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Complete every applicable entry

election year and attached to that

The RIC should keep copies of all

space on Form 1120-RIC. Do not enter

return, or if applicable, to a request for

filed returns. They help in preparing

“See attached” instead of completing

an extension of time to file that return.

future and amended returns.

the entry spaces. If more space is

For more details, see Rev. Proc. 99-17,

Depository Methods of

needed on the forms or schedules,

1999-1 C.B. 503, and sections 475(e)

attach separate sheets using the same

and (f).

Tax Payment

size and format as the printed forms. If

Change in accounting

there are supporting statements and

A RIC must pay the tax due in full no

attachments, arrange them in the same

later than the 15th day of the 3rd month

method

order as the schedules or forms they

after the end of the tax year. The two

To change its method of accounting,

support and attach them last. Show the

methods of depositing corporate

the RIC must file Form 3115,

totals on the printed forms. Enter the

income taxes are discussed below.

Application for Change in Accounting

RIC’s name and EIN on each

Method. For more information, see

Electronic Deposit

supporting statement or attachment.

Form 3115.

Requirement

Accounting Methods

The RIC must make electronic deposits

Accounting Periods

of all depository taxes (such as

Figure taxable income using the

A RIC must figure its taxable income on

method of accounting regularly used in

employment tax, excise tax, and

the basis of a tax year. A tax year is the

keeping the RIC’s books and records.

corporate income tax) using the

annual accounting period a RIC uses to

In all cases, the method used must

Electronic Federal Tax Payment

keep its records and report its income

clearly reflect taxable income.

System (EFTPS) in 2007 if:

•

and expenses. RICs can use a

The total deposits of such taxes in

Permissible methods include:

calendar year or a fiscal year.

•

2005 were more than $200,000 or

Cash,

•

The RIC was required to use EFTPS

Accrual, or

For more information about

•

in 2006.

Any other method authorized by the

accounting periods, see Regulations

If the RIC is required to use EFTPS

Internal Revenue Code.

sections 1.441-1 and 1.441-2.

and fails to do so, it may be subject to a

Accrual method

Change of tax year

10% penalty. If the RIC is not required

to use EFTPS, it may participate

Generally, a RIC must use the accrual

Generally, a RIC must get the consent

voluntarily.

method of accounting if its average

of the IRS before changing its tax year.

annual gross receipts exceed $5

To enroll in or get more information

To obtain the consent, file Form 1128,

million. For more details, see section

about EFTPS, call 1-800-555-4477 or

Application To Adopt, Change, or

448(c).

visit

Retain a Tax Year. However, under

certain conditions, a RIC may change

Depositing on time. For EFTPS

Mark-to-market accounting

its tax year without getting the consent.

deposits to be made timely, the RIC

method

must initiate the transaction at least one

For more information on change of

Generally, dealers in securities must

business day before the date the

tax year, see Form 1128 and

use the mark-to-market accounting

deposit is due.

Regulations section 1.442-1.

method described in section 475. Under

Deposits With Form 8109

this method, any security that is

Rounding Off to Whole

inventory to the dealer must be held at

If the RIC does not use EFTPS, deposit

its fair market value (FMV).

RIC income tax payments (and

Dollars

estimated tax payments) with Form

Any security held by a dealer that is

A RIC may round off cents to whole

8109, Federal Tax Deposit Coupon. If

not inventory and held at the close of

dollars on its return and schedules. If

you do not have a preprinted Form

the tax year is treated as sold at its

the RIC does round to whole dollars, it

8109, use Form 8109-B to make

FMV on the last business day of the tax

must round all amounts. To round, drop

deposits. You can get this form by

year. Any resulting gain or loss must be

amounts under 50 cents and increase

calling 1-800-829-4933 or visiting an

taken into account that year in

amounts from 50 cents to 99 cents to

IRS taxpayer assistance area. Be sure

determining gross income. The gain or

the next dollar (for example, $1.39

to have your EIN ready when you call.

loss taken into account is generally

becomes $1 and $2.50 becomes $3).

treated as ordinary gain or loss.

Do not send deposits directly to an

If two or more amounts must be

IRS office; otherwise, the RIC may

For details, including exceptions, see

added to figure the amount to enter on

have to pay a penalty. Mail or deliver

section 475, the related regulations,

a line, include cents when adding the

the completed Form 8109 with the

and Rev. Rul. 94-7, 1994-1 C.B. 151.

amounts and round off only the total.

payment to an authorized depositary

Dealers in commodities and traders

(such as a commercial bank or other

in securities and commodities may

financial institution authorized to accept

Recordkeeping

elect, with some exceptions, to use the

federal tax deposits). Make checks or

mark-to-market accounting method. To

Keep the RIC’s records for as long as

money orders payable to the

make the election, the RIC must file a

they may be needed for administration

depositary.

statement describing the election, the

of any provision of the Internal

If the RIC prefers, it may mail the

first tax year the election is to be

Revenue Code. Usually, records that

coupon and payment to Financial

effective, and in the case of an election

support an item of income, deduction,

Agent, Federal Tax Deposit Processing,

for traders in securities or commodities,

or credit on the return must be kept for

P.O. Box 970030, St. Louis, MO 63197.

the trade or business for which the

3 years from the date the return is due

Make the check or money order

election is made. Except for new

or filed, whichever is later. Keep

payable to “Financial Agent.”

taxpayers, the statement must be filed

records that verify the RIC’s basis in

by the due date (not including

property for as long as they are needed

To help ensure proper crediting,

extensions) of the income tax return for

to figure the basis of the original or

enter the RIC’s EIN, the tax period to

the tax year immediately preceding the

replacement property.

which the deposit applies, and “Form

-5-

Instructions For Form 1120-Ric - U.s. Income Tax Return For Regulated Investment Companies - 2006 Page 5

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