Form 8816 - Special Loss Discount Account And Special Estimated Tax Payments For Insurance Companies Page 2
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1
22
Form 8816 (Rev. 9-2017)
Page
the same amount as on Form 1120-PC,
1120-PC, page 1, line 14d, or Form
year for which the payment was made (that
1120-L, page 1, line 29d. For purposes of
Schedule A, line 27, or Form 1120-L, page
is, to the extent there is a balance on line
Form 1120, this amount is included on
1, line 17. For purposes of Form 1120, this
12 at the end of the 15
tax year beginning
th
amount is included in line 26, page 1, Form
Form 1120, Schedule J, Part II, line 13.
after the year for which the payment was
1120. Generally, additions are only made in
made), that SETP shall be treated as an
Generally, payments are only made in
the initial year of a specific loss year’s
estimated tax payment made under section
the initial year an account is established. If
account.
6655 for the 16
year after the year for
th
amounts are added in subsequent years,
which the payment was made. Enter these
Line 6. Enter on this line and on Form
attach an explanation.
amounts on Form 1120-PC, page 1, line
1120-PC, Schedule A, line 12, Form
Line 10. Enter the amount of SETPs made
14c, or Form 1120-L, page 1, line 29c. For
1120-L, page 1, line 6, or Form 1120, page
in a prior year that are treated as having
purposes of Form 1120, this amount is
1, line 10, amounts that are required to be
been made for the current year (which
included on Form 1120, Schedule J, Part II,
removed from the SLDA and included in
allows a current deduction under section
line 13.
income. See section 847(5) for details.
847). In effect, the amount on line 10 will be
Note: Section 847(5) requires that, to the
treated as having been transferred from
Paperwork Reduction Act Notice. We
extent that any amount added to the SLDA
one accident year to another accident year.
ask for the information on this form to carry
is not subtracted from the SLDA before the
This line is intended to ensure the proper
out the Internal Revenue laws of the United
accounting of SETPs and to avoid the
th
15
year after the year for which the
States. You are required to give us the
amount was added, the amount must be
unnecessary exchange of monies between
information. We need it to ensure that you
taxpayers and the IRS.
subtracted from the SLDA for the 15
th
year
are complying with these laws and to allow
and included in gross income for the 15
th
Example. Assume for calendar year 2016,
us to figure and collect the right amount of
year.
a taxpayer has $1 million in taxable income
tax.
Line 7. The amount entered on this line
without regard to section 847 and has
You are not required to provide the
may not exceed the amount on line 3.
made estimated tax payments sufficient to
information requested on a form that is
satisfy its liability. For prior accident year X,
subject to the Paperwork Reduction Act
Part III. Special Estimated
the taxpayer took a section 847 deduction
unless the form displays a valid OMB
Tax Payments (SETPs)
and paid an SETP.
control number. Books or records relating
• In year 2016, a portion of that prior
to a form or its instructions must be
Use Part III to reconcile the corporation’s
accident year’s discount reverses
retained as long as their contents may
SETPs for each tax year it has made a
($50,000), and $50,000 is includible in
become material in the administration of
section 847 election.
income (Part II, line 6) and results in an
any Internal Revenue law. Generally, tax
Section 847(8) (tax benefit determination)
increased tax liability of $17,000. Also in
returns and return information are
requires that if a taxpayer carries back net
year 2016, the taxpayer takes a section
confidential, as required by section 6103.
operating losses or capital losses that arise
847 deduction of $50,000 for accident year
The time needed to complete and file
in years after a year in which a section 847
2016 requiring an SETP of $17,000.
this form will vary depending on individual
deduction was claimed, the taxpayer must
• Instead of actually making an SETP of
circumstances. The estimated burden for
recompute the tax benefit attributable to
$17,000 for year 2016, the taxpayer can
business taxpayers filing this form is
the previously claimed section 847
enter $17,000 on line 10 for accident year
approved under OMB control number
deduction taking into account the loss
2016 and transfer that amount from the
1545-0123. The estimated burden for all
carrybacks. Tax benefits also include those
balance of SETP for accident year X to
other taxpayers who file this form is shown
derived from filing a consolidated return
accident year 2016. The taxpayer must
below.
with another insurance company (without
also include $17,000 on Part III, line 11, for
Recordkeeping .
.
.
. 4 hr., 18 min.
regard to section 1503(c)).
accident year X.
Learning about the
Therefore, if this recomputation changes
Line 11. Enter the total payments applied
law or the form .
the amount of the section 847 tax benefit,
.
.
.
.1 hr., 5 min.
to pay additional tax due as a result of
the taxpayer must provide a computation
Preparing, copying,
including in income amounts required by
schedule and attach it to Form 8816.
assembling, and
section 847(5). The total of the amount(s)
sending the form to
Line 8. The amount entered on this line
on line 11 must agree with the amount on
the IRS .
should be the same as the ending balance
.
.
.
.
.
. 1 hr., 12 min.
Form 1120-PC, page 1, line 14b, or Form
for this account for the year immediately
1120-L, page 1, line 29b. For purposes of
If you have any comments concerning the
preceding this year. If the amounts are
Form 1120, this amount is included on
accuracy of these time estimates or
different, attach an explanation.
Form 1120, Schedule J, Part II, line 13.
suggestions for making this form simpler, we
Line 9. Enter the total payments made for
would be happy to hear from you. See the
Line 12. To the extent that an SETP is not
this accident year. The amount entered on
instructions for Form 1120-PC, Form 1120-L,
used to offset additional tax due for any of
this line for the current accident year must
or Form 1120.
the first 15 tax years beginning after the
agree with the figures shown on Form
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