, or amended return by

Additional tax under section 197(f). A

•

Online — Click on the EIN link at www.

checking the appropriate box.

corporation that elects to pay tax on the

irs.gov/businesses/small. The EIN is

gain from the sale of an intangible under

Note. If a change of address occurs after

issued immediately once the application

the related person exception to the

the return is filed, use Form 8822,

information is validated.

anti-churning rules should include any

Change of Address, to notify the IRS of

•

By telephone at 1-800-829-4933 from

additional tax due under section

the new address.

7:00 a.m. to 10:00 p.m. in the

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

corporation’s local time zone.

dotted line next to line 4, enter “Section

Taxable Income

•

By mailing or faxing Form SS-4,

197” and the amount.

Application for Employer Identification

Line 1, Taxable income, and line 2,

Line 5. Enter amount of tax that a

Number.

Taxable investment income. If the

reciprocal must include. A mutual

corporation is a small company as

insurance company that is an interinsurer

If the corporation has not received its

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

or reciprocal underwriter may elect, under

EIN by the time the return is due, enter

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

section 835, to limit the deduction for

“Applied for” and the date you applied in

on taxable investment income, complete

amounts paid or incurred to a qualifying

the space for the EIN. For more details,

Schedule B (ignore Schedule A) and

attorney-in-fact to the amount of the

see the instructions for Form SS-4.

enter the amount from Schedule B, line

deductions of the attorney-in-fact

21, on line 2, page 1. All other

allocable to the income received by the

Note. The online application process is

corporations should complete Schedule A

attorney-in-fact from the reciprocal. If this

not yet available for corporations with

(ignore Schedule B) and enter on line 1,

election is made, any increase in taxable

addresses in foreign countries or Puerto

page 1, the amount from Schedule A, line

income of a reciprocal as a result of this

Rico.

37.

limitation is taxed at the highest rate of

tax specified in section 11(b).

Tax Computation and

Item D. Section 953

Make no entry on line 5 if the mutual

insurance company’s taxable income

Payments

Elections

before including the section 835(b)

Check the applicable box if the

amount is $100,000 or more. Otherwise,

Line 3

corporation is a foreign corporation and

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

If the corporation is a member of a

elects under:

amount. If an entry is made on line 5,

controlled group, it must check the box on

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

attach a statement showing how the tax

line 3 and complete Schedule O (Form

related person insurance income as

was computed.

1120). Members of a controlled group

effectively connected with the conduct of

Reciprocal underwriters making the

must use Schedule O (Form 1120) to

a trade or business in the United States

section 835(a) election are allowed a

figure the tax for the group. See Schedule

credit on line 14h for the amount of tax

O and its instructions for more

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

paid by the attorney-in-fact that is related

information.

domestic corporation.

to the income received by the

Line 4

attorney-in-fact from the reciprocal in the

tax year.

Generally, a foreign corporation

Most corporations not filing a

making either election must file its return

consolidated return figure their tax by

See section 835 and the related

with the Internal Revenue Service Center,

using the Tax Rate Schedule below.

regulations for special rules and

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

information regarding the statements

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

required to be attached to the return.

Tax Rate Schedule

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

Line 6. Alternative minimum tax (AMT).

procedural rules, election statement

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

page 1 is:

A corporation that is not a small

formats, and filing addresses for making

corporation exempt from the AMT

the respective elections under section

Of the

may be required to file Form 4626

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

CAUTION

But not

amount

if it claims certain credits, even though it

Over —

over —

Tax is:

over —

Note. Once either election is made, it will

does not owe any AMT. See Form 4626

$50,000

15%

apply to the tax year for which made and

for details.

50,000

75,000

$ 7,500 + 25%

50,000

all subsequent tax years unless revoked

Unless the corporation is treated as a

75,000

100,000

13,750 + 34%

75,000

with the consent of the IRS. Also, any

100,000

335,000

22,250 + 39%

100,000

small corporation exempt from the AMT, it

loss of a foreign corporation electing to be

335,000

10,000,000

113,900 + 34%

335,000

may owe the AMT if it has any of the

treated as a domestic insurance company

10,000,000

15,000,000

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

adjustments and tax preference items

15,000,000

18,333,333

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

under section 953(d) will be treated as a

listed on Form 4626. The corporation

18,333,333

- - - - -

35%

dual-consolidated loss and may not be

must file Form 4626 if its taxable income

used to reduce the taxable income of any

(or loss) before the NOL deduction,

other member of the affiliated group for

Deferred tax under section 1291. If the

combined with these adjustments and tax

this tax year or any other tax year.

corporation was a shareholder in a

preference items is more than the smaller

passive foreign investment company

of $40,000 or the corporation’s allowable

Note. If a section 953(d) election is

(PFIC) and received an excess

exemption amount (from Form 4626). For

made, include the additional tax required

distribution or disposed of its investment

this purpose, taxable income does not

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

in the PFIC during the year, it must

include the NOL deduction.

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

include the total increase in taxes due

See Form 4626 for definitions and

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

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

details on how to figure the tax.

Attach a schedule showing the

entered on line 4. On the dotted line next

computation. See section 953(d) for more

to line 4, enter “Section 1291” and the

Line 8a. Foreign tax credit. To find out

details.

amount.

when a corporation can take the credit for

-6-

Instructions for Form 1120-PC

Instructions For Form 1120-Pc - 2006 Page 6

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