Looking for a U.s. Department Of The Treasury Forms And Templates? Download it for free!

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

The RIC should keep copies of all filed

3. Certain transactions for which the

1999-7 I.R.B. 52, and sections 475(e) and

returns. They help in preparing future and

RIC has contractual protection against

(f).

amended returns.

disallowance of the tax benefits.

4. Certain transactions resulting in a

Change in accounting method.

Other Forms That May Be

loss of at least $10 million in any single

Generally, the RIC must get IRS consent

year or $20 million in any combination of

to change the method of accounting used

Required

years.

to report taxable income (for income as a

5. Any transaction identified by the

In addition to Form 1120-RIC, the RIC

whole or for the treatment of any material

IRS in published guidance as a

may have to file some of the following

item). To do so, the RIC must file Form

“transaction of interest” (a transaction that

forms. Also see Pub. 542, Corporations,

3115, Application for Change in

for an expanded list of forms the RIC may

the IRS believes has a potential for tax

Accounting Method. See Form 3115 and

be required to file.

avoidance or evasion, but has not yet

Pub. 538, Accounting Periods and

been identified as a listed transaction).

Form 976, Claim for Deficiency

Methods, for more information.

Dividends Deductions by a Personal

There are some instances when the

For more information, see Regulations

Holding Company, Regulated Investment

RIC can obtain automatic consent from

section 1.6011-4 and the Instructions for

Company, or Real Estate Investment

the IRS to change to certain accounting

Form 8886.

Trust. Use this form to claim a deficiency

methods. See Rev. Proc. 2008-52,

dividend under section 860.

Penalties. The RIC may have to pay

2008-36 I.R.B. 587, as modified by

a penalty if it is required to disclose a

Form 1096, Annual Summary and

Announcement 2008-84, 2008-38 I.R.B.

reportable transaction under section 6011

Transmittal of U.S. Information Returns.

748.

and fails to properly complete and file

Use Form 1096 to transmit Forms 1099

Form 8886. Penalties may also apply

and 5498 to the Internal Revenue

Accounting Periods

under section 6707A if the RIC fails to file

Service.

A RIC must figure its taxable income on

Form 8886 with its Form 1120-RIC, fails

Form 1099-DIV, Dividends and

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

to provide a copy of Form 8886 to the

Distributions. Report certain dividends

annual accounting period a RIC uses to

Office of Tax Shelter Analysis (OTSA), or

and distributions.

keep its records and report its income and

files a form that fails to include all the

Form 1099-INT, Interest Income. Report

expenses. RICs can use a calendar year

information required (or includes incorrect

interest income.

or a fiscal year. For more information

information). Other penalties, such as an

about accounting periods, see

accuracy-related penalty under section

Form 2438, Undistributed Capital Gains

Regulations sections 1.441-1 and

6662A, may also apply. See the

Tax Return, must be filed by the RIC if it

1.441-2.

Instructions for Form 8886 for details on

designates undistributed net long-term

these and other penalties.

capital gains under section 852(b)(3)(D).

Change of tax year. Generally, a RIC

must receive consent from the IRS before

Reportable transactions by material

Form 2439, Notice to Shareholder of

changing its tax year. To obtain the

advisors. Material advisors to any

Undistributed Long-Term Capital Gains,

consent, file Form 1128, Application To

reportable transaction must disclose

must be completed and a copy given to

Adopt, Change, or Retain a Tax Year.

certain information about the reportable

each shareholder for whom the RIC paid

However, under certain conditions, a RIC

transaction by filing Form 8918, Material

tax on undistributed net long-term capital

may change its tax year without obtaining

Advisor Disclosure Statement, with the

gains under section 852(b)(3)(D).

the consent.

IRS.

Form 3520, Annual Return to Report

See the Instructions for Form 1128

Transactions With Foreign Trusts and

Safe harbor under Temporary

and Pub. 538 for more information on

Receipt of Certain Foreign Gifts, may be

Regulations section 1.67-2T(j)(2).

accounting periods and tax years.

required if the RIC received a distribution

Generally, shareholders in a nonpublicly

from, was a grantor of, or transferor to, a

offered fund that are individuals or

Rounding Off to

foreign trust during the tax year. See

pass-through entities are treated as

Question 5 of Schedule N (Form 1120).

having received a dividend in an amount

Whole Dollars

equal to the shareholder’s allocable share

Form 8613, Return of Excise Tax on

A RIC can round off cents to whole

of affected RIC expenses for the calendar

Undistributed Income of Regulated

year. They are also treated as having

dollars on its return and schedules. If the

Investment Companies. If the RIC is liable

paid or incurred an expense described in

RIC does round to whole dollars, it must

for the 4% excise tax on undistributed

section 212 (and subject to the 2%

round all amounts. To round, drop

income under section 4982 or makes an

limitation on miscellaneous itemized

amounts under 50 cents and increase

election under section 4982(e)(4), it must

deductions) in the same amount for the

amounts from 50 cents to 99 cents to the

file this return for the calendar year.

calendar year.

next dollar (for example, $1.39 becomes

$1 and $2.50 becomes $3).

Statements

Election. A nonpublicly offered fund

may elect to treat its affected RIC

If two or more amounts must be added

Reportable transaction disclosure

expenses for a calendar year as equal to

to figure the amount to enter on a line,

statement. Disclose information for each

40% of the amount determined under

include cents when adding the amounts

reportable transaction in which the RIC

Temporary Regulations section

and round off only the total.

participated. Form 8886, Reportable

1.67-2T(j)(1)(i) for that calendar year.

Transaction Disclosure Statement, must

Recordkeeping

be filed for each tax year that the federal

To make this election, attach to Form

income tax liability of the RIC is affected

Keep the RIC’s records for as long as

1120-RIC for the tax year that includes

by its participation in the transaction. The

they may be needed for administration of

the last day of the calendar year for which

following are reportable transactions.

any provision of the Internal Revenue

the fund makes the election a statement

Code. Usually, records that support an

1. Any listed transaction, which is a

that it is making an election under

item of income, deduction, or credit on the

transaction that is the same as or

Temporary Regulations section

return must be kept for 3 years from the

substantially similar to tax avoidance

1.67-2T(j)(2). Once made, the election

date the return is due or filed, whichever

transactions identified by the IRS.

remains in effect for all subsequent

is later. Keep records that verify the RIC’s

2. Any transaction offered under

calendar years and may not be revoked

basis in property for as long as they are

conditions of confidentiality for which the

without IRS consent. See Temporary

needed to figure the basis of the original

RIC paid an advisor a fee of at least

Regulations section 1.67-2T for

or replacement property.

$250,000.

definitions and other details.

-5-

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

Related Articles

Related forms

Related Categories