Instructions For Form 1120-Pc - 2009 (Page 19 of 21) in pdf

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of the total value of the stock of at least

filing instructions and penalties for failure

State and local government obligations,

one of the other includible corporations.

to file.

the interest on which is excludable from

2. Stock that represents at least 80%

gross income under section 103(a), and

Item 10

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of the total voting power and at least 80%

Stock in a mutual fund or other RIC that

of the total value of the stock of each of

Show any tax-exempt interest received or

distributed exempt-interest dividends

the other corporations (except for the

accrued. Include any exempt-interest

during the tax year of the corporation.

common parent) must be owned directly

dividends received as a shareholder in a

Line 18. Insurance liabilities. Include

by one or more of the other includible

mutual fund or other RIC.

on this line:

corporations.

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Undiscounted unpaid losses.

Item 11

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Loss adjustment expenses.

For this purpose, the term “stock”

If the corporation has an NOL, it generally

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Unearned premiums.

generally does not include any stock that

can elect under section 172(b)(3) to waive

See section 846 for more information.

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

the entire carryback period for the NOL

is limited and preferred as to dividends

and instead carry the NOL forward to

Line 27. Adjustments to shareholders’

and does not participate significantly in

future tax years. To do so, check the box

equity. Some examples of adjustments

corporate growth, and (d) has redemption

on line 11 and file the tax return by its due

to report on this line include:

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and liquidation rights that do not exceed

date, including extensions. Do not attach

Unrealized gains and losses on

the issue price of the stock (except for a

the statement described in Temporary

securities held “available for sale.”

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reasonable redemption or liquidation

Regulations section 301.9100-12T. Once

Foreign currency translation

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

made, the election is irrevocable.

adjustments.

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

The excess of additional pension

However, an exception applies for an

stock for purposes of determining stock

liability over unrecognized prior service

applicable 2008 or 2009 NOL. See the

ownership above.

cost.

instructions for line 37, Schedule A, on

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Guarantees of employee stock (ESOP)

Question 6

page 14. Also, see Pub. 542, section 172,

debt.

and Form 1139 for more details.

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Check the “Yes” box if one foreign person

Compensation related to employee

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

Corporations filing a consolidated

stock award plans.

power of all classes of stock of the

return that elect to waive the entire

If the total adjustment to be entered on

corporation entitled to vote, or (b) the total

carryback period for the group must also

line 27 is a negative amount, enter the

value of all classes of stock of the

attach the statement required by

amount in parentheses.

corporation.

Regulations section 1.1502-21(b)(3) or

the election will not be valid.

The constructive ownership rules of

section 318 apply in determining if a

Item 12

Schedule M-1—

corporation is foreign owned. See section

Enter the amount of the NOL carryover to

Reconciliation of Income

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

the tax year from prior years, even if

Enter on line 6a the percentage owned

(Loss) per Books With

some of the loss is used to offset income

by the foreign person specified in

on this return. The amount to enter is the

Income per Return

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

total of all NOLs generated in prior years

the owner’s country.

All insurance companies required to file

but not used to offset income (either as a

Form 1120-PC, with total assets

carryback or carryover) to a tax year prior

Note. If there is more than one

(non-consolidated or consolidated for all

to 2009. Do not reduce the amount by

25%-or-more foreign owner, complete

corporations included within the tax

any NOL deduction reported on Schedule

lines 6a and 6b for the foreign person with

consolidation group) of $10 million or

A, line 36b.

the highest percentage of ownership.

more on the last day of the tax year must

Foreign person. The term “foreign

complete Schedule M-3 (Form 1120-PC)

person” means:

instead of Schedule M-1. See Schedule

Schedule L—Balance

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A foreign citizen or nonresident alien,

M-3 (Form 1120-PC) on page 6. A

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Sheets per Books

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

corporation filing Form 1120-PC that is

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

not required to file Schedule M-3 (Form

Note. All insurance companies required

or resident),

1120-PC) may voluntarily file Schedule

to file Form 1120-PC must complete

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A foreign partnership,

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

Schedule L.

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A foreign corporation,

M-1. See the Instructions for Schedule

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Any foreign estate or trust within the

The balance sheets should agree with

M-3 (Form 1120-PC) for more

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

the corporation’s books and records.

information.

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A foreign government (or one of its

If filing a consolidated return, report

Line 5c. Travel and entertainment.

agencies or instrumentalities) to the

total consolidated assets, liabilities, and

Include on line 5c any of the following.

extent that it is engaged in the conduct of

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shareholder’s equity for all corporations

Meals and entertainment expenses not

a commercial activity as described in

joining in the return. See Consolidated

deductible under section 274(n).

section 892.

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Return on page 5.

Expenses for the use of an

Owner’s country. For individuals, the

entertainment facility.

Corporations with total assets

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term “owner’s country” means the country

The part of business gifts over $25.

(non-consolidated or consolidated for all

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of residence. For all others, it is the

Expenses of an individual over $2,000

corporations included within the tax

country where incorporated, organized,

which are allocable to conventions on

consolidation group) of $10 million or

created, or administered.

cruise ships.

more on the last day of the tax year must

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Requirement to file Form 5472. If the

Employee achievement awards over

complete Schedule M-3 (Form 1120-PC)

corporation checked “Yes” it may have to

$400.

instead of Schedule M-1. See the

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file Form 5472, Information Return of a

The cost of entertainment tickets over

separate instructions for Schedule M-3

25% Foreign-Owned U.S. Corporation or

face value (also subject to 50% limit

(Form 1120-PC) for provisions that also

a Foreign Corporation Engaged in a U.S.

under section 274(n)).

affect Schedule L.

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Trade or Business. Generally, a 25%

The cost of skyboxes over the face

Line 1. Cash. Include certificates of

foreign-owned corporation that had a

value of nonluxury box seat tickets.

deposit as cash on this line.

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reportable transaction with a foreign or

The part of luxury water travel

domestic related party during the tax year

Line 5. Tax-exempt securities. Include

expenses not deductible under section

must file Form 5472. See Form 5472 for

on this line:

274(m).

-19-

Instructions for Form 1120-PC (2009)

Instructions For Form 1120-Pc - 2009 Page 19

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