Instructions For Form 1120-Pc - 2016 (Page 14 of 23) in pdf

See Pub. 535 for more information on

policies. Whether dividends have been

Travel, meals, and entertainment

depletion.

paid or declared should be determined

expenses. Special rules apply (discussed

according to the method of accounting

later).

Line 24. Pension, profit-sharing, etc.,

employed by the insurance company.

Utilities.

plans. Enter the deduction for

Ordinary losses from trade or business

contributions to qualified pension,

Dividends and similar distributions.

activities of a partnership (from

profit-sharing, or other funded deferred

Include amounts returned or credited to

Schedule K-1 (Form 1065 or 1065-B)). Do

compensation plans. Employers who

policyholders on cancellation or expiration

not offset ordinary income against

maintain such a plan generally must file

of policies issued by a mutual fire or flood

ordinary losses. Instead, include the

one of the forms listed below unless

insurance company:

income on line 13. Show the partnership's

exempt from filing under regulations or

1. Where the premium deposits for

name, address, and EIN on a separate

other applicable guidance, even if the plan

the policy are the same (regardless of the

statement attached to this return. If the

is not a qualified plan under the Internal

length of the policy) and

amount entered is from more than one

Revenue Code. The filing requirement

partnership, identify the amount from each

2. The unabsorbed portion of the

applies even if the corporation does not

partnership.

premium deposits not required for losses,

claim a deduction for the current tax year.

Any extraterritorial income exclusion

expenses, or establishment of reserves is

There are penalties for failure to file these

from Form 8873, Extraterritorial Income

returned or credited to the policyholder on

forms on time and for overstating the

Exclusion.

cancellation or expiration of the policy.

pension plan deduction. See sections

Deduction for certain costs of energy

6652(e) and 6662(f). Also, see the

In the case of a qualified group

efficient commercial building property

instructions for the applicable form.

self-insurers fund, the fund's deduction for

placed in service during the tax year.

policyholder dividends is allowed no

Form 5500, Annual Return/Report of

Dividends paid in cash on stock held by

earlier than the date the state regulatory

Employee Benefit Plan.

an employee stock ownership plan.

authority determines the amount of the

However, a deduction may only be taken

Form 5500-SF, Short Form Annual

policyholder dividend that may be paid.

for the dividends above if, according to the

Return/Report of Small Employee Benefit

See section 6076 of the Technical and

plan, the dividends are:

Plan. File this form instead of Form 5500,

Miscellaneous Revenue Act of 1988.

1. Paid in cash directly to the plan

generally, if there are under 100

Line 30. Mutual interinsurers or recip-

participants or beneficiaries;

participants at the beginning of the plan

rocal underwriters—increase in sub-

year.

2. Paid to the plan, which distributes

scriber accounts. A mutual insurance

them in cash to the plan participants or

company that is an interinsurer or

Note. Form 5500 and Form 5500-SF

their beneficiaries no later than 90 days

reciprocal underwriter may deduct the

must be filed electronically under the

after the end of the plan year in which the

increase in savings credited to subscriber

computerized ERISA Filing Acceptance

dividends are paid;

accounts for the tax year.

System (EFAST2). For more information,

3. At the election of the participants or

see the EFAST2 website at

Savings credited to subscriber

their beneficiaries (a) payable as provided

accounts means the surplus credited to

under 1 or 2 above, or (b) paid to the plan

the individual accounts of subscribers

Form 5500-EZ, Annual Return of

and reinvested in qualifying employer

before the 16th day of the 3rd month

One-Participant (Owners and Their

securities; or

following the close of the tax year. This is

Spouses) Retirement Plan. File this form

4. Used to make payments on a loan

true only if the corporation would be

for a plan that only covers the owner (or

described in section 404(a)(9).

required to pay this amount promptly to a

the owner and his or her spouse) but only

subscriber if the subscriber ended the

See section 404(k) for more details and

if the owner (or the owner and his or her

contract when the corporation's tax year

the limitation on certain dividends.

spouse) owns the entire business.

ends. The corporation must notify the

Do not deduct the following.

Line 25. Employee benefit programs.

subscriber as required by Regulations

Fines or penalties paid to a government

Enter contributions to employee benefit

section 1.823-6(c)(2)(v). The subscriber

for violating any law.

programs not claimed elsewhere on the

must treat any savings credited to the

Lobbying expenses. However, see

return (for example, insurance, health and

subscriber's account as a dividend paid or

exceptions (discussed later).

welfare programs, etc.) that are not an

declared.

Travel, meals, and entertainment.

incidental part of a pension, profit-sharing,

Line 31. Other deductions. Attach a

Subject to limitations and restrictions

etc., plan included on line 24.

statement listing by type and amount all

discussed below, a corporation can

Line 27. Additional deduction. Enter on

allowable deductions under sections

deduct ordinary and necessary travel,

line 27 the total from Form 8816, Part II,

832(c)(1) and (10) (net of the annual

meals, and entertainment expenses paid

line 5.

statement change in undiscounted unpaid

or incurred in its trade or business. Also,

loss adjustment expenses) that are not

Any insurance company taking the

special rules apply to deductions for gifts,

deductible on lines 15 through 30.

additional deduction must:

skybox rentals, luxury water travel,

Make special estimated tax payments

Examples of other deductions include

convention expenses, and entertainment

equal to the tax benefit from the deduction

the following. See Pub. 535 for details on

tickets. See section 274 and Pub. 463.

and

other deductions that may apply to

Travel. The corporation cannot deduct

Establish and maintain a Special Loss

corporations.

travel expenses of any individual

Discount Account. See section 847 and

The domestic production activities

accompanying a corporate officer or

Form 8816 for more information.

deduction. See Form 8903.

employee, including a spouse or

Certain business start-up and

dependent of the officer or employee,

Line 29. Dividends to policyholders.

organizational costs (discussed earlier

unless:

Enter the total dividends and similar

under Limitations on Deductions).

That individual is an employee of the

distributions paid or declared to

Legal and professional fees.

corporation, and

policyholders, as policyholders, except in

Supplies used and consumed in the

the case of a mutual fire insurance

business.

company exclusively issuing perpetual

Instructions for Form 1120-PC (2016)

-14-

Instructions For Form 1120-Pc - 2016 Page 14

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