Line 3b, column (a). Section 103(a)
required for losses, expenses, or
line 31. Show the partnership’s name,
excludes interest on state or local bonds
establishment of reserves is returned or
address, and EIN on a separate
from gross income.
credited to the policyholder on
statement attached to this return. If the
cancellation or expiration of the policy,
amount entered is from more than one
This exclusion does not apply to any:
must include in income an amount equal
partnership, identify the amount from
1. Private activity bond which is not a
to 2% of the premiums earned on
each partnership.
qualified bond as defined by section 141;
•
insurance contracts during the tax year
Part or all of the proceeds received
2. Arbitrage bond as defined by
with respect to such policies after
from certain corporate-owned life
section 148; or
deduction of premium deposits returned
insurance contracts issued after August
3. Bonds not meeting the
or credited during the same tax year. See
17, 2006. Corporations that own one or
requirements of section 149 (regarding
section 832(b)(1)(D).
more employer-owned life insurance
the registration of tax-exempt bonds).
contracts issued after August 17, 2006,
Line 9. Income on account of special
must file Form 8925, Report of
income and deduction accounts.
Lines 3a and 3b, column (b).
Employer-Owned Life Insurance
Corporations which write the kinds of
Amortization of premium. Enter on
Contracts.
insurance below must maintain the
line 3a, column (b), the total amortization
•
Income from cancellation of debt
following special accounts. A corporation
of bond premium, including amortization
(COD) for the repurchase of a debt
which writes:
on tax-exempt bonds. Enter on line 3b,
instrument for less than its adjusted issue
column (b), the amortization of bond
1. Mortgage guaranty insurance must
price. If the corporation elected to defer
premium on tax-exempt bonds only.
maintain a mortgage guaranty account;
COD income from the reacquisition of an
2. Lease guaranty insurance must
Note. Insurance companies electing to
applicable debt instrument in 2009 or
maintain a lease guaranty account; and
amortize discount for tax purposes must
2010, see section 108(i) and Rev. Proc.
3. Insurance on obligations the
reduce the amortization of premium by
2009-37.
interest on which is excludable from gross
any amortization of discount.
•
The corporation’s share of the following
income under section 103 must maintain
Line 4. Gross rents. Enter gross rents,
from Form 8621, Information Return by a
an account with respect to insurance on
computed as indicated under the
Shareholder of a Passive Foreign
state and local obligations.
instructions for Gross income, on page 8.
Investment Company or Qualified
Deduct expenses, such as repairs,
Electing Fund.
Amounts required to be subtracted
interest, taxes, and depreciation, on the
from these accounts under sections
1. Ordinary earnings of a qualified
proper lines for deductions.
832(e)(5) and 832(e)(6) must be reported
electing fund (QEF) (from Part II, line 1c).
Line 6. Capital gain net income. Every
as income on line 9. See section 832(e)
2. Gain or loss from marking passive
sale or exchange of a capital asset must
for more information.
foreign investment company (PFIC) stock
be reported in detail on Schedule D (Form
to market (from Part III, line 5c or 7).
Line 10. Income from protection
1120), Capital Gains and Losses, even if
3. Gain or loss from sale or other
against loss account. Although section
there is no gain or loss.
disposition of Section 1296 stock (from
1024 of P.L. 99-514 repealed section 824
Part III, line 8c or 9b).
relating to the protection against loss
Generally, losses from sales or
4. Excess distributions from a section
(PAL) account, PAL account balances are
exchanges of capital assets are only
1291 fund treated as ordinary income
includible in income as though section
allowed to the extent of gains. However,
(from Part III, line 11b).
824 were still in effect. Attach a schedule
corporations taxed under section 831 may
showing the computation.
claim losses from capital assets sold or
See the Instructions for Form 8621.
exchanged to get funds to meet abnormal
Line 11. Mutual interinsurers or
Deductions
insurance losses and to pay dividends
reciprocal underwriters — decrease in
and similar distributions to policyholders.
subscriber accounts. Enter the
Limitations on Deductions
Do not include those types of losses here,
decrease for the tax year in savings
but instead, report them on Schedule G.
Section 263A uniform capitalization
credited to subscriber accounts of a
rules. The uniform capitalization rules of
mutual insurance company that is an
The net capital loss for these
section 263A require corporations to
interinsurer or reciprocal underwriter.
corporations is the amount by which
capitalize certain costs.
losses for the year from sales or
Line 12. Income from a special loss
exchanges of capital assets exceed the
discount account. Enter the amount
See Regulations sections 1.263A-1
gains from these sales or exchanges plus
from Form 8816, Part II, line 6.
through 1.263A-3.
the smaller of:
Line 13. Other Income. Enter any other
Transactions between related
1. Taxable income (computed without
taxable income not reported on lines 1
taxpayers. Generally, an accrual basis
gains or losses from sales or exchanges
through 12. List the type and amount of
taxpayer can only deduct business
of capital assets); or
income on an attached schedule. If the
expenses and interest owed to a related
2. Losses from the sale or exchange
corporation has only one item of other
party in the year the payment is included
of capital assets sold or exchanged to
income, describe it in parentheses on line
in the income of the related party. See
obtain funds to meet abnormal insurance
13. Examples of other income to report on
sections 163(e)(3), 163(j), and 267 for
losses and to provide for the payment of
line 13 include the following.
limitations on deductions for unpaid
•
dividends and similar distributions to
The amount included in income from
interest and expenses.
policyholders.
Form 6478, Alcohol and Cellulosic Biofuel
Corporations use Form 8926,
Fuels Credit.
Disqualified Corporate Interest Expense
Subject to the limitations in section
•
The amount included in income from
Disallowed Under Section 163(j) and
1212(a), a net capital loss can be carried
Form 8864, Biodiesel and Renewable
Related Information, to figure the amount
back 3 years and forward 5 years as a
Diesel Fuels Credit.
of any corporate interest expense
short-term capital loss.
•
Refunds of taxes deducted in prior
disallowed by section 163(j).
Line 8. Certain mutual fire or flood
years to the extent they reduced income
Section 291 limitations. Corporations
insurance company premiums. A
subject to tax imposed. See section 111
may be required to adjust certain
mutual fire or flood insurance company
and the related regulations. Do not offset
deductions. See section 291 to determine
whose principal business is the issuance
current year taxes against tax refunds.
•
the amount of the adjustment. Also, see
of policies (1) for which the premium
Ordinary income from trade or business
section 43.
deposits are the same (regardless of the
activities of a partnership (from Schedule
length of the term the policies are written
K-1 (Form 1065 or Form 1065-B)). Do not
Golden parachute payments. A portion
for) and (2) under which the unabsorbed
offset ordinary losses against ordinary
of the payments made by a corporation to
portion of such premium deposits not
income. Instead, include the losses on
key personnel that exceeds their usual
-9-
Instructions for Form 1120-PC (2011)