Looking for a Form 1120-ric Templates? Download it for free!

How to report

Trade or Business. Generally, a 25%

information, see Regulations section

foreign-owned corporation that had a

1.853-3.

Attach a schedule showing the

reportable transaction with a foreign or

computation of each item included in, or

Item 11

domestic related party during the tax year

subtracted from, the total for line 7. On

must file Form 5472. See Form 5472 for

Election under section 853A. A RIC

the dotted line next to line 7, enter the

filing instructions.

can elect to pass through credits from tax

amount of tax or interest, identify it as tax

credit bonds to its shareholders. If the

or interest, and specify the Code section

Item 8

RIC makes the election, include the

that applies.

Tax-exempt interest. Show any

interest income from the tax credit bonds

tax-exempt interest received or accrued.

on Part I, line 2. Also, increase the

Schedule K–Other

Include any exempt-interest dividends

dividends paid deduction by the amount

received as a shareholder in a mutual

of the credits distributed to shareholders.

Information

fund or other RIC.

If the RIC makes the election, it is not

The following instructions apply to

allowed to take any credits related to the

Item 10

qualified tax credit bonds.

questions 1 through 11. Complete all

items that apply.

Election under section 853(a). A RIC

For more information, see section

may make an irrevocable election under

853A.

Question 3

section 853(a) to allow its shareholders to

Notification to shareholders. If the

Check the “Yes” box if the RIC is a

apply their share of the foreign taxes paid

RIC makes the election to apply section

subsidiary in a parent-subsidiary

by the RIC either as a credit or a

853A, it must furnish to its shareholders a

controlled group. This applies even if the

deduction. If the RIC makes this election,

written notice designating the

RIC is a subsidiary member of one group

the amount of foreign taxes it paid during

shareholder’s proportionate share of: (1)

and the parent corporation of another.

the tax year may not be taken as a credit

credits from tax credit bonds, and (2)

Note. If the RIC is an “excluded

or a deduction on Form 1120-RIC, but

gross income in respect of such credits.

member” of a controlled group (see

may be claimed on Form 1120-RIC,

The notice must be mailed to the

section 1563(b)(2)), it is still considered a

Schedule A, line 5, as an addition to the

shareholders no later than 60 days after

member of a controlled group for this

dividends-paid deduction.

the end of the RIC’s tax year.

purpose.

Eligibility. To qualify to make the

election, the RIC must meet the following

Question 5

requirements.

Schedule L–Balance

Check the “Yes” box if one foreign person

•

More than 50% of the value of the

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

Sheets per Books

RIC’s total assets at the end of the tax

power of all classes of stock of the RIC

year must consist of stock or securities in

The balance sheets should agree with the

entitled to vote or (b) the total value of all

foreign corporations.

RIC’s books and records.

•

classes of stock of the RIC.

The RIC must meet the holding period

Line 1. Cash. Include certificates of

The constructive ownership rules of

requirements of section 901(k) with

deposit as cash on line 1.

section 318 apply in determining if a RIC

respect to its common and preferred

is foreign owned. See section 6038A(c)(5)

stock. If the RIC fails to meet these

Line 4. Tax-Exempt Securities. Include

and the related regulations.

holding period requirements, the election

on this line:

that allows a RIC to pass through to its

Enter on line 5b(1) the percentage

1. State and local government

shareholders the foreign tax credits for

owned by the foreign person specified in

obligations, the interest on which is

foreign taxes paid by the RIC is

question 5. For line 5b(2), enter the name

excludible from gross income under

disallowed. Although the foreign taxes

of the owner’s country.

section 103(a), and

paid may not be taken as a credit by

2. Stock in another mutual fund or

Note. If there is more than one

either the RIC or the shareholder, they

RIC that distributed exempt-interest

25%-or-more foreign owner, complete

are still deductible at the fund level.

dividends during the tax year of the RIC.

lines 5b(1) and 5b(2) for the foreign

Reporting requirements. To make a

person with the highest percentage of

Line 24. Adjustments to Shareholders’

valid election under section 853, in

ownership.

Equity. Examples of adjustments to

addition to timely filing Form 1120-RIC

Foreign person. The term “foreign

report on this line include:

and checking the box for Schedule K,

•

person” includes:

Unrealized gains and losses on

item 10, the RIC must file a statement of

•

A foreign citizen or nonresident alien.

securities held “available for sale.”

election, which includes the information

•

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

Foreign currency translation

listed under Regulations section

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

adjustments.

1.853-4(c). The information must be

•

or resident).

The excess of additional pension

provided on or with a Form 1118, Foreign

•

A foreign partnership.

liability over unrecognized prior service

Tax Credit, attached to the RIC’s timely

•

A foreign corporation.

cost.

filed tax return.

•

Any foreign estate or trust within the

Guarantees of employee stock (ESOP)

For more information, see Regulations

meaning of section 7701(a)(31).

debt.

•

section 1.853-4.

•

A foreign government (or one of its

Compensation related to employee

agencies or instrumentalities) to the

Notification to shareholders. If the

stock award plans.

extent that it is engaged in the conduct of

RIC makes the election, it must furnish to

If the total adjustment to be entered on

a commercial activity as described in

its shareholders a written notice

line 24 is a negative amount, enter the

section 892.

designating the shareholder’s portion of

amount in parentheses.

(1) foreign taxes paid by the RIC to

Owner’s country. For individuals, the

foreign countries and possessions of the

term “owner’s country” means the country

United States, and (2) the dividend that

of residence. For all others, it is the

Schedule M–1

represents income derived from:

country where incorporated, organized,

•

sources within countries described in

created, or administered.

Reconciliation of Income (Loss)

section 901(j), and

Requirement to file Form 5472. If the

•

per Books With Income per

other foreign-source income.

RIC checked “Yes,” it may have to file

Return

Form 5472, Information Return of a 25%

The notice must be mailed to the

Foreign Owned U.S. Corporation or a

shareholders no later than 60 days after

Line 5d. Travel and Entertainment.

Foreign Corporation Engaged In a U.S.

the end of the RIC’s tax year. For more

Include on line 5d any of the following:

-13-

Instructions For Form 1120-Ric - U.s. Income Tax Return For Regulated Investment Companies - 2009 Page 13

Related Articles

Related forms

Related Categories