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Line 4. Payments with respect to

1, 2011, a RIC can elect, under section

Item E. Final Return, Name

securities loans. Enter the amount

108(i), to defer the income from discharge

Change, Address Change,

received or accrued from a broker as

of indebtedness in connection with the

compensation for securities loaned by the

election. If the RIC makes the election,

or Amended Return

RIC to the broker for use in completing

the income is deferred and ratably

•

If this is the RIC’s final return and it will

market transactions. The payments must

included in income over the 5-year period

no longer exist, check the “Final return”

meet the requirements of section

beginning with:

512(a)(5).

box.

1. For a reacquisition occurring in

•

If the RIC has changed its name since

2009, the fifth tax year following the tax

Line 5. Excess of Net Short-Term

it last filed a return, check the “Name

year in which the reacquisition occurs,

Capital Gain Over Net Long-Term

change” box. Generally, a RIC must also

and

Capital Loss. Enter the amount from

have amended its articles of incorporation

2. For a reacquisition occurring in

Schedule D (Form 1120), line 12. Every

and filed the amendment with the state in

2010, the fourth tax year following the tax

sale or exchange of a capital asset must

which it was incorporated.

year in which the reacquisition occurs.

•

be reported in detail on Schedule D (Form

If the RIC has changed its address

To make the election, attach a

1120), even if no gain or loss is indicated.

since it last filed a return (including a

statement to the RIC’s return for the tax

change to an “in care of” address), check

Line 7. Other Income. Enter any other

year in which the applicable reacquisition

the “Address change” box.

taxable income (loss) not reported on

occurs. The statement must clearly

lines 1 through 6, except net capital gain

Note. If a change in address occurs after

identify the applicable instrument and

reported in Part II. List the type and

the return is filed, use Form 8822,

include the amount of income to which

amount of income on an attached

Change of Address, to notify the IRS of

the election applies. Once made, the

schedule. If the RIC has only one item of

the new address.

election is irrevocable. For more

other income, describe it in parentheses

information, see section 108(i) and Rev.

Amended return. If the RIC is amending

on line 7. Examples of other income to

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

its return, check the box for “Amended

report on line 7 include:

return,” complete the entire return, correct

•

Deductions

Gross rents.

the appropriate lines with the new

•

Recoveries of fees or expenses in

information, and refigure the RIC’s tax

Limitations on Deductions

settlement or litigation.

liability. Attach a statement that explains

•

Amounts received or accrued as

Transactions between related

the reason for the amendments and

consideration for entering into

taxpayers. Generally, an accrual basis

identifies the lines being changed on the

agreements to make real property loans

taxpayer may only deduct business

amended return.

or to purchase or lease real property.

expenses and interest owed to a related

•

Recoveries of bad debts deducted in

party in the year the payment is includible

prior years under the specific charge-off

Part I—Investment

in the income of the related party. See

method.

section 267 for limitations on deductions

•

Company Taxable Income

Refunds of taxes deducted in prior

for interest and expenses paid to a

years to the extent they reduced income

related party.

Income

subject to tax in the year deducted (see

Also see the instructions for Form

section 111). Do not offset current year

Line 1. Dividends. A RIC that is the

8926, Disqualified Corporate Interest

taxes against prior year tax refunds.

holder of record of any share of stock on

•

Expense Disallowed Under Section 163(j)

The recapture amount under section

the record date for a dividend payable on

and Related Information, with respect to

280F if the business use of listed property

that stock must include the dividend in

section 163(j).

drops to 50% or less. To figure the

gross income by the later of: the date the

Golden parachute payments. A portion

recapture amount, complete Part IV of

share became ex-dividend, or the date

of the payments made by a RIC to key

Form 4797.

the RIC acquired the share.

•

personnel that exceeds their usual

Ordinary income from trade or business

Line 2. Interest. Enter taxable interest

compensation may not be deductible.

activities of a partnership (from Schedule

on U.S. obligations and on loans, notes,

This occurs when the RIC has an

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

mortgages, bonds, bank deposits,

agreement (golden parachute) with key

ordinary losses against ordinary income.

employees to pay them an amount

corporate bonds, tax refunds, etc.

Instead, include the losses on line 22.

substantially in excess of their base

Show the partnership’s name, address,

Do not offset interest expense against

amount if control of the RIC changes. See

and EIN on a separate statement

interest income. Special rules apply to

section 280G and Regulations section

attached to this return. If the amount

interest income from certain

1.280G-1 for more information. Also, see

entered is from more than one

below-market-rate loans. See section

the instructions for line 9.

partnership, identify the amount from

7872 for more information on the tax

each partnership.

Business start-up and organizational

treatment of loans on which inadequate or

•

Any net positive section 481 income

costs. For business start-up and

no interest is charged.

adjustment due to a change in method of

organizational costs paid or incurred after

Note. Report tax-exempt interest income

accounting. See Form 3115 and its

September 8, 2008, a RIC can deduct up

on Schedule K, item 8. Do not include

instructions for more information.

to $5,000 of such costs for the year it

tax-exempt interest on line 2. Also, if

•

Part or all of the proceeds received

begins business (unless the RIC elects to

required, include the same amount on

from certain corporate-owned life

capitalize all such costs). The $5,000

Schedule M-1, line 7.

insurance contracts issued after August

deduction is reduced by the amount the

Include interest income from qualified

17, 2006. Corporations that own one or

total costs exceed $50,000. If the total

tax credit bonds on line 2. If the RIC

more employer-owned life insurance

costs are $55,000 or more, the deduction

elects to pass through the credits to

contracts issued after this date must file

is reduced to zero. Any cost not deducted

shareholders, see the instructions for

Form 8925, Report of Employer-Owned

must be amortized ratably over a

Part II, Schedule A, line 6.

Life Insurance Contracts. See section

180-month period, beginning with the

Line 3. Net Foreign Currency Gain or

101(j) for details.

month the corporation begins business.

•

(Loss) from Section 988 Transactions.

Income from discharge of indebtedness

The RIC is not required to attach a

Enter the net foreign currency gain (loss)

for the purchase of a debt instrument for

statement or specifically identify the

from section 988 transactions treated as

less than its adjusted issue price.

amount deducted in order for the election

ordinary income or loss under section

However, for a reacquisition of an

to be effective. The RIC can choose to

988(a)(1)(A). Attach a schedule detailing

applicable debt instrument after

forgo the deduction and instead elect to

each separate transaction.

December 31, 2008, and before January

capitalize all such costs. The election to

-7-

Instructions For Form 1120-Ric - U.s. Income Tax Return For Regulated Investment Companies - 2009 Page 7

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