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Examples of other deductions

The lobbying activities relate to

Lobbying expenses. Generally,

include:

matters of direct financial interest to the

lobbying expenses are not deductible.

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Amortization. See Form 4562.

donor’s trade or business and

Examples of non-deductible expenses

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Certain business start-up and

The principal purpose of the

include:

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organizational costs the RIC elects to

contribution was to avoid federal

Amounts paid or incurred in

amortize or deduct.

income tax by obtaining a deduction for

connection with influencing federal or

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Supplies used and consumed in the

activities that would have been

state legislation (but not local

business.

nondeductible under the lobbying

legislation) or

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Utilities.

expense rules if conducted directly by

Amounts paid or incurred in

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Ordinary losses from trade or

the donor.

connection with any communication

business activities of a partnership

with certain federal executive branch

For information on contributions to

(from Schedule K-1 (Form 1065 or

officials in an attempt to influence the

charitable organizations that conduct

1065-B)). Do not offset ordinary income

official actions or positions of the

lobbying activities, see section

against ordinary losses. Instead,

officials. See Regulations section

170(f)(9).

include the income on line 7. Show the

1.162-29 for the definition of

Pension, profit-sharing, etc., plans.

partnership’s name, address, and EIN

“influencing legislation.”

Report contributions to qualified

on a separate statement attached to

Dues and other similar amounts paid

pension, profit-sharing, or other

this return. If the amount is from more

to certain tax-exempt organizations

funded-deferred compensation plans.

than one partnership, identify

Employers who maintain such a plan

may not be deductible. See section

separately the amount from each

generally must file Form 5500, Annual

162(e)(3). Certain in-house lobbying

partnership.

Return/Report of Employee Benefit

expenditures that do not exceed $2,000

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Any extraterritorial income exclusion

are deductible.

Plan, even if the plan is not a qualified

(from Form 8873, line 54).

plan under the Internal Revenue Code.

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Any net negative section 481(a)

For more information on other

The filing requirement applies even if

adjustment.

deductions that may apply to RICs, see

the RIC does not claim a deduction for

Pub. 535.

Charitable contributions. Enter

the current tax year. There are

contributions or gifts actually paid within

penalties for failure to file these forms

Tax and Payments

the tax year to or for the use of

on time and for overstating the pension

Line 28b. Estimated tax payments.

charitable and governmental

plan deduction. See sections 6652(e)

Enter any estimated tax payments the

organizations described in section

and 6662(f).

RIC made for the tax year.

170(c) and any unused contribution

Travel, meals, and entertainment.

carryovers.

Subject to certain limitations and

Line 28f. Credit from Form 2439.

restrictions, the RIC can deduct

Enter the credit from Form 2439 for the

RICs reporting taxable income on

ordinary and necessary travel, meals,

RIC’s share of the tax paid by another

the accrual method may elect to treat

and entertainment expenses incurred in

RIC or a REIT on undistributed

as paid during the tax year any

its trade or business.

long-term capital gains included in the

contributions paid by the 15th day of

RIC’s income. Attach Form 2439 to

the 3rd month after the end of the tax

Travel. The RIC cannot deduct

Form 1120-RIC.

year if the contributions were

travel expenses of any individual

authorized by the board of directors

accompanying a corporate officer or

Line 28g. Credit for federal tax on

during the tax year. Attach a

employee unless:

fuels. Complete and attach Form

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declaration to the return that includes

That individual is an employee of the

4136, Credit for Federal Tax Paid on

RIC and

the date the resolution was adopted.

Fuels, if the RIC qualifies to take this

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His or her travel is for a bona fide

credit.

Limitation on deduction. The total

business purpose that would otherwise

amount claimed cannot be more than

Line 28h. Credit for federal telephone

be deductible by that individual.

10% of taxable income computed

excise tax paid. If the RIC was billed

Meals and entertainment.

without regard to the following:

after February 28, 2003, and before

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Generally, the RIC can deduct only

Any deduction for contributions.

August 1, 2006, for the federal

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50% of the amount otherwise allowable

The special deductions on line 25,

telephone excise tax on long distance

for meals and entertainment expenses

relating to dividends paid.

or bundled service, the RIC may be

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paid or incurred in its trade or business.

The deduction allowed under section

able to request a credit for the tax paid.

249, relating to any premium paid or

Amounts treated as

The RIC had bundled service if its local

incurred upon the repurchase of a

compensation. Generally, the RIC

and long distance service was provided

convertible bond.

may be able to deduct otherwise

under a plan that does not separately

nondeductible entertainment,

state the charge for local service. The

Carryover. Charitable contributions

amusement or recreation expenses if

RIC cannot request the credit if it has

over the 10% limitation cannot be

the amounts are treated as

already received a credit or refund from

deducted for the tax year but may be

compensation to the recipient and

its service provider. If the RIC requests

carried over to the next 5 tax years

reported on Form W-2 for an employee

the credit, it cannot ask its service

subject to certain limitations.

or on Form 1099-MISC for an

provider for a credit or refund and must

independent contractor.

For more information on charitable

withdraw any request previously

contributions, including substantiation

submitted to its provider.

However, if the recipient is an officer,

and recordkeeping requirements, see

director, or beneficial owner (directly or

The RIC can request the credit by

the regulations under section 170 and

indirectly) of more than 10% of any

attaching Form 8913, Credit for Federal

Pub. 526, Charitable Contributions.

class of stock, the deductible expense

Telephone Excise Tax Paid, showing

is limited. See section 274(e)(2) and

Contributions to organizations

the actual amount the RIC paid. The

Notice 2005-45, 2005-24 I.R.B. 1228.

conducting lobbying activities.

RIC also may be able to request the

Contributions made to an organization

See section 274 and Pub. 463 for a

credit based on an estimate of the

that conducts lobbying activities are not

more extensive discussion of these

amount paid. See Form 8913 for

deductible if:

topics.

details. In either case, the RIC must

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Instructions For Form 1120-Ric - U.s. Income Tax Return For Regulated Investment Companies - 2006 Page 9

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