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is not a PHC and should compute its tax

see Form 8621, Return by a Shareholder

Line 6–Other Taxes

using the Tax Rate Schedule below:

of a Passive Foreign Investment

Include any of the following taxes and

Company or Qualified Electing Fund.

interest in the total on line 6. Check the

Tax Rate Schedule

appropriate box(es) for the form, if any,

Additional tax under section 197(f). A

If the investment company taxable income

RIC that elects to pay tax on the gain

used to compute the total.

(line 26, page 1) is:

from the sale of an intangible under the

Recapture of Investment Credit. If the

related person exception to the

RIC disposed of investment credit

anti-churning rules should include any

Of the

property or changed the property’s use

additional tax due under section

But not

amount

before the end of its useful life or recovery

197(f)(9)(B) in the total for line 2d. On the

Over —

over —

Tax is:

over —

period, it may owe a tax. See Form 4255,

dotted line to the left of line 2d, write

Recapture of Investment Credit, for

“Section 197” and the amount.

$50,000

15%

details.

50,000

75,000

$ 7,500 + 25%

50,000

Line 3a– Foreign Tax Credit

Recapture of Low-Income Housing

75,000

100,000

13,750 + 34%

75,000

To find out when a RIC can claim the

Credit. If the RIC disposed of property

100,000

335,000

22,250 + 39% 100,000

credit for payment of income tax to a

(or there was a reduction in the qualified

335,000

10,000,000

113,900 + 34% 335,000

foreign country or U.S. possession, see

basis of the property) for which it took the

10,000,000

15,000,000 3,400,000 + 35% 10,000,000

15,000,000

18,333,333 5,150,000 + 38% 15,000,000

Form 1118, Foreign Tax

low-income housing credit, it may owe a

18,333,333

—

35%

Credit — Corporations. The RIC may not

tax. See Form 8611, Recapture of

claim this credit if an election under

Low-Income Housing Credit, and IRC

section 853 was made for the tax year.

For a RIC that is a personal holding

section 42(j)(1) for more information.

See Election under section 853(a), under

company. A RIC that is not in

Other. Additional tax and interest

Schedule K, Item 10.

compliance with Regulations section

amounts can be included in the total

1.852-6 is a PHC and is taxed at a flat

Line 3b–Credit from Form 8834,

entered on line 6. Check the box for

rate of 35% on its investment company

“Other” if the RIC includes any of the

line 29

taxable income.

taxes and interest discussed below. See

Enter any qualified electric vehicle

Line 2b–Capital Gains Tax

How to report, below, for details on

passive activity credits from prior years

reporting these amounts on an attached

Enter the capital gains tax from line 8,

allowed for the current tax year from Form

schedule.

Part II. If the 1120-RIC has qualified

8834, Qualified Plug-In Electric and

•

Recapture of qualified electric vehicle

timber gain, see the instructions for line 4,

Electric Vehicle Credit, line 29.

(QEV) credit. The RIC must recapture

Part II, on this page.

part of the QEV credit it claimed in a prior

Line 3c–General Business

Line 2c–Alternative Minimum

year if, within 3 full years of the date the

Credit

Tax (AMT)

vehicle was placed in service, it ceases to

The RIC is required to file Form 3800,

qualify for the credit. See Regulations

Unless the RIC is treated as a small

General Business Credit, to claim most

section 1.30-1 for details on how to figure

corporation exempt from the AMT, it may

business credits. For a list of allowable

the recapture.

owe the AMT if it has any of the

•

credits, see Form 3800. Enter the

Recapture of Indian employment credit.

adjustments and tax preference items

allowable credit from Part II, line 32, of

Generally, if an employer terminates the

listed on Form 4626, Alternative Minimum

Form 3800, on line 3c. Also, see the

employment of a qualified employee less

Tax — Corporations. The RIC must file

applicable credit form and its instructions.

than 1 year after the date of initial

Form 4626 if its investment company

See Form 3800 for a complete listing of

employment, any Indian employment

taxable income (or loss), and retained

general business credits.

credit allowed for a prior tax year because

capital gains not designated under

of wages paid or incurred to that

section 852(b)(3)(D), plus adjustments

Line 3d–Other Credits

employee must be recaptured. For

and tax preference items, is more than

Minimum tax credit. To figure the

details, see Form 8845 and section 45A.

the smaller of:

•

minimum tax credit and any carryforward

Recapture of new markets credit (see

$40,000 or

•

of that credit, use Form 8827, Credit for

Form 8874 and Regulations section

The RIC’s allowable exemption amount

Prior Year Minimum Tax — Corporations.

1.45D-1(e) for details).

(from Form 4626).

•

Recapture of employer-provided

Bond credits from Form 8912. Enter

See Form 4626 for definitions and

childcare facilities and services credit

the allowable credits from Form 8912,

details on how to figure the tax.

(see Form 8882 and section 45F(d) for

Credit to Holders of Tax Credit Bonds,

Apportioning tax preference items.

details).

line 18. However, if the RIC elects to pass

•

Items of tax preference may be

Interest due on deferred gain

through credits from tax credit bonds to its

apportioned by the RIC between the

recognition (section 1260(b)).

shareholders, it cannot take the credit.

entity and its shareholders in accordance

See Item 11 on page 13 for more

with section 59(d)(1)(A).

Built-in Gains Tax

information.

If, on or after January 2, 2002, property of

Line 2d—Income Tax

Line 5– Personal Holding

a C corporation becomes property of a

Deferred tax under section 1291. If the

RIC by either: (a) the qualification of the C

Company Tax

RIC was a shareholder in a passive

corporation as a RIC; or (b) the transfer of

A RIC is taxed as a personal holding

foreign investment company (PFIC), and

such property to a RIC, then the RIC will

company under section 542 if:

received an excess distribution or

be subject to the built-in gains tax under

•

At least 60% of its adjusted ordinary

disposed of its investment in the PFIC

section 1374 unless the C corporation

gross income for the tax year is personal

during the year, it must include the

elects deemed sale treatment on the

holding company income, and

increase in taxes due under section

transferred property. If the C corporation

•

At any time during the last half of the

1291(c)(2) in the total for line 2d. On the

does not make this election, the RIC must

tax year more than 50% in value of its

dotted line to the left of line 2d write

pay tax on the net recognized built-in gain

outstanding stock is owned, directly or

“Section 1291” and the amount.

during the 10-year period beginning on its

indirectly, by five or fewer individuals.

Do not include on line 2d any interest

first day as a RIC or the day it acquired

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

See the Instructions for Schedule PH

the property (for tax years beginning in

this applies, show the amount of interest

(Form 1120), U.S. Personal Holding

2009 or 2010, see the Built-in Gains Tax

owed in the bottom margin of page 1 and

Company (PHC) Tax, for definitions and

Worksheet Instructions on page 12 for an

write “Section 1291 interest.” For details,

details on how to figure the tax.

exception).

-11-

Instructions For Form 1120-Ric - U.s. Income Tax Return For Regulated Investment Companies - 2009 Page 11

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