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Department of the Treasury  
Internal Revenue Service  
2023  
Instructions for  
Form 1120-PC  
U.S. Property and Casualty Insurance Company Income Tax Return  
Section references are to the Internal Revenue Code  
unless otherwise noted.  
Contents  
Contents  
Page  
Schedule M-1 . . . . . . . . . . . . . . . . . . . . . . . . . . 26  
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28  
Page  
What's New . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1  
Photographs of Missing Children . . . . . . . . . . . . . . . . 2  
The Taxpayer Advocate Service . . . . . . . . . . . . . . . . . 2  
How To Get Forms and Publications . . . . . . . . . . . . . . 2  
General Instructions . . . . . . . . . . . . . . . . . . . . . . . . . 2  
Purpose of Form . . . . . . . . . . . . . . . . . . . . . . . . . 2  
Who Must File . . . . . . . . . . . . . . . . . . . . . . . . . . 2  
Where To File . . . . . . . . . . . . . . . . . . . . . . . . . . . 3  
Electronic Filing . . . . . . . . . . . . . . . . . . . . . . . . . 2  
When To File . . . . . . . . . . . . . . . . . . . . . . . . . . . 2  
Who Must Sign . . . . . . . . . . . . . . . . . . . . . . . . . . 3  
Paid Preparer Authorization . . . . . . . . . . . . . . . . . 3  
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4  
Assembling the Return . . . . . . . . . . . . . . . . . . . . 4  
Tax Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 4  
Estimated Tax Payments . . . . . . . . . . . . . . . . . . . 4  
Interest and Penalties . . . . . . . . . . . . . . . . . . . . . 5  
Accounting Methods . . . . . . . . . . . . . . . . . . . . . . 5  
Accounting Period . . . . . . . . . . . . . . . . . . . . . . . 6  
Rounding Off to Whole Dollars . . . . . . . . . . . . . . . 6  
Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . 6  
Future Developments  
For the latest information about developments related to  
Form 1120-PC and its instructions, such as legislation  
enacted after they were published, go to IRS.gov/  
What's New  
Increase in penalty for failure to file. For tax returns  
required to be filed in 2024, the minimum penalty for  
failure to file a tax return that is more than 60 days late has  
increased to the smaller of the tax due or $485. See Late  
filing of return, later.  
Expiration of 100% business meal expense deduc-  
tion. The temporary 100% business meal expenses  
deduction for food and beverages provided by a  
restaurant does not apply to amounts paid or incurred  
after 2022.  
Corporate alternative minimum tax (CAMT). For tax  
years beginning after 2022, certain corporations must  
determine whether they are subject to the new CAMT and  
calculate CAMT, if applicable. See the instructions for  
page 1, line 6. Also, see new Schedule I, Question 20.  
Elective payment election. Applicable entities and  
electing taxpayers can elect to treat certain credits as  
elective payments. Resulting overpayment may result in  
refunds. See the instructions for line 15g. Also see the  
Instructions for Form 3800.  
Other Forms and Statements That May Be  
Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6  
Specific Instructions . . . . . . . . . . . . . . . . . . . . . . . . . 6  
Period Covered . . . . . . . . . . . . . . . . . . . . . . . . . 6  
Name and Address . . . . . . . . . . . . . . . . . . . . . . . 7  
Identifying Information . . . . . . . . . . . . . . . . . . . . . 7  
Employer Identification Number (EIN) . . . . . . . . . . 8  
Section 953 Elections . . . . . . . . . . . . . . . . . . . . . 8  
Relief from additions to tax for underpayments appli-  
cable to the new corporate alternative minimum tax.  
For tax year 2023, the IRS will waive the penalty for failure  
to make estimated tax payments for taxes attributable to a  
CAMT liability for affected corporations. Affected  
corporations must still file Form 2220 even if they owe no  
estimated tax penalty. However, affected corporations  
may exclude the CAMT tax liability when calculating the  
required annual payment on Form 2220. Affected  
corporations must also include an amount of estimated  
tax penalty on page 1, line 17 of Form 1120-PC even if  
that amount is zero. Failure to follow these instructions  
could result in the corporation receiving a penalty notice  
that will require an abatement request to apply the relief  
provided by Notice 2023-42. See Notice 2023-42,  
2023-26 I.R.B. 1085, available at IRS.gov/irb/  
Final Return, Name Change, Address  
Change, or Amended Return . . . . . . . . . . . . . . 8  
Taxable Income . . . . . . . . . . . . . . . . . . . . . . . . . 8  
Tax Computation and Payments . . . . . . . . . . . . . . 8  
Schedule A . . . . . . . . . . . . . . . . . . . . . . . . . . . 10  
Schedule B, Part I . . . . . . . . . . . . . . . . . . . . . . . 18  
Schedule B, Part II . . . . . . . . . . . . . . . . . . . . . . 18  
Schedule C . . . . . . . . . . . . . . . . . . . . . . . . . . . 19  
Schedule E . . . . . . . . . . . . . . . . . . . . . . . . . . . 21  
Schedule F . . . . . . . . . . . . . . . . . . . . . . . . . . . 22  
Schedule G . . . . . . . . . . . . . . . . . . . . . . . . . . . 23  
Schedule H . . . . . . . . . . . . . . . . . . . . . . . . . . . 23  
Schedule I . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23  
Schedule L . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26  
2023-26_IRB#NOT-2023-42. Also, see the instructions for  
page 1, line 17.  
Jan 29, 2024  
Cat. No. 64537I  
   
Photographs of  
Missing Children  
General Instructions  
Purpose of Form  
The Internal Revenue Service is a proud partner with the  
(NCMEC). Photographs of missing children selected by  
the Center may appear in instructions on pages that would  
otherwise be blank. You can help bring these children  
home by looking at the photographs and calling  
1-800-THE-LOST (1-800-843-5678) if you recognize a  
child.  
Use Form 1120-PC to report the income, gains, losses,  
deductions, and credits, and to figure the income tax  
liability of insurance companies, other than life insurance  
companies.  
Who Must File  
Every domestic nonlife insurance company and every  
foreign corporation that would qualify as a nonlife  
insurance company subject to taxation under section 831,  
if it were a U.S. corporation, must file Form 1120-PC. This  
includes organizations described in section 501(m)(1) that  
provide commercial-type insurance and organizations  
described in section 833.  
The Taxpayer Advocate Service  
The Taxpayer Advocate Service (TAS) is an independent  
organization within the IRS that helps taxpayers and  
protects taxpayer rights. TAS's job is to ensure that every  
taxpayer is treated fairly and knows and understands their  
rights under the Taxpayer Bill of Rights.  
Exceptions. A nonlife insurance company that is:  
Exempt under section 501(c)(15) should file Form 990,  
As a taxpayer, the corporation has rights that the IRS  
must abide by in its dealings with the corporation. TAS can  
help the corporation if:  
Return of Organization Exempt From Income Tax;  
Subject to taxation under section 831, and disposes of  
its insurance business and reserves, or otherwise ceases  
to be taxed under section 831, but continues its corporate  
existence while winding up and liquidating its affairs,  
should file Form 1120, U.S. Corporation Income Tax  
Return.  
A problem is causing financial difficulty for the business;  
The business is facing an immediate threat of adverse  
action; and  
The corporation has tried repeatedly to contact the IRS  
but no one has responded, or the IRS hasn't responded  
by the date promised.  
Life insurance companies. Life insurance companies  
should file Form 1120-L, U.S. Life Insurance Company  
Income Tax Return.  
The TAS tax toolkit at TaxpayerAdvocate.IRS.gov can  
help the corporation understand these rights.  
Foreign-owned domestic disregarded entities. If a  
foreign person, including a foreign corporation, wholly  
owns a domestic disregarded entity (DE), the domestic  
DE is treated as a domestic corporation separate from its  
owner (the foreign corporation) for purposes of the  
reporting requirements under section 6038A that apply to  
25% foreign-owned domestic corporations. These rules  
apply to a domestic DE owned by a foreign insurance  
company that makes an election under section 953(c)(3)  
(C) but do not apply to a domestic DE owned by a foreign  
insurance company that makes an election under section  
953(d) (for information on these elections, see the  
instructions for item D). If a foreign insurance company  
electing under section 953(c)(3)(C) wholly owns a  
domestic DE, the DE is required to file Form 5472,  
Information Return of a 25% Foreign-Owned U.S.  
Corporation or a Foreign Corporation Engaged in a U.S.  
Trade or Business. For additional information and  
coordination with Form 5472 filing by the domestic DE,  
see the Instructions for Form 5472.  
TAS has offices in every state, the District of Columbia,  
and Puerto Rico. Local advocates' numbers are in their  
local directories and at TaxpayerAdvocate.IRS.gov/  
Contact-Us. The corporation can also call TAS at  
877-777-4778.  
TAS also works to resolve large-scale or systemic  
problems that affect many taxpayers. If the corporation  
knows of one of these broad issues, please report it to  
TAS through the Systemic Advocacy Management  
System at IRS.gov/SAMS.  
For more information, go to  
How To Get Forms  
and Publications  
Internet. You can access the IRS website 24 hours a day,  
7 days a week, at IRS.gov to:  
Download forms, instructions, and publications;  
Order IRS products online;  
Electronic Filing  
Go to IRS.gov/Filing for the latest information. Also, go to  
IRS.gov/MeF and click on the link for “Modernized e-File  
Forms” for information on which forms the corporation can  
or must e-file.  
Research your tax questions online;  
Search publications online by topic or keyword;  
View Internal Revenue Bulletins (IRBs) published in  
recent years; and  
Sign up to receive local and national tax news by email.  
When To File  
Tax forms and publications. The corporation can view,  
print, or download all of the forms and publications it may  
need on IRS.gov/FormsPubs. Otherwise, the corporation  
can go to IRS.gov/OrderForms to place an order and have  
forms mailed to it. The IRS will process your order for  
forms and publications as soon as possible.  
Generally, a corporation must file its income tax return by  
the 15th day of the 4th month after the end of its tax year.  
A new corporation filing a short-period return must  
generally file by the 15th day of the 4th month after the  
short period ends. A corporation that has dissolved must  
2
Instructions for Form 1120-PC (2023)  
               
Where To File  
File the corporation's return at the applicable IRS address listed below.  
If the corporation's principal business, office, or agency is located in:  
Use the following address:  
Department of the Treasury  
Internal Revenue Service  
Ogden, UT 84201-0012  
The United States  
Internal Revenue Service  
P.O. Box 409101  
Ogden, UT 84409  
A foreign country or U.S. territories  
generally file by the 15th day of the 4th month after the  
date it dissolved.  
Paid Preparer Use Only section. If an employee of the  
corporation completes Form 1120-PC, the paid preparer  
space should remain blank. Anyone who prepares Form  
1120-PC but does not charge the corporation should not  
complete that section. Generally, anyone who is paid to  
prepare the return must sign it and complete the section.  
However, a corporation with a fiscal tax year ending  
June 30 must file by the 15th day of the 3rd month after  
the end of its tax year. A corporation with a short tax year  
ending any time in June will be treated as if the short year  
ended on June 30, and must file by the 15th day of the 3rd  
month after the end of its tax year.  
The paid preparer must complete the required preparer  
information and:  
Sign the return in the space provided for the preparer's  
If the due date falls on a Saturday, Sunday, or legal  
signature,  
Include their Preparer Tax Identification Number (PTIN);  
holiday, the corporation can file on the next business day.  
and  
Private Delivery Services  
Give a copy of the return to the taxpayer.  
Corporations can use certain private delivery services  
(PDSs) designated by the IRS to meet the “timely mailing  
as timely filing” rule for tax returns. Go to IRS.gov/PDS for  
the current list of designated services.  
Note. A paid preparer may sign original or amended  
returns by rubber stamp, mechanical device, or computer  
software program.  
The PDS can tell you how to get written proof of the  
mailing date.  
Paid Preparer Authorization  
If the corporation wants to allow the IRS to discuss its  
2023 tax return with the paid preparer who signed it,  
check the “Yes” box in the signature area of the return.  
This authorization applies only to the individual whose  
signature appears in the “Paid Preparer Use Only” section  
of the return. It does not apply to the firm, if any, shown in  
that section.  
For the IRS mailing address to use if you are using a  
Private delivery services cannot deliver items to  
P.O. boxes. You must use the U.S. Postal Service  
!
CAUTION  
to mail any item to an IRS P.O. box address.  
If the “Yes” box is checked, the corporation is  
authorizing the IRS to call the paid preparer to answer any  
questions that may arise during the processing of its  
return. The corporation is also authorizing the paid  
preparer to:  
Extension of Time To File  
File Form 7004, Application for Automatic Extension of  
Time To File Certain Business Income Tax, Information,  
and Other Returns, to request an extension of time to file.  
Generally, the corporation must file Form 7004 by the  
regular due date of the return. See the Instructions for  
Form 7004.  
Give the IRS any information that is missing from the  
return;  
Call the IRS for information about the processing of the  
return or the status of any related refund or payment(s);  
and  
Who Must Sign  
The return must be signed and dated by:  
Respond to certain IRS notices about math errors,  
The president, vice president, treasurer, assistant  
offsets, and return preparation.  
treasurer, chief accounting officer; or  
The corporation is not authorizing the paid preparer to  
receive any refund check, bind the corporation to anything  
(including any additional tax liability), or otherwise  
represent the corporation before the IRS.  
The authorization will automatically end no later than  
the due date (excluding extensions) for filing the  
corporation's 2024 tax return. If the corporation wants to  
expand the paid preparer's authorization or revoke the  
authorization before it ends, see Pub. 947, Practice Before  
the IRS and Power of Attorney.  
Any other corporate officer (such as a tax officer)  
authorized to sign.  
If a return is filed on behalf of a corporation by a  
receiver, trustee, or assignee, the fiduciary must sign the  
return instead of the corporate officer. Returns and forms  
signed by a receiver or trustee in bankruptcy on behalf of  
a corporation must be accompanied by a copy of the order  
or instructions of the court authorizing signing of the return  
or form.  
Instructions for Form 1120-PC (2023)  
3
           
Electronic Deposit Requirement  
Statements  
Corporations must use electronic funds transfer to make  
all federal tax deposits (such as deposits of employment,  
excise, and corporate income tax). Generally, electronic  
funds transfers are made using the Electronic Federal Tax  
Payment System (EFTPS).  
NAIC annual statement. Regulations section  
1.6012-2(c) requires that the National Association of  
Insurance Commissioners (NAIC) annual statement be  
filed with Form 1120-PC. A foreign insurance company  
subject to tax under section 831 that is not required to file  
an annual statement must file a copy of the pro forma  
annual statement. A penalty for the late filing of a return  
may be imposed for not including the annual statement  
when the return is filed. However, see Electronic filing,  
next.  
If the corporation does not want to use EFTPS, it can  
arrange for its tax professional, financial institution, payroll  
service, or other trusted third party to make deposits on its  
behalf. Also, it can arrange for its financial institution to  
submit a same-day payment (discussed later) on its  
behalf. EFTPS is a free service provided by the  
Department of the Treasury. Services provided by a tax  
professional, financial institution, payroll service, or other  
third party may have a fee.  
Electronic filing. If the domestic or foreign nonlife  
insurance company files Form 1120-PC electronically, do  
not attach the annual statement or pro forma annual  
statement to the electronically filed return. However, you  
must provide a copy of the annual statement or pro forma  
annual statement to the IRS if requested and retain it with  
your other tax records for the period required by the  
regulations.  
Reconciliation. Corporations that do not file a  
Schedule M-3 (Form 1120-PC), Net Income (Loss)  
Reconciliation for U.S. Property and Casualty Insurance  
Companies With Total Assets of $10 Million or More, with  
Form 1120-PC must attach a statement that reconciles the  
NAIC annual statement to Form 1120-PC.  
To get more information about EFTPS or to enroll in  
EFTPS, go to EFTPS.gov or call 800-555-4477. To  
contact EFTPS using Telecommunications Relay Services  
(TRS) for people who are deaf, hard of hearing, or have a  
speech disability, dial 711 and provide the TRS assistant  
the 800-555-4477 number above or 800-733-4829.  
Depositing on time. To make EFTPS deposits on time,  
the corporation must submit the transaction by 8 p.m.  
Eastern time the day before the date the deposit is due. If  
the corporation uses a third party to make deposits on its  
behalf, they may have different cutoff times.  
Same-day wire payment option. If the corporation fails  
to submit a deposit transaction on EFTPS by 8 p.m.  
Eastern time the day before the date a deposit is due, it  
can still make the deposit on time by using the Federal Tax  
Collection Service (FTCS). Before using the same-day  
wire payment method, the corporation will need to make  
arrangements with its financial institution ahead of time  
regarding availability, deadlines, and costs. Financial  
institutions may charge a fee for payments made this way.  
To learn more about making a same-day wire payment, go  
Assembling the Return  
To ensure that the corporation's tax return is correctly  
processed, attach all schedules and other forms after  
page 9 of Form 1120-PC in the following order.  
1. Schedule N (Form 1120).  
2. Form 4626.  
3. Form 4136.  
4. Form 8978.  
5. Form 965-B.  
6. Form 8941.  
7. Form 3800.  
8. Additional schedules in alphabetical order.  
9. Additional forms in numerical order.  
10. Supporting statements and attachments.  
Estimated Tax Payments  
Generally, the following rules apply to the corporation's  
payments of estimated tax.  
The corporation must make installment payments of  
Complete every applicable entry space on Form  
1120-PC. Do not enter “See Attached” or “Available Upon  
Request” instead of completing the entry spaces. If more  
space is needed on the forms or schedules, attach  
separate sheets using the same size and format as the  
printed forms. If there are supporting statements and  
attachments, arrange them in the same order as the  
schedules or forms they support and attach them last.  
Show the totals on the printed forms. Enter the  
estimated tax if it expects its total tax for the year (less  
applicable credits) to be $500 or more.  
The installments are due by the 15th day of the 4th, 6th,  
9th, and 12th months of the tax year. If any date falls on a  
Saturday, Sunday, or legal holiday, the installment is due  
on the next regular business day.  
The corporation must use electronic funds transfer to  
make installment payments of estimated tax.  
If, after the corporation figures and deposits estimated  
corporation's name and employer identification number  
(EIN) on each supporting statement or attachment.  
tax, it finds that its tax liability for the year will be more or  
less than originally estimated, it may have to refigure its  
required installments. If earlier installments were  
underpaid, the corporation may owe a penalty. See  
Tax Payments  
Generally, the corporation must pay any tax due in full no  
later than the due date for filing its tax return (not including  
extensions). See the instructions for line 18. If the due  
date falls on a Saturday, Sunday, or legal holiday, the  
payment is due on the next day that isn't a Saturday,  
Sunday, or legal holiday.  
If the corporation overpaid estimated tax, it may be able  
to get a quick refund by filing Form 4466, Corporation  
Application for Quick Refund of Overpayment of  
Estimated Tax. See the instructions for Form 1120-PC,  
line 15c.  
4
Instructions for Form 1120-PC (2023)  
             
See section 6655 and Pub. 542, Corporations, for more  
information on estimated taxes.  
Form 941, Employer's QUARTERLY Federal Tax  
Return;  
Form 944, Employer's ANNUAL Federal Tax Return; or  
Estimated tax penalty. A corporation that does not  
make estimated tax payments when due may be subject  
to an underpayment penalty for the period of  
Form 945, Annual Return of Withheld Federal Income  
Tax.  
The trust fund recovery penalty may be imposed on all  
underpayment. Generally, a corporation is subject to the  
penalty if its tax liability is $500 or more and it did not  
timely pay at least the smaller of:  
persons who are determined by the IRS to be responsible  
for collecting, accounting for, or paying over these taxes,  
and who acted willfully in not doing so. The penalty is  
equal to the full amount of the unpaid trust fund tax. See  
the Instructions for Form 720 or Pub. 15 (Circular E),  
Employer's Tax Guide, for details, including the definition  
of responsible persons.  
Its tax liability for the current year, or  
Its prior year tax.  
See section 6655 for details and exceptions, including  
special rules for large corporations.  
Use Form 2220, Underpayment of Estimated Tax by  
Corporations, to see if the corporation owes a penalty and  
to figure the amount of the penalty. If Form 2220 is  
completed, enter the penalty on line 17. See the  
instructions for line 17. Also see Relief from additions to  
Note. The trust fund recovery penalty will not apply to any  
amount of trust fund taxes an employer holds back in  
anticipation of the credit for qualified sick and family leave  
wages or the employee retention credit that they are  
entitled to. See Pub. 15 for more information.  
Other penalties. Other penalties can be imposed for  
negligence, substantial understatement of tax, reportable  
transaction understatements, and fraud. See sections  
6662, 6662A, and 6663.  
Foreign insurance companies, see Notice 90-13,  
1990-1 C.B. 321, before computing estimated tax.  
!
CAUTION  
Interest and Penalties  
Accounting Methods  
Figure taxable income using the method of accounting  
regularly used in keeping the corporation's books and  
records. In all cases, the method used must clearly show  
taxable income. Permissible methods include cash,  
accrual, or any other method authorized by the Internal  
Revenue Code.  
If the corporation receives a notice about penalties  
after it files its return, send the IRS an explanation  
!
CAUTION  
and we will determine if the corporation meets the  
criteria for the reasonable-cause exception to the  
penalties. Do not attach an explanation when the  
corporation's return is filed.  
The gross amounts of underwriting and investment  
income should be computed on the basis of the Statement  
of Income of the NAIC annual statement to the extent not  
inconsistent with the Internal Revenue Code and its  
regulations. In all cases, the method used must clearly  
show taxable income.  
Change in accounting method. Generally, the  
corporation must get IRS consent to change either an  
overall method of accounting or the accounting treatment  
of any material item for income tax purposes. To obtain  
consent, the corporation must generally file Form 3115,  
Application for Change in Accounting Method, during the  
tax year for which the change was requested. See the  
Instructions for Form 3115 and Pub. 538, Accounting  
Periods and Methods, for more information and  
exceptions, including filing exceptions for qualified small  
business taxpayers. Also see the Instructions for Form  
3115 for procedures that may apply for obtaining  
automatic consent to change certain methods of  
accounting, non-automatic change procedures, and  
reduced Form 3115 filing requirements.  
Interest. Interest is charged on taxes paid late even if an  
extension of time to file is granted. Interest is also charged  
on penalties imposed for failure to file, negligence, fraud,  
substantial valuation misstatements, substantial  
understatements of tax, and reportable transaction  
understatements from the due date (including extensions)  
to the date of payment. The interest charge is figured at a  
rate determined under section 6621.  
Late filing of return. A corporation that does not file its  
tax return by the due date, including extensions, may be  
penalized 5% of the unpaid tax for each month or part of a  
month the return is late, up to a maximum of 25% of the  
unpaid tax. The minimum penalty for a tax return required  
to be filed in 2024 that is over 60 days late is the smaller of  
the tax due or $485 (adjusted for inflation). The penalty  
will not be imposed if the corporation can show that the  
failure to file on time was due to reasonable cause. See  
Caution, earlier.  
Late payment of tax. A corporation that does not pay  
the tax when due may generally be penalized 1/2 of 1% of  
the unpaid tax for each month or part of a month the tax is  
not paid, up to a maximum of 25% of the unpaid tax. See  
Caution, earlier.  
Safe harbor method of accounting for premium ac-  
quisition expenses. Insurance companies subject to tax  
under section 831 are provided with a safe harbor method  
of accounting for premium acquisition expenses. Form  
3115 must be filed in order to change to the safe harbor  
method. For more information, see the Instructions for  
Form 3115.  
Trust fund recovery penalty. This penalty may apply if  
certain excise, income, social security, and Medicare  
taxes that must be collected or withheld are not collected  
or withheld, or these taxes are not paid. These taxes are  
generally reported on:  
Certain changes in method of accounting for organi-  
Form 720, Quarterly Federal Excise Tax Return;  
zations to which section 833 applies. Blue Cross or  
Instructions for Form 1120-PC (2023)  
5
             
Blue Shield organizations under section 833(c)(2), or  
organizations described in section 833(c)(3), can obtain  
automatic consent to change the method of accounting for  
unearned premiums resulting from either a failure to meet  
the medical loss ratio (MLR) requirements of section  
833(c)(5), or meeting the MLR requirements after failing to  
do so in a prior year. Form 3115 must be filed in order to  
make this change in accounting method. See the  
Instructions for Form 3115.  
section 1.351-3(d)(1)) that receives stock of a corporation  
in exchange for property in a nonrecognition event must  
include the statement required by Regulations section  
1.351-3(a) on or with the transferor's tax return for the tax  
year of the exchange. The transferee corporation must  
include the statement required by Regulations section  
1.351-3(b) on or with its return for the tax year of the  
exchange, unless all the required information is included  
in any statement(s) provided by a significant transferor  
that is attached to the same return for the same section  
351 exchange. If the transferor or transferee corporation is  
a controlled foreign corporation (CFC), each U.S.  
Accounting Period  
An insurance company must figure its taxable income on  
the basis of a tax year. A tax year is the annual accounting  
period an insurance company uses to keep its records  
and report its income and expenses.  
shareholder (within the meaning of section 951(b)) must  
include the required statement on or with its return.  
Distributions under section 355. Every corporation that  
makes a distribution of stock or securities of a controlled  
corporation, as described in section 355 (or so much of  
section 356 as it relates to section 355), must include the  
statement required by Regulations section 1.355-5(a) on  
or with its return for the year of the distribution. A  
significant distributee (as defined in Regulations section  
1.355-5(c)) that receives stock or securities of a controlled  
corporation must include the statement required by  
Regulations section 1.355-5(b) on or with its return for the  
year of receipt. If the distributing or distributee corporation  
is a CFC, each U.S. shareholder (within the meaning of  
section 951(b)) must include the statement on or with its  
return.  
As a general rule under section 843, the tax year for  
every insurance company is the calendar year. However, if  
an insurance company joins in the filing of a consolidated  
return, it may adopt the tax year of the common parent  
corporation even if that year is not a calendar year.  
Rounding Off to Whole Dollars  
The corporation may enter decimal points and cents when  
completing its tax return. However, the corporation should  
round off cents to whole dollars on its return, forms, and  
schedules to make completing its return easier. The  
corporation must either round off all amounts on its return  
to whole dollars, or use cents for all amounts. To round,  
drop amounts under 50 cents and increase amounts from  
50 to 99 cents to the next dollar. For example, $8.40  
rounds to $8 and $8.50 rounds to $9.  
Dual-consolidated losses. If a domestic corporation  
incurs a dual-consolidated loss (as defined in Regulations  
section 1.1503(d)-1(b)(5)), the corporation (or  
If two or more amounts must be added to figure the  
amount to enter on a line, include cents when adding the  
amounts and round off only the total.  
consolidated group) may need to attach a domestic use  
agreement and/or an annual certification, as provided in  
Regulations sections 1.1503(d)-6(d) and (g).  
Election to reduce basis under section 362(e)(2)(C).  
If property is transferred to a corporation subject to section  
362(e)(2), the transferor and the transferee corporation  
may elect, under section 362(e)(2)(C), to reduce the  
transferor's basis in the stock received instead of reducing  
the transferee corporation's basis in the property  
transferred. Once made, the election is irrevocable. For  
more information, see section 362(e)(2) and Regulations  
section 1.362-4. If an election is made, a statement must  
be filed in accordance with Regulations section 1.362-4(d)  
(3).  
Recordkeeping  
Keep the corporation's records for as long as they may be  
needed for the administration of any provision of the  
Internal Revenue Code. Usually, records that support an  
item of income, deduction, or credit on the return must be  
kept for 3 years from the date the return is due or filed,  
whichever is later. Keep records that verify the  
corporation's basis in property for as long as they are  
needed to figure the basis of the original or replacement  
property.  
The corporation should keep copies of all filed returns.  
They help in preparing future and amended returns and in  
the calculation of earnings and profits.  
Other forms and statements. See Pub. 542,  
Corporations, for a list of other forms and statements a  
corporation may need to file in addition to the forms and  
statements discussed throughout these instructions.  
Other Forms and Statements That  
May Be Required  
Reportable transaction disclosure statement.  
Participants in any reportable transaction must file Form  
8886, Reportable Transaction Disclosure Statement. See  
the Instructions for Form 8886.  
Reportable transactions by material advisors.  
Material advisors to any reportable transaction must file  
Form 8918, Material Advisor Disclosure Statement. See  
the Instructions for Form 8918.  
Specific Instructions  
Period Covered  
Generally, file the 2023 return for calendar year 2023.  
However, if an insurance company joins in the filing of a  
consolidated return, it may adopt the tax year of the  
common parent corporation even if that year is not a  
calendar year. For a fiscal or short tax year return, fill in the  
tax year space at the top of the form.  
Transfers to a corporation controlled by the transfer-  
or. Every significant transferor (as defined in Regulations  
6
Instructions for Form 1120-PC (2023)  
             
eliminating entries for intercompany transactions between  
corporations within the consolidated group. Attach  
consolidated balance sheets and a reconciliation of  
consolidated retained earnings.  
Name and Address  
Enter the corporation's true name (as set forth in the  
charter or other legal document creating it), address, and  
EIN on the appropriate lines. Enter the address of the  
corporation's principal office or place of business. Include  
the suite, room, or other unit number after the street  
address. If the post office does not deliver mail to the  
street address and the corporation has a P.O. box, show  
the box number instead.  
For more information on consolidated returns, see the  
regulations under section 1502.  
Note. If a nonlife insurance company is a member of an  
affiliated group, file Form 1120-PC as an attachment to the  
consolidated return in addition to the supporting  
statements discussed earlier. Across the top of page 1 of  
Form 1120-PC, enter “Supporting Statement to  
Consolidated Return.”  
Note. Do not use the address of the registered agent for  
the state in which the corporation is incorporated. For  
example, if a business is incorporated in Delaware or  
Nevada and the corporation's principal office is located in  
Little Rock, Arkansas, the corporation should enter the  
Little Rock address.  
If the corporation has a foreign address, include the city  
or town, state or province, country, and foreign postal  
code. Do not abbreviate the country name. Follow the  
country's practice for entering the name of the state or  
province and postal code.  
Life-Nonlife Consolidated Return  
If the corporation is the common parent of a life-nonlife  
consolidated group, check Item A, boxes 1 and 2.  
Filing requirements. The common parent of a  
life-nonlife consolidated group is required to do the  
following.  
File the applicable consolidated corporate income tax  
return as one of the following: a Form 1120-L, where the  
common parent is a life insurance company; a Form  
1120-PC, where the common parent is an insurance  
company, other than a life insurance company; or a Form  
1120, where the common parent is any other type of  
corporation.  
If the corporation receives its mail in care of a third  
party (such as an accountant or an attorney), enter on the  
street address line “C/O” followed by the third party's  
name and street address or P.O. box.  
Item A. Identifying Information  
Consolidated Return  
If an affiliated group of corporations includes one or more  
domestic life insurance companies taxed under section  
801, the common parent may elect to treat those  
companies as includible corporations. The life insurance  
companies must have been members of the group for the  
5 tax years immediately preceding the tax year for which  
the election is made. See section 1504(c)(2) and  
Regulations section 1.1502-47(b)(12).  
Indicate clearly on the face of the return that the  
corporate tax return is a life-nonlife return. This  
requirement is satisfied by checking Item A, boxes 1 and  
2.  
Show any setoffs required by paragraphs (e), (h), and  
(j) of Regulations section 1.1502-47.  
Report separately the nonlife consolidated taxable  
income or loss, determined under Regulations section  
1.1502-47(f), on a Form 1120 or 1120-PC (whether filed  
by the common parent or as an attachment to the  
consolidated return), for all nonlife members of the  
consolidated group.  
Corporations filing a consolidated return must check  
Item A, box 1, and attach Form 851, Affiliations Schedule,  
and other supporting statements to the return. Also, for the  
first year a subsidiary corporation is being included in a  
consolidated return, attach Form 1122, Authorization and  
Consent of Subsidiary Corporation To Be Included in a  
Consolidated Income Tax Return, to the parent's  
Report separately the consolidated life insurance  
company taxable income (as defined by Regulations  
section 1.1502-47(b)(3)) determined under Regulations  
section 1.1502-47, on a Form 1120-L (whether filed by the  
common parent or as an attachment to the consolidated  
return), for all life members of the consolidated group.  
consolidated return. Attach a separate Form 1122 for each  
new subsidiary being included in the consolidated return.  
Schedule M-3 (Form 1120-PC)  
A nonlife insurance company with total assets  
(nonconsolidated or consolidated for all companies  
included within a tax consolidation group) of $10 million or  
more on the last day of the tax year must file  
File supporting statements for each corporation  
included in the consolidated return. Do not use Form  
1120-PC as a substitute for the supporting statement. On  
the supporting statement, use columns to show the  
following, both before and after adjustments.  
Schedule M-3 (Form 1120-PC) instead of Schedule M-1.  
A corporation filing Form 1120-PC that is not required to  
file Schedule M-3 may voluntarily file Schedule M-3  
instead of Schedule M-1.  
1. Items of gross income and deductions.  
2. A computation of taxable income.  
3. Balance sheets as of the beginning and end of the  
If you are filing Schedule M-3 (Form 1120-PC), check  
Item A, box 3, at the top of page 1 of Form 1120-PC. See  
the Instructions for Schedule M-3 (Form 1120-PC) for  
more details.  
tax year.  
4. A reconciliation of income per books with income  
per return.  
5. A reconciliation of retained earnings.  
Note. If you do not file Schedule M-3 (Form 1120-PC)  
with Form 1120-PC, see Reconciliation under Statements,  
earlier.  
Enter on Form 1120-PC the totals for each item of  
income, gain, loss, expense, or deduction, net of  
Instructions for Form 1120-PC (2023)  
7
         
2. Section 953(d) to be treated as a domestic  
corporation.  
Item B. Employer Identification  
Number (EIN)  
Generally, a foreign corporation making either section  
953 election must file its return by sending it to:  
Enter the corporation's EIN. If the corporation does not  
have an EIN, it must apply for one. An EIN can be applied  
for in any of the following ways.  
Internal Revenue Service Center  
P.O. Box 409101  
Online—Go to  
IRS.gov/EIN. The EIN is issued immediately once the  
Ogden, UT 84409  
application information is validated.  
By faxing or mailing Form SS-4, Application for  
See Notice 87-50, 1987-2 C.B. 357; and Rev. Proc.  
2003-47, 2003-28 I.R.B. 55, for the procedural rules,  
election statement formats, and filing addresses for  
making the respective elections under section 953(c)(3)  
(C) or section 953(d).  
Once either election is made, it will apply to the tax year  
for which made and all subsequent tax years unless  
revoked with the consent of the IRS. Also, any loss of a  
foreign corporation electing to be treated as a domestic  
insurance company under section 953(d) will be treated  
as a dual-consolidated loss and may not be used to  
reduce the taxable income of any other member of the  
affiliated group for this tax year or any other tax year.  
Employer Identification Number.  
Corporations located in the United States or U.S.  
territories can use the online application. Foreign  
!
CAUTION  
corporations may call 267-941-1099 (not a  
toll-free number) for more information on obtaining an EIN.  
See the Instructions for Form SS-4.  
EIN applied for, but not received. If the corporation has  
not received its EIN by the time the return is due, enter  
“Applied For” and the date the corporation applied in the  
space for the EIN. However, if the corporation is filing its  
return electronically, an EIN is required at the time the  
return is filed. An exception applies to subsidiaries of  
corporations whose returns are filed with the parent's  
electronically filed consolidated Form 1120. These  
subsidiaries should enter “Applied For” in the space for the  
EIN on their returns. The subsidiaries' returns are  
identified under the parent corporation's EIN.  
If a section 953(d) election is made, include the  
additional tax required to be paid on page 1, line 14. On  
the dotted line to the left of line 14, enter “Section 953(d)”  
and the amount. Attach a statement showing the  
computation. See section 953(d) for more details.  
Note. A captive insurance company can make an election  
under section 831(b) and an election under section 953(d)  
if it is a foreign insurance company.  
For more information, see the Instructions for Form  
SS-4.  
Item D. Section 831(b) and Section  
953 Elections  
Item E. Final Return, Name Change,  
Address Change, or Amended Return  
Check the applicable box(es) if an election is made under  
section(s) 831(b), 953(c)(3)(C), or 953(d).  
Indicate a final return, name change, address change, or  
amended return by checking the appropriate box.  
Section 831(b) election. Check the 831(b) box if the  
insurance company elects to be taxed on taxable  
investment income in lieu of the tax otherwise applicable  
under section 831(a). Section 831(b) applies to a small  
company, as defined under section 831(b)(2)(A), if such  
company meets the diversification requirements of section  
831(b)(2)(B) and such corporation elects the application  
of section 831(b) for such tax year under section 831(b)(2)  
(A)(iii). See the instructions for Schedule I, Question 14,  
later. See Regulations section 301.9100-8(a) for the rules  
regarding the timing and manner of making the election  
under section 831(b)(2)(A)(iii).  
Note. The election under section 831(b)(2)(A)(iii) applies  
to the tax year for which made and for all subsequent tax  
years for which a corporation is a small company, as  
defined under section 831(b)(2)(A), and such corporation  
meets the diversification requirements of section 831(b)  
(2)(B). Once made, an election under section 831(b)(2)(A)  
(iii) may only be revoked with the consent of the Secretary.  
Note. If a change in address or responsible party occurs  
after the return is filed, use Form 8822-B, Change of  
Address or Responsible Party — Business, to notify the  
IRS. See the instructions for Form 8822-B for details.  
Taxable Income  
Line 1, Taxable income, and line 2, Taxable invest-  
ment income. If the corporation is a small company as  
defined in section 831(b)(2) and elects under section  
831(b)(2)(A)(iii) to be taxed on taxable investment income,  
complete Schedule B (ignore Schedule A) and enter the  
amount from Schedule B, line 21, on page 1, line 2. Also,  
complete Schedule I, Question 14. All other corporations  
should complete Schedule A (ignore Schedule B) and  
enter on page 1, line 1, the amount from Schedule A,  
line 37.  
Tax Computation and Payments  
Line 3. Income tax. Multiply taxable income (page 1,  
line 1) by 21%. (0.21). Enter this amount on line 3.  
Deferred tax under section 1291. If the corporation  
was a shareholder in a passive foreign investment  
company (PFIC) and received an excess distribution or  
disposed of its investment in the PFIC during the year, it  
must include the total increase in taxes due under section  
Section 953 elections. Check the applicable box if the  
corporation is a foreign corporation and elects under:  
1. Section 953(c)(3)(C) to treat its related person  
insurance income as effectively connected with the  
conduct of a trade or business in the United States, or  
8
Instructions for Form 1120-PC (2023)  
           
1291(c)(2) from Form 8621 in the amount entered on  
line 3. On the dotted line next to line 3, enter “Section  
1291” and the amount.  
Do not include on line 3 any interest due under section  
1291(c)(3). Instead, include the amount of interest owed  
on line 12z.  
Line 8d. Credit for prior year minimum tax. Enter any  
allowable credit from Form 8827, Credit for Prior Year  
Minimum Tax—Corporations. Complete and attach Form  
8827.  
Line 8e. Bond credits from Form 8912. Enter the  
allowable credits from Form 8912, Credit to Holders of Tax  
Credit Bonds, line 12.  
For more information on reporting the deferred tax and  
interest, see the Instructions for Form 8621.  
Line 8f. Total credits. Add lines 8a through 8e. Enter the  
Additional tax under section 197(f). A corporation  
that elects to recognize gain and pay tax on the sale of a  
section 197 intangible under the related person exception  
to the anti-churning rules should include any additional tax  
due in the total for line 3. On the dotted line next to line 3,  
enter “Section 197” and the amount. See section 197(f)(9)  
(B)(ii).  
total on line 8f.  
Line 10. Foreign corporations. A foreign corporation  
carrying on an insurance business in the United States is  
taxed as a domestic insurance company on its income  
effectively connected with the conduct of a trade or  
business in the United States (see sections 864(c) and  
897 for a definition).  
Generally, any other U.S.-source income received by  
the foreign corporation is taxed at 30% (or at a lower treaty  
rate) under section 881. If the corporation has this income,  
attach a statement showing the kind and amount of  
income, the tax rate, and the amount of tax. Enter the tax  
on line 10. However, see Reduction of section 881 tax,  
later.  
Line 4. Enter amount of tax that a reciprocal must in-  
clude. A mutual insurance company that is an  
interinsurer or reciprocal underwriter may elect, under  
section 835, to limit the deduction for amounts paid or  
incurred to a qualifying attorney-in-fact to the amount of  
the deductions of the attorney-in-fact allocable to the  
income received by the attorney-in-fact from the  
reciprocal. If this election is made, any increase in taxable  
income of a reciprocal as a result of this limitation is taxed  
at the highest rate of tax specified in section 11(b).  
Note. Interest received from certain portfolio debt  
investments that were issued after July 18, 1984, is not  
subject to the tax. See section 881(c).  
Make no entry on line 4 if the mutual insurance  
company's taxable income before including the section  
835(b) amount is $100,000 or more. Otherwise, this tax is  
21% of the section 835(b) amount. If an entry is made on  
line 4, attach a statement showing how the tax was  
computed.  
Reciprocal underwriters making the section 835(a)  
election are allowed a credit on line 15f for the amount of  
tax paid by the attorney-in-fact that is related to the  
income received by the attorney-in-fact from the reciprocal  
in the tax year.  
See section 835 and the related regulations for special  
rules and information regarding the statements required to  
be attached to the return.  
Line 5. Base erosion minimum tax amount. If the  
corporation had gross receipts of at least $500 million in  
any 1 of the 3 preceding tax years, see section 59A and  
the Instructions for Form 8991 for further guidance on the  
determination of the amount of base erosion minimum tax.  
Line 6. Corporate alternative minimum tax. Enter on  
line 6 the amount from Form 4626, Alternative Minimum  
Tax—Corporations, Part II, line 13, if applicable. See the  
Instructions for Form 4626.  
Line 8a. Foreign tax credit. To find out when a  
corporation can take the credit for payment of income tax  
to a foreign country or U.S. territory, see Form 1118,  
Foreign Tax Credit—Corporations.  
Line 8b. Credit from Form 8834. Enter any qualified  
electric vehicle passive activity credits from prior years  
allowed for the current tax year from Form 8834, Qualified  
Electric Vehicle Credit, line 7. Attach Form 8834.  
Line 8c. General business credit. Enter on line 8c the  
allowable credit from Form 3800, General Business  
Credit, Part II, line 38. See the Instructions for Form 3800.  
See section 842 for more information.  
Minimum effectively connected net investment  
income. See section 842(b) and Notice 89-96, 1989-2  
C.B. 417, for the general rules for computing this amount.  
Also, see Rev. Proc. 2023-21, 2023-19 I.R.B. 837 (or any  
successor), available at IRS.gov/irb/2023-19_IRB#REV-  
PROC-2023-21, for the domestic asset/liability  
percentages and domestic investment yields needed to  
compute this amount.  
Any additional income required by section 842(b) must  
be included in taxable income (for example, Schedule A,  
line 13).  
Reduction of section 881 tax. Additional taxes  
resulting from the net investment income adjustment may  
offset a corporation's section 881 tax on U.S.-source  
income. The tax reduction is determined by multiplying the  
section 881 tax by the ratio of the amount of income  
adjustment to income subject to the section 881 tax,  
computed without the exclusion for interest on state and  
local bonds or income exempted from taxation by treaty.  
See section 842(c)(1). Attach a statement showing how  
the reduction under section 881 was figured. Enter the net  
tax imposed by section 881 on line 10.  
Line 11. Personal holding company tax. A corporation  
(other than a corporation described in section 542(c)) is  
taxed as a personal holding company (PHC) under  
section 542 if:  
At least 60% of its adjusted ordinary gross income for  
the tax year is PHC income, and  
At any time during the last half of the tax year more than  
50% in value of its outstanding stock is directly or  
indirectly owned by five or fewer individuals.  
Instructions for Form 1120-PC (2023)  
9
               
See Schedule PH (Form 1120), U.S. Personal Holding  
Company (PHC) Tax, for definitions and details on how to  
figure the tax.  
Line 12a. Recapture of investment credit. If the  
corporation disposed of investment credit property or  
changed its use before the end of the 5-year recapture  
period under section 50(a), enter the increase in tax from  
Form 4255, Recapture of Investment Credit. See the  
Instructions for Form 4255.  
Line 12b. Recapture of low-income housing credit. If  
the corporation disposed of property (or there was a  
reduction in the qualified basis of the property) for which it  
took the low-income housing credit, and the corporation  
did not follow the procedures that would have prevented  
recapture of the credit, it may owe a tax. See Form 8611,  
Recapture of Low-Income Housing Credit. Complete and  
attach Form 8611.  
Line 15f. Credit by reciprocal for tax paid by attor-  
ney-in-fact under section 835(d). Enter the amount of  
tax paid by an attorney-in-fact as a result of income  
received by the attorney-in-fact from the reciprocal during  
the tax year. For more information, see section 835 and  
the related regulations, and the instructions for line 4,  
earlier.  
Line 15g. Elective payment election amount from  
Form 3800. Enter on line 15g the total net elective  
payment election amount from Form 3800, Part III, line 6,  
column (i). See the Instructions for Form 3800.  
Line 15z. Other credits and payments. Enter the  
amount of any other credits the corporation may take  
and/or payments made. Enter an explanation of the entry  
to the left of the entry space.  
Backup withholding. If the corporation had federal  
income tax withheld from any payments it received  
because, for example, it failed to give the payer its correct  
EIN, include the amount withheld in the total for line 15z.  
Enter the amount withheld and the words “Backup  
Withholding” on the dotted line to the left of the entry  
space for line 15z.  
Line 12z. Other. If the corporation includes any  
additional taxes and interest such as the items discussed  
below, attach a statement showing the computation of  
each item included in the total for line 12z and identify the  
applicable Code section and the type of tax or interest.  
Recapture of Indian employment credit. Generally, if an  
Line 16. Total. Combine the amounts on lines 15d  
employer terminates the employment of a qualified  
employee less than 1 year after the date of initial  
employment, any Indian employment credit allowed for a  
prior tax year because of wages paid or incurred to that  
employee must be recaptured. See Form 8845 and  
section 45A.  
through 15z and enter the total on line 16.  
Line 17. Estimated tax penalty. Generally, the  
corporation does not have to file Form 2220 with its  
income tax return because the IRS will figure the amount  
of any penalty and notify the corporation of any amount  
due. However, see the Instructions for Form 2220 for  
circumstances where the corporation must file Form 2220  
even if it owes no penalty.  
Recapture of new markets credit (see Form 8874, New  
Markets Credit, and Form 8874-B, Notice of Recapture  
Event for New Markets Credit).  
Recapture of employer-provided childcare facilities and  
If Form 2220 is attached, check the box on line 17 and  
services credit (see Form 8882).  
Interest on deferred tax attributable to certain nondealer  
enter any penalty on this line.  
If the corporation's tax liability includes a CAMT  
installment obligations (see section 453A(c)).  
liability, the corporation must complete and attach  
!
Interest due on deferred gain (see section 1260(b)).  
Interest due under section 1291(c)(3). See Form 8621  
CAUTION  
Form 2220. The affected corporation must also  
include an amount of estimated tax penalty on Form  
1120-PC, line 17, even if that amount is zero. Failure to  
follow these instructions could result in the corporation  
receiving a penalty notice that will require an abatement  
request to apply any penalty relief. See Notice 2023-42.  
and its instructions.  
Alternative tax on qualifying shipping activities (see  
Form 8902).  
Line 14. Total tax. Include any deferred tax on the  
termination of a section 1294 election applicable to  
shareholders in a qualified electing fund (QEF) in the  
amount entered on line 14.  
Subtract any deferred tax on the corporation's share of  
undistributed earnings of a QEF (see Form 8621).  
How to report. Attach a statement showing the  
computation of each item included in, or subtracted from,  
the total for line 14. On the dotted line next to line 14,  
specify (a) the applicable Code section, (b) the type of tax,  
and (c) the amount of tax.  
Line 15c. Current year’s refund applied for on Form  
4466. If the corporation overpaid estimated tax, it may be  
able to get a quick refund by filing Form 4466. The  
overpayment must be at least 10% of the corporation's  
expected income tax liability and at least $500. File Form  
4466 after the end of the corporation's tax year, and no  
later than the due date for filing the corporation’s tax  
return. Form 4466 must be filed before the corporation  
files its tax return. See the instructions for Form 4466.  
Line 18. Amount owed. If the corporation cannot pay  
the full amount of tax owed, it can apply for an installment  
agreement online. Go to IRS.gov/OPA for the latest  
information.  
Line 20. Electronic deposit of tax refund of $1 million  
or more. If the corporation is due a refund of $1 million or  
more and wants it electronically deposited into its  
checking or savings account at any U.S. bank or other  
financial institution instead of having a check sent to the  
corporation, complete Form 8302 and attach it to the  
corporation's tax return.  
Schedule A—Taxable Income  
Gross income. Under section 832, gross amounts of  
underwriting and investment income should be computed  
on the basis of the Statement of Income of the NAIC  
10  
Instructions for Form 1120-PC (2023)  
               
annual statement to the extent not inconsistent with the  
Internal Revenue Code and its regulations.  
The net capital loss for these corporations is the  
amount by which losses for the year from sales or  
exchanges of capital assets exceed the gains from these  
sales or exchanges plus the smaller of:  
Income from qualifying shipping activities. Gross  
income does not include income from qualifying shipping  
activities if the corporation makes an election under  
section 1354 to be taxed on its notional shipping income  
(as defined in section 1353) at the highest corporate tax  
rate specified in section 11. If the election is made, the  
corporation may generally not claim any loss, deduction,  
or credit with respect to qualifying shipping activities. A  
corporation making this election may also elect to defer  
gain on the disposition of a qualifying vessel.  
1. Taxable income (computed without gains or losses  
from sales or exchanges of capital assets); or  
2. Losses from the sale or exchange of capital assets  
sold or exchanged to obtain funds to meet abnormal  
insurance losses and to provide for the payment of  
dividends and similar distributions to policyholders.  
Subject to the limitations in section 1212(a), a net  
capital loss can be carried back 3 years and forward 5  
years as a short-term capital loss.  
Line 8. Certain mutual fire or flood insurance compa-  
ny premiums. A mutual fire or flood insurance company  
whose principal business is the issuance of policies (1) for  
which the premium deposits are the same (regardless of  
the length of the term the policies are written for), and (2)  
under which the unabsorbed portion of such premium  
deposits not required for losses, expenses, or  
Use Form 8902, Alternative Tax on Qualifying Shipping  
Activities, to figure the tax. Include the alternative tax on  
Form 1120-PC, page 1, line 12z.  
Note. In computing the amounts for lines 2, 3, and 4, take  
all interest, dividends, or rents received during the year;  
add interest, dividends, or rents due and accrued at the  
end of the tax year; and deduct interest, dividends, or  
rents due and accrued at the end of the preceding tax  
year. For rules regarding the accrual of dividends, see  
Regulations section 1.301-1(b).  
Line 3a, column (a). Interest (including tax-exempt  
interest). Enter the gross amount of interest income,  
including all tax-exempt interest.  
establishment of reserves is returned or credited to the  
policyholder on cancellation or expiration of the policy,  
must include in income an amount equal to 2% of the  
premiums earned on insurance contracts during the tax  
year with respect to such policies after deduction of  
premium deposits returned or credited during the same  
tax year.  
Line 9. Income on account of special income and de-  
duction accounts. Corporations which write the kinds of  
insurance below must maintain the following special  
accounts. A corporation which writes:  
Line 3b, column (a). Interest exempt under section  
103. Section 103(a) excludes interest on state or local  
bonds from gross income.  
This exclusion does not apply to any:  
1. Private activity bond which is not a qualified bond,  
as defined by section 141;  
1. Mortgage guaranty insurance must maintain a  
2. Arbitrage bond, as defined by section 148; or  
mortgage guaranty account,  
3. Bonds not meeting the requirements of section 149  
2. Lease guaranty insurance must maintain a lease  
guaranty account, and  
(regarding the registration of tax-exempt bonds).  
3. Insurance on obligations the interest on which is  
excludable from gross income under section 103 must  
maintain an account with respect to insurance on state  
and local obligations.  
Lines 3a and 3b, column (b). Amortization of premi-  
um. Enter on line 3a, column (b), the total amortization of  
bond premium, including amortization on tax-exempt  
bonds. Enter on line 3b, column (b), the amortization of  
bond premium on tax-exempt bonds only.  
Amounts required to be subtracted from these  
accounts under sections 832(e)(5) and 832(e)(6) must be  
reported as income on line 9. See section 832(e) for more  
information.  
Line 10. Income from protection against loss ac-  
count. Although section 1024 of P.L. 99-514 repealed  
section 824 relating to the protection against loss (PAL)  
account, PAL account balances are includible in income  
as though section 824 were still in effect. Attach a  
statement showing the computation.  
Line 11. Mutual interinsurers or reciprocal underwrit-  
ers—decrease in subscriber accounts. Enter the  
decrease for the tax year in savings credited to subscriber  
accounts of a mutual insurance company that is an  
interinsurer or a reciprocal underwriter.  
Line 13. Other income. Enter any other taxable income  
not reported on lines 1 through 11. List the type and  
amount of income on an attached statement. If the  
corporation has only one item of other income, describe it  
Note. Insurance companies electing to amortize discount  
for tax purposes must reduce the amortization of premium  
by any amortization of discount.  
Line 4. Gross rents. Enter gross rents, computed as  
indicated under Gross income, earlier. Deduct expenses,  
such as repairs, interest, taxes, and depreciation, on the  
proper lines for deductions.  
Line 6. Capital gain net income. Every sale or  
exchange of a capital asset must be reported in detail on  
Schedule D (Form 1120), Capital Gains and Losses, even  
if there is no gain or loss.  
Generally, losses from sales or exchanges of capital  
assets are only allowed to the extent of gains. However,  
corporations taxed under section 831 may claim losses  
from capital assets sold or exchanged to get funds to  
meet abnormal insurance losses and to pay dividends and  
similar distributions to policyholders. Do not include those  
types of losses here; instead, report them on Schedule G.  
Instructions for Form 1120-PC (2023)  
11  
 
in parentheses on line 13. Examples of other income to  
report on line 13 include the following.  
the last day of any calendar quarter in which the credit is  
allowed.  
Any income under P.L. 115-97, section 13517(c)(3)(B)  
Note. A credit is available only if the leave was taken after  
March 31, 2020, and before October 1, 2021, and only  
after the qualified leave wages were paid, which might,  
under certain circumstances, not occur until a quarter  
after September 30, 2021, including quarters in 2023.  
(ii) (transitional relief for change in reserve).  
Any amount includible in income from Form 6478,  
Biofuel Producer Credit.  
Any amount includible in income from Form 8864,  
Biodiesel, Renewable Diesel, or Sustainable Aviation  
Fuels Credit.  
Deductions  
Refunds of taxes deducted in prior years to the extent  
they reduced income subject to tax imposed. See section  
111 and the related regulations. Do not offset current-year  
taxes against tax refunds.  
Limitations on Deductions  
Section 263A uniform capitalization rules. The  
uniform capitalization rules of section 263A require  
corporations to capitalize certain costs.  
A small business taxpayer is not required to capitalize  
costs under section 263A. A small business taxpayer that  
wants to discontinue capitalizing costs under section  
263A must change its method of accounting. See section  
263A(i) and Regulations section 1.263A-1(j). Also, see the  
Instructions for Form 3115.  
For more information on the uniform capitalization rules,  
see Pub. 538. Also, see Regulations sections 1.263A-1  
through 1.263A-3.  
Transactions between related taxpayers. Generally,  
an accrual basis taxpayer can only deduct business  
expenses and interest owed to a related party in the year  
the payment is included in the income of the related party.  
See sections 163(e)(3) and 267 for limitations on  
deductions for unpaid interest and expenses.  
Limitations on business interest expense. Business  
interest expense may be limited. See section 163(j) and  
Form 8990, Limitation on Business Interest Expense  
Under Section 163(j). Also, see Limitation on deduction in  
the instructions for Schedule A, Line 20a and Schedule I,  
Question 18, later.  
Section 291 limitations. Corporations may be required  
to adjust certain deductions. See section 291 to determine  
the amount of the adjustment.  
Golden parachute payments. A portion of the  
payments made by a corporation to key personnel that  
exceeds their usual compensation may not be deductible.  
This occurs when the corporation has an agreement  
(golden parachute) with these key employees to pay them  
these excess amounts if control of the corporation  
changes. See section 280G and Regulations section  
1.280G-1. Also, see the instructions for line 15.  
Business start-up and organizational costs. A  
corporation can elect to deduct a limited amount of  
start-up and organizational costs it paid or incurred. Any  
remaining costs must generally be amortized over a  
180-month period. See sections 195 and 248 and the  
related regulations.  
Ordinary income from trade or business activities of a  
partnership from Schedule K-1 (Form 1065). Do not offset  
ordinary losses against ordinary income. Instead, include  
the losses on line 31. Show the partnership's name,  
address, and EIN on a separate statement attached to this  
return. If the amount entered is from more than one  
partnership, identify the amount from each partnership.  
The transferred loss amount identified as “Section 91  
Transferred Loss Amount.This amount is required to be  
recognized under section 91 resulting from a transfer of  
substantially all the assets of a foreign branch (within the  
meaning of section 367(a)(3)(C), as in effect before its  
repeal) to a specified 10%-owned foreign corporation (as  
defined in section 245A(b)) with respect to which the  
corporation was a U.S. shareholder immediately after the  
transfer as other income. Under section 91(d), transferred  
loss amounts recognized are treated as derived from  
sources within the United States.  
Part or all of the proceeds received from certain  
corporate-owned life insurance contracts issued after  
August 17, 2006. Corporations that own one or more  
employer-owned life insurance contracts issued after  
August 17, 2006, must file Form 8925, Report of  
Employer-Owned Life Insurance Contracts. See Form  
8925.  
One-eighth of any adjustment attributable to the  
application of the discount factors published in Rev. Proc.  
2019-06, 2019-02 I.R.B 284, available at IRS.gov/irb/  
2019-02_IRB#RP-2019-06, to unpaid losses for the tax  
year preceding the first tax year beginning after December  
31, 2017.  
The corporation's share of the following income from  
Form 8621, Information Return by a Shareholder of a  
Passive Foreign Investment Company or Qualified  
Electing Fund.  
1. Ordinary earnings of a QEF.  
2. Gain or loss from marking PFIC stock to market.  
3. Gain or loss from sale or other disposition of section  
1296 stock.  
4. Excess distributions from a section 1291 fund  
allocated to the current year and pre-PFIC years, if any.  
See Form 8621 and its instructions for details.  
Time for making an election. The corporation  
generally elects to deduct startup or organizational costs  
by claiming the deduction on its income tax return filed by  
the due date (including extensions) for the tax year in  
which the active trade or business begins. For more  
details including special rules for costs paid or incurred  
Any payroll tax credit taken by an employer on its 2023  
employment tax returns (Forms 941, 943, and 944) for  
qualified paid sick leave and qualified paid family leave  
under the FFCRA and the ARP (both the nonrefundable  
and refundable portions). The corporation must include  
the full amount of the credit for qualified sick and family  
leave wages in gross income for the tax year that includes  
12  
Instructions for Form 1120-PC (2023)  
         
before September 9, 2008, see the Instructions for Form  
4562, Depreciation and Amortization.  
Limitation on tax benefits for remuneration under the  
Patient Protection and Affordable Care Act. The $1  
million compensation limit is reduced to $500,000 for  
remuneration for services provided by individuals for or on  
behalf of certain health insurance providers. The  
If the corporation timely filed its return for the year  
without making an election, it can still make an election by  
filing an amended return within 6 months of the due date  
of the return (excluding extensions). Clearly indicate the  
election on the amended return and enter “Filed pursuant  
to Regulations section 301.9100-2” at the top of the  
amended return. File the amended return at the same  
address the corporation filed its original return. The  
election applies when figuring taxable income for the  
current tax year and all subsequent years.  
The corporation can choose to forgo the election by  
affirmatively electing to capitalize its start-up or  
organizational costs on its income tax return filed by the  
due date (including extensions) for the tax year in which  
the active trade or business begins.  
$500,000 limitation applies to remuneration that is  
deductible in the tax year during which the services were  
performed and remuneration for services during the year  
that is deductible in a future tax year (called “deferred  
deduction remuneration”). The $500,000 limitation is  
reduced by any amounts disallowed as excess parachute  
payments. See section 162(m)(6) and Regulations section  
1.162-31 for definitions and other special rules. Also, see  
Notice 2011-2, 2011-2 I.R.B. 260.  
Line 15. Compensation of officers. Enter deductible  
officers' compensation on line 15. See Employment  
credits, later, for employment credits that may reduce your  
deduction for officers' compensation. Do not include  
compensation deductible elsewhere on the return, such  
as elective contributions to a section 401(k) cash or  
deferred arrangement, or amounts contributed under a  
salary reduction SEP agreement or a SIMPLE IRA plan.  
Include only the deductible part of each officer's  
compensation on line 15. (See Disallowance of deduction  
Attach a statement for all officers using the following  
columns.  
Note. The election to either amortize or capitalize start-up  
costs is irrevocable and applies to all start-up costs that  
are related to the trade or business.  
Report the deductible amount of such costs and any  
amortization on Schedule A, line 31. For amortization that  
begins during the current tax year, complete and attach  
Form 4562.  
Reducing certain expenses for which credits are al-  
lowable. If the corporation claims certain credits, it may  
need to reduce allowable deductions for expenses used to  
figure the credit. This applies to credits such as the  
following.  
1. Name of officer.  
2. Social security number.  
3. Percentage of time devoted to business.  
4. Amount of compensation.  
Employment credits. See Employment credits, later.  
Credit for increasing research activities (Form 6765).  
Orphan drug credit (Form 8820).  
If a consolidated return is filed, each member of an  
affiliated group must furnish this information.  
Disallowance of deduction for employee compensa-  
tion in excess of $1 million. Publicly held corporations  
cannot deduct compensation to a “covered employee” to  
the extent that the compensation exceeds $1 million.  
Generally, a covered employee is:  
Disabled access credit (Form 8826).  
Employer credit for social security and Medicare taxes  
paid on certain employee tips (Form 8846).  
Credit for small employer pension plan start-up costs  
(Form 8881).  
Credit for employer-provided childcare facilities and  
services (Form 8882).  
The principal executive officer of the corporation (or an  
Credit for small employer health insurance premiums  
individual acting in that capacity) as of the end of the tax  
year, or  
(Form 8941).  
If the corporation has any of these credits, figure the  
current year credit before figuring the deduction for  
expenses on which the credit is based. If the corporation  
capitalized any costs on which it figured the credit, it may  
need to reduce the amount capitalized by the credit  
attributable to these costs.  
An employee whose total compensation must be  
reported to shareholders under the Securities Exchange  
Act of 1934 because the employee is among the three  
highest compensated officers for that tax year (other than  
the principal executive officer).  
For this purpose, compensation does not include the  
See the instructions for the form used to figure the  
following.  
applicable credit for more details.  
Income from certain employee trusts, annuity plans, or  
Limitations on deductions related to property leased  
to tax-exempt entities. If a corporation leases property  
to a governmental or other tax-exempt entity, the  
corporation cannot claim deductions related to the  
property to the extent that they exceed the corporation's  
income from the lease payments. This disallowed  
tax-exempt use loss can be carried over to the next tax  
year and treated as a deduction with respect to the  
property for that tax year. See section 470(d) for  
exceptions.  
pensions.  
Any benefit paid to an employee that is excluded from  
the employee's income.  
The deduction limit does not apply to:  
Commissions based on individual performance;  
Qualified performance-based compensation; and  
Income payable under a written, binding contract in  
effect on February 17, 1993.  
The $1 million limit is reduced by amounts disallowed  
as excess parachute payments under section 280G.  
Instructions for Form 1120-PC (2023)  
13  
   
See section 162(m) and Regulations section 1.162-27.  
Also, see Notice 2007-49, 2007-25 I.R.B. 1429.  
And the vehicle's FMV on the  
first day of the lease exceeded:  
The lease term began:  
Cars (excluding trucks and vans)  
Limitations on tax benefits for executive compensa-  
tion under the Treasury Troubled Asset Relief Pro-  
gram (TARP). The $1 million compensation limit is  
reduced to $500,000 for executive remuneration and  
deferred deduction executive remuneration paid to  
covered executives by any entity that receives or has  
received financial assistance under the TARP. The limit  
applies for each period in which obligations arising from  
financial assistance under the TARP remain outstanding.  
The $500,000 is reduced by any amounts disallowed as  
excess parachute payments. See section 162(m)(5) for  
definitions and other special rules. Also, see Notice  
2008-94, 2008-44 I.R.B. 1070, for additional guidance.  
After 12/31/22 but before 1/1/2024  
After 12/31/21 but before 1/1/23  
After 12/31/20 but before 1/1/22  
After 12/31/17 but before 1/1/21  
After 12/31/12 but before 1/1/18  
Trucks and Vans  
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$60,000  
$56,000  
$51,000  
$50,000  
$19,000  
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.
After 12/31/22 but before 1/1/24  
After 12/31/21 but before 1/1/23  
After 12/31/20 but before 1/1/22  
After 12/31/17 but before 1/1/21  
After 12/31/13 but before 1/1/18  
After 12/31/09 but before 1/1/14  
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$60,000  
$56,000  
$51,000  
$50,000  
$19,500  
$19,000  
In addition, a portion of any parachute payments made  
to a covered executive by an applicable employer  
participating in a TARP is not deductible as compensation  
if the payments are made because of a severance from  
employment during an applicable tax year. For this  
purpose, a parachute payment is any payment to a senior  
executive officer for departure from a company for any  
reason, except for payments for services performed or  
benefits accrued. These limits do not apply to a payment  
already treated as a parachute payment. See section  
280G(e) and Notice 2008-94.  
Line 16. Salaries and wages. Enter the total salaries  
and wages paid for the tax year. Do not include salaries  
and wages deductible elsewhere on the return, such as  
amounts included in officers' compensation, elective  
contributions to a section 401(k) cash or deferred  
arrangement, or amounts contributed under a salary  
reduction SEP agreement or a SIMPLE IRA plan.  
See Pub. 463, Travel, Gift, and Car Expenses, for  
instructions on figuring the inclusion amount.  
Note. The inclusion amount for lease terms beginning in  
2024 will be published in the Internal Revenue Bulletin in  
early 2024.  
Line 19. Taxes and licenses. Enter taxes paid or  
accrued during the tax year, but do not include the  
following.  
Federal income taxes.  
Foreign or U.S. territories income taxes if a tax credit is  
claimed.  
Taxes not imposed on the corporation.  
Taxes, including state or local sales taxes, that are paid  
or incurred in connection with an acquisition or disposition  
of property (these taxes must be treated as a part of the  
cost of the acquired property or, in the case of a  
disposition, as a reduction in the amount realized on the  
disposition).  
If the corporation provided taxable fringe benefits to its  
employees, such as the personal use of a car, do not  
deduct as wages the amount allocated for depreciation  
and other expenses that are claimed elsewhere on the  
return (for example, on Schedule A, line 22 or line 31).  
Taxes assessed against local benefits that increase the  
value of the property assessed (such as for paving, etc.).  
Taxes deducted elsewhere on the return.  
See section 164(d) for information on the  
If the corporation claims a credit for any wages  
apportionment of taxes on real property between a seller  
and a purchaser.  
paid or incurred, it may need to reduce any  
!
CAUTION  
corresponding deduction for salaries and wages.  
See Employment credits below.  
Note. Section 9010 of the Patient Protection and  
Affordable Care Act imposes a fee on each covered entity  
engaged in the business of providing health insurance for  
U.S. health risks. The fee is treated as a tax described in  
section 275 relating to taxes for which no deduction is  
allowed. For more information, see the final regulations  
and Rev. Rul. 2013-27.  
Employment credits. If the corporation claims a credit  
on any of the forms below, it may need to reduce its  
deduction for officers’ compensation and salaries and  
wages. See the applicable form for details.  
Form 5884, Work Opportunity Credit.  
Form 8844, Empowerment Zone Employment Credit.  
Form 8932, Credit for Employer Differential Wage  
Do not reduce the corporation's deduction for  
social security and Medicare taxes by the  
!
Payments.  
CAUTION  
nonrefundable and refundable portions of any  
Form 8994, Employer Credit for Paid Family and  
FFCRA and ARP credits for qualified sick and family leave  
wages claimed on its employment tax returns. Instead,  
report this amount as income on line 13.  
Medical Leave.  
Line 18. Rents. If the corporation rented or leased a  
vehicle, enter the total annual rent or lease expense paid  
or incurred during the year. Also, complete Form 4562,  
Part V. If the corporation leased a vehicle for a term of 30  
days or more, the deduction for the vehicle lease expense  
may have to be reduced by an amount includible in  
income called the inclusion amount. The corporation may  
have an inclusion amount if:  
Line 20a. Interest.  
Note. Do not offset interest income against interest  
expense.  
The corporation must allocate the interest expense if  
the proceeds of a loan were used for more than one  
14  
Instructions for Form 1120-PC (2023)  
   
purpose (for example, to purchase a portfolio investment  
and to acquire an interest in a passive activity). See  
Temporary Regulations section 1.163-8T for the interest  
allocation rules.  
For other special rules that apply to corporations, see Pub.  
542.  
Line 22. Depreciation. Include on line 22 depreciation  
and the cost of certain property that the corporation  
elected to expense under section 179. See Form 4562  
and the Instructions for Form 4562.  
Line 23. Depletion. If the corporation has an economic  
interest in mineral property or standing timber, it can take  
a deduction for depletion. In the case of leased property,  
the depletion deduction is divided between the lessor and  
the lessee.  
See sections 613 and 613A for percentage depletion  
rates applicable to natural deposits. Also, see section 291  
for the limitation on the depletion deduction for iron ore  
and coal (including lignite).  
Do not deduct the following interest.  
Interest on indebtedness incurred or continued to  
purchase or carry obligations if the interest is wholly  
exempt from income tax. See section 265(b) for special  
rules and exceptions for financial institutions. Also, see  
section 265(b)(7) for a temporary de minimis exception for  
financial institutions for certain tax-exempt bonds issued in  
2009 and 2010.  
Interest and carrying charges on straddles. Generally,  
these amounts must be capitalized. See section 263(g).  
Interest on debt allocable to the production of  
designated property by a corporation for its own use or for  
sale. The corporation must capitalize this interest. Also,  
capitalize any interest on debt allocable to an asset used  
to produce the property. See section 263A(f) and  
Regulations sections 1.263A-8 through 1.263A-15 for  
definitions and more information.  
Attach Form T (Timber), Forest Activities Schedule, if a  
deduction for depletion of timber is taken.  
There are special rules for intangible drilling and  
development costs incurred outside the United States.  
See section 263(i).  
Line 24. Pension, profit-sharing, etc., plans. Enter the  
deduction for contributions to qualified pension,  
profit-sharing, or other funded deferred compensation  
plans.  
Interest on unpaid taxes attributable to nondisclosed  
reportable transactions. See section 163(m).  
Limitation on deduction. Under section 163(j),  
business interest expense is generally limited to the sum  
of business interest income, 30% of the adjusted taxable  
income, and floor plan financing interest. The amount of  
any business interest expense that is not allowed as a  
deduction for the tax year is carried forward to the  
following year. If section 163(j) applies, use Form 8990 to  
figure the amount of business interest expense the  
corporation can deduct for the current tax year and the  
amount that can be carried forward to the next year. See  
the Instructions for Form 8990. Also see Schedule I,  
Question 18, later.  
Note. Employers who maintain a plan are generally  
required to file Form 5500, Form 5500-SF, or Form  
Form5500EZ for more information.  
Line 25. Employee benefit programs. Enter  
contributions to employee benefit programs not claimed  
elsewhere on the return (for example, insurance, health  
and welfare programs, etc.) that are not an incidental part  
of a pension, profit-sharing, etc., plan included on line 24.  
Special rules apply to the following.  
Forgone interest on certain below-market-rate loans  
Line 29. Dividends to policyholders. Enter the total  
dividends and similar distributions paid or declared to  
policyholders, as policyholders, except in the case of a  
mutual fire insurance company exclusively issuing  
perpetual policies. Whether dividends have been paid or  
declared should be determined according to the method  
of accounting employed by the insurance company.  
Dividends and similar distributions. Include amounts  
returned or credited to policyholders on cancellation or  
expiration of policies issued by a mutual fire or flood  
insurance company:  
(see section 7872).  
Original issue discount (OID) on certain high-yield  
discount obligations. See section 163(e)(5) to determine  
the disqualified amount of the deduction for OID that is  
deferred and the amount that is disallowed on a high-yield  
discount obligation. The rules under section 163(e)(5) do  
not apply to certain high-yield discount obligations issued  
before January 1, 2011. See section 163(e)(5)(F), and  
Notice 2010-11, 2010-4 I.R.B. 326.  
Interest which is allocable to unborrowed policy cash  
values of life insurance, endowment, or annuity contracts  
issued after June 8, 1997. See section 264(f). Attach a  
statement showing the computation of the deduction.  
1. Where the premium deposits for the policy are the  
same (regardless of the length of the policy); and  
2. The unabsorbed portion of the premium deposits  
not required for losses, expenses, or establishment of  
reserves is returned or credited to the policyholder on  
cancellation or expiration of the policy.  
Line 20b. Less tax-exempt interest expense. Enter  
interest paid or accrued during the tax year on  
indebtedness incurred or continued to purchase or carry  
obligations if the interest is wholly exempt from income  
tax. See section 265.  
Line 21. Charitable contributions. Include charitable  
contributions, as provided in section 170. See section 170  
and its regulations for limitations, carryover, exclusions,  
requirements, substantiation, and other rules.  
In the case of a qualified group self-insurers fund, the  
fund's deduction for policyholder dividends is allowed no  
earlier than the date the state regulatory authority  
determines the amount of the policyholder dividend that  
may be paid. See section 6076 of the Technical and  
Miscellaneous Revenue Act of 1988.  
For more information on charitable contributions,  
including substantiation and recordkeeping requirements,  
see section 170 and the related regulations and Pub. 526.  
Line 30. Mutual interinsurers or reciprocal underwrit-  
ers—increase in subscriber accounts. A mutual  
Instructions for Form 1120-PC (2023)  
15  
           
insurance company that is an interinsurer or reciprocal  
underwriter may deduct the increase in savings credited  
to subscriber accounts for the tax year.  
Savings credited to subscriber accounts means the  
surplus credited to the individual accounts of subscribers  
before the 16th day of the 3rd month following the close of  
the tax year. This is true only if the corporation would be  
required to pay this amount promptly to a subscriber if the  
subscriber ended the contract when the corporation's tax  
year ends.  
Line 31. Other deductions. Attach a statement listing by  
type and amount all allowable deductions under sections  
832(c)(1) and (10) (net of the annual statement change in  
undiscounted unpaid loss adjustment expenses) that are  
not deductible on lines 15 through 30.  
Lobbying expenses. However, see the exceptions  
discussed later.  
Amounts paid or incurred for any settlement, payout, or  
attorney fees related to sexual harassment or sexual  
abuse, if such payments are subject to a nondisclosure  
agreement. See section 162(q).  
Travel, meals, and entertainment. Subject to limitations  
and restrictions discussed below, a corporation can  
deduct ordinary and necessary travel, meals, and  
non-entertainment expenses paid or incurred in its trade  
or business. Generally, entertainment expenses,  
membership dues, and facilities used in connection with  
these activities cannot be deducted. In addition, no  
deduction is generally allowed for qualified transportation  
fringe benefits. Also, special rules apply to deductions for  
gifts, luxury water travel, and convention expenses. See  
section 274 and Pub. 463 for details.  
Examples of other deductions may include the  
following.  
Travel. The corporation cannot deduct travel expenses  
of any individual accompanying a corporate officer or  
employee, including a spouse or dependent of the officer  
or employee, unless:  
Any deduction under P.L. 115-97, section 13517(c)(3)  
(B)(i) (transitional relief for change in reserve).  
Any energy efficient commercial buildings deduction for  
property placed in service during the tax year. Complete  
and attach Form 7205.  
That individual is an employee of the corporation, and  
That individual’s travel is for a bona fide business  
Certain business startup and organizational costs  
purpose and would otherwise be deductible by that  
individual.  
(discussed earlier under Limitations on Deductions).  
Legal and professional fees.  
Meals. Generally, the corporation can deduct only 50%  
of the amount otherwise allowable for  
Supplies used and consumed in the business.  
Travel, meals, and entertainment expenses. Special  
non-entertainment-related meal expenses paid or incurred  
in its trade or business. Meals not separately stated from  
entertainment are generally not deductible.  
rules apply (discussed later).  
Utilities.  
Ordinary losses from trade or business activities of a  
In addition (subject to exceptions under section 274(k)  
partnership from Schedule K-1 (Form 1065). Do not offset  
ordinary income against ordinary losses. Instead, include  
the income on line 13. Show the partnership's name,  
address, and EIN on a separate statement attached to this  
return. If the amount entered is from more than one  
partnership, identify the amount from each partnership.  
(2)):  
Meals must not be lavish or extravagant, and  
An employee of the corporation must be present at the  
meal.  
Membership dues. The corporation can deduct  
Any extraterritorial income exclusion from Form 8873,  
amounts paid or incurred for membership dues in civic or  
public service organizations, professional organizations  
(such as bar and medical associations), business  
leagues, trade associations, chambers of commerce,  
boards of trade, and real estate boards. However, no  
deduction is allowed if a principal purpose of the  
organization is to entertain or provide entertainment  
facilities for members or their guests. This includes  
country clubs, golf and athletic clubs, airline and hotel  
clubs, and clubs operated to provide meals under  
conditions favorable to business discussion.  
Extraterritorial Income Exclusion.  
Dividends paid in cash on stock held by an employee  
stock ownership plan (ESOP). However, a deduction may  
only be taken for the dividends above if, according to the  
plan, the dividends are:  
1. Paid in cash directly to the plan participants or  
beneficiaries;  
2. Paid to the plan, which distributes them in cash to  
the plan participants or their beneficiaries no later than 90  
days after the end of the plan year in which the dividends  
are paid;  
3. At the election of the participants or their  
beneficiaries (a) payable as provided under (1) or (2)  
above, or (b) paid to the plan and reinvested in qualifying  
employer securities; or  
Qualified transportation fringes (QTFs). Generally,  
no deduction is allowed under section 274(a)(4) for QTFs  
provided by employers to their employees. QTFs are  
defined in section 132(f)(1) and include:  
Transportation in a commuter highway vehicle between  
the employee’s residence and place of employment,  
4. Used to make payments on a loan described in  
Any transit pass, and  
Qualified parking.  
section 404(a)(9).  
See section 404(k) for more details and the limitation  
on certain dividends.  
See section 274; Pub. 15-B, Employer’s Tax Guide to  
Fringe Benefits, for details.  
Entertainment facilities. Generally, the corporation  
cannot deduct an expense paid or incurred for a facility  
(such as a yacht or hunting lodge) used for an activity  
usually considered entertainment, amusement, or  
recreation.  
Do not deduct expenses such as the following.  
Amounts paid to, or at the direction of, a government or  
specified nongovernmental entity for the violation, or  
investigation or inquiry, of a law. However, see the  
exceptions discussed later.  
16  
Instructions for Form 1120-PC (2023)  
   
Amounts treated as compensation. Generally, the  
corporation may be able to deduct otherwise  
Line 36b. Net operating loss deduction. Section 172  
provides for an NOL deduction, limitation, carryovers, and  
carrybacks. Attach a statement showing the computation  
of the NOL deduction.  
nondeductible entertainment, amusement, or recreation  
expenses if the amounts are treated as compensation to  
the recipient and reported on Form W-2 for an employee  
or on Form 1099-NEC for an independent contractor.  
The following special rules apply.  
Section 382 provides a limitation on NOL carryforwards  
However, if the recipient is an officer, director, beneficial  
owner (directly or indirectly), or other “specified individual”  
(as defined in section 274(e)(2)(B) and Regulations  
section 1.274-9(b)), special rules apply.  
Fines and penalties. Generally, no deduction is allowed  
for fines or similar penalties paid or incurred to, or at the  
direction of, a government or governmental entity for  
violating any law, or for the investigation or inquiry into the  
potential violation of a law, except:  
and certain built-in losses following ownership change.  
If a corporation acquires control of another corporation  
(or acquires its assets in a reorganization), the amount of  
pre-acquisition losses that may offset recognized built-in  
gain may be limited (see section 384).  
If a corporation elects the alternative tax on qualifying  
shipping activities under section 1354, no deduction is  
allowed for an NOL attributable to the qualifying shipping  
activities to the extent that the loss is carried forward from  
a tax year preceding the first tax year for which the  
Amounts that constitute restitution,  
alternative tax election was made. See section 1358(b)(2).  
Amounts paid to come into compliance with the law,  
Amounts paid or incurred as the result of certain court  
Section 831(b)(3) provides for a limitation on use of  
NOLs.  
orders or agreements in which no government or  
governmental entity is a party, and  
For more details on the NOL deduction, see section  
Amounts paid or incurred for taxes due. No deduction is  
172 and the Instructions for Form 1139, Corporation  
Application for Tentative Refund.  
allowed unless the amounts are specifically identified in  
the order or agreement and the corporation establishes  
that the amounts were paid for that purpose. Also, any  
amount paid or incurred as reimbursement to the  
government for the costs of any investigation or litigation  
are not eligible for the exceptions and are nondeductible.  
See section 162(f).  
Line 37. Taxable income. If line 37 (figured without  
regard to the items listed under Minimum taxable income  
below) is zero or less, the corporation may have an NOL  
that can be carried back or forward as a deduction to other  
tax years.  
Minimum taxable income. The corporation's taxable  
income cannot be less than the largest of the following  
amounts.  
Lobbying expenses. Generally, lobbying expenses are  
not deductible. These expenses include:  
Amounts paid or incurred in connection with influencing  
The inversion gain of the corporation for the tax year, if  
federal, state, or local legislation (but not amounts paid or  
incurred before December 22, 2017, in connection with  
local legislation); or  
the corporation is an expatriated entity or a partner in an  
expatriated entity. See section 7874(a).  
The sum of the corporation's excess inclusions from its  
Amounts paid or incurred in connection with any  
residual interest in a real estate mortgage investment  
conduit (REMIC) from Schedules Q (Form 1066), line 2c,  
and the corporation's taxable income determined solely  
with respect to its ownership and high-yield interests in  
financial asset securitization investment trusts (FASITs).  
See section 860E(a).  
communication with certain federal executive branch  
officials in an attempt to influence the official actions or  
positions of the officials. See Regulations section 1.162-  
29 for the definition of “influencing legislation.”  
Dues and other similar amounts paid to certain tax-  
exempt organizations may not be deductible. If certain in-  
house lobbying expenditures do not exceed $2,000, they  
are deductible.  
Line 32. Total deductions. Section 848 (capitalization of  
certain policy acquisition expenses) requires insurance  
companies to capitalize specified policy acquisition  
expenses and deduct them ratably over time. Attach a  
statement showing all computations. See section 848 and  
its regulations.  
Line 34b. Deduction on account of the special in-  
come and deduction accounts. Enter the total of the  
amounts required to be added under sections 832(e)(4)  
and (6). However, no deduction is permitted unless tax  
and loss bonds are purchased in an amount equal to the  
tax benefit of the deduction. See section 832(e).  
Net operating loss. Only certain losses can be carried  
back. The carryback period for these losses is 2 years.  
For NOLs that can be carried back, the corporation can  
elect to waive the carryback period and instead carry the  
NOL forward to future tax years.  
See the Instructions for Form 1139. See the  
instructions for Schedule I, Item 10 for information on  
making the election to waive the entire carryback period.  
The NOL deduction for tax year 2023 generally cannot  
exceed the aggregate amount of NOLs arising in tax years  
beginning before January 1, 2018, carried to such year  
plus the lesser of:  
1. The aggregate amount of NOLs arising in tax years  
beginning after December 31, 2017, carried to such tax  
year; or  
Note. The deduction on account of the special income  
and deduction accounts is limited to taxable income for  
the tax year (computed without regard to this deduction or  
to any carryback of a net operating loss (NOL)).  
2. 80% of the excess, if any, of taxable income  
determined without any NOL deduction, section 199A  
deduction, or section 250 deduction, over any NOL  
carryover to the tax year from tax years beginning before  
January 1, 2018.  
Instructions for Form 1120-PC (2023)  
17  
     
An exception applies for NOLs of insurance companies  
other than life insurance companies. The 80% taxable  
income limit does not apply to these entities. See sections  
172(b) and (f).  
Deductions  
Line 9. Real estate taxes. Enter taxes paid or accrued  
on real estate owned by the corporation and deductible  
under section 164.  
See the Instructions for Form 1139 for other special  
Line 10. Other real estate expenses. Enter all ordinary  
and necessary real estate expenses, such as fire  
insurance, heat, light, and labor. Also, enter the cost of  
incidental repairs, such as labor and supplies, that do not  
add to the property's value or appreciably prolong its life.  
Do not include any amount paid for new buildings or for  
permanent improvements or betterments made to  
increase the value of any property. Do not include any  
amount spent on foreclosed property before the property  
is held for rent.  
Line 11. Depreciation. Enter depreciation on assets  
only to the extent that the assets are used to produce  
gross investment income reported on Schedule B, lines 1  
through 7. For more information, see the instructions for  
rules and elections.  
Schedule B, Part I—Taxable  
Investment Income of Electing Small  
Companies  
Note. (1) Once an election under section 831(b) is made  
to be taxed only on investment income, it can only be  
revoked with the consent of the Secretary; and (2) a  
corporation making this election must include on  
Schedule B, line 8, any amount subtracted from a PAL  
account.  
Income  
Line 1a, column (a). Interest (including tax-exempt  
interest). Enter the gross amount of interest income,  
including all tax-exempt interest income.  
Note. See section 834(d)(1) regarding the limitation of  
expenses on real estate owned and occupied in part or in  
whole by a mutual insurance company.  
Line 1b, column (a). Interest exempt under section  
103. Enter the amount of interest on state and local  
bonds that is exempt from taxation under section 103. See  
the instructions for Schedule A, line 3b, column (a), for  
more information.  
Lines 1a and 1b, column (b). Amortization of premi-  
um. Enter on line 1a, column (b), the total amortization of  
bond premium, including amortization on tax-exempt  
bonds.  
Line 12. Depletion. Enter any allowable depletion on  
royalty income reported on Schedule B, line 4. See the  
instructions for Schedule A, line 23 for more information.  
Line 13. Trade or business deductions. Enter the total  
deductions related to any trade or business income  
included in gross investment income under section 834(b)  
(2). Do not include deductions for any insurance business.  
Do not include losses from sales or exchanges of capital  
assets or property used in the business, or from the  
compulsory or involuntary conversion of property used in  
the trade or business.  
Enter on line 1b, column (b), the amortization of bond  
premium on tax-exempt bonds.  
Line 14. Interest. See the instructions for Schedule A,  
Note. Insurance companies electing to amortize discount  
for tax purposes must reduce the amortization of premium  
by any amortization of discount.  
Line 3. Rents. Enter the gross rents received or accrued  
during the tax year. Deduct rental expenses such as  
repairs, interest, taxes, and depreciation on the proper  
lines in the Deductions section.  
Line 5. Gross income from a trade or business, other  
than an insurance business, and from Form 4797.  
Enter the gross income from a trade or business, other  
than an insurance business, carried on by the insurance  
company or by a partnership of which the insurance  
company is a partner. Include section 1245 and section  
1250 gains (as modified by section 291) and other gains  
from Form 4797, on investment assets only.  
Line 6. Income from leases described in sections  
834(b)(1)(B) and 834(b)(1)(C). Enter gross income  
from entering into, changing, or ending any lease,  
mortgage, or other instrument or agreement from which  
the company earns interest, rents, or royalties.  
lines 20a and 20b.  
Line 17. Investment expenses. Enter expenses that are  
properly chargeable as investment expenses. If general  
expenses are allocated to investment expenses, the total  
deduction cannot be more than the amount on  
Schedule B, Part II, line 39. Attach a statement showing  
the kind and amount of general expenses. Minor items  
may be grouped together.  
See section 267 for the limitation on deductions for  
unpaid expenses and interest in transactions between  
related taxpayers.  
Schedule B, Part II—Invested Assets  
Book Values  
Use Schedule B, Part II, to compute the limitation on  
investment expenses under section 834(c)(2) when any  
general expenses are in part assigned to, or included in,  
the investment expenses deducted on Schedule B, Part I,  
line 17.  
Line 8. Gross investment income. If gross investment  
income includes an amount subtracted from the PAL  
account, enter on the dotted line next to line 8, “PALand  
the amount.  
18  
Instructions for Form 1120-PC (2023)  
       
subject to income tax and that are subject to the 65%  
deduction under section 243(c), and  
Schedule C—Dividends, Inclusions,  
Dividends-Received Deduction, and  
Other Special Deductions  
Taxable distributions from an interest charge domestic  
international sales corporation (IC-DISC) or former  
domestic international sales corporation (DISC) that are  
considered eligible for the 65% deduction.  
Definitions  
Line 3. Enter the following.  
Dividends received on certain debt-financed stock  
Prorated amounts. Prorated amounts mean tax-exempt  
interest and dividends for which a deduction is allowable  
under section 243, 244 (as affected by P.L. 113-295, Div.  
A, section 221(a)(41)(A), December 19, 2014, 128 Stat.  
4043), or 245 (other than 100% dividends).  
100% dividend. 100% dividend means any dividend if  
the percentage used for purposes of determining the  
deduction allowable under section 243, 244 (as affected  
by P.L. 113-295, Div. A, section 221(a)(41)(A), December  
19, 2014, 128 Stat. 4043), or 245(b) is 100%. See section  
243, section 244 as affected by P.L. 113-295, and section  
245.  
acquired after July 18, 1984, from domestic and foreign  
corporations subject to income tax that would otherwise  
be subject to the dividends-received deduction under  
section 243(a)(1), 243(c), or 245(a). Generally,  
debt-financed stock is stock that the corporation acquired  
by incurring a debt (for example, it borrowed money to buy  
the stock).  
Dividends received from a regulated investment  
company (RIC) on certain debt-financed stock. The  
amount of dividends eligible for the dividends-received  
deduction is limited by section 854(b). The corporation  
should receive a notice from the RIC specifying the  
amount of dividends that qualify for the deduction.  
Lines 1 Through 25  
Line 4. Enter dividends received on preferred stock of a  
less-than-20%-owned public utility that is subject to  
income tax and is allowed the deduction provided in  
section 247 (as affected by P.L. 113-295, Div. A, section  
221(a)(41)(A), December 19, 2014, 128 Stat. 4043) for  
dividends paid.  
For purposes of the 20% ownership test on lines 1 through  
7, the percentage of stock owned by the corporation is  
based on voting power and value of the stock. Preferred  
stock described in section 1504(a)(4) is not taken into  
account.  
Line 5. Enter dividends received on preferred stock of a  
20%-or-more-owned public utility that is subject to income  
tax and is allowed the deduction provided in section 247  
(as affected by P.L. 113-295, Div. A, section 221(a)(41)(A),  
December 19, 2014, 128 Stat. 4043) for dividends paid.  
Consolidated returns. Corporations filing consolidated  
returns should see Regulations sections 1.1502-13,  
1.1502-26, and 1.1502-27 before completing Schedule C.  
Lines 1 through 9, column (a). Enter in column (a) of  
the appropriate line those dividends that are subject to the  
provisions of section 832(b)(5)(B).This will include:  
Line 6. Enter the U.S.-source portion of dividends that:  
Are received from less-than-20%-owned foreign  
1. All dividends (other than 100% dividends) received  
corporations, and  
on stock acquired after August 7, 1986; and  
Qualify for the 50% deduction under section 245(a). To  
2. 100% dividends received on stock acquired after  
August 7, 1986, to the extent that such dividends are  
attributable to prorated amounts (see definition earlier).  
qualify for the 50% deduction, the corporation must own at  
least 10% of the stock of the foreign corporation by vote  
and value.  
Also, include dividends received from a  
less-than-20%-owned foreign sales corporation (FSC)  
that:  
In the case of an insurance company that files a  
consolidated return, the determination with respect to any  
dividend paid by a member to another member of the  
affiliated group is made as if no consolidated return was  
filed. See section 832(g).  
Are attributable to income treated as effectively  
connected with the conduct of a trade or business within  
the United States (excluding foreign trade income), and  
Line 1. Enter dividends (except those received on certain  
debt-financed stock acquired after July 18, 1984 (see  
section 246A)) that are:  
Qualify for the 50% deduction under section 245(c)(1)  
(B).  
Line 7. Enter the U.S.-source portion of dividends that:  
Received from less-than-20%-owned domestic  
Are received from 20%-or-more-owned foreign  
corporations subject to income tax, and  
Qualified for the 50% deduction under section 243(a)  
corporations, and  
Qualify for the 65% deduction under sections 245(a)  
(1).  
and 242 by reference.  
See section 246 and section 854 for limitations and  
Also, include dividends received from a  
exclusions.  
20%-or-more-owned FSC that:  
Report so-called dividends or earnings received from  
mutual savings banks, etc., as interest. Do not treat them  
as dividends.  
Are attributable to income treated as effectively  
connected with the conduct of a trade or business within  
the United States (excluding foreign trade income), and  
Line 2. Enter on line 2:  
Qualify for the 65% deduction provided in section  
Dividends (except those received on certain  
245(c)(1)(B).  
debt-financed stock acquired after July 18, 1984) that are  
received from 20%-or-more-owned domestic corporations  
Instructions for Form 1120-PC (2023)  
19  
         
should equal the sum of the amounts reported by the U.S.  
shareholder on Form(s) 5471, Schedule I, line 1b.  
Line 12c, column (b). Enter all other amounts included  
in income under section 951, other than amounts on  
line 15. This should equal the sum of the amounts  
reported by the U.S. shareholder on Form(s) 5471,  
Schedule I, lines 1c–1h, 2, and 4.  
Line 13, column (b). Enter amounts included in income  
under the section 951. See Form 8992, Part II, line 5; and  
the Instructions for Form 8992. If you also have a Form  
5471 reporting requirement, attach Form 5471.  
Line 8. Enter dividends received from wholly owned  
foreign subsidiaries that are eligible for the 100%  
deduction under section 245(b).  
In general, the deduction under section 245(b) applies  
to dividends paid out of the earnings and profits of a  
foreign corporation for a tax year during which:  
All of its outstanding stock is directly or indirectly owned  
by the domestic corporation receiving the dividends, and  
All of its gross income from all sources is effectively  
connected with the conduct of a trade or business within  
the United States.  
Also, include on line 8 dividends from FSCs that are  
attributable to foreign trade income and that are eligible for  
the 100% deduction provided in section 245(c)(1)(A).  
Line 15, column (b). Reserved for future use.  
Line 16, column (b). Include the following.  
1. Dividends (other than capital gain distributions  
reported on Schedule D (Form 1120) and exempt-interest  
dividends) that are received from RICs and that are not  
subject to the 50% deduction.  
Line 9. Enter only those dividends that qualify under  
section 243(b) for the 100% dividends-received deduction  
described in section 243(a)(3).  
The 100% deduction does not apply to affiliated group  
members that are joining in the filing of a consolidated  
return.  
2. Dividends from tax-exempt organizations.  
3. Dividends (other than capital gain distributions)  
received from a real estate investment trust (REIT) that,  
for the tax year of the trust in which the dividends are paid,  
qualifies under sections 856 through 860.  
Line 10, column (b). Enter the foreign-source portion of  
dividends that:  
Are received from specified 10%-owned foreign  
4. Dividends not eligible for a dividends-received  
corporations (as defined in section 245A(b)), including, for  
example, gain from the sale of stock of a foreign  
corporation that is treated as a dividend under sections  
1248(a) and (j); and  
deduction, which include the following.  
a. Dividends received on any share of stock held for  
less than 46 days during the 91-day period beginning 45  
days before the ex-dividend date. When counting the  
number of days the corporation held the stock, you cannot  
count certain days during which the corporation's risk of  
loss was diminished. See section 246(c)(4) and  
Qualify for the 100% deduction under section 245A(a)  
(excluding any hybrid dividends; see the instructions for  
line 11 below).  
Line 11, column (b). Enter the foreign dividends not  
Regulations section 1.246-5 for more details.  
reportable on line 3, 6, 7, 8, or 10 of column (b).  
b. Dividends received on any share of preferred stock  
which are attributable to periods totaling more than 366  
days, if such stock was held for less than 91 days during  
the 181-day period that began 90 days before the  
ex-dividend date. When counting the number of days the  
corporation held the stock, you cannot count certain days  
during which the corporation's risk of loss was diminished.  
See section 246(c)(4) and Regulations section 1.246-5 for  
more details. Preferred dividends attributable to periods  
totaling less than 367 days are subject to the 46-day  
holding period rule above.  
Include on line 11 the foreign-source portion of any  
dividend that does not qualify for the section 245A  
deduction (for example, hybrid dividends within the  
meaning of section 245A(e), ineligible amounts of  
dividends within the meaning of Regulations section  
1.245A-5(b), dividends that fail to meet the holding period  
requirement under section 246(c)(5), etc.).  
Also, include on line 11 the corporation's share of  
distributions from a section 1291 fund from Form 8621, to  
the extent that the amounts are taxed as dividends under  
section 301. See Form 8621 and its instructions.  
Attach a statement identifying the amount of each  
dividend reported on line 11 and the provision pursuant to  
which a deduction is not allowed with respect to such  
dividend.  
Line 12a, column (b). Enter the foreign-source portion  
of any subpart F inclusions attributable to the sale or  
exchange by a CFC of stock in another foreign corporation  
described in section 964(e)(4). This should equal the sum  
of the amounts reported by the U.S. shareholder on  
Form(s) 5471, Schedule I, line 1a. (Do not include on  
line 12a any portion of such subpart F inclusion that is not  
eligible for the section 245A deduction pursuant to  
Regulations section 1.245A-5(g)(2). Include such  
amounts on line 12c.)  
c. Dividends on any share of stock to the extent the  
corporation is under an obligation (including a short sale)  
to make related payments with respect to positions in  
substantially similar or related property.  
5. Any other taxable dividend income not properly  
reported elsewhere on Schedule C.  
Line 20. Dividends received on certain debt-financed  
stock acquired after July 18, 1984, are not entitled to the  
full 50% or 65% dividends-received deduction. The 50%  
or 65% deduction is reduced by a percentage that is  
related to the amount of debt incurred to acquire the  
stock. See section 246A. Also, see section 245(a) before  
making this computation for an additional limitation that  
applies to dividends received from foreign corporations.  
Attach a statement showing how the amount on line 20  
was figured.  
Line 12b, column (b). Enter the total subpart F  
inclusions attributable to tiered hybrid dividends. This  
20  
Instructions for Form 1120-PC (2023)  
Keep for Your Records  
Worksheet for Schedule C, Line 26  
1. Refigure the amount from Schedule A, line 35, or Schedule B, line 19, whichever applies, without  
any adjustment under section 1059, and without any capital loss carryback to the tax year under  
section 1212(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
2. Enter the sum of the amounts from line 25, column (b) (without regard to wholly owned foreign  
subsidiary dividends), and line 9, column (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
3. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
4. Multiply line 3 by 65% (0.65) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
5. Add lines 19, 22, 24, and 25, column (b) (without regard to FSC dividends), and the portion of the  
deduction on line 20, column (b), that is attributable to dividends received from  
20%-or-more-owned corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
6. Enter the smaller of line 4 or line 5. If line 5 is greater than line 4, stop here; enter the amount from  
line 6 on line 26, column (b), and do not complete the rest of this worksheet . . . . . . . . . . . . . . . . . . .  
7. Enter the total amount of dividends received from 20%-or-more-owned corporations that are  
included on lines 2, 3, 5, 7, and 8, column (b) (without regard to FSC dividends) . . . . . . . . . . . . . . .  
8. Subtract line 7 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
9. Multiply line 8 by 50% (0.50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
10. Subtract line 5 from line 26, column (b) (without regard to FSC dividends) . . . . . . . . . . . . . . . . . . . . .  
11. Enter the smaller of line 9 or line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
12. Dividends-received deduction after limitation (section 246(b)). Add lines 6 and 11. Enter the  
result here and on line 26, column (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
and Blue Shield organizations described in section 833(c)  
Line 26, column (b). Generally, line 26, column (b),  
cannot exceed the amount from the Worksheet for  
Schedule C, Line 26, above. However, in a year in which  
an NOL occurs, this limitation does not apply even if the  
loss is created by the dividends-received deduction. See  
sections 172(d) and 246(b).  
(2), and other organizations described in section 833(c)  
(3), to those with an MLR of 85% or more. Organizations  
with an MLR less than 85% are allowed to deduct only  
80% of unearned premiums. See section 833(c)(5) and  
Regulations section 1.833-1.  
Line 1. Enter gross premiums written on insurance  
contracts during the tax year, less return premiums and  
premiums paid for reinsurance. See Regulations section  
1.832-4.  
Line 28, column (b). Enter the section 250 deduction  
claimed for foreign-derived intangible income (FDII) and  
global intangible low-taxed income (GILTI). This should  
equal the sum of Form 8993, Part III, lines 28 and 29.  
Lines 2a and 4a. Include on lines 2a and 4a the  
Line 29. Reserved for future use.  
following.  
1. All life insurance reserves, as defined in section  
Schedule E—Premiums Earned  
816(b) (but determined under section 807).  
2. Generally, all section 833 organizations with an  
MLR of 85% or more (discussed earlier) are permitted to  
enter 100% of unearned premiums on lines 2a and 4a.  
Section 833 organizations with an MLR of less than 85%  
must change to an 80% Unearned Premium Reserve. For  
more information, see Change in accounting method,  
earlier.  
Definitions  
Undiscounted unearned premiums. Undiscounted  
unearned premiums means the unearned premiums  
shown in the annual statement filed for the year ending  
with or within the tax year.  
Applicable interest rate. Applicable interest rate means  
the annual rate determined under section 846(c)(2) for the  
calendar year the premiums are received.  
Applicable statutory premium recognition pattern.  
Applicable statutory premium recognition pattern means  
the statutory premium recognition pattern in effect for the  
calendar year the premiums are received, and is based on  
the statutory premium recognition pattern which applies to  
premiums received by the corporation in that calendar  
year. For purposes of the preceding sentence, premiums  
received during any calendar year will be treated as  
received in the middle of such year.  
Lines 2b and 4b. Include on lines 2b and 4b 90% of  
unearned premiums for insurance against default in the  
payment of principal or interest on securities described in  
section 165(g)(2)(C) (relating to worthless securities) with  
maturities of more than 5 years. See section 832(b)(7)(B).  
Lines 2c and 4c. The amount of discounted unearned  
premiums at the end of any tax year must be the present  
value of those premiums (as of such time and separately  
with respect to premiums received in each calendar year)  
determined by using:  
1. The amount of the undiscounted unearned  
Medical loss ratio (MLR). Section 833(c)(5) limits the  
premiums at such time,  
100% deduction of unearned premiums by Blue Cross  
Instructions for Form 1120-PC (2023)  
21  
             
2. The applicable interest rate, and  
annual statement (as defined by section 846(e)(3)) filed  
for the calendar year ending with or within the tax year.  
See section 1.832-4(b) relating to the determination of  
unpaid losses.  
Section 832(b)(5)(A) provides rules for figuring losses  
incurred. Section 832(b)(5)(B) provides rules for reducing  
the deduction figured in section 832(b)(5)(A).  
3. The applicable statutory premium recognition  
pattern.  
Lines 2d and 4d. Include on lines 2d and 4d 80% of the  
total of all unearned premiums not reported on lines 2a  
through 2c, or 4a through 4c, respectively.  
A reciprocal or interinsurer required under state law to  
reflect unearned premiums on its annual statement net of  
premium acquisition expenses should increase its  
unearned premiums by the amount of such acquisition  
expenses prior to making the computation on lines 2d and  
4d. See section 832(b)(7)(E).  
Line 6. Transitional adjustments apply to companies  
which become taxable under section 831(a). See section  
832(b)(7)(D).  
Rev. Proc. 2023-41, 2023-52, I.R.B. 1607, available at  
prescribes discount factors for the 2023 accident year for  
use by insurance companies in computing discounted  
unpaid losses under section 846 and discounted  
estimated salvage recoverable under section 832. Rev.  
Proc. 2023-41 also provides, for convenience, discount  
factors for losses incurred in earlier accident years for use  
in tax years beginning in 2023. The discount factors set  
forth in Rev. Proc. 2023-41 are determined under section  
846 and Regulations section 1.846-1.  
Schedule F—Losses Incurred  
Note. P.L. 115-97, section 13523, modified discounting  
rules for property and casualty insurance companies,  
modified the rate of interest used to discount unpaid  
losses, modified computational rules for loss payment  
patterns, and repealed the historical payment pattern  
election. These amendments apply to tax years beginning  
after 2017. An 8-year transition rule also applies. See  
section 846 of the Internal Revenue Code, as modified by  
P.L. 115-97, section 13523.  
Line 1. Losses paid. Enter the total losses paid on  
insurance contracts during the tax year less salvage and  
reinsurance recovered during the tax year. Attach a  
statement that reconciles the amount entered on line 1 to  
the amount reported on the corporation's annual  
statement.  
Lines 2a and 4a. Unpaid losses on life insurance con-  
tracts. Unpaid losses must be adjusted for recoveries of  
reinsurance. The amounts of expected recoveries should  
be estimated based on the facts in each case and the  
corporation's experience with similar cases. See  
Regulations section 1.832-4(b).  
Lines 2b and 4b. Discounted unpaid losses outstand-  
ing. Enter all discounted unpaid losses, as defined in  
section 846.  
Section 846 provides that the amount of discounted  
unpaid losses must be figured separately by each line of  
business (multiple peril lines must be treated as a single  
line of business) and by each accident year and must be  
equal to the present value of those losses determined by  
using the:  
Note. There is a special application of the “fresh start”  
provision for an insurance company that is not subject to  
tax under section 831(a) for its first tax year beginning  
after December 31, 1986, because (1) it is described in  
section 501(c), or (2) it is subject to tax under section  
831(b) on its investment income.  
If the insurance company later becomes subject to tax  
under section 831(a), the rules relating to the fresh start  
under the discounting provisions are applied by treating  
the last tax year before the year in which the insurance  
company becomes subject to tax under section 831(a) as  
the insurance company's last tax year beginning before  
1987. See section 1010(e) of the Technical and  
Miscellaneous Revenue Act of 1988 and Notice 88-100,  
1988-2 C.B. 439.  
1. Amount of the undiscounted unpaid losses,  
2. Applicable interest rate, and  
3. Applicable loss payment pattern.  
Lines 6 and 7. Estimated salvage and reinsurance re-  
coverable. Enter on lines 6 and 7 the amount of  
Section 846(e)(6) provides that any determination  
under section 846(a) (discounted losses determined) with  
respect to unpaid losses relating to accident and health  
insurance lines of businesses (other than credit disability  
insurance) must be made (a) in the case of unpaid losses  
relating to disability income, by using the general rules  
prescribed under section 807(d) applicable to  
estimated salvage and reinsurance recoverable. See Rev.  
Proc. 2023-41 for the latest information and guidance.  
Line 9. Tax-exempt interest subject to section 832(b)  
(5)(B). Enter the amount of tax-exempt interest received  
or accrued during the tax year on investments made after  
August 7, 1986. For information regarding the  
noncancelable accident and health insurance contracts  
and using a mortality or morbidity table reflecting the  
taxpayer’s experience, except that the limitation of section  
846(a)(3) (Limitation on amount of discounted losses) will  
apply; and (b) in all other cases, by using an assumption  
(in lieu of a loss payment pattern) that unpaid losses are  
paid in the middle of the year following the accident year.  
determination of the acquisition date of an investment, see  
the instructions for Schedule C.  
Line 13. Reduction of deduction under section 832(b)  
(5)(B). Multiply line 12 by the applicable percentage,  
which is 25% (5.25% divided by the highest corporate tax  
rate).  
A separate series of discount factors are computed for,  
and applied to, undiscounted unpaid losses attributable to  
each accident year of each line of business shown on the  
22  
Instructions for Form 1120-PC (2023)  
   
Note. Any determination under section 833(b) must be  
made by only taking into account items from the  
health-related business of the corporation.  
Line 8a. Adjusted tax-exempt income. Reduce the  
total tax-exempt interest received or accrued during the  
tax year by any amount (not otherwise deductible) which  
would have been allowable as a deduction for the tax year  
if such interest were not tax exempt. Enter the result on  
line 8a.  
Line 8b. Adjusted dividends-received deduction.  
Reduce the total amount allowed as a deduction under  
sections 243, 244 (as affected by P.L. 113-295, Div. A,  
section 221(a)(41)(A), December 19, 2014, 128 Stat.  
4043), and 245 by the amount of any decrease in  
deductions allowable for the tax year because of section  
832(b)(5)(B) when the decrease is caused by the  
deductions under sections 243, 244 (as affected by P.L.  
113-295, Div. A, section 221(a)(41)(A), December 19,  
2014, 128 Stat. 4043), and 245. Enter the result on  
line 8b.  
Schedule G—Other Capital Losses  
Capital assets are considered sold or exchanged to  
provide funds to meet abnormal insurance losses and to  
pay dividends and make similar distributions to  
policyholders to the extent that the gross receipts from  
their sale or exchange are not more than the amount by  
which the sum of dividends and similar distributions paid  
to policyholders, losses paid, and expenses paid for the  
tax year is more than the total on Schedule G, line 9.  
Total gross receipts from sales of capital assets  
(line 12, column (c)) must not be more than line 10. If  
necessary, the corporation may report part of the gross  
receipts from a particular sale of a capital asset on this  
schedule and the rest on Schedule D (Form 1120).  
Otherwise, do not include on Schedule D (Form 1120) any  
sales reported on this schedule.  
Schedule H—Special Deduction and  
Ending Adjusted Surplus for Section  
833 Organizations  
Schedule I—Other Information  
Section 833(c)(5) provides that section 833(a)(2) and  
section 833(a)(3) do not apply to any organization with an  
MLR of less than 85%. See section 833(c)(5). Also, see  
Medical loss ratio, earlier.  
Complete all items that apply to the corporation.  
Question 4  
Check the “Yes” box if:  
The corporation is a subsidiary in an affiliated group  
Line 5. Beginning adjusted surplus. If the corporation  
was a section 833 organization in 2022, it should enter the  
amount from its 2022 Form 1120-PC, Schedule H, line 10.  
Generally, the adjusted surplus as of the beginning of  
any tax year is an amount equal to the adjusted surplus as  
of the beginning of the preceding tax year:  
(defined later), but is not filing a consolidated return for the  
tax year with that group; or  
The corporation is a subsidiary in a parent-subsidiary  
controlled group. For a definition of parent-subsidiary  
controlled group, see the Instructions for Schedule O  
(Form 1120).  
1. Increased by the amount of any adjusted taxable  
Any corporation that meets either of the requirements  
above should check the “Yes” box. This applies even if the  
corporation is a subsidiary member of one group and the  
parent corporation of another.  
income for the preceding tax year, or  
2. Decreased by the amount of any adjusted NOL for  
the preceding tax year.  
If 2023 is the first tax year the taxpayer qualifies as a  
section 833 organization, see section 833(c)(3)(C) to  
determine the adjusted surplus as of the beginning of the  
2023 tax year.  
For purposes of the computation of the adjusted  
surplus, the terms “adjusted taxable income” and  
“adjusted net operating loss” mean the taxable income or  
the NOL, respectively, determined with the following  
modifications.  
Note. If the corporation is an “excluded member” of a  
controlled group (see the definition in the Instructions for  
Schedule O (Form 1120)), it is still considered a member  
of a controlled group for this purpose.  
Affiliated group. An affiliated group is one or more  
chains of includible corporations (as defined in section  
1504(b)) connected through stock ownership with a  
common parent corporation. See section 1504(a). The  
common parent must be an includible corporation and the  
following requirements must be met.  
1. Without regard to the deduction determined under  
section 833(b)(1).  
1. The common parent must own directly stock that  
represents at least 80% of the total voting power and at  
least 80% of the total value of the stock of at least one of  
the other includible corporations.  
2. Stock that represents at least 80% of the total voting  
power and at least 80% of the total value of the stock of  
each of the other corporations (except for the common  
parent) must be owned directly by one or more of the  
other includible corporations.  
2. Without regard to any carryover or carryback to that  
tax year.  
3. By increasing gross income by an amount equal to  
the net exempt income for the tax year.  
Line 6. Special deduction. The special deduction under  
section 833(b) cannot be taken if the MLR is less than  
85%. If the MLR is less than 85%, enter zero on line 6 and  
Schedule A, line 34a.  
For this purpose, the term “stock” generally does not  
include any stock that (a) is nonvoting, (b) is  
Note. The deduction for any tax year is limited to taxable  
income for that tax year determined without regard to this  
deduction.  
nonconvertible, (c) is limited and preferred as to dividends  
Instructions for Form 1120-PC (2023)  
23  
             
and does not participate significantly in corporate growth,  
and (d) has redemption and liquidation rights that do not  
exceed the issue price of the stock (except for a  
reasonable redemption or liquidation premium).  
tax years. To do so, check the box on line 10 and file the  
tax return by its due date, including extensions. Do not  
attach the statement described in Temporary Regulations  
section 301.9100-12T. Generally, once made, the election  
is irrevocable.  
If the corporation timely filed its return for the loss year  
without making the election, it can make the election on an  
amended return filed within 6 months of the due date of  
the loss year return (excluding extensions). Attach the  
election to the amended return and enter "Filed pursuant  
to section 301.9100-2" on the election statement. See the  
Instructions for Form 1139.  
Question 6  
Check the “Yes” box if one foreign person owned at least  
25% of the total voting power of all classes of stock of the  
corporation entitled to vote, or at least 25% of the total  
value of all classes of stock of the corporation.  
The constructive ownership rules of section 318 apply  
in determining if a corporation is foreign owned. See  
section 6038A(c)(5) and the related regulations.  
Corporations filing a consolidated return that elect to  
waive the entire carryback period for the group must also  
attach the statement required by Regulations section  
1.1502-21(b)(3) or the election will not be valid.  
Enter on line 6a the percentage owned by the foreign  
person specified in question 6. On line 6b, enter the name  
of the owner's country.  
Item 11  
Note. If there is more than one 25%-or-more foreign  
owner, complete lines 6a and 6b for the foreign person  
with the highest percentage of ownership.  
Enter the amount of the NOL carryover to this tax year  
from prior years, even if some of the loss is used to offset  
income on this return. The amount to enter is the total of  
all NOLs generated in prior years but not used to offset  
income (either as a carryback or carryover) in a tax year  
prior to 2023. Do not reduce the amount by any NOL  
deduction reported on Schedule A, line 36b.  
Foreign person. The term “foreign person” means:  
An individual who is not a citizen or resident of the  
United States;  
An individual who is a citizen or resident of a U.S.  
territory who is not otherwise a citizen or resident of the  
United States;  
Question 12  
Any partnership, association, company, or corporation  
Schedule UTP (Form 1120) asks for information about tax  
positions that affect the U.S. federal income tax liabilities  
of certain corporations that issue or are included in  
audited financial statements and have assets that equal or  
exceed $10 million. For details, see the Instructions for  
Schedule UTP.  
that is not created or organized in the United States;  
Any foreign estate or trust within the meaning of section  
7701(a)(31); or  
A foreign government (or one of its agencies or  
instrumentalities) to the extent that it is engaged in the  
conduct of a commercial activity, as described in section  
892.  
Attach Schedule UTP to the corporation's income tax  
return. Do not file it separately. A taxpayer that files a  
protective Form 1120-PC must also file Schedule UTP if it  
satisfies the requirements set forth above.  
However, the term “foreign person” does not include  
any foreign person who consents to the filing of a joint  
income tax return.  
Question 13  
Owner's country. For individuals, the term “owner's  
country” means the country of residence. For all others, it  
is the country where incorporated, organized, created, or  
administered.  
Requirement to file Form 5472. If the corporation  
checked “Yes,it may have to file Form 5472. Generally, a  
25% foreign-owned corporation that had a reportable  
transaction with a foreign or domestic related party during  
the tax year must file Form 5472. See the Instructions for  
Form 5472 for filing instructions and penalties for failure to  
file.  
Section 833(c)(5) provides that section 833(a)(2) and  
section 833(a)(3) do not apply to a Blue Cross or Blue  
Shield organization described in section 833(c)(2), or  
other organization described in section 833(c)(3), unless it  
has an MLR of 85% or more for the tax year.  
For purposes of section 833(c)(5), the MLR is equal to  
the amount expended on reimbursement for clinical  
services provided to enrollees (as defined in 45 C.F.R.  
158.140) and for activities that improve health care quality  
(as defined in 45 C.F.R. 158.150) under its policies during  
the tax year (section 833(c)(5) MLR numerator) divided by  
the total premium revenue (section 833(c)(5) MLR  
denominator). See section 833(c)(5) and Regulations  
section 1.833-1. Also, see Medical loss ratio, earlier.  
Check the “Yes” box if the corporation is a Blue Cross  
or Blue Shield organization described in section 833(c)(2),  
or other organization described in section 833(c)(3), that  
has satisfied the MLR requirements of section 833(c)(5).  
Item 9  
Show any tax-exempt interest received or accrued.  
Include any exempt-interest dividends received as a  
shareholder in a mutual fund or other RIC. Also, if  
required, include the same amount on Schedule M-1,  
line 7 (or Schedule M-3 (Form 1120-PC), Part II, line 13, if  
applicable).  
Item 10  
If you checked “Yes,” you must enter:  
Generally, if the corporation has an NOL for tax year 2023,  
it can generally elect to waive the entire carryback period  
for the NOL and instead carry the NOL forward to future  
The section 833(c)(5) MLR numerator on line 13(a),  
The section 833(c)(5) MLR denominator on line 13(b),  
and  
24  
Instructions for Form 1120-PC (2023)  
         
The section 833(c)(5) percentage on line 13(c).  
Question 16  
If the corporation paid or accrued any interest or royalty for  
which a deduction is not allowed under section 267A,  
check "Yes" and enter the total amount of interest and  
royalty paid or accrued by the corporation (including the  
corporation's allocable share through a partnership) for  
which a deduction is not allowed.  
Payments to which section 267A applies. Interest or  
royalty paid or accrued by a domestic corporation  
(including, in the case of a domestic corporation that is a  
partner in a partnership, the domestic corporation's  
allocable share of interest or royalty paid or accrued by the  
partnership) is subject to section 267A. Section 267A  
generally applies to interest or royalty paid or accrued  
according to a hybrid arrangement (such as, for example,  
a payment according to a hybrid instrument, or a payment  
to a reverse hybrid), provided that the payment or accrual  
is to a related party (or according to a structured  
If you checked “No,enter zero on Schedule H, line 6,  
and Schedule A, line 34a. You cannot take the special  
deduction. See the instructions for Schedule H.  
Also, if you checked “No,” your deduction of unearned  
premiums is limited. See the instructions for Schedule E  
for more information.  
Question 14  
Only a corporation that qualifies as a small company  
under section 831(b)(2) is eligible to elect to be taxed on  
taxable investment income under section 831(b) in lieu of  
the tax otherwise applicable under section 831(a). See  
section 831(b)(2)(A)(iii). Section 831(b)(2)(A)(ii) provides  
that a corporation must meet the diversification  
requirements in section 831(b)(2)(B) to qualify as a small  
company. A corporation meets the diversification  
requirements if under section 831(b)(2)(B)(i)(I) no more  
than 20% of the net written premiums (or, if greater, direct  
written premiums) of such corporation for the tax year is  
attributable to any one policyholder. However, a  
arrangement). In addition, under an imported mismatch  
rule, section 267A generally applies to interest or royalties  
paid or accrued according to a non-hybrid arrangement  
where the income attributable to that payment or accrual  
is directly or indirectly offset by certain deductions  
involving hybridity incurred by a related party or according  
to a structured arrangement. However, section 267A does  
not apply if a de minimis exception is satisfied. See  
Regulations section 1.267A-1(c). For purposes of section  
267A, interest and royalties are defined broadly. For  
additional information about arrangements subject to  
section 267A, see Regulations sections 1.267A-2 and  
1.267A-4. Also, see the anti-avoidance rule under  
Regulations section 1.267A-5(b)(6).  
corporation that does not meet this 20% test can meet the  
diversification requirement under section 831(b)(2)(B) if  
no person who holds (directly or indirectly) an interest in  
such insurance company is a specified holder who holds  
(directly or indirectly) aggregate interest in such insurance  
company which constitutes a percentage of the entire  
interests in such insurance company which is more than  
2% higher than the percentage of interests in the specified  
assets with respect to such insurance company held  
(directly or indirectly) by such specified holder under  
section 831(b)(2)(B)(i)(II).  
Extent to which deduction is disallowed. When  
section 267A applies to interest or royalties paid or  
accrued pursuant to a hybrid arrangement, it generally  
disallows a deduction for the amount to the extent that,  
under the foreign tax law, there is not a corresponding  
income inclusion (including long-term deferral). However,  
the deduction is not disallowed to the extent the amount is  
directly or indirectly included in income in the United  
States, such as if the amount is taken into account with  
respect to a U.S. shareholder under section 951(a) or  
section 951A. For additional information, see Regulations  
sections 1.267A-2 through 1.267A-4. For examples  
illustrating the application of section 267A, see  
A corporation making an election under section 831(b)  
(2)(A)(iii) must complete question 14 to indicate whether it  
qualifies as a small company, and, therefore, is eligible to  
make the election to be taxed on taxable investment  
income because it meets the diversification requirements  
of the 20% test in section 831(b)(2)(B)(i)(I). If the  
corporation answers “No” for question 14(a), then the  
corporation must satisfy the specified holder/specified  
asset test in section 831(b)(2)(B)(i)(II) to qualify to make  
the section 831(b)(2)(A)(iii) election to be taxed on taxable  
investment income. If the corporation satisfies the  
specified holder/specified asset test in section 831(b)(2)  
(B)(i)(II), the corporation should answer “Yes” for question  
14(b). If the corporation does not satisfy either the  
diversification requirements of section 831(b)(2)(B)(i)(I) or  
section 831(b)(2)(B)(i)(II) for the tax year (answering “No”  
for both questions), the corporation is not a small  
Regulations section 1.267A-6.  
Question 17  
Check “Yes” if the corporation has an election in effect to  
exclude a real property trade or business or a farming  
business from section 163(j). For more information, see  
section 163(j) and the Instructions for Form 8990.  
company and, therefore, is not eligible to be taxed on  
taxable investment income under section 831(b) in lieu of  
the tax otherwise applicable under section 831(a).  
Question 18  
Question 15  
Generally, a taxpayer with a trade or business must file  
Form 8990 to claim a deduction for business interest. In  
addition, Form 8990 must be filed by any taxpayer that  
owns an interest in a partnership with current-year, or  
prior-year carryover, excess business interest expense  
allocated from the partnership.  
If the corporation had gross receipts of at least $500  
million in any 1 of the 3 preceding tax years, complete  
Form 8991 and attach it to this return. For this purpose,  
the corporation's gross receipts include the gross receipts  
of all persons aggregated with the corporation, as  
specified in section 59A(e)(3). See the Instructions for  
Form 8991 to determine if the corporation is subject to the  
base erosion minimum tax.  
Exclusions from filing. A taxpayer is not required to file  
Form 8990 if the taxpayer is a small business taxpayer  
Instructions for Form 1120-PC (2023)  
25  
   
(defined below) and does not have excess business  
interest expense from a partnership. A taxpayer is also not  
required to file Form 8990 if the taxpayer only has  
business interest expense from the following excepted  
trades or businesses.  
Line 5. Tax-exempt securities. Include on this line:  
State and local government obligations, the interest on  
which is excludable from gross income under section  
103(a); and  
Stock in a mutual fund or other RIC that distributed  
An electing real property trade or business.  
An electing farming business.  
exempt-interest dividends during the tax year of the  
corporation.  
Certain utility businesses.  
Line 18. Insurance liabilities. Include on this line:  
Small business taxpayer. A small business taxpayer is  
not subject to the business interest expense limitation and  
is not required to file Form 8990. A small business  
taxpayer is a taxpayer that (a) is not a tax shelter (as  
defined in section 448(d)(3)); and (b) meets the gross  
receipts test of section 448(c), discussed next.  
Gross receipts test. For tax years beginning in 2023, a  
taxpayer meets the gross receipts test if the taxpayer has  
average annual gross receipts of $29 million or less for the  
3 prior tax years. See section 448(c) and the Instructions  
for Form 8990 for additional information.  
Undiscounted unpaid losses,  
Loss adjustment expenses, and  
Unearned premiums.  
See section 846 for more information.  
Line 27. Adjustments to shareholders' equity. Some  
examples of adjustments to report on this line include:  
Unrealized gains and losses on securities held  
“available for sale,”  
Foreign currency translation adjustments,  
The excess of additional pension liability over  
unrecognized prior service cost,  
Guarantees of ESOP debt, and  
Question 19  
Compensation related to employee stock award plans.  
If the corporation is a member of a controlled group, check  
the “Yes” box. Complete and attach Schedule O (Form  
1120), Consent Plan and Apportionment Schedule for a  
Controlled Group. Component members of a controlled  
group must use Schedule O to report the apportionment  
of certain tax benefits between the members of the group.  
See Schedule O and the Instructions for Schedule O for  
more information.  
If the total adjustment to be entered on line 27 is a  
negative amount, enter the amount in parentheses.  
Schedule M-1— Reconciliation of  
Income (Loss) per Books With  
Income (Loss) per Return  
In completing Schedule M-1, the following apply.  
Question 20  
All insurance companies required to file Form 1120-PC  
Check the appropriate boxes to indicate if the corporation  
is required to file Form 4626. If the corporation does not  
meet the requirements of the safe harbor method, as  
provided under section 59(k)(3)(A) and Notice 2023-7,  
2023-3 I.R.B. 390, available at IRS.gov/irb/  
with total assets (nonconsolidated or consolidated for all  
corporations included within the tax consolidation group)  
of $10 million or more on the last day of the tax year must  
file Schedule M-3 (Form 1120-PC) instead of  
Schedule M-1. See Schedule M-3 (Form 1120-PC),  
earlier.  
2023-03_IRB#NOT-2023-7, complete and attach Form  
4626 to the corporation's return. See the Instructions for  
Form 4626.  
A corporation filing Form 1120-PC that is not required to  
file Schedule M-3 (Form 1120-PC) may voluntarily file  
Schedule M-3 (Form 1120-PC) instead of Schedule M-1.  
See the Instructions for Schedule M-3 (Form 1120-PC) for  
more information.  
Schedule L—Balance Sheets per  
Books  
Note. All insurance companies required to file Form  
1120-PC must complete Schedule L.  
The balance sheets should agree with the corporation's  
books and records.  
Line 5c. Travel and entertainment. Include on line 5c  
any of the following.  
Entertainment expenses not deductible under section  
274(a).  
Meal expenses not deductible under section 274(n).  
Expenses for the use of an entertainment facility.  
The part of business gifts over $25.  
If filing a consolidated return, report total consolidated  
assets, liabilities, and shareholders’ equity for all  
corporations joining in the return. See Consolidated  
returns, earlier.  
Expenses of an individual over $2,000, allocable to  
conventions on cruise ships.  
Employee achievement awards of nontangible or  
tangible property over $400 ($1,600 if part of a qualified  
plan).  
Corporations with total assets (nonconsolidated or  
consolidated for all corporations included within the tax  
consolidation group) of $10 million or more on the last day  
of the tax year must file Schedule M-3 (Form 1120-PC)  
instead of Schedule M-1. See the separate Instructions for  
Schedule M-3 (Form 1120-PC) for provisions that also  
affect Schedule L.  
The cost of skyboxes.  
Nondeductible club dues.  
The part of luxury water travel expenses not deductible  
under section 274(m).  
Expenses for travel as a form of education.  
Other nondeductible travel and entertainment  
Line 1. Cash. Include certificates of deposit as cash on  
expenses.  
this line.  
26  
Instructions for Form 1120-PC (2023)  
               
The time needed to complete and file this form will vary  
depending on individual circumstances. The estimated  
burden for business taxpayers filing this form is approved  
under OMB control number 1545-0123 and is included in  
the estimates shown in the instructions for their business  
income tax return.  
Line 7a. Tax-exempt interest. Report any tax-exempt  
interest received or accrued, including any  
exempt-interest dividends received as a shareholder in a  
mutual fund or other RIC. Also, report this same amount  
on Schedule I, item 10.  
Paperwork Reduction Act Notice. We ask for the  
information on these forms to carry out the Internal  
Revenue laws of the United States. You are required to  
give us the information. We need it to ensure that you are  
complying with these laws and to allow us to figure and  
collect the right amount of tax.  
You are not required to provide the information  
requested on a form that is subject to the Paperwork  
Reduction Act unless the form displays a valid OMB  
control number. Books or records relating to a form or its  
instructions must be retained as long as their contents  
may become material in the administration of any Internal  
Revenue law. Generally, tax returns and return information  
are confidential, as required by section 6103.  
If you have comments or suggestions for making this  
form and related schedules simpler, we would be happy to  
hear from you. You can send us comments through  
IRS.gov/FormComments. Or you can write to:  
Internal Revenue Service  
Tax Forms and Publications  
1111 Constitution Ave. NW, IR-6526  
Washington, DC 20224  
Do not send the tax form to this address. Instead, see  
Where To File, earlier.  
Instructions for Form 1120-PC (2023)  
27  
Index  
A
Estimated tax:  
Pension, profit-sharing, etc. plans 15  
Period covered 6  
Payments 4  
Penalty 5, 10  
Personal holding company tax 9  
Private delivery services 3  
Accounting methods 5  
Extension of time to file 3  
Accounting methods, change in 5  
Accounting period (tax year) 6  
Address change 8  
F
R
Adjustments to shareholders'  
Final return 8  
Recordkeeping 6  
equity 26  
Foreign corporations 9  
Foreign person 24  
Related party transactions 12  
Affiliated group 23  
Amended return 8  
Amortization 12  
S
Foreign tax credit 9  
Form 3800 10  
Schedule:  
Assembling the return 4  
Forms and publications, how to get 2  
B, Part I 18  
B, Part II 18  
B
G
Backup withholding 10  
General business credit 9  
Base erosion minimum tax 9  
Blue Cross or Blue Shield 21, 24  
Business start-up expenses 12  
Golden parachute payments 12  
I
Insurance liabilities 26  
C
Interest due on late payment of tax 5  
CAMT 9  
M-1 26  
M-3 7  
Charitable contributions 15  
Consolidated return 7  
Corporate alternative minimum tax 9  
L
Limitation on dividends-received  
Section 953 election 8  
deduction 21  
Limitations on deductions 12  
Lobbying expenses 17  
T
D
Tax and payments 8  
Deductions 12  
Tax issues, unresolved 2  
Tax rate 8  
M
Definitions 19  
100% dividend 19  
Applicable interest rate 21  
Medical loss ratio 5, 21, 23, 24  
Medical loss ratio (MLR) 21  
Minimum tax:  
Tax-exempt securities 26  
Travel, meals, and entertainment 16  
Applicable statutory premium  
recognition pattern 21  
Prior year, credit for 9  
Prorated amounts 19  
U
Undiscounted unearned premiums 21  
Uncertain tax positions 24  
N
Depository methods of tax  
NAIC annual statement 4  
Name change 8  
payment 4  
W
Disclosure statement 6  
When to file, extension 3  
Where to file 3  
Net operating loss 17  
E
Who must file:  
O
Elective payment election 10  
Exceptions 2  
Other deductions 16  
Owner's country 24  
Electronic deposit of tax refund of $1  
Life insurance companies 2  
Who must sign 3  
million or more 10  
Electronic federal tax payment  
Worksheet for Schedule C 21  
system (EFTPS) 4  
P
Electronic filing 2  
Paid preparer authorization 3  
Penalties 5, 10  
Employer identification number  
(EIN) 8  
28