Instructions For Form 1120-Pc - 2016 (Page 10 of 23) in pdf

back 3 years and forward 5 years as a

income, describe it in parentheses on

Line 3a, column (a). Gross interest.

short-term capital loss.

line 13. Examples of other income to

Enter the gross amount of interest income,

report on line 13 include the following.

including all tax-exempt interest.

Line 8. Certain mutual fire or flood in-

The amount included in income from

surance company premiums. A mutual

Line 3b, column (a). Section 103(a)

Form 6478, Biofuel Producer Credit.

fire or flood insurance company whose

excludes interest on state or local bonds

The amount included in income from

principal business is the issuance of

from gross income.

Form 8864, Biodiesel and Renewable

policies (1) for which the premium

Diesel Fuels Credit.

This exclusion does not apply to any:

deposits are the same (regardless of the

Refunds of taxes deducted in prior

1. Private activity bond which is not a

length of the term the policies are written

years to the extent they reduced income

qualified bond as defined by section 141;

for) and (2) under which the unabsorbed

subject to tax imposed. See section 111

portion of such premium deposits not

2. Arbitrage bond as defined by

and the related regulations. Do not offset

required for losses, expenses, or

section 148; or

current year taxes against tax refunds.

establishment of reserves is returned or

3. Bonds not meeting the

Ordinary income from trade or business

credited to the policyholder on

requirements of section 149 (regarding the

activities of a partnership (from

cancellation or expiration of the policy,

registration of tax-exempt bonds).

Schedule K-1 (Form 1065 or Form

must include in income an amount equal

1065-B)). Do not offset ordinary losses

to 2% of the premiums earned on

Lines 3a and 3b, column (b). Amortiza-

against ordinary income. Instead, include

insurance contracts during the tax year

tion of premium. Enter on line 3a,

the losses on line 31. Show the

with respect to such policies after

column (b), the total amortization of bond

partnership's name, address, and EIN on

deduction of premium deposits returned or

premium, including amortization on

a separate statement attached to this

credited during the same tax year. See

tax-exempt bonds. Enter on line 3b,

return. If the amount entered is from more

section 832(b)(1)(D).

column (b), the amortization of bond

than one partnership, identify the amount

premium on tax-exempt bonds only.

Line 9. Income on account of special

from each partnership.

income and deduction accounts.

Part or all of the proceeds received

Note. Insurance companies electing to

Corporations which write the kinds of

from certain corporate-owned life

amortize discount for tax purposes must

insurance below must maintain the

insurance contracts issued after August

reduce the amortization of premium by

following special accounts. A corporation

17, 2006. Corporations that own one or

any amortization of discount.

which writes:

more employer-owned life insurance

contracts issued after August 17, 2006,

Line 4. Gross rents. Enter gross rents,

1. Mortgage guaranty insurance must

must file Form 8925, Report of

computed as indicated under the

maintain a mortgage guaranty account;

Employer-Owned Life Insurance

instructions for Gross income, earlier.

2. Lease guaranty insurance must

Contracts.

Deduct expenses, such as repairs,

maintain a lease guaranty account; and

Income from cancellation of debt (COD)

interest, taxes, and depreciation, on the

3. Insurance on obligations the

for the repurchase of a debt instrument for

proper lines for deductions.

interest on which is excludable from gross

less than its adjusted issue price.

Line 6. Capital gain net income. Every

income under section 103 must maintain

Any COD income deferred from 2009 or

sale or exchange of a capital asset must

an account with respect to insurance on

2010 that is includible in income in 2016.

be reported in detail on Schedule D (Form

state and local obligations.

See section 108(i), Regulations section

1120), Capital Gains and Losses, even if

1.108(i)-1, and Rev. Proc. 2009-37.

Amounts required to be subtracted

there is no gain or loss.

The corporation's share of the following

from these accounts under sections

Generally, losses from sales or

income from Form 8621, Information

832(e)(5) and 832(e)(6) must be reported

exchanges of capital assets are only

Return by a Shareholder of a Passive

as income on line 9. See section 832(e)

allowed to the extent of gains. However,

Foreign Investment Company or Qualified

for more information.

corporations taxed under section 831 may

Electing Fund.

Line 10. Income from protection

claim losses from capital assets sold or

1. Ordinary earnings of a qualified

against loss account. Although section

exchanged to get funds to meet abnormal

electing fund (QEF).

1024 of P.L. 99-514 repealed section 824

insurance losses and to pay dividends and

2. Gain or loss from marking passive

relating to the protection against loss

similar distributions to policyholders. Do

foreign investment company (PFIC) stock

(PAL) account, PAL account balances are

not include those types of losses here, but

to market.

includible in income as though section 824

instead, report them on Schedule G.

3. Gain or loss from sale or other

were still in effect. Attach a statement

The net capital loss for these

disposition of section 1296 stock.

showing the computation.

corporations is the amount by which

4. Excess distributions from a section

losses for the year from sales or

Line 11. Mutual interinsurers or recip-

1291 fund allocated to the current year

exchanges of capital assets exceed the

rocal underwriters—decrease in sub-

and pre-PFIC years, if any.

gains from these sales or exchanges plus

scriber accounts. Enter the decrease for

the smaller of:

the tax year in savings credited to

See Form 8621 and the Instructions for

subscriber accounts of a mutual insurance

Form 8621 for details.

1. Taxable income (computed without

company that is an interinsurer or

gains or losses from sales or exchanges

Deductions

reciprocal underwriter.

of capital assets); or

2. Losses from the sale or exchange

Line 12. Income from a special loss

Limitations on Deductions

of capital assets sold or exchanged to

discount account. Enter the amount

obtain funds to meet abnormal insurance

from Form 8816, Part II, line 6.

Section 263A uniform capitalization

losses and to provide for the payment of

rules. The uniform capitalization rules of

Line 13. Other Income. Enter any other

dividends and similar distributions to

section 263A require corporations to

taxable income not reported on lines 1

policyholders.

capitalize certain costs.

through 12. List the type and amount of

income on an attached statement. If the

Subject to the limitations in section

See Regulations sections 1.263A-1

corporation has only one item of other

1212(a), a net capital loss can be carried

through 1.263A-3.

Instructions for Form 1120-PC (2016)

-10-

Instructions For Form 1120-Pc - 2016 Page 10

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