Instructions For Form 1120-Pc - 2010 (Page 7 of 21) in pdf

1120). Component members of a

Make no entry on line 5 if the mutual

8912, Credit to Holders of Tax Credit

controlled group must use Schedule O to

insurance company’s taxable income

Bonds, line 18.

report the apportionment of taxable

before including the section 835(b)

Line 10. Foreign corporations. A

income, income tax, and certain tax

amount is $100,000 or more. Otherwise,

foreign corporation carrying on an

benefits between the members of the

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

insurance business in the United States is

group. See Schedule O and the

amount. If an entry is made on line 5,

taxed as a domestic insurance company

instructions for Schedule O for more

attach a statement showing how the tax

on its income effectively connected with

information.

was computed.

the conduct of a trade or business in the

United States (see sections 864(c) and

Line 4

Reciprocal underwriters making the

897 for definition).

section 835(a) election are allowed a

If the corporation is a member of a

credit on line 14h for the amount of tax

Generally, any other U.S.-source

controlled group and is filing Schedule O

paid by the attorney-in-fact that is related

income received by the foreign

(Form 1120), enter the corporation’s tax

to the income received by the

corporation is taxed at 30% (or at a lower

from Part III of Schedule O.

attorney-in-fact from the reciprocal in the

treaty rate) under section 881. If the

Most corporations that are not

tax year.

corporation has this income, attach a

members of a controlled group and are

schedule showing the kind and amount of

See section 835 and the related

not filing a consolidated return figure their

income, the tax rate, and the amount of

regulations for special rules and

tax by using the Tax Rate Schedule

tax. Enter the tax on line 10. However,

information regarding the statements

below.

see Reduction of section 881 tax below.

required to be attached to the return.

Note. Interest received from certain

Line 6. Alternative minimum tax (AMT).

Tax Rate Schedule

portfolio debt investments that were

A corporation that is not a small

issued after July 18, 1984, is not subject

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

corporation exempt from the AMT

to the tax. See section 881(c).

page 1 is:

may be required to file Form 4626

CAUTION

See section 842 for more information.

if it claims certain credits, even though it

Of the

Minimum effectively connected net

But not

amount

does not owe any AMT. See Form 4626.

Over —

over —

Tax is:

over —

investment income. See section 842(b)

Unless the corporation is treated as a

and Notice 89-96, 1989-2 C.B. 417, for

15%

$50,000

small corporation exempt from the AMT, it

50,000

75,000

$ 7,500 + 25%

50,000

the general rules for computing this

may owe the AMT if it has any of the

75,000

100,000

13,750 + 34%

75,000

amount. Also, see Rev. Proc. 2010-29,

adjustments and tax preference items

22,250 + 39%

100,000

335,000

100,000

2010-35 I.R.B. 309, for the domestic

335,000

10,000,000

113,900 + 34%

335,000

listed on Form 4626. The corporation

asset/liability percentages and domestic

10,000,000

15,000,000

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

must file Form 4626 if its taxable income

investment yields needed to compute this

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

15,000,000

18,333,333

(or loss) before the NOL deduction,

amount.

18,333,333

- - - - -

35%

combined with these adjustments and tax

Any additional income required by

preference items is more than the smaller

Deferred tax under section 1291. If the

section 842(b) must be included in

of $40,000 or the corporation’s allowable

corporation was a shareholder in a

taxable income (for example, Schedule A,

exemption amount (from Form 4626). For

passive foreign investment company

line 13).

this purpose, taxable income does not

(PFIC) and received an excess

Reduction of section 881 tax.

include the NOL deduction.

distribution or disposed of its investment

Additional taxes resulting from the net

See Form 4626 for definitions and

in the PFIC during the year, it must

investment income adjustment may offset

details on how to figure the tax.

include the total increase in taxes due

a corporation’s section 881 tax on

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

Line 8a. Foreign tax credit. To find out

U.S.-source income. The tax reduction is

entered on line 4. On the dotted line next

when a corporation can take the credit for

determined by multiplying the section 881

to line 4, enter “Section 1291” and the

payment of income tax to a foreign

tax by the ratio of the amount of income

amount.

country or U.S. possession, see Form

adjustment to income subject to the

1118, Foreign Tax Credit – Corporations.

Do not include on line 4 any interest

section 881 tax, computed without the

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

Line 8b. Credit from Form 8834, line

exclusion for interest on state and local

show the amount of interest owed in the

29. Enter any qualified electric vehicle

bonds or income exempted from taxation

bottom margin of page 1 and enter

passive activity credits from prior years

by treaty. See section 842(c)(2). Attach a

“Section 1291 interest.” See Form 8621.

allowed for the current tax year from Form

statement showing how the reduction

Additional tax under section 197(f). A

8834, Qualified Plug-In Electric and

under section 881 was figured. Enter the

corporation that elects to pay tax on the

Electric Vehicle Credit, line 29. Also

net tax imposed by section 881 on line

gain from the sale of an intangible under

include on line 8b any credits from Form

10.

the related person exception to the

5735, American Samoa Economic

Line 11. Personal holding company

anti-churning rules should include any

Development Credit. See the Instructions

tax. A corporation (other than a

for Form 5735.

additional tax due under section

corporation described in section 542(c)) is

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

taxed as a personal holding company

Line 8c. General Business Credit.

dotted line next to line 4, enter “Section

(PHC) under section 542 if:

Enter on line 8c the allowable credit from

•

197” and the amount.

At least 60% of its adjusted ordinary

Form 3800, Part II, line 32.

Line 5. Enter amount of tax that a

gross income for the tax year is PHC

The corporation is required to file Form

reciprocal must include. A mutual

income, and

3800, General Business Credit, to claim

•

insurance company that is an interinsurer

At any time during the last half of the

most business credits. For a list of

or reciprocal underwriter may elect, under

tax year more than 50% in value of its

allowable credits, see Form 3800. Also,

section 835, to limit the deduction for

outstanding stock is directly or indirectly

see the applicable credit form and its

amounts paid or incurred to a qualifying

owned by five or fewer individuals.

instructions.

attorney-in-fact to the amount of the

See Schedule PH (Form 1120), U.S.

Line 8d. Credit for prior year minimum

deductions of the attorney-in-fact

Personal Holding Company (PHC) Tax,

tax. To figure the minimum tax credit

allocable to the income received by the

for definitions and details on how to figure

and any carryforward of that credit, use

attorney-in-fact from the reciprocal. If this

the tax.

Form 8827, Credit for Prior Year Minimum

election is made, any increase in taxable

Line 12. Other Taxes

Tax — Corporations.

income of a reciprocal as a result of this

limitation is taxed at the highest rate of

Line 8e. Bond credits from Form 8912.

Include any of the following taxes and

tax specified in section 11(b).

Enter the allowable credits from Form

interest in the total on line 12. Check the

-7-

Instructions for Form 1120-PC (2010)

Instructions For Form 1120-Pc - 2010 Page 7

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