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Form 8816 (Rev. 1-2010)
Page
Line 1. Enter the undiscounted unpaid
carrybacks. Tax benefits also include
Line 11. Enter the total payments applied
losses (as defined in section 846(b)) for
those derived from filing a consolidated
to pay additional tax due as a result of
each accident year, measured as of the
return with another insurance company
including in income amounts required by
end of the tax year, related to losses
(without regard to section 1503(c)).
section 847(5). The total of the amount(s)
incurred in tax years beginning after
on line 11 must agree with the amount on
Therefore, if this recomputation
December 31, 1986.
Form 1120-PC, page 1, line 14b, or Form
changes the amount of the section 847
1120-L, page 1, line 29b. For purposes of
Line 2. Enter the related discounted
tax benefit, the taxpayer must provide a
Form 1120, this amount is included in line
unpaid losses determined under
computation schedule and attach it to
32b, page 1, Form 1120.
section 846.
Form 8816.
Line 12. To the extent that a SETP is not
Line 8. The amount entered on this line
Part II. Special Loss
used to offset additional tax due for any
should be the same as the ending
of the first 15 tax years beginning after
Discount Account (SLDA)
balance for this account for the year
the year for which the payment was
immediately preceding this year. If the
Keep a separate SLDA for each accident
made (i.e., to the extent there is a
amounts are different, attach an
year for which an additional deduction
th
balance on line 12 at the end of the 15
explanation.
under section 847 is claimed. Do not net
tax year beginning after the year for
Line 9. Enter the total payments made
amounts from one year against amounts
which the payment was made), that SETP
for this accident year. The amount
from another year.
shall be treated as an estimated tax
entered on this line for the current
Line 4. Enter the balance in the SLDA at
payment made under section 6655 for
accident year must agree with the
th
the beginning of the year for which this
the 16
year after the year for which the
figures shown on Form 1120-PC,
return is filed.
payment was made. Enter these amounts
page 1, line 14d, or Form 1120-L,
on Form 1120-PC, page 1, line 14c, or
Line 5. The amount entered on line 5
page 1, line 29d. For purposes of
Form 1120-L, page 1, line 29c. For
may not exceed the amount on line 3.
Form 1120, this amount is included in
purposes of Form 1120, this amount is
The total of the amount(s) reported on
line 32b, page 1, Form 1120.
included in line 32b, page 1, Form 1120.
line 5 must be the same amount as on
Generally, payments are only made in
Form 1120-PC, Schedule A, line 27, or
the initial year an account is established.
Form 1120-L, page 1, line 17. For
Paperwork Reduction Act Notice. We
If amounts are added in subsequent
purposes of Form 1120, this amount is
ask for the information on this form to
years, attach an explanation.
included in line 26, page 1, Form 1120.
carry out the Internal Revenue laws of
Line 10. Enter the amount of SETPs
Generally, additions are only made in the
the United States. You are required to
made in a prior year that are treated as
initial year of a specific loss year’s
give us the information. We need it to
having been made for the current year
account.
ensure that you are complying with
(which allows a current deduction under
Line 6. Enter on this line and on Form
these laws and to allow us to figure and
section 847). In effect, the amount on
1120-PC, Schedule A, line 12, Form
collect the right amount of tax.
line 10 will be treated as having been
1120-L, page 1, line 6, or Form 1120,
You are not required to provide the
transferred from one accident year to
page 1, line 10 amounts that are
information requested on a form that is
another accident year. This line is
required to be removed from the SLDA
subject to the Paperwork Reduction Act
intended to assure the proper
and included in income. See section
unless the form displays a valid OMB
accounting of SETPs and to avoid the
847(5) for details.
control number. Books or records
unnecessary exchange of monies
Note: Section 847(5) requires that, to
relating to a form or its instructions must
between taxpayers and the IRS.
the extent that any amount added to the
be retained as long as their contents
Example: Assume for calendar year
SLDA is not subtracted from the SLDA
may become material in the
2009, a taxpayer has $1 million in
th
before the 15
year after the year for
administration of any Internal Revenue
taxable income without regard to section
which the amount was added, the
law. Generally, tax returns and return
847 and has made estimated tax
amount must be subtracted from the
information are confidential, as required
payments sufficient to satisfy its liability.
th
SLDA for the 15
year and included in
by section 6103.
For prior accident year X, the taxpayer
th
gross income for the 15
year.
The time needed to complete and file
took a section 847 deduction and paid a
Line 7. The amount entered on this line
this form varies depending on individual
SETP.
may not exceed the amount on line 3.
circumstances. The estimated average
● In year 2009, a portion of that prior
time is:
accident year’s discount reverses
Part III. Special Estimated
Recordkeeping
4 hr., 18 min.
($50,000), and $50,000 is includible in
Tax Payments (SETPs)
income (Part II, line 6) and results in an
Learning about the
increased tax liability of $17,000. Also in
law or the form
1 hr.
Use Part III to reconcile the corporation’s
year 2009, the taxpayer takes a section
Preparing, copying,
SETPs for each tax year it has made a
847 deduction of $50,000 for accident
assembling, and
section 847 election.
year 2009 requiring a SETP of $17,000.
sending the form to
Section 847(8) (tax benefit
● Instead of actually making a SETP of
the IRS
1 hr., 6 min.
determination) requires that if a taxpayer
$17,000 for year 2009, the taxpayer can
If you have any comments concerning
carries back net operating losses or
enter $17,000 on line 10 for accident
the accuracy of these time estimates or
capital losses that arise in years after a
year 2009 and transfer that amount from
suggestions for making this form
year in which a section 847 deduction
the balance of SETP for accident year X
simpler, we would be happy to hear from
was claimed, the taxpayer must
to accident year 2009. The taxpayer
you. See the instructions for Form
recompute the tax benefit attributable to
must also include $17,000 on Part III,
1120-PC, Form 1120-L, or Form 1120.
the previously claimed section 847
line 11, for accident year X.
deduction taking into account the loss
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