Instructions For Form 1120-Pc - 2010 (Page 9 of 21) in pdf

3. Bonds not meeting the

or credited during the same tax year. See

partnership, identify the amount from

requirements of section 149 (regarding

section 832(b)(1)(D).

each partnership.

•

the registration of tax-exempt bonds).

Part or all of the proceeds received

Line 9. Income on account of special

from certain corporate-owned life

income and deduction accounts.

Lines 3a and 3b, column (b).

insurance contracts issued after August

Corporations which write the kinds of

Amortization of premium. Enter on

17, 2006. Corporations that own one or

insurance below must maintain the

line 3a, column (b), the total amortization

more employer-owned life insurance

following special accounts. A corporation

of bond premium, including amortization

contracts issued after August 17, 2006,

which writes:

on tax-exempt bonds. Enter on line 3b,

must file Form 8925, Report of

1. Mortgage guaranty insurance must

column (b), the amortization of bond

Employer-Owned Life Insurance

maintain a mortgage guaranty account;

premium on tax-exempt bonds only.

Contracts.

2. Lease guaranty insurance must

•

Note. Insurance companies electing to

Income from cancellation of debt

maintain a lease guaranty account; and

amortize discount for tax purposes must

(COD) for the repurchase of a debt

3. Insurance on obligations the

reduce the amortization of premium by

instrument for less than its adjusted issue

interest on which is excludable from gross

any amortization of discount.

price. However, for a reacquisition of an

income under section 103 must maintain

applicable debt instrument after

Line 4. Gross rents. Enter gross rents,

an account with respect to insurance on

December 31, 2008, and before January

computed as indicated under the

state and local obligations.

1, 2011, a corporation can elect, under

instructions for Gross income, on page 8.

section 108(i), to defer the income from

Deduct expenses, such as repairs,

Amounts required to be subtracted

COD in connection with the election. If the

interest, taxes, and depreciation, on the

from these accounts under sections

corporation makes the election, the

proper lines for deductions.

832(e)(5) and 832(e)(6) must be reported

income is deferred and ratably included in

as income on line 9. See section 832(e)

Line 6. Capital gain net income. Every

income over the 5-year period beginning

for more information.

sale or exchange of a capital asset must

with:

Line 10. Income from protection

be reported in detail on Schedule D (Form

1. For a reacquisition occurring in

against loss account. Although section

1120), Capital Gains and Losses, even if

2009, the fifth tax year following the tax

there is no gain or loss.

1024 of P.L. 99-514 repealed section 824

year in which the reacquisition occurs,

relating to the protection against loss

Generally, losses from sales or

and

(PAL) account, PAL account balances are

exchanges of capital assets are only

2. For a reacquisition occurring in

includible in income as though section

allowed to the extent of gains. However,

2010, the fourth tax year following the tax

824 were still in effect. Attach a schedule

corporations taxed under section 831 may

year in which the reacquisition occurs.

showing the computation.

claim losses from capital assets sold or

To make the election for a 2010

Line 11. Mutual interinsurers or

exchanged to get funds to meet abnormal

reacquisition, attach a statement to the

reciprocal underwriters — decrease in

insurance losses and to pay dividends

corporation’s 2010 tax return. The

subscriber accounts. Enter the

and similar distributions to policyholders.

statement must clearly identify the

Do not include those types of losses here,

decrease for the tax year in savings

applicable instrument and include the

but instead, report them on Schedule G.

credited to subscriber accounts of a

amount of income to which the election

mutual insurance company that is an

The net capital loss for these

applies. Once made, the election is

interinsurer or reciprocal underwriter.

corporations is the amount by which

irrevocable and the exclusions for COD

Line 12. Income from a special loss

losses for the year from sales or

income under section 108(a)(1)(A), (B),

discount account. Enter the amount

exchanges of capital assets exceed the

(C), and (D) do not apply for the tax year

gains from these sales or exchanges plus

from Form 8816, Part II, line 6.

of the election or any later tax year. See

the smaller of:

Line 13. Other Income. Enter any other

section 108(i). Also see Rev. Proc.

taxable income not reported on lines 1

1. Taxable income (computed without

2009-37, 2009-36 I.R.B. 309.

through 12. List the type and amount of

gains or losses from sales or exchanges

An electing corporation will accelerate

income on an attached schedule. If the

of capital assets); or

the reporting of deferred COD income if

corporation has only one item of other

2. Losses from the sale or exchange

the electing corporation (a) changes its

income, describe it in parentheses on line

of capital assets sold or exchanged to

tax status, (b) ceases its corporate

13. Examples of other income to report on

obtain funds to meet abnormal insurance

existence in a transaction to which

losses and to provide for the payment of

line 13 include the following.

section 381(a) does not apply, or (c)

•

dividends and similar distributions to

The amount included in income from

engages in a transaction that impairs its

policyholders.

Form 6478, Alcohol and Cellulosic Biofuel

ability to pay the tax liability associated

Fuels Credit.

with its deferred COD income. See

•

Subject to the limitations in section

The amount included in income from

section 108(i)(5)(D). If the corporation is a

1212(a), a net capital loss can be carried

Form 8864, Biodiesel and Renewable

direct or indirect partner in a partnership,

back 3 years and forward 5 years as a

Diesel Fuels Credit.

other special rules apply. See Temporary

•

short-term capital loss.

Refunds of taxes deducted in prior

Regulations section 1.108(i)-2T.

Line 8. Certain mutual fire or flood

years to the extent they reduced income

Deductions

insurance company premiums. A

subject to tax in the year deducted (see

mutual fire or flood insurance company

section 111). Do not offset current year

Limitations on Deductions

whose principal business is the issuance

taxes against tax refunds.

•

of policies (1) for which the premium

Any recapture under section 179A for

Section 263A uniform capitalization

deposits are the same (regardless of the

qualified clean-fuel vehicle refueling

rules. The uniform capitalization rules of

length of the term the policies are written

property if, at any time before the end of

section 263A require corporations to

for) and (2) under which the unabsorbed

its recovery period, the property ceases to

capitalize certain costs.

portion of such premium deposits not

qualify.

•

See Regulations sections 1.263A-1

required for losses, expenses, or

Ordinary income from trade or business

through 1.263A-3.

establishment of reserves is returned or

activities of a partnership (from Schedule

credited to the policyholder on

K-1 (Form 1065 or Form 1065-B)). Do not

Transactions between related

cancellation or expiration of the policy,

offset ordinary losses against ordinary

taxpayers. Generally, an accrual basis

must include in income an amount equal

income. Instead, include the losses on

taxpayer can only deduct business

to 2% of the premiums earned on

line 31. Show the partnership’s name,

expenses and interest owed to a related

insurance contracts during the tax year

address, and EIN on a separate

party in the year the payment is included

with respect to such policies after

statement attached to this return. If the

in the income of the related party. See

deduction of premium deposits returned

amount entered is from more than one

sections 163(e)(3), 163(j), and 267 for

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Instructions for Form 1120-PC (2010)

Instructions For Form 1120-Pc - 2010 Page 9

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