Form 8816 - Special Loss Discount Account And Special Estimated Tax Payments For Insurance Companies Page 2
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Form 8816 (Rev. 9-2013)
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
changes the amount of the section 847
Form 1120-L, page 1, line 29b. For
Line 2. Enter the related discounted
tax benefit, the taxpayer must provide a
purposes of Form 1120, this amount is
unpaid losses determined under section
computation schedule and attach it to
included on Form 1120, Schedule J,
846.
Form 8816.
Part II, line 13.
Line 8. The amount entered on this line
Part II. Special Loss
Line 12. To the extent that a SETP is not
should be the same as the ending
Discount Account (SLDA)
used to offset additional tax due for any
balance for this account for the year
of the first 15 tax years beginning after
immediately preceding this year. If the
Keep a separate SLDA for each accident
the year for which the payment was made
amounts are different, attach an
year for which an additional deduction
(i.e., to the extent there is a balance on
explanation.
under section 847 is claimed. Do not net
line 12 at the end of the 15
tax year
th
Line 9. Enter the total payments made
amounts from one year against amounts
beginning after the year for which the
for this accident year. The amount
from another year.
payment was made), that SETP shall be
entered on this line for the current
treated as an estimated tax payment
Line 4. Enter the balance in the SLDA at
accident year must agree with the
made under section 6655 for the 16
the beginning of the year for which this
th
figures shown on Form 1120-PC, page
year after the year for which the payment
return is filed.
1, line 14d, or Form 1120-L, page 1, line
was made. Enter these amounts on
Line 5. The amount entered on line 5
29d. For purposes of Form 1120, this
Form 1120-PC, page 1, line 14c, or
may not exceed the amount on line 3.
amount is included on Form 1120,
Form 1120-L, page 1, line 29c. For
The total of the amount(s) reported on
Schedule J, Part II, line 13.
purposes of Form 1120, this amount is
line 5 must be the same amount as on
Generally, payments are only made in
included on Form 1120, Schedule J,
Form 1120-PC, Schedule A, line 27, or
the initial year an account is established.
Part II, line 13.
Form 1120-L, page 1, line 17. For
If amounts are added in subsequent
purposes of Form 1120, this amount is
years, attach an explanation.
included in line 26, page 1, Form 1120.
Paperwork Reduction Act Notice. We
Line 10. Enter the amount of SETPs
Generally, additions are only made in the
ask for the information on this form to
made in a prior year that are treated as
initial year of a specific loss year’s
carry out the Internal Revenue laws of
having been made for the current year
account.
the United States. You are required to
(which allows a current deduction under
give us the information. We need it to
Line 6. Enter on this line and on
section 847). In effect, the amount on
ensure that you are complying with these
Form 1120-PC, Schedule A, line 12,
line 10 will be treated as having been
laws and to allow us to figure and collect
Form 1120-L, page 1, line 6, or
transferred from one accident year to
the right amount of tax.
Form 1120, page 1, line 10 amounts that
another accident year. This line is
are required to be removed from the
You are not required to provide the
intended to ensure the proper
SLDA and included in income. See
information requested on a form that is
accounting of SETPs and to avoid the
section 847(5) for details.
subject to the Paperwork Reduction Act
unnecessary exchange of monies
unless the form displays a valid OMB
Note: Section 847(5) requires that, to the
between taxpayers and the IRS.
control number. Books or records
extent that any amount added to the
Example: Assume for calendar year
relating to a form or its instructions must
SLDA is not subtracted from the SLDA
2012, a taxpayer has $1 million in
be retained as long as their contents
before the 15
th
year after the year for
taxable income without regard to section
may become material in the
which the amount was added, the
847 and has made estimated tax
administration of any Internal Revenue
amount must be subtracted from the
payments sufficient to satisfy its liability.
law. Generally, tax returns and return
SLDA for the 15
year and included in
th
For prior accident year X, the taxpayer
information are confidential, as required
gross income for the 15
year.
th
took a section 847 deduction and paid a
by section 6103.
Line 7. The amount entered on this line
SETP.
The time needed to complete and file
may not exceed the amount on line 3.
• In year 2012, a portion of that prior
this form varies depending on individual
accident year’s discount reverses
Part III. Special Estimated
circumstances. The estimated average
($50,000), and $50,000 is includible in
time is:
Tax Payments (SETPs)
income (Part II, line 6) and results in an
Recordkeeping .
.
.
. 4 hr., 18 min.
increased tax liability of $17,000. Also in
Use Part III to reconcile the corporation’s
year 2012, the taxpayer takes a section
Learning about the
SETPs for each tax year it has made a
847 deduction of $50,000 for accident
law or the form .
.
.
. 1 hr., 5 min.
section 847 election.
year 2012 requiring a SETP of $17,000.
Preparing, copying,
Section 847(8) (tax benefit
• Instead of actually making a SETP of
assembling, and
determination) requires that if a taxpayer
$17,000 for year 2012, the taxpayer can
sending the form to
carries back net operating losses or
enter $17,000 on line 10 for accident
the IRS
.
.
.
.
.
. 1 hr., 12 min.
capital losses that arise in years after a
year 2012 and transfer that amount from
year in which a section 847 deduction
If you have any comments concerning
the balance of SETP for accident year X
was claimed, the taxpayer must
the accuracy of these time estimates or
to accident year 2012. The taxpayer
recompute the tax benefit attributable to
suggestions for making this form
must also include $17,000 on Part III, line
the previously claimed section 847
simpler, we would be happy to hear
11, for accident year X.
deduction taking into account the loss
from you. See the instructions for
Form 1120-PC, Form 1120-L, or
Form 1120.
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