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Item 12

power of all classes of stock of the

Schedule L—Balance

corporation entitled to vote, or (b) the total

Enter the amount of the NOL carryover to

value of all classes of stock of the

Sheets per Books

the tax year from prior years, even if

corporation.

some of the loss is used to offset income

Note. All insurance companies required

on this return. The amount to enter is the

The constructive ownership rules of

to file Form 1120-PC must complete

total of all NOLs generated in prior years

section 318 apply in determining if a

Schedule L.

but not used to offset income (either as a

corporation is foreign owned. See section

carryback or carryover) in a tax year prior

The balance sheets should agree with

6038A(c)(5) and the related regulations.

to 2011. Do not reduce the amount by

the corporation’s books and records.

Enter on line 6a the percentage owned

any NOL deduction reported on Schedule

If filing a consolidated return, report

by the foreign person specified in

A, line 36b.

total consolidated assets, liabilities, and

question 6. On line 6b, enter the name of

shareholder’s equity for all corporations

the owner’s country.

Question 13

joining in the return. See Consolidated

Note. If there is more than one

Return on page 5.

A corporation that files Form 1120-PC

25%-or-more foreign owner, complete

must file Schedule UTP (Form 1120) with

Corporations with total assets

lines 6a and 6b for the foreign person with

its income tax return if:

(non-consolidated or consolidated for all

the highest percentage of ownership.

•

The corporation has assets that equal

corporations included within the tax

or exceed $100 million;

Foreign person. The term “foreign

consolidation group) of $10 million or

•

The corporation or a related party

person” means:

more on the last day of the tax year must

•

issued audited financial statements

A foreign citizen or nonresident alien,

complete Schedule M-3 (Form 1120-PC)

•

reporting all or a portion of the

An individual who is a citizen of a U.S.

instead of Schedule M-1. See the

corporation’s operations for all or a

possession (but who is not a U.S. citizen

separate instructions for Schedule M-3

portion of the corporation’s tax year; and

or resident),

(Form 1120-PC) for provisions that also

•

The corporation has one or more tax

A foreign partnership,

affect Schedule L.

•

positions that must be reported on

A foreign corporation,

Line 1. Cash. Include certificates of

•

Schedule UTP.

Any foreign estate or trust within the

deposit as cash on this line.

meaning of section 7701(a)(31), or

Line 5. Tax-exempt securities. Include

•

For details, see the Instructions for

A foreign government (or one of its

on this line:

Schedule UTP.

agencies or instrumentalities) to the

•

State and local government obligations,

extent that it is engaged in the conduct of

the interest on which is excludable from

Attach Schedule UTP to the

a commercial activity as described in

gross income under section 103(a), and

corporation’s income tax return. Do not

section 892.

•

Stock in a mutual fund or other RIC that

file it separately. A taxpayer that files a

distributed exempt-interest dividends

Owner’s country. For individuals, the

protective Form 1120-PC must also file

during the tax year of the corporation.

term “owner’s country” means the country

Schedule UTP if it satisfies the

of residence. For all others, it is the

Line 18. Insurance liabilities. Include

requirements set forth above.

country where incorporated, organized,

on this line:

•

created, or administered.

Question 14

Undiscounted unpaid losses.

•

Loss adjustment expenses.

Requirement to file Form 5472. If the

Section 833(c)(5) provides that section

•

Unearned premiums.

corporation checked “Yes” it may have to

833 does not apply to a Blue Cross or

file Form 5472, Information Return of a

See section 846 for more information.

Blue Shield organization described in

25% Foreign-Owned U.S. Corporation or

section 833(c)(2), or other organization

Line 27. Adjustments to shareholders’

a Foreign Corporation Engaged in a U.S.

described in section 833(c)(3), unless it

equity. Some examples of adjustments

Trade or Business. Generally, a 25%

has a medical loss ratio of 85% or more

to report on this line include:

•

foreign-owned corporation that had a

for the tax year.

Unrealized gains and losses on

reportable transaction with a foreign or

securities held “available for sale.”

•

For purposes of section 833(c)(5), the

domestic related party during the tax year

Foreign currency translation

medical loss ratio is equal to the amount

must file Form 5472. See Form 5472 for

adjustments.

•

expended on reimbursement for clinical

filing instructions and penalties for failure

The excess of additional pension

services provided to enrollees (as defined

to file.

liability over unrecognized prior service

in 45 C.F.R. 158.140) under its policies

cost.

Item 10

•

during the tax year (section 833 MLR

Guarantees of employee stock (ESOP)

Numerator) divided by the total premium

Show any tax-exempt interest received or

debt.

•

revenue (section 833 MLR Denominator).

accrued. Include any exempt-interest

Compensation related to employee

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

dividends received as a shareholder in a

stock award plans.

for more information.

mutual fund or other RIC.

If the total adjustment to be entered on

line 27 is a negative amount, enter the

Item 11

Check the “Yes” box if the corporation

amount in parentheses.

is a Blue Cross or Blue Shield

If the corporation has an NOL, it generally

organization described in section

can elect under section 172(b)(3) to waive

833(c)(2), or other organization described

the entire carryback period for the NOL

Schedule M-1—

in section 833(c)(3), that has satisfied the

and instead carry the NOL forward to

Reconciliation of Income

medical loss ratio (MLR) requirements of

future tax years. To do so, check the box

section 833(c)(5).

on line 11 and file the tax return by its due

(Loss) per Books With

date, including extensions. Do not attach

If you checked “No” enter zero on

Income per Return

the statement described in Temporary

Schedule H, line 6, and Schedule A, line

Regulations section 301.9100-12T. Once

All insurance companies required to file

34a. You cannot take the special

made, the election is irrevocable.

Form 1120-PC, with total assets

deduction. See the instructions for

Corporations filing a consolidated

(non-consolidated or consolidated for all

Schedule H.

return that elect to waive the entire

corporations included within the tax

carryback period for the group must also

Also, if you checked “No” your

consolidation group) of $10 million or

attach the statement required by

deduction of unearned premiums is

more on the last day of the tax year must

Regulations section 1.1502-21(b)(3) or

limited. See the instructions for Schedule

complete Schedule M-3 (Form 1120-PC)

the election will not be valid.

E for more information.

instead of Schedule M-1. See Schedule

-19-

Instructions for Form 1120-PC (2011)

Instructions For Form 1120-Pc - U.s. Property And Casualty Insurance Company Income Tax Return Page 19

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