Instructions For Form 1120-Pc - 2005 (Page 19 of 21) in pdf

from the health-related business of the

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

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

corporation.

is limited and preferred as to dividends

period for the NOL and instead carry the

and does not participate significantly in

NOL forward to future tax years. To do

Line 8a. Adjusted tax-exempt income.

corporate growth, and (d) has redemption

so, check the box on line 11 and file the

Reduce the total tax-exempt interest

and liquidation rights that do not exceed

tax return by its due date, including

received or accrued during the tax year

the issue price of the stock (except for a

extensions (do not attach the statement

by any amount (not otherwise deductible)

reasonable redemption or liquidation

described in Temporary Regulations

which would have been allowable as a

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

section 301.9100-12T). Once made, the

deduction for the tax year if such interest

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

election is irrevocable. See Pub. 542,

were not tax-exempt. Enter the result on

stock for purposes of determining stock

section 172, and Form 1139 for more

line 8a.

ownership above.

details.

Line 8b. Adjusted dividends-received

Corporations filing a consolidated

Question 6

deduction. Reduce the total amount

return must also attach the statement

allowed as a deduction under sections

Check the “Yes” box if one foreign person

required by Temporary Regulations

243, 244, and 245 by the amount of any

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

section 1.1502-21T(b)(3).

decrease in deductions allowable for the

power of all classes of stock of the

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

corporation entitled to vote, or (b) the total

Item 12

when the decrease is caused by the

value of all classes of stock of the

Enter the amount of the NOL carryover to

deductions under sections 243, 244, and

corporation.

the tax year from prior years, even if

245. Enter the result on line 8b.

The constructive ownership rules of

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

Schedule I—Other

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

but not used to offset income (either as a

Information

carryback or carryover) to a tax year prior

Enter on line 6a the percentage owned

to 2005. Do not reduce the amount by

by the foreign person specified in

The following instructions apply to page 7,

any NOL deduction reported on Schedule

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

Form 1120-PC. Complete all items that

A, line 36b.

the owner’s country.

apply to the corporation.

Note. If there is more than one

Question 4

25%-or-more foreign owner, complete

Check the “Yes” box if:

Schedule L—Balance

lines 6a and 6b for the foreign person with

•

The corporation is a subsidiary in an

the highest percentage of ownership.

Sheets per Books

affiliated group (defined below), but is not

Foreign person. The term “foreign

filing a consolidated return for the tax year

Note. All insurance companies required

person” means:

with that group, or

to file Form 1120-PC must complete

•

A foreign citizen or nonresident alien,

The corporation is a subsidiary in a

Schedule L.

•

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

parent-subsidiary controlled group

The balance sheet should agree with

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

(defined on page 6).

the corporation’s books and records.

or resident),

•

Any corporation that meets either of

A foreign partnership,

If filing a consolidated return, report

•

the requirements above should check the

A foreign corporation,

total consolidated assets, liabilities, and

•

“Yes” box. This applies even if the

Any foreign estate or trust within the

shareholder’s equity for all corporations

corporation is a subsidiary member of one

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

joining in the return. See Consolidated

•

group and the parent corporation of

A foreign government (or one of its

Return on page 3.

another.

agencies or instrumentalities) to the

Line 1. Cash. Include certificates of

Note. If the corporation is an “excluded

extent that it is engaged in the conduct of

deposit as cash on this line.

member” of a controlled group (see

a commercial activity as described in

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

section 892.

Line 5. Tax-exempt securities. Include

member of a controlled group for this

on this line:

Owner’s country. For individuals, the

•

purpose.

State and local government obligations,

term “owner’s country” means the country

the interest on which is excludable from

Affiliated group. An affiliated group is

of residence. For all others, it is the

gross income under section 103(a) and

one or more chains of includible

country where incorporated, organized,

•

Stock in a mutual fund or other RIC that

corporations (section 1504(a)) connected

created, or administered.

distributed exempt-interest dividends

through stock ownership with a common

Requirement to file Form 5472. If the

during the tax year of the corporation.

parent corporation. The common parent

corporation checked “Yes”, it may have to

must be an includible corporation and the

Line 18. Insurance liabilities. Include

file Form 5472. Generally, a 25%

following requirements must be met.

on this line:

foreign-owned corporation that had a

•

1. The common parent must own

Undiscounted unpaid losses.

reportable transaction with a foreign or

•

directly stock that represents at least 80%

Loss adjustment expenses.

domestic related party during the tax year

•

Unearned premiums.

of the total voting power and at least 80%

must file Form 5472. See Form 5472 for

of the total value of the stock of at least

filing instructions and penalties for failure

See section 846 for more information.

one of the other includible corporations.

to file.

Line 27. Adjustments to shareholders’

2. Stock that represents at least 80%

Item 10

equity. Some examples of adjustments

of the total voting power and at least 80%

to report on this line include:

Show any tax-exempt interest received or

of the total value of the stock of each of

•

Unrealized gains and losses on

accrued. Include any exempt-interest

the other corporations (except for the

securities held “available for sale.”

dividends received as a shareholder in a

common parent) must be owned directly

•

Foreign currency translation

mutual fund or other RIC.

by one or more of the other includible

adjustments.

corporations.

•

Item 11

The excess of additional pension

For this purpose, the term “stock”

If the corporation has an NOL for its 2005

liability over unrecognized prior service

generally does not include any stock that

tax year, it can elect under section

cost.

-19-

Instructions for Form 1120-PC

Instructions For Form 1120-Pc - 2005 Page 19

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