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Formularul 1120-RIC Instrucţiuni

Instrucțiuni pentru formularul 1120-RIC, U.S. Revenirea impozitului pe venit pentru societățile de investiții reglementate

Rev. 2023

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  • Formularul 1120-RIC - SUA Revenirea impozitului pe venit pentru societățile de investiții reglementate
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Department of the Treasury  
Internal Revenue Service  
2023  
Instructions for Form  
1120-RIC  
U.S. Income Tax Return for Regulated Investment Companies  
Section references are to the Internal Revenue Code  
Future Developments  
unless otherwise noted.  
For the latest information about developments related to  
Form 1120-RIC and its instructions, such as legislation  
enacted after this form and instructions were published,  
Contents  
Page  
Photographs of Missing Children . . . . . . . . . . . . . . . . 1  
The Taxpayer Advocate Service . . . . . . . . . . . . . . . . . 1  
How To Get Forms and Publications . . . . . . . . . . . . . . 2  
General Instructions . . . . . . . . . . . . . . . . . . . . . . . . . 2  
Purpose of Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2  
Who Must File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2  
General Requirements To Qualify as a RIC . . . . . . . . . 2  
Other Requirements . . . . . . . . . . . . . . . . . . . . . . . . . 2  
Definition of a Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 3  
Where To File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3  
When To File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3  
Who Must Sign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4  
Paid Preparer Authorization . . . . . . . . . . . . . . . . . . . . 4  
Assembling the Return . . . . . . . . . . . . . . . . . . . . . . . 4  
Tax Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5  
Estimated Tax Payments . . . . . . . . . . . . . . . . . . . . . . 5  
Interest and Penalties . . . . . . . . . . . . . . . . . . . . . . . . 5  
Accounting Methods . . . . . . . . . . . . . . . . . . . . . . . . . 6  
Accounting Periods . . . . . . . . . . . . . . . . . . . . . . . . . . 6  
Rounding Off to Whole Dollars . . . . . . . . . . . . . . . . . . 6  
Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6  
Other Forms That May Be Required . . . . . . . . . . . . . . 6  
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7  
Specific Instructions . . . . . . . . . . . . . . . . . . . . . . . . . 9  
Period Covered . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9  
Name and Address . . . . . . . . . . . . . . . . . . . . . . . . . . 9  
Item B. Date RIC Was Established . . . . . . . . . . . . . . . 9  
Item C. Employer Identification Number (EIN) . . . . . . . 9  
Item D. Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . 9  
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 over 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.  
Elective payment election. Applicable entities and  
electing taxpayers can elect to treat certain credits as  
elective payments. Any resulting overpayment may result  
in refunds. See the instructions for line 28h. Also, see the  
Instructions for Form 3800.  
Photographs of Missing Children  
The Internal Revenue Service is a proud partner with the  
(NCMEC). Photographs of missing children selected by  
the Center may appear in instructions on pages that would  
otherwise be blank. You can help bring these children  
home by looking at the photographs and calling  
1-800-THE-LOST (1-800-843-5678) if you recognize a  
child.  
The Taxpayer Advocate Service  
The Taxpayer Advocate Service (TAS) is an independent  
organization within the IRS that helps taxpayers and  
protects taxpayer rights. TAS's job is to ensure that every  
taxpayer is treated fairly and knows and understands their  
rights under the Taxpayer Bill of Rights.  
Item E. Final Return, Name Change, Address  
Change, or Amended Return . . . . . . . . . . . . . . . . 9  
Part I—Investment Company Taxable Income . . . . . . . 9  
Part II—Tax on Undistributed Net Capital Gain Not  
Designated Under Section 852(b)(3)(D) . . . . . . . 15  
As a taxpayer, the RIC has rights that the IRS must  
abide by in its dealings with the RIC. TAS can help the RIC  
if:  
Schedule A—Deduction for Dividends Paid . . . . . . . 15  
Schedule B—Income From Tax-Exempt  
A problem is causing financial difficulty for the business;  
The business is facing an immediate threat of adverse  
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15  
Schedule J—Tax Computation . . . . . . . . . . . . . . . . . 15  
Schedule K—Other Information . . . . . . . . . . . . . . . . 17  
Schedule L—Balance Sheets per Books . . . . . . . . . 19  
Schedule M-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20  
action; or  
The RIC has tried repeatedly to contact the IRS but no  
one has responded, or the IRS hasn't responded by the  
date promised.  
TAS has offices in every state, the District of Columbia,  
and Puerto Rico. Local advocates' numbers are in their  
Jan 25, 2024  
Cat. No. 64251J  
   
local directories and at TaxpayerAdvocate.IRS.gov. The  
Other Requirements  
RIC can also call TAS at 877-777-4778.  
In addition, the RIC must meet the (1) income test, (2)  
asset test, and (3) distribution requirements explained  
below.  
TAS also works to resolve large-scale or systemic  
problems that affect many taxpayers. If the RIC knows of  
one of these broad issues, please report it to TAS through  
the Systemic Advocacy Management System at  
The income test: At least 90% of its gross income must  
be derived from the following items:  
Dividends;  
For more information, go to IRS.gov/Advocate.  
Interest (including tax-exempt interest income);  
Payments with respect to securities loans (as defined in  
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:  
section 512(a)(5));  
Gains from the sale or other disposition of stock or  
securities (as defined in ICA section 2(a)(36)) or foreign  
currencies;  
Other income (including gains from options, futures, or  
Download forms, instructions, and publications;  
Order IRS products online;  
forward contracts) derived from the RIC's business of  
investing in such stock, securities, or currencies; and  
Research your tax questions online;  
Net income derived from an interest in a qualified  
Search publications online by topic or keyword;  
View Internal Revenue Bulletins (IRBs) published in  
publicly traded partnership (as defined in section 851(h)).  
Income from a partnership (other than a qualified  
publicly traded partnership) or trust qualifies under the  
90% test to the extent the RIC's distributive share of such  
income is from items described above as realized by the  
partnership or trust.  
Income that a RIC receives in the normal course of  
business as a reimbursement from its investment advisor  
is qualifying income for purposes of the 90% test if the  
reimbursement is includible in the RIC's gross income.  
recent years; and  
Sign up to receive local and national tax news by email.  
Tax forms and publications. The RIC can view,  
download, or print all of the forms and publications it may  
need at IRS.gov/FormsPubs.  
Otherwise, the RIC can go to IRS.gov/OrderForms to  
place an order and have forms mailed to it.  
General Instructions  
A RIC that fails to meet the requirements of section  
851(b)(2) may still be considered to have satisfied the  
requirements of this test if:  
Purpose of Form  
Following the RIC's identification of the failure, a  
Use Form 1120-RIC, U.S. Income Tax Return for  
Regulated Investment Companies, to report the income,  
gains, losses, deductions, credits, and to figure the  
income tax liability of a regulated investment company  
(RIC) as defined in section 851.  
description of each item of its gross income described in  
section 851(b)(2) is set forth in a statement for the tax  
year; and  
Failure to meet the requirements of this test is due to  
reasonable cause and not due to willful neglect.  
Who Must File  
The asset test:  
A domestic corporation that meets certain conditions  
(discussed below) must file Form 1120-RIC if it elects to  
be treated as a RIC for the tax year (or has made an  
election for a prior tax year and the election has not been  
terminated or revoked). The election is made by  
1. At the end of each quarter of the RIC's tax year, at  
least 50% of the value of its assets must be invested in the  
following items:  
Cash and cash items (including receivables);  
Government securities;  
computing taxable income as a RIC on Form 1120-RIC.  
Securities of other RICs; and  
Qualified opportunity funds. To certify as a qualified  
opportunity fund (QOF), the RIC must file Form 1120-RIC  
and attach Form 8996, even if the RIC had no income or  
expenses to report. See Schedule K, Question 15. Also,  
see the Instructions for Form 8996.  
Securities of other issuers, except that the investment in  
a single issuer of securities may not exceed 5% of the  
value of the RIC's assets or 10% of the outstanding voting  
securities of the issuer (except as provided in section  
851(e)).  
2. At the end of each quarter of the RIC's tax year, no  
more than 25% of the value of the RIC's assets may be  
invested in the securities of:  
General Requirements To Qualify as a  
RIC  
The term “regulated investment company” applies to any  
domestic corporation that:  
A single issuer (excluding government securities or  
securities of other RICs);  
Two or more issuers controlled by the RIC and engaged  
Is registered throughout the tax year as a management  
company or unit investment trust under the Investment  
Company Act of 1940 (ICA),  
in the same or related trades or businesses; or  
One or more qualified publicly traded partnerships as  
Has an election in effect under the ICA to be treated as  
defined in section 851(h).  
a business development company, or  
See sections 851(b)(3) and 851(c) for further details.  
Is a common trust fund or similar fund that is neither an  
investment company under section 3(c)(3) of the ICA nor  
a common trust fund as defined under section 584(a).  
2
           
Where To File  
File the RIC's return at the applicable IRS address listed below.  
If the RIC's principal business, office, or  
agency is located in:  
And the total assets at the end of the  
tax year are:  
Use the following address:  
Department of the Treasury  
Connecticut, Delaware, District of Columbia,  
Georgia, Illinois, Indiana, Kentucky, Maine,  
Maryland, Massachusetts, Michigan, New  
Hampshire, New Jersey, New York, North  
Carolina, Ohio, Pennsylvania, Rhode Island,  
South Carolina, Tennessee, Vermont, Virginia,  
West Virginia, Wisconsin  
Less than $10 million and Schedule M-3 Internal Revenue Service  
is not filed  
Kansas City, MO  
64999-0012  
Department of the Treasury  
$10 million or more or Schedule M-3 is Internal Revenue Service  
filed  
Ogden, UT  
84201-0012  
Alabama, Alaska, Arizona, Arkansas, California,  
Colorado, Florida, Hawaii, Idaho, Iowa, Kansas,  
Louisiana, Minnesota, Mississippi, Missouri,  
Montana, Nebraska, Nevada, New Mexico,  
North Dakota, Oklahoma, Oregon, South  
Dakota, Texas, Utah, Washington, Wyoming  
Department of the Treasury  
Internal Revenue Service  
Ogden, UT  
Any amount  
84201-0012  
A group of corporations with members located in more than one service center area will often keep all the books and  
records at the principal office of the managing corporation. In this case, file the tax returns with the service center for the  
area in which the principal office of the managing corporation is located.  
3. A RIC that fails to meet the requirements of section  
851(b)(3) for a quarter may be considered to have  
satisfied the requirements of this test if:  
90% of the excess of the RIC's interest income  
excludable from gross income under section 103(a) over  
its deductions disallowed under sections 265 and 171(a)  
(2).  
After the RIC identifies the failure, the RIC provides a  
statement with a description of each asset that causes the  
RIC to fail to satisfy the requirements at the close of the  
quarter;  
A RIC that does not satisfy the distribution  
requirements will be subject to taxation as a C  
!
CAUTION  
corporation.  
The failure is due to reasonable cause and not due to  
Earnings and profits. The RIC must either have been  
a RIC for all tax years ending after November 7, 1983, or,  
at the end of the current tax year, have had no  
accumulated earnings and profits from any non-RIC tax  
year.  
willful neglect; and  
The RIC disposes of the assets set forth on the  
statement (or the requirements of section 851(b)(3) are  
otherwise met) within 6 months after the last day of the  
quarter in which the RIC identified the failure.  
4. De minimis failures. A RIC that fails to meet the  
requirements of section 851(b)(3) for a quarter may be  
considered to have satisfied the requirements of this test  
if:  
Note. For this purpose, current year distributions are  
treated as made from the earliest earnings and profits  
accumulated in any non-RIC tax year. See section 852(c)  
(3). Also, see section 852(e) for procedures that may allow  
the RIC to avoid disqualification for the initial year if the  
RIC did not meet this requirement.  
Such failure is due to ownership of assets, the total  
value of which does not exceed the lesser of:  
a. 1% of the total value of the RIC's assets at the end  
Definition of a Fund  
of the quarter for which the measurement is done, or  
The term “fund” refers to a separate portfolio of assets,  
whose beneficial interests are owned by the holders of a  
class or series of stock of the RIC that is preferred over all  
other classes or series for that portfolio of assets.  
b. $10 million; and  
The RIC disposes of the assets following the  
identification of the failure (or the requirements of section  
851(b)(3) are otherwise met) within 6 months after the last  
day of the quarter in which the RIC identified the failure.  
When To File  
Note. For special rules regarding failure to meet the  
requirements of the income and asset tests, see sections  
851(d)(2) and 851(i).  
Generally, a RIC must file its income tax return by the 15th  
day of the 4th month after the end of its tax year. A new  
RIC filing a short period return must generally file by the  
15th day of the 4th month after the short period ends. A  
RIC that has dissolved must generally file by the 15th day  
of the 4th month after the date of dissolution.  
Distribution requirements. The RIC's deduction for  
dividends paid for the tax year (as defined in section 561,  
but without regard to capital gain dividends) equals or  
exceeds the sum of:  
However, a RIC 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 RIC with a short tax year ending anytime in  
June will be treated as if the short year ended on June 30,  
90% of its investment company taxable income  
determined without regard to section 852(b)(2)(D); and  
3
     
and must file by the 15th day of the 3rd month after the  
end of its tax year.  
A paid preparer may sign original or amended  
returns by rubber stamp, mechanical device, or  
computer software program.  
TIP  
If the due date falls on a Saturday, Sunday, or legal  
holiday, the RIC may file its return on the next business  
day.  
Paid Preparer Authorization  
If the RIC wants to allow the IRS to discuss its 2023 tax  
return with the paid preparer who signed the return, 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 RIC's return. It does not apply to the firm, if any,  
shown in that section.  
Private Delivery Services  
RICs can use certain private delivery services (PDS)  
designated by the IRS to meet the “timely mailing as  
timely filing” rule for tax returns. Go to IRS.gov/PDS for the  
current list of designated services.  
The PDS can tell you how to get written proof of the  
mailing date.  
If the “Yes” box is checked, the RIC is authorizing the  
IRS to call the paid preparer to answer any questions that  
may arise during the processing of its return. The RIC is  
also authorizing the paid preparer to:  
For the IRS mailing address to use if you're using PDS,  
Give the IRS any information that is missing from the  
Private delivery services can't deliver items to P.O.  
return;  
boxes. You must use the U.S. Postal Service to  
!
Call the IRS for information about the processing of the  
CAUTION  
mail any item to an IRS P.O. box address.  
return or the status of any related refund or payment(s);  
and  
Extension of Time To File  
Respond to certain IRS notices about math errors,  
File Form 7004, Application for Automatic Extension of  
Time To File Certain Business Income Tax, Information,  
and Other Returns, to request an extension of time to file.  
Generally, the RIC must file Form 7004 by the regular due  
date of the return.  
offsets, and return preparation.  
The RIC is not authorizing the paid preparer to receive  
any refund check, bind the RIC to anything (including any  
additional tax liability), or otherwise represent the RIC  
before the IRS.  
The authorization will automatically end no later than  
the due date (excluding extensions) for filing the RIC's  
2024 tax return. If the RIC 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.  
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 a tax officer)  
authorized to sign.  
If a return is filed on behalf of a RIC 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 RIC  
must be accompanied by a copy of the order or  
instructions of the court authorizing signing of the return or  
form.  
Assembling the Return  
To ensure that the RIC's tax return is correctly processed,  
attach all schedules, statements, and other forms after  
page 4, Form 1120-RIC, in the following order.  
1. Schedule N (Form 1120).  
2. Schedule D (Form 1120).  
3. Form 8949.  
4. Form 4136.  
5. Form 8948.  
Note. If this return is being filed for a series fund (as  
defined in section 851(g)(2)), the return may be signed by  
any officer authorized to sign for the corporation in which  
the fund is a series.  
6. Form 965-B.  
Paid Preparer Use Only section. If an employee of the  
RIC completes Form 1120-RIC, the paid preparer's  
section should remain blank. Anyone who prepares Form  
1120-RIC but does not charge the RIC should not  
complete that section. Generally, anyone who is paid to  
prepare the return must sign it and complete the section.  
7. Form 8941.  
8. Form 3800.  
9. Form 8997.  
10. Additional schedules in alphabetical order.  
11. Additional forms in numerical order.  
12. Supporting statements and attachments.  
The paid preparer must complete the required preparer  
information and:  
Complete every applicable entry space on Form  
1120-RIC. Do not enter “See attached” instead of  
completing the entry spaces. If more space is needed on  
the forms or schedules, attach separate sheets using the  
same size and format as the printed forms.  
If there are supporting statements and attachments,  
arrange them in the same order as the schedules or forms  
they support and attach them last. Show the totals on the  
Sign the return in the space provided for the preparer's  
signature,  
Include their Preparer Tax Identification Number (PTIN),  
and  
Give a copy of the return to the RIC.  
4
     
printed forms. Enter the RIC's name and EIN on each  
supporting statement or attachment.  
If, after the RIC figures and deposits estimated tax, it  
finds that its tax liability for the year will be more or less  
than originally estimated, it may have to refigure its  
required installments. If earlier installments were  
underpaid, the RIC may owe a penalty. See the  
instructions for line 30, later.  
Tax Payments  
Generally, the RIC must pay the tax due in full no later  
than the due date for filing its tax return (not including  
extensions). See the instructions for line 31. If the due  
date falls on a Saturday, Sunday, or legal holiday, the  
payment is due on the next day that isn't a Saturday,  
Sunday, or legal holiday.  
If the RIC overpaid its estimated tax, it may be able to  
get a quick refund by filing Form 4466, Corporation  
Application for Quick Refund of Overpayment of  
Estimated Tax. The overpayment must be at least 10% of  
the RIC's expected income tax liability and at least $500.  
Electronic Deposit Requirement  
See section 6655 and Pub. 542, Corporations, for more  
information on how to figure estimated taxes.  
RICs must use electronic funds transfer to make all federal  
tax deposits (such as deposits of employment, excise,  
and corporate income tax). Generally, electronic funds  
transfers are made using the Electronic Federal Tax  
Payment System (EFTPS). However, if the RIC 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 may arrange  
for its financial institution to submit a same-day tax wire  
payment (discussed below) on its behalf. EFTPS is a free  
service provided by the Department of the Treasury.  
Services provided by a tax professional, financial  
institution, payroll service, or other third party may have a  
fee.  
Interest and Penalties  
Interest. Interest is charged on taxes paid late even if an  
extension of time to file is granted. Interest is also charged  
on penalties imposed for failure to file, negligence, fraud,  
substantial valuation misstatements, substantial  
understatements of tax, and reportable transaction  
understatements from the due date (including extensions)  
to the date of payment. The interest charge is figured at a  
rate determined under section 6621.  
Late filing of return. A RIC 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. The penalty will not be imposed if the  
RIC can show that the failure to file on time was due to  
reasonable cause.  
To get more information about EFTPS or to enroll in  
EFTPS, visit EFTPS.gov, or call 800-555-4477. To contact  
EFTPS using Telecommunications Relay Services (TRS)  
for people who are deaf, hard of hearing, or have a speech  
disability, dial 711 and provide the TRS assistant the  
800-555-4477 number above or 800-733-4829.  
Depositing on time. For any deposit made by EFTPS to  
be on time, the RIC must submit the deposit by 8 p.m.  
Eastern time the day before the date the deposit is due. If  
the RIC uses a third party to make deposits on its behalf,  
they may have different cutoff times.  
Same-day wire payment option. If the RIC fails to  
submit a deposit transaction on EFTPS by 8 p.m. Eastern  
time on the day before the date a deposit is due, it can still  
make its deposit on time by using the Federal Tax  
Collection Service (FTCS). To use the same-day wire  
payment method, the RIC 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 the information the RIC will need to provide its  
financial institution to make a same-day wire payment, go  
Late payment of tax. A RIC 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. The  
penalty will not be imposed if the RIC can show that the  
failure to pay on time was due to reasonable cause.  
Reasonable cause determinations. If the RIC receives  
a notice about a penalty after it files its return, send the  
IRS an explanation and we will determine if the RIC meets  
the reasonable cause criteria. Do not attach an  
explanation when the RIC's return is filed.  
Trust fund recovery penalty. This penalty may apply if  
certain excise, income, social security, and Medicare  
taxes that must be collected or withheld are not collected  
or withheld, or these taxes are not paid. These taxes are  
generally reported on:  
Form 720, Quarterly Federal Excise Tax Return;  
Form 941, Employer's QUARTERLY Federal Tax  
Estimated Tax Payments  
Return;  
Generally, the following rules apply to the RIC's payments  
of estimated tax.  
Form 944, Employer's ANNUAL Federal Tax Return; or  
Form 945, Annual Return of Withheld Federal Income  
The RIC must make installment payments of estimated  
Tax.  
tax if it expects its total tax for the year (less applicable  
credits) to be $500 or more.  
The trust fund recovery penalty may be imposed on all  
The installments are due by the 15th day of the 4th, 6th,  
persons who are determined by the IRS to be responsible  
for collecting, accounting for, or paying over these taxes,  
and who acted willfully in not doing so. The penalty is  
equal to the full amount of the unpaid trust fund tax. See  
the Instructions for Form 720 or Pub. 15 (Circular E), for  
details, including the definition of responsible persons.  
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 RIC must use electronic funds transfer to make  
installment payments of estimated tax.  
5
       
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 or Pub. 51 for more information.  
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.  
Other penalties. Other penalties can be imposed for  
negligence, substantial understatement of tax, reportable  
transaction understatements, and fraud. See sections  
6662, 6662A, and 6663.  
Accounting Periods  
A RIC must figure its taxable income on the basis of a tax  
year. A tax year is the annual accounting period a RIC  
uses to keep its records and report its income and  
expenses. RICs can use a calendar year or a fiscal year.  
For more information about accounting periods, see  
Regulations sections 1.441-1 and 1.441-2.  
Accounting Methods  
Figure taxable income using the method of accounting  
regularly used in keeping the RIC's books and records. In  
all cases, the method used must clearly reflect taxable  
income.  
Change of tax year. Generally, a RIC must receive  
consent from the IRS before changing its tax year. To  
obtain the consent, file Form 1128, Application To Adopt,  
Change, or Retain a Tax Year. However, under certain  
conditions, a RIC may change its tax year without  
obtaining the consent.  
Generally, permissible methods include:  
Cash,  
Accrual, or  
Any other method authorized by the Internal Revenue  
See the Instructions for Form 1128 and Pub. 538 for  
Code.  
more information on accounting periods and tax years.  
For more information, see Pub. 538, Accounting  
Rounding Off to  
Whole Dollars  
Periods and Methods.  
Accrual method. Generally, a RIC must use the accrual  
method of accounting if its average annual gross receipts  
for the prior 3 years exceed $29 million. See section  
448(c).  
Mark-to-market accounting method. Generally,  
dealers in securities must use the mark-to-market  
accounting method described in section 475. Under this  
method, any security that is inventory to the dealer must  
be held at its fair market value (FMV).  
Any security held by a dealer that is not inventory and  
held at the close of the tax year is treated as sold at its  
FMV on the last business day of the tax year. Any resulting  
gain or loss must be taken into account that year in  
determining gross income. The gain or loss taken into  
account is generally treated as ordinary gain or loss.  
The RIC may enter decimal points and cents when  
completing its return. However, the RIC should round off  
cents to whole dollars on its return, forms, and schedules  
to make completing its return easier. The RIC 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.  
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 RIC's records for as long as they may be needed  
for 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 RIC's basis in property for as  
long as they are needed to figure the basis of the original  
or replacement property.  
For details, including exceptions, see section 475, the  
related regulations, and Rev. Rul. 97-39, 1997-39 I.R.B. 4.  
Dealers in commodities and traders in securities and  
commodities may elect, with some exceptions, to use the  
mark-to-market accounting method. To make the election,  
the RIC must file a statement describing the election, the  
first tax year the election is to be effective, and in the case  
of an election for traders in securities or commodities, the  
trade or business for which the election is made. Except  
for new taxpayers, the statement must be filed by the due  
date (not including extensions) of the income tax return for  
the tax year immediately preceding the election year and  
attached to that return, or if applicable, to a request for an  
extension of time to file that return. For more details, see  
Rev. Proc. 99-17, 1999-7 I.R.B. 52, and sections 475(e)  
and (f).  
Change in accounting method. Generally, the RIC  
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 RIC  
must 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.  
The RIC should keep copies of all filed returns. They  
help in preparing future and amended returns and in the  
calculation of earnings and profits.  
Other Forms That May Be Required  
In addition to Form 1120-RIC, the RIC may have to file  
some of the following forms.  
Form 976, Claim for Deficiency Dividends Deductions by  
a Personal Holding Company, Regulated Investment  
Company, or Real Estate Investment Trust. Use this form  
to claim a deficiency dividend deduction under section  
860.  
Form 1096, Annual Summary and Transmittal of U.S.  
Information Returns. Use Form 1096 to transmit Forms  
1099 and 5498 to the Internal Revenue Service.  
6
         
figure the domestic corporation's GILTI under section  
951A and attach it to Form 1120-RIC.  
Form 1099-DIV, Dividends and Distributions. Report  
certain dividends and distributions.  
Form 8996, Qualified Opportunity Fund. Use Form 8996  
to certify that the RIC is organized as a qualified  
opportunity fund (QOF) to invest in qualified opportunity  
zone property. In addition, a QOF RIC files Form 8996  
annually to report that it meets the 90% investment  
standard of section 1400Z-2 or to compute the penalty if it  
fails to meet the investment standard.  
Form 8997, Initial and Annual Statement of Qualified  
Opportunity Fund (QOF) Investments. Use Form 8997 to  
report investments in one or more QOFs. Report the  
amount of deferred gains invested in QOFs at the  
beginning of the current tax year, transactions related to  
investments in QOFs for the current tax year, which  
include capital gains deferred and invested in QOFs and  
dispositions of investments in QOFs, and the amount of  
deferred gains invested in QOFs at the end of the current  
tax year.  
Form 1099-INT, Interest Income. Report interest income.  
Form 2438, Undistributed Capital Gains Tax Return,  
must be filed by the RIC if it designates undistributed net  
long-term capital gains under section 852(b)(3)(D).  
Form 2439, Notice to Shareholder of Undistributed  
Long-Term Capital Gains, must be completed and a copy  
given to each shareholder for whom the RIC paid tax on  
undistributed net long-term capital gains under section  
852(b)(3)(D).  
Form 3520, Annual Return To Report Transactions With  
Foreign Trusts and Receipt of Certain Foreign Gifts, may  
be required if the RIC received a distribution from, was a  
grantor of, or transferor to a foreign trust during the tax  
year. See Question 5 of Schedule N (Form 1120).  
Form 5471, Information Return of U.S. Persons With  
Respect To Certain Foreign Corporations. Use Form 5471  
if the RIC is a U.S. shareholder of a controlled foreign  
corporation, a specified foreign corporation, or otherwise  
subject to the reporting requirements of section 6038 or  
6046, and the related regulations.  
Form 7205, Energy Efficient Commercial Buildings  
Deduction. Use Form 7205 to calculate and claim the  
deduction under section 179D for qualifying energy  
efficient commercial buildings placed in service during the  
tax year.  
Form 8613, Return of Excise Tax on Undistributed  
Income of Regulated Investment Companies. If the RIC is  
liable for the 4% excise tax on undistributed income under  
section 4982 or makes an election under section 4982(e)  
(4), it must file this return for the calendar year.  
Form 8621, Information Return by a Shareholder of a  
Passive Foreign Investment Company or Qualified  
Electing Fund. Use Form 8621 if the RIC is a direct or  
indirect shareholder of a passive foreign investment  
company, as defined in section 1297(a).  
Statements  
Reportable transaction disclosure statement.  
Disclose information for each reportable transaction in  
which the RIC participated. Form 8886, Reportable  
Transaction Disclosure Statement, must be filed for each  
tax year that the federal income tax liability of the RIC is  
affected by its participation in the transaction. The  
following are reportable transactions.  
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 RIC (or a related party) paid  
an advisor a fee of at least $250,000.  
3. Certain transactions for which the RIC (or a related  
party) has contractual protection against disallowance of  
the tax benefits.  
Form 8927, Determination Under Section 860(e)(4) by a  
Qualified Investment Entity. Use Form 8927 to make a  
determination under section 860(e)(4) for purposes of  
paying deficiency dividends.  
4. Certain transactions resulting in a loss of at least  
$10 million in any single year or $20 million in any  
combination of years.  
5. Any transaction identified by the IRS by notice,  
regulation, or other published guidance as a “transaction  
of interest.See Notice 2009-55, 2009-31 I.R.B. 170.  
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  
For more information, see Regulations section  
1.6011-4. Also, see the Instructions for Form 8886.  
Penalties. The RIC 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 8886.  
Penalties may also apply under section 6707A if the RIC  
fails to file Form 8886 with its Form 1120-RIC, 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, may also apply. See the Instructions  
for Form 8886 for details on these and other penalties.  
Instructions for Form 8975 and Schedule A (Form 8975).  
Form 8990, Limitation on Business Interest Expense  
Under Section 163(j). Use Form 8990 to calculate the  
amount of business interest expense the RIC can deduct  
and the amount to carry forward to the next year.  
Form 8992, U.S. Shareholder Calculation of Global  
Reportable transactions by material advisors.  
Intangible Low-Taxed Income (GILTI). Use Form 8992 to  
Material advisors to any reportable transaction must  
7
 
disclose certain information about the reportable  
transaction by filing Form 8918, Material Advisor  
Disclosure Statement, with the IRS. For details, see the  
Instructions for Form 8918.  
Certain dividends. A dividend received from a RIC is  
taken into account in computing (a) the deduction under  
section 243, or (b) qualified dividend income, only to the  
extent reported by the RIC as eligible for such deduction  
or such treatment in written statements furnished to its  
shareholders. A RIC must determine the reportable  
amounts under section 854(b). For purposes of the  
dividends-received deduction, a capital gain dividend  
received from a RIC is not treated as a dividend. The  
capital gain dividend is treated as a long-term capital gain  
by the shareholder.  
Safe harbor under Temporary Regulations section  
1.67-2T(j)(2). Generally, shareholders in a nonpublicly  
offered fund that are individuals or pass-through entities  
are treated as having received a dividend in an amount  
equal to the shareholder's allocable share of affected RIC  
expenses for the calendar year. They are also treated as  
having paid or incurred an expense described in section  
212 in the same amount for the calendar year.  
Consent to partnership election to close its books  
monthly. Certain money market funds that obtain an  
interest in an eligible partnership that invests in assets  
exempt from taxation under section 103 may be qualified  
to pay exempt-interest dividends to their shareholders. To  
qualify for payment of exempt-interest dividends, a RIC  
must meet the quarterly net asset value (NAV)  
requirements under section 852(b)(5). To maintain the  
required NAV at the end of each quarter, the RIC may take  
into account on a monthly basis its distributive share of  
partnership items if the eligible partnership makes a  
proper election to close its books at the end of each  
month. See Rev. Proc. 2003-84, 2003-48 I.R.B. 1159, as  
modified by Notice 2008-80, for details.  
Election. A nonpublicly offered fund may elect to treat  
its affected RIC expenses for a calendar year as equal to  
40% of the amount determined under Temporary  
Regulations section 1.67-2T(j)(1)(i) for that calendar year.  
To make this election, attach to Form 1120-RIC for the  
tax year that includes the last day of the calendar year for  
which the fund makes the election a statement that it is  
making an election under Temporary Regulations section  
1.67-2T(j)(2). Once made, the election remains in effect  
for all subsequent calendar years and may not be revoked  
without IRS consent. See Temporary Regulations section  
1.67-2T for definitions and other details.  
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.  
Eligibility. A RIC is entitled to take into account its  
distributive share of partnership items on a monthly basis  
if:  
The RIC is entitled to hold itself out as a money market  
fund, or an equivalent of a money market fund;  
The RIC provides a statement to the partnership that it  
consents to the partnership's election to close its books  
monthly and that the RIC will include in its taxable income  
its distributive share of partnership items in a manner  
consistent with the election. See Rev. Proc. 2003-84 for  
the required contents of the statement of consent;  
The RIC provides the statement of consent to the  
custodian or manager of the partnership by the last day of  
the second month after the month in which the RIC  
acquires the partnership interest; and  
shareholder (within the meaning of section 951(b)) must  
include the required statement on or with its return.  
The partnership is eligible under Rev. Proc. 2003-84 to  
Distributions under section 355. Every RIC 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 attach the  
statement required by Regulations section 1.355-5(a) to  
its return for the year of the distribution. A significant  
distributee (as defined in Regulations section 1.355-5(c)  
(1)) 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).  
make the monthly closing election and the election is  
effective by the second month after the month in which the  
RIC acquires the partnership interest.  
Statement of consent. The consent to a partnership's  
monthly closing election is effective for the month in which  
the RIC acquires the partnership interest, unless the RIC  
requests that the consent be effective for either of the two  
immediately following calendar months. In addition to  
timely providing the partnership with the statement of  
consent, the statement should be filed with Form  
1120-RIC for the first tax year in which the consent is  
effective. The monthly closing consent (and the  
partnership's election) may be revoked only with the  
consent of the Commissioner. However, the RIC's consent  
becomes ineffective on any day when the RIC ceases to  
be an eligible partner and the partnership's monthly  
closing election is terminated as of the first day of any  
month the partnership is no longer eligible for the election  
under Rev. Proc. 2003-84. For more details, see the  
revenue procedure.  
8
Other forms and statements. See Pub. 542,  
Corporations, for a list of other forms and statements a  
RIC may need to file in addition to the forms and  
statements discussed throughout these instructions.  
Item D. Total Assets  
Enter the RIC's total assets (as determined by the  
accounting method regularly used in keeping the fund's  
books and records) at the end of the tax year. If there are  
no assets at the end of the tax year, enter -0-.  
Specific Instructions  
Item E. Final Return, Name Change,  
Address Change, or Amended Return  
Period Covered  
File the 2023 return for calendar year 2023 and fiscal  
years that begin in 2023 and end in 2024. For a fiscal year  
return, fill in the tax year in the space at the top of the  
form.  
If this is the RIC's final return and it will no longer exist,  
check the “Final return” box.  
If the RIC has changed its name since it last filed a  
return, check the “Name change” box. Generally, a RIC  
must also have amended its articles of incorporation and  
filed the amendment with the state in which it was  
incorporated.  
The 2023 Form 1120-RIC may also be used if:  
The RIC has a tax year of less than 12 months that  
begins and ends in 2024; and  
If the RIC has changed its address since it last filed a  
The 2024 Form 1120-RIC is not available at the time the  
return (including a change to an “in care of” address),  
check the “Address change” box.  
RIC is required to file its return.  
The RIC must show its 2024 tax year information on the  
2023 Form 1120-RIC and take into account any tax law  
changes that are effective for tax years beginning after  
December 31, 2023.  
Note. If a change in address or responsible party occurs  
after the return is filed, use Form 8822-B, Change of  
Address or Responsible Party—Business, to notify the  
IRS of the new address. See the instructions for Form  
8822-B for details.  
Amended return. If the RIC is amending its return, check  
the box for “Amended return,complete the entire return,  
correct the appropriate lines with the new information, and  
refigure the RIC's tax liability. Attach a statement that  
explains the reason for the amendments and identifies the  
lines being changed on the amended return.  
Name and Address  
Enter the RIC'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 RIC'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  
RIC has a P.O. box, show the box number instead.  
Part I—Investment  
Note. Do not use the address of the registered agent for  
the state in which the RIC is incorporated. For example, if  
a business is incorporated in Delaware or Nevada and the  
RIC's principal office is located in Little Rock, AR, the RIC  
should enter the Little Rock address.  
Company Taxable Income  
Income  
Line 1. Dividends. A RIC that is the holder of record of  
any share of stock on the record date for a dividend  
payable on that stock must include the dividend in gross  
income by the later of the date the share became  
ex-dividend, or the date the RIC acquired the share.  
If the RIC 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.  
Line 2. Interest. Enter taxable interest on U.S.  
obligations and on loans, notes, mortgages, bonds, bank  
deposits, corporate bonds, tax refunds, etc.  
Do not offset interest expense against interest income.  
Special rules apply to interest income from certain  
below-market-rate loans. See section 7872 for more  
information on the tax treatment of loans on which  
inadequate or no interest is charged.  
Item B. Date RIC Was Established  
If this return is being filed for a series fund (as described in  
section 851(g)(2)), enter the date the fund was created.  
Otherwise, enter the date the RIC was incorporated or  
organized.  
Item C. Employer  
Identification Number (EIN)  
Enter the RIC's EIN. If the RIC does not have an EIN, it  
must apply for one. An EIN may be applied for:  
Note. Report tax-exempt interest income on Schedule K,  
item 8. Do not include tax-exempt interest on line 2. Also,  
if required, include the same amount on Schedule M-1,  
line 7.  
Include interest income from tax credit bonds on line 2.  
If the RIC elects to pass through the credits to  
shareholders, see the instructions for Part II, Schedule A,  
line 7.  
Online by visiting IRS.gov/EIN. The EIN is issued  
immediately once the application information is validated;  
or  
By mailing or faxing Form SS-4, Application for  
Employer Identification Number.  
If the RIC has not received its EIN by the time the return  
is due, write “Applied for” and the date you applied in the  
space for the EIN. See the Instructions for Form SS-4 for  
details.  
Line 3. Net foreign currency gain or (loss) from sec-  
tion 988 transactions. Enter the net foreign currency  
9
               
gain (loss) from section 988 transactions treated as  
ordinary income or loss under section 988(a)(1)(A). Attach  
a statement detailing each separate transaction.  
Line 4. Payments with respect to securities loans.  
Enter the amount received or accrued from a broker as  
compensation for securities loaned by the RIC to the  
broker for use in completing market transactions. The  
payments must meet the requirements of section 512(a)  
(5).  
Line 5. Excess of net short-term capital gain over net  
long-term capital loss. Enter the amount from  
Schedule D (Form 1120), line 16. Every sale or exchange  
of a capital asset must be reported even if no gain or loss  
is indicated.  
If a RIC has a net capital loss for any tax year, the  
excess of the net short-term capital loss over the net  
long-term capital gain shall be a short-term capital loss  
arising on the first day of the next tax year. The excess of  
the net long-term capital loss over the net short-term  
capital gain shall be a long-term capital loss arising on the  
first day of the next tax year. Also, there is no limit on the  
number of tax years that a RIC is allowed to carry over a  
net capital loss. See section 1212(a)(3) for more  
information.  
The recapture amount under section 280F if the  
business use of listed property drops to 50% or less. To  
figure the recapture amount, complete Part IV of Form  
4797;  
Ordinary income from trade or business activities of a  
partnership (from Schedule K-1 (Form 1065)). Do not  
offset ordinary losses against ordinary income. Instead,  
include the losses on line 22. 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;  
Any net positive section 481 income adjustment due to  
a change in method of accounting. See Form 3115 and its  
instructions for more information;  
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 this  
date must file Form 8925, Report of Employer-Owned Life  
Insurance Contracts. See section 101(j) for details;  
Income from cancellation of debt (COD) from the  
repurchase of a debt instrument for less than its adjusted  
issue price;  
The RIC's share of the following income from Form  
8621, Information Return by a Shareholder of a Passive  
Foreign Investment Company or Qualified Electing Fund.  
Line 7. Other income. Enter any other taxable income  
(loss) not reported on lines 1 through 6, except net capital  
gain reported in Part II.  
1. Ordinary earnings of a qualified electing fund  
(QEF).  
If the RIC owns any controlled foreign corporations or  
qualified electing funds, enter the amount included in  
gross income under section 951(a)(1)(A), plus the amount  
of global intangible low-taxed income determined under  
section 951A (which is treated as an amount included  
under section 951(a)(1)(A)), and any amount included in  
gross income under section 1293(a). See Regulations  
section 1.851-2(b)(2)(iii). Do not include in this line any  
amounts that are treated as dividends and reported on  
line 1. See Regulations section 1.851-2(b)(2)(i). Refer to  
Form 5471, Form 8621, and Form 8992, and their  
2. Gain or loss from marking passive foreign  
investment company income (PFIC) stock to market.  
3. Gain or loss from sale or other disposition of  
Section 1296 stock.  
4. The amount of excess distributions from a Section  
1291 fund that is treated as ordinary income.  
See Form 8621 and the Instructions for Form 8621 for  
details; and  
Any payroll tax credit taken by an employer on its 2023  
instructions, to determine the amount included in gross  
income under section 951(a)(1)(A) (including the amount  
of global intangible low-taxed income) and section  
1293(a). Also, consider the applicability of section 951A  
with respect to controlled foreign corporations owned by  
domestic partnerships in which the RIC has an interest.  
List the type and amount of income on an attached  
statement. If the RIC has only one item of other income,  
describe it in parentheses on line 7. Examples of other  
income to report on line 7 include:  
employment tax returns (Forms 941, 943, and 944) for  
qualified paid sick and qualified paid family leave under  
FFCRA and ARP (both the nonrefundable and refundable  
portions). The RIC 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.  
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.  
Gross rents;  
Recoveries of fees or expenses in settlement or  
litigation;  
Amounts received or accrued as consideration for  
Deductions  
Limitations on Deductions  
entering into agreements to make real property loans or to  
purchase or lease real property;  
Recoveries of bad debts deducted in prior years under  
Transactions between related taxpayers. Generally,  
an accrual basis taxpayer may only deduct business  
expenses and interest owed to a related party in the year  
the payment is includible in the income of the related  
party. See section 267 for limitations on deductions for  
interest and expenses paid to a related party.  
the specific charge-off method;  
Refunds of taxes deducted in prior years to the extent  
they reduced income subject to tax in the year deducted  
(see section 111). Do not offset current year taxes against  
prior year tax refunds;  
10  
Limitations on business interest expense. Business  
interest expense may be limited. See section 163(j), Form  
8990, and the related instructions. Also, see Limitation on  
deduction in the instructions for line 13 and Schedule K,  
Question 14, later.  
Golden parachute payments. A portion of the  
payments made by a RIC to key personnel that exceeds  
their usual compensation may not be deductible. This  
occurs when the RIC has an agreement (golden  
parachute) with key employees to pay them an amount  
substantially in excess of their base amount if control of  
the RIC changes. See section 280G and Regulations  
section 1.280G-1 for more information. Also, see the  
instructions for line 9.  
Business start-up and organizational costs. A RIC  
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 an election. The RIC 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. However, for start-up  
or organizational costs paid or incurred before September  
9, 2008, the RIC may be required to attach a statement to  
its return to elect to deduct such costs. See Regulations  
sections 1.195-1 and 1.248-1 for details.  
Passive activity limitations. Limitations on passive  
activity losses and credits under section 469 apply to  
RICs that are closely held (as defined in section 469(j)(1)).  
RICs subject to the passive activity limitations must  
complete Form 8810, Corporate Passive Activity Loss and  
Credit Limitations, to compute their allowable passive  
activity loss and credit. Before completing Form 8810, see  
Temporary Regulations section 1.163-8T for rules on  
allocating interest expense among activities.  
Closely held corporation. A RIC is closely held if at  
any time during the last half of the tax year more than 50%  
in value of its outstanding stock is directly or indirectly  
owned by or for not more than five individuals and it is not  
a personal service corporation.  
Line 9. Compensation of officers. Enter the deductible  
officer's compensation on line 9. The RIC determines who  
is an officer under the laws of the state where  
incorporated. 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.  
If the RIC's total receipts are $500,000 or more,  
complete and attach Form 1125-E. Total receipts are  
figured by adding:  
1. Line 8, Part I;  
2. Net capital gain from line 1, Part II; and  
3. Line 9a, Form 2438.  
Enter on line 9 the amount from Form 1125-E, line 4.  
For more details, including special rules for costs paid  
or incurred before September 9, 2008, see the  
Instructions for Form 4562.  
Line 10. Salaries and wages. Enter the salaries and  
wages paid for the tax year reduced by the amount  
claimed on:  
If the RIC 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 RIC filed its  
original return. The election applies when figuring taxable  
income for the current tax year and all subsequent years.  
Form 5884, Work Opportunity Credit;  
Form 8844, Empowerment Zone Employment Credit;  
Form 8932, Credit for Employer Differential Wage  
Payments; and  
Form 8994, Employer Credit for Paid Family and  
Medical Leave.  
See the instructions for these forms for more  
information.  
Do not include salaries and wages deductible  
elsewhere on the return, such as amounts included in  
officer's 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.  
Note. The RIC can choose to forgo the elections above  
by clearly electing to capitalize its start-up or  
organizational costs on an income tax return filed by the  
due date (including extensions) for the tax year in which  
the active trade or business begins.  
Report the deductible amount of such costs and any  
amortization on line 22. For amortization that begins  
during the current tax year, complete and attach Form  
4562.  
If the RIC provided taxable fringe benefits to its  
employees, such as personal use of a car, do not  
!
CAUTION  
deduct as wages any amounts deducted  
elsewhere.  
Section 265(a)(3) limitation. If the RIC paid  
exempt-interest dividends during the tax year (including  
those dividends deemed paid under section 855), no  
deduction is allowed for that portion of otherwise  
deductible expenses allocable to tax-exempt income. The  
excluded amount is determined by the amount tax-exempt  
income bears to total gross income (including tax-exempt  
income but excluding capital gain net income).  
If the RIC claims a credit for any wages paid or  
incurred, it may need to reduce any corresponding  
!
CAUTION  
deduction for officers' compensation and salaries  
and wages. See the instructions for the form used to figure  
the applicable credit for more details.  
Line 11. Rents. If the RIC rented or leased a vehicle,  
enter the total annual rent or lease expense paid or  
incurred during the year. Also, complete Part V of Form  
Net operating loss deduction. The net operating loss  
deduction is not allowed.  
11  
 
4562, Depreciation and Amortization. If the RIC leased a  
vehicle for a term of 30 days or more, the deduction for the  
vehicle lease expense may have to be reduced by an  
amount called the inclusion amount.  
rules and exceptions for financial institutions. Also, see  
section 265(b)(7) for a temporary de minimis exception for  
financial institutions for certain tax exempt bonds issued in  
2009 and 2010.  
For cash basis taxpayers, prepaid interest allocable to  
The RIC may have an inclusion amount if:  
years following the current tax year. For example, a cash  
basis calendar year taxpayer who in 2023 prepaid interest  
allocable to any period after 2023 can deduct only the  
amount allocable to 2023.  
The lease term began:  
And the vehicle's FMV on  
the first day of the lease  
exceeded:  
Cars (excluding trucks and vans)  
After 12/31/22 but before 1/1/24  
After 12/31/21 but before 1/1/23  
After 12/31/20 but before 1/1/22  
After 12/31/17 but before 1/1/21  
After 12/31/12 but before 1/1/18  
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$60,000  
$56,000  
$51,000  
$50,000  
$19,000  
Interest and carrying charges on straddles. Generally,  
these amounts must be capitalized. See section 263(g).  
Special rules apply to:  
Original issue discount (OID) on certain high-yield  
Trucks and Vans  
discount obligations. See section 163(e)(5) to determine  
the amount of the deduction for OID that is deferred and  
the amount that is disallowed on a high-yield discount  
obligation. The rules under section 163(e)(5) do not apply  
to certain high-yield discount obligations issued after  
August 31, 2008, and before January 1, 2011. See section  
163(e)(5)(F). Also, see Notice 2010-11, 2010-4 I.R.B. 326.  
After 12/31/22 but before 1/1/24  
After 12/31/21 but before 1/1/23  
After 12/31/20 but before 1/1/22  
After 12/31/17 but before 1/1/21  
After 12/31/13 but before 1/1/18  
After 12/31/09 but before 1/1/14  
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$60,000  
$56,000  
$51,000  
$50,000  
$19,500  
$19,000  
See Pub. 463, Travel, Gift, and Car Expenses, for instructions on figuring the inclusion amount.  
The inclusion amount for lease terms beginning in 2024 will be published in the Internal  
Revenue Bulletin in early 2024.  
The deduction for interest when the RIC 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.  
Line 12. Taxes and licenses. Enter taxes paid or  
accrued during the tax year, but do not include the  
following.  
Limitation on deduction. Under section 163(j),  
business interest expense is generally limited to the sum  
of business interest income, 30% of the adjusted taxable  
income, and floor plan financing interest. Business  
interest expense includes any interest paid or accrued  
properly allocable to a trade or business (other than  
certain excepted trades or businesses). A small business  
taxpayer that is not a tax shelter (as defined in section  
448(d)(3)), and that meets the gross receipts test, is not  
required to limit business interest expense under section  
163(j). A taxpayer meets the gross receipts test if the  
taxpayer has average annual gross receipts of not more  
than $29 million for the 3 prior tax years under the gross  
receipts test of section 448(c). Gross receipts include the  
aggregate gross receipts from all persons treated as a  
single employer such as a controlled group of  
Federal income taxes (except for the tax imposed on  
net recognized built-in gain allocable to ordinary income).  
Foreign or U.S. territory income taxes if a foreign tax  
credit is claimed, or if the RIC made an election under  
section 853.  
Excise taxes imposed under section 4982 on  
undistributed RIC income.  
Taxes not imposed on the RIC.  
Taxes, including state or local sales taxes, that are paid  
or incurred in connection with an acquisition or disposition  
of property (these taxes must be treated as a part of the  
cost of the acquired property or, in the case of a  
disposition, as a reduction in the amount realized on the  
disposition).  
Taxes assessed against local benefits that increase the  
corporations, commonly controlled partnerships or  
proprietorships, and affiliated service groups. If the  
corporation fails to meet the gross receipts test, Form  
8990 is generally required. See the Instructions for Form  
8990. Also, see Schedule K, Questions 13 and 14 for  
conditions for filing Form 8990.  
value of the property assessed (such as for paving, etc.).  
Taxes deducted elsewhere on the return.  
See section 164(d) for information on apportionment of  
taxes on real property between seller and purchaser.  
Do not reduce the RIC's deduction for social  
security and Medicare taxes by the nonrefundable  
Interest expense cannot be used to offset interest  
!
CAUTION  
and refundable portions of any FFCRA and ARP  
income.  
!
credits for qualified sick and family leave wages claimed  
on its employment tax returns. Instead, report this amount  
as income on line 7.  
CAUTION  
Line 14. Depreciation. Include on line 14 depreciation  
and the cost of certain property that the RIC elected to  
expense under section 179. See Form 4562 and the  
related instructions to figure the amount of depreciation to  
enter on this line.  
Line 22. Other deductions. Attach a statement listing by  
type and amount all allowable deductions that are not  
specifically deductible elsewhere on Form 1120-RIC.  
Generally, a deduction may not be taken for any amount  
that is allocable to tax-exempt income. See section 265(b)  
for exceptions.  
Line 13. Interest. The RIC must make an interest  
allocation if the proceeds of a loan were used for more  
than one purpose (for example, to purchase a portfolio  
investment and to acquire an interest in a passive activity).  
See Temporary Regulations section 1.163-8T for the  
interest allocation rules.  
The following interest is not deductible.  
Interest on indebtedness incurred or continued to  
purchase or carry obligations if the interest is wholly  
exempt from income tax. See section 265(b) for special  
12  
 
Examples of other deductions include:  
Amortization. See Form 4562;  
see the regulations under section 170 and Pub. 526,  
Charitable Contributions.  
Contributions to organizations conducting  
lobbying activities. Contributions made to an  
organization that conducts lobbying activities are not  
deductible if:  
Any applicable deduction under section 179D for costs  
of energy efficient commercial building property placed in  
service during the tax year. Complete and attach new  
Form 7205;  
Certain business start-up and organizational costs the  
The lobbying activities relate to matters of direct  
RIC elects to amortize or deduct;  
financial interest to the donor's trade or business, and  
Supplies used and consumed in the business;  
Utilities;  
The principal purpose of the contribution was to avoid  
federal income tax by obtaining a deduction for activities  
that would have been nondeductible under the lobbying  
expense rules if conducted directly by the donor.  
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 separately the amount from each  
partnership;  
For information on contributions to charitable  
organizations that conduct lobbying activities, see section  
170(f)(9).  
Pension, profit-sharing, etc., plans. Enter contributions  
to qualified pension, profit-sharing, or other  
funded-deferred compensation plans. Employers who  
maintain such a plan must generally file Form 5500,  
Annual Return/Report of Employee Benefit Plan, even if  
the plan is not a qualified plan under the Internal Revenue  
Code. The filing requirement applies even if the RIC does  
not claim a deduction for the current tax 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).  
Any extraterritorial income exclusion (from Form 8873,  
line 52); and  
Any net negative section 481(a) adjustment.  
Do not deduct expenses such as the following.  
Fines or penalties paid to a government for violating any  
law. However, other limitations apply for certain amounts  
paid or incurred after December 21, 2017. See section  
162(f), and Fines and penalties, later.  
Lobbying expenses. However, see Lobbying expenses,  
later.  
Note. Form 5500 must be filed electronically under the  
computerized ERISA Filing Acceptance System  
(EFAST2). For more information, see the EFAST2 website  
Travel, meals, and entertainment. Subject to certain  
limitations and restrictions, the RIC can deduct ordinary  
and necessary travel, meal, and non-entertainment  
expenses paid or incurred in its trade or business.  
Generally, entertainment expenses, membership dues,  
and facilities used in connection with these activities  
cannot be deducted. In addition, no deduction is generally  
allowed for qualified transportation fringe benefits. Also,  
special rules apply to deductions for gifts, luxury water  
travel, and convention expenses. See section 274 and  
Pub. 463 for more details.  
Travel. The RIC cannot deduct travel expenses of any  
individual accompanying a corporate officer or employee  
unless:  
Amounts paid or incurred after December 22, 2017, for  
any settlement or payment related to sexual harassment  
or sexual abuse, if such settlement or payment is subject  
to a nondisclosure agreement or for related attorney's  
fees. See new section 162(q).  
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 contribution carryovers.  
RICs reporting taxable income on the accrual method  
may elect to treat as paid during the tax year any  
contributions paid by the due date of the RIC’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  
section 170(a)(2)(B).  
That individual is an employee of the RIC, and  
That individual’s travel is for a bona fide business  
Limitation on deduction. Generally, the total amount  
claimed cannot be more than 10% of taxable income (the  
sum of Part I, line 26; Part ll, line 3; and Form 2438,  
line 11) computed without regard to the following:  
purpose that would otherwise be deductible by that  
individual.  
Meals. Generally, the RIC can deduct only 50% of the  
amount otherwise allowable for non-entertainment related  
meal expenses paid or incurred in its trade or business.  
Any deduction for contributions; or  
The deduction allowed under section 249, related to  
Meals not separately stated from entertainment are  
generally not deductible. In addition (subject to exceptions  
under section 274(k)(2)):  
any premium paid or incurred upon the repurchase of a  
convertible bond.  
Carryover. Charitable contributions over the 10%  
limitation cannot be deducted for the tax year but may be  
carried over to the next 5 tax years subject to certain  
limitations.  
Meals must not be lavish or extravagant, and  
An employee of the RIC must be present at the meal.  
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.  
For more information on charitable contributions,  
including substantiation and recordkeeping requirements,  
13  
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:  
Amounts paid or incurred in connection with influencing  
federal, state, or local legislation; or  
Amounts paid or incurred in connection with any  
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.”  
Transportation in a commuter highway vehicle between  
the employee's residence and place of employment,  
Any transit pass, and  
Qualified parking.  
Dues and other similar amounts paid to certain  
tax-exempt organizations may not be deductible. Certain  
in-house lobbying expenditures that do not exceed $2,000  
are deductible.  
See section 274 and Pub. 15-B for details.  
Membership dues. The RIC can deduct amounts paid  
or incurred for membership dues in civic or public service  
organizations, professional organizations (such as bar or  
medical associations), business leagues, trade  
Line 25a. Deduction for dividends paid. Enter the  
amount from Schedule A, line 8a.  
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 to members or their  
guests. In addition, RICs 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.  
Entertainment facilities. Generally, the RIC 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  
RIC 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 for an employee, or on Form  
1099-NEC for an independent contractor.  
Line 25b. Section 851(d)(2) and section 851(i) deduc-  
tions. Enter the amount from Schedule J, lines 2c and  
2d.  
Tax and Payments  
Line 28b. Estimated tax payments. Enter any  
estimated tax payments the RIC made for the current tax  
year.  
Line 28f. Credit from Form 2439. Enter the credit from  
Form 2439 for the RIC's share of the tax paid by another  
RIC or a Real Estate Investment Trust (REIT) on  
undistributed long-term capital gains included in the RIC's  
income. Attach Form 2439 to Form 1120-RIC.  
Line 28g. Credit for federal tax on fuels. Complete  
and attach Form 4136, Credit for Federal Tax Paid on  
Fuels, if the RIC qualifies to take this credit.  
Line 28h. Elective payment election amount from  
Form 3800. Enter on line 28h the total net elective  
payment election amount from Form 3800, General  
Business Credit, Part III, line 6, column (i). See the  
Instructions for Form 3800.  
However, if the recipient is an officer, director, beneficial  
owner (directly or indirectly), or other “specified individual”  
(as defined in section 274(e)(2)(B) and Regulations  
section 1.274-9(b)), special rules apply.  
See section 274 and Pub. 463 for a more extensive  
Line 29. Total payments and credits. Combine lines  
28d through 28h and enter the total on line 29.  
Backup Withholding. If the RIC had 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 29. Enter the  
amount withheld and the words “Backup Withholding” in  
the blank space above line 29.  
Line 30. Estimated tax penalty. A RIC that does not  
make estimated tax payments when due may be subject  
to an underpayment penalty for the period of  
underpayment. Generally, a RIC is subject to the penalty if  
its tax liability is $500 or more and it did not timely pay at  
least the smaller of:  
discussion of these topics.  
Fines and penalties. Generally, no deduction is allowed  
for fines or similar penalties paid or incurred to, or at the  
direction of, a government or governmental entity for  
violating any law, or for the investigation or inquiry into the  
potential violation of a law, except:  
Amounts that constitute restitution,  
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  
governmental entity 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  
RIC establishes that the amounts were paid for that  
purpose. Also, any amount paid or incurred as  
reimbursement to the government for the costs of any  
investigation or litigation are not eligible for the exceptions  
and are nondeductible.  
Its tax liability for the current year, or  
Its prior year's tax.  
Use Form 2220, Underpayment of Estimated Tax by  
Corporations, to see if the RIC owes a penalty and to  
figure the amount of the penalty. See the Instructions for  
Form 2220 for more information.  
See section 162(f).  
If Form 2220 is attached, check the box on this line and  
enter the amount of any penalty.  
Lobbying expenses. Generally, lobbying expenses are  
not deductible. Examples of nondeductible expenses  
include:  
Line 31. Amount owed. If the RIC cannot pay the full  
amount of tax owed, it can apply for an installment  
14  
         
agreement online. The RIC can apply for an installment  
agreement online if:  
Line 7. If the RIC elects under section 853A to pass  
through credits from qualified tax credit bonds to  
shareholders, increase the dividends paid deduction by  
the amount of the credits distributed to shareholders. To  
make the election, see the instructions for Item 11 under  
Schedule K—Other Information.  
It cannot pay the full amount shown on line 31,  
The total amount owed is $25,000 or less, and  
The RIC can pay the liability in full in 24 months.  
To apply using the Online Payment Agreement  
Application, go to IRS.gov/OPA.  
Under an installment agreement, the RIC can pay what  
Schedule B—Income From  
Tax-Exempt Obligations  
it owes in monthly installments. There are certain  
conditions that must be met to enter into and maintain an  
installment agreement, such as paying the liability within  
24 months and making all required deposits and timely  
filing tax returns during the length of the agreement.  
If the installment agreement is accepted, the RIC will be  
charged a fee and it will be subject to penalties and  
interest on the amount of tax not paid by the due date of  
the return.  
If, at the close of each quarter of the tax year, at least 50%  
of the value of the fund's assets consisted of tax-exempt  
obligations under section 103(a), the RIC qualifies under  
section 852(b)(5) to pay exempt-interest dividends for the  
tax year. See section 852(b)(5)(A) for the definition of  
exempt-interest dividends and other details.  
In the case of a qualified “fund of funds” structure, a  
RIC may pay exempt-interest dividends without regard to  
the requirement that at least 50% of the value of the fund’s  
assets consist of tax-exempt obligations. See section  
852(g) for more information.  
Part II—Tax on Undistributed Net  
Capital Gain Not Designated Under  
Section 852(b)(3)(D)  
If this applies, check the “Yes” box on line 1 and  
complete lines 2 through 5.  
Line 1. Enter the net capital gain from line 17 of  
Schedule D (Form 1120).  
Schedule J—Tax Computation  
Line 1  
If the RIC is a member of a controlled group, check the  
box on line 1 and complete and attach Schedule O (Form  
1120), Consent Plan and Apportionment Schedule for a  
Controlled Group. See Schedule O (Form 1120) and its  
instructions for more information.  
Line 2. Enter the capital gain dividends from Schedule A,  
line 8b.  
Line 4. Capital gains tax. Multiply the amount on line 3  
by 21% (0.21). Enter the result here and on Schedule J,  
line 2b.  
Schedule A—Deduction for Dividends  
Paid  
Column (a) is used to determine the deduction for  
dividends paid resulting from income derived from  
ordinary dividends.  
Line 2a—Tax on Investment Company Taxable  
Income  
RICs figure their tax by multiplying investment company  
taxable income by 21%. Enter this amount on line 2a.  
Column (b) is used to determine the deduction for  
dividends paid resulting from income derived from capital  
gain dividends.  
Section 561 (taking into account sections 852(b)(7),  
852(c)(3)(B), and 855(a)) determines the deduction for  
dividends paid. Do not take into account exempt-interest  
dividends defined in section 852(b)(5) or any amount  
reported for the tax year on Form 2438, line 9b. See  
section 852(b)(8) for information on post-October capital  
losses and late year ordinary losses.  
Line 3. Dividends, both ordinary and capital gain,  
declared and payable to shareholders of record in  
October, November, or December are treated as paid by  
the RIC and received by each shareholder on December  
31 of that calendar year provided that they are actually  
paid in January of the following calendar year. Enter on  
line 3 all such dividends not already included on line 1 or  
2.  
Line 6. Enter the foreign tax paid deduction allowed as  
an addition to the dividends paid deduction under section  
853(b)(1)(B). See the instructions for Item 10 of  
Schedule K for information on the election available under  
section 853(a).  
For a RIC that is a personal holding company (PHC).  
A RIC that is not in compliance with Regulations section  
1.852-6 is a PHC and is taxed at a flat rate of 21% on its  
investment company taxable income.  
Line 2b—Capital Gains Tax  
Enter the capital gains tax from line 4, Part II.  
Line 2c—Tax Imposed Under Section 851(d)(2)  
Enter the tax imposed under section 851(d)(2) relating to  
failures to meet certain requirements of the asset test of  
section 851(b)(3). See the instructions on page 2 for  
details on the requirements of the asset test. Also, see  
section 851(d)(2).  
Attach a statement showing the computation of the tax  
and an explanation of why the RIC failed to meet the  
requirements of the asset test, and a description of why  
such failure is due to reasonable cause and not to willful  
neglect.  
Line 2d—Tax Imposed Under Section 851(i)  
Enter the tax imposed under section 851(i) relating to  
failures to meet certain requirements of the gross income  
test.  
15  
         
See the instructions on page 2 for details on the  
requirements of the gross income test. Also, see section  
851(i).  
Line 5—Personal Holding Company Tax  
A RIC is taxed as a personal holding company under  
section 542 if:  
At least 60% of its adjusted ordinary gross income for  
Attach a statement showing the computation of the tax  
and an explanation of why the RIC failed to meet the  
requirements of the gross income test, and a description  
of why such failure is due to reasonable cause and not to  
willful neglect.  
the tax year is personal holding company income, and  
At any time during the last half of the tax year more than  
50% in value of its outstanding stock is owned, directly or  
indirectly, by five or fewer individuals.  
See the Instructions for Schedule PH (Form 1120), U.S.  
Personal Holding Company (PHC) Tax, for definitions and  
details on how to figure the tax.  
Line 2e—Income Tax  
Deferred tax under section 1291. If the RIC was a  
shareholder in a passive foreign investment company  
(PFIC), and received an excess distribution or disposed of  
its investment in the PFIC during the year, it must include  
the increase in taxes due under section 1291(c)(2) (from  
Form 8621) in the total for line 2e. On the dotted line to the  
left of line 2e, write “Section 1291” and the amount.  
Do not include on line 2e any interest due under section  
1291(c)(3). Instead, include the amount owed on  
Schedule J, line 9, Other taxes.  
Line 6—Interest on Deferred Tax Liability for  
Installment Obligations Under Section 453A(c)  
Enter any interest on deferred tax attributable to certain  
nondealer installment obligations (section 453A(c)).  
Line 7—Interest on Deferred Tax Liability for  
Installment Obligations Under Section 453(l)(3)  
Enter any interest on deferred tax attributable to certain  
dealer installment obligations under section 453(I).  
For more information on reporting the deferred tax and  
interest, see the Instructions for Form 8621.  
Line 8—Recapture of Investment Credit  
Additional tax under section 197(f). A RIC that elects  
to recognize gain and pay tax on the gain from 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 2e. On the dotted line  
to the left of line 2e, write “Section 197” and the amount.  
See section 197(f)(9)(B)(ii).  
If the RIC disposed of investment credit property or  
changed its use before the end of the 5-year recapture  
period under section 50(a), enter the increase in tax from  
Form 4255, Recapture of Investment Credit. See the  
Instructions for Form 4255.  
Line 9—Other Taxes  
Include on line 9 additional taxes and interest such as the  
following. Attach a statement showing the computation of  
each item included in the total for line 9 and identify the  
applicable Code section and the type of tax or interest.  
Line 3a—Foreign Tax Credit  
To find out when a RIC can claim the credit for payment of  
income tax to a foreign country or U.S. territory, see Form  
1118, Foreign Tax Credit—Corporations. The RIC may not  
claim this credit if an election under section 853 was made  
for the tax year. See Election under section 853(a) under  
Schedule K, Item 10.  
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.  
Line 3b—Credit from Form 8834  
Enter any qualified electric vehicle passive activity credits  
from prior years allowed for the current tax year from Form  
8834, Qualified Electric Vehicle Credit, line 7, and attach  
Form 8834 to this return.  
Recapture of new markets credit (see Form 8874 and  
Form 8874-B).  
Recapture of employer-provided childcare facilities and  
services credit (see Form 8882).  
Interest due on deferred gain recognition (section  
Line 3c—General Business Credit  
Use Form 3800 to claim any general business credits.  
Enter on line 3c the allowable credit from Form 3800, Part  
II, line 38. See the Instructions for Form 3800.  
1260(b)).  
Interest due under section 1291(c)(3).  
Recapture of low-income housing credit. If the RIC  
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 RIC 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, and section 42(j)(1) for more  
information.  
Line 3d—Other Credits  
Minimum tax credit. Enter any allowable credit from  
Form 8827, Credit for Prior Year Minimum  
Tax—Corporations. Complete and attach Form 8827.  
Bond credits from Form 8912. Enter the allowable  
credits from Form 8912, Credit to Holders of Tax Credit  
Bonds, line 12. However, if the RIC elects to pass through  
credits from tax credit bonds to its shareholders, it cannot  
take the credit. See Item 11 under question 5, later, for  
more information.  
Built-in Gains Tax  
If, on or after January 2, 2002, property of a C corporation  
becomes property of a RIC by either (a) the qualification  
of the C corporation as a RIC; or (b) the transfer of such  
16  
property to a RIC, then the RIC will be subject to the  
built-in gains tax under section 1374 unless the C  
corporation elects deemed sale treatment on the  
transferred property. Generally, if the C corporation does  
not make this election for tax years beginning in 2020, the  
RIC must pay tax on the net recognized built-in gain  
during the 5-year period beginning on its first day as a RIC  
or the day it acquired the property. Special rules apply to  
conversion transactions on or after June 7, 2019, as well  
as conversion transactions with a related section 355  
distribution. See Regulations section 1.337(d)-7 for  
details.  
Line c. The RIC's net unrealized built-in gain is the  
amount, if any, by which the FMV of the assets of the RIC  
at the beginning of its first RIC year (or as of the date the  
assets were acquired, for any asset with a basis  
determined by reference to its basis (or the basis of any  
other property) in the hands of a C corporation) exceeds  
the aggregate adjusted basis of such assets at that time.  
Enter on line c the RIC's net unrealized built-in gain  
reduced by the net recognized built-in gain for prior years.  
See sections 1374(c)(2) and (d)(1).  
Line d. If the amount on line b exceeds the amount on  
line a, the excess is treated as a recognized built-in gain in  
the succeeding tax year.  
A RIC's recognition period for conversion transactions  
that occur on or after August 8, 2016, and on or before  
February 17, 2017, is the 10-year period beginning on its  
first day as a RIC or the day the RIC acquired the property,  
as described in Temporary Regulations section  
Line e. Enter the section 1374(b)(2) deduction.  
Generally, this is any net operating loss or capital loss  
carryforward (to the extent of net capital gain included in  
recognized built-in gain for the tax year) arising in tax  
years for which the RIC was a C corporation. A net loss  
carryforward must be used to reduce recognized built-in  
gain for the tax year to the greatest extent possible before  
it can be used to reduce the RIC's taxable income.  
1.337(d)-7T(b)(2)(iii), as in effect on August 8, 2016.  
However, under the provisions of final Regulations section  
1.337(d)-7(g)(2)(iii), a RIC may choose to apply a 5-year  
recognition period to conversion transactions that occur  
on or after August 8, 2016, and on or before February 17,  
2017. See final Regulations section 1.337(d)-7 and  
Temporary Regulations section 1.337(d)-7T for details.  
Line h. Credit carryforwards arising in tax years for which  
the RIC was a C corporation must be used to reduce the  
tax on net built-in gain for the tax year to the greatest  
extent possible before the credit carryforwards can be  
used to reduce the tax on the RIC's taxable income.  
Line i. The RIC's tax on the net recognized built-in gain is  
treated as a loss sustained by the RIC after October 31 of  
the same tax year. Deduct the tax attributable to:  
Recognized built-in gains and losses generally retain  
their character (for example, ordinary income or capital  
gain) and are treated the same as other gains or losses of  
the RIC. The RIC's tax on net recognized built-in gain is  
treated as a loss sustained by the RIC after October 31 of  
the same tax year (see the instructions for line i of the  
Built-in Gains Tax Worksheet, later). See Regulations  
section 1.337(d)-7 for details.  
Ordinary gain as a deduction for taxes on Form  
1120-RIC, line 12;  
Short-term capital gain as a short-term capital loss in  
Part I of Form 8949; and  
Different rules apply to elections to be a RIC and to  
transfers of property in a carryover basis transaction that  
occurred prior to January 2, 2002. For RIC elections and  
property transfers before this date, the C corporation is  
subject to deemed sale treatment on the transferred  
property unless the RIC elects section 1374 treatment.  
See Regulations section 1.337(d)-6 for information on how  
to make the election and figure the tax for RIC elections  
and property transfers before this date. The RIC may also  
generally rely on Regulations section 1.337(d)-5 for RIC  
elections and property transfers that occurred before  
January 2, 2002.  
Long-term capital gain as a long-term capital loss in  
Part II of Form 8949.  
Line 10—Total Tax  
Include any deferred tax on the termination of a section  
1294 election applicable to shareholders in a qualified  
electing fund in the amount entered on line 10. See Form  
8621 and How To Report below.  
Subtract from the total for line 10 the deferred tax on  
the RIC's share of the undistributed earnings of a qualified  
electing fund (see Form 8621).  
Built-in Gains Tax Worksheet Instructions  
How To Report  
Complete the worksheet to figure the built-in gains tax  
under Regulations section 1.337(d)-6 or 1.337(d)-7.  
Line a. Enter the amount that would be the taxable  
income of the RIC for the tax year if only recognized  
built-in gain, recognized built-in loss, and recognized  
built-in gain carryover were taken into account.  
Attach a statement showing the computation of each item  
included in, or subtracted from, the total for line 10. On the  
dotted line next to line 10, enter the amount of tax or  
interest, identify it as tax or interest, and specify the Code  
section that applies.  
Schedule K—Other Information  
Line b. Add the amounts shown on:  
The following instructions apply to questions 1 through 15.  
Complete all items that apply.  
Form 1120-RIC, page 1, line 24;  
Form 1120-RIC, Part II, line 1; and  
Form 2438, line 11.  
Question 3  
For this purpose, refigure line 24 on page 1 without regard  
to any election under section 852(b)(2)(F). Enter the result  
on line b of the Built-in Gains Tax Worksheet.  
Check the “Yes” box if the RIC is a subsidiary in a  
parent-subsidiary controlled group. This applies even if  
17  
     
Built-in Gains Tax Worksheet (keep for your records)  
a. Excess of recognized built-in gains over recognized built-in losses . . . . . . . . . . . . . . . . . . . . . .  
b. Taxable income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
a.  
b.  
c. Enter the net unrealized built-in gain reduced by any net recognized built-in gain for all prior  
years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
d. Net recognized built-in gain (enter the smallest of line a, b, or c) . . . . . . . . . . . . . . . . . . . . . . .  
e. Section 1374(b)(2) deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
f. Subtract line e from line d. If zero, enter -0- here and on line i . . . . . . . . . . . . . . . . . . . . . . . . . .  
g. Enter 21% of line f . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
c.  
d.  
e.  
f.  
g.  
h. Business credit and minimum tax credit carryforwards under section 1374(b)(3) from C corporation  
(see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
i. Tax. Subtract line h from line g (if zero or less, enter -0-). Enter here and include on line 9 of  
Schedule J (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
h.  
i.  
the RIC is a subsidiary member of one group and the  
parent corporation of another.  
party during the tax year must file Form 5472. See Form  
5472 for filing instructions.  
Note. If the RIC is an “excluded member” of a controlled  
group (see section 1563(b)(2)), it is still considered a  
member of a controlled group for this purpose.  
Item 8  
Tax-exempt interest. Show any tax-exempt interest  
received or accrued. Include any exempt-interest  
dividends received as a shareholder in a mutual fund or  
other RIC.  
Question 5  
Check the “Yes” box if one foreign person owned at least  
25% of (a) the total voting power of all classes of stock of  
the RIC entitled to vote, or (b) the total value of all classes  
of stock of the RIC.  
Item 10  
Election under section 853(a). A RIC may make an  
irrevocable election under section 853(a) to allow its  
shareholders to apply their share of the foreign taxes paid  
by the RIC either as a credit or a deduction. If the RIC  
makes this election, the amount of foreign taxes it paid  
during the tax year may not be taken as a credit or a  
deduction on Form 1120-RIC, but may be claimed on  
Form 1120-RIC, Schedule A, line 5, as an addition to the  
dividends-paid deduction.  
The constructive ownership rules of section 318 apply  
in determining if a RIC is foreign owned. See section  
6038A(c)(5) and the related regulations.  
Enter on line 5b(1) the percentage owned by the  
foreign person specified in question 5. For line 5b(2),  
enter the name of the owner's country.  
Note. If there is more than one 25%-or-more foreign  
owner, complete lines 5b(1) and 5b(2) for the foreign  
person with the highest percentage of ownership.  
Eligibility. To qualify to make the election, the RIC must  
meet the following requirements.  
More than 50% of the value of the RIC's total assets at  
the end of the tax year must consist of stock or securities  
in foreign corporations.  
Foreign person. The term “foreign person” includes:  
A foreign citizen or nonresident alien,  
The RIC must meet the holding period requirements of  
An individual who is a citizen or resident of a U.S.  
section 901(k) with respect to its common and preferred  
stock. If the RIC fails to meet these holding period  
requirements, the election that allows a RIC to pass  
through to its shareholders the foreign tax credits for  
foreign taxes paid by the RIC is disallowed. Although the  
foreign taxes paid may not be taken as a credit by either  
the RIC or the shareholder, they are still deductible at the  
fund level.  
territory (but who is not a U.S. citizen or resident),  
A foreign partnership,  
A foreign corporation,  
Any foreign estate or trust within the meaning of section  
7701(a)(31), and  
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.  
Election under section 852(g). In the case of a  
qualified “fund of funds” structure, a RIC may elect to allow  
shareholders the foreign tax credit without regard to the  
requirement that more than 50% of the value of its assets  
consist of stock or securities in foreign corporations. See  
section 852(g) for more information.  
Reporting requirements. To make a valid election under  
section 853 or 852(g), in addition to timely filing Form  
1120-RIC and checking the box for Schedule K, item 10a  
or b, the RIC must file a statement of election, which  
includes the information listed under Regulations section  
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 RIC checked  
Yes,it may have 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.  
Generally, a 25% foreign-owned corporation that had a  
reportable transaction with a foreign or domestic related  
18  
   
1.853-4(c). The information must be provided on or with a  
Form 1118, Foreign Tax Credit, attached to the RIC's  
timely filed tax return.  
Exclusions from filing. A RIC is not required to file Form  
8990 if the RIC is a small business taxpayer that does not  
have excess business interest expense from a partnership  
and did not pay section 163(j) interest dividends for the  
tax year. A RIC is also not required to file Form 8990 if the  
RIC only has business interest expense from these  
excepted trades or businesses:  
For more information, see Regulations section 1.853-4.  
Notification to shareholders. If the RIC makes the  
election, it must furnish to its shareholders a written  
statement reporting the shareholder's portion of (1) foreign  
taxes paid by the RIC to foreign countries and territories of  
the United States, and (2) the dividend that represents  
income derived from:  
An electing real property trade or business,  
An electing farming business, or  
Certain utility businesses.  
Sources within countries described in section 901(j),  
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 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.  
and  
Other foreign-source income.  
Item 11  
Election under section 853A. A RIC can elect to pass  
through credits from tax credit bonds to its shareholders. If  
the RIC makes the election, include the interest income  
from the tax credit bonds on Part I, line 2. Also, increase  
the dividends paid deduction by the amount of the credits  
distributed to shareholders. If the RIC makes the election,  
it is not allowed to take any credits related to the qualified  
tax credit bonds.  
For more information, see section 853A.  
Notification to shareholders. If the RIC makes the  
election to apply section 853A, it must furnish to its  
shareholders a written statement reporting the  
shareholder's proportionate share of (1) credits from tax  
credit bonds, and (2) gross income in respect of such  
credits.  
Question 15  
To certify as a QOF, the RIC must file Form 1120-RIC and  
attach Form 8996, even if the RIC had no income or  
expenses to report. If the RIC is attaching Form 8996,  
check the “Yes” box for question 15. On the line following  
the dollar sign, enter the amount from Form 8996, line 15.  
Question 13, Business Interest Expense  
Election  
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 property  
with a recovery period of 10 years or more. 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 taxpayer 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.  
The penalty reported on this line from Form 8996,  
line 15, is not due with the filing of this form. The IRS will  
separately send to you a notice setting forth the due date  
for the penalty payment and where that payment should  
be sent.  
Schedule L—Balance Sheets per  
Books  
The balance sheets should agree with the RIC's books  
and records.  
Line 1. Cash. Include certificates of deposit as cash on  
line 1.  
Line 4. Tax-exempt securities. Include on this line:  
1. State and local government obligations, the interest  
on which is excludible from gross income under section  
103(a); and  
2. Stock in another mutual fund or RIC that distributed  
Question 14, Conditions for Filing Form 8990  
exempt-interest dividends during the tax year of the RIC.  
Generally, a RIC must file Form 8990 to claim a deduction  
for business interest. In addition, Form 8990 must be filed  
by any RIC that owns an interest in a partnership with  
current year, or prior year carryover, excess business  
interest expense allocated from the partnership. A RIC  
must also file a Form 8990 if the RIC paid section 163(j)  
interest dividends for the tax year.  
Line 24. Adjustments to shareholders' equity.  
Examples of adjustments to report on this line include:  
Unrealized gains and losses on securities held  
“available for sale”;  
Foreign currency translation adjustments;  
19  
         
The excess of additional pension liability over  
Expenses for the use of an entertainment facility;  
The part of business gifts over $25;  
unrecognized prior service cost;  
Guarantees of employee stock (ESOP) debt; and  
Expenses of an individual over $2,000, that are  
Compensation related to employee stock award plans.  
allocable to conventions on cruise ships;  
Employee achievement awards of nontangible property  
If the total adjustment to be entered on line 24 is a  
or tangible property over $400 ($1,600 if part of a qualified  
plan);  
negative amount, enter the amount in parentheses.  
The cost of skyboxes;  
Schedule M-1  
Reconciliation of Income (Loss) per Books With  
Income per Return  
The part of luxury water travel not deductible under  
section 274(m);  
Expenses for travel as a form of education; and  
Other nondeductible travel and entertainment  
expenses.  
Line 5d. Travel and entertainment. Include on line 5d  
any of the following:  
Line 7. Tax-exempt interest. Include as interest on  
line 7 any exempt-interest dividends received by the RIC  
as a shareholder in a mutual fund or other RIC.  
Entertainment expenses not deductible under section  
274(a);  
Entertainment related meal expenses;  
Non-entertainment related meals not deductible under  
section 274(n);  
Paperwork Reduction Act Notice. We ask for the information on this form 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.  
Estimates of taxpayer burden. The following tables show burden estimates based on current statutory requirements  
as of December 2023 for taxpayers filing 2023 Forms 1065, 1066, 1120, 1120-C, 1120-F, 1120-H, 1120-ND, 1120-S,  
1120-SF, 1120-FSC, 1120-L, 1120-PC, 1120-REIT, 1120-RIC, 1120-POL, and related attachments. Time spent and  
out-of-pocket costs are presented separately. Time burden is broken out by taxpayer activity, with reporting representing  
the largest component. Out-of-pocket costs include any expenses incurred by taxpayers to prepare and submit their tax  
returns. Examples include tax return preparation and submission fees, postage and photocopying costs, and tax  
preparation software costs. While these estimates don’t include burden associated with post-filing activities, IRS  
operational data indicate that electronically prepared and filed returns have fewer arithmetic errors, implying lower  
post-filing burden.  
Reported time and cost burdens are national averages and don't necessarily reflect a "typical" case. Most taxpayers  
experience lower than average burden, with taxpayer burden varying considerably by taxpayer type.  
The average burden for partnerships filing Forms 1065 and related attachments is about 60 hours and $5,000; the  
average burden for corporations filing Form 1120 and associated forms is about 105 hours and $6,700; and the average  
burden for Forms 1066, 1120-REIT, 1120-RIC, 1120-S, and all related attachments is 65 hours and $4,400. Within each  
of these estimates there is significant variation in taxpayer activity. Tax preparation fees and other out-of-pocket costs  
vary extensively depending on the tax situation of the taxpayer, the type of software or professional preparer used, and  
the geographic location. Third-party burden hours are not included in these estimates.  
Table 1 – Taxpayer Burden for Entities Taxed as Partnerships  
Forms 1065, 1066, and all attachments  
Primary Form Filed or Type of  
Taxpayer  
Total Number of Returns  
Average Time (hours)  
Average Cost ($)  
Average Monetized  
Burden ($)  
(millions)  
All Partnerships  
Small  
5.3  
4.9  
0.4  
60  
50  
200  
5,000  
3,200  
27,800  
8,700  
5,200  
50,800  
Large*  
*A large business is defined as one having end-of-year assets greater than $10 million. A large business is defined the same way for partnerships, taxable  
corporations, and pass-through corporations. A small business is any business that doesn’t meet the definition of a large business.  
20  
 
Table 2 – Taxpayer Burden for Entities Taxed as Taxable Corporations  
Forms 1120, 1120-C, 1120-F, 1120-H, 1120-ND, 1120-SF, 1120-FSC, 1120-L, 1120-PC, 1120-POL, and all  
attachments  
Primary Form Filed or Type of  
Taxpayer  
Total Number of Returns  
Average Time (hours)  
Average Cost ($)  
Average Monetized  
Burden ($)  
(millions)  
All Taxable Corporations  
2.1  
2.0  
0.1  
105  
55  
830  
6,700  
3,600  
53,800  
14,900  
6,200  
149,000  
Small  
Large*  
*A large business is defined as one having end-of-year assets greater than $10 million. A large business is defined the same way for partnerships, taxable  
corporations, and pass-through corporations. A small business is any business that doesn’t meet the definition of a large business.  
Table 3 – Taxpayer Burden for Entities Taxed as Pass-Through Corporations  
Forms 1120-REIT, 1120-RIC, 1120-S, and all attachments  
Primary Form Filed or Type of  
Taxpayer  
Total Number of Returns  
Average Time (hours)  
Average Cost ($)  
Average Monetized  
Burden ($)  
(millions)  
All Pass-Through Corporations  
5.8  
5.7  
0.1  
65  
60  
295  
4,400  
3,800  
37,700  
7,500  
6,400  
71,800  
Small  
Large*  
*A large business is defined as one having end-of-year assets greater than $10 million. A large business is defined the same way for partnerships, taxable  
corporations, and pass-through corporations. A small business is any business that doesn’t meet the definition of a large business.  
Comments. If you have comments concerning the accuracy of these time estimates or suggestions for making these  
forms simpler, we would be happy to hear from you. You can send us comments through IRS.gov/FormComments. Or  
you can write to the Internal Revenue Service, Tax Forms and Publications Division, 1111 Constitution Ave. NW, IR-6526,  
Washington, DC 20224. Do not send the tax form to this office. Instead, see Where To File, earlier, near the beginning of  
the instructions.  
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