PDF document

- 1 -

                          Userid: CPM                       Schema:          Leadpct: 100% Pt. size: 10  Draft             Ok to Print
                                                            instrx
AH XSL/XML                Fileid: … s/i1120ric/2023/a/xml/cycle07/source                                (Init. & Date) _______

Page 1 of 21                                                                                            10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

                                                                                                        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 
Contents                                                              Page   Form 1120-RIC and its instructions, such as legislation 
Photographs of Missing Children . . . . . . . . . . . . . . . .           1  enacted after this form and instructions were published, 
The Taxpayer Advocate Service . . . . . . . . . . . . . . . . .           1  go to IRS.gov/Form1120RIC.
How To Get Forms and Publications . . . . . . . . . . . . . .             2
                                                                             What’s New
General Instructions  . . . . . . . . . . . . . . . . . . . . . . . . .   2
Purpose of Form . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2  Increase in penalty for failure to file. For tax returns 
Who Must File . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2  required to be filed in 2024, the minimum penalty for 
                                                                             failure to file a return that is over 60 days late has 
General Requirements To Qualify as a RIC . . . . . . . . .                2
                                                                             increased to the smaller of the tax due or $485. See Late 
Other Requirements . . . . . . . . . . . . . . . . . . . . . . . . .      2  filing of return, later.
Definition of a Fund . . . . . . . . . . . . . . . . . . . . . . . . . .  3
                                                                             Expiration of 100% business meal expense deduc-
Where To File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
                                                                             tion.   The temporary 100% business meal expenses 
When To File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3  deduction for food and beverages provided by a 
Who Must Sign . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4  restaurant does not apply to amounts paid or incurred 
Paid Preparer Authorization . . . . . . . . . . . . . . . . . . . .       4  after 2022.
Assembling the Return     . . . . . . . . . . . . . . . . . . . . . . .   4  Elective payment election. Applicable entities and 
Tax Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5  electing taxpayers can elect to treat certain credits as 
Estimated Tax Payments . . . . . . . . . . . . . . . . . . . . . .        5  elective payments. Any resulting overpayment may result 
Interest and Penalties  . . . . . . . . . . . . . . . . . . . . . . . .   5  in refunds. See the instructions for line 28h. Also, see the 
Accounting Methods . . . . . . . . . . . . . . . . . . . . . . . . .      6  Instructions for Form 3800.

Accounting Periods . . . . . . . . . . . . . . . . . . . . . . . . . .    6  Photographs of Missing Children
Rounding Off to Whole Dollars . . . . . . . . . . . . . . . . . .         6  The Internal Revenue Service is a proud partner with the 
Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   6  National Center for Missing & Exploited Children® 
Other Forms That May Be Required . . . . . . . . . . . . . .              6  (NCMEC). Photographs of missing children selected by 
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7  the Center may appear in instructions on pages that would 
Specific Instructions . . . . . . . . . . . . . . . . . . . . . . . . .   9  otherwise be blank. You can help bring these children 
                                                                             home by looking at the photographs and calling 
Period Covered  . . . . . . . . . . . . . . . . . . . . . . . . . . . .   9
                                                                             1-800-THE-LOST (1-800-843-5678) if you recognize a 
Name and Address . . . . . . . . . . . . . . . . . . . . . . . . . .      9  child.
Item B. Date RIC Was Established . . . . . . . . . . . . . . .            9
Item C. Employer Identification Number (EIN) . . . . . . .                9  The Taxpayer Advocate Service
Item D. Total Assets  . . . . . . . . . . . . . . . . . . . . . . . . .   9  The Taxpayer Advocate Service (TAS) is an independent 
Item E. Final Return, Name Change, Address                                   organization within the IRS that helps taxpayers and 
Change, or Amended Return . . . . . . . . . . . . . . . .                 9  protects taxpayer rights. TAS's job is to ensure that every 
                                                                             taxpayer is treated fairly and knows and understands their 
Part I—Investment Company Taxable Income . . . . . . .                    9
                                                                             rights under the Taxpayer Bill of Rights.
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 
Schedule A—Deduction for Dividends Paid                 . . . . . . .     15 abide by in its dealings with the RIC. TAS can help the RIC 
Schedule B—Income From Tax-Exempt                                            if:
Obligations   . . . . . . . . . . . . . . . . . . . . . . . . . . . .     15 •  A problem is causing financial difficulty for the business;
Schedule J—Tax Computation          . . . . . . . . . . . . . . . . .     15 •  The business is facing an immediate threat of adverse 
                                                                             action; or
Schedule K—Other Information . . . . . . . . . . . . . . . .              17
                                                                             •  The RIC has tried repeatedly to contact the IRS but no 
Schedule L—Balance Sheets per Books                 . . . . . . . . .     19 one has responded, or the IRS hasn't responded by the 
Schedule M-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    20 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

- 2 -

Page 2 of 21       Fileid: … s/i1120ric/2023/a/xml/cycle07/source                         10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

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) 
  TAS also works to resolve large-scale or systemic         asset test, and (3) distribution requirements explained 
problems that affect many taxpayers. If the RIC knows of    below.
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 
IRS.gov/SAMS.                                               be derived from the following items:
                                                            • Dividends;
  For more information, go to IRS.gov/Advocate.             • Interest (including tax-exempt interest income);
How To Get Forms                                            • Payments with respect to securities loans (as defined in 
                                                            section 512(a)(5));
and Publications                                            • Gains from the sale or other disposition of stock or 
                                                            securities (as defined in ICA section 2(a)(36)) or foreign 
Internet. You can access the IRS website 24 hours a day, 
                                                            currencies;
7 days a week, at IRS.gov to:
                                                            • Other income (including gains from options, futures, or 
• Download forms, instructions, and publications;
                                                            forward contracts) derived from the RIC's business of 
• Order IRS products online;
                                                            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;
                                                            publicly traded partnership (as defined in section 851(h)).
• View Internal Revenue Bulletins (IRBs) published in 
recent years; and                                             Income from a partnership (other than a qualified 
• Sign up to receive local and national tax news by email.  publicly traded partnership) or trust qualifies under the 
                                                            90% test to the extent the RIC's distributive share of such 
Tax forms and publications.   The RIC can view,             income is from items described above as realized by the 
download, or print all of the forms and publications it may partnership or trust.
need at IRS.gov/FormsPubs.
                                                              Income that a RIC receives in the normal course of 
  Otherwise, the RIC can go to IRS.gov/OrderForms to        business as a reimbursement from its investment advisor 
place an order and have forms mailed to it.                 is qualifying income for purposes of the 90% test if the 
                                                            reimbursement is includible in the RIC's gross income.
General Instructions                                          A RIC that fails to meet the requirements of section 
                                                            851(b)(2) may still be considered to have satisfied the 
Purpose of Form                                             requirements of this test if:
Use Form 1120-RIC, U.S. Income Tax Return for               • Following the RIC's identification of the failure, a 
Regulated Investment Companies, to report the income,       description of each item of its gross income described in 
gains, losses, deductions, credits, and to figure the       section 851(b)(2) is set forth in a statement for the tax 
income tax liability of a regulated investment company      year; and
(RIC) as defined in section 851.                            • 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     1. At the end of each quarter of the RIC's tax year, at 
be treated as a RIC for the tax year (or has made an        least 50% of the value of its assets must be invested in the 
election for a prior tax year and the election has not been following items:
terminated or revoked). The election is made by             • Cash and cash items (including receivables);
computing taxable income as a RIC on Form 1120-RIC.         • Government securities;
                                                            • Securities of other RICs; and
Qualified opportunity funds.  To certify as a qualified     • Securities of other issuers, except that the investment in 
opportunity fund (QOF), the RIC must file Form 1120-RIC     a single issuer of securities may not exceed 5% of the 
and attach Form 8996, even if the RIC had no income or      value of the RIC's assets or 10% of the outstanding voting 
expenses to report. See Schedule K, Question 15. Also,      securities of the issuer (except as provided in section 
see the Instructions for Form 8996.                         851(e)).
General Requirements To Qualify as a                          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 
RIC                                                         invested in the securities of:
The term “regulated investment company” applies to any      • A single issuer (excluding government securities or 
domestic corporation that:                                  securities of other RICs);
• Is registered throughout the tax year as a management     • Two or more issuers controlled by the RIC and engaged 
company or unit investment trust under the Investment       in the same or related trades or businesses; or
Company Act of 1940 (ICA),                                  • 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

- 3 -

Page 3 of 21          Fileid: … s/i1120ric/2023/a/xml/cycle07/source                                  10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Where To File
File the RIC's return at the applicable IRS address listed below.

   If the RIC's principal business, office, or  And the total assets at the end of the 
                                                                                                  Use the following address:
         agency is located in:                     tax year are:
Connecticut, Delaware, District of Columbia,                                           Department of the Treasury
Georgia, Illinois, Indiana, Kentucky, Maine,    Less than $10 million and Schedule M-3  Internal Revenue Service
Maryland, Massachusetts, Michigan, New                   is not filed                  Kansas City, MO
Hampshire, New Jersey, New York, North                                                 64999-0012 
Carolina, Ohio, Pennsylvania, Rhode Island,                                            Department of the Treasury
South Carolina, Tennessee, Vermont, Virginia,   $10 million or more or Schedule M-3 is Internal Revenue Service
West Virginia, Wisconsin                                    filed                      Ogden, UT 
                                                                                       84201-0012
Alabama, Alaska, Arizona, Arkansas, California, 
Colorado, Florida, Hawaii, Idaho, Iowa, Kansas,                                        Department of the Treasury
Louisiana, Minnesota, Mississippi, Missouri,                                           Internal Revenue Service
                                                       Any amount
Montana, Nebraska, Nevada, New Mexico,                                                 Ogden, UT 
North Dakota, Oklahoma, Oregon, South                                                  84201-0012
Dakota, Texas, Utah, Washington, Wyoming

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        •   90% of the excess of the RIC's interest income 
851(b)(3) for a quarter may be considered to have                 excludable from gross income under section 103(a) over 
satisfied the requirements of this test if:                       its deductions disallowed under sections 265 and 171(a)
•  After the RIC identifies the failure, the RIC provides a       (2).
statement with a description of each asset that causes the 
                                                                          A RIC that does not satisfy the distribution 
RIC to fail to satisfy the requirements at the close of the 
                                                                          requirements will be subject to taxation as a C 
quarter;                                                          CAUTION!
                                                                          corporation.
•  The failure is due to reasonable cause and not due to 
willful neglect; and                                                  Earnings and profits.       The RIC must either have been 
•  The RIC disposes of the assets set forth on the                a RIC for all tax years ending after November 7, 1983, or, 
statement (or the requirements of section 851(b)(3) are           at the end of the current tax year, have had no 
otherwise met) within 6 months after the last day of the          accumulated earnings and profits from any non-RIC tax 
quarter in which the RIC identified the failure.                  year.
   4. De minimis failures. A RIC that fails to meet the 
                                                                  Note.   For this purpose, current year distributions are 
requirements of section 851(b)(3) for a quarter may be 
                                                                  treated as made from the earliest earnings and profits 
considered to have satisfied the requirements of this test 
                                                                  accumulated in any non-RIC tax year. See section 852(c)
if:
                                                                  (3). Also, see section 852(e) for procedures that may allow 
•  Such failure is due to ownership of assets, the total 
                                                                  the RIC to avoid disqualification for the initial year if the 
value of which does not exceed the lesser of:
                                                                  RIC did not meet this requirement.
   a. 1% of the total value of the RIC's assets at the end 
of the quarter for which the measurement is done, or              Definition of a Fund
   b. $10 million; and                                            The term “fund” refers to a separate portfolio of assets, 
•  The RIC disposes of the assets following the                   whose beneficial interests are owned by the holders of a 
identification of the failure (or the requirements of section     class or series of stock of the RIC that is preferred over all 
851(b)(3) are otherwise met) within 6 months after the last       other classes or series for that portfolio of assets.
day of the quarter in which the RIC identified the failure.
                                                                  When To File
Note.  For special rules regarding failure to meet the            Generally, a RIC must file its income tax return by the 15th 
requirements of the income and asset tests, see sections          day of the 4th month after the end of its tax year. A new 
851(d)(2) and 851(i).                                             RIC filing a short period return must generally file by the 
Distribution requirements. The RIC's deduction for                15th day of the 4th month after the short period ends. A 
dividends paid for the tax year (as defined in section 561,       RIC that has dissolved must generally file by the 15th day 
but without regard to capital gain dividends) equals or           of the 4th month after the date of dissolution.
exceeds the sum of:                                                   However, a RIC with a fiscal tax year ending June 30 
•  90% of its investment company taxable income                   must file by the 15th day of the 3rd month after the end of 
determined without regard to section 852(b)(2)(D); and            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, 

                                                                                                                                3

- 4 -

Page 4 of 21          Fileid: … s/i1120ric/2023/a/xml/cycle07/source                 10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

and must file by the 15th day of the 3rd month after the              A paid preparer may sign original or amended 
end of its tax year.                                           TIP    returns by rubber stamp, mechanical device, or 
                                                                      computer software program.
  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 
Private Delivery Services                                      return with the paid preparer who signed the return, check 
RICs can use certain private delivery services (PDS)           the “Yes” box in the signature area of the return. This 
designated by the IRS to meet the “timely mailing as           authorization applies only to the individual whose 
timely filing” rule for tax returns. Go to IRS.gov/PDS for the signature appears in the “Paid Preparer Use Only” section 
current list of designated services.                           of the RIC's return. It does not apply to the firm, if any, 
                                                               shown in that section.
  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 
  For the IRS mailing address to use if you're using PDS,      may arise during the processing of its return. The RIC is 
go to IRS.gov/PDSstreetAddresses.                              also authorizing the paid preparer to:
        Private delivery services can't deliver items to P.O.  • Give the IRS any information that is missing from the 
                                                               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         offsets, and return preparation.
Time To File Certain Business Income Tax, Information, 
and Other Returns, to request an extension of time to file.      The RIC is not authorizing the paid preparer to receive 
Generally, the RIC must file Form 7004 by the regular due      any refund check, bind the RIC to anything (including any 
date of the return.                                            additional tax liability), or otherwise represent the RIC 
                                                               before the IRS.
Who Must Sign                                                    The authorization will automatically end no later than 
The return must be signed and dated by:                        the due date (excluding extensions) for filing the RIC's 
• The president, vice president, treasurer, assistant          2024 tax return. If the RIC wants to expand the paid 
treasurer, chief accounting officer; or                        preparer's authorization or revoke the authorization before 
• Any other corporate officer (such as a tax officer)          it ends, see Pub. 947, Practice Before the IRS and Power 
authorized to sign.                                            of Attorney.

  If a return is filed on behalf of a RIC by a receiver,       Assembling the Return
trustee, or assignee, the fiduciary must sign the return, 
instead of the corporate officer. Returns and forms signed     To ensure that the RIC's tax return is correctly processed, 
by a receiver or trustee in bankruptcy on behalf of a RIC      attach all schedules, statements, and other forms after 
must be accompanied by a copy of the order or                  page 4, Form 1120-RIC, in the following order.
instructions of the court authorizing signing of the return or   1. Schedule N (Form 1120).
form.                                                            2. Schedule D (Form 1120).
Note. If this return is being filed for a series fund (as        3. Form 8949.
defined in section 851(g)(2)), the return may be signed by       4. Form 4136.
any officer authorized to sign for the corporation in which      5. Form 8948.
the fund is a series.                                            6. Form 965-B.
Paid Preparer Use Only section.      If an employee of the       7. Form 8941.
RIC completes Form 1120-RIC, the paid preparer's 
                                                                 8. Form 3800.
section should remain blank. Anyone who prepares Form 
1120-RIC but does not charge the RIC should not                  9. Form 8997.
complete that section. Generally, anyone who is paid to          10. Additional schedules in alphabetical order.
prepare the return must sign it and complete the section.        11. Additional forms in numerical order.
  The paid preparer must complete the required preparer          12. Supporting statements and attachments.
information and:
                                                                 Complete every applicable entry space on Form 
• Sign the return in the space provided for the preparer's 
                                                               1120-RIC. Do not enter “See attached” instead of 
signature,
                                                               completing the entry spaces. If more space is needed on 
• Include their Preparer Tax Identification Number (PTIN), 
                                                               the forms or schedules, attach separate sheets using the 
and
                                                               same size and format as the printed forms.
• Give a copy of the return to the RIC.
                                                                 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 

4

- 5 -

Page 5 of 21 Fileid: … s/i1120ric/2023/a/xml/cycle07/source 10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

printed forms. Enter the RIC's name and EIN on each • If, after the RIC figures and deposits estimated tax, it
supporting statement or attachment. finds that its tax liability for the year will be more or less
than originally estimated, it may have to refigure its
Tax Payments required installments. If earlier installments were
Generally, the RIC must pay the tax due in full no later underpaid, the RIC may owe a penalty. See the
than the due date for filing its tax return (not including instructions for line 30, later.
extensions). See the instructions for line 31. If the due • If the RIC overpaid its estimated tax, it may be able to
date falls on a Saturday, Sunday, or legal holiday, the get a quick refund by filing Form 4466, Corporation
payment is due on the next day that isn't a Saturday, Application for Quick Refund of Overpayment of
Sunday, or legal holiday. 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
RICs must use electronic funds transfer to make all federal
information on how to figure estimated taxes.
tax deposits (such as deposits of employment, excise,
and corporate income tax). Generally, electronic funds Interest and Penalties
transfers are made using the Electronic Federal Tax
Payment System (EFTPS). However, if the RIC does not Interest. Interest is charged on taxes paid late even if an
want to use EFTPS, it can arrange for its tax professional, extension of time to file is granted. Interest is also charged
financial institution, payroll service, or other trusted third on penalties imposed for failure to file, negligence, fraud,
party to make deposits on its behalf. Also, it may arrange substantial valuation misstatements, substantial
for its financial institution to submit a same-day tax wire understatements of tax, and reportable transaction
payment (discussed below) on its behalf. EFTPS is a free understatements from the due date (including extensions)
service provided by the Department of the Treasury. to the date of payment. The interest charge is figured at a
Services provided by a tax professional, financial rate determined under section 6621.
institution, payroll service, or other third party may have a Late filing of return. A RIC that does not file its tax
fee. return by the due date, including extensions, may be
penalized 5% of the unpaid tax for each month or part of a
To get more information about EFTPS or to enroll in month the return is late, up to a maximum of 25% of the
EFTPS, visit EFTPS.gov, or call 800-555-4477. To contact unpaid tax. The minimum penalty for a tax return required
EFTPS using Telecommunications Relay Services (TRS) to be filed in 2024 that is over 60 days late is the smaller of
for people who are deaf, hard of hearing, or have a speech the tax due or $485. The penalty will not be imposed if the
disability, dial 711 and provide the TRS assistant the RIC can show that the failure to file on time was due to
800-555-4477 number above or 800-733-4829. reasonable cause.
Depositing on time. For any deposit made by EFTPS to Late payment of tax. A RIC that does not pay the tax
be on time, the RIC must submit the deposit by 8 p.m. when due may generally be penalized / of 1% of the 1 2
Eastern time the day before the date the deposit is due. If unpaid tax for each month or part of a month the tax is not
the RIC uses a third party to make deposits on its behalf, paid, up to a maximum of 25% of the unpaid tax. The
they may have different cutoff times. penalty will not be imposed if the RIC can show that the
Same-day wire payment option. If the RIC fails to failure to pay on time was due to reasonable cause.
submit a deposit transaction on EFTPS by 8 p.m. Eastern Reasonable cause determinations. If the RIC receives
time on the day before the date a deposit is due, it can still a notice about a penalty after it files its return, send the
make its deposit on time by using the Federal Tax IRS an explanation and we will determine if the RIC meets
Collection Service (FTCS). To use the same-day wire the reasonable cause criteria. Do not attach an
payment method, the RIC will need to make arrangements explanation when the RIC's return is filed.
with its financial institution ahead of time regarding
availability, deadlines, and costs. Financial institutions Trust fund recovery penalty. This penalty may apply if
may charge a fee for payments made this way. To learn certain excise, income, social security, and Medicare
more about the information the RIC will need to provide its taxes that must be collected or withheld are not collected
financial institution to make a same-day wire payment, go or withheld, or these taxes are not paid. These taxes are
to IRS.gov/SameDayWire. generally reported on:
• Form 720, Quarterly Federal Excise Tax Return;
Estimated Tax Payments • Form 941, Employer's QUARTERLY Federal Tax
Generally, the following rules apply to the RIC's payments Return;
of estimated tax. • Form 944, Employer's ANNUAL Federal Tax Return; or
• The RIC must make installment payments of estimated • Form 945, Annual Return of Withheld Federal Income
tax if it expects its total tax for the year (less applicable Tax.
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
9th, and 12th months of the tax year. If any date falls on a for collecting, accounting for, or paying over these taxes,
Saturday, Sunday, or legal holiday, the installment is due and who acted willfully in not doing so. The penalty is
on the next regular business day. equal to the full amount of the unpaid trust fund tax. See
• The RIC must use electronic funds transfer to make the Instructions for Form 720 or Pub. 15 (Circular E), for
installment payments of estimated tax. details, including the definition of responsible persons.

- 6 -

Page 6 of 21 Fileid: … s/i1120ric/2023/a/xml/cycle07/source 10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Note. The trust fund recovery penalty will not apply to any 538 for more information and exceptions. Also, see the
amount of trust fund taxes an employer holds back in Instructions for Form 3115 for procedures that may apply
anticipation of the credit for qualified sick and family leave for obtaining automatic consent to change certain
wages or the employee retention credit that they are methods of accounting, non-automatic change
entitled to. See Pub. 15 or Pub. 51 for more information. procedures, and reduced Form 3115 filing requirements.

Other penalties. Other penalties can be imposed for Accounting Periods
negligence, substantial understatement of tax, reportable
A RIC must figure its taxable income on the basis of a tax
transaction understatements, and fraud. See sections
year. A tax year is the annual accounting period a RIC
6662, 6662A, and 6663.
uses to keep its records and report its income and
Accounting Methods expenses. RICs can use a calendar year or a fiscal year.
For more information about accounting periods, see
Figure taxable income using the method of accounting
Regulations sections 1.441-1 and 1.441-2.
regularly used in keeping the RIC's books and records. In
all cases, the method used must clearly reflect taxable Change of tax year. Generally, a RIC must receive
income. consent from the IRS before changing its tax year. To
obtain the consent, file Form 1128, Application To Adopt,
Generally, permissible methods include: Change, or Retain a Tax Year. However, under certain
• Cash, conditions, a RIC may change its tax year without
• Accrual, or obtaining the consent.
• Any other method authorized by the Internal Revenue
Code. See the Instructions for Form 1128 and Pub. 538 for
more information on accounting periods and tax years.
For more information, see Pub. 538, Accounting
Periods and Methods. Rounding Off to
Accrual method. Generally, a RIC must use the accrual Whole Dollars
method of accounting if its average annual gross receipts The RIC may enter decimal points and cents when
for the prior 3 years exceed $29 million. See section completing its return. However, the RIC should round off
448(c). cents to whole dollars on its return, forms, and schedules
Mark-to-market accounting method. Generally, to make completing its return easier. The RIC must either
dealers in securities must use the mark-to-market round off all amounts on its return to whole dollars, or use
accounting method described in section 475. Under this cents for all amounts. To round, drop amounts under 50
method, any security that is inventory to the dealer must cents and increase amounts from 50 to 99 cents to the
be held at its fair market value (FMV). next dollar. For example, $8.40 rounds to $8 and $8.50
rounds to $9.
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 If two or more amounts must be added to figure the
FMV on the last business day of the tax year. Any resulting amount to enter on a line, include cents when adding the
gain or loss must be taken into account that year in amounts and round off only the total.
determining gross income. The gain or loss taken into
Recordkeeping
account is generally treated as ordinary gain or loss.
Keep the RIC's records for as long as they may be needed
For details, including exceptions, see section 475, the for administration of any provision of the Internal Revenue
related regulations, and Rev. Rul. 97-39, 1997-39 I.R.B. 4. Code. Usually, records that support an item of income,
Dealers in commodities and traders in securities and deduction, or credit on the return must be kept for 3 years
commodities may elect, with some exceptions, to use the from the date the return is due or filed, whichever is later.
mark-to-market accounting method. To make the election, Keep records that verify the RIC's basis in property for as
the RIC must file a statement describing the election, the long as they are needed to figure the basis of the original
first tax year the election is to be effective, and in the case or replacement property.
of an election for traders in securities or commodities, the
trade or business for which the election is made. Except The RIC should keep copies of all filed returns. They
for new taxpayers, the statement must be filed by the due help in preparing future and amended returns and in the
date (not including extensions) of the income tax return for calculation of earnings and profits.

the tax year immediately preceding the election year and Other Forms That May Be Required
attached to that return, or if applicable, to a request for an
In addition to Form 1120-RIC, the RIC may have to file
extension of time to file that return. For more details, see
some of the following forms.
Rev. Proc. 99-17, 1999-7 I.R.B. 52, and sections 475(e)
and (f). Form 976, Claim for Deficiency Dividends Deductions by
a Personal Holding Company, Regulated Investment
Change in accounting method. Generally, the RIC
Company, or Real Estate Investment Trust. Use this form
must get IRS consent to change either an overall method
to claim a deficiency dividend deduction under section
of accounting or the accounting treatment of any material
860.
item for income tax purposes. To obtain consent, the RIC
must file Form 3115, Application for Change in Accounting Form 1096, Annual Summary and Transmittal of U.S.
Method, during the tax year for which the change is Information Returns. Use Form 1096 to transmit Forms
requested. See the Instructions for Form 3115 and Pub. 1099 and 5498 to the Internal Revenue Service.

- 7 -

Page 7 of 21 Fileid: … s/i1120ric/2023/a/xml/cycle07/source 10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Form 1099-DIV, Dividends and Distributions. Report figure the domestic corporation's GILTI under section
certain dividends and distributions. 951A and attach it to Form 1120-RIC.
Form 1099-INT, Interest Income. Report interest income. Form 8996, Qualified Opportunity Fund. Use Form 8996
to certify that the RIC is organized as a qualified
Form 2438, Undistributed Capital Gains Tax Return, opportunity fund (QOF) to invest in qualified opportunity
must be filed by the RIC if it designates undistributed net zone property. In addition, a QOF RIC files Form 8996
long-term capital gains under section 852(b)(3)(D). annually to report that it meets the 90% investment
Form 2439, Notice to Shareholder of Undistributed standard of section 1400Z-2 or to compute the penalty if it
Long-Term Capital Gains, must be completed and a copy fails to meet the investment standard.
given to each shareholder for whom the RIC paid tax on Form 8997, Initial and Annual Statement of Qualified
undistributed net long-term capital gains under section Opportunity Fund (QOF) Investments. Use Form 8997 to
852(b)(3)(D). report investments in one or more QOFs. Report the
Form 3520, Annual Return To Report Transactions With amount of deferred gains invested in QOFs at the
Foreign Trusts and Receipt of Certain Foreign Gifts, may beginning of the current tax year, transactions related to
be required if the RIC received a distribution from, was a investments in QOFs for the current tax year, which
grantor of, or transferor to a foreign trust during the tax include capital gains deferred and invested in QOFs and
year. See Question 5 of Schedule N (Form 1120). dispositions of investments in QOFs, and the amount of
deferred gains invested in QOFs at the end of the current
Form 5471, Information Return of U.S. Persons With tax year.
Respect To Certain Foreign Corporations. Use Form 5471
if the RIC is a U.S. shareholder of a controlled foreign Statements
corporation, a specified foreign corporation, or otherwise
subject to the reporting requirements of section 6038 or Reportable transaction disclosure statement.
6046, and the related regulations. Disclose information for each reportable transaction in
which the RIC participated. Form 8886, Reportable
Form 7205, Energy Efficient Commercial Buildings Transaction Disclosure Statement, must be filed for each
Deduction. Use Form 7205 to calculate and claim the tax year that the federal income tax liability of the RIC is
deduction under section 179D for qualifying energy affected by its participation in the transaction. The
efficient commercial buildings placed in service during the following are reportable transactions.
tax year.
1. Any listed transaction, which is a transaction that is
Form 8613, Return of Excise Tax on Undistributed the same as or substantially similar to one of the types of
Income of Regulated Investment Companies. If the RIC is transactions that the IRS has determined to be a tax
liable for the 4% excise tax on undistributed income under avoidance transaction and identified by notice, regulation,
section 4982 or makes an election under section 4982(e) or other published guidance as a listed transaction.
(4), it must file this return for the calendar year. 2. Any transaction offered under conditions of
Form 8621, Information Return by a Shareholder of a confidentiality for which the RIC (or a related party) paid
Passive Foreign Investment Company or Qualified an advisor a fee of at least $250,000.
Electing Fund. Use Form 8621 if the RIC is a direct or 3. Certain transactions for which the RIC (or a related
indirect shareholder of a passive foreign investment party) has contractual protection against disallowance of
company, as defined in section 1297(a). the tax benefits.
Form 8927, Determination Under Section 860(e)(4) by a 4. Certain transactions resulting in a loss of at least
Qualified Investment Entity. Use Form 8927 to make a $10 million in any single year or $20 million in any
determination under section 860(e)(4) for purposes of combination of years.
paying deficiency dividends. 5. Any transaction identified by the IRS by notice,
Form 8975, Country-by-Country Report. Certain U.S. regulation, or other published guidance as a “transaction
persons that are the ultimate parent entity of a U.S. of interest.” See Notice 2009-55, 2009-31 I.R.B. 170.
multinational enterprise group with annual revenue for the For more information, see Regulations section
preceding reporting period of $850 million or more are 1.6011-4. Also, see the Instructions for Form 8886.
required to file Form 8975. Form 8975 and Schedule A
Penalties. The RIC may have to pay a penalty if it is
(Form 8975) must be filed with the income tax return of the
required to disclose a reportable transaction under section
ultimate parent entity of a U.S. multinational enterprise
6011 and fails to properly complete and file Form 8886.
group for the tax year in or within which the reporting
Penalties may also apply under section 6707A if the RIC
period covered by Form 8975 ends. For more information,
fails to file Form 8886 with its Form 1120-RIC, fails to
see Form 8975, Schedule A (Form 8975) and the
provide a copy of Form 8886 to the Office of Tax Shelter
Instructions for Form 8975 and Schedule A (Form 8975).
Analysis (OTSA), or files a form that fails to include all the
Form 8990, Limitation on Business Interest Expense information required (or includes incorrect information).
Under Section 163(j). Use Form 8990 to calculate the Other penalties, such as an accuracy-related penalty
amount of business interest expense the RIC can deduct under section 6662A, may also apply. See the Instructions
and the amount to carry forward to the next year. for Form 8886 for details on these and other penalties.
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

- 8 -

Page 8 of 21 Fileid: … s/i1120ric/2023/a/xml/cycle07/source 10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

disclose certain information about the reportable Certain dividends. A dividend received from a RIC is
transaction by filing Form 8918, Material Advisor taken into account in computing (a) the deduction under
Disclosure Statement, with the IRS. For details, see the section 243, or (b) qualified dividend income, only to the
Instructions for Form 8918. extent reported by the RIC as eligible for such deduction
Safe harbor under Temporary Regulations section or such treatment in written statements furnished to its
1.67-2T(j)(2). Generally, shareholders in a nonpublicly shareholders. A RIC must determine the reportable
offered fund that are individuals or pass-through entities amounts under section 854(b). For purposes of the
are treated as having received a dividend in an amount dividends-received deduction, a capital gain dividend
equal to the shareholder's allocable share of affected RIC received from a RIC is not treated as a dividend. The
expenses for the calendar year. They are also treated as capital gain dividend is treated as a long-term capital gain
having paid or incurred an expense described in section by the shareholder.
212 in the same amount for the calendar year. Consent to partnership election to close its books
Election. A nonpublicly offered fund may elect to treat monthly. Certain money market funds that obtain an
its affected RIC expenses for a calendar year as equal to interest in an eligible partnership that invests in assets
40% of the amount determined under Temporary exempt from taxation under section 103 may be qualified
Regulations section 1.67-2T(j)(1)(i) for that calendar year. to pay exempt-interest dividends to their shareholders. To
To make this election, attach to Form 1120-RIC for the qualify for payment of exempt-interest dividends, a RIC
tax year that includes the last day of the calendar year for must meet the quarterly net asset value (NAV)
which the fund makes the election a statement that it is requirements under section 852(b)(5). To maintain the
making an election under Temporary Regulations section required NAV at the end of each quarter, the RIC may take
1.67-2T(j)(2). Once made, the election remains in effect into account on a monthly basis its distributive share of
for all subsequent calendar years and may not be revoked partnership items if the eligible partnership makes a
without IRS consent. See Temporary Regulations section proper election to close its books at the end of each
1.67-2T for definitions and other details. month. See Rev. Proc. 2003-84, 2003-48 I.R.B. 1159, as
modified by Notice 2008-80, for details.
Transfers to a corporation controlled by the transfer-
Eligibility. A RIC is entitled to take into account its
or. Every significant transferor (as defined in Regulations
distributive share of partnership items on a monthly basis
section 1.351-3(d)(1)) that receives stock of a corporation
if:
in exchange for property in a nonrecognition event must
include the statement required by Regulations section • The RIC is entitled to hold itself out as a money market
fund, or an equivalent of a money market fund;
1.351-3(a) on or with the transferor's tax return for the tax
year of the exchange. The transferee corporation must • The RIC provides a statement to the partnership that it
consents to the partnership's election to close its books
include the statement required by Regulations section
1.351-3(b) on or with its return for the tax year of the monthly and that the RIC will include in its taxable income
its distributive share of partnership items in a manner
exchange, unless all the required information is included
consistent with the election. See Rev. Proc. 2003-84 for
in any statement(s) provided by a significant transferor
the required contents of the statement of consent;
that is attached to the same return for the same section
351 exchange. If the transferor or transferee corporation is • The RIC provides the statement of consent to the
custodian or manager of the partnership by the last day of
a controlled foreign corporation (CFC), each U.S.
the second month after the month in which the RIC
shareholder (within the meaning of section 951(b)) must
acquires the partnership interest; and
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 make the monthly closing election and the election is
a distribution of stock or securities of a controlled effective by the second month after the month in which the
corporation, as described in section 355 (or so much of RIC acquires the partnership interest.
section 356 as it relates to section 355), must attach the
Statement of consent. The consent to a partnership's
statement required by Regulations section 1.355-5(a) to
monthly closing election is effective for the month in which
its return for the year of the distribution. A significant
the RIC acquires the partnership interest, unless the RIC
distributee (as defined in Regulations section 1.355-5(c)
requests that the consent be effective for either of the two
(1)) that receives stock or securities of a controlled
immediately following calendar months. In addition to
corporation must include the statement required by
timely providing the partnership with the statement of
Regulations section 1.355-5(b) on or with its return for the
consent, the statement should be filed with Form
year of receipt. If the distributing or distributee corporation
1120-RIC for the first tax year in which the consent is
is a CFC, each U.S. shareholder (within the meaning of
effective. The monthly closing consent (and the
section 951(b)) must include the statement on or with its
partnership's election) may be revoked only with the
return.
consent of the Commissioner. However, the RIC's consent
Dual consolidated losses. If a domestic corporation becomes ineffective on any day when the RIC ceases to
incurs a dual consolidated loss (as defined in Regulations be an eligible partner and the partnership's monthly
section 1.1503-2(c)(5)), the corporation (or consolidated closing election is terminated as of the first day of any
group) may need to attach an elective relief agreement month the partnership is no longer eligible for the election
and/or an annual certification, as provided in Regulations under Rev. Proc. 2003-84. For more details, see the
section 1.1503-2(g)(2). revenue procedure.

- 9 -

Page 9 of 21  Fileid: … s/i1120ric/2023/a/xml/cycle07/source                                  10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Other forms and statements.         See Pub. 542,                Item D. Total Assets
Corporations, for a list of other forms and statements a         Enter the RIC's total assets (as determined by the 
RIC may need to file in addition to the forms and                accounting method regularly used in keeping the fund's 
statements discussed throughout these instructions.              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, 
Period Covered                                                   Address Change, or Amended Return
File the 2023 return for calendar year 2023 and fiscal           • If this is the RIC's final return and it will no longer exist, 
years that begin in 2023 and end in 2024. For a fiscal year      check the “Final return” box.
return, fill in the tax year in the space at the top of the      • If the RIC has changed its name since it last filed a 
form.                                                            return, check the “Name change” box. Generally, a RIC 
                                                                 must also have amended its articles of incorporation and 
   The 2023 Form 1120-RIC may also be used if:                   filed the amendment with the state in which it was 
• The RIC has a tax year of less than 12 months that             incorporated.
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), 
RIC is required to file its return.                              check the “Address change” box.
   The RIC must show its 2024 tax year information on the 
2023 Form 1120-RIC and take into account any tax law             Note.  If a change in address or responsible party occurs 
changes that are effective for tax years beginning after         after the return is filed, use Form 8822-B, Change of 
December 31, 2023.                                               Address or Responsible Party—Business, to notify the 
                                                                 IRS of the new address. See the instructions for Form 
Name and Address                                                 8822-B for details.
Enter the RIC's true name (as set forth in the charter or        Amended return.    If the RIC is amending its return, check 
other legal document creating it), address, and EIN on the       the box for “Amended return,” complete the entire return, 
appropriate lines. Enter the address of the RIC's principal      correct the appropriate lines with the new information, and 
office or place of business. Include the suite, room, or         refigure the RIC's tax liability. Attach a statement that 
other unit number after the street address. If the post          explains the reason for the amendments and identifies the 
office does not deliver mail to the street address and the       lines being changed on the amended return.
RIC has a P.O. box, show the box number instead.
Note. Do not use the address of the registered agent for         Part I—Investment
the state in which the RIC is incorporated. For example, if      Company Taxable Income
a business is incorporated in Delaware or Nevada and the 
RIC's principal office is located in Little Rock, AR, the RIC    Income
should enter the Little Rock address.
                                                                 Line 1. Dividends. A RIC that is the holder of record of 
   If the RIC receives its mail in care of a third party (such   any share of stock on the record date for a dividend 
as an accountant or an attorney), enter on the street            payable on that stock must include the dividend in gross 
address line “C/O” followed by the third party's name and        income by the later of the date the share became 
street address or P.O. box.                                      ex-dividend, or the date the RIC acquired the share.
Item B. Date RIC Was Established                                 Line 2. Interest. Enter taxable interest on U.S. 
                                                                 obligations and on loans, notes, mortgages, bonds, bank 
If this return is being filed for a series fund (as described in deposits, corporate bonds, tax refunds, etc.
section 851(g)(2)), enter the date the fund was created. 
Otherwise, enter the date the RIC was incorporated or              Do not offset interest expense against interest income. 
organized.                                                       Special rules apply to interest income from certain 
                                                                 below-market-rate loans. See section 7872 for more 
Item C. Employer                                                 information on the tax treatment of loans on which 
                                                                 inadequate or no interest is charged.
Identification Number (EIN)
Enter the RIC's EIN. If the RIC does not have an EIN, it         Note.  Report tax-exempt interest income on Schedule K, 
must apply for one. An EIN may be applied for:                   item 8. Do not include tax-exempt interest on line 2. Also, 
• Online by visiting IRS.gov/EIN. The EIN is issued              if required, include the same amount on Schedule M-1, 
immediately once the application information is validated;       line 7.
or                                                                 Include interest income from tax credit bonds on line 2. 
• By mailing or faxing Form SS-4, Application for                If the RIC elects to pass through the credits to 
Employer Identification Number.                                  shareholders, see the instructions for Part II, Schedule A, 
   If the RIC has not received its EIN by the time the return    line 7.
is due, write “Applied for” and the date you applied in the      Line 3. Net foreign currency gain or (loss) from sec-
space for the EIN. See the Instructions for Form SS-4 for        tion 988 transactions. Enter the net foreign currency 
details.

                                                                                                                                  9

- 10 -

Page 10 of 21 Fileid: … s/i1120ric/2023/a/xml/cycle07/source 10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

gain (loss) from section 988 transactions treated as • The recapture amount under section 280F if the
ordinary income or loss under section 988(a)(1)(A). Attach business use of listed property drops to 50% or less. To
a statement detailing each separate transaction. figure the recapture amount, complete Part IV of Form
4797;
Line 4. Payments with respect to securities loans.
Enter the amount received or accrued from a broker as • Ordinary income from trade or business activities of a
partnership (from Schedule K-1 (Form 1065)). Do not
compensation for securities loaned by the RIC to the
offset ordinary losses against ordinary income. Instead,
broker for use in completing market transactions. The
include the losses on line 22. Show the partnership's
payments must meet the requirements of section 512(a)
name, address, and EIN on a separate statement
(5).
attached to this return. If the amount entered is from more
Line 5. Excess of net short-term capital gain over net than one partnership, identify the amount from each
long-term capital loss. Enter the amount from partnership;
Schedule D (Form 1120), line 16. Every sale or exchange • Any net positive section 481 income adjustment due to
of a capital asset must be reported even if no gain or loss a change in method of accounting. See Form 3115 and its
is indicated. instructions for more information;
If a RIC has a net capital loss for any tax year, the • Part or all of the proceeds received from certain
excess of the net short-term capital loss over the net corporate-owned life insurance contracts issued after
long-term capital gain shall be a short-term capital loss August 17, 2006. Corporations that own one or more
arising on the first day of the next tax year. The excess of employer-owned life insurance contracts issued after this
the net long-term capital loss over the net short-term date must file Form 8925, Report of Employer-Owned Life
capital gain shall be a long-term capital loss arising on the Insurance Contracts. See section 101(j) for details;
first day of the next tax year. Also, there is no limit on the • Income from cancellation of debt (COD) from the
number of tax years that a RIC is allowed to carry over a repurchase of a debt instrument for less than its adjusted
net capital loss. See section 1212(a)(3) for more issue price;
information. • The RIC's share of the following income from Form
Line 7. Other income. Enter any other taxable income 8621, Information Return by a Shareholder of a Passive
(loss) not reported on lines 1 through 6, except net capital Foreign Investment Company or Qualified Electing Fund.
gain reported in Part II. 1. Ordinary earnings of a qualified electing fund
If the RIC owns any controlled foreign corporations or (QEF).
qualified electing funds, enter the amount included in 2. Gain or loss from marking passive foreign
gross income under section 951(a)(1)(A), plus the amount investment company income (PFIC) stock to market.
of global intangible low-taxed income determined under 3. Gain or loss from sale or other disposition of
section 951A (which is treated as an amount included Section 1296 stock.
under section 951(a)(1)(A)), and any amount included in
4. The amount of excess distributions from a Section
gross income under section 1293(a). See Regulations
1291 fund that is treated as ordinary income.
section 1.851-2(b)(2)(iii). Do not include in this line any
amounts that are treated as dividends and reported on See Form 8621 and the Instructions for Form 8621 for
line 1. See Regulations section 1.851-2(b)(2)(i). Refer to details; and
Form 5471, Form 8621, and Form 8992, and their • Any payroll tax credit taken by an employer on its 2023
instructions, to determine the amount included in gross employment tax returns (Forms 941, 943, and 944) for
income under section 951(a)(1)(A) (including the amount qualified paid sick and qualified paid family leave under
of global intangible low-taxed income) and section FFCRA and ARP (both the nonrefundable and refundable
1293(a). Also, consider the applicability of section 951A portions). The RIC must include the full amount of the
with respect to controlled foreign corporations owned by credit for qualified sick and family leave wages in gross
domestic partnerships in which the RIC has an interest. income for the tax year that includes the last day of any
List the type and amount of income on an attached calendar quarter in which the credit is allowed.
statement. If the RIC has only one item of other income,
Note. A credit is available only if the leave was taken after
describe it in parentheses on line 7. Examples of other
March 31, 2020, and before October 1, 2021, and only
income to report on line 7 include:
after the qualified leave wages were paid, which might,
• Gross rents;
under certain circumstances, not occur until a quarter
• Recoveries of fees or expenses in settlement or
after September 30, 2021, including quarters in 2023.
litigation;
• Amounts received or accrued as consideration for Deductions
entering into agreements to make real property loans or to
purchase or lease real property; Limitations on Deductions
• Recoveries of bad debts deducted in prior years under Transactions between related taxpayers. Generally,
the specific charge-off method; an accrual basis taxpayer may only deduct business
• Refunds of taxes deducted in prior years to the extent expenses and interest owed to a related party in the year
they reduced income subject to tax in the year deducted the payment is includible in the income of the related
(see section 111). Do not offset current year taxes against party. See section 267 for limitations on deductions for
prior year tax refunds; interest and expenses paid to a related party.

- 11 -

Page 11 of 21           Fileid: … s/i1120ric/2023/a/xml/cycle07/source                 10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Limitations on business interest expense.         Business     Passive activity limitations. Limitations on passive 
interest expense may be limited. See section 163(j), Form      activity losses and credits under section 469 apply to 
8990, and the related instructions. Also, see Limitation on    RICs that are closely held (as defined in section 469(j)(1)). 
deduction in the instructions for line 13 and Schedule K,      RICs subject to the passive activity limitations must 
Question 14, later.                                            complete Form 8810, Corporate Passive Activity Loss and 
                                                               Credit Limitations, to compute their allowable passive 
Golden parachute payments.    A portion of the 
                                                               activity loss and credit. Before completing Form 8810, see 
payments made by a RIC to key personnel that exceeds 
                                                               Temporary Regulations section 1.163-8T for rules on 
their usual compensation may not be deductible. This 
                                                               allocating interest expense among activities.
occurs when the RIC has an agreement (golden 
parachute) with key employees to pay them an amount              Closely held corporation.   A RIC is closely held if at 
substantially in excess of their base amount if control of     any time during the last half of the tax year more than 50% 
the RIC changes. See section 280G and Regulations              in value of its outstanding stock is directly or indirectly 
section 1.280G-1 for more information. Also, see the           owned by or for not more than five individuals and it is not 
instructions for line 9.                                       a personal service corporation.
Business start-up and organizational costs.       A RIC        Line 9. Compensation of officers.      Enter the deductible 
can elect to deduct a limited amount of start-up and           officer's compensation on line 9. The RIC determines who 
organizational costs it paid or incurred. Any remaining        is an officer under the laws of the state where 
costs must generally be amortized over a 180-month             incorporated. Do not include compensation deductible 
period. See sections 195 and 248 and the related               elsewhere on the return, such as elective contributions to 
regulations.                                                   a section 401(k) cash or deferred arrangement, or 
                                                               amounts contributed under a salary reduction SEP 
Time for making an election.  The RIC generally 
                                                               agreement or a SIMPLE IRA plan.
elects to deduct start-up or organizational costs by 
claiming the deduction on its income tax return filed by the     If the RIC's total receipts are $500,000 or more, 
due date (including extensions) for the tax year in which      complete and attach Form 1125-E. Total receipts are 
the active trade or business begins. However, for start-up     figured by adding:
or organizational costs paid or incurred before September        1. Line 8, Part I;
9, 2008, the RIC may be required to attach a statement to        2. Net capital gain from line 1, Part II; and
its return to elect to deduct such costs. See Regulations 
sections 1.195-1 and 1.248-1 for details.                        3. Line 9a, Form 2438.
For more details, including special rules for costs paid         Enter on line 9 the amount from Form 1125-E, line 4.
or incurred before September 9, 2008, see the                  Line 10. Salaries and wages.   Enter the salaries and 
Instructions for Form 4562.                                    wages paid for the tax year reduced by the amount 
If the RIC timely filed its return for the year without        claimed on:
making an election, it can still make an election by filing an • Form 5884, Work Opportunity Credit;
amended return within 6 months of the due date of the          • Form 8844, Empowerment Zone Employment Credit;
return (excluding extensions). Clearly indicate the election   • Form 8932, Credit for Employer Differential Wage 
on the amended return and write "Filed pursuant to             Payments; and
section 301.9100-2" at the top of the amended return. File     • Form 8994, Employer Credit for Paid Family and 
the amended return at the same address the RIC filed its       Medical Leave.
original return. The election applies when figuring taxable      See the instructions for these forms for more 
income for the current tax year and all subsequent years.      information.
Note. The RIC can choose to forgo the elections above            Do not include salaries and wages deductible 
by clearly electing to capitalize its start-up or              elsewhere on the return, such as amounts included in 
organizational costs on an income tax return filed by the      officer's compensation, elective contributions to a section 
due date (including extensions) for the tax year in which      401(k) cash or deferred arrangement, or amounts 
the active trade or business begins.                           contributed under a salary reduction SEP agreement or a 
                                                               SIMPLE IRA plan.
Report the deductible amount of such costs and any 
amortization on line 22. For amortization that begins                  If the RIC provided taxable fringe benefits to its 
during the current tax year, complete and attach Form            !     employees, such as personal use of a car, do not 
4562.                                                          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               If the RIC claims a credit for any wages paid or 
those dividends deemed paid under section 855), no               !     incurred, it may need to reduce any corresponding 
deduction is allowed for that portion of otherwise             CAUTION deduction for officers' compensation and salaries 
deductible expenses allocable to tax-exempt income. The        and wages. See the instructions for the form used to figure 
excluded amount is determined by the amount tax-exempt         the applicable credit for more details.
income bears to total gross income (including tax-exempt 
income but excluding capital gain net income).                 Line 11. Rents. If the RIC rented or leased a vehicle, 
Net operating loss deduction. The net operating loss           enter the total annual rent or lease expense paid or 
deduction is not allowed.                                      incurred during the year. Also, complete Part V of Form 

                                                                                                                           11

- 12 -

Page 12 of 21 Fileid: … s/i1120ric/2023/a/xml/cycle07/source 10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

4562, Depreciation and Amortization. If the RIC leased a rules and exceptions for financial institutions. Also, see
vehicle for a term of 30 days or more, the deduction for the section 265(b)(7) for a temporary de minimis exception for
vehicle lease expense may have to be reduced by an financial institutions for certain tax exempt bonds issued in
amount called the inclusion amount. 2009 and 2010.
The RIC may have an inclusion amount if: • For cash basis taxpayers, prepaid interest allocable to
The lease term began: And the vehicle's FMV on years following the current tax year. For example, a cash
the first day of the lease basis calendar year taxpayer who in 2023 prepaid interest
exceeded: allocable to any period after 2023 can deduct only the
Cars (excluding trucks and vans) amount allocable to 2023.
After 12/31/22 but before 1/1/24 . . . . . . . . . . $60,000 Interest and carrying charges on straddles. Generally,
After 12/31/21 but before 1/1/23 . . . . . . . . . . $56,000 •
After 12/31/20 but before 1/1/22 . . . . . . . . . . $51,000 these amounts must be capitalized. See section 263(g).
After 12/31/17 but before 1/1/21 . . . . . . . . . . $50,000 Special rules apply to:
After 12/31/12 but before 1/1/18 . . . . . . . . . . $19,000
Trucks and Vans • Original issue discount (OID) on certain high-yield
After 12/31/22 but before 1/1/24 . . . . . . . . . . $60,000 discount obligations. See section 163(e)(5) to determine
After 12/31/21 but before 1/1/23 . . . . . . . . . . $56,000 the amount of the deduction for OID that is deferred and
After 12/31/20 but before 1/1/22 . . . . . . . . . . $51,000 the amount that is disallowed on a high-yield discount
After 12/31/17 but before 1/1/21 . . . . . . . . . . $50,000 obligation. The rules under section 163(e)(5) do not apply
After 12/31/13 but before 1/1/18 . . . . . . . . . . $19,500 to certain high-yield discount obligations issued after
After 12/31/09 but before 1/1/14 . . . . . . . . . . $19,000 August 31, 2008, and before January 1, 2011. See section
See Pub. 463, Travel, Gift, and Car Expenses, for instructions on figuring the inclusion amount. 163(e)(5)(F). Also, see Notice 2010-11, 2010-4 I.R.B. 326.
The inclusion amount for lease terms beginning in 2024 will be published in the Internal • The deduction for interest when the RIC is a
Revenue Bulletin in early 2024.
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
Line 12. Taxes and licenses. Enter taxes paid or
showing the computation of the deduction.
accrued during the tax year, but do not include the
Limitation on deduction. Under section 163(j),
following.
business interest expense is generally limited to the sum
• Federal income taxes (except for the tax imposed on
of business interest income, 30% of the adjusted taxable
net recognized built-in gain allocable to ordinary income).
income, and floor plan financing interest. Business
• Foreign or U.S. territory income taxes if a foreign tax
interest expense includes any interest paid or accrued
credit is claimed, or if the RIC made an election under
properly allocable to a trade or business (other than
section 853.
certain excepted trades or businesses). A small business
• Excise taxes imposed under section 4982 on
taxpayer that is not a tax shelter (as defined in section
undistributed RIC income.
448(d)(3)), and that meets the gross receipts test, is not
• Taxes not imposed on the RIC.
required to limit business interest expense under section
• Taxes, including state or local sales taxes, that are paid
163(j). A taxpayer meets the gross receipts test if the
or incurred in connection with an acquisition or disposition
taxpayer has average annual gross receipts of not more
of property (these taxes must be treated as a part of the
than $29 million for the 3 prior tax years under the gross
cost of the acquired property or, in the case of a
receipts test of section 448(c). Gross receipts include the
disposition, as a reduction in the amount realized on the
aggregate gross receipts from all persons treated as a
disposition).
single employer such as a controlled group of
• Taxes assessed against local benefits that increase the
corporations, commonly controlled partnerships or
value of the property assessed (such as for paving, etc.).
proprietorships, and affiliated service groups. If the
• Taxes deducted elsewhere on the return.
corporation fails to meet the gross receipts test, Form
See section 164(d) for information on apportionment of 8990 is generally required. See the Instructions for Form
taxes on real property between seller and purchaser. 8990. Also, see Schedule K, Questions 13 and 14 for
Do not reduce the RIC's deduction for social conditions for filing Form 8990.
! 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 CAUTION!
on its employment tax returns. Instead, report this amount
as income on line 7. Line 14. Depreciation. Include on line 14 depreciation
and the cost of certain property that the RIC elected to
Line 13. Interest. The RIC must make an interest expense under section 179. See Form 4562 and the
allocation if the proceeds of a loan were used for more related instructions to figure the amount of depreciation to
than one purpose (for example, to purchase a portfolio enter on this line.
investment and to acquire an interest in a passive activity). Line 22. Other deductions. Attach a statement listing by
See Temporary Regulations section 1.163-8T for the type and amount all allowable deductions that are not
interest allocation rules. specifically deductible elsewhere on Form 1120-RIC.
The following interest is not deductible. Generally, a deduction may not be taken for any amount
• Interest on indebtedness incurred or continued to that is allocable to tax-exempt income. See section 265(b)
purchase or carry obligations if the interest is wholly for exceptions.
exempt from income tax. See section 265(b) for special

- 13 -

Page 13 of 21 Fileid: … s/i1120ric/2023/a/xml/cycle07/source 10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Examples of other deductions include: see the regulations under section 170 and Pub. 526,
• Amortization. See Form 4562; Charitable Contributions.
• Any applicable deduction under section 179D for costs Contributions to organizations conducting
of energy efficient commercial building property placed in lobbying activities. Contributions made to an
service during the tax year. Complete and attach new organization that conducts lobbying activities are not
Form 7205; deductible if:
• 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; • The principal purpose of the contribution was to avoid
• Utilities; federal income tax by obtaining a deduction for activities
• Ordinary losses from trade or business activities of a that would have been nondeductible under the lobbying
partnership (from Schedule K-1 (Form 1065)). Do not expense rules if conducted directly by the donor.
offset ordinary income against ordinary losses. Instead, For information on contributions to charitable
include the income on line 7. Show the partnership's organizations that conduct lobbying activities, see section
name, address, and EIN on a separate statement 170(f)(9).
attached to this return. If the amount is from more than
one partnership, identify separately the amount from each Pension, profit-sharing, etc., plans. Enter contributions
partnership; to qualified pension, profit-sharing, or other
• Any extraterritorial income exclusion (from Form 8873, funded-deferred compensation plans. Employers who
line 52); and maintain such a plan must generally file Form 5500,
• Any net negative section 481(a) adjustment. Annual Return/Report of Employee Benefit Plan, even if
the plan is not a qualified plan under the Internal Revenue
Do not deduct expenses such as the following.
Code. The filing requirement applies even if the RIC does
• Fines or penalties paid to a government for violating any
not claim a deduction for the current tax year. There are
law. However, other limitations apply for certain amounts
penalties for failure to file these forms on time and for
paid or incurred after December 21, 2017. See section
overstating the pension plan deduction. See sections
162(f), and Fines and penalties, later.
6652(e) and 6662(f).
• Lobbying expenses. However, see Lobbying expenses,
later. Note. Form 5500 must be filed electronically under the
• Amounts paid or incurred after December 22, 2017, for computerized ERISA Filing Acceptance System
any settlement or payment related to sexual harassment (EFAST2). For more information, see the EFAST2 website
or sexual abuse, if such settlement or payment is subject at www.EFAST.dol.gov.
to a nondisclosure agreement or for related attorney's
fees. See new section 162(q). Travel, meals, and entertainment. Subject to certain
limitations and restrictions, the RIC can deduct ordinary
Charitable contributions. Enter contributions or gifts and necessary travel, meal, and non-entertainment
actually paid within the tax year to or for the use of expenses paid or incurred in its trade or business.
charitable and governmental organizations described in
section 170(c) and any unused contribution carryovers. Generally, entertainment expenses, membership dues,
and facilities used in connection with these activities
RICs reporting taxable income on the accrual method cannot be deducted. In addition, no deduction is generally
may elect to treat as paid during the tax year any allowed for qualified transportation fringe benefits. Also,
contributions paid by the due date of the RIC’s tax return special rules apply to deductions for gifts, luxury water
(not including extensions) if the contributions were travel, and convention expenses. See section 274 and
authorized by the board of directors during the tax year. Pub. 463 for more details.
Attach a declaration to the return stating that the Travel. The RIC cannot deduct travel expenses of any
resolution authorizing the contributions was adopted by individual accompanying a corporate officer or employee
the board of directors during the tax year. The declaration unless:
must include the date the resolution was adopted. See That individual is an employee of the RIC, and
•
section 170(a)(2)(B). That individual’s travel is for a bona fide business
•
Limitation on deduction. Generally, the total amount purpose that would otherwise be deductible by that
claimed cannot be more than 10% of taxable income (the individual.
sum of Part I, line 26; Part ll, line 3; and Form 2438, Meals. Generally, the RIC can deduct only 50% of the
line 11) computed without regard to the following: amount otherwise allowable for non-entertainment related
• Any deduction for contributions; or meal expenses paid or incurred in its trade or business.
• The deduction allowed under section 249, related to
any premium paid or incurred upon the repurchase of a Meals not separately stated from entertainment are
convertible bond. generally not deductible. In addition (subject to exceptions
Carryover. Charitable contributions over the 10% under section 274(k)(2)):
limitation cannot be deducted for the tax year but may be • Meals must not be lavish or extravagant, and
carried over to the next 5 tax years subject to certain • An employee of the RIC must be present at the meal.
limitations. See section 274(n)(3) for a special rule that applies to
For more information on charitable contributions, expenses for meals consumed by individuals subject to
including substantiation and recordkeeping requirements, the hours of service limits of the Department of
Transportation.

- 14 -

Page 14 of 21 Fileid: … s/i1120ric/2023/a/xml/cycle07/source 10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Qualified transportation fringes (QTFs). Generally, • Amounts paid or incurred in connection with influencing
no deduction is allowed under section 274(a)(4) for QTFs federal, state, or local legislation; or
provided by employers to their employees. QTFs are • Amounts paid or incurred in connection with any
defined in section 132(f)(1) and include: communication with certain federal executive branch
• Transportation in a commuter highway vehicle between officials in an attempt to influence the official actions or
the employee's residence and place of employment, positions of the officials. See Regulations section
• Any transit pass, and 1.162-29 for the definition of “influencing legislation.”
• Qualified parking. Dues and other similar amounts paid to certain
See section 274 and Pub. 15-B for details. tax-exempt organizations may not be deductible. Certain
Membership dues. The RIC can deduct amounts paid in-house lobbying expenditures that do not exceed $2,000
or incurred for membership dues in civic or public service are deductible.
organizations, professional organizations (such as bar or Line 25a. Deduction for dividends paid. Enter the
medical associations), business leagues, trade amount from Schedule A, line 8a.
associations, chambers of commerce, boards of trade,
and real estate boards. However, no deduction is allowed Line 25b. Section 851(d)(2) and section 851(i) deduc-
if a principal purpose of the organization is to entertain or tions. Enter the amount from Schedule J, lines 2c and
provide entertainment facilities to members or their 2d.
guests. In addition, RICs cannot deduct membership dues
in any club organized for business, pleasure, recreation, or Tax and Payments
other social purpose. This includes country clubs, golf and Line 28b. Estimated tax payments. Enter any
athletic clubs, airline and hotel clubs, and clubs operated estimated tax payments the RIC made for the current tax
to provide meals under conditions favorable to business. year.
Entertainment facilities. Generally, the RIC cannot
Line 28f. Credit from Form 2439. Enter the credit from
deduct an expense paid or incurred for a facility (such as a
Form 2439 for the RIC's share of the tax paid by another
yacht or hunting lodge) used for an activity usually
RIC or a Real Estate Investment Trust (REIT) on
considered entertainment, amusement, or recreation.
undistributed long-term capital gains included in the RIC's
Amounts treated as compensation. Generally, the income. Attach Form 2439 to Form 1120-RIC.
RIC may be able to deduct otherwise nondeductible
entertainment, amusement, or recreation expenses if the Line 28g. Credit for federal tax on fuels. Complete
amounts are treated as compensation to the recipient and and attach Form 4136, Credit for Federal Tax Paid on
reported on Form W-2 for an employee, or on Form Fuels, if the RIC qualifies to take this credit.
1099-NEC for an independent contractor. Line 28h. Elective payment election amount from
However, if the recipient is an officer, director, beneficial Form 3800. Enter on line 28h the total net elective
owner (directly or indirectly), or other “specified individual” payment election amount from Form 3800, General
(as defined in section 274(e)(2)(B) and Regulations Business Credit, Part III, line 6, column (i). See the
section 1.274-9(b)), special rules apply. Instructions for Form 3800.
See section 274 and Pub. 463 for a more extensive Line 29. Total payments and credits. Combine lines
discussion of these topics. 28d through 28h and enter the total on line 29.
Fines and penalties. Generally, no deduction is allowed Backup Withholding. If the RIC had income tax
for fines or similar penalties paid or incurred to, or at the withheld from any payments it received, because, for
direction of, a government or governmental entity for example, it failed to give the payer its correct EIN, include
violating any law, or for the investigation or inquiry into the the amount withheld in the total for line 29. Enter the
potential violation of a law, except: amount withheld and the words “Backup Withholding” in
• Amounts that constitute restitution, the blank space above line 29.
• Amounts paid to come into compliance with the law, Line 30. Estimated tax penalty. A RIC that does not
• Amounts paid or incurred as the result of certain court make estimated tax payments when due may be subject
orders or agreements in which no government or to an underpayment penalty for the period of
governmental entity is a party, and underpayment. Generally, a RIC is subject to the penalty if
• Amounts paid or incurred for taxes due. its tax liability is $500 or more and it did not timely pay at
No deduction is allowed unless the amounts are least the smaller of:
specifically identified in the order or agreement and the • Its tax liability for the current year, or
RIC establishes that the amounts were paid for that • Its prior year's tax.
purpose. Also, any amount paid or incurred as Use Form 2220, Underpayment of Estimated Tax by
reimbursement to the government for the costs of any Corporations, to see if the RIC owes a penalty and to
investigation or litigation are not eligible for the exceptions figure the amount of the penalty. See the Instructions for
and are nondeductible. Form 2220 for more information.
See section 162(f). If Form 2220 is attached, check the box on this line and
Lobbying expenses. Generally, lobbying expenses are enter the amount of any penalty.
not deductible. Examples of nondeductible expenses Line 31. Amount owed. If the RIC cannot pay the full
include: amount of tax owed, it can apply for an installment

- 15 -

Page 15 of 21 Fileid: … s/i1120ric/2023/a/xml/cycle07/source 10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

agreement online. The RIC can apply for an installment Line 7. If the RIC elects under section 853A to pass
agreement online if: through credits from qualified tax credit bonds to
• It cannot pay the full amount shown on line 31, shareholders, increase the dividends paid deduction by
• The total amount owed is $25,000 or less, and the amount of the credits distributed to shareholders. To
• The RIC can pay the liability in full in 24 months. make the election, see the instructions for Item 11 under
To apply using the Online Payment Agreement Schedule K—Other Information.
Application, go to IRS.gov/OPA.
Under an installment agreement, the RIC can pay what Schedule B—Income From
it owes in monthly installments. There are certain
conditions that must be met to enter into and maintain an Tax-Exempt Obligations
installment agreement, such as paying the liability within If, at the close of each quarter of the tax year, at least 50%
24 months and making all required deposits and timely of the value of the fund's assets consisted of tax-exempt
filing tax returns during the length of the agreement. obligations under section 103(a), the RIC qualifies under
If the installment agreement is accepted, the RIC will be section 852(b)(5) to pay exempt-interest dividends for the
charged a fee and it will be subject to penalties and tax year. See section 852(b)(5)(A) for the definition of
interest on the amount of tax not paid by the due date of exempt-interest dividends and other details.
the return. In the case of a qualified “fund of funds” structure, a
RIC may pay exempt-interest dividends without regard to
Part II—Tax on Undistributed Net the requirement that at least 50% of the value of the fund’s
assets consist of tax-exempt obligations. See section
Capital Gain Not Designated Under 852(g) for more information.
Section 852(b)(3)(D) If this applies, check the “Yes” box on line 1 and
Line 1. Enter the net capital gain from line 17 of complete lines 2 through 5.
Schedule D (Form 1120).
Line 2. Enter the capital gain dividends from Schedule A, Schedule J—Tax Computation
line 8b.
Line 1
Line 4. Capital gains tax. Multiply the amount on line 3 If the RIC is a member of a controlled group, check the
by 21% (0.21). Enter the result here and on Schedule J, box on line 1 and complete and attach Schedule O (Form
line 2b. 1120), Consent Plan and Apportionment Schedule for a
Controlled Group. See Schedule O (Form 1120) and its
Schedule A—Deduction for Dividends instructions for more information.

Paid Line 2a—Tax on Investment Company Taxable
Column (a) is used to determine the deduction for Income
dividends paid resulting from income derived from RICs figure their tax by multiplying investment company
ordinary dividends. taxable income by 21%. Enter this amount on line 2a.
Column (b) is used to determine the deduction for For a RIC that is a personal holding company (PHC).
dividends paid resulting from income derived from capital A RIC that is not in compliance with Regulations section
gain dividends. 1.852-6 is a PHC and is taxed at a flat rate of 21% on its
Section 561 (taking into account sections 852(b)(7), investment company taxable income.
852(c)(3)(B), and 855(a)) determines the deduction for
dividends paid. Do not take into account exempt-interest Line 2b—Capital Gains Tax
dividends defined in section 852(b)(5) or any amount Enter the capital gains tax from line 4, Part II.
reported for the tax year on Form 2438, line 9b. See
section 852(b)(8) for information on post-October capital Line 2c—Tax Imposed Under Section 851(d)(2)
losses and late year ordinary losses. Enter the tax imposed under section 851(d)(2) relating to
failures to meet certain requirements of the asset test of
Line 3. Dividends, both ordinary and capital gain, section 851(b)(3). See the instructions on page 2 for
declared and payable to shareholders of record in details on the requirements of the asset test. Also, see
October, November, or December are treated as paid by section 851(d)(2).
the RIC and received by each shareholder on December
31 of that calendar year provided that they are actually Attach a statement showing the computation of the tax
paid in January of the following calendar year. Enter on and an explanation of why the RIC failed to meet the
line 3 all such dividends not already included on line 1 or requirements of the asset test, and a description of why
2. such failure is due to reasonable cause and not to willful
neglect.
Line 6. Enter the foreign tax paid deduction allowed as
an addition to the dividends paid deduction under section Line 2d—Tax Imposed Under Section 851(i)
853(b)(1)(B). See the instructions for Item 10 of Enter the tax imposed under section 851(i) relating to
Schedule K for information on the election available under failures to meet certain requirements of the gross income
section 853(a). test.

- 16 -

Page 16 of 21 Fileid: … s/i1120ric/2023/a/xml/cycle07/source 10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

See the instructions on page 2 for details on the Line 5—Personal Holding Company Tax
requirements of the gross income test. Also, see section A RIC is taxed as a personal holding company under
851(i). section 542 if:
Attach a statement showing the computation of the tax • At least 60% of its adjusted ordinary gross income for
and an explanation of why the RIC failed to meet the the tax year is personal holding company income, and
requirements of the gross income test, and a description • At any time during the last half of the tax year more than
of why such failure is due to reasonable cause and not to 50% in value of its outstanding stock is owned, directly or
willful neglect. indirectly, by five or fewer individuals.
See the Instructions for Schedule PH (Form 1120), U.S.
Line 2e—Income Tax
Personal Holding Company (PHC) Tax, for definitions and
Deferred tax under section 1291. If the RIC was a details on how to figure the tax.
shareholder in a passive foreign investment company
(PFIC), and received an excess distribution or disposed of Line 6—Interest on Deferred Tax Liability for
its investment in the PFIC during the year, it must include Installment Obligations Under Section 453A(c)
the increase in taxes due under section 1291(c)(2) (from Enter any interest on deferred tax attributable to certain
Form 8621) in the total for line 2e. On the dotted line to the nondealer installment obligations (section 453A(c)).
left of line 2e, write “Section 1291” and the amount.
Do not include on line 2e any interest due under section Line 7—Interest on Deferred Tax Liability for
1291(c)(3). Instead, include the amount owed on Installment Obligations Under Section 453(l)(3)
Schedule J, line 9, Other taxes. Enter any interest on deferred tax attributable to certain
For more information on reporting the deferred tax and dealer installment obligations under section 453(I).
interest, see the Instructions for Form 8621.
Line 8—Recapture of Investment Credit
Additional tax under section 197(f). A RIC that elects
If the RIC disposed of investment credit property or
to recognize gain and pay tax on the gain from the sale of
changed its use before the end of the 5-year recapture
a section 197 intangible under the related person
period under section 50(a), enter the increase in tax from
exception to the anti-churning rules should include any
Form 4255, Recapture of Investment Credit. See the
additional tax due in the total for line 2e. On the dotted line
Instructions for Form 4255.
to the left of line 2e, write “Section 197” and the amount.
See section 197(f)(9)(B)(ii). Line 9—Other Taxes
Line 3a—Foreign Tax Credit Include on line 9 additional taxes and interest such as the
following. Attach a statement showing the computation of
To find out when a RIC can claim the credit for payment of
each item included in the total for line 9 and identify the
income tax to a foreign country or U.S. territory, see Form
applicable Code section and the type of tax or interest.
1118, Foreign Tax Credit—Corporations. The RIC may not
• Recapture of Indian employment credit. Generally, if an
claim this credit if an election under section 853 was made
employer terminates the employment of a qualified
for the tax year. See Election under section 853(a) under
employee less than 1 year after the date of initial
Schedule K, Item 10.
employment, any Indian employment credit allowed for a
Line 3b—Credit from Form 8834 prior tax year because of wages paid or incurred to that
employee must be recaptured. For details, see Form 8845
Enter any qualified electric vehicle passive activity credits and section 45A.
from prior years allowed for the current tax year from Form Recapture of new markets credit (see Form 8874 and
•
8834, Qualified Electric Vehicle Credit, line 7, and attach Form 8874-B).
Form 8834 to this return. Recapture of employer-provided childcare facilities and
•
Line 3c—General Business Credit services credit (see Form 8882).
• Interest due on deferred gain recognition (section
Use Form 3800 to claim any general business credits. 1260(b)).
Enter on line 3c the allowable credit from Form 3800, Part • Interest due under section 1291(c)(3).
II, line 38. See the Instructions for Form 3800.
Recapture of low-income housing credit. If the RIC
Line 3d—Other Credits disposed of property (or there was a reduction in the
qualified basis of the property) for which it took the
Minimum tax credit. Enter any allowable credit from
low-income housing credit, and the RIC did not follow the
Form 8827, Credit for Prior Year Minimum
procedures that would have prevented recapture of the
Tax—Corporations. Complete and attach Form 8827.
credit, it may owe a tax. See Form 8611, Recapture of
Bond credits from Form 8912. Enter the allowable Low-Income Housing Credit, and section 42(j)(1) for more
credits from Form 8912, Credit to Holders of Tax Credit information.
Bonds, line 12. However, if the RIC elects to pass through
credits from tax credit bonds to its shareholders, it cannot Built-in Gains Tax
take the credit. See Item 11 under question 5, later, for
more information. 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

- 17 -

Page 17 of 21 Fileid: … s/i1120ric/2023/a/xml/cycle07/source 10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

property to a RIC, then the RIC will be subject to the Line c. The RIC's net unrealized built-in gain is the
built-in gains tax under section 1374 unless the C amount, if any, by which the FMV of the assets of the RIC
corporation elects deemed sale treatment on the at the beginning of its first RIC year (or as of the date the
transferred property. Generally, if the C corporation does assets were acquired, for any asset with a basis
not make this election for tax years beginning in 2020, the determined by reference to its basis (or the basis of any
RIC must pay tax on the net recognized built-in gain other property) in the hands of a C corporation) exceeds
during the 5-year period beginning on its first day as a RIC the aggregate adjusted basis of such assets at that time.
or the day it acquired the property. Special rules apply to
Enter on line c the RIC's net unrealized built-in gain
conversion transactions on or after June 7, 2019, as well
reduced by the net recognized built-in gain for prior years.
as conversion transactions with a related section 355
See sections 1374(c)(2) and (d)(1).
distribution. See Regulations section 1.337(d)-7 for
details. 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
A RIC's recognition period for conversion transactions the succeeding tax year.
that occur on or after August 8, 2016, and on or before
Line e. Enter the section 1374(b)(2) deduction.
February 17, 2017, is the 10-year period beginning on its
Generally, this is any net operating loss or capital loss
first day as a RIC or the day the RIC acquired the property,
carryforward (to the extent of net capital gain included in
as described in Temporary Regulations section
recognized built-in gain for the tax year) arising in tax
1.337(d)-7T(b)(2)(iii), as in effect on August 8, 2016.
years for which the RIC was a C corporation. A net loss
However, under the provisions of final Regulations section
carryforward must be used to reduce recognized built-in
1.337(d)-7(g)(2)(iii), a RIC may choose to apply a 5-year
gain for the tax year to the greatest extent possible before
recognition period to conversion transactions that occur
it can be used to reduce the RIC's taxable income.
on or after August 8, 2016, and on or before February 17,
2017. See final Regulations section 1.337(d)-7 and Line h. Credit carryforwards arising in tax years for which
Temporary Regulations section 1.337(d)-7T for details. 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
Recognized built-in gains and losses generally retain extent possible before the credit carryforwards can be
their character (for example, ordinary income or capital used to reduce the tax on the RIC's taxable income.
gain) and are treated the same as other gains or losses of
Line i. The RIC's tax on the net recognized built-in gain is
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
treated as a loss sustained by the RIC after October 31 of
the same tax year. Deduct the tax attributable to:
the same tax year (see the instructions for line i of the
• Ordinary gain as a deduction for taxes on Form
Built-in Gains Tax Worksheet, later). See Regulations
1120-RIC, line 12;
section 1.337(d)-7 for details.
• 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 • Long-term capital gain as a long-term capital loss in
Part II of Form 8949.
occurred prior to January 2, 2002. For RIC elections and
property transfers before this date, the C corporation is Line 10—Total Tax
subject to deemed sale treatment on the transferred
property unless the RIC elects section 1374 treatment. Include any deferred tax on the termination of a section
See Regulations section 1.337(d)-6 for information on how 1294 election applicable to shareholders in a qualified
to make the election and figure the tax for RIC elections electing fund in the amount entered on line 10. See Form
and property transfers before this date. The RIC may also 8621 and How To Report below.
generally rely on Regulations section 1.337(d)-5 for RIC Subtract from the total for line 10 the deferred tax on
elections and property transfers that occurred before the RIC's share of the undistributed earnings of a qualified
January 2, 2002. electing fund (see Form 8621).

Built-in Gains Tax Worksheet Instructions How To Report

Complete the worksheet to figure the built-in gains tax Attach a statement showing the computation of each item
under Regulations section 1.337(d)-6 or 1.337(d)-7. included in, or subtracted from, the total for line 10. On the
Line a. Enter the amount that would be the taxable dotted line next to line 10, enter the amount of tax or
income of the RIC for the tax year if only recognized interest, identify it as tax or interest, and specify the Code
built-in gain, recognized built-in loss, and recognized section that applies.
built-in gain carryover were taken into account.
Line b. Add the amounts shown on: Schedule K—Other Information
• Form 1120-RIC, page 1, line 24; The following instructions apply to questions 1 through 15.
• Form 1120-RIC, Part II, line 1; and Complete all items that apply.
• Form 2438, line 11.
For this purpose, refigure line 24 on page 1 without regard Question 3
to any election under section 852(b)(2)(F). Enter the result Check the “Yes” box if the RIC is a subsidiary in a
on line b of the Built-in Gains Tax Worksheet. parent-subsidiary controlled group. This applies even if

- 18 -

Page 18 of 21               Fileid: … s/i1120ric/2023/a/xml/cycle07/source                                                                 10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Built-in Gains Tax Worksheet                       (keep for your records)
a.   Excess of recognized built-in gains over recognized built-in losses . . . . . . . . . . . . . . . . . . . . . .                         a.  
b.   Taxable income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       b.  
c.   Enter the net unrealized built-in gain reduced by any net recognized built-in gain for all prior 
     years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . c.  
d.   Net recognized built-in gain (enter the smallest of line a, b, or c) . . . . . . . . . . . . . . . . . . . . . . .                      d.  
e.   Section 1374(b)(2) deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            e.  
f.   Subtract line e from line d. If zero, enter -0- here and on line i . . . . . . . . . . . . . . . . . . . . . . . . . .                  f.  
g.   Enter 21% of line f     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   g.  
h.   Business credit and minimum tax credit carryforwards under section 1374(b)(3) from C corporation 
     (see instructions)    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   h.  
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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           i.  

the RIC is a subsidiary member of one group and the                                        party during the tax year must file Form 5472. See Form 
parent corporation of another.                                                             5472 for filing instructions.

Note. If the RIC is an “excluded member” of a controlled                                   Item 8
group (see section 1563(b)(2)), it is still considered a 
                                                                                           Tax-exempt interest.                  Show any tax-exempt interest 
member of a controlled group for this purpose.
                                                                                           received or accrued. Include any exempt-interest 
Question 5                                                                                 dividends received as a shareholder in a mutual fund or 
                                                                                           other RIC.
Check the “Yes” box if one foreign person owned at least 
25% of (a) the total voting power of all classes of stock of                               Item 10
the RIC entitled to vote, or (b) the total value of all classes 
of stock of the RIC.                                                                       Election under section 853(a).                    A RIC may make an 
                                                                                           irrevocable election under section 853(a) to allow its 
  The constructive ownership rules of section 318 apply                                    shareholders to apply their share of the foreign taxes paid 
in determining if a RIC is foreign owned. See section                                      by the RIC either as a credit or a deduction. If the RIC 
6038A(c)(5) and the related regulations.                                                   makes this election, the amount of foreign taxes it paid 
  Enter on line 5b(1) the percentage owned by the                                          during the tax year may not be taken as a credit or a 
foreign person specified in question 5. For line 5b(2),                                    deduction on Form 1120-RIC, but may be claimed on 
enter the name of the owner's country.                                                     Form 1120-RIC, Schedule A, line 5, as an addition to the 
                                                                                           dividends-paid deduction.
Note. If there is more than one 25%-or-more foreign                                            Eligibility.      To qualify to make the election, the RIC must 
owner, complete lines 5b(1) and 5b(2) for the foreign                                      meet the following requirements.
person with the highest percentage of ownership.                                             • More than 50% of the value of the RIC's total assets at 
Foreign person.        The term “foreign person” includes:                                 the end of the tax year must consist of stock or securities 
• A foreign citizen or nonresident alien,                                                  in foreign corporations.
• An individual who is a citizen or resident of a U.S.                                       • The RIC must meet the holding period requirements of 
territory (but who is not a U.S. citizen or resident),                                     section 901(k) with respect to its common and preferred 
• A foreign partnership,                                                                   stock. If the RIC fails to meet these holding period 
• A foreign corporation,                                                                   requirements, the election that allows a RIC to pass 
• Any foreign estate or trust within the meaning of section                                through to its shareholders the foreign tax credits for 
7701(a)(31), and                                                                           foreign taxes paid by the RIC is disallowed. Although the 
• A foreign government (or one of its agencies or                                          foreign taxes paid may not be taken as a credit by either 
instrumentalities) to the extent that it is engaged in the                                 the RIC or the shareholder, they are still deductible at the 
conduct of a commercial activity, as described in section                                  fund level.
892.                                                                                       Election under section 852(g).                    In the case of a 
Owner's country.       For individuals, the term “owner's                                  qualified “fund of funds” structure, a RIC may elect to allow 
country” means the country of residence. For all others, it                                shareholders the foreign tax credit without regard to the 
is the country where incorporated, organized, created, or                                  requirement that more than 50% of the value of its assets 
administered.                                                                              consist of stock or securities in foreign corporations. See 
                                                                                           section 852(g) for more information.
Requirement to file Form 5472.                 If the RIC checked 
“Yes,” it may have to file Form 5472, Information Return of                                Reporting requirements.                       To make a valid election under 
a 25% Foreign Owned U.S. Corporation or a Foreign                                          section 853 or 852(g), in addition to timely filing Form 
Corporation Engaged in a U.S. Trade or Business.                                           1120-RIC and checking the box for Schedule K, item 10a 
Generally, a 25% foreign-owned corporation that had a                                      or b, the RIC must file a statement of election, which 
reportable transaction with a foreign or domestic related                                  includes the information listed under Regulations section 

18

- 19 -

Page 19 of 21 Fileid: … s/i1120ric/2023/a/xml/cycle07/source 10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

1.853-4(c). The information must be provided on or with a Exclusions from filing. A RIC is not required to file Form
Form 1118, Foreign Tax Credit, attached to the RIC's 8990 if the RIC is a small business taxpayer that does not
timely filed tax return. have excess business interest expense from a partnership
For more information, see Regulations section 1.853-4. and did not pay section 163(j) interest dividends for the
Notification to shareholders. If the RIC makes the tax year. A RIC is also not required to file Form 8990 if the
election, it must furnish to its shareholders a written RIC only has business interest expense from these
statement reporting the shareholder's portion of (1) foreign excepted trades or businesses:
taxes paid by the RIC to foreign countries and territories of • An electing real property trade or business,
the United States, and (2) the dividend that represents • An electing farming business, or
income derived from: • Certain utility businesses.
• Sources within countries described in section 901(j), Small business taxpayer. A small business taxpayer is
and not subject to the business interest expense limitation and
• Other foreign-source income. is not required to file Form 8990. A small business
taxpayer is a taxpayer that (a) is not a tax shelter (as
Item 11
defined in section 448(d)(3)), and (b) meets the gross
Election under section 853A. A RIC can elect to pass receipts test of section 448(c), discussed next.
through credits from tax credit bonds to its shareholders. If Gross receipts test. For 2023, a taxpayer meets the
the RIC makes the election, include the interest income gross receipts test if the taxpayer has average annual
from the tax credit bonds on Part I, line 2. Also, increase gross receipts of $29 million or less for the 3 prior tax
the dividends paid deduction by the amount of the credits years. A taxpayer's average annual gross receipts for the
distributed to shareholders. If the RIC makes the election, 3 prior tax years is determined by adding the gross
it is not allowed to take any credits related to the qualified receipts for the 3 prior tax years and dividing the total by 3.
tax credit bonds. Gross receipts include the aggregate gross receipts
For more information, see section 853A. from all persons treated as a single employer, such as a
Notification to shareholders. If the RIC makes the controlled group of corporations, commonly controlled
election to apply section 853A, it must furnish to its partnerships, or proprietorships, and affiliated service
shareholders a written statement reporting the groups. See section 448(c) and the Instructions for Form
shareholder's proportionate share of (1) credits from tax 8990 for additional information.
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
Question 13, Business Interest Expense attach Form 8996, even if the RIC had no income or
Election expenses to report. If the RIC is attaching Form 8996,
The limitation on business interest expense applies to check the “Yes” box for question 15. On the line following
every taxpayer with a trade or business, unless the the dollar sign, enter the amount from Form 8996, line 15.
taxpayer meets certain specified exceptions. A taxpayer The penalty reported on this line from Form 8996,
may elect out of the limitation for certain businesses line 15, is not due with the filing of this form. The IRS will
otherwise subject to the business interest expense separately send to you a notice setting forth the due date
limitation. for the penalty payment and where that payment should
Certain real property trades or businesses and farming be sent.
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 Schedule L—Balance Sheets per
alternative depreciation system to depreciate any property Books
with a recovery period of 10 years or more. Also, you are The balance sheets should agree with the RIC's books
not entitled to the special depreciation allowance for that and records.
property. For a taxpayer with more than one qualifying
business, the election is made with respect to each Line 1. Cash. Include certificates of deposit as cash on
business. line 1.
Check "Yes" if the taxpayer has an election in effect to Line 4. Tax-exempt securities. Include on this line:
exclude a real property trade or business or a farming 1. State and local government obligations, the interest
business from section 163(j). For more information, see on which is excludible from gross income under section
section 163(j) and the Instructions for Form 8990. 103(a); and
Question 14, Conditions for Filing Form 8990 2. Stock in another mutual fund or RIC that distributed
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 Line 24. Adjustments to shareholders' equity.
by any RIC that owns an interest in a partnership with Examples of adjustments to report on this line include:
current year, or prior year carryover, excess business • Unrealized gains and losses on securities held
interest expense allocated from the partnership. A RIC “available for sale”;
must also file a Form 8990 if the RIC paid section 163(j) • Foreign currency translation adjustments;
interest dividends for the tax year.

- 20 -

Page 20 of 21 Fileid: … s/i1120ric/2023/a/xml/cycle07/source 10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

• The excess of additional pension liability over • Expenses for the use of an entertainment facility;
unrecognized prior service cost; • The part of business gifts over $25;
• 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;
If the total adjustment to be entered on line 24 is a • Employee achievement awards of nontangible property
negative amount, enter the amount in parentheses. or tangible property over $400 ($1,600 if part of a qualified
plan);
• The cost of skyboxes;
Schedule M-1 • The part of luxury water travel not deductible under
section 274(m);
Reconciliation of Income (Loss) per Books With Expenses for travel as a form of education; and
•
Income per Return • Other nondeductible travel and entertainment
Line 5d. Travel and entertainment. Include on line 5d expenses.
any of the following: Line 7. Tax-exempt interest. Include as interest on
• Entertainment expenses not deductible under section line 7 any exempt-interest dividends received by the RIC
274(a); as a shareholder in a mutual fund or other RIC.
• 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 Total Number of Returns Average Time (hours) Average Cost ($) Average Monetized
Taxpayer (millions) Burden ($)
All Partnerships 5.3 60 5,000 8,700
Small 4.9 50 3,200 5,200
Large* 0.4 200 27,800 50,800
*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.

- 21 -

Page 21 of 21             Fileid: … s/i1120ric/2023/a/xml/cycle07/source                           10:26 - 25-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

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 Total Number of Returns Average Time (hours)  Average Cost ($)                                       Average Monetized 
Taxpayer                      (millions)                                                                                           Burden ($)
All Taxable Corporations      2.1                     105                   6,700                                                  14,900
           Small              2.0                     55                    3,600                                                  6,200
           Large*             0.1                     830                   53,800                                                 149,000
*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 Total Number of Returns Average Time (hours)  Average Cost ($)                                       Average Monetized 
Taxpayer                      (millions)                                                                                           Burden ($)
All Pass-Through Corporations 5.8                     65                    4,400                                                  7,500
           Small              5.7                     60                    3,800                                                  6,400
           Large*             0.1                     295                   37,700                                                 71,800
*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.

                                                                                                                                                           21

PDF file checksum: 2931249393

(Plugin #1/9.12/13.0)