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                                                                                                 Department of the Treasury
                                                                                                 Internal Revenue Service
2022

Instructions for Form 

1120-RIC

U.S. Income Tax Return for Regulated Investment Companies

Section references are to the Internal            Future Developments                       Advanced manufacturing invest-
Revenue Code unless otherwise noted.
                                                  For the latest information about          ment credit. If a RIC held a qualified 
Contents                                  Page    developments related to Form              investment in an advanced 
Photographs of Missing Children       . . . . 1   1120-RIC and its instructions, such as    manufacturing facility that is placed in 
The Taxpayer Advocate Service .       . . . . 1   legislation enacted after this form and   service after December 31, 2022, it 
How To Get Forms and                              instructions were published, go to        can elect to treat the credit for the 
Publications .    . . . . . . . . . . . . . . 2   IRS.gov/Form1120RIC.                      advanced manufacturing investment 
General Instructions .  . . . . . . . . . . . . 2                                           as a deemed payment. If the election 
Purpose of Form . . . . . . . . . . . . . . . 2   What’s New                                is made, the RIC is treated as making 
Who Must File   . . . . . . . . . . . . . . . . 2                                           a payment against tax by the amount 
General Requirements To Qualify                   Increase in penalty for failure to        of the credit. See section 48D. See 
as a RIC .      . . . . . . . . . . . . . . . . 2 file. For returns due in 2023, the        the Instructions for Form 3468 for 
Other Requirements      . . . . . . . . . . . . 2 minimum penalty for failure to file a     information on how to report the 
Definition of a Fund .  . . . . . . . . . . . . 3 return that is over 60 days late has      deemed credit on the RIC's return.
Where To File . . . . . . . . . . . . . . . . . 3 increased to the smaller of the tax due 
When To File .  . . . . . . . . . . . . . . . . 3 or $450. See Late filing of return, later.
Who Must Sign . . . . . . . . . . . . . . . . 4                                             Photographs of Missing 
Paid Preparer Authorization .   . . . . . . . 4   Form 1120-W now historical.       Form    Children
Assembling the Return .   . . . . . . . . . . 4   1120-W, Estimated Tax for                 The Internal Revenue Service is a 
Tax Payments    . . . . . . . . . . . . . . . . 4 Corporations, and the Instructions for    proud partner with the National Center 
Estimated Tax Payments      . . . . . . . . . 5   Form 1120-W are now historical. The       for Missing & Exploited Children® 
Interest and Penalties . . . . . . . . . . . . 5  2022 Form 1120-W (released in 2021)       (NCMEC). Photographs of missing 
Accounting Methods .     . . . . . . . . . . . 5  and the 2022 Instructions for Form        children selected by the Center may 
Accounting Periods .    . . . . . . . . . . . . 6 1120-W (released in 2021) will be the     appear in instructions on pages that 
Rounding Off to Whole Dollars .     . . . . . 6   last revision of both the form and its    would otherwise be blank. You can 
Recordkeeping . . . . . . . . . . . . . . . . 6   instructions. Prior versions will be      help bring these children home by 
Other Forms That May Be                           available on IRS.gov.                     looking at the photographs and calling 
Required .      . . . . . . . . . . . . . . . . 6 Payroll credit for COVID-related          1-800-THE-LOST (1-800-843-5678) if 
Statements . . . . . . . . . . . . . . . . . . 7  paid sick and family leave.               you recognize a child.
Specific Instructions . . . . . . . . . . . . . 8 Generally, the credit for qualified sick 
Period Covered  . . . . . . . . . . . . . . . 8                                             The Taxpayer Advocate 
                                                  and family leave wages, as enacted 
Name and Address .      . . . . . . . . . . . . 9
                                                  under the Families First Coronavirus 
Item B. Date RIC Was                                                                        Service
Established .     . . . . . . . . . . . . . . 9   Response Act (FFCRA) and amended          The Taxpayer Advocate Service 
Item C. Employer Identification                   and extended by the COVID-related         (TAS) is an independent organization 
Number (EIN) .      . . . . . . . . . . . . . 9   Tax Relief Act of 2020, and the credit    within the IRS that helps taxpayers 
Item D. Total Assets .  . . . . . . . . . . . . 9 for qualified sick and family leave       and protects taxpayer rights. TAS's 
Item E. Final Return, Name                        wages, as enacted under the               job is to ensure that every taxpayer is 
Change, Address Change, or                        American Rescue Plan Act of 2021          treated fairly and knows and 
Amended Return .         . . . . . . . . . . . 9  (the ARP), have expired. However,         understands their rights under the 
Part I—Investment Company                         employers that paid qualified sick and    Taxpayer Bill of Rights.
Taxable Income .         . . . . . . . . . . . 9
Part II—Tax on Undistributed Net                  family leave wages in 2022 for leave 
Capital Gain Not Designated                       taken after March 31, 2020, and             As a taxpayer, the RIC has rights 
Under Section 852(b)(3)(D) .          . . .   14  before October 1, 2021, may be            that the IRS must abide by in its 
Schedule A—Deduction for                          eligible to claim a credit for qualified  dealings with the RIC. TAS can help 
Dividends Paid .        . . . . . . . . . . . 14  sick and family leave wages in 2022.      the RIC if:
Schedule B—Income From                            See the March 2022 revision of the        • A problem is causing financial 
Tax-Exempt Obligations .          . . . . .   15  Instructions for Form 941 and the         difficulty for the business;
Schedule J—Tax Computation .        . . . .   15  2022 Instructions for Form 944 for        • The business is facing an 
Schedule K—Other Information .        . . .   17  more information. There is no double      immediate threat of adverse action; or
Schedule L—Balance Sheets per                     tax benefit allowed and the amounts       • The RIC has tried repeatedly to 
Books .  . . . . . . . . . . . . . . . . .    19
Schedule M-1 .  . . . . . . . . . . . . . . . 19  claimed are reportable as income.         contact the IRS but no one has 
                                                  See Line 7. Other income, later.          responded, or the IRS hasn't 
                                                                                            responded by the date promised.

Feb 14, 2023                                                  Cat. No. 64251J

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  The TAS toolkit at                     year and the election has not been      the 90% test to the extent the RIC's 
TaxpayerAdvocate.IRS.gov can help        terminated or revoked). The election    distributive share of such income is 
the RIC understand these rights.         is made by computing taxable income     from items described above as 
                                         as a RIC on Form 1120-RIC.              realized by the partnership or trust.
  TAS has offices in every state, the 
District of Columbia, and Puerto Rico.   Qualified opportunity funds.     To        Income that a RIC receives in the 
Local advocates' numbers are in their    certify as a qualified opportunity fund normal course of business as a 
local directories and at                 (QOF), the RIC must file Form           reimbursement from its investment 
TaxpayerAdvocate.IRS.gov. The RIC        1120-RIC and attach Form 8996,          advisor is qualifying income for 
can also call TAS at 877-777-4778.       even if the RIC had no income or        purposes of the 90% test if the 
                                         expenses to report. See Schedule K,     reimbursement is includible in the 
  TAS also works to resolve              Question 15. Also, see the              RIC's gross income.
large-scale or systemic problems that    Instructions for Form 8996.                A RIC that fails to meet the 
affect many taxpayers. If the RIC                                                requirements of section 851(b)(2) may 
knows of one of these broad issues,      General Requirements To                 still be considered to have satisfied 
please report it to TAS through the                                              the requirements of this test if:
Systemic Advocacy Management             Qualify as a RIC
System at                                The term “regulated investment          •  Following the RIC's identification of 
IRS.gov/SAMS.                            company” applies to any domestic        the failure, a description of each item 
                                         corporation that:                       of its gross income described in 
  For more information, go to            • Is registered throughout the tax      section 851(b)(2) is set forth in a 
IRS.gov/Advocate.                        year as a management company or         statement for the tax year; and
                                         unit investment trust under the         •  Failure to meet the requirements of 
How To Get Forms                         Investment Company Act of 1940          this test is due to reasonable cause 
and Publications                         (ICA),                                  and not due to willful neglect.
                                         • Has an election in effect under the   The asset test: 
Internet. You can access the IRS         ICA to be treated as a business            1. At the end of each quarter of the 
website 24 hours a day, 7 days a         development company, or                 RIC's tax year, at least 50% of the 
                                         •
week, at IRS.gov to:                       Is a common trust fund or similar     value of its assets must be invested in 
• Download forms, instructions, and      fund that is neither an investment      the following items:
publications;                            company under section 3(c)(3) of the       Cash and cash items (including 
                                                                                 •
• Order IRS products online;             ICA nor a common trust fund as          receivables);
• Research your tax questions online;    defined under section 584(a).              Government securities;
• Search publications online by topic                                            •
or keyword;                                                                      •  Securities of other RICs; and
                                         Other Requirements
• View Internal Revenue Bulletins                                                •  Securities of other issuers, except 
                                         In addition, the RIC must meet the (1) 
(IRBs) published in recent years; and                                            that the investment in a single issuer 
                                         income test, (2) asset test, and (3) 
• Sign up to receive local and                                                   of securities may not exceed 5% of 
                                         distribution requirements explained 
national tax news by email.                                                      the value of the RIC's assets or 10% 
                                         below.                                  of the outstanding voting securities of 
Tax forms and publications.    The                                               the issuer (except as provided in 
                                         The income test:    At least 90% of its 
RIC can view, download, or print all of                                          section 851(e)).
                                         gross income must be derived from 
the forms and publications it may 
                                         the following items:
need at IRS.gov/FormsPubs.                                                          2. At the end of each quarter of the 
                                         • Dividends;                            RIC's tax year, no more than 25% of 
  Otherwise, the RIC can go to           • Interest (including tax-exempt        the value of the RIC's assets may be 
IRS.gov/OrderForms to place an           interest income);                       invested in the securities of:
order and have forms mailed to it.       • Payments with respect to securities   •  A single issuer (excluding 
                                         loans (as defined in section 512(a)     government securities or securities of 
General Instructions                     (5));                                   other RICs);
                                         • Gains from the sale or other          •  Two or more issuers controlled by 
Purpose of Form                          disposition of stock or securities (as  the RIC and engaged in the same or 
Use Form 1120-RIC, U.S. Income Tax       defined in ICA section 2(a)(36)) or     related trades or businesses; or
Return for Regulated Investment          foreign currencies;                     •  One or more qualified publicly 
Companies, to report the income,         • Other income (including gains from    traded partnerships as defined in 
gains, losses, deductions, credits, and  options, futures, or forward contracts) section 851(h).
to figure the income tax liability of a  derived from the RIC's business of         See sections 851(b)(3) and 851(c) 
regulated investment company (RIC)       investing in such stock, securities, or for further details.
as defined in section 851.               currencies; and
                                         • Net income derived from an interest      3. A RIC that fails to meet the 
Who Must File                            in a qualified publicly traded          requirements of section 851(b)(3) for 
A domestic corporation that meets        partnership (as defined in section      a quarter may be considered to have 
certain conditions (discussed below)     851(h)).                                satisfied the requirements of this test 
                                                                                 if:
must file Form 1120-RIC if it elects to    Income from a partnership (other      •  After the RIC identifies the failure, 
be treated as a RIC for the tax year (or than a qualified publicly traded        the RIC provides a statement with a 
has made an election for a prior tax     partnership) or trust qualifies under 

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description of each asset that causes 
the RIC to fail to satisfy the           Where To File
requirements at the close of the         File the RIC's return at the applicable IRS address listed below.
quarter;
• The failure is due to reasonable       If the RIC's principal          And the total assets at 
cause and not due to willful neglect;    business, office, or agency     the end of the tax year   Use the following address:
and                                            is located in:                    are:
• The RIC disposes of the assets set     Connecticut, Delaware, District                           Department of the Treasury
forth on the statement (or the           of Columbia, Georgia, Illinois, Less than $10 million and  Internal Revenue Service
requirements of section 851(b)(3) are    Indiana, Kentucky, Maine,       Schedule M-3 is not filed Kansas City, MO
otherwise met) within 6 months after     Maryland, Massachusetts,                                  64999-0012 
the last day of the quarter that the RIC Michigan, New Hampshire, 
identified the failure.                  New Jersey, New York, North                               Department of the Treasury
                                         Carolina, Ohio, Pennsylvania,   $10 million or more or    Internal Revenue Service
  4. De minimis failures. A RIC that     Rhode Island, South Carolina,   Schedule M-3 is filed     Ogden, UT 
fails to meet the requirements of        Tennessee, Vermont, Virginia,                             84201-0012
section 851(b)(3) for a quarter may be   West Virginia, Wisconsin
considered to have satisfied the         Alabama, Alaska, Arizona, 
requirements of this test if:            Arkansas, California, 
• Such failure is due to ownership of    Colorado, Florida, Hawaii, 
assets that the total value does not     Idaho, Iowa, Kansas, 
                                                                                                   Department of the Treasury
exceed the lesser of:                    Louisiana, Minnesota, 
                                                                                                   Internal Revenue Service
  a. 1% of the total value of the        Mississippi, Missouri,            Any amount
                                                                                                   Ogden, UT 
                                         Montana, Nebraska, Nevada, 
                                                                                                   84201-0012
RIC's assets at the end of the quarter   New Mexico, North Dakota, 
for which the measurement is done, or    Oklahoma, Oregon, South 
  b. $10 million; and                    Dakota, Texas, Utah, 
• The RIC disposes of the asset          Washington, Wyoming
following the identification of the 
failure (or the requirements of section 
851(b)(3) are otherwise met) within 6    A group of corporations with members located in more than one service center 
months after the last day of the         area will often keep all the books and records at the principal office of the 
quarter in which the RIC identified the  managing corporation. In this case, file the tax returns with the service center 
failure.                                 for the area in which the principal office of the managing corporation is located.
Note.    For special rules regarding     Note. For this purpose, current year         15th day of the 3rd month after the 
failure to meet the requirements of the  distributions are treated as made from       end of its tax year. A RIC with a short 
income and asset tests, see sections     the earliest earnings and profits            tax year ending anytime in June will 
851(d)(2) and 851(i).                    accumulated in any non-RIC tax year.         be treated as if the short year ended 
                                         See section 852(c)(3). Also, see             on June 30, and must file by the 15th 
Distribution requirements.     The       section 852(e) for procedures that           day of the 3rd month after the end of 
RIC's deduction for dividends paid for   may allow the RIC to avoid                   its tax year.
the tax year (as defined in section      disqualification for the initial year if the 
561, but without regard to capital gain  RIC did not meet this requirement.           If the due date falls on a Saturday, 
dividends) equals or exceeds the sum                                                  Sunday, or legal holiday, the RIC may 
of:                                      Definition of a Fund                         file its return on the next business day.
• 90% of its investment company          The term “fund” refers to a separate         Private Delivery Services
taxable income determined without        portfolio of assets, whose beneficial        RICs can use certain private delivery 
regard to section 852(b)(2)(D); and      interests are owned by the holders of        services (PDS) designated by the IRS 
• 90% of the excess of the RIC's         a class or series of stock of the RIC        to meet the “timely mailing as timely 
interest income excludable from gross    that is preferred over all other classes     filing” rule for tax returns. Go to 
income under section 103(a) over its     or series for that portfolio of assets.      IRS.gov/PDS for the current list of 
deductions disallowed under sections 
                                                                                      designated services.
265 and 171(a)(2).                       When To File
         A RIC that does not satisfy the Generally, a RIC must file its income        The PDS can tell you how to get 
  !      distribution requirements will  tax return by the 15th day of the 4th        written proof of the mailing date.
CAUTION  be subject to taxation as a C   month after the end of its tax year. A       For the IRS mailing address to use 
corporation.                             new RIC filing a short period return         if you're using PDS, go to IRS.gov/
                                         must generally file by the 15th day of       PDSstreetAddresses.
  Earnings and profits. The RIC          the 4th month after the short period 
must either have been a RIC for all tax  ends. A RIC that has dissolved must                       Private delivery services can't 
years ending after November 7, 1983,     generally file by the 15th day of the        !            deliver items to P.O. boxes. 
or, at the end of the current tax year,  4th month after the date of dissolution.     CAUTION      You must use the U.S. Postal 
                                                                                      Service to mail any item to an IRS 
have had no accumulated earnings         However, a RIC with a fiscal tax 
                                                                                      P.O. box address.
and profits from any non-RIC tax year.   year ending June 30 must file by the 

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Extension of Time To File                 Paid Preparer                           10. Additional schedules in 
                                                                                  alphabetical order.
File Form 7004, Application for           Authorization
Automatic Extension of Time To File       If the RIC wants to allow the IRS to    11. Additional forms in numerical 
Certain Business Income Tax,              discuss its 2022 tax return with the    order.
Information, and Other Returns, to        paid preparer who signed the return,    12. Supporting statements and 
request an extension of time to file.     check the “Yes” box in the signature    attachments.
Generally, the RIC must file Form         area of the return. This authorization 
                                                                                  Complete every applicable entry 
7004 by the regular due date of the       applies only to the individual whose 
                                                                                  space on Form 1120-RIC. Do not 
return.                                   signature appears in the “Paid 
                                                                                  enter “See attached” instead of 
                                          Preparer Use Only” section of the 
                                                                                  completing the entry spaces. If more 
Who Must Sign                             RIC's return. It does not apply to the 
                                                                                  space is needed on the forms or 
The return must be signed and dated       firm, if any, shown in that section.
by:                                                                               schedules, attach separate sheets 
• The president, vice president,           If the “Yes” box is checked, the RIC   using the same size and format as the 
treasurer, assistant treasurer, chief     is authorizing the IRS to call the paid printed forms.
accounting officer; or                    preparer to answer any questions that   If there are supporting statements 
• Any other corporate officer (such as    may arise during the processing of its  and attachments, arrange them in the 
a tax officer) authorized to sign.        return. The RIC is also authorizing the same order as the schedules or forms 
                                          paid preparer to:                       they support and attach them last. 
  If a return is filed on behalf of a RIC  Give the IRS any information that is   Show the totals on the printed forms. 
                                          •
by a receiver, trustee, or assignee, the  missing from the return;                Enter the RIC's name and EIN on 
fiduciary must sign the return, instead    Call the IRS for information about     each supporting statement or 
                                          •
of the corporate officer. Returns and     the processing of the return or the     attachment.
forms signed by a receiver or trustee     status of any related refund or 
in bankruptcy on behalf of a RIC must     payment(s); and                         Tax Payments
                                          •
be accompanied by a copy of the            Respond to certain IRS notices         Generally, the RIC must pay the tax 
order or instructions of the court        about math errors, offsets, and return  due in full no later than the due date 
authorizing signing of the return or      preparation.                            for filing its tax return (not including 
form.
                                                                                  extensions). See the instructions for 
                                           The RIC is not authorizing the paid    line 31. If the due date falls on a 
Note. If this return is being filed for a preparer to receive any refund check,   Saturday, Sunday, or legal holiday, 
series fund (as defined in section        bind the RIC to anything (including     the payment is due on the next day 
851(g)(2)), the return may be signed      any additional tax liability), or       that isn't a Saturday, Sunday, or legal 
by any officer authorized to sign for     otherwise represent the RIC before      holiday.
the corporation in which the fund is a    the IRS.
series.                                                                           Electronic Deposit 
Paid Preparer Use Only section.       If   The authorization will automatically   Requirement
an employee of the RIC completes          end no later than the due date 
                                                                                  RICs must use electronic funds 
Form 1120-RIC, the paid preparer's        (excluding extensions) for filing the 
                                                                                  transfer to make all federal tax 
section should remain blank. Anyone       RIC's 2023 tax return. If the RIC wants 
                                                                                  deposits (such as deposits of 
who prepares Form 1120-RIC but            to expand the paid preparer's 
                                                                                  employment, excise, and corporate 
does not charge the RIC should not        authorization or revoke the 
                                                                                  income tax). Generally, electronic 
complete that section. Generally,         authorization before it ends, see Pub. 
                                                                                  funds transfers are made using the 
anyone who is paid to prepare the         947, Practice Before the IRS and 
                                                                                  Electronic Federal Tax Payment 
return must sign it and complete the      Power of Attorney.
                                                                                  System (EFTPS). However, if the RIC 
section.                                                                          does not want to use EFTPS, it can 
                                          Assembling the Return                   arrange for its tax professional, 
  The paid preparer must complete         To ensure that the RIC's tax return is  financial institution, payroll service, or 
the required preparer information and:    correctly processed, attach all         other trusted third party to make 
• Sign the return in the space            schedules, statements, and other        deposits on its behalf. Also, it may 
provided for the preparer's signature,    forms after page 4, Form 1120-RIC, in   arrange for its financial institution to 
• Include their Preparer Tax              the following order.                    submit a same-day tax wire payment 
Identification Number (PTIN), and
• Give a copy of the return to the RIC.    1. Schedule N (Form 1120).             (discussed below) on its behalf. 
                                           2. Schedule D (Form 1120).             EFTPS is a free service provided by 
        A paid preparer may sign                                                  the Department of the Treasury. 
TIP     original or amended returns        3. Form 8949.
                                                                                  Services provided by a tax 
        by rubber stamp, mechanical        4. Form 4136.                          professional, financial institution, 
device, or computer software               5. Form 8948.                          payroll service, or other third party 
program.                                                                          may have a fee.
                                           6. Form 965-B.
                                           7. Form 8941.                          To get more information about 
                                           8. Form 3800.                          EFTPS or to enroll in EFTPS, visit 
                                                                                  EFTPS.gov, or call 800-555-4477. To 
                                           9. Form 8997.                          contact EFTPS using 

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Telecommunications Relay Services refund by filing Form 4466, The penalty will not be imposed if the
(TRS) for people who are deaf, hard Corporation Application for Quick RIC can show that the failure to pay
of hearing, or have a speech Refund of Overpayment of Estimated on time was due to reasonable cause.
disability, dial 711 and provide the Tax. The overpayment must be at
Reasonable cause determinations.
TRS assistant the 800-555-4477 least 10% of the RIC's expected
If the RIC receives a notice about a
number above or 800-733-4829. income tax liability and at least $500.
penalty after it files its return, send the
Depositing on time. For any deposit See section 6655 for more IRS an explanation and we will
made by EFTPS to be on time, the information on how to figure estimated determine if the RIC meets the
RIC must submit the deposit by 8 p.m. taxes. reasonable cause criteria. Do not
Eastern time the day before the date attach an explanation when the RIC's
the deposit is due. If the RIC uses a Estimated tax penalty. A RIC that return is filed.
third party to make deposits on its does not make estimated tax
behalf, they may have different cutoff payments when due may be subject Trust fund recovery penalty. This
times. to an underpayment penalty for the penalty may apply if certain excise,
period of underpayment. Generally, a income, social security, and Medicare
Same-day wire payment option. If RIC is subject to the penalty if its tax taxes that must be collected or
the RIC fails to submit a deposit liability is $500 or more and it did not withheld are not collected or withheld,
transaction on EFTPS by 8 p.m. timely pay at least the smaller of: or these taxes are not paid. These
Eastern time on the day before the • Its tax liability for the current year, taxes are generally reported on:
date a deposit is due, it can still make or • Form 720, Quarterly Federal Excise
its deposit on time by using the • Its prior year’s tax. Tax Return;
Federal Tax Collection Service • Form 941, Employer's
(FTCS). To use the same-day wire Use Form 2220, Underpayment of QUARTERLY Federal Tax Return;
payment method, the RIC will need to Estimated Tax by Corporations, to Form 944, Employer's ANNUAL
•
make arrangements with its financial see if the RIC owes a penalty and to Federal Tax Return; or
institution ahead of time regarding figure the amount of the penalty. If Form 945, Annual Return of
•
availability, deadlines, and costs. Form 2220 is completed, enter the Withheld Federal Income Tax.
Financial institutions may charge a fee penalty on line 30. See the
for payments made this way. To learn instructions for line 30. The trust fund recovery penalty
may be imposed on all persons who
more about the information the RIC are determined by the IRS to be
will need to provide its financial Interest and Penalties
responsible for collecting, accounting
institution to make a same-day wire Interest. Interest is charged on taxes for, or paying over these taxes, and
payment, go to IRS.gov/ paid late even if an extension of time who acted willfully in not doing so.
SameDayWire. to file is granted. Interest is also The penalty is equal to the full amount
charged on penalties imposed for of the unpaid trust fund tax. See the
Estimated Tax Payments failure to file, negligence, fraud, Instructions for Form 720 or Pub. 15
Generally, the following rules apply to substantial valuation misstatements, (Circular E), for details, including the
the RIC's payments of estimated tax. substantial understatements of tax, definition of responsible persons.
• The RIC must make installment and reportable transaction
payments of estimated tax if it expects understatements from the due date Note. The trust fund recovery penalty
its total tax for the year (less (including extensions) to the date of will not apply to any amount of trust
applicable credits) to be $500 or payment. The interest charge is fund taxes an employer holds back in
more. figured at a rate determined under anticipation of the credit for qualified
• The installments are due by the section 6621. sick and family leave wages or the
15th day of the 4th, 6th, 9th, and 12th Late filing of return. A RIC that employee retention credit that they
months of the tax year. If any date does not file its tax return by the due are entitled to. See Pub. 15 or Pub. 51
falls on a Saturday, Sunday, or legal date, including extensions, may be for more information.
holiday, the installment is due on the penalized 5% of the unpaid tax for Other penalties. Other penalties can
next regular business day. each month or part of a month the be imposed for negligence,
• The RIC must use electronic funds return is late, up to a maximum of 25% substantial understatement of tax,
transfer to make installment payments of the unpaid tax. The minimum reportable transaction
of estimated tax. penalty for a return that is over 60 understatements, and fraud. See
• If, after the RIC figures and deposits days late is the smaller of the tax due sections 6662, 6662A, and 6663.
estimated tax, it finds that its tax or $450. The penalty will not be
liability for the year will be more or imposed if the RIC can show that the Accounting Methods
less than originally estimated, it may failure to file on time was due to Figure taxable income using the
have to refigure its required reasonable cause. method of accounting regularly used
installments. If earlier installments
were underpaid, the RIC may owe a Late payment of tax. A RIC that in keeping the RIC's books and
penalty. See Estimated tax penalty does not pay the tax when due may records. In all cases, the method used
below. generally be penalized / of 1% of the 1 2 must clearly reflect taxable income.
• If the RIC overpaid its estimated unpaid tax for each month or part of a Generally, permissible methods
tax, it may be able to get a quick month the tax is not paid, up to a include:
maximum of 25% of the unpaid tax.

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• Cash, obtain consent, the RIC must file Form Internal Revenue Code. Usually,
• Accrual, or 3115, Application for Change in records that support an item of
• Any other method authorized by the Accounting Method, during the tax income, deduction, or credit on the
Internal Revenue Code. year for which the change is return must be kept for 3 years from
requested. See the Instructions for the date the return is due or filed,
For more information, see Pub. Form 3115 and Pub. 538 for more whichever is later. Keep records that
538, Accounting Periods and information and exceptions. Also, see verify the RIC's basis in property for
Methods. the Instructions for Form 3115 for as long as they are needed to figure
Accrual method. Generally, a RIC procedures that may apply for the basis of the original or
must use the accrual method of obtaining automatic consent to replacement property.
accounting if its average annual gross change certain methods of
The RIC should keep copies of all
receipts for the prior 3 years exceed accounting, non-automatic change
filed returns. They help in preparing
$27 million. See section 448(c). procedures, and reduced Form 3115
future and amended returns and in the
filing requirements.
Mark-to-market accounting meth- calculation of earnings and profits.
od. Generally, dealers in securities
Accounting Periods
must use the mark-to-market Other Forms That May Be
A RIC must figure its taxable income
accounting method described in Required
on the basis of a tax year. A tax year
section 475. Under this method, any In addition to Form 1120-RIC, the RIC
is the annual accounting period a RIC
security that is inventory to the dealer may have to file some of the following
uses to keep its records and report its
must be held at its fair market value forms.
income and expenses. RICs can use
(FMV).
a calendar year or a fiscal year. For Form 976, Claim for Deficiency
Any security held by a dealer that is more information about accounting Dividends Deductions by a Personal
not inventory and held at the close of periods, see Regulations sections Holding Company, Regulated
the tax year is treated as sold at its 1.441-1 and 1.441-2. Investment Company, or Real Estate
FMV on the last business day of the
tax year. Any resulting gain or loss Change of tax year. Generally, a Investment Trust. Use this form to
must be taken into account that year RIC must receive consent from the claim a deficiency dividend deduction
in determining gross income. The gain IRS before changing its tax year. To under section 860.
or loss taken into account is generally obtain the consent, file Form 1128, Form 1096, Annual Summary and
treated as ordinary gain or loss. Application To Adopt, Change, or Transmittal of U.S. Information
Retain a Tax Year. However, under
For details, including exceptions, Returns. Use Form 1096 to transmit
certain conditions, a RIC may change
see section 475, the related Forms 1099 and 5498 to the Internal
its tax year without obtaining the
regulations, and Rev. Rul. 97-39, Revenue Service.
consent.
1997-39 I.R.B. 4. Form 1099-DIV, Dividends and
See the Instructions for Form 1128
Dealers in commodities and traders Distributions. Report certain dividends
and Pub. 538 for more information on
in securities and commodities may and distributions.
accounting periods and tax years.
elect, with some exceptions, to use Form 1099-INT, Interest Income.
the mark-to-market accounting Report interest income.
Rounding Off to
method. To make the election, the
RIC must file a statement describing Whole Dollars Form 2438, Undistributed Capital
the election, the first tax year the The RIC may enter decimal points Gains Tax Return, must be filed by the
election is to be effective, and in the and cents when completing its return. RIC if it designates undistributed net
case of an election for traders in However, the RIC should round off long-term capital gains under section
securities or commodities, the trade or cents to whole dollars on its return, 852(b)(3)(D).
business for which the election is forms, and schedules to make Form 2439, Notice to Shareholder of
made. Except for new taxpayers, the completing its return easier. The RIC Undistributed Long-Term Capital
statement must be filed by the due must either round off all amounts on Gains, must be completed and a copy
date (not including extensions) of the its return to whole dollars, or use given to each shareholder for whom
income tax return for the tax year cents for all amounts. To round, drop the RIC paid tax on undistributed net
immediately preceding the election amounts under 50 cents and increase long-term capital gains under section
year and attached to that return, or if amounts from 50 to 99 cents to the 852(b)(3)(D).
applicable, to a request for an next dollar. For example, $8.40
extension of time to file that return. For rounds to $8 and $8.50 rounds to $9. Form 3520, Annual Return To
Report Transactions With Foreign
more details, see Rev. Proc. 99-17, If two or more amounts must be Trusts and Receipt of Certain Foreign
1999-7 I.R.B. 52, and sections 475(e) added to figure the amount to enter on Gifts, may be required if the RIC
and (f). a line, include cents when adding the received a distribution from, was a
Change in accounting method. amounts and round off only the total. grantor of, or transferor to a foreign
Generally, the RIC must get IRS trust during the tax year. See
consent to change either an overall Recordkeeping Question 5 of Schedule N (Form
method of accounting or the Keep the RIC's records for as long as 1120).
accounting treatment of any material they may be needed for
item for income tax purposes. To administration of any provision of the

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Form 5471, Information Return of the RIC can deduct and the amount to 4. Certain transactions resulting in
U.S. Persons With Respect To carry forward to the next year. a loss of at least $10 million in any
single year or $20 million in any
Certain Foreign Corporations. Use Form 8992, U.S. Shareholder
combination of years.
Form 5471 if the RIC is a U.S. Calculation of Global Intangible
shareholder of a controlled foreign Low-Taxed Income (GILTI). Use Form 5. Any transaction identified by the
corporation, a specified foreign 8992 to figure the domestic IRS by notice, regulation, or other
corporation, or otherwise subject to corporation's GILTI under section published guidance as a “transaction
the reporting requirements of section 951A and attach it to Form 1120-RIC. of interest.” See Notice 2009-55,
6038 or 6046, and the related 2009-31 I.R.B. 170.
regulations. Form 8996, Qualified Opportunity
Fund. Use Form 8996 to certify that For more information, see
Form 7205, Energy Efficient the RIC is organized as a qualified Regulations section 1.6011-4. Also,
Commercial Buildings Deduction. Use opportunity fund (QOF) to invest in see the Instructions for Form 8886.
Form 7205 to calculate and claim the qualified opportunity zone property. In
Penalties. The RIC may have to
deduction under section 179D for addition, a QOF RIC files Form 8996
pay a penalty if it is required to
qualifying energy efficient commercial annually to report that it meets the
disclose a reportable transaction
buildings placed in service during the 90% investment standard of section
under section 6011 and fails to
tax year. 1400Z-2 or to compute the penalty if it
properly complete and file Form 8886.
Form 8613, Return of Excise Tax on fails to meet the investment standard.
Penalties may also apply under
Undistributed Income of Regulated Form 8997, Initial and Annual section 6707A if the RIC fails to file
Investment Companies. If the RIC is Statement of Qualified Opportunity Form 8886 with its Form 1120-RIC,
liable for the 4% excise tax on Fund (QOF) Investments. Use Form fails to provide a copy of Form 8886 to
undistributed income under section 8997 to report investments in one or the Office of Tax Shelter Analysis
4982 or makes an election under more QOFs. Report the amount of (OTSA), or files a form that fails to
section 4982(e)(4), it must file this deferred gains invested in QOFs at include all the information required (or
return for the calendar year. the beginning of the current tax year, includes incorrect information). Other
Form 8621, Information Return by a transactions related to investments in penalties, such as an
Shareholder of a Passive Foreign QOFs for the current tax year, which accuracy-related penalty under
Investment Company or Qualified include capital gains deferred and section 6662A, may also apply. See
Electing Fund. Use Form 8621 if the invested in QOFs and dispositions of the Instructions for Form 8886 for
RIC is a direct or indirect shareholder investments in QOFs, and the amount details on these and other penalties.
of a passive foreign investment of deferred gains invested in QOFs at
Reportable transactions by materi-
company, as defined in section the end of the current tax year.
al advisors. Material advisors to any
1297(a). reportable transaction must disclose
Statements
Form 8927, Determination Under certain information about the
Section 860(e)(4) by a Qualified Reportable transaction disclosure reportable transaction by filing Form
Investment Entity. Use Form 8927 to statement. Disclose information for 8918, Material Advisor Disclosure
make a determination under section each reportable transaction in which Statement, with the IRS. For details,
860(e)(4) for purposes of paying the RIC participated. Form 8886, see the Instructions for Form 8918.
deficiency dividends. Reportable Transaction Disclosure Safe harbor under Temporary Reg-
Statement, must be filed for each tax ulations section 1.67-2T(j)(2).
Form 8975, Certain U.S. persons year that the federal income tax Generally, shareholders in a
that are the ultimate parent entity of a liability of the RIC is affected by its nonpublicly offered fund that are
U.S. multinational enterprise group participation in the transaction. The individuals or pass-through entities
with annual revenue for the preceding following are reportable transactions. are treated as having received a
reporting period of $850 million or
more are required to file Form 8975. 1. Any listed transaction, which is dividend in an amount equal to the
Form 8975 and Schedule A (Form a transaction that is the same as or shareholder's allocable share of
8975) must be filed with the income substantially similar to one of the affected RIC expenses for the
tax return of the ultimate parent entity types of transactions that the IRS has calendar year. They are also treated
of a U.S. multinational enterprise determined to be a tax avoidance as having paid or incurred an expense
group for the tax year in or within transaction and identified by notice, described in section 212 in the same
which the reporting period covered by regulation, or other published amount for the calendar year.
Form 8975 ends. For more guidance as a listed transaction.
Election. A nonpublicly offered
information, see Form 8975, 2. Any transaction offered under fund may elect to treat its affected RIC
Schedule A (Form 8975) and the conditions of confidentiality for which expenses for a calendar year as equal
Instructions for Form 8975 and the RIC (or a related party) paid an to 40% of the amount determined
Schedule A (Form 8975). advisor a fee of at least $250,000. under Temporary Regulations section
Form 8990, Limitation on Business 3. Certain transactions for which 1.67-2T(j)(1)(i) for that calendar year.
Interest Expense Under Section the RIC (or a related party) has To make this election, attach to
163(j). Use Form 8990 to calculate the contractual protection against Form 1120-RIC for the tax year that
amount of business interest expense disallowance of the tax benefits. includes the last day of the calendar

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year for which the fund makes the group) may need to attach an elective of the partnership by the last day of
election a statement that it is making relief agreement and/or an annual the second month after the month in
an election under Temporary certification, as provided in which the RIC acquires the
Regulations section 1.67-2T(j)(2). Regulations section 1.1503-2(g)(2). partnership interest; and
Once made, the election remains in • The partnership is eligible under
Certain dividends. A dividend
effect for all subsequent calendar Rev. Proc. 2003-84 to make the
received from a RIC is taken into
years and may not be revoked without monthly closing election and the
account in computing (a) the
IRS consent. See Temporary election is effective by the second
deduction under section 243, or (b)
Regulations section 1.67-2T for month after the month in which the
qualified dividend income, only to the
definitions and other details. RIC acquires the partnership interest.
extent reported by the RIC as eligible
Transfers to a corporation control- for such deduction or such treatment Statement of consent. The consent
led by the transferor. Every in written statements furnished to its to a partnership's monthly closing
significant transferor (as defined in shareholders. A RIC must determine election is effective for the month in
Regulations section 1.351-3(d)(1)) the reportable amounts under section which the RIC acquires the
that receives stock of a corporation in 854(b). For purposes of the partnership interest, unless the RIC
exchange for property in a dividends-received deduction, a requests that the consent be effective
nonrecognition event must include the capital gain dividend received from a for either of the two immediately
statement required by Regulations RIC is not treated as a dividend. The following calendar months. In addition
section 1.351-3(a) on or with the capital gain dividend is treated as a to timely providing the partnership
transferor's tax return for the tax year long-term capital gain by the with the statement of consent, the
of the exchange. The transferee shareholder. statement should be filed with Form
corporation must include the 1120-RIC for the first tax year in which
Consent to partnership election to
statement required by Regulations the consent is effective. The monthly
close its books monthly. Certain
section 1.351-3(b) on or with its return closing consent (and the partnership's
money market funds that obtain an
for the tax year of the exchange, election) may be revoked only with the
interest in an eligible partnership that
unless all the required information is consent of the Commissioner.
invests in assets exempt from taxation
included in any statement(s) provided However, the RIC's consent becomes
under section 103 may be qualified to
by a significant transferor that is ineffective on any day when the RIC
pay exempt-interest dividends to their
attached to the same return for the ceases to be an eligible partner and
shareholders. To qualify for payment
same section 351 exchange. If the the partnership's monthly closing
of exempt-interest dividends, a RIC
transferor or transferee corporation is election is terminated as of the first
must meet the quarterly net asset
a controlled foreign corporation day of any month the partnership is no
value (NAV) requirements under
(CFC), each U.S. shareholder (within longer eligible for the election under
section 852(b)(5). To maintain the
the meaning of section 951(b)) must Rev. Proc. 2003-84. For more details,
required NAV at the end of each
include the required statement on or see the revenue procedure.
quarter, the RIC may take into
with its return.
account on a monthly basis its Other forms and statements. See
Distributions under section 355. distributive share of partnership items Pub. 542, Corporations, for a list of
Every RIC that makes a distribution of if the eligible partnership makes a other forms and statements a RIC
stock or securities of a controlled proper election to close its books at may need to file in addition to the
corporation, as described in section the end of each month. See Rev. forms and statements discussed
355 (or so much of section 356 as it Proc. 2003-84, 2003-48 I.R.B. 1159, throughout these instructions.
relates to section 355), must attach as modified by Notice 2008-80, for
the statement required by Regulations details.
section 1.355-5(a) to its return for the Specific Instructions
Eligibility. A RIC is entitled to take
year of the distribution. A significant
into account its distributive share of
distributee (as defined in Regulations Period Covered
partnership items on a monthly basis
section 1.355-5(c)) that receives stock File the 2022 return for calendar year
if:
or securities or a controlled 2022 and fiscal years that begin in
corporation must include the • The RIC is entitled to hold itself out 2022 and end in 2023. For a fiscal
as a money market fund, or an
statement required by Regulations year return, fill in the tax year in the
equivalent of a money market fund;
section 1.355-5(b) on or with its return space at the top of the form.
for the year of receipt. If the • The RIC provides a statement to
the partnership that it consents to the The 2022 Form 1120-RIC may also
distributing or distributee corporation be used if:
partnership's election to close its
is a CFC, each U.S. shareholder • The RIC has a tax year of less than
books monthly and that the RIC will
(within the meaning of section 951(b)) 12 months that begins and ends in
include in its taxable income its
must include the statement on or with 2023; and
distributive share of partnership items
its return. • The 2023 Form 1120-RIC is not
in a manner consistent with the
Dual consolidated losses. If a election. See Rev. Proc. 2003-84 for available at the time the RIC is
domestic corporation incurs a dual the required contents of the statement required to file its return.
consolidated loss (as defined in of consent; The RIC must show its 2023 tax
Regulations section 1.1503-2(c)(5)), • The RIC provides the statement of year information on the 2022 Form
the corporation (or consolidated consent to the custodian or manager 1120-RIC and take into account any

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tax law changes that are effective for books and records) at the end of the 7872 for more information on the tax
tax years beginning after December tax year. If there are no assets at the treatment of loans on which
31, 2022. end of the tax year, enter -0-. inadequate or no interest is charged.

Name and Address Item E. Final Return, Name Note. Report tax-exempt interest
income on Schedule K, item 8. Do not
Enter the RIC's true name (as set forth Change, Address Change,
include tax-exempt interest on line 2.
in the charter or other legal document or Amended Return Also, if required, include the same
creating it), address, and EIN on the
appropriate lines. Enter the address of • If this is the RIC's final return and it amount on Schedule M-1, line 7.
will no longer exist, check the “Final
the RIC's principal office or place of Include interest income from tax
return” box.
business. Include the suite, room, or credit bonds on line 2. If the RIC
other unit number after the street • If the RIC has changed its name elects to pass through the credits to
since it last filed a return, check the
address. If the post office does not shareholders, see the instructions for
“Name change” box. Generally, a RIC
deliver mail to the street address and Part II, Schedule A, line 7.
must also have amended its articles of
the RIC has a P.O. box, show the box Line 3. Net foreign currency gain
incorporation and filed the
number instead. or (loss) from section 988 transac-
amendment with the state in which it
Note. Do not use the address of the was incorporated. tions. Enter the net foreign currency
registered agent for the state in which • If the RIC has changed its address gain (loss) from section 988
the RIC is incorporated. For example, since it last filed a return (including a transactions treated as ordinary
if a business is incorporated in change to an “in care of” address), income or loss under section 988(a)
Delaware or Nevada and the RIC's check the “Address change” box. (1)(A). Attach a statement detailing
principal office is located in Little each separate transaction.
Note. If a change in address or
Rock, AR, the RIC should enter the Line 4. Payments with respect to
responsible party occurs after the
Little Rock address. securities loans. Enter the amount
return is filed, use Form 8822-B,
received or accrued from a broker as
If the RIC receives its mail in care Change of Address or Responsible
compensation for securities loaned by
of a third party (such as an accountant Party—Business, to notify the IRS of
the RIC to the broker for use in
or an attorney), enter on the street the new address. See the instructions
completing market transactions. The
address line “C/O” followed by the for Form 8822-B for details.
third party's name and street address payments must meet the
or P.O. box. Amended return. If the RIC is requirements of section 512(a)(5).
amending its return, check the box for
Line 5. Excess of net short-term
“Amended return,” complete the entire
Item B. Date RIC Was capital gain over net long-term
return, correct the appropriate lines
capital loss. Enter the amount from
Established with the new information, and refigure
Schedule D (Form 1120), line 16.
If this return is being filed for a series the RIC's tax liability. Attach a
Every sale or exchange of a capital
fund (as described in section 851(g) statement that explains the reason for
asset must be reported even if no gain
(2)), enter the date the fund was the amendments and identifies the
or loss is indicated.
created. Otherwise, enter the date the lines being changed on the amended
RIC was incorporated or organized. return. If a RIC has a net capital loss for
any tax year, the excess of the net
Item C. Employer short-term capital loss over the net
Identification Number Part I—Investment long-term capital gain shall be a
(EIN) Company Taxable Income short-term capital loss arising on the
first day of the next tax year. The
Enter the RIC's EIN. If the RIC does Income excess of the net long-term capital
not have an EIN, it must apply for one. loss over the net short-term capital
Line 1. Dividends. A RIC that is the
An EIN may be applied for: gain shall be a long-term capital loss
holder of record of any share of stock
• Online by visiting IRS.gov/EIN. The arising on the first day of the next tax
on the record date for a dividend
EIN is issued immediately once the year. Also, there is no limit on the
payable on that stock must include the
application information is validated; or number of tax years that a RIC is
dividend in gross income by the later
• By mailing or faxing Form SS-4, allowed to carry over a net capital
of the date the share became
Application for Employer Identification loss. See section 1212(a)(3) for more
ex-dividend, or the date the RIC
Number. information.
acquired the share.
If the RIC has not received its EIN Line 7. Other income. Enter any
by the time the return is due, write Line 2. Interest. Enter taxable
“Applied for” and the date you applied interest on U.S. obligations and on other taxable income (loss) not
in the space for the EIN. See the loans, notes, mortgages, bonds, bank reported on lines 1 through 6, except
Instructions for Form SS-4 for details. deposits, corporate bonds, tax net capital gain reported in Part II.
refunds, etc. If the RIC owns any controlled
Item D. Total Assets Do not offset interest expense foreign corporations or qualified
Enter the RIC's total assets (as against interest income. Special rules electing funds, enter the amount
determined by the accounting method apply to interest income from certain included in gross income under
regularly used in keeping the fund's below-market-rate loans. See section section 951(a)(1)(A), plus the amount

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of global intangible low-taxed income • Any net positive section 481 Deductions
determined under section 951A income adjustment due to a change in
Limitations on Deductions
(which is treated as an amount method of accounting. See Form
included under section 951(a)(1)(A)), 3115 and its instructions for more Transactions between related tax-
and any amount included in gross information; payers. Generally, an accrual basis
income under section 1293(a). See • Part or all of the proceeds received taxpayer may only deduct business
Regulations section 1.851-2(b)(2)(iii). from certain corporate-owned life expenses and interest owed to a
Do not include in this line any insurance contracts issued after related party in the year the payment
amounts that are treated as dividends August 17, 2006. Corporations that is includible in the income of the
and reported on line 1. See own one or more employer-owned life related party. See section 267 for
Regulations section 1.851-2(b)(2)(i). insurance contracts issued after this limitations on deductions for interest
Refer to Form 5471, Form 8621, and date must file Form 8925, Report of and expenses paid to a related party.
Form 8992, and their instructions, to Employer-Owned Life Insurance
determine the amount included in Contracts. See section 101(j) for Limitations on business interest
gross income under section 951(a)(1) details; expense. Business interest expense
(A) (including the amount of global • Income from cancellation of debt may be limited. See section 163(j),
intangible low-taxed income) and (COD) from the repurchase of a debt Form 8990, and the related
section 1293(a). Also, consider the instrument for less than its adjusted instructions. Also, see Limitation on
applicability of section 951A with issue price; deduction in the instructions for
line 13 and Schedule K, Question 14,
respect to controlled foreign • The RIC's share of the following later.
corporations owned by domestic income from Form 8621, Information
partnerships in which the RIC has an Return by a Shareholder of a Passive Golden parachute payments. A
interest. Foreign Investment Company or portion of the payments made by a
List the type and amount of income Qualified Electing Fund. RIC to key personnel that exceeds
their usual compensation may not be
on an attached statement. If the RIC 1. Ordinary earnings of a qualified
deductible. This occurs when the RIC
has only one item of other income, electing fund (QEF).
describe it in parentheses on line 7. has an agreement (golden parachute)
2. Gain or loss from marking
Examples of other income to report on with key employees to pay them an
passive foreign investment company
line 7 include: amount substantially in excess of their
income (PFIC) stock to market.
• Gross rents; base amount if control of the RIC
• Recoveries of fees or expenses in 3. Gain or loss from sale or other changes. See section 280G and
settlement or litigation; disposition of Section 1296 stock. Regulations section 1.280G-1 for
• Amounts received or accrued as 4. The amount of excess more information. Also, see the
consideration for entering into distributions from a Section 1291 fund instructions for line 9.
agreements to make real property that is treated as ordinary income. Business start-up and organiza-
loans or to purchase or lease real tional costs. A RIC can elect to
property; See Form 8621 and the
• Recoveries of bad debts deducted Instructions for Form 8621 for details; deduct a limited amount of start-up
in prior years under the specific and and organizational costs it paid or
charge-off method; • The amount of payroll tax credit incurred. Any remaining costs must
• Refunds of taxes deducted in prior taken by an employer on its 2022 generally be amortized over a
years to the extent they reduced employment tax returns (Forms 941, 180-month period. See sections 195
income subject to tax in the year 943, and 944) for qualified paid sick and 248 and the related regulations.
deducted (see section 111). Do not and qualified paid family leave under Time for making an election.
offset current year taxes against prior FFCRA and ARP (both the The RIC generally elects to deduct
year tax refunds; nonrefundable and refundable start-up or organizational costs by
• The recapture amount under portions). The RIC must include the claiming the deduction on its income
section 280F if the business use of full amount of the credit for qualified tax return filed by the due date
listed property drops to 50% or less. sick and family leave wages in gross (including extensions) for the tax year
To figure the recapture amount, income for the tax year that includes in which the active trade or business
complete Part IV of Form 4797; the last day of any calendar quarter in begins. However, for start-up or
• Ordinary income from trade or which the credit is allowed. organizational costs paid or incurred
before September 9, 2008, the RIC
business activities of a partnership Note. A credit is available only if the may be required to attach a statement
(from Schedule K-1 (Form 1065)). Do leave was taken after March 31, 2020, to its return to elect to deduct such
not offset ordinary losses against and before October 1, 2021, and only costs. See Regulations sections
ordinary income. Instead, include the after the qualified leave wages were 1.195-1 and 1.248-1 for details.
losses on line 22. Show the paid, which might, under certain
partnership's name, address, and EIN circumstances, not occur until a For more details, including special
on a separate statement attached to quarter after September 30, 2021, rules for costs paid or incurred before
this return. If the amount entered is including quarters in 2022. September 9, 2008, see the
from more than one partnership, Instructions for Form 4562. Also, see
identify the amount from each Pub. 535, Business Expenses.
partnership;

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If the RIC timely filed its return for directly or indirectly owned by or for If the RIC claims a credit for
the year without making an election, it not more than five individuals and it is ! any wages paid or incurred, it
can still make an election by filing an not a personal service corporation. CAUTION may need to reduce any
amended return within 6 months of corresponding deduction for officers'
Line 9. Compensation of officers.
the due date of the return (excluding compensation and salaries and
Enter the deductible officer's
extensions). Clearly indicate the wages. See the instructions for the
compensation on line 9. The RIC
election on the amended return and form used to figure the applicable
determines who is an officer under the
write "Filed pursuant to section credit for more details.
laws of the state where incorporated.
301.9100-2" at the top of the
Do not include compensation
amended return. File the amended Line 11. Rents. If the RIC rented or
deductible elsewhere on the return,
return at the same address the RIC leased a vehicle, enter the total
such as elective contributions to a
filed its original return. The election annual rent or lease expense paid or
section 401(k) cash or deferred
applies when figuring taxable income incurred during the year. Also,
arrangement, or amounts contributed
for the current tax year and all complete Part V of Form 4562,
under a salary reduction SEP
subsequent years. Depreciation and Amortization. If the
agreement or a SIMPLE IRA plan.
RIC leased a vehicle for a term of 30
Note. The RIC can choose to forgo If the RIC's total receipts are days or more, the deduction for the
the elections above by clearly electing $500,000 or more, complete and vehicle lease expense may have to be
to capitalize its start-up or attach Form 1125-E. Total receipts reduced by an amount called the
organizational costs on an income tax are figured by adding: inclusion amount.
return filed by the due date (including 1. Line 8, Part I; The RIC may have an inclusion amount if:
extensions) for the tax year in which The lease term began: And the
2. Net capital gain from line 1, Part
the active trade or business begins. vehicle's FMV
II; and
Report the deductible amount of on the first day
3. Line 9a, Form 2438. of the lease
such costs and any amortization on exceeded:
line 22. For amortization that begins Enter on line 9 the amount from Cars (excluding trucks and
during the current tax year, complete Form 1125-E, line 4. vans)
After 12/31/21 but before
and attach Form 4562. Line 10. Salaries and wages. Enter 1/1/23 . . . . . . . . . . . . . $56,000
Section 265(a)(3) limitation. If the the salaries and wages paid for the After 12/31/20 but before
1/1/22 . . . . . . . . . . . . . $51,000
RIC paid exempt-interest dividends tax year reduced by the amount After 12/31/17 but before
during the tax year (including those claimed on: 1/1/21 . . . . . . . . . . . . . $50,000
dividends deemed paid under section • Form 5884, Work Opportunity After 12/31/12 but before
855), no deduction is allowed for that Credit; 1/1/18 . . . . . . . . . . . . . $19,000
After 12/31/07 but before
portion of otherwise deductible • Form 8844, Empowerment Zone 1/1/13 . . . . . . . . . . . . . $18,500
expenses allocable to tax-exempt Employment Credit; Trucks and Vans
income. The excluded amount is • Form 8845, Indian Employment After 12/31/21 but before
determined by the amount tax-exempt Credit, if applicable; 1/1/23 . . . . . . . . . . . . . $56,000
income bears to total gross income • Form 8932, Credit for Employer After 12/31/20 but before
1/1/22 . . . . . . . . . . . . . $51,000
(including tax-exempt income but Differential Wage Payments; and
After 12/31/17 but before
excluding capital gain net income). • Form 8994, Employer Credit for 1/1/21 . . . . . . . . . . . . . $50,000
Paid Family and Medical Leave.
Net operating loss deduction. The After 12/31/13 but before
net operating loss deduction is not See the instructions for these forms 1/1/18 . . . . . . . . . . . . . $19,500
allowed. for more information. After 12/31/09 but before
1/1/14 . . . . . . . . . . . . . $19,000
Passive activity limitations. Do not include salaries and wages After 12/31/08 but before
Limitations on passive activity losses deductible elsewhere on the return, 1/1/10 . . . . . . . . . . . . . $18,500
and credits under section 469 apply to such as amounts included in officer's After 12/31/07 but before
RICs that are closely held (as defined compensation, elective contributions 1/1/09 . . . . . . . . . . . . . $19,000
See Pub. 463, Travel, Gift, and Car Expenses, for instructions
in section 469(j)(1)). RICs subject to to a section 401(k) cash or deferred on figuring the inclusion amount. The inclusion amount for
the passive activity limitations must arrangement, or amounts contributed lease terms beginning in 2023 will be published in the Internal
complete Form 8810, Corporate under a salary reduction SEP Revenue Bulletin in early 2023.
Passive Activity Loss and Credit agreement or a SIMPLE IRA plan.

Limitations, to compute their allowable If the RIC provided taxable Line 12. Taxes and licenses. Enter
passive activity loss and credit. Before ! fringe benefits to its taxes paid or accrued during the tax
completing Form 8810, see CAUTION employees, such as personal
year, but do not include the following.
Temporary Regulations section use of a car, do not deduct as wages • Federal income taxes (except for
1.163-8T for rules on allocating any amounts deducted elsewhere. the tax imposed on net recognized
interest expense among activities. built-in gain allocable to ordinary
Closely held corporation. A RIC income).
is closely held if at any time during the • Foreign or U.S. possession income
last half of the tax year more than 50% taxes if a foreign tax credit is claimed,
in value of its outstanding stock is or if the RIC made an election under
section 853.

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• Excise taxes imposed under • Interest and carrying charges on Line 14. Depreciation. Include on
section 4982 on undistributed RIC straddles. Generally, these amounts line 14 depreciation and the cost of
income. must be capitalized. See section certain property that the RIC elected
• Taxes not imposed on the RIC. 263(g). to expense under section 179. See
• Taxes, including state or local sales Special rules apply to: Form 4562 and the related
taxes, that are paid or incurred in • Original issue discount (OID) on instructions to figure the amount of
connection with an acquisition or certain high-yield discount obligations. depreciation to enter on this line.
disposition of property (these taxes See section 163(e)(5) to determine
Line 22. Other deductions. Attach a
must be treated as a part of the cost of the amount of the deduction for OID
statement listing by type and amount
the acquired property or, in the case that is deferred and the amount that is
all allowable deductions that are not
of a disposition, as a reduction in the disallowed on a high-yield discount
specifically deductible elsewhere on
amount realized on the disposition). obligation. The rules under section
Form 1120-RIC. Generally, a
• Taxes assessed against local 163(e)(5) do not apply to certain
deduction may not be taken for any
benefits that increase the value of the high-yield discount obligations issued
amount that is allocable to tax-exempt
property assessed (such as for after August 31, 2008, and before
income. See section 265(b) for
paving, etc.). January 1, 2011. See section 163(e)
exceptions.
• Taxes deducted elsewhere on the (5)(F). Also, see Notice 2010-11,
return. 2010-4 I.R.B. 326. Examples of other deductions
See section 164(d) for information • The deduction for interest when the include:
on apportionment of taxes on real RIC is a policyholder or beneficiary • Amortization. See Form 4562;
property between seller and with respect to a life insurance, • Any applicable deduction under
purchaser. endowment, or annuity contract section 179D for costs of energy
issued after June 8, 1997. For details, efficient commercial building property
Do not reduce the RIC's placed in service during the tax year.
see section 264(f). Attach a statement
! deduction for social security showing the computation of the Complete and attach new Form 7205.
CAUTION and Medicare taxes by the
deduction. • Certain business start-up and
nonrefundable and refundable organizational costs the RIC elects to
portions of the FFCRA and ARP Limitation on deduction. Under amortize or deduct;
credits for qualified sick and family section 163(j), business interest • Supplies used and consumed in the
leave wages claimed on its expense is generally limited to the business;
employment tax returns. Instead, sum of business interest income, 30% • Utilities;
report this amount as income on of the adjusted taxable income, and • Ordinary losses from trade or
line 7. floor plan financing interest. Business business activities of a partnership
interest expense includes any interest (from Schedule K-1 (Form 1065)). Do
Line 13. Interest. The RIC must paid or accrued properly allocable to a not offset ordinary income against
make an interest allocation if the trade or business (other than certain ordinary losses. Instead, include the
proceeds of a loan were used for excepted trades or businesses). A income on line 7. Show the
more than one purpose (for example, small business taxpayer that is not a partnership's name, address, and EIN
to purchase a portfolio investment and tax shelter (as defined in section on a separate statement attached to
to acquire an interest in a passive 448(d)(3)), and that meets the gross this return. If the amount is from more
activity). See Temporary Regulations receipts test is not required to limit than one partnership, identify
section 1.163-8T for the interest business interest expense under separately the amount from each
allocation rules. section 163(j). A taxpayer meets the partnership;
The following interest is not gross receipts test if the taxpayer has • Any extraterritorial income
deductible. average annual gross receipts of not exclusion (from Form 8873, line 52);
• Interest on indebtedness incurred more than $27 million for the 3 prior • Any net negative section 481(a)
or continued to purchase or carry tax years under the gross receipts test adjustment; and
obligations if the interest is wholly of section 448(c). Gross receipts
Do not deduct expenses such as
exempt from income tax. See section include the aggregate gross receipts
the following.
265(b) for special rules and from all persons treated as a single
• Fines or penalties paid to a
exceptions for financial institutions. employer such as a controlled group
government for violating any law.
Also, see section 265(b)(7) for a of corporations, commonly controlled
However, other limitations apply for
temporary de minimis exception for partnerships or proprietorships, and
certain amounts paid or incurred after
financial institutions for certain tax affiliated service groups. If the
December 21, 2017. See section
exempt bonds issued in 2009 and corporation fails to meet the gross
162(f), and Fines and penalties, later.
2010. receipts test, Form 8990 is generally
• Lobbying expenses. However, see
• For cash basis taxpayers, prepaid required. See the Instructions for
Lobbying expenses, later.
interest allocable to years following Form 8990. Also, see Schedule K,
• Amounts paid or incurred after
the current tax year. For example, a Questions 13 and 14 for conditions for
December 22, 2017, for any
cash basis calendar year taxpayer filing Form 8990.
settlement or payment related to
who in 2022 prepaid interest allocable Interest expense cannot be sexual harassment or sexual abuse, if
to any period after 2022 can deduct ! used to offset interest income. such settlement or payment is subject
only the amount allocable to 2022. CAUTION to a nondisclosure agreement or for

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related attorney's fees. See new For information on contributions to deduct 100% of the business meal
section 162(q). charitable organizations that conduct expenses if the meals are food and
lobbying activities, see section 170(f) beverages provided by a restaurant.
Charitable contributions. Enter
(9). This applies only to amounts incurred
contributions or gifts actually paid
after December 31, 2020, and before
within the tax year to or for the use of Pension, profit-sharing, etc., plans.
January 1, 2023.
charitable and governmental Enter contributions to qualified
organizations described in section pension, profit-sharing, or other Meals not separately stated from
170(c) and any unused contribution funded-deferred compensation plans. entertainment are generally not
carryovers. Employers who maintain such a plan deductible. In addition (subject to
RICs reporting taxable income on must generally file Form 5500, Annual exceptions under section 274(k)(2)):
the accrual method may elect to treat Return/Report of Employee Benefit • Meals must not be lavish or
as paid during the tax year any Plan, even if the plan is not a qualified extravagant, and
contributions paid by the due date of plan under the Internal Revenue • An employee of the RIC must be
the RIC’s tax return (not including Code. The filing requirement applies present at the meal.
extensions) if the contributions were even if the RIC does not claim a See section 274(n)(3) for a special
authorized by the board of directors deduction for the current tax year. rule that applies to expenses for
during the tax year. Attach a There are penalties for failure to file meals consumed by individuals
declaration to the return stating that these forms on time and for subject to the hours of service limits of
the resolution authorizing the overstating the pension plan the Department of Transportation.
contributions was adopted by the deduction. See sections 6652(e) and
board of directors during the tax year. 6662(f). Qualified transportation fringes
(QTFs). Generally, no deduction is
The declaration must include the date allowed under section 274(a)(4) for
Note. Form 5500 must be filed
the resolution was adopted. See QTFs provided by employers to their
electronically under the computerized
section 170(a)(2)(B). employees. QTFs are defined in
ERISA Filing Acceptance System
Limitation on deduction. (EFAST2). For more information, see section 132(f)(1) and include:
Generally, the total amount claimed the EFAST2 website at • Transportation in a commuter
cannot be more than 10% of taxable www.EFAST.dol.gov. highway vehicle between the
income (the sum of Part I, line 26; Part employee's residence and place of
Travel, meals, and entertainment.
ll, line 3; and Form 2438, line 11) employment,
Subject to certain limitations and
computed without regard to the • Any transit pass, and
restrictions, the RIC can deduct
following: • Qualified parking.
ordinary and necessary travel, meal,
• Any deduction for contributions; or See section 274, Pub. 15-B, and
and non-entertainment expenses paid
• The deduction allowed under Pub. 535 for details.
or incurred in its trade or business.
section 249, related to any premium
paid or incurred upon the repurchase Generally, entertainment Membership dues. The RIC can
of a convertible bond. expenses, membership dues, and deduct amounts paid or incurred for
facilities used in connection with these membership dues in civic or public
Carryover. Charitable activities cannot be deducted. In service organizations, professional
contributions over the 10% limitation addition, no deduction is generally organizations (such as bar or medical
cannot be deducted for the tax year allowed for qualified transportation associations), business leagues,
but may be carried over to the next 5 fringe benefits. Also, special rules trade associations, chambers of
tax years subject to certain limitations. apply to deductions for gifts, luxury commerce, boards of trade, and real
For more information on charitable water travel, and convention estate boards. However, no deduction
contributions, including substantiation expenses. See section 274, Pub. 463, is allowed if a principal purpose of the
and recordkeeping requirements, see and Pub. 535 for more details. organization is to entertain or provide
the regulations under section 170 and entertainment facilities to members or
Travel. The RIC cannot deduct
Pub. 526, Charitable Contributions. their guests. In addition, RICs cannot
travel expenses of any individual deduct membership dues in any club
Contributions to organizations accompanying a corporate officer or organized for business, pleasure,
conducting lobbying activities. employee unless: recreation, or other social purpose.
Contributions made to an organization • That individual is an employee of This includes country clubs, golf and
that conducts lobbying activities are the RIC, and athletic clubs, airline and hotel clubs,
not deductible if: • That individual’s travel is for a bona and clubs operated to provide meals
• The lobbying activities relate to fide business purpose that would under conditions favorable to
matters of direct financial interest to otherwise be deductible by that business.
the donor's trade or business, and individual.
• The principal purpose of the Entertainment facilities.
Meals. Generally, the RIC can
contribution was to avoid federal Generally, the RIC cannot deduct an
deduct only 50% of the amount
income tax by obtaining a deduction expense paid or incurred for a facility
otherwise allowable for
for activities that would have been (such as a yacht or hunting lodge)
non-entertainment related meal
nondeductible under the lobbying used for an activity usually considered
expenses paid or incurred in its trade
expense rules if conducted directly by entertainment, amusement, or
or business. However, the RIC can
the donor. recreation.

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Amounts treated as 1.162-29 for the definition of • The total amount owed is $25,000
compensation. Generally, the RIC “influencing legislation.” or less, and
may be able to deduct otherwise Dues and other similar amounts • The RIC can pay the liability in full
nondeductible entertainment, paid to certain tax-exempt in 24 months.
amusement, or recreation expenses if organizations may not be deductible. To apply using the Online Payment
the amounts are treated as Certain in-house lobbying Agreement Application, go to IRS.gov/
compensation to the recipient and expenditures that do not exceed OPA.
reported on Form W-2 for an $2,000 are deductible. Under an installment agreement,
employee, or on Form 1099-NEC for the RIC can pay what it owes in
an independent contractor. Line 25a. Deductions for dividends
monthly installments. There are
paid. Enter the amount from
However, if the recipient is an certain conditions that must be met to
Schedule A, line 8a.
officer, director, beneficial owner enter into and maintain an installment
(directly or indirectly), or other Line 25b. Section 851(d)(2) and agreement, such as paying the liability
“specified individual” (as defined in section 851(i) deductions. Enter within 24 months and making all
section 274(e)(2)(B) and Regulations the amount from Schedule J, line 2c. required deposits and timely filing tax
section 1.274-9(b)), special rules returns during the length of the
Tax and Payments
apply. agreement.
See section 274 and Pub. 463 for a Line 28. Reserved for future use. If the installment agreement is
more extensive discussion of these Line 29b. Estimated tax payments. accepted, the RIC will be charged a
topics. Enter any estimated tax payments the fee and it will be subject to penalties
Fines and penalties. Generally, no RIC made for the tax year. and interest on the amount of tax not
paid by the due date of the return.
deduction is allowed for fines or Line 29f. Credit from Form 2439.
similar penalties paid or incurred to, or Enter the credit from Form 2439 for
at the direction of, a government or the RIC's share of the tax paid by Part II—Tax on
governmental entity for violating any another RIC or a Real Estate Undistributed Net Capital
law, or for the investigation or inquiry Investment Trust (REIT) on
into the potential violation of a law, undistributed long-term capital gains Gain Not Designated
except: included in the RIC's income. Attach Under Section 852(b)(3)
• Amounts that constitute restitution, Form 2439 to Form 1120-RIC. (D)
• Amounts paid to come into
compliance with the law, Line 29g. Credit for federal tax on Line 1. Enter the net capital gain from
• Amounts paid or incurred as the fuels. Complete and attach Form line 17 of Schedule D (Form 1120).
result of certain court orders or 4136, Credit for Federal Tax Paid on
Line 2. Enter the capital gain
agreements in which no government Fuels, if the RIC qualifies to take this
dividends from Schedule A, line 8b.
or governmental entity is a party, and credit.
Line 4. Capital gains tax. Multiply
• Amounts paid or incurred for taxes Line 29h. Reserved for future use.
due. the amount on line 3 by 21% (0.21).
Line 29i. Reserved for future use. Enter the result here and on
No deduction is allowed unless the Schedule J, line 2b.
amounts are specifically identified in Line 29j. Backup withholding. If the
the order or agreement and the RIC RIC had income tax withheld from any
establishes that the amounts were payments it received, because, for Schedule A—Deduction
paid for that purpose. Also, any example, it failed to give the payer its
amount paid or incurred as correct EIN, include the amount for Dividends Paid
reimbursement to the government for withheld in the total for line 29j. Enter Column (a) is used to determine the
the costs of any investigation or the amount withheld and the words deduction for dividends paid resulting
litigation are not eligible for the “Backup Withholding” in the blank from income derived from ordinary
exceptions and are nondeductible. space above line 29j. dividends.
See section 162(f). Line 30. Estimated tax penalty. A Column (b) is used to determine the
RIC that does not make estimated tax deduction for dividends paid resulting
Lobbying expenses. Generally, payments when due may be subject from income derived from capital gain
lobbying expenses are not deductible. to an underpayment penalty for the dividends.
Examples of nondeductible expenses period of underpayment. See the Section 561 (taking into account
include: Instructions for Form 2220, sections 852(b)(7), 852(c)(3)(B), and
• Amounts paid or incurred in Underpayment of Estimated Tax by 855(a)) determines the deduction for
connection with influencing federal, Corporations, for more information. dividends paid. Do not take into
state, or local legislation; or
• Amounts paid or incurred in Line 31. Amount owed. If the RIC account exempt-interest dividends
connection with any communication cannot pay the full amount of tax defined in section 852(b)(5) or any
with certain federal executive branch owed, it can apply for an installment amount reported for the tax year on
officials in an attempt to influence the agreement online. The RIC can apply Form 2438, line 9b. See section
official actions or positions of the for an installment agreement online if: 852(b)(8) for information on
officials. See Regulations section • It cannot pay the full amount shown post-October capital losses and late
on line 31, year ordinary losses.

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Line 3. Dividends, both ordinary and Controlled Group. See Schedule O For more information on reporting
capital gain, declared and payable to (Form 1120) and its instructions for the deferred tax and interest, see the
shareholders of record in October, more information. Instructions for Form 8621.
November, or December are treated Line 2a—Tax on Investment Additional tax under section
as paid by the RIC and received by 197(f). A RIC that elects to recognize
Company Taxable Income
each shareholder on December 31 of gain and pay tax on the gain from the
that calendar year provided that they RICs figure their tax by multiplying
sale of a section 197 intangible under
are actually paid in January of the investment company taxable income
the related person exception to the
following calendar year. Enter on by 21%. Enter this amount on line 2a.
anti-churning rules should include any
line 3 all such dividends not already For a RIC that is a personal hold- additional tax due in the total for
included on line 1 or 2. ing company (PHC). A RIC that is line 2d. On the dotted line to the left of
Line 6. Enter the foreign tax paid not in compliance with Regulations line 2d, write “Section 197” and the
deduction allowed as an addition to section 1.852-6 is a PHC and is taxed amount. See section 197(f)(9)(B)(ii).
the dividends paid deduction under at a flat rate of 21% on its investment
section 853(b)(1)(B). See the company taxable income. Line 3a—Foreign Tax Credit
To find out when a RIC can claim the
instructions for Item 10 of Schedule K Line 2b—Capital Gains Tax credit for payment of income tax to a
for information on the election
Enter the capital gains tax from line 4, foreign country or U.S. possession,
available under section 853(a).
Part II. see Form 1118, Foreign Tax
Line 7. If the RIC elects under Credit—Corporations. The RIC may
section 853A to pass through credits Line 2c—Taxes Imposed Under
not claim this credit if an election
from qualified tax credit bonds to Sections 851(d)(2) and 851(i) under section 853 was made for the
shareholders, increase the dividends Check the appropriate box(es) and tax year. See Election under section
paid deduction by the amount of the enter the tax(es) imposed under the 853(a) under Schedule K, Item 10.
credits distributed to shareholders. To following relief provisions:
make the election, see the instructions • Section 851(d)(2) relating to failures Line 3b—Credit from Form
for Item 11 under Schedule K—Other to meet certain requirements of the 8834
Information. asset test of section 851(b)(3); and Enter any qualified electric vehicle
• Section 851(i) relating to failures to passive activity credits from prior
meet certain requirements of the years allowed for the current tax year
Schedule B—Income From gross income test. from Form 8834, Qualified Electric
Tax-Exempt Obligations Vehicle Credit, line 7, and attach Form
See the instructions on page 2 for
If, at the close of each quarter of the 8834 to this return.
details on the requirements of the
tax year, at least 50% of the value of
gross income and asset tests. Also,
the fund's assets consisted of Line 3c—General Business
see sections 851(d)(2) and 851(i).
tax-exempt obligations under section Credit
103(a), the RIC qualifies under Attach a statement showing the The RIC is required to file Form 3800,
section 852(b)(5) to pay computation of the tax(es) and an General Business Credit, to claim
exempt-interest dividends for the tax explanation of why the RIC failed to most business credits. For a list of
year. See section 852(b)(5)(A) for the meet the requirement of the asset test allowable credits, see Form 3800.
definition of exempt-interest dividends or the gross income test, and a Enter the allowable credit from Part II,
and other details. description of why such failure is due line 38, of Form 3800, on line 3c. Also,
to reasonable cause and not to willful see the applicable credit form and its
In the case of a qualified “fund of
neglect. instructions.
funds” structure, a RIC may pay
exempt-interest dividends without Line 2d—Income Tax Line 3d—Other Credits
regard to the requirement that at least
50% of the value of the fund’s assets Deferred tax under section 1291. If Minimum tax credit. Enter any
consist of tax-exempt obligations. See the RIC was a shareholder in a allowable credit from Form 8827,
section 852(g) for more information. passive foreign investment company Credit for Prior Year Minimum
(PFIC), and received an excess Tax—Corporations. Complete and
If this applies, check the “Yes” box distribution or disposed of its attach Form 8827.
on line 1 and complete lines 2 through investment in the PFIC during the Bond credits from Form 8912.
5. year, it must include the increase in Enter the allowable credits from Form
taxes due under section 1291(c)(2) 8912, Credit to Holders of Tax Credit
(from Form 8621) in the total for Bonds, line 12. However, if the RIC
Schedule J—Tax line 2d. On the dotted line to the left of elects to pass through credits from tax
Computation line 2d, write “Section 1291” and the credit bonds to its shareholders, it
Line 1 amount. cannot take the credit. See Item 11
If the RIC is a member of a controlled Do not include on line 2d any under question 5, later, for more
group, check the box on line 1 and interest due under section 1291(c)(3). information.
complete and attach Schedule O Instead, include the amount owed on
(Form 1120), Consent Plan and Schedule J, line 7, Other taxes.
Apportionment Schedule for a

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Line 5—Personal Holding • Recapture of new markets credit instructions for line i of the Built-in
Company Tax (see Form 8874 and Form 8874-B). Gains Tax Worksheet, later). See
A RIC is taxed as a personal holding • Recapture of employer-provided Regulations section 1.337(d)-7 for
childcare facilities and services credit details.
company under section 542 if:
(see Form 8882).
• At least 60% of its adjusted ordinary Different rules apply to elections to
gross income for the tax year is • Interest due on deferred gain
recognition (section 1260(b)). be a RIC and to transfers of property
personal holding company income, in a carryover basis transaction that
and • Interest due under section 1291(c)
(3). occurred prior to January 2, 2002. For
• At any time during the last half of RIC elections and property transfers
the tax year more than 50% in value of before this date, the C corporation is
its outstanding stock is owned, Built-in Gains Tax
subject to deemed sale treatment on
directly or indirectly, by five or fewer the transferred property unless the
individuals. If, on or after January 2, 2002,
property of a C corporation becomes RIC elects section 1374 treatment.
See the Instructions for property of a RIC by either: (a) the See Regulations section 1.337(d)-6
Schedule PH (Form 1120), U.S. qualification of the C corporation as a for information on how to make the
Personal Holding Company (PHC) RIC; or (b) the transfer of such election and figure the tax for RIC
Tax, for definitions and details on how property to a RIC, then the RIC will be elections and property transfers
to figure the tax. subject to the built-in gains tax under before this date. The RIC may also
section 1374 unless the C corporation generally rely on Regulations section
Line 6—Interest on Deferred elects deemed sale treatment on the 1.337(d)-5 for RIC elections and
Tax Liability transferred property. Generally, if the property transfers that occurred
Include any interest on deferred tax C corporation does not make this before January 2, 2002.
attributable to certain nondealer election for tax years beginning in
installment obligations (section 2020, the RIC must pay tax on the net Built-in Gains Tax Worksheet
453A(c)) and dealer installment recognized built-in gain during the Instructions
obligations (section 453(l)). 5-year period beginning on its first day
as a RIC or the day it acquired the Complete the worksheet to figure the
Line 7—Other Taxes property. Special rules apply to built-in gains tax under Regulations
Include any of the following taxes and conversion transactions on or after section 1.337(d)-6 or 1.337(d)-7.
interest in the total on line 7. Check June 7, 2019, as well as conversion Line a. Enter the amount that would
the appropriate box(es) for the form, if transactions with a related section be the taxable income of the RIC for
any, used to compute the total. 355 distribution. See Regulations the tax year if only recognized built-in
Recapture of low-income housing section 1.337(d)-7 for details. gain, recognized built-in loss, and
credit. If the RIC disposed of recognized built-in gain carryover
property (or there was a reduction in A RIC's recognition period for
were taken into account.
the qualified basis of the property) for conversion transactions that occur on
which it took the low-income housing or after August 8, 2016, and on or Line b. Add the amounts shown on:
credit, and the RIC did not follow the before February 17, 2017, is the • Form 1120-RIC, page 1, line 24;
procedures that would have 10-year period beginning on its first • Form 1120-RIC, Part II, line 1; and
prevented recapture of the credit, it day as a RIC or the day the RIC • Form 2438, line 11.
may owe a tax. See Form 8611, acquired the property, as described in For this purpose, refigure line 24 on
Recapture of Low-Income Housing Temporary Regulations section page 1 without regard to any election
Credit, and section 42(j)(1) for more 1.337(d)-7T(b)(2)(iii), as in effect on under section 852(b)(2)(F). Enter the
information. August 8, 2016. However, under the result on line b of the Built-in Gains
provisions of final Regulations section Tax Worksheet.
Other. Additional tax and interest 1.337(d)-7(g)(2)(iii), a RIC may Line c. The RIC's net unrealized
amounts can be included in the total choose to apply a 5-year recognition built-in gain is the amount, if any, by
entered on line 7. Check the box for period to conversion transactions that which the FMV of the assets of the
“Other” if the RIC includes any of the occur on or after August 8, 2016, and RIC at the beginning of its first RIC
taxes and interest discussed below. on or before February 17, 2017. See year (or as of the date the assets were
See How To Report below for details final Regulations section 1.337(d)-7 acquired, for any asset with a basis
on reporting these amounts on an and Temporary Regulations section determined by reference to its basis
attached statement. 1.337(d)-7T for details. (or the basis of any other property) in
• Recapture of Indian employment
the hands of a C corporation) exceeds
credit. Generally, if an employer Recognized built-in gains and
the aggregate adjusted basis of such
terminates the employment of a losses generally retain their character
assets at that time.
qualified employee less than 1 year (for example, ordinary income or
after the date of initial employment, capital gain) and are treated the same Enter on line c the RIC's net
any Indian employment credit allowed as other gains or losses of the RIC. unrealized built-in gain reduced by the
for a prior tax year because of wages The RIC's tax on net recognized net recognized built-in gain for prior
paid or incurred to that employee built-in gain is treated as a loss years. See sections 1374(c)(2) and
must be recaptured. For details, see sustained by the RIC after October 31 (d)(1).
Form 8845 and section 45A. of the same tax year (see the

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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 7of 
   Schedule J (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           i.  

Line d. If the amount on line b                          Schedule J, line 7. Also, attach a                              section 1563(b)(2)), it is still 
exceeds the amount on line a, the                        statement, showing the computation                              considered a member of a controlled 
excess is treated as a recognized                        of each item included in the total for                          group for this purpose.
built-in gain in the succeeding tax                      line 7, and identify (a) the type of tax 
year.                                                    or interest, and (b) the applicable                             Question 5
                                                         Code section.                                                   Check the “Yes” box if one foreign 
Line e. Enter the section 1374(b)(2)                                                                                     person owned at least 25% of (a) the 
deduction. Generally, this is any net                    Line 8—Total Tax                                                total voting power of all classes of 
operating loss or capital loss                           Include any deferred tax on the                                 stock of the RIC entitled to vote, or (b) 
carryforward (to the extent of net                       termination of a section 1294 election                          the total value of all classes of stock of 
capital gain included in recognized                      applicable to shareholders in a                                 the RIC.
built-in gain for the tax year) arising in               qualified electing fund in the amount 
tax years for which the RIC was a C                      entered on line 8. See Form 8621 and                                The constructive ownership rules of 
corporation. A net loss carryforward                     How To Report below.                                            section 318 apply in determining if a 
must be used to reduce recognized                                                                                        RIC is foreign owned. See section 
built-in gain for the tax year to the                        Subtract from the total for line 8 the                      6038A(c)(5) and the related 
greatest extent possible before it can                   deferred tax on the RIC's share of the                          regulations.
be used to reduce the RIC's taxable                      undistributed earnings of a qualified 
income.                                                  electing fund (see Form 8621).                                      Enter on line 5b(1) the percentage 
                                                                                                                         owned by the foreign person specified 
Line h. Credit carryforwards arising                     How To Report                                                   in question 5. For line 5b(2), enter the 
in tax years for which the RIC was a C                                                                                   name of the owner's country.
corporation must be used to reduce                       Attach a statement showing the 
the tax on net built-in gain for the tax                 computation of each item included in,                           Note.       If there is more than one 
year to the greatest extent possible                     or subtracted from, the total for line 8.                       25%-or-more foreign owner, complete 
before the credit carryforwards can be                   On the dotted line next to line 8, enter                        lines 5b(1) and 5b(2) for the foreign 
used to reduce the tax on the RIC's                      the amount of tax or interest, identify it                      person with the highest percentage of 
taxable income.                                          as tax or interest, and specify the                             ownership.
Line i. The RIC's tax on the net                         Code section that applies.                                      Foreign person.       The term “foreign 
recognized built-in gain is treated as a                                                                                 person” includes:
loss sustained by the RIC after                                                                                          •   A foreign citizen or nonresident 
                                                         Schedule K—Other 
October 31 of the same tax year.                                                                                         alien,
Deduct the tax attributable to:                          Information                                                     •   An individual who is a citizen or 
• Ordinary gain as a deduction for                       The following instructions apply to                             resident of a U.S. possession (but 
taxes on Form 1120-RIC, line 12;                         questions 1 through 15. Complete all                            who is not a U.S. citizen or resident),
• Short-term capital gain as a                           items that apply.                                               •   A foreign partnership,
short-term capital loss in Part I of                     Question 3                                                      •   A foreign corporation,
Form 8949; and                                                                                                           •   Any foreign estate or trust within the 
• Long-term capital gain as a                            Check the “Yes” box if the RIC is a                             meaning of section 7701(a)(31), and
long-term capital loss in Part II of                     subsidiary in a parent-subsidiary                               •   A foreign government (or one of its 
Form 8949.                                               controlled group. This applies even if                          agencies or instrumentalities) to the 
                                                         the RIC is a subsidiary member of one                           extent that it is engaged in the 
                                                         group and the parent corporation of 
How To Report                                                                                                            conduct of a commercial activity, as 
                                                         another.                                                        described in section 892.
If the RIC checked the “Other” box,                      Note.     If the RIC is an “excluded                            Owner's country.      For individuals, 
enter the tax or interest on                             member” of a controlled group (see                              the term “owner's country” means the 

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country of residence. For all others, it more than 50% of the value of its exceptions. A taxpayer may elect out
is the country where incorporated, assets consist of stock or securities in of the limitation for certain businesses
organized, created, or administered. foreign corporations. See section otherwise subject to the business
852(g) for more information. interest expense limitation.
Requirement to file Form 5472. If
the RIC checked “Yes,” it may have to Reporting requirements. To make Certain real property trades or
file Form 5472, Information Return of a valid election under section 853 or businesses and farming businesses
a 25% Foreign Owned U.S. 852(g), in addition to timely filing Form qualify to make an election not to limit
Corporation or a Foreign Corporation 1120-RIC and checking the box for business interest expense. This is an
Engaged in a U.S. Trade or Business. Schedule K, item 10a or b, the RIC irrevocable election. If you make this
Generally, a 25% foreign-owned must file a statement of election, election, you are required to use the
corporation that had a reportable which includes the information listed alternative depreciation system to
transaction with a foreign or domestic under Regulations section 1.853-4(c). depreciate any property with a
related party during the tax year must The information must be provided on recovery period of 10 years or more.
file Form 5472. See Form 5472 for or with a Form 1118, Foreign Tax Also, you are not entitled to the
filing instructions. Credit, attached to the RIC's timely special depreciation allowance for
filed tax return. that property. For a taxpayer with
Item 8
For more information, see more than one qualifying business,
Tax-exempt interest. Show any Regulations section 1.853-4. the election is made with respect to
tax-exempt interest received or each business.
accrued. Include any exempt-interest Notification to shareholders. If
dividends received as a shareholder the RIC makes the election, it must Check "Yes" if the taxpayer has an
in a mutual fund or other RIC. furnish to its shareholders a written election in effect to exclude a real
statement reporting the shareholder's property trade or business or a
Item 10 portion of (1) foreign taxes paid by the farming business from section 163(j).
Election under section 853(a). A RIC to foreign countries and For more information, see section
RIC may make an irrevocable election possessions of the United States, and 163(j) and the Instructions for Form
under section 853(a) to allow its (2) the dividend that represents 8990.
shareholders to apply their share of income derived from: Question 14, Conditions for
the foreign taxes paid by the RIC • Sources within countries described
Filing Form 8990
either as a credit or a deduction. If the in section 901(j), and
RIC makes this election, the amount • Other foreign-source income. Generally, a RIC must file Form 8990
to claim a deduction for business
of foreign taxes it paid during the tax Item 11 interest. In addition, Form 8990 must
year may not be taken as a credit or a be filed by any RIC that owns an
deduction on Form 1120-RIC, but Election under section 853A. A
may be claimed on Form 1120-RIC, RIC can elect to pass through credits interest in a partnership with current
Schedule A, line 5, as an addition to from tax credit bonds to its year, or prior year carryover, excess
the dividends-paid deduction. shareholders. If the RIC makes the business interest expense allocated
election, include the interest income from the partnership. A RIC must also
Eligibility. To qualify to make the from the tax credit bonds on Part I, file a Form 8990 if the RIC paid
election, the RIC must meet the line 2. Also, increase the dividends section 163(j) interest dividends for
following requirements. paid deduction by the amount of the the tax year.
• More than 50% of the value of the credits distributed to shareholders. If Exclusions from filing. A RIC is not
RIC's total assets at the end of the tax the RIC makes the election, it is not required to file Form 8990 if the RIC is
year must consist of stock or allowed to take any credits related to a small business taxpayer that does
securities in foreign corporations. the qualified tax credit bonds. not have excess business interest
• The RIC must meet the holding expense from a partnership and did
For more information, see section
period requirements of section 901(k) not pay section 163(j) interest
853A.
with respect to its common and dividends for the tax year. A RIC is
preferred stock. If the RIC fails to Notification to shareholders. If also not required to file Form 8990 if
meet these holding period the RIC makes the election to apply the RIC only has business interest
requirements, the election that allows section 853A, it must furnish to its expense from these excepted trades
a RIC to pass through to its shareholders a written statement or businesses:
shareholders the foreign tax credits reporting the shareholder's • An electing real property trade or
for foreign taxes paid by the RIC is proportionate share of (1) credits from business,
disallowed. Although the foreign taxes tax credit bonds, and (2) gross • An electing farming business, or
paid may not be taken as a credit by income in respect of such credits. • Certain utility businesses.
either the RIC or the shareholder, they
are still deductible at the fund level. Question 13, Business Interest Small business taxpayer. A small
Expense Election business taxpayer is not subject to the
Election under section 852(g). In business interest expense limitation
The limitation on business interest
the case of a qualified “fund of funds” and is not required to file Form 8990.
expense applies to every taxpayer
structure, a RIC may elect to allow A small business taxpayer is a
with a trade or business, unless the
shareholders the foreign tax credit taxpayer that (a) is not a tax shelter
taxpayer meets certain specified
without regard to the requirement that (as defined in section 448(d)(3)), and

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(b) meets the gross receipts test of
section 448(c), discussed next. Schedule L—Balance Schedule M-1
Gross receipts test. For 2022, a Sheets per Books Reconciliation of Income (Loss)
taxpayer meets the gross receipts test The balance sheets should agree with per Books With Income per
if the taxpayer has average annual the RIC's books and records.
Return
gross receipts of $27 million or less Line 1. Cash. Include certificates of
for the 3 prior tax years. A taxpayer's deposit as cash on line 1. Line 5d. Travel and entertainment.
average annual gross receipts for the Include on line 5d any of the following:
3 prior tax years is determined by Line 4. Tax-exempt securities. • Entertainment expenses not
adding the gross receipts for the 3 Include on this line: deductible under section 274(a);
prior tax years and dividing the total 1. State and local government • Entertainment related meal
by 3. obligations, the interest on which is expenses;
Gross receipts include the excludible from gross income under • Non entertainment related meals
aggregate gross receipts from all section 103(a); and not deductible under section 274(n);
persons treated as a single employer, 2. Stock in another mutual fund or • Expenses for the use of an
such as a controlled group of RIC that distributed exempt-interest entertainment facility;
corporations, commonly controlled dividends during the tax year of the • The part of business gifts over $25;
partnerships, or proprietorships, and RIC. • Expenses of an individual over
$2,000, that are allocable to
affiliated service groups. See section
448(c) and the Instructions for Form Line 24. Adjustments to sharehol- conventions on cruise ships;
8990 for additional information. ders' equity. Examples of • Employee achievement awards of
adjustments to report on this line nontangible property or tangible
Question 15 include: property over $400 ($1,600 if part of a
To certify as a QOF, the RIC must file • Unrealized gains and losses on qualified plan);
Form 1120-RIC and attach Form securities held “available for sale;” • The cost of skyboxes;
8996, even if the corporation had no • Foreign currency translation • The part of luxury water travel not
income or expenses to report. If the adjustments; deductible under section 274(m);
corporation is attaching Form 8996, • The excess of additional pension • Expenses for travel as a form of
check the “Yes” box for question 15. liability over unrecognized prior education; and
On the line following the dollar sign, service cost; • Other nondeductible travel and
enter the amount from Form 8996, • Guarantees of employee stock entertainment expenses.
line 15. (ESOP) debt; and For more information, see Pub.
The penalty reported on this line • Compensation related to employee 535, Business Expenses.
from Form 8996, line 15, is not due stock award plans.
Line 7. Tax-exempt interest.
with the filing of this form. The IRS will If the total adjustment to be entered Include as interest on line 7 any
separately send to you a notice on line 24 is a negative amount, enter exempt-interest dividends received by
setting forth the due date for the the amount in parentheses. the RIC as a shareholder in a mutual
penalty payment and where that fund or other RIC.
payment should be sent.

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 November 2022 for taxpayers filing 2022 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. For instance, the
estimated average time burden for all business entities is 93 hours, with an average cost of $3,927 per return. This
average includes all associated forms and schedules, across all preparation methods and taxpayer activities.
The average burden for partnerships filing Forms 1065 and related attachments is about 85 hours and $3,900; the
average burden for corporations filing Form 1120 and associated forms is about 140 hours and $6,100; and the average

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burden for Forms 1066, 1120-REIT, 1120-RIC, 1120-S, and all related attachments is 80 hours and $3,100. 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                     4.8                  85                          3,900                                         7,900
           Small                     4.5                  75                          2,800                                         5,300
           Large*                    0.3                  245                         20,600                                        45,900
*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 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                  140                         6,100                                         15,100
           Small                     2.0                  90                          3,100                                         6,400
           Large*                    0.1                  895                         49,700                                        142,600
*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        5.4                  80                          3,100                                         6,400
           Small                     5.3                  80                          2,800                                         5,800
           Large*                    0.1                  330                         24,500                                        58,500
*A large business is defined as one having end-of-year assets greater than $10 million. A large business is defined the same way for partnerships, taxable 
corporations, and pass-through corporations. A small business is any business that doesn’t meet the definition of a large business.

Comments. If you have comments concerning the accuracy of these time estimates or suggestions for making these 
forms simpler, we would be happy to hear from you. You can send us comments through IRS.gov/FormComments. Or 
you can write to the Internal Revenue Service, Tax Forms and Publications Division, 1111 Constitution Ave. NW, 
IR-6526, Washington, DC 20224. Do not send the tax form to this office. Instead, see Where To File, earlier, near the 
beginning of the instructions.

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