Instructions For Form 1120-Pc - 2010 (Page 19 of 21) in pdf

Item 11

the other corporations (except for the

C.F.R. 158.150) in the section 833 MLR

common parent) must be owned directly

numerator.

If the corporation has an NOL, it generally

by one or more of the other includible

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

See section 833(c)(5) and Notice

corporations.

the entire carryback period for the NOL

2010-79 for more information.

and instead carry the NOL forward to

Check the “Yes” box if the corporation

For this purpose, the term “stock”

future tax years. To do so, check the box

is a Blue Cross or Blue Shield

generally does not include any stock that

on line 11 and file the tax return by its due

organization described in section

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

date, including extensions. Do not attach

833(c)(2), or other organization described

is limited and preferred as to dividends

the statement described in Temporary

in section 833(c)(3), that has satisfied the

and does not participate significantly in

Regulations section 301.9100-12T. Once

medical loss ratio (MLR) requirements of

corporate growth, and (d) has redemption

made, the election is irrevocable.

section 833(c)(5).

and liquidation rights that do not exceed

the issue price of the stock (except for a

Corporations filing a consolidated

If you checked “No” enter zero on

reasonable redemption or liquidation

return that elect to waive the entire

Schedule H, line 6, and Schedule A, line

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

carryback period for the group must also

34a. You cannot take the special

attach the statement required by

deduction. See the instructions for

Question 6

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

Schedule H.

Check the “Yes” box if one foreign person

the election will not be valid.

Also, if you checked “No” your

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

Item 12

deduction of unearned premiums is

power of all classes of stock of the

limited. See the instructions for Schedule

corporation entitled to vote, or (b) the total

Enter the amount of the NOL carryover to

E for more information.

value of all classes of stock of the

the tax year from prior years, even if

corporation.

some of the loss is used to offset income

on this return. The amount to enter is the

The constructive ownership rules of

Schedule L—Balance

total of all NOLs generated in prior years

section 318 apply in determining if a

Sheets per Books

but not used to offset income (either as a

corporation is foreign owned. See section

carryback or carryover) in a tax year prior

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

Note. All insurance companies required

to 2010. Do not reduce the amount by

to file Form 1120-PC must complete

Enter on line 6a the percentage owned

any NOL deduction reported on Schedule

Schedule L.

by the foreign person specified in

A, line 36b.

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

The balance sheets should agree with

Question 13

the owner’s country.

the corporation’s books and records.

A corporation that files Form 1120-PC

Note. If there is more than one

If filing a consolidated return, report

must file Schedule UTP (Form 1120) with

25%-or-more foreign owner, complete

total consolidated assets, liabilities, and

its income tax return if:

lines 6a and 6b for the foreign person with

shareholder’s equity for all corporations

•

The corporation has assets that equal

the highest percentage of ownership.

joining in the return. See Consolidated

or exceed $100 million;

Return on page 5.

Foreign person. The term “foreign

•

The corporation or a related party

person” means:

Corporations with total assets

issued audited financial statements

•

A foreign citizen or nonresident alien,

(non-consolidated or consolidated for all

reporting all or a portion of the

•

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

corporations included within the tax

corporation’s operations for all or a

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

consolidation group) of $10 million or

portion of the corporation’s tax year; and

or resident),

•

more on the last day of the tax year must

The corporation has one or more tax

•

A foreign partnership,

complete Schedule M-3 (Form 1120-PC)

positions that must be reported on

•

A foreign corporation,

instead of Schedule M-1. See the

Schedule UTP.

•

Any foreign estate or trust within the

separate instructions for Schedule M-3

For details, see the Instructions for

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

(Form 1120-PC) for provisions that also

•

Schedule UTP.

A foreign government (or one of its

affect Schedule L.

agencies or instrumentalities) to the

Attach Schedule UTP to the

Line 1. Cash. Include certificates of

extent that it is engaged in the conduct of

corporation’s income tax return. Do not

deposit as cash on this line.

a commercial activity as described in

file it separately. A taxpayer that files a

Line 5. Tax-exempt securities. Include

section 892.

protective Form 1120-PC must also file

on this line:

Schedule UTP if it satisfies the

Owner’s country. For individuals, the

•

State and local government obligations,

requirements set forth above.

term “owner’s country” means the country

the interest on which is excludable from

of residence. For all others, it is the

gross income under section 103(a), and

Question 14

country where incorporated, organized,

•

Stock in a mutual fund or other RIC that

Section 833(c)(5) provides that section

created, or administered.

distributed exempt-interest dividends

833 does not apply to a Blue Cross or

Requirement to file Form 5472. If the

during the tax year of the corporation.

Blue Shield organization described in

corporation checked “Yes” it may have to

Line 18. Insurance liabilities. Include

section 833(c)(2), or other organization

file Form 5472, Information Return of a

on this line:

described in section 833(c)(3), unless it

25% Foreign-Owned U.S. Corporation or

•

Undiscounted unpaid losses.

has a medical loss ratio of 85% or more

a Foreign Corporation Engaged in a U.S.

•

Loss adjustment expenses.

for the tax year. For purposes of section

Trade or Business. Generally, a 25%

•

Unearned premiums.

833(c)(5), the medical loss ratio is equal

foreign-owned corporation that had a

to the amount expended on

See section 846 for more information.

reportable transaction with a foreign or

reimbursement for clinical services

Line 27. Adjustments to shareholders’

domestic related party during the tax year

provided to enrollees (as defined in 45

equity. Some examples of adjustments

must file Form 5472. See Form 5472 for

C.F.R. 158.140) under its policies during

to report on this line include:

filing instructions and penalties for failure

the tax year (section 833 MLR

•

Unrealized gains and losses on

to file.

Numerator) divided by the total premium

securities held “available for sale.”

Item 10

revenue (section 833 MLR Denominator).

•

Foreign currency translation

Show any tax-exempt interest received or

Note. For 2010, the IRS will not

adjustments.

•

accrued. Include any exempt-interest

challenge the inclusion of amounts

The excess of additional pension

dividends received as a shareholder in a

expended for activities that improve

liability over unrecognized prior service

mutual fund or other RIC.

health care quality (as defined in 45

cost.

-19-

Instructions for Form 1120-PC (2010)

Instructions For Form 1120-Pc - 2010 Page 19

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