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

•

Tax Map: an electronic research tool

value of the RIC’s assets or 10% of the

General Requirements

and finding aid;

outstanding voting securities of the

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To Qualify as a RIC

issuer (except as provided in section

Tax law frequently asked questions

851(e)).

(FAQs);

The term “regulated investment

•

2. At the end of each quarter of the

Tax Topics from the IRS telephone

company” applies to any domestic

RIC’s tax year, no more than 25% of

response system;

corporation that:

the value of the RIC’s assets may be

•

Fill-in, print and save features for

Is registered throughout the tax year

invested in the securities of:

most tax forms;

as a management company or unit

•

A single issuer (excluding

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investment trust under the Investment

Internal Revenue Bulletins; and

government securities or securities of

•

Company Act of 1940 (ICA),

Toll-free and email technical support.

other RICs),

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Has an election in effect under the

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Two or more issuers controlled by

ICA to be treated as a business

The CD is released twice during the

the RIC and engaged in the same or

development company, or

year. The first release will ship the

related trades or businesses, or

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Is a common trust fund or similar

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beginning of January and the final

One or more qualified publicly

fund that is neither an investment

release will ship the beginning of

traded partnerships as defined in

company under section 3(c)(3) of the

March.

section 851(h).

ICA nor a common trust fund as

See sections 851(b)(3) and 851(c)

defined under section 584(a).

Buy the CD from the National

for further details.

Technical Information Service (NTIS) at

Other Requirements

for $25 (no

Distribution requirements. The RIC’s

handling fee) or call 1-877-CDFORMS

deduction for dividends paid for the tax

In addition, the RIC must meet the

(1-877-233-6767) toll-free to buy the

year (as defined in section 561, but

income test, the asset test, and the

CD-ROM for $25 (plus a $5 handling

without regard to capital gain dividends)

distribution requirements explained

fee). Price is subject to change.

equals or exceeds the sum of:

below.

•

90% of its investment company

The income test: At least 90% of its

taxable income determined without

By phone and in person

gross income must be derived from the

regard to section 852(b)(2)(D); and

following items:

You can order forms and publications

•

90% of the excess of the RIC’s

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Dividends,

by calling 1-800-TAX-FORM

interest income excludable from gross

•

Interest (including tax-exempt

(1-800-829-3676). You can also get

income under section 103(a) over its

interest income),

most forms and publications at your

deductions disallowed under sections

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Payments with respect to securities

local IRS office.

265 and 171(a)(2).

loans (as defined in section 512(a)(5)),

•

Gains from the sale or other

A RIC that does not satisfy the

How To Access the

disposition of stock or securities (as

distribution requirements will be

defined in ICA section 2(a)(36)) or

subject to taxation as a C

Internal Revenue

CAUTION

foreign currencies,

corporation.

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Other income (including gains from

Bulletin (I.R.B.)

Earnings and profits. The RIC

options, futures, or forward contracts)

must either have been a RIC for all tax

You can access the I.R.B. on the

derived from the RIC’s business of

years ending after November 7, 1983,

Internet at (post-1995

investing in such stock, securities, or

or, at the end of the current tax year,

Bulletins only). Select the Tax

currencies, and

had no accumulated earnings and

•

Professionals button, select Basic Tools

Net income derived from an interest

profits from any non-RIC tax year.

for Tax Pro, then page down to

in a qualified publicly traded partnership

Reference Materials to locate the

Note. For this purpose, current year

(as defined in section 851(h)).

Internal Revenue Bulletins.

distributions are treated as made from

Income from a partnership or trust

the earliest earnings and profits

qualifies under the 90% test to the

accumulated in any non-RIC tax year.

extent the RIC’s distributive share of

General Instructions

See section 852(c)(3). Also see section

such income is from items described

852(e) for procedures that may allow

above as realized by the partnership or

the RIC to avoid disqualification for the

trust.

Purpose of Form

initial year if the RIC did not meet this

Income that a RIC receives in the

requirement.

Use Form 1120-RIC, U.S. Income Tax

normal course of business as a

Return for Regulated Investment

reimbursement from its investment

Definition of a Fund

Companies, to report the income,

advisor is qualifying income for

gains, losses, deductions, credits, and

purposes of the 90% test if the

The term “fund” refers to a separate

to figure the income tax liability of a

reimbursement is includible in the RIC’s

portfolio of assets, whose beneficial

regulated investment company (RIC) as

gross income.

interests are owned by the holders of a

defined in section 851.

class or series of stock of the RIC that

The asset test:

is preferred over all other classes or

1. At the end of each quarter of the

Who Must File

series for that portfolio of assets.

RIC’s tax year, at least 50% of the

A domestic corporation that meets

value of its assets must be invested in

When To File

certain conditions (discussed below)

the following items.

•

must file Form 1120-RIC if it elects to

Cash and cash items (including

Generally, a RIC must file its income

be treated as a RIC for the tax year (or

receivables),

tax return by the 15th day of the 3rd

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has made an election for a prior tax

Government securities,

month after the end of its tax year. A

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year and the election has not been

Securities of other RICs, and

new RIC filing a short period return

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terminated or revoked). The election is

Securities of other issuers, except

must generally file by the 15th day of

made by computing taxable income as

that the investment in a single issuer of

the 3rd month after the short period

a RIC on Form 1120-RIC.

securities may not exceed 5% of the

ends. A RIC that has dissolved must

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Instructions For Form 1120-Ric - U.s. Income Tax Return For Regulated Investment Companies - 2006 Page 2

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