Form 1120-L Instruksi
Instruksi untuk Formulir 1120-L, U.S. Perusahaan Asuransi Jiwa Pengembalian Pajak
Artikelnr. 2023
Formulir Terkait
- Bentuk 1120-L - U.S. Asuransi Jiwa Pengembalian Pajak
Department of the Treasury
Internal Revenue Service
2023
Instructions for Form 1120-L
U.S. Life Insurance Company Income Tax Return
Section references are to the Internal Revenue Code
Future Developments
unless otherwise noted.
For the latest information about developments related to
Form 1120-L and its instructions, such as legislation
enacted after they were published, go to IRS.gov/
Contents
Page
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 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
19.
Elective payment election. Applicable entities and
electing taxpayers can elect to treat certain credits as
elective payments. Any resulting overpayment may result
the Instructions for Form 3800.
Other Forms and Statements That May Be
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. Affected corporations must still file the
2023 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 line 29 of
Form 1120-L (or other appropriate line of the corporation's
income tax return), even if that amount is zero. Failure to
follow these instructions could result in affected
Item E. Final Return, Name Change, Address
Schedule A—Dividends, Inclusions,
Dividends-Received Deduction, and Other
corporations 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,
Schedule F—Increase (Decrease) in
Photographs of Missing Children
The IRS is a proud partner with the National Center for
Missing & Exploited Children® (NCMEC). Photographs of
missing children selected by the Center may appear in
instructions on pages that would otherwise be blank. You
Jan 30, 2024
Cat. No. 11485H
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.
companies if they were U.S. corporations must file Form
1120-L. This includes organizations described in section
501(m)(1) that provide commercial-type life insurance.
The Taxpayer Advocate Service
Mutual Savings Banks Conducting Life
Insurance Business
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
Mutual savings banks conducting life insurance business
and meeting the requirements of section 594 are subject
to an alternative tax consisting of:
A partial tax computed on Form 1120, U.S. Corporation
•
Income Tax Return, on the taxable income of the bank,
excluding the life insurance department; and
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:
A partial tax on the taxable income computed on Form
•
1120-L of the life insurance department.
A problem is causing financial difficulty for the business;
The business is facing an immediate threat of adverse
•
Enter the combined tax on Form 1120, Schedule J,
line 1. File Form 1120 and attach Form 1120-L as a
statement (and identify it as such) or attach a statement
showing the computation of the taxable income of the life
insurance department (including all relevant information
that would be reported on Form 1120-L).
•
action; or
•
The corporation has tried repeatedly to contact the IRS
but no one has responded, or the IRS hasn't responded
by the date promised.
the corporation understand these rights.
Foreign Life Insurance Companies
TAS has offices in every state, the District of Columbia,
and Puerto Rico. Local advocates' numbers are in their
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
A foreign life insurance company that sells a U.S. real
property interest must file Form 1120-L and Schedule D
(Form 1120) to report the sale. Gain or loss from the sale
of a U.S. real property interest is considered effectively
connected with the conduct of a U.S. business, even
though the foreign life insurance company does not carry
on any insurance business in the United States and is not
otherwise required to file a U.S. income tax return. See
sections 842 and 897; and the instructions for Schedule K
line 8, later.
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 may be 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.
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;
•
•
•
•
•
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.
•
Tax forms and publications. The corporation can view,
download, or print all of the forms and publications it may
forms mailed to it.
General Instructions
Note. A domestic DE is generally a transparent entity.
Any insurance company that must file Form 1120-L will
include on Form 1120-L any tax items of a wholly owned
domestic DE that are subject to reporting.
Qualified opportunity investment. If the corporation
held a qualified investment in a qualified opportunity fund
(QOF) at any time during the year, the corporation must
file its return with Form 8997, Initial and Annual Statement
Purpose of Form
Use Form 1120-L to report the income, gains, losses,
deductions, credits, and to figure the income tax liability of
life insurance companies.
Who Must File
Every domestic life insurance company and certain
foreign corporations that would qualify as life insurance
2
Instructions Form 1120-L (2023)
of Qualified Opportunity Fund (QOF) Investments,
attached. See the Instructions for Form 8997.
When To File
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
generally file by the 15th day of the 4th month after the
date it dissolved.
Other Insurance Companies
Insurance companies, other than life insurance
companies, should file Form 1120-PC, U.S. Property and
Casualty Insurance Company Income Tax Return. A burial
or funeral benefit insurance company that directly
manufactures funeral supplies or performs funeral
services is taxable under section 831 and should file Form
1120-PC.
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.
Definitions
An “insurance company” means any corporation if more
than half of its business during the tax year is from the
issuance of insurance or annuity contracts or the
reinsuring of risks underwritten by insurance companies.
If the due date falls on a Saturday, Sunday, or legal
holiday, the corporation can file on the next business day.
A “life insurance company” is an insurance company in
the business of issuing life insurance and annuity
contracts either separately or combined with health and
accident insurance, or noncancelable contracts of health
and accident insurance that meet the reserves test in
section 816(a). Guaranteed renewable life, health, and
accident insurance that the corporation cannot cancel but
reserves the right to adjust premium rates by classes,
according to experience under the kind of policy involved,
are treated as noncancelable.
Private Delivery Services
Corporations can use certain private delivery services
(PDSs) designated by the IRS to meet the “timely mailing
the current list of designated services.
The PDS can tell you how to get written proof of the
mailing date.
For the IRS mailing address to use if you're using a
The “reserves test” requires that life insurance
reserves, as defined in section 816(b), plus unearned
premiums and unpaid losses (whether or not ascertained)
on noncancelable life, health, or accident policies not
included in life insurance reserves must make up more
than 50% of total reserves as defined in section 816(c).
When determining whether the reserves test has been
met:
1. Life insurance reserves and total reserves must
each be reduced by an amount equal to the mean of the
aggregates, at the beginning and end of the tax year, of
the policy loans outstanding with respect to contracts for
which life insurance reserves are maintained;
2. Amounts set aside and held at interest to satisfy
obligations under contracts that do not contain permanent
guarantees with respect to life, accident, or health
contingencies must not be included in either life insurance
reserves (section 816(c)(1)) or other reserves required by
law (section 816(c)(3)); and
PDSs cannot deliver items to P.O. boxes. You
must use the U.S. Postal Service to mail any item
!
CAUTION
to an IRS P.O. box address.
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, file Form 7004 by the regular due date of the
return. See the Instructions for Form 7004.
Who Must Sign
The return must be signed and dated by:
The president, vice-president, treasurer, assistant
•
treasurer, chief accounting officer; or
Any other corporate officer (such as 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.
Paid Preparer Use Only section. If an employee of the
corporation completes Form 1120-L, the paid preparer
section should remain blank. Anyone who prepares Form
1120-L 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.
3. Deficiency reserves must not be included in either
life insurance reserves or total reserves.
Electronic Filing
Corporations can generally electronically file (e-file) Form
7004 (automatic extension of time to file) and Forms 940,
941, and 944 (employment tax returns). If there is a
balance due, the corporation can authorize an electronic
funds withdrawal while e-filing. Form 1099 and other
information returns can also be electronically filed. The
option to e-file does not, however, apply to certain returns.
links for “Businesses & Self-Employed” and
“Corporations.”
The paid preparer must complete the required preparer
information and:
Instructions Form 1120-L (2023)
3
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 Center
Ogden, UT 84201-0012
The United States
Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409
A foreign country or U.S. territory
Sign the return in the space provided for the preparer's
statement was used as the basis for computing taxable
income, attach that annual statement to Form 1120-L.
However, see Electronic filing next.
•
signature,
Include their Preparer Tax Identification Number (PTIN),
•
and
Electronic filing. If a domestic or foreign life insurance
company files Form 1120-L electronically, don’t attach the
annual statement or pro forma annual statement to the
electronically filed return. However, if the full annual
statement is not attached, 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.
Give a copy of the return to the taxpayer.
•
Note. A paid preparer may sign original or amended
returns by rubber stamp, mechanical device, or computer
software program.
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 doesn’t apply to the firm, if any, shown in
that section.
Reconciliation. Corporations that do not file
Schedule M-3 (Form 1120-L) with Form 1120-L must
attach a statement that reconciles Form 1120-L with the
annual statement used as the basis for computing taxable
income reported on Form 1120-L. Also, see the Note
under the instructions for Schedule F, later, for additional
required reconciliations.
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:
Assembling the Return
To ensure that the corporation's tax return is correctly
processed, attach all schedules and other forms after
page 5 of Form 1120-L in the following order.
1. Schedule N (Form 1120).
2. Form 4626.
3. Form 4136.
4. Form 8978.
5. Form 965-B.
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
Respond to certain IRS notices about math errors,
•
offsets, and return preparation.
6. Form 8941.
7. Form 3800.
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.
8. Additional schedules in alphabetical order.
9. Additional forms in numerical order.
10. Supporting statements and attachments.
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.
Complete every applicable entry space on Form
1120-L. 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 on 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
Statements
Annual statement. In general, every domestic or foreign
life insurance company must attach a copy of the National
Association of Insurance Commissioners (NAIC) annual
statement filed with the state of domicile and used as the
basis for computing taxable income. If a different annual
corporation's name and employer identification number
(EIN) on each supporting statement or attachment.
4
Instructions Form 1120-L (2023)
less than originally estimated, it may have to refigure its
required installments. If earlier installments were
underpaid, the corporation may owe a penalty. See
Estimated tax penalty below.
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
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
See section 6655 and Pub. 542, Corporations, for more
Electronic Deposit Requirement
information on how to figure estimated taxes.
Corporations must use electronic funds transfers 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).
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
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:
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 wire payment (discussed later) on its
behalf. EFTPS is a free service provided by the
Its tax liability for the current year, or
Its prior year's tax.
•
•
See section 6655 for details and exceptions, including
special rules for large corporations.
Department of the Treasury. Services provided by a tax
professional, financial institution, payroll service, or other
third party may have a fee.
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 29. See the
alternative minimum tax, earlier.
To get more information about EFTPS or to enroll in
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 your 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.
Interest and Penalties
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
reasonable-cause criteria. Do not attach an explanation
when the corporation's return is filed.
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
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). To use 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
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.
Estimated Tax Payments
Generally, the following rules apply to the corporation's
payments of estimated tax.
The corporation must make installment payments of
•
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 transfers to
•
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
make installment payments of estimated tax.
If, after the corporation figures and deposits estimated
•
tax, it finds that its tax liability for the year will be more or
Instructions Form 1120-L (2023)
5
or withheld, or these taxes are not paid. These taxes are
generally reported on:
Rounding Off to Whole Dollars
The corporation may enter decimal points and cents when
completing its 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.
Form 720, Quarterly Federal Excise Tax Return;
Form 941, Employer's QUARTERLY Federal Tax
•
•
Return;
Form 944, Employer's ANNUAL Federal Tax Return; or
•
Form 945, Annual Return of Withheld Federal Income
•
Tax.
The trust fund recovery penalty may be imposed on all
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; and Pub. 15 (Circular E),
Employer's Tax Guide, for details, including the definition
of responsible persons.
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.
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.
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.
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.
Accounting Methods
The return of a life insurance company must be filed using
the accrual method of accounting or, to the extent
permitted under regulations, a combination of the accrual
method with any other method, except the cash receipts
and disbursements method. In all cases, the method used
must clearly show life insurance company taxable income
(LICTI).
Other Forms and Statements That
May Be Required
Reportable transaction disclosure statement.
Disclose information for each reportable transaction in
which the corporation participated. Form 8886,
Reportable Transaction Disclosure Statement, must be
filed for each tax year that the federal income tax liability
of the corporation is affected by its participation in the
transaction. The following are reportable transactions.
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 is requested. See the
Instructions for Form 3115 and Pub. 538 for more
information and exceptions. 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.
1. Any listed transaction, which is a transaction that is
the same as or substantially similar to one of the types of
transactions that the IRS has determined to be a tax
avoidance transaction and identified by notice, regulation,
or other published guidance as a listed transaction.
2. Any transaction offered under conditions of
confidentiality for which the corporation (or a related party)
paid an advisor a fee of at least $250,000.
3. Certain transactions for which the corporation (or a
related party) has contractual protection against
disallowance of the tax benefits.
4. Certain transactions resulting in a loss of at least
$10 million in any single year or $20 million in any
combination of years.
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.
5. Any transaction identified by the IRS by notice,
regulation, or other published guidance as a “transaction
of interest.”
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.
For more information, see Regulations section
1.6011-4. Also see the Instructions for Form 8886.
Penalties. The corporation may have to pay a penalty if
it is required to disclose a reportable transaction under
section 6011 and fails to properly complete and file Form
6
Instructions Form 1120-L (2023)
8886. Penalties also apply under section 6707A if the
corporation fails to file Form 8886 with its corporate return,
fails to provide a copy of Form 8886 to the Office of Tax
Shelter Analysis (OTSA), or files a form that fails to include
all the information required (or includes incorrect
information). Other penalties, such as an accuracy-related
penalty under section 6662A, also apply. See the
Instructions for Form 8886 for details on these and other
penalties.
Reportable transactions by material advisors.
Material advisors to any reportable transaction must
disclose certain information about the reportable
transaction by filing Form 8918, Material Advisor
Disclosure Statement, with the IRS. See the Instructions
for Form 8918.
be filed in accordance with Regulations section 1.362-4(d)
(3).
Form 8975, Country-by-Country Report. Certain U.S.
persons that are the ultimate parent entity of a U.S.
multinational enterprise group with annual revenue for the
preceding reporting period of $850 million or more are
required to file Form 8975. Form 8975 and Schedule A
(Form 8975) must be filed with the income tax return of the
ultimate parent entity of a U.S. multinational enterprise
group for the tax year in or within which the reporting
period covered by Form 8975 ends. For more information,
see Form 8975, Schedule A (Form 8975), and the
Instructions for Form 8975 and Schedule A (Form 8975).
Additional 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.
Transfers to a corporation controlled by the transfer-
or. Every significant transferor (as defined in Regulations
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.
Specific Instructions
Period Covered
Section 843 requires all insurance companies to file on a
calendar year basis, unless they join in the filing of a
consolidated return. If a consolidated return is filed,
indicate the period covered on the parent corporation's
return.
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.
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.
Dual consolidated losses. If a domestic corporation
incurs a dual consolidated loss (as defined in Regulations
section 1.1503-2(c)(5)), the corporation (or consolidated
group) may need to attach an elective relief agreement
and/or an annual certification as provided in Regulations
section 1.1503-2(g)(2).
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 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.
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.
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
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 life
insurance companies as includible corporations. The life
insurance companies must have been members of the
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
Instructions Form 1120-L (2023)
7
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).
requirement is satisfied by checking box 2 of item A on
page 1.
Show any setoffs required by paragraphs (e), (h), and
•
(j) of Regulations section 1.1502-47.
Report separately the nonlife consolidated taxable
Note. The eligibility requirements (the tacking rule) for a
life insurance company to join in the filing of a
•
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.
consolidated return with nonlife companies are covered in
Regulations section 1.1502-47(b)(12)(v).
Note. If an election under section 1504(c)(2) is in effect
for an affiliated group for the tax year, all items of
members of the group that are not life insurance
companies must not be taken into account in figuring the
tentative LICTI of members that are life insurance
companies.
Report separately the consolidated LICTI (as defined by
•
Regulations section 1.1502-47(g)(1)), determined under
Regulations section 1.1502-11, 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.
Corporations filing a consolidated return must check
box 1 of item A 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 consolidated return. Attach a separate Form 1122
for each new subsidiary being included in the
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
Across the top of page 1 of Form 1120-PC, write
“Supporting Statement to Consolidated Returns.”
Schedule M-3 (Form 1120-L)
consolidated return.
A life insurance company with total assets
File supporting statements for each corporation
included in the consolidated return. Do not use Form
1120-L as a substitute for the supporting statement. On
the supporting statement, use columns to show the
following, both before and after adjustments.
(non-consolidated 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
Schedule M-3 (Form 1120-L), Net Income (Loss)
Reconciliation for U.S. Life Insurance Companies With
Total Assets of $10 Million or More. A corporation filing
Form 1120-L that is not required to file Schedule M-3 may
voluntarily file Schedule M-3.
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-L), check
box 3, of item A, “Schedule M-3 (Form 1120-L) attached”
at the top of page 1 of Form 1120-L. See the Instructions
for Schedule M-3 (Form 1120-L) 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-L) with
earlier.
Enter on Form 1120-L the totals for each item of
income, gain, loss, expense, or deduction, net of
eliminating entries for intercompany transactions between
corporations within the consolidated group. Attach
consolidated balance sheets and a reconciliation of
consolidated retained earnings.
Item B. Employer Identification
Number (EIN)
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 one of the following ways.
For more information on consolidated returns, see the
regulations under section 1502.
Online—Click on the Employer ID Numbers link at
•
Life-Nonlife Consolidated Return
If the corporation is the common parent of a life-nonlife
consolidated group, check boxes 1 and 2 of item A.
Filing requirements. The common parent of a
life-nonlife consolidated group must satisfy the following
filing requirements.
IRS.gov/EIN. The EIN is issued immediately once the
application information is validated.
By faxing or mailing Form SS-4, Application for
•
Employer Identification Number.
Corporations located in the United States or U.S.
territories can use the online application. Foreign
!
File the applicable consolidated corporate income tax
CAUTION
•
corporations should call 1-267-941-1099 (not a
return: 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.
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
Indicate clearly on the face of the return that the
•
corporate tax return is a life-nonlife return. This
8
Instructions Form 1120-L (2023)
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.
Life Insurance Company Taxable
Income
Income
Except as otherwise provided in the Internal Revenue
Code, gross income includes all income from whatever
source derived.
Line 1. Enter gross premiums and other consideration
received on insurance and annuity contracts less return
premiums and premiums and other consideration paid for
indemnity reinsurance.
Gross premiums and other consideration includes
advance premiums, deposits, fees, assessments,
consideration received for assuming liabilities under
contracts not issued by the corporation, and any amount
treated as premiums received under section 808(e).
Return premiums include amounts rebated or refunded
due to policy cancellations or incorrectly computed
premiums, but do not include amounts returned to
policyholders when such amounts are not fixed in the
contract but instead depend on the corporation's
experience or the management's discretion.
Line 3a. Decrease in reserves under section 807(f). If
the amount of any item referred to in section 807(c)
decreased as a result of a change in the basis used to
determine that item, then enter the section 807(f)
prescribed portion of the change that must be included in
life insurance company gross income (LICGI).
For more information, see the Instructions for Form
SS-4.
Item D. Section 953 Elections
Check the appropriate 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
2. Section 953(d) to be treated as a domestic
corporation.
Generally, a foreign corporation making either election
must file its return by sending it to:
Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409
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).
Note. If a corporation no longer qualifies as a life
insurance company, the balance of any adjustments under
section 807(f) must be taken into account in the last tax
year the corporation is qualified to file Form 1120-L. See
section 807(f)(2).
Line 3b. Income from Reserve Transition Relief. If
section 807(d) (as amended by P.L. 115-97) decreased
the amount of the reserve for any contract as of the close
of the tax year preceding the first tax year beginning after
2017, enter the portion of the change that must be
included in LICGI as prescribed by section 13517(c)(3) of
P.L. 115-97. See Rev. Proc. 2019-34, 2019-35 I.R.B. 669,
for more information.
Line 4. Investment income. Enter the amount from
Schedule B, line 6, less 50% of interest income of an
employee stock ownership plan (ESOP) loan made prior
to August 20, 1996. Also, see section 1602 of P.L.
104-188 for binding contracts and refinancing rules.
Line 5. Capital gain net income. Unless specifically
excluded by section 1221, each asset held by a
corporation (whether or not connected with its business) is
a "capital asset."
Note. Once either election is made, it will apply to the tax
year for which it was 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 the tax year or any other tax year.
Note. If a section 953(d) election is made, include the
additional tax required to be paid on line 11 of
Schedule K. On the dotted line to the left of line 11 of
Schedule K, write “Section 953(d)” and the amount.
Attach a statement showing the computation. See section
953(d) for more details.
Item E. Final Return, Name Change,
Address Change, or Amended Return
Indicate if this is a final return, name change, address
change, or amended return by checking the appropriate
box.
Note. If a change of 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 of the new address.
Under section 1221, capital asset does not include the
following.
1. Assets that can be inventoried or property held
mainly for sale to customers.
2. Depreciable or real property used in the trade or
business.
Instructions Form 1120-L (2023)
9
3. Certain copyrights; or literary, musical, or artistic
compositions.
4. Accounts or notes receivable acquired in the
ordinary course of trade or business for services rendered
or from the sale of property described in (1) above.
meaning of section 367(a)(3)(C), as in effect before its
repeal) to a foreign corporation with respect to which you
were 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.
5. Certain publications of the U.S. Government.
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.
Section 818(b) modifies the above definition so only
property used in carrying on an insurance business will be
considered as “depreciable or real property used in the
corporation's trade or business.” For life insurance
companies, gains or losses from the sale or exchange of
depreciable assets of any business other than an
insurance business will be treated as gains or losses from
the sale or exchange of capital assets.
Income from cancellation of debt (COD) for the
•
repurchase of a debt instrument for less than its adjusted
issue price.
See section 818(c) and the related regulations for how
to limit the gain from the sale or exchange of any section
818(c) property.
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.
Note. Form 8949, Sales and Other Dispositions of Capital
Assets, must be attached to Schedule D (Form 1120), as
required.
See Form 8621 and the Instructions for Form 8621 for
details.
1. Ordinary earnings of a qualified electing fund
(QEF).
Line 7. Other income. Enter any other taxable income,
includible in LICGI, not reported on lines 1 through 6. List
the type and amount of income on an attached statement.
If the life insurance company has only one item of other
income, describe it in parentheses on line 7. The following
are examples of other income to report on line 7.
2. Gain or loss from marking passive foreign
investment company (PFIC) stock to market.
3. Gain or loss from sale or other disposition of section
1296 stock.
Gains and losses (including ordinary gains and losses)
•
4. Excess distributions from a section 1291 fund
from sales or exchanges of assets used in a trade or
business and from involuntary conversions reported on
Form 4797, Sales of Business Property. Section 818(b)(1)
provides that, for section 1231(a), “property used in a
trade or business” includes only the following.
1. Property used in carrying on an insurance business
that is either real or depreciable property held for more
than 1 year.
allocated to the current year and pre-PFIC years, if any.
Any amount of 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 the last day of any calendar quarter in which
the credit is allowed.
2. Timber, coal, and domestic iron ore to which section
631 applies.
For (1) above, property used in a trade or business
does not include property includible in inventory; property
held primarily for sale to customers; or certain copyrights,
literary, musical, or artistic compositions, letters,
memoranda, and similar property.
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.
Any amount includible in income from Form 6478,
•
Biofuel Producer Credit, if applicable.
Deductions
Any amount includible in income from Form 8864,
•
Biodiesel, Renewable Diesel, or Sustainable Aviation
Fuels Credit.
Limitations on Deductions
Ordinary income from trade or business activities of a
•
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
partnership from Schedule K-1 (Form 1065), Partner's
Share of Income, Deductions, Credits, etc. Do not offset
ordinary losses against ordinary income. Instead, include
the losses on line 18. 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.
Section 91 Transferred Loss Amount. Enter the
•
transferred loss amount and identify the amount as
“Section 91 Transferred Loss Amount” required to be
recognized under section 91 resulting from a transfer of
substantially all the assets of a foreign branch (within the
For more information on the uniform capitalization rules,
see Pub. 538. Also, see Regulations sections 1.263A-1
through 1.263A-3.
10
Instructions Form 1120-L (2023)
need to reduce the otherwise allowable deductions for
expenses used to figure the credit. This applies to credits
such as the following.
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 the instructions for
Credit for increasing research activities (Form 6765).
Orphan drug credit (Form 8820).
•
•
•
•
•
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
•
Section 291 limitations. Corporations may be required
to adjust certain deductions. See section 291 to determine
the amount of the adjustment.
services (Form 8882).
Credit for small employer health insurance premiums
•
(Form 8941).
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.
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.
See the instructions for the form used to figure the
applicable credit for more information.
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.
Time for making the election. The corporation
generally elects to deduct start-up 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.
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 more
details and exceptions.
Line 9. Death benefits, etc. Enter all claims and benefits
accrued and losses incurred (whether or not ascertained)
during the year on insurance and annuity contracts.
For more details, see the Instructions for Form 4562,
Depreciation and Amortization.
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 write “Filed pursuant
to 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 elections
above 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.
Losses incurred (whether or not ascertained) include a
reasonable estimate of both losses incurred but not
reported and of reported losses, when the amount of the
losses cannot be determined by the end of the tax year.
Losses incurred must be adjusted to take into account
recoveries (for example, for reinsurance) for those losses
together with estimates of those recoveries that may be
recovered on those losses in future years.
Under section 807(c), the amount of unpaid
losses (other than losses on life insurance
TIP
contracts) must be the amount of the discounted
unpaid losses under section 846. See the instructions for
Schedule F, line 2, for more information on the discounting
provisions.
Line 11a. Increase in reserves under section 807(f).
If the amount of any item referred to in section 807(c)
increased as a result of a change in the basis used to
determine that item, then enter the section 807(f)
prescribed portion of the change that is a deduction in
computing LICTI.
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 start-up and
organizational costs and any amortization on line 18. For
amortization that begins during the current year, complete
and attach Form 4562.
Note. If a corporation ceases to qualify as a life insurance
company, the balance of any adjustments under section
807(f) must be taken into account in the last year that the
Reducing certain expenses for which credits are al-
lowable. If the corporation claims certain credits, it may
Instructions Form 1120-L (2023)
11
corporation is qualified to file Form 1120-L. See section
807(f)(2).
next year. See the Instructions for Form 8990. Also see
Consolidated groups. The limitation in section 163(j)
(1) on the amount allowed as a deduction for business
interest applies at the level of the consolidated group.
Line 11b. Deduction from Reserve Transition Relief. If
section 807(d) (as amended by P.L. 115-97) increased the
amount of the reserve for any contract as of the close of
the tax year preceding the first tax year beginning after
2017, enter the portion of the change that is a deduction in
computing LICTI as prescribed by section 13517(c)(3) of
P.L. 115-97. See Rev. Proc. 2019-34, 2019-35 I.R.B. 669,
for more information.
Line 12. Deductible policyholder dividends. A
policyholder dividend is any dividend or similar distribution
to policyholders in their capacity as such and includes any
amount paid or credited (including an increase in benefits)
where the amount is not fixed in the contract but depends
on the corporation’s experience or management’s
discretion. Enter on line 12 the amount of policyholder
dividends paid or credited during the tax year. Also, under
section 808(e), any policyholder dividend that (a)
increases either the cash surrender value of the contract
or other benefits payable under the contract, or (b)
reduces the premium otherwise required to be paid, is
treated as paid to and returned by the policyholder to the
company as a premium. Include these amounts in income
on page 1, line 1.
Line 15b. Less tax-exempt interest expense. Enter
interest paid or accrued on indebtedness incurred or
continued to purchase or carry obligations, the interest on
which is wholly tax exempt. See section 265(b) for special
rules and exceptions for financial institutions. Also see
section 265(b)(7) for a de minimis exception for financial
institutions for certain tax-exempt bonds issued in 2009
and 2010.
Line 18. Other deductions. Attach a statement, listing
by type and amount, all allowable deductions in
computing LICTI (including the amortization of premiums
under section 811(b)) not included on lines 9 through 16.
Examples of other deductions may include the
following.
Certain business start-up and organizational costs
•
Legal and professional fees.
•
•
•
Supplies used and consumed in the business.
Travel, meals, and entertainment expenses. Special
rules apply (discussed later).
Utilities.
•
•
Line 13. Assumption by another person of liabilities
under insurance, etc., contracts. Enter the total
consideration paid by the corporation to another person
(other than for indemnity reinsurance) for the assumption
by that person of liabilities under insurance and annuity
contracts (including supplementary contracts).
Ordinary losses from trade or business activities of a
partnership from Schedule K-1 (Form 1065). Do not offset
ordinary income against ordinary losses. Instead, include
the income on line 7. Show the partnership's name,
address, and EIN on a separate statement attached to this
return. If the amount is from more than one partnership,
identify the amount from each partnership.
Line 14. Dividends reimbursable by taxpayer. Enter
the amount of policyholder dividends:
Any extraterritorial income exclusion (from Form 8873,
•
1. Paid or accrued by another insurance company for
Extraterritorial Income Exclusion).
policies this corporation has reinsured, and
Any applicable deduction under section 179D for the
•
cost of energy efficient commercial building property
placed in service during the tax year. Complete and attach
Form 7205.
2. That are reimbursable by the corporation under the
terms of the reinsurance contract.
Line 15a. Interest. Enter all interest paid or accrued
during the tax year. No deduction is allowed under section
163 for interest on the items described in section 807(c).
Also, do not include interest included on Schedule G,
line 9 (General deductions).
Limitations. The deduction for interest is limited when
the corporation is a policyholder or beneficiary with
respect to a life insurance, endowment, or annuity
contract issued after June 8, 1997. For details, see
section 264(f). Attach a statement showing the
computation of the deduction.
Business interest expense is any interest paid or
accrued on indebtedness properly allocable to a trade or
business. 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 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
expense the corporation can deduct for the current tax
year and the amount that can be carried forward to the
Dividends paid in cash on stock held by an ESOP.
•
However, a deduction can 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 such 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
4. Used to make payments on a loan described in
section 404(a)(9).
See section 404(k) for more details and the limitation on
certain dividends.
Depreciation or amortization (attach Form 4562, if
•
required). Attach Form T (Timber), Forest Activities
Schedule, if a deduction for depletion of timber is taken.
Foreign intangible drilling costs and foreign exploration
12
Instructions Form 1120-L (2023)
and development costs must either be added to the
corporation's basis for cost depletion purposes or be
deducted ratably over a 10-year period. See sections
263(i), 616, and 617.
For details, see section 162(m) and Regulations
section 1.162-27. Also, see Notice 2007-49, 2007-25
I.R.B. 1429.
Salaries and wages. Include 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.
If the corporation provided taxable fringe benefits to its
employees, such as personal use of a car, do not deduct
as wages the amount allocated for depreciation and other
expenses claimed under Other Deductions on line 18.
Do not deduct the following.
Amounts paid, or incurred to, or at the direction of, a
•
government or governmental entity for the violation, or
investigation, or inquiry into the potential violation, of a
law.
Lobbying expenses. However, see exceptions
•
(discussed later).
Also, include on line 18 the following.
Compensation of officers. Enter deductible officers'
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 18. (See Disallowance of deduction
Attach a statement for compensation of all officers using
the following columns.
If the corporation claims a credit for any wages
paid or incurred, it may need to reduce any
!
CAUTION
corresponding deduction for officers’
compensation and salaries and wages. See Reducing
Also, reduce the amounts deducted as
compensation of officers and salaries and wages
!
CAUTION
by the nonrefundable and refundable portions of
the CARES Act and the ARP employee retention credit
claimed on the corporation’s employment tax return(s).
1. Name of officer.
2. Social security number.
3. Percentage of time devoted to business.
4. Amount of compensation.
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 in tax years
beginning after December 31, 2009. The $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.
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:
The principal executive officer of the corporation (or an
•
individual acting in that capacity) as of the end of the tax
year, or
Employment credits. If the corporation claims a credit
on any of the forms listed below, it may need to reduce its
deduction for salaries and wages. See the applicable
form(s).
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).
Form 5884, Work Opportunity Credit.
•
Form 8844, Empowerment Zone Employment Credit, if
•
For this purpose, compensation does not include the
applicable.
following.
Form 8882, Credit for Employer-Provided Childcare
•
Income from certain employee trusts, annuity plans, or
•
Facilities and Services.
Form 8932, Credit for Employer Differential Wage
pensions.
•
Any benefit paid to an employee that is excluded from
•
Payments.
the employee's income.
Form 8994, Employer Credit for Paid Family and
•
The deduction limit does not apply to:
Medical Leave.
Commissions based on individual performance;
Qualified performance-based compensation; and
Income payable under a written binding contract in
•
•
•
Pension, profit-sharing, etc., plans. Enter the
deduction for contributions to qualified pension,
profit-sharing, or other funded deferred compensation
plans. Employers who maintain such a plan must
generally file one of the forms listed below unless exempt
from filing under regulations or other applicable guidance,
even if the plan is not a qualified plan under the Internal
Revenue Code. The filing requirement applies even if the
corporation does not claim a deduction for the current tax
effect on February 17, 1993.
The $1 million limit is reduced by amounts disallowed
as excess parachute payments under section 280G.
Instructions Form 1120-L (2023)
13
year. There are penalties for failure to file these forms on
time and for overstating the pension plan deduction. See
sections 6652(e) and 6662(f). Also, see the instructions
for the applicable form.
Contributions of $250 or more. A corporation can
deduct a contribution of $250 or more only if it gets a
written acknowledgment from the donee organization that
shows the amount of cash contributed, describes any
property contributed, and either gives a description and a
good faith estimate of the value of any goods or services
provided in return for the contribution or states that no
goods or services were provided in return for the
contribution. The acknowledgment must be obtained by
the due date (including extensions) of the corporation's
return, or, if earlier, the date the return is filed. Do not
attach the acknowledgment to the tax return, but keep it
with the corporation's records.
Contributions of property other than cash. If a
corporation contributes property other than cash and
claims over a $500 deduction for the property, it must
generally attach a statement to the return describing the
kind of property contributed and the method used to
determine its fair market value (FMV). Attach Form 8283,
Noncash Charitable Contributions, to the return for
contributions of property (other than money) if the total
claimed deduction for all property contributed was more
than $5,000. Special rules apply to the contribution of
certain property. See the Instructions for Form 8283.
Form 5500, Annual Return Report of Employee Benefit
Plan.
Form 5500-SF, Short Form Annual Return/Report of
Small Employee Benefit Plan, instead of Form 5500,
generally if under 100 participants at the beginning of the
plan year.
Note. Form 5500 and Form 5500-SF must be filed
electronically under the computerized ERISA Filing
Acceptance System (EFAST2). For more information, see
Form 5500-EZ, Annual Return of A One-Participant
(Owners/Partners and Their Spouses) Retirement Plan or
A Foreign Plan. File this form for a plan that only covers
the owner (or the owner and their spouse) but only if the
owner (or the owner and their spouse) owns the entire
business.
Charitable contributions. Enter contributions or gifts
actually paid within the tax year to or for the use of
charitable and governmental organizations described in
section 170(c) and any unused contributions carried over
from prior years. Special rules and limits apply to
contributions to organizations conducting lobbying
activities. See section 170(f)(9).
Life insurance companies reporting LICTI on the
accrual method can elect to treat as paid during the tax
year any contributions paid by the due date for filing the
corporations’s tax return (not including extensions), if the
contributions were authorized by the board of directors
during the tax year. Attach a declaration to the return
stating that the resolution authorizing the contributions
was adopted by the board of directors during the tax year.
The declaration must include the date the resolution was
adopted. See Regulations section 1.170A-11.
Qualified conservation contributions. Special rules
apply to qualified conservation contributions, including
contributions of certain easements on buildings located in
a registered historic district. See section 170(h) and Pub.
526, Charitable Contributions. For special rules applicable
to certain qualified conservation contributions made by
Native corporations, see section 170(b)(2)(C).
Other special rules. See section 170 for special rules,
limitations, and requirements.
Travel, meals, and entertainment. Subject to limitations
and restrictions discussed below, a corporation can
deduct ordinary and necessary travel, meal, and
nonentertainment expenses paid or incurred in its trade or
business. Generally, entertainment expenses,
Limitation on deduction. The total amount claimed
cannot be more than 10% of LICTI computed without
regard to the following.
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. Special rules apply to deductions for gifts,
luxury water travel, and convention expenses. See section
274 and Pub. 463, Travel, Gift, and Car Expenses.
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 for contributions.
•
•
•
•
The deduction for policyholder dividends.
The deduction for dividends received.
Any net operating loss (NOL) carryback to the tax year
under section 172.
Any capital loss carryback to the tax year under section
•
1212(a)(1).
Carryover. Charitable contributions over the 10%
limitation (or the 25% limitation, if elected; see below)
cannot be deducted for the tax year but may be carried
over to the next 5 tax years.
That individual is an employee of the corporation, and
Their travel is for a bona fide business purpose and
•
•
would otherwise be deductible by that individual.
Meals. Generally, the corporation can deduct only 50%
of the amount otherwise allowable for
A contributions carryover is not allowed, however, to the
extent that it increases an NOL.
non-entertainment-related meal expenses paid or incurred
in its trade or business.
Cash contributions. For contributions of cash, check, or
other monetary gifts (regardless of the amount), the
corporation must maintain a bank record, or a receipt,
letter, or other written communication from the donee
organization indicating the name of the organization, the
date of the contribution, and the amount of the
contribution.
Meals not separately stated from entertainment are
generally not deductible. In addition (subject to exceptions
under section 274(k)(2)):
Meals must not be lavish or extravagant, and
•
An employee of the corporation must be present at the
•
meal.
14
Instructions Form 1120-L (2023)
See section 274(n)(3) for a special rule that applies to
expenses for meals consumed by individuals subject to
the hours of service limits of the Department of
Transportation.
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:
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).
Lobbying expenses. Generally, lobbying expenses are
not deductible. These expenses include:
Amounts paid or incurred in connection with influencing
•
federal, state, or local legislation (but not amounts paid or
incurred before December 22, 2017, in connection with
local legislation); or
Transportation in a commuter highway vehicle between
•
the employee's residence and place of employment,
Amounts paid or incurred in connection with any
•
Any transit pass, and
Qualified parking.
•
•
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.”
See section 274 and Pub. 15-B, Employer’s Tax Guide
to Fringe Benefits, for details.
Membership dues. The corporation can deduct
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. In addition,
corporations cannot deduct membership dues in any club
organized for business, pleasure, recreation, or other
social purpose. This includes country clubs, golf and
athletic clubs, airline and hotel clubs, and clubs operated
to provide meals under conditions favorable to business
discussion.
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.
Amounts treated as compensation. Generally, the
corporation may be able to deduct otherwise
nondeductible entertainment, amusement, or recreation
expenses if the amounts are treated as compensation to
the recipient and reported on Form W-2, Wage and Tax
Statement, for an employee or on Form 1099-NEC,
Nonemployee Compensation, for an independent
contractor.
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 21b. NOL deduction. The NOL deduction is the
lesser of the aggregate of the NOL carryovers to the tax
year, plus the NOL carrybacks to the tax year. If this
deduction is taken, show its computation on an attached
statement. Generally, a life insurance company can carry
over an NOL to each tax year following the tax year of the
loss. After applying the NOL to the first tax year to which it
may be carried, the portion of the loss the corporation may
carry to each of the remaining tax years is the excess, if
any, of the loss over the sum used as an NOL deduction in
the carryover year. See section 172 for special rules,
limitations, and definitions pertaining to the NOL
deduction and carryover.
If an ownership change (described in section 382(g))
occurs, the amount of the taxable income of a loss
corporation that may be offset by the pre-change loss
carryovers may be limited. (See section 382 and the
related regulations.) A loss corporation must include the
information statement as provided in Regulations section
1.382-11(a), with its income tax return for each tax year
that it is a loss corporation in which an ownership shift,
equity structures shift, or other transaction described in
Temporary Regulations section 1.382-2T(a)(2)(i) occurs. If
the corporation makes the closing-of-the-books election,
see Regulations section 1.382-6(b).
The limitations under section 382 do not apply to
certain ownership changes after February 17, 2009, made
pursuant to a restructuring plan under the Emergency
Economic Stabilization Act of 2008. See section 382(n).
For guidance in applying section 382 to loss
corporations whose instruments were acquired by the
Department of the Treasury under certain programs under
the Emergency Economic Stabilization Act of 2008, see
Notice 2010-2, 2010-2 I.R.B. 251.
For more details on the NOL deduction, see section
172 and the Instructions for Form 1139, Corporation
Application for Tentative Refund.
Line 24. Phased inclusion of balance of policyhold-
ers surplus account. Section 13514(d) of P.L. 115-97
requires a one-eighth per year phased inclusion of any
December 31, 2017, balance of the policyholders surplus
account starting in 2018. This amount cannot be reduced
by an NOL.
However, if the recipient is an officer, a director, a
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 or similar 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:
Amounts that constitute restitution or remediation of
•
property,
Amounts paid to come into compliance with the law,
•
•
Amounts paid or incurred as the result of certain court
orders or agreements in which no government or specified
nongovernmental agency is a party, and
Amounts paid or incurred for taxes due.
•
No deduction is 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
Instructions Form 1120-L (2023)
15
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 28.
Write the amount withheld and the words “Backup
Withholding” in the blank space above line 28.
Line 29. 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.
Line 25. Total taxable income. The total taxable income
reported on line 25 cannot be less than line 24 of the Form
1120-L.
Also, line 25 cannot be less than the largest of the
following amounts.
The inversion gain of the corporation for the tax year, if
•
the corporation is an expatriated entity or a partner in an
expatriated entity. For details, see section 7874.
The sum of the corporation's excess inclusions from
•
Schedule Q (Form 1066), line 2c, and the corporation's
taxable income determined solely with respect to its
ownership and high-yield interests in FASITs. For details,
see sections 860E(a) and 860J (repealed).
If Form 2220 is attached, check the box on line 29 and
Tax and Payments
enter the amount of any penalty on that line.
Line 27b. Estimated tax payments. Enter any
estimated tax payments the corporation made for the
current tax year.
If the corporation's tax liability includes a CAMT
liability, the corporation must complete and attach
!
CAUTION
Form 2220. The affected corporation must also
include an amount of estimated tax penalty on Form
1120-L, line 29, 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
Line 27c. 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 30. Amount owed. If the corporation cannot pay
the full amount of tax owed, it can apply for an installment
information.
Line 32. Refunded 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, Electronic Deposit
of Tax Refund of $1 Million or More, and attach it to the
corporation's tax return.
Line 27d. Combine lines 27a through 27c.
Line 27f. Credit for tax paid on undistributed capital
gains. Enter any credit from Form 2439, Notice to
Shareholder of Undistributed Long-Term Capital Gains, for
the corporation's share of the tax paid by a regulated
investment company (RIC) or a real estate investment
trust (REIT) on undistributed long-term capital gains
included in the corporation's income. Attach Form 2439 to
Form 1120-L.
Schedule A—Dividends, Inclusions,
Dividends-Received Deduction, and
Other Special Deductions
Line 27g. Credit for federal tax on fuels. Enter the total
income tax credit claimed on Form 4136, Credit for
Federal Tax Paid on Fuels. Attach Form 4136 to Form
1120-L.
Line 27h. U.S. income tax paid or withheld at source.
Enter the amount of any U.S. income tax paid or withheld
as reported on Form 1042-S, Foreign Person's U.S.
Source Income Subject to Withholding.
Line 27i. Elective payment election amount from
Form 3800. Enter the elective payment election amount
from Form 3800, General Business Credit, Part III, line 6,
column (i). See the Instructions for Form 3800.
Line 27z. Other credits and payments. Include on
line 27z any other refundable credit or payment the
corporation is claiming. Attach a statement listing the type
of credit and the amount of the credit or payment.
Credit for tax on ozone-depleting chemicals.
Include on line 27z any credit the corporation is claiming
under section 4682(g)(2) for tax on ozone-depleting
chemicals.
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.
Consolidated returns. Corporations filing a
consolidated return should see Regulations sections
1.1502-13, 1.1502-26, and 1.1502-27 before completing
Schedule A.
Corporations filing a consolidated return must not
report as dividends on Schedule A any amounts received
from corporations within the tax consolidation group. Such
dividends are eliminated in consolidation rather than offset
by the dividends-received deduction.
Line 1, column (a). Enter dividends (except those
received on certain debt-financed stock acquired after
July 18, 1984 (see section 246A)) that are:
Line 28. Total payments and credits. Combine the
amounts on lines 27d through 27z and enter the total on
line 28.
Received from less-than-20%-owned domestic
•
corporations subject to income tax, and
16
Instructions Form 1120-L (2023)
Qualified for the 50% deduction under section 243(a)
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), Dec. 19, 2014, 128 Stat. 4043)
for dividends paid.
•
(1).
Also include on line 1 the following.
Taxable distributions from an interest charge domestic
•
international sales corporation (IC-DISC) or former
domestic interational sales corporation (DISC) that are
designated as eligible for the 50% deduction and certain
dividends of Federal Home Loan Banks. See section
246(a)(2).
Line 6, column (a). Enter the U.S.-source portion of
dividends that:
Are received from less-than-20%-owned foreign
•
corporations, and
Qualify for the 50% deduction under section 245(a). To
•
Dividends (except those received on certain
•
qualify for the 50% deduction, the corporation must own at
least 10% of the stock of the foreign corporation by vote
and value.
debt-financed stock acquired after July 18, 1984) from a
RIC. The amount of dividends eligible for the
dividends-received deduction under section 243 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.
Also include dividends received from a
less-than-20%-owned foreign sales corporation (FSC)
that:
Are attributable to income treated as effectively
•
Report so-called dividends or earnings received from
mutual savings banks, etc., as interest. Do not treat them
as dividends.
connected with the conduct of a trade or business within
the United States (excluding foreign trade income), and
Qualify for the 50% deduction under section 245(c)(1)
•
(B).
Line 2, column (a). Enter on line 2:
Dividends (except those received on debt-financed
•
Line 7, column (a). Enter the U.S.-source portion of
stock acquired after July 18, 1984) that are received from
20%-or-more-owned domestic corporations subject to
income tax and that are subject to the 65% deduction
under section 243(c), and
dividends that:
Are received from 20%-or-more-owned foreign
•
corporations, and
Qualify for the 65% deduction under sections 245(a)
•
Taxable distributions from an IC-DISC or former DISC
•
and 243 by reference.
that are considered eligible for the 65% deduction.
Also include dividends received from a
Line 3, column (a). Enter the following.
20%-or-more-owned FSC that:
Dividends received on certain debt-financed stock
Are attributable to income treated as effectively
•
•
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).
connected with the conduct of a trade or business within
the United States (excluding foreign trade income), and
Qualify for the 65% deduction under section 245(c)(1)
•
(B).
Line 8, column (a). Enter dividends received from wholly
owned foreign subsidiaries that are eligible for the 100%
deduction under section 245(b) but that do not qualify as
“100% dividends” under section 805(a)(4)(C).
Dividends received from a RIC on 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.
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
Line 3, columns (b) and (c). Dividends received on
certain debt-financed stock acquired after July 18, 1984,
are not entitled to the full 50% or 65% dividends-received
deduction under section 243 or 245(a). 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
certain dividends received from foreign corporations.
Attach a statement showing how the amount on line 3,
column (c), was figured.
Line 4, column (a). 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), Dec. 19, 2014, 128 Stat. 4043)
for dividends paid.
All of its gross income from all sources is effectively
•
connected with the conduct of a trade or business within
the United States.
Do not include dividends received from a life insurance
company.
Also, include on line 8, column (a), 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 9, column (a). Enter only those dividends that
qualify under section 243(b) for the 100%
dividends-received deduction described in section 243(a)
(3) but that do not qualify as “100% dividends” under
section 805(a)(4)(C). Corporations taking this deduction
are subject to the provisions of section 1561. Do not
include dividends received from a life insurance company.
Line 5, column (a). Enter dividends received on
preferred stock of a 20%-or-more-owned public utility that
Instructions Form 1120-L (2023)
17
The 100% deduction does not apply to affiliated group
members that are joining in the filing of a consolidated
return.
Line 10, column (c). Limitation on dividends-received
deduction. Generally, line 10 of column (c) cannot
exceed the amount from the Worksheet for Schedule A,
Line 10. 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 section 246(b).
Line 17c, column (a). Enter all other amounts included
in income under section 951, which should equal the U.S.
shareholder's pro rata share of the sum of the amounts
reported on Form(s) 5471, Schedule I, lines 1f, 2, 3, and 4.
Line 18, column (a). Enter amounts included in income
under the section 951A GILTI provision. See Form 8992,
U.S. Shareholder Calculation of Global Intangible
Low-Taxed Income (GILTI), Part II, line 5; and the
Instructions for Form 8992. Also, consider the applicability
of section 951A with respect to CFCs owned by domestic
partnerships in which the filer has an interest. If you also
have a Form 5471 reporting requirement, attach Form
5471.
Line 13, column (a). In general, enter “100% dividends”
as defined in section 805(a)(4)(C). That is, in general,
enter dividends that qualify for the 100%
dividends-received deduction under sections 243, 244 (as
affected by P.L. 113-295, Div. A, section 221(a)(41)(A),
Dec. 19, 2014, 128 Stat. 4043), and 245(b), and were not
reported on line 8 or 9 because they were (a) not
distributed out of tax-exempt interest or out of dividends
that do not qualify as 100% dividends, or (b) paid by a life
insurance company.
Line 19, column (a). Include the following.
1. Include gross-up for taxes deemed paid under
section 902 (for dividends paid in pre-2022 tax years of
foreign corporations) and 960.
2. 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.
Note. Certain dividends received by a foreign corporation
are not subject to proration. Attach a statement showing
computations.
3. Dividends from tax-exempt organizations.
Line 14, column(a). Enter the foreign-source portion of
4. Dividends (other than capital gain distributions)
received from a REIT that, for the tax year of the trust in
which the dividends are paid, qualifies under sections 856
through 860.
dividends:
Received from specified 10%-owned foreign
•
corporations (as defined in section 245A(b)), including
gain from the sale of stock of a foreign corporation that is
treated as a dividend under sections 1248(a) and (i); and
5. Dividends not eligible for a dividends-received
deduction, which include the following.
Qualify for the 100% deduction under section 245A(a).
•
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
Line 15, column (a). Enter foreign dividends not
reportable on line 3, 6, 7, 8, or 14 of column (a).
Include on line 15 any hybrid dividends from a CFC.
•
Hybrid dividends are generally dividends received from a
CFC that would otherwise be reported on line 14 except
the CFC receives a deduction (or other tax benefit) with
respect to any income, war profits, or excess profits taxes
imposed by any foreign country or territory of the United
States.
Regulations section 1.246-5 for more details.
b. Dividends attributable to periods totaling more than
366 days that the corporation received on any share of
preferred stock 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.
Also, include on line 15 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 the Instructions for Form
8621.
Line 16, column (a). Reserved for future use.
Line 16, column (c). Reserved for future use.
Line 17a, column (a). 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 U.S.
shareholder's pro rata share of the amount reported on
Form(s) 5471, Information Return of U.S. Persons With
Respect to Certain Foreign Corporations, Schedule I,
line 1a.
Line 17b, column (a). Enter the pro rata share of
subpart F inclusions attributable to hybrid dividends of
tiered corporations under section 245A(e)(2). This should
equal the U.S. shareholder's pro rata share of the amount
reported on Form(s) 5471, Schedule I, line 1b.
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.
6. Any other taxable dividend income not properly
reported above.
Line 21, column (c). Enter the section 250 deduction
claimed for FDII and GILTI. This should equal the sum of
line 8 and line 9 of Form 8993, Section 250 Deduction for
Foreign-Derived Intangible Income (FDII) and Global
Intangible Low-Taxed Income (GILTI), Part IV.
18
Instructions Form 1120-L (2023)
Keep for Your Records
Worksheet for Schedule A, Line 10
1. Refigure Form 1120-L, page 1, line 8, without any adjustment under section 1059, and without any
capital loss carryback to the tax year under section 1212(a)(1). Add this refigured line 8 amount to
the amount on page 1, line 25. Subtract from that total the sum of page 1, lines 9 through 18 . . . . .
2. Add lines 9, 13, 14, and 17a, column (c), and the portion of the deduction on line 8, column (c), that
is attributable to dividends from FSCs that are attributable to foreign trade income . . . . . . . . . . . . . .
3. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Multiply line 3 by 65% (0.65) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Add lines 2, 5, and 7, column (c); the portion of the deduction on line 8, column (c), that is
attributable to wholly owned foreign subsidiaries; and the portion of the deduction on line 3, column
(c), 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 and enter the amount
from line 6 on line 10, column (c), and do not complete the rest of the worksheet . . . . . . . . . . . . . . .
7. Enter the total amount of dividends from 20%-or-more-owned corporations that are included on lines
2, 3, 5, and 7, column (a), and the portion of the deduction on line 8, column (a), that is attributable
to wholly owned subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8. Subtract line 7 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9. Multiply line 8 by 50% (0.50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10. Subtract line 5 above from line 10, column (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 10, column (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
and depreciation, should be reported as “Other
deductions” on page 1, line 18.
Line 4. Royalties. Enter the royalties received or accrued
during the tax year. Report the depletion deduction on
page 1, line 18.
Line 5. Leases, terminations, etc. Enter the income
received from entering into, altering, or terminating any
lease, mortgage, or other instrument from which the
corporation derives interest, rents, or royalties.
Schedule B—Investment Income
Line 1. Interest. Enter the total taxable interest received
or accrued during the tax year, less any amortization of
premium, plus any accrual of discount required by section
811(b). Generally, the appropriate amortization of
premium and accrual of discount for the tax year on
bonds, notes, debentures, or other evidence of
indebtedness held by a life insurance company should be
determined:
1. Under the method regularly employed by the
Schedule F—Increase (Decrease) in
Reserves (Section 807)
company, if reasonable; and
2. In all other cases, under the regulations.
For bonds (as defined in section 171(d)) issued after
September 27, 1985, the appropriate amount of
amortization of premium must be determined using the
yield to maturity method described in section 171(b)(3).
Market discount is not required to be accrued under
section 811(b). Attach a statement showing the method
and computation used.
Note. Attach a statement to the tax return that reconciles
lines 1 through 6 of Schedule F to the annual statement
used to prepare the tax return. If the annual statement
used to prepare the tax return is different from the NAIC
annual statement filed with the state of domicile, include a
separate reconciliation of lines 1 through 6 of Schedule F
to the annual statement filed with the state of domicile.
Schedule F is used to determine if, under section 807,
certain reserves decreased or increased for the tax year.
A net decrease will be includible in gross income, while a
net increase will be a deduction in computing LICTI.
Note. The Small Business Job Protection Act of 1996
repealed section 133, which provided for the 50% interest
income exclusion with respect to ESOP loans. The Act
also repealed section 812(g), which provided for the
exclusion of interest income from ESOP loans for
company/policyholder proration. The repeal of these
exclusions is effective for ESOP loans made after August
20, 1996. See Act section 1602 for special rules for
binding contract agreements in effect prior to June 10,
1996, and certain refinancings made after August 20,
1996.
The net increase or net decrease in reserves is figured
by comparing the opening balance for reserves to the
closing balance for reserves reduced by the policyholders'
share of tax-exempt interest (and the increase in policy
cash value of section 264(f) policies as defined in section
805(a)(4)(F)).
Reserve adjustments are not treated as interest
expenses for allocation purposes under section 864(c).
See section 818(f).
Line 3. Rents. Enter the rents received or accrued during
the tax year. Related expenses, such as repairs, taxes,
Instructions Form 1120-L (2023)
19
There are special rules for computing reserves of
unearned premiums of certain nonlife contracts. See
section 807(e)(5)(A).
For this item, the appropriate rate of interest is the
highest rate or rates permitted to be used to discount the
obligations by the NAIC as of the date the reserve is
determined. In no case shall the amount determined
under section 807(c)(3) for any contract be less than the
net surrender value of such contract.
Line 4. Dividend accumulations and other amounts.
Enter the total dividend accumulations and other amounts
held as interest in connection with insurance and annuity
contracts.
Note. If the basis for determining the amount of any item
referred to in section 807(c) (life insurance reserves, etc.)
at the end of the tax year differs from the basis for the
determination at the beginning of the tax year, see section
807(f).
Line 1. Life insurance reserves. For rules on how to
compute life insurance reserves, see sections 807(d) and
(e).
Line 2. Unearned premiums and unpaid losses. For
purposes of sections 807 and 805(a)(1), the amount of the
unpaid losses (other than losses on life insurance
contracts) must be the amount of the discounted unpaid
losses determined under section 846.
Section 846 provides that the amount of the 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:
Line 5. Advance premiums. Enter the total premiums
received in advance and liabilities for premium deposit
funds. See section 807(e)(5)(A) for special rules for
treatment of certain nonlife reserves.
Line 6. Special contingency reserves. Enter the total
reasonable special contingency reserves under contracts
of group-term life insurance or group accident and health
insurance, which are established and maintained for the
provision of insurance on retired lives, premium
stabilization, or for a combination thereof.
Line 8. Increase (decrease) in reserves under section
807. In figuring the amount on line 8, any decrease in
reserves must be computed without any reduction of the
closing balance of section 807 reserves by the
1. Amount of the undiscounted unpaid losses,
2. Applicable interest rate, and
3. Applicable loss payment pattern.
policyholders' share of tax-exempt interest.
Line 11. Do not include the exempt portion of any of the
interest income received on an ESOP loan made prior to
August 21,1996. For binding contract and refinancing
rules, see section 1602 of P.L. 104-188.
Special rules apply to:
Unpaid losses related to disability insurance (other than
•
credit disability insurance),
Noncancelable accident and health insurance, and
Cancelable accident and health insurance.
•
•
Schedule G—Policy Acquisition
Expenses
With regard to the special rules for discounting unpaid
losses on accident and health insurance (other than
disability income insurance), unpaid losses are assumed
to be paid in the middle of the year following the accident
year.
For purposes of section 848(b), all life insurance company
members of the same controlled group are treated as one
company. Any deduction determined for the group must
be allocated among the life insurance companies in the
group in such a manner as the IRS may prescribe.
Generally, the amount of undiscounted unpaid losses
means the unpaid losses shown in the annual statement.
The amount of discounted unpaid losses with respect to
any line of business for an accident year cannot exceed
the total amount of unpaid losses with respect to any line
of business for an accident year as reported on the annual
statement.
The applicable interest rate for each calendar year and
the applicable loss payment patterns for each accident
year for each line of business are determined by the IRS.
The applicable interest rate and loss payment patterns for
2023 are published in Rev. Proc. 2023-41, 2023-52 I.R.B
1607, available at IRS.gov/irb/2023-52_IRB#REV-
PROC-2023-41. Rev. Proc. 2023-41 also provides, for
convenience, the discount factors for losses incurred in
earlier accident years for use in tax years beginning in
2023.
Note. Policy acquisition expenses for an annuity or life
insurance contract that includes a qualified long-term care
insurance contract as part of, or as a rider on, the annuity
or life insurance contract, must be capitalized using the
net premium percentage for contracts that are not
described in section 848(c)(1)(A) or 848(c)(1)(B). See
section 848(e)(6) for more information.
Line 1. Gross premiums and other consideration.
Generally, gross premiums and other consideration is the
total of:
1. All premiums and other consideration (other than
amounts on reinsurance agreements), and
2. Net positive consideration for any reinsurance
agreement (see Regulations section 1.848-2(b)).
Line 3. Supplementary contracts. Enter the amount
(discounted at the appropriate rate of interest) necessary
to satisfy the obligations under insurance and annuity
contracts, but only if the obligations do not involve (at the
time the computation is made) life, accident, or health
contingencies.
Also include on this line:
Advanced premiums;
•
•
Amounts in a premium deposit fund or similar account,
as permitted by Regulations section 1.848-2(b)(3);
Fees;
•
•
Assessments;
20
Instructions Form 1120-L (2023)
Amounts that the insurance company charges itself
Do not include on line 1 any interest due under section
1291(c)(3). Instead, include the amount of interest owed
on Schedule K, line 11.
•
representing premiums with respect to benefits for its
employees (including full-time insurance salesmen treated
as employees under section 7701(a)(20)); and
For more information on reporting the deferred tax and
The value of a new contract issued in an exchange
•
interest, see the Instructions for Form 8621.
described in Regulations section 1.848-2(c)(2) or (3).
Increase in tax attributable to partner's audit
liability under section 6226. If the corporation is filing
Form 8978 to report adjustments shown on Form 8986,
Partner’s Share of Adjustment(s) to Partnership-Related
Item(s), they received from partnerships which have been
audited and have elected to push out imputed
Line 2. Return premiums and premiums and other
consideration incurred for reinsurance. For purposes
of section 848(d)(1)(B) and Regulations section
1.848-2(e), return premiums means amounts (other than
policyholder dividends or claims and benefit payments)
returned or credited to the policyholder. See Regulations
sections 1.848-2(f) and 1.848-3 for how to treat amounts
returned to another insurance company under a
reinsurance agreement.
underpayments to their partners, include any increase in
taxes due from Form 8978, line 14, in the total for Form
1120-L, Schedule K, line 1. On the dotted line next to
line 1, enter "FROM FORM 8978" and the amount. Attach
Form 8978. If Form 8978, line 14, shows a decrease in
tax, see the instructions for Schedule K, line 6.
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 1. On the dotted line next to line 1,
enter “Section 197” and the amount. See section 197(f)(9)
(B)(ii).
Line 4. Enter the applicable net premium percentage as
defined in section 848(c)(1).
Line 5. The entries in column 5(a), 5(b), or 5(c) may be
positive or negative.
Line 6. If the sum of columns 5(a), 5(b), and 5(c) is
negative, enter this negative amount on line 6 and
enter -0- on lines 7 and 8. The result is a negative
capitalization amount under section 848(f).
Line 2. 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, Tax on Base Erosion
Payments of Taxpayers With Substantial Gross Receipts,
for further guidance on the determination of the amount of
base erosion minimum tax.
Line 3. Corporate alternative minimum tax. Enter on
Schedule K, line 3, the amount from Form 4626,
Alternative Minimum Tax—Corporations, Part II, line 13, if
applicable. See the Instructions for Form 4626.
Line 9. General deductions. These are deductions
under sections 161 through 198, relating to itemized
deductions, and sections 401 through 424, relating to
pension, profit-sharing, stock bonus plans, etc. Also,
include on this line ceding commissions incurred for the
reinsurance of a specified insurance contract. Do not
include amortization deductions of specified policy
acquisition expenses under section 848(a) or (b). Skip
line 9 if the corporation has elected out of the general
deductions limitation. See Regulations section 1.848-2(g)
(8).
Line 5a. Foreign tax credit. To find out if a corporation
can take this credit for payment of income tax to a foreign
country or U.S. territory, see Form 1118, Foreign Tax
Credit—Corporations.
Line 5b. Credit from Form 8834. Enter any qualified
electric vehicle passive activity credits from prior years
allowed for the current year from Form 8834, Qualified
Electric Vehicle Credit, line 7. Attach Form 8834.
Line 5c. General business credit. Use Form 3800 to
claim any general business credits. Enter on line 5c the
allowable credit from Form 3800, Part II, line 38. See the
Instructions for Form 3800.
Line 5d. 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 5e. Bond credits from Form 8912. Enter the
allowable credits from Form 8912, Credit to Holders of Tax
Credit Bonds, line 12.
Line 6. Total credits. Add lines 5a through 5e and enter
the total on line 6.
Decrease attributable to partner's audit liability
under section 6226. If the corporation is filing Form
8978 to report adjustments shown on Form 8986 they
Note. If interest expense is included on line 9, do not also
include it on page 1, line 15a.
Line 13. Unamortized specified policy acquisition ex-
penses from prior years. Enter the balance of
unamortized specified policy acquisition expenses from
prior years as of the beginning of the tax year. See section
848(f)(1)(B).
Line 16. Phase-out amount. The amount of
amortization for members of a controlled group and the
phase-out of the group's specified policy acquisition
expenses under section 848(b) must be allocated to each
member in proportion to that member's specified policy
acquisition expenses for the tax year.
Schedule K—Tax Computation
Line 1. Corporations figure their tax by multiplying
taxable income by 21% (0.21).
Deferred tax under section 1291. If the corporation
was a shareholder in a 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 1291(c)(2) (from Form 8621) in the total
for line 1. On the dotted line to the left of line 1, enter
“Section 1291” and the amount.
Instructions Form 1120-L (2023)
21
received from partnerships which have been audited and
have elected to push out imputed underpayments to their
partners, include any decrease in taxes due (negative
amount) from Form 8978, line 14, in the total for Form
1120-L, Schedule K, line 6. On the dotted line next to
line 6, enter "FROM FORM 8978" and the amount. Attach
Form 8978. If Form 8978, line 14, shows an increase in
tax, see the instructions for Schedule K, line 1.
Line 8. Foreign corporations. A foreign corporation
carrying on a life insurance business in the United States
is taxed as a domestic life 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 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
later.
Line 11. Other taxes. Include any of the following taxes
and interest in the total on line 11. Attach a statement
showing the computation of each item included in the total
for line 11 and identify the applicable Code section and
the type of tax or interest.
Recapture of Indian employment credit. Generally, if an
•
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. For details, see Form 8845
and section 45A.
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
•
services credit (see Form 8882).
Interest on deferred tax attributable to certain nondealer
•
installment obligations (section 453A(c)).
Interest due on deferred gain (section 1260(b)).
•
•
Interest due under section 1291(c)(3). See Form 8621
and the Instructions for Form 8621.
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).
Line 12. Total tax. Include any deferred tax on the
termination of a section 1294 election applicable to
shareholders in a QEF in the amount entered on line 12.
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 12. On the dotted line next to line 12,
specify (a) the applicable Code section, (b) the type of tax,
and (c) the amount of tax.
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. 2021-41, 2021-39 I.R.B. 443,
liability percentages and domestic yields needed to
compute this amount.
Any additional income required by section 842(b) must
be included in LICTI (for example, page 1, line 7).
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 of section 881 tax was figured. Enter the net
tax imposed by section 881 on line 8.
Line 9. 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
Instructions for Form 4255.
Line 10. 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.
Schedule L
All filers must complete Parts I and II of Schedule L.
Note. Foreign life insurance companies should report
assets and insurance liabilities for their U.S. business only.
Part I—Total Assets
For Schedule L, assets mean all assets of the corporation.
In valuing real property and stocks, use FMV; for other
assets, use the adjusted basis as determined under
section 1011 and related sections, without regard to
section 818(c). An interest in a partnership or trust is not
itself treated as an asset of the corporation. Instead, the
corporation is treated as actually owning its proportionate
share of the assets held by the partnership or trust. The
value of the corporation's share of these assets should be
listed on line 3.
Part II—Total Assets and Total Insurance
Liabilities
The information provided in Part II should conform
with the “Assets” and “Liabilities, Surplus, and
!
CAUTION
Other Funds” sections of the NAIC annual
statement.
Foreign life insurance companies must maintain a
minimum surplus of U.S. assets over their U.S. insurance
liabilities. The minimum required surplus is determined by
multiplying their U.S. insurance liabilities by a percentage
22
Instructions Form 1120-L (2023)
determined by the IRS. The IRS determines the
percentage from data supplied by domestic life insurance
companies on Schedule L, Part II. See section 842.
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.
Enter on line 8a the percentage owned by the foreign
person specified in question 8. On line 8b, write the name
of the owner's country.
For Schedule L, total insurance liabilities means the
sum of the following amounts as of the end of the tax year.
1. Total reserves as defined in section 816(c); plus
Note. If there is more than one 25%-or-more foreign
owner, complete lines 8a and 8b for the foreign person
with the highest percentage of ownership.
2. The items referred to in paragraphs (3), (4), (5), and
(6) of section 807(c), to the extent such amounts are not
included in total reserves.
Foreign life insurance companies, see Notice 89-96 for
more information on determining total insurance liabilities
on U.S. business.
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;
Schedule M—Other Information
Complete the items that apply to the corporation.
Any partnership, association, company, or corporation
•
that is not created or organized in the United States;
Any foreign estate or trust within the meaning of section
Question 6. Check the “Yes” box if:
•
The corporation is a subsidiary in an affiliated group
•
7701(a)(31); or
(defined below) but is not filing a consolidated return for
the tax year with that group, 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.
The corporation is a subsidiary in a parent-subsidiary
•
controlled group. For a definition of a parent-subsidiary
controlled group, see the Instructions for Schedule O
(Form 1120).
However, the term "foreign person" does not include
any foreign person who consents to the filing of a joint
income tax return.
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” to question 8, 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.
Item 11. Enter the amount of the NOL carryover to the 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 page 1, line 21b.
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.
Note. If the corporation is an “excluded member” of a
controlled group (see 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 (section 1504(a))
connected through stock ownership with a common
parent corporation. The common parent must be an
includible corporation and the following requirements must
be met.
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.
Item 12. Complete item 12 to identify the state where the
annual statement used to prepare the tax return was filed.
Question 13. A corporation that files Form 1120-L must
file Schedule UTP (Form 1120), Uncertain Tax Position
Statement, with its 2022 income tax return if:
For this purpose, “stock” generally does not include any
stock that (a) is nonvoting, (b) is nonconvertible, (c) is
limited and preferred as to dividends 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). See section 1504(a)
(4).
Question 8. 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.
For 2023, the corporation's total assets equal or exceed
•
$10 million;
The corporation or a related party issued audited
•
financial statements reporting all or a portion of a
corporation's operations for all or a portion of the
corporation's tax year; and
The corporation has one or more tax positions that must
•
be reported on Schedule UTP.
Attach Schedule UTP to the corporation's income tax
return. Do not file it separately. A taxpayer that files a
Instructions Form 1120-L (2023)
23
protective Form 1120-L must also file Schedule UTP if it
satisfies the requirements set forth above.
current year, or prior year carryover, excess business
interest expense allocated from the partnership.
For details, see the Instructions for Schedule UTP.
Exclusions from filing. A taxpayer is not required to file
Form 8990 if the taxpayer is a small business taxpayer
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.
Question 14. If the corporation had gross receipts of at
least $500 million in any 1 of the 3 preceding tax years,
complete and attach Form 8991. 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.
An electing real property trade or business.
An electing farming business.
•
•
•
Certain utility businesses.
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. A taxpayer's average annual gross
receipts for the 3 prior tax years is determined by adding
the gross receipts for the 3 prior tax years and dividing the
total by 3. Gross receipts include the aggregate gross
receipts from all persons treated as a single employer,
such as a controlled group of corporations, commonly
controlled partnerships, or proprietorships, and affiliated
service groups. See section 448(c) and the Instructions
for Form 8990 for additional information.
Question 15. Section 267A disallows a deduction for
certain interest and royalty payments or accruals. In
general, section 267A applies when:
1. The interest or royalty is paid or accrued to a related
party;
2. Under its tax laws, the related party either:
a. Does not include the full amount in income, or
b. Is allowed a deduction with respect to the amount;
and
3. The amount is paid or accrued pursuant to a hybrid
transaction or by, or to, a hybrid entity.
When section 267A applies, the deduction is generally
disallowed to the extent the related party does not include
the amount in income or is allowed a deduction with
respect to the amount. However, the deduction is not
disallowed to the extent the amount is included in the
gross income of a U.S. shareholder under section 951(a).
Member of controlled group, business under com-
mon control, or affiliated group. For purposes of the
gross receipts test, all members of a controlled group of
corporations (as defined in section 52(a)) and all
members of a group of businesses under common control
(as defined in section 52(b)), are treated as a single
person, and all employees of the members of an affiliated
service group (as defined in sections 414(m) and (o)) shall
be treated as employed by a single person. If required,
attach Form 8990 to the corporation's income tax return.
earlier.
Question 18. 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 (Form 1120) to report the apportionment of
certain tax benefits between the members of the group.
See Schedule O (Form 1120) and the Instructions for
Schedule O (Form 1120) for more information.
For definitions of terms, see section 267A.
Question 16. The limitation on business interest expense
applies to every taxpayer with a trade or business, unless
the taxpayer meets certain specified exceptions. A
taxpayer may elect out of the limitation for certain
businesses otherwise subject to the business interest
expense limitation.
Certain real property trades or businesses and farming
businesses qualify to make an election not to limit
business interest expense. This is an irrevocable election.
If you make this election, you are required to use the
alternative depreciation system to depreciate any
nonresidential real property, residential rental property,
and qualified improvement property for an electing real
property trade or business, and any property with a
recovery period of 10 years or more for an electing
farming business. See section 168(g)(1)(F). Also, you are
not entitled to the special depreciation allowance for that
property. For a taxpayer with more than one qualifying
business, the election is made with respect to each
business.
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.
Question 17. 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
Question 19. 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/
4626 must be completed and attached to the corporation’s
return. See the Instructions for Form 4626.
24
Instructions Form 1120-L (2023)
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.
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.
If you have comments or suggestions for making this form and related schedules simpler, we would be happy to hear
Internal Revenue Service
Tax Forms and Publications
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
Instructions Form 1120-L (2023)
25
Index
A
R
Recordkeeping 6
S
G
Schedule:
Amortization 11
A 16
B 19
Gross premiums and other
F 19
consideration 9
G 20
B
K 21
I
M 23
L
C
Life insurance company taxable
Controlled group:
income 9
Limitation on dividends-received
T
deduction 18
Tax and payments:
Parent-subsidiary 23
Prior year(s) special estimated tax
D
M
Deductions 10
Minimum tax:
Transactions between related
Definitions:
taxpayers 11
Travel, meals, and entertainment:
N
Depository methods of tax
payment 5
W
O
E
Overpaid 16
Electronic deposit of tax refund of $1
Electronic Federal Tax Payment
Mutual savings banks conducting life
P
Employer identification number
(EIN) 8
F
26