Instructions For Form 1120-Pc - U.s. Property And Casualty Insurance Company Income Tax Return Page 13
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21In the case of a qualified group
725, and Notice 2006-52, 2006-26 I.R.B.
membership dues in civic or public
self-insurers fund, the fund’s deduction for
1175.
service organizations, professional
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policyholder dividends is allowed no
Certain environmental remediation
organizations (such as bar and medical
earlier than the date the state regulatory
costs that the corporation elects to
associations), business leagues, trade
authority determines the amount of the
deduct. See section 198.
associations, chambers of commerce,
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policyholder dividend that may be paid.
Dividends paid in cash on stock held by
boards of trade, and real estate boards.
See section 6076 of the Technical and
an employee stock ownership plan.
However, no deduction is allowed if a
Miscellaneous Revenue Act of 1988.
However, a deduction may only be taken
principal purpose of the organization is to
for the dividends above if, according to
entertain, or provide entertainment
Line 30. Mutual interinsurers or
the plan, the dividends are:
facilities for, members or their guests. In
reciprocal underwriters — increase in
addition, corporations cannot deduct
a. Paid in cash directly to the plan
subscriber accounts. A mutual
membership dues in any club organized
participants or beneficiaries;
insurance company that is an interinsurer
for business, pleasure, recreation, or
b. Paid to the plan, which distributes them
or reciprocal underwriter may deduct the
other social purpose. This includes
in cash to the plan participants or their
increase in savings credited to subscriber
country clubs, golf and athletic clubs,
beneficiaries no later than 90 days
accounts for the tax year.
airline and hotel clubs, and clubs
after the end of the plan year in which
operated to provide meals under
Savings credited to subscriber
the dividends are paid;
conditions favorable to business
accounts means the surplus credited to
c. At the election of the participants or
discussion.
the individual accounts of subscribers
their beneficiaries (i) payable as
before the 16th day of the 3rd month
provided under a or b above or (ii) paid
Entertainment facilities. The
following the close of the tax year. This is
to the plan and reinvested in qualifying
corporation cannot deduct an expense
true only if the corporation would be
employer securities; or
paid or incurred for a facility (such as a
required to pay this amount promptly to a
d. Used to make payments on a loan
yacht or hunting lodge) used for an
subscriber if the subscriber ended the
described in section 404(a)(9).
activity usually considered entertainment,
contract when the corporation’s tax year
amusement, or recreation.
See section 404(k) for more details
ends. The corporation must notify the
and the limitation on certain dividends.
Amounts treated as compensation.
subscriber as required by Regulations
Do not deduct the following.
Generally, the corporation may be able to
section 1.823-6(c)(2)(v). The subscriber
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Fines or penalties paid to a government
deduct otherwise nondeductible
must treat any savings credited to the
for violating any law.
entertainment, amusement, or recreation
subscriber’s account as a dividend paid or
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Lobbying expenses. However, see
expenses if the amounts are treated as
declared.
exceptions (discussed below).
compensation to the recipient and
Line 31. Other deductions. Attach a
reported on Form W-2 for an employee or
Travel, meals, and entertainment.
statement listing by type and amount all
on Form 1099-MISC for an independent
Subject to limitations and restrictions
allowable deductions under sections
contractor.
discussed below, a corporation can
832(c)(1) and (10) (net of the annual
deduct ordinary and necessary travel,
However, if the recipient is an officer,
statement change in undiscounted unpaid
meals, and entertainment expenses paid
director, or beneficial owner (directly or
loss adjustment expenses) that are not
or incurred in its trade or business. Also,
indirectly) of more than 10% of any class
deductible on lines 15 through 30.
special rules apply to deductions for gifts,
of stock, the deductible expense is
skybox rentals, luxury water travel,
Examples of other deductions include
limited. See section 274(e)(2) and Notice
convention expenses, and entertainment
the following. See Pub. 535 for details on
2005-45, 2005-24 I.R.B. 1228.
tickets. See section 274 and Pub. 463.
other deductions that may apply to
Lobbying expenses. Generally,
corporations.
Travel. The corporation cannot deduct
lobbying expenses are not deductible.
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The domestic production activities
travel expenses of any individual
These expenses include:
deduction. See Form 8903.
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accompanying a corporate officer or
Amounts paid or incurred in connection
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Certain business start-up and
employee, including a spouse or
with influencing federal or state legislation
organizational costs (discussed earlier
dependent of the officer or employee,
(but not local legislation) or
under Limitations on Deductions).
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unless:
Amounts paid or incurred in connection
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Certain environmental remediation
That individual is an employee of the
with any communication with certain
costs that the corporation elects to
corporation, and
federal executive branch officials in an
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deduct. See section 198.
His or her travel is for a bona fide
attempt to influence the official actions or
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Legal and professional fees.
business purpose and would otherwise be
positions of the officials. See Regulations
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Supplies used and consumed in the
deductible by that individual.
section 1.162-29 for the definition of
business.
“influencing legislation.”
Meals and entertainment. Generally,
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Travel, meals, and entertainment
the corporation can deduct only 50% of
Dues and other similar amounts paid
expenses. Special rules apply (discussed
the amount otherwise allowable for meals
to certain tax-exempt organizations may
later).
and entertainment expenses paid or
not be deductible. See section 162(e)(3).
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Utilities.
incurred in its trade or business. In
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If certain in-house lobbying expenditures
Ordinary losses from trade or business
addition (subject to exceptions under
do not exceed $2,000, they are
activities of a partnership (from Schedule
section 274(k)(2)):
deductible.
K-1 (Form 1065 or 1065-B)). Do not offset
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Meals must not be lavish or
Line 32. Total deductions. Insurance
ordinary income against ordinary losses.
extravagant;
Instead, include the income on line 13.
companies that issue specified insurance
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A bona fide business discussion must
Show the partnership’s name, address,
contracts (as defined in section 848(e)(1))
occur during, immediately before, or
and EIN on a separate statement
are generally required to amortize policy
immediately after the meal; and
attached to this return. If the amount
acquisition expenses on a straight-line
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An employee of the corporation must
entered is from more than one
basis over a period of 120 months
be present at the meal.
partnership, identify the amount from
beginning with the 1st month in the 2nd
See section 274(n)(3) for a special rule
each partnership.
half of the tax year (section 848(a)).
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that applies to expenses for meals
Any extraterritorial income exclusion
Reduce total deductions on line 32 by the
consumed by individuals subject to the
(from Form 8873, line 52).
amount required to be capitalized under
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hours of service limits of the Department
Deduction for certain energy efficient
section 848. Attach a schedule showing
of Transportation.
commercial building property placed in
all computations. See section 848 and its
service during the tax year. See section
Membership dues. The corporation
regulations for special rules, definitions,
179D, Notice 2008-40, 2008-14 I.R.B.
can deduct amounts paid or incurred for
and exceptions. Also see Schedule G,
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Instructions for Form 1120-PC (2011)
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