Looking for a Form 1120-pc Templates? Download it for free!

Line 8b. Adjusted dividends-received

section 846(e), Regulations section

Schedule H—Special

deduction. Reduce the total amount

1.846-2, and Rev. Proc. 92-76, 1992-2

allowed as a deduction under sections

C.B. 453.

Deduction and Ending

243, 244, and 245 by the amount of any

Note. There is a special application of

Adjusted Surplus for

decrease in deductions allowable for the

the “fresh start” provision for an insurance

tax year because of section 832(b)(5)(B)

Section 833 Organizations

company that is not subject to tax under

when the decrease is caused by the

section 831(a) for its first tax year

deductions under sections 243, 244, and

Section 833(c)(5) provides that section

beginning after December 31, 1986,

245. Enter the result on line 8b.

833 does not apply to any organization

because (1) it is described in section

with a medical loss ratio of less than 85%.

501(c) or (2) it is subject to tax under

See section 833(c)(5) and Notice 2010-79

section 831(b) on its investment income.

Schedule I—Other

for more information.

If the insurance company later

Information

Line 5. Beginning adjusted surplus. If

becomes subject to tax under section

the corporation was a section 833

The following instructions apply to page 7,

831(a), the rules relating to the fresh start

organization in 2010, it should enter the

Form 1120-PC. Complete all items that

under the discounting provisions are

amount from Schedule H, line 10, of its

apply to the corporation.

applied by treating the last tax year before

2010 Form 1120-PC.

the year in which the insurance company

Question 4

Generally, the adjusted surplus as of

becomes subject to tax under section

Check the “Yes” box if:

the beginning of any tax year is an

831(a) as the insurance company’s last

•

The corporation is a subsidiary in an

amount equal to the adjusted surplus as

tax year beginning before 1987. See

affiliated group (defined below), but is not

of the beginning of the preceding tax

section 1010(e) of the Technical and

filing a consolidated return for the tax year

year:

Miscellaneous Revenue Act of 1988 and

with that group, or

Notice 88-100, 1988-2 C.B. 439.

1. Increased by the amount of any

•

The corporation is a subsidiary in a

adjusted taxable income for the preceding

parent-subsidiary controlled group. For a

Lines 6 and 7. Estimated salvage and

tax year or

definition of parent-subsidiary controlled

reinsurance recoverable. Enter on

2. Decreased by the amount of any

group, see the instructions for Schedule

lines 6 and 7 the amount of estimated

adjusted net operating loss for the

O (Form 1120).

salvage and reinsurance recoverable.

preceding tax year.

The amount of estimated salvage

Any corporation that meets either of

recoverable must be determined on a

the requirements above should check the

If 2011 is the first tax year the taxpayer

discounted basis. The salvage discount

“Yes” box. This applies even if the

qualifies as a section 833 organization,

factors for 2011 are published in Rev.

corporation is a subsidiary member of one

see section 833(c)(3)(C) to determine the

Proc. 2011-54, 2011-46 I.R.B . 759. The

group and the parent corporation of

adjusted surplus as of the beginning of

salvage discount factors for 2012 will be

another.

the 2011 tax year.

published in the Internal Revenue Bulletin

Note. If the corporation is an “excluded

For purposes of the computation of the

when available. Also see Regulations

member” of a controlled group (see

adjusted surplus, the terms “adjusted

section 1.832-4.

definition in the Instructions for Schedule

taxable income” and “adjusted net

O (Form 1120)), it is still considered a

Line 9. Tax-exempt interest subject to

operating loss” mean the taxable income

member of a controlled group for this

section 832(b)(5)(B). Enter the amount

or the net operating loss, respectively,

purpose.

of tax-exempt interest received or

determined with the following

accrued during the tax year on

Affiliated group. An affiliated group is

modifications:

investments made after August 7, 1986.

one or more chains of includible

1. Without regard to the deduction

For information regarding the

corporations (section 1504(a)) connected

determined under section 833(b)(1);

determination of the acquisition date of an

through stock ownership with a common

2. Without regard to any carryover or

investment, see the instructions for

parent corporation. The common parent

carryback to that tax year; and

Schedule C.

must be an includible corporation and the

3. By increasing gross income by an

following requirements must be met.

amount equal to the net exempt income

1. The common parent must own

for the tax year.

Schedule G—Other

directly stock that represents at least 80%

of the total voting power and at least 80%

Line 6. Special deduction. The special

Capital Losses

of the total value of the stock of at least

deduction under section 833(b) cannot be

Capital assets are considered sold or

one of the other includible corporations.

taken if the medical loss ratio is less than

exchanged to provide funds to meet

2. Stock that represents at least 80%

85%. If the medical loss ratio is less than

abnormal insurance losses and to pay

of the total voting power and at least 80%

85%, enter zero on line 6 and Schedule

dividends and make similar distributions

of the total value of the stock of each of

A, line 34a.

to policyholders to the extent that the

the other corporations (except for the

Note. The deduction for any tax year is

gross receipts from their sale or exchange

common parent) must be owned directly

limited to taxable income for that tax year

are not more than the amount by which

by one or more of the other includible

determined without regard to this

the sum of dividends and similar

corporations.

deduction.

distributions paid to policyholders, losses

For this purpose, the term “stock”

paid, and expenses paid for the tax year

Note. Under section 833(b)(4), any

generally does not include any stock that

is more than the total on line 9, Schedule

determination under section 833(b) must

(a) is nonvoting, (b) is nonconvertible, (c)

be made by only taking into account items

is limited and preferred as to dividends

from the health-related business of the

Total gross receipts from sales of

and does not participate significantly in

corporation.

capital assets (line 12, column (c)) must

corporate growth, and (d) has redemption

not be more than line 10. If necessary,

Line 8a. Adjusted tax-exempt income.

and liquidation rights that do not exceed

the corporation may report part of the

Reduce the total tax-exempt interest

the issue price of the stock (except for a

gross receipts from a particular sale of a

received or accrued during the tax year

reasonable redemption or liquidation

capital asset on this schedule and the rest

by any amount (not otherwise deductible)

premium). See section 1504(a)(4).

on Schedule D (Form 1120). Otherwise,

which would have been allowable as a

Question 6

do not include on Schedule D (Form

deduction for the tax year if such interest

1120) any sales reported on this

were not tax-exempt. Enter the result on

Check the “Yes” box if one foreign person

schedule.

line 8a.

owned at least 25% of (a) the total voting

-18-

Instructions for Form 1120-PC (2011)

Instructions For Form 1120-Pc - U.s. Property And Casualty Insurance Company Income Tax Return Page 18

Related Articles

Related forms

Related Categories