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Attach a statement showing the

The domestic production activities

are penalties for failure to file these forms

computation of the deduction.

deduction.

on time and for overstating the pension

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The deduction allowed under section

plan deduction. See sections 6652(e) and

Line 14. Depreciation. Include on line

249, related to any premium paid or

6662(f).

14 depreciation and the cost of certain

incurred upon the repurchase of a

Travel, meals, and entertainment.

property that the RIC elected to expense

convertible bond.

Subject to certain limitations and

under section 179. See Form 4562 and its

restrictions, the RIC can deduct ordinary

instructions to figure the amount of

Carryover. Charitable contributions

and necessary travel, meals, and

depreciation to enter on this line.

over the 10% limitation cannot be

entertainment expenses incurred in its

deducted for the tax year but may be

Line 22. Other Deductions

trade or business.

carried over to the next 5 tax years

Penalties or fines paid to any

subject to certain limitations.

Travel. The RIC cannot deduct travel

government agency or

expenses of any individual accompanying

For more information on charitable

instrumentality because of a

CAUTION

a corporate officer or employee unless:

contributions, including substantiation and

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violation of a law are not deductible. See

That individual is an employee of the

recordkeeping requirements, see the

Chapter 11, Other Expenses, in

RIC and

regulations under section 170 and Pub.

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Publication 535 for additional information.

His or her travel is for a bona fide

526, Charitable Contributions.

business purpose that would otherwise be

Attach a schedule listing by type and

Temporary suspension of 10% limit

deductible by that individual.

amount all allowable deductions that are

for contributions to Midwestern

not specifically deductible elsewhere on

Meals and entertainment. Generally,

disaster area. A RIC can elect to deduct

Form 1120-RIC. Generally, a deduction

the RIC can deduct only 50% of the

qualified cash contributions without

may not be taken for any amount that is

amount otherwise allowable for meals

regard to the general 10% limit, if the

allocable to tax-exempt income. See

and entertainment expenses paid or

contributions were paid after May 1, 2008,

section 265(b) for exceptions.

incurred in its trade or business.

and before January 1, 2009, to a qualified

Examples of other deductions include:

charitable organization as defined in

Amounts treated as compensation.

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Amortization. See Form 4562.

section 170(b)(1)(A) (except for

Generally, the RIC may be able to deduct

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Certain business start-up and

contributions to a section 509(a)(3)

otherwise nondeductible entertainment,

organizational costs the RIC elects to

organization or a donor advised fund (as

amusement or recreation expenses if the

amortize or deduct.

defined in section 4966(d)(2))), and were

amounts are treated as compensation to

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Supplies used and consumed in the

for relief efforts in one or more

the recipient and reported on Form W-2

business.

Midwestern disaster areas. The

for an employee or on Form 1099-MISC

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Utilities.

corporation must obtain

for an independent contractor.

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Ordinary losses from trade or business

contemporaneous written

However, if the recipient is an officer,

activities of a partnership (from Schedule

acknowledgement from the organization

director, or beneficial owner (directly or

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

that the contribution was used ( or will be

indirectly) of more than 10% of any class

ordinary income against ordinary losses.

used) for relief efforts in one or more

of stock, the deductible expense is

Instead, include the income on line 7.

Midwestern disaster areas. The total

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

Show the partnership’s name, address,

amount claimed cannot exceed 100% of

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

and EIN on a separate statement

the excess of the corporation’s taxable

See section 274 and Pub. 463 for a

attached to this return. If the amount is

income (as computed under Limitation on

more extensive discussion of these

from more than one partnership, identify

deduction above, substituting “100%” for

topics.

separately the amount from each

“10%” ) over the corporation’s deduction

partnership.

Lobbying expenses. Generally,

for all other charitable contributions. Any

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Deduction for certain energy efficient

lobbying expenses are not deductible.

excess contributions can be carried over

commercial building property placed in

Examples of non-deductible expenses

to the next 5 years. For more information,

service. See section 179D, Notice

include:

see Pub. 4492-B.

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2008-40, 2008-14 I.R.B. 725, and Notice

Amounts paid or incurred in connection

Contributions to organizations

2006-52, 2006-26 I.R.B. 1175.

with influencing federal or state legislation

conducting lobbying activities.

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Any extraterritorial income exclusion

(but not local legislation) or

Contributions made to an organization

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(from Form 8873, line 52).

Amounts paid or incurred in connection

that conducts lobbying activities are not

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Any net negative section 481(a)

with any communication with certain

deductible if:

adjustment.

federal executive branch officials in an

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The lobbying activities relate to matters

attempt to influence the official actions or

Charitable contributions. Enter

of direct financial interest to the donor’s

positions of the officials. See Regulations

contributions or gifts actually paid within

trade or business and

section 1.162-29 for the definition of

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the tax year to or for the use of charitable

The principal purpose of the

“influencing legislation.”

and governmental organizations

contribution was to avoid federal income

described in section 170(c) and any

Dues and other similar amounts paid

tax by obtaining a deduction for activities

unused contribution carryovers.

to certain tax-exempt organizations may

that would have been nondeductible

not be deductible. See section 162(e)(3).

under the lobbying expense rules if

RICs reporting taxable income on the

Certain in-house lobbying expenditures

conducted directly by the donor.

accrual method may elect to treat as paid

that do not exceed $2,000 are deductible.

during the tax year any contributions paid

For information on contributions to

For more information on other

by the 15th day of the 3rd month after the

charitable organizations that conduct

deductions that may apply to RICs, see

end of the tax year if the contributions

lobbying activities, see section 170(f)(9).

Pub. 535.

were authorized by the board of directors

Pension, profit-sharing, etc., plans.

during the tax year. Attach a declaration

Enter contributions to qualified pension,

Tax and Payments

to the return that includes the date the

profit-sharing, or other funded-deferred

resolution was adopted.

Line 28b. Estimated tax payments.

compensation plans. Employers who

Enter any estimated tax payments the

Limitation on deduction. The total

maintain such a plan generally must file

RIC made for the tax year.

amount claimed cannot be more than

Form 5500, Annual Return/Report of

10% of taxable income (the sum of Part I,

Employee Benefit Plan, even if the plan is

Line 28f. Credit from Form 2439. Enter

line 26; Part ll, line 3; and Form 2438, line

not a qualified plan under the Internal

the credit from Form 2439 for the RIC’s

11) computed without regard to the

Revenue Code. The filing requirement

share of the tax paid by another RIC or a

following:

applies even if the RIC does not claim a

Real Estate Investment Trust (REIT) on

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Any deduction for contributions.

deduction for the current tax year. There

undistributed long-term capital gains

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

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