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Form 8816 (Rev. 9-2017) Page 2
the same amount as on Form 1120-PC, 1120-PC, page 1, line 14d, or Form year for which the payment was made (that
Schedule A, line 27, or Form 1120-L, page 1120-L, page 1, line 29d. For purposes of is, to the extent there is a balance on line
1, line 17. For purposes of Form 1120, this Form 1120, this amount is included on 12 at the end of the 15thtax year beginning
amount is included in line 26, page 1, Form Form 1120, Schedule J, Part II, line 13. after the year for which the payment was
1120. Generally, additions are only made in Generally, payments are only made in made), that SETP shall be treated as an
the initial year of a specific loss year’s the initial year an account is established. If estimated tax payment made under section
account. amounts are added in subsequent years, 6655 for the 16thyear after the year for
Line 6. Enter on this line and on Form attach an explanation. which the payment was made. Enter these
amounts on Form 1120-PC, page 1, line
1120-PC, Schedule A, line 12, Form Line 10. Enter the amount of SETPs made 14c, or Form 1120-L, page 1, line 29c. For
1120-L, page 1, line 6, or Form 1120, page in a prior year that are treated as having purposes of Form 1120, this amount is
1, line 10, amounts that are required to be been made for the current year (which included on Form 1120, Schedule J, Part II,
removed from the SLDA and included in allows a current deduction under section line 13.
income. See section 847(5) for details. 847). In effect, the amount on line 10 will be
Note: Section 847(5) requires that, to the treated as having been transferred from Paperwork Reduction Act Notice. We
extent that any amount added to the SLDA one accident year to another accident year. ask for the information on this form to carry
is not subtracted from the SLDA before the This line is intended to ensure the proper out the Internal Revenue laws of the United
15thyear after the year for which the accounting of SETPs and to avoid the States. You are required to give us the
amount was added, the amount must be unnecessary exchange of monies between information. We need it to ensure that you
subtracted from the SLDA for the 15thyear taxpayers and the IRS. are complying with these laws and to allow
and included in gross income for the 15th Example. Assume for calendar year 2016, us to figure and collect the right amount of
year. a taxpayer has $1 million in taxable income tax.
Line 7. The amount entered on this line without regard to section 847 and has You are not required to provide the
may not exceed the amount on line 3. made estimated tax payments sufficient to information requested on a form that is
satisfy its liability. For prior accident year X, subject to the Paperwork Reduction Act
Part III. Special Estimated the taxpayer took a section 847 deduction unless the form displays a valid OMB
Tax Payments (SETPs) and paid an SETP. control number. Books or records relating
Use Part III to reconcile the corporation’s • In year 2016, a portion of that prior to a form or its instructions must be
SETPs for each tax year it has made a accident year’s discount reverses retained as long as their contents may
section 847 election. ($50,000), and $50,000 is includible in become material in the administration of
income (Part II, line 6) and results in an any Internal Revenue law. Generally, tax
Section 847(8) (tax benefit determination) increased tax liability of $17,000. Also in returns and return information are
requires that if a taxpayer carries back net year 2016, the taxpayer takes a section confidential, as required by section 6103.
operating losses or capital losses that arise 847 deduction of $50,000 for accident year The time needed to complete and file
in years after a year in which a section 847 2016 requiring an SETP of $17,000. this form will vary depending on individual
deduction was claimed, the taxpayer must • Instead of actually making an SETP of circumstances. The estimated burden for
recompute the tax benefit attributable to $17,000 for year 2016, the taxpayer can business taxpayers filing this form is
the previously claimed section 847 enter $17,000 on line 10 for accident year approved under OMB control number
deduction taking into account the loss 2016 and transfer that amount from the 1545-0123. The estimated burden for all
carrybacks. Tax benefits also include those balance of SETP for accident year X to other taxpayers who file this form is shown
derived from filing a consolidated return accident year 2016. The taxpayer must below.
with another insurance company (without also include $17,000 on Part III, line 11, for Recordkeeping . . . . 4 hr., 18 min.
regard to section 1503(c)). accident year X.
Learning about the
Therefore, if this recomputation changes Line 11. Enter the total payments applied law or the form . . . . .1 hr., 5 min.
the amount of the section 847 tax benefit, to pay additional tax due as a result of
the taxpayer must provide a computation including in income amounts required by Preparing, copying,
schedule and attach it to Form 8816. section 847(5). The total of the amount(s) assembling, and
Line 8. The amount entered on this line on line 11 must agree with the amount on sending the form to
should be the same as the ending balance Form 1120-PC, page 1, line 14b, or Form the IRS . . . . . . . 1 hr., 12 min.
for this account for the year immediately 1120-L, page 1, line 29b. For purposes of If you have any comments concerning the
preceding this year. If the amounts are Form 1120, this amount is included on accuracy of these time estimates or
different, attach an explanation. Form 1120, Schedule J, Part II, line 13. suggestions for making this form simpler, we
Line 9. Enter the total payments made for Line 12. To the extent that an SETP is not would be happy to hear from you. See the
this accident year. The amount entered on used to offset additional tax due for any of instructions for Form 1120-PC, Form 1120-L,
this line for the current accident year must the first 15 tax years beginning after the or Form 1120.
agree with the figures shown on Form
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