Instructions For Form 1120-Pc - 2009 (Page 15 of 21) in pdf

Line 13. Trade or business deductions.

Enter on line 1b, column (b), the

received is made as if the group were not

Enter the total deductions related to any

amortization of bond premium on

filing a consolidated return.

trade or business income included in

tax-exempt bonds.

Prorated amounts means tax-exempt

gross investment income under section

interest and dividends for which a

Note. Insurance companies electing to

834(b)(2). Do not include deductions for

deduction is allowable under section 243,

amortize discount for tax purposes must

any insurance business. Do not include

244, or 245 (other than 100% dividends).

reduce the amortization of premium by

losses from sales or exchanges of capital

any amortization of discount.

100% dividend means any dividend if

assets or property used in the business,

the percentage used for purposes of

Line 3. Gross rents. Enter the gross

or from the compulsory or involuntary

determining the deduction allowable

rents received or accrued during the tax

conversion of property used in the trade

under section 243, 244, or 245(b) is

year. Deduct rental expenses such as

or business.

100%. A special rule applies to certain

repairs, interest, taxes, and depreciation

Line 14. Interest. See the instructions

dividends received by a foreign

on the proper lines in the Deductions

for lines 20a and 20b, Schedule A.

corporation.

section.

Line 17. Investment expenses. Enter

Lines 1 through 25

Line 5. Gross income from a trade or

expenses that are properly chargeable as

business, other than an insurance

For purposes of the 20% ownership test

investment expenses. If general

business, and from Form 4797. Enter

on lines 1 through 7, the percentage of

expenses are allocated to investment

the gross income from a trade or

stock owned by the corporation is based

expenses, the total deduction cannot be

business, other than an insurance

on voting power and value of the stock.

more than the amount on Schedule B,

business, carried on by the insurance

Preferred stock described in section

Part II, line 39. Attach a schedule showing

company or by a partnership of which the

1504(a)(4) is not taken into account.

the kind and amount of general expenses.

insurance company is a partner. Include

Corporations filing a consolidated return

Minor items may be grouped together.

section 1245 and section 1250 gains (as

should see Regulations sections

See section 267 for the limitation on

modified by section 291) and other gains

1.1502-13, 1.1502-26, and 1.1502-27

deductions for unpaid expenses and

from Form 4797, Sales of Business

before completing Schedule C.

interest in transactions between related

Property, on investment assets only.

Corporations filing a consolidated

taxpayers.

Line 6. Income from leases described

return must not report as dividends on

in sections 834(b)(1)(B) and

Schedule C any amounts received from

834(b)(1)(C). Enter gross income from

Schedule B, Part

corporations within the tax consolidation

entering into, changing, or ending any

group. Such dividends are eliminated in

II—Invested Assets Book

lease, mortgage, or other instrument or

consolidation rather than offset by the

agreement from which the company

dividends-received deduction.

Values

earns interest, rents, or royalties.

Lines 1 through 9, column (a). Enter in

Use Schedule B, Part II, to compute the

column (a) of the appropriate line those

Line 8. Gross investment income. If

limitation on investment expenses under

dividends that are subject to the

gross investment income includes an

section 834(c)(2) when any general

provisions of section 832(b)(5)(B).This will

amount subtracted from the protection

expenses are in part assigned to, or

include:

against loss account, write on the dotted

included in, the investment expenses

line next to line 8, “PAL” and the amount.

1. All dividends (other than 100%

deducted on Schedule B, Part I, line 17.

dividends) received on stock acquired

Deductions

after August 7, 1986, and

Note. See section 834(d)(1) regarding

2. 100% dividends received on stock

Schedule C—Dividends

the limitation of expenses on real estate

acquired after August 7, 1986, to the

and Special Deductions

owned and occupied in part or in whole

extent that such dividends are attributable

by a mutual insurance company.

to prorated amounts (see definition

Definitions

earlier).

Line 9. Real estate taxes. Enter taxes

The acquisition date for investments

paid or accrued on real estate owned by

In the case of an insurance company

acquired by direct purchase is the trade

the corporation and deductible under

that files a consolidated return, the

date rather than the settlement date. For

section 164.

determination with respect to any

investments not acquired by direct

Line 10. Other real estate expenses.

dividend paid by a member to another

purchase (such as those acquired

Enter all ordinary and necessary real

member of the affiliated group is made as

through transfers among affiliates,

estate expenses, such as fire insurance,

if no consolidated return was filed. See

tax-free reorganizations, or the liquidation

heat, light, and labor. Also enter the cost

section 832(g).

of a subsidiary, etc.), the actual

of incidental repairs, such as labor and

Line 1. Enter dividends (except those

acquisition date should be used

supplies, that do not add to the property’s

received on debt-financed stock acquired

regardless of the holding period

value or appreciably prolong its life. Do

after July 18, 1984 – see section 246A)

determined under section 1223.

not include any amount paid for new

that are:

A special rule applies in determining

buildings or for permanent improvements

•

Received from less-than-20%-owned

the acquisition date of dividends received

or betterments made to increase the

domestic corporations subject to income

from affiliates. This rule provides that the

value of any property or any amount

tax, and

portion of any 100% dividend which is

spent on foreclosed property before the

•

Qualified for the 70% deduction under

related to prorated amounts be treated as

property is held for rent.

section 243(a)(1).

received with respect to stock acquired on

Line 11. Depreciation. Enter

Also, include on line 1 the following.

the later of:

•

depreciation on assets only to the extent

Taxable distributions from an IC-DISC

(a) the date the payor acquired the

that the assets are used to produce gross

or former DISC that are designated as

stock or obligation to which the prorated

investment income reported on lines 1

eligible for the 70% deduction and certain

amounts are attributable or

through 7 of Schedule B. For more

dividends of Federal Home Loan Banks.

information, see the instructions for line

(b) the first day on which the payor and

See section 246(a)(2).

•

22, Schedule A.

payee were members of the same

Dividends (except those received on

affiliated group as defined in section

Line 12. Depletion. Enter any allowable

debt-financed stock acquired after July

243(b).

depletion on royalty income reported on

18, 1984) from a regulated investment

line 4, Schedule B. See the instructions

Also, if the taxpayer is a member of an

company (RIC). The amount of dividends

for line 23, Schedule A, for more

affiliated group filing a consolidated

eligible for the dividends-received

information.

return, its determination of dividends

deduction under section 243 is limited by

-15-

Instructions for Form 1120-PC (2009)

Instructions For Form 1120-Pc - 2009 Page 15

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