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                                                                                                          Department of the Treasury
                                                                                                          Internal Revenue Service
2023

Instructions for Form 1120-L

U.S. Life Insurance Company Income Tax Return

Section references are to the Internal Revenue Code                            Future Developments
unless otherwise noted.
Contents                                                                  Page For the latest information about developments related to 
Future Developments         . . . . . . . . . . . . . . . . . . . . . . . . 1  Form 1120-L and its instructions, such as legislation 
                                                                               enacted after they were published, go to IRS.gov/
What's New    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
                                                                               Form1120L.
Photographs of Missing Children . . . . . . . . . . . . . . . .             1
The Taxpayer Advocate Service . . . . . . . . . . . . . . . . .             2
                                                                               What's New
How To Get Forms and Publications . . . . . . . . . . . . . .               2
General Instructions      . . . . . . . . . . . . . . . . . . . . . . . . . 2  Increase in penalty for failure to file. For tax returns 
Purpose of Form . . . . . . . . . . . . . . . . . . . . . . . . .           2  required to be filed in 2024, the minimum penalty for 
                                                                               failure to file a return that is more than 60 days late has 
Who Must File           . . . . . . . . . . . . . . . . . . . . . . . . . . 2  increased to the smaller of the tax due or $485. See Late 
Definitions       . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3  filing of return, later.
Electronic Filing         . . . . . . . . . . . . . . . . . . . . . . . . . 3
                                                                               Expiration of 100% business meal expense deduc-
When To File          . . . . . . . . . . . . . . . . . . . . . . . . . . . 3  tion.   The temporary 100% business meal expenses 
Where To File . . . . . . . . . . . . . . . . . . . . . . . . . . .         4  deduction for food and beverages provided by a 
Who Must Sign . . . . . . . . . . . . . . . . . . . . . . . . . .           3  restaurant does not apply to amounts paid or incurred 
Paid Preparer Authorization . . . . . . . . . . . . . . . . .               4  after 2022.
Statements          . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4  Corporate alternative minimum tax (CAMT).          For tax 
Assembling the Return               . . . . . . . . . . . . . . . . . . . . 4  years beginning after 2022, certain corporations must 
Tax Payments . . . . . . . . . . . . . . . . . . . . . . . . . . .          5  determine whether they are subject to the new CAMT and 
Interest and Penalties            . . . . . . . . . . . . . . . . . . . . . 5  calculate CAMT if applicable. See the instructions for 
                                                                               Schedule K, line 3. Also, see new Schedule M, Question 
Accounting Methods . . . . . . . . . . . . . . . . . . . . . .              6
                                                                               19.
Accounting Period             . . . . . . . . . . . . . . . . . . . . . . . 6
Rounding Off to Whole Dollars . . . . . . . . . . . . . . .                 6  Elective payment election.      Applicable entities and 
                                                                               electing taxpayers can elect to treat certain credits as 
Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . .           6
                                                                               elective payments. Any resulting overpayment may result 
Other Forms and Statements That May Be                                         in refunds. See the instructions for line 27i, later. Also, see 
      Required      . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6  the Instructions for Form 3800.
Specific Instructions     . . . . . . . . . . . . . . . . . . . . . . . . . 7
                                                                               Relief from additions to tax for underpayments appli-
Period Covered            . . . . . . . . . . . . . . . . . . . . . . . . . 7
                                                                               cable to the new corporate alternative minimum tax. 
Name and Address . . . . . . . . . . . . . . . . . . . . . . .              7  For tax year 2023, the IRS will waive the penalty for failure 
Item A. Identifying Information               . . . . . . . . . . . . . . . 7  to make estimated tax payments for taxes attributable to a 
Item B. Employer Identification Number (EIN)                        . . . . 8  CAMT liability. Affected corporations must still file the 
Item D. Section 953 Elections                 . . . . . . . . . . . . . . . 9  2023 Form 2220, even if they owe no estimated tax 
Item E. Final Return, Name Change, Address                                     penalty. However, affected corporations may exclude the 
      Change, or Amended Return . . . . . . . . . . . . . .                 9  CAMT tax liability when calculating the required annual 
                                                                               payment on Form 2220. Affected corporations must also 
Life Insurance Company Taxable Income                         . . . . . . . 9
                                                                               include an amount of estimated tax penalty on line 29 of 
Schedule A—Dividends, Inclusions,                                              Form 1120-L (or other appropriate line of the corporation's 
      Dividends-Received Deduction, and Other                                  income tax return), even if that amount is zero. Failure to 
      Special Deductions . . . . . . . . . . . . . . . . . . . .            16 follow these instructions could result in affected 
Schedule B—Investment Income . . . . . . . . . . . .                        19 corporations receiving a penalty notice that will require an 
Schedule F—Increase (Decrease) in                                              abatement request to apply the relief provided by Notice 
      Reserves (Section 807) . . . . . . . . . . . . . . . . .              19 2023-42. See Notice 2023-42, 2023-26 I.R.B. 1085, 
Schedule G—Policy Acquisition Expenses                          . . . . .   20 available at IRS.gov/irb/2023-26_IRB#NOT-2023-42. Also, 
Schedule K—Tax Computation                      . . . . . . . . . . . . .   21 see the instructions for line 29.

Schedule L        . . . . . . . . . . . . . . . . . . . . . . . . . . . .   22 Photographs of Missing Children
Schedule M—Other Information . . . . . . . . . . . . .                      23 The IRS is a proud partner with the National Center for 
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Missing & Exploited Children® (NCMEC). Photographs of 
                                                                               missing children selected by the Center may appear in 
                                                                               instructions on pages that would otherwise be blank. You 

Jan 30, 2024                                                            Cat. No. 11485H

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can help bring these children home by looking at the companies if they were U.S. corporations must file Form
photographs and calling 1-800-THE-LOST 1120-L. This includes organizations described in section
(1-800-843-5678) if you recognize a child. 501(m)(1) that provide commercial-type life insurance.

The Taxpayer Advocate Service Mutual Savings Banks Conducting Life
The Taxpayer Advocate Service (TAS) is an independent Insurance Business
organization within the IRS that helps taxpayers and Mutual savings banks conducting life insurance business
protects taxpayer rights. TAS's job is to ensure that every and meeting the requirements of section 594 are subject
taxpayer is treated fairly and knows and understands their to an alternative tax consisting of:
rights under the Taxpayer Bill of Rights. • A partial tax computed on Form 1120, U.S. Corporation
As a taxpayer, the corporation has rights that the IRS Income Tax Return, on the taxable income of the bank,
must abide by in its dealings with the corporation. TAS can excluding the life insurance department; and
help the corporation if: • A partial tax on the taxable income computed on Form
1120-L of the life insurance department.
• A problem is causing financial difficulty for the business;
• The business is facing an immediate threat of adverse Enter the combined tax on Form 1120, Schedule J,
action; or line 1. File Form 1120 and attach Form 1120-L as a
• The corporation has tried repeatedly to contact the IRS statement (and identify it as such) or attach a statement
but no one has responded, or the IRS hasn't responded showing the computation of the taxable income of the life
by the date promised. insurance department (including all relevant information
that would be reported on Form 1120-L).
The TAS toolkit at TaxpayerAdvocate.IRS.gov can help
the corporation understand these rights. Foreign Life Insurance Companies
TAS has offices in every state, the District of Columbia, A foreign life insurance company that sells a U.S. real
and Puerto Rico. Local advocates' numbers are in their property interest must file Form 1120-L and Schedule D
local directories and at TaxpayerAdvocate.IRS.gov/ (Form 1120) to report the sale. Gain or loss from the sale
Contact-Us. The corporation can also call TAS at of a U.S. real property interest is considered effectively
877-777-4778. connected with the conduct of a U.S. business, even
TAS also works to resolve large-scale or systemic though the foreign life insurance company does not carry
problems that affect many taxpayers. If the corporation on any insurance business in the United States and is not
knows of one of these broad issues, please report it to otherwise required to file a U.S. income tax return. See
TAS through the Systemic Advocacy Management sections 842 and 897; and the instructions for Schedule K
System at IRS.gov/SAMS. line 8, later.
For more information, go to Foreign-owned domestic disregarded entities. If a
IRS.gov/Advocate. foreign person, including a foreign corporation, wholly
owns a domestic disregarded entity (DE), the domestic
How To Get Forms and Publications DE is treated as a domestic corporation separate from its
owner (the foreign corporation) for purposes of the
Internet. You can access the IRS website 24 hours a day,
reporting requirements under section 6038A that apply to
7 days a week, at IRS.gov to:
25% foreign-owned domestic corporations. These rules
• Download forms, instructions, and publications;
apply to a domestic DE owned by a foreign insurance
• Order IRS products online;
company that makes an election under section 953(c)(3)
• Research your tax questions online;
(C) but do not apply to a domestic DE owned by a foreign
• Search publications online by topic or keyword;
insurance company that makes an election under section
• View Internal Revenue Bulletins (IRBs) published in
953(d) (for information on these elections, see the
recent years; and
instructions for item D). If a foreign insurance company
• Sign up to receive local and national tax news by email.
electing under section 953(c)(3)(C) wholly owns a
Tax forms and publications. The corporation can view, domestic DE, the DE may be required to file Form 5472,
download, or print all of the forms and publications it may Information Return of a 25% Foreign-Owned U.S.
need on IRS.gov/FormsPubs. Otherwise, the corporation Corporation or a Foreign Corporation Engaged in a U.S.
can go to IRS.gov/OrderForms to place an order and have Trade or Business. For additional information and
forms mailed to it. coordination with Form 5472 filing by the domestic DE,
see the Instructions for Form 5472.

General Instructions Note. A domestic DE is generally a transparent entity.
Any insurance company that must file Form 1120-L will
Purpose of Form include on Form 1120-L any tax items of a wholly owned
Use Form 1120-L to report the income, gains, losses, domestic DE that are subject to reporting.
deductions, credits, and to figure the income tax liability of
life insurance companies. Qualified opportunity investment. If the corporation
held a qualified investment in a qualified opportunity fund
Who Must File (QOF) at any time during the year, the corporation must
Every domestic life insurance company and certain file its return with Form 8997, Initial and Annual Statement
foreign corporations that would qualify as life insurance

2 Instructions Form 1120-L (2023)

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of Qualified Opportunity Fund (QOF) Investments,              When To File
attached. See the Instructions for Form 8997.
                                                              Generally, a corporation must file its income tax return by 
Other Insurance Companies                                     the 15th day of the 4th month after the end of its tax year. 
                                                              A new corporation filing a short-period return must 
Insurance companies, other than life insurance 
                                                              generally file by the 15th day of the 4th month after the 
companies, should file Form 1120-PC, U.S. Property and 
                                                              short period ends. A corporation that has dissolved must 
Casualty Insurance Company Income Tax Return. A burial 
                                                              generally file by the 15th day of the 4th month after the 
or funeral benefit insurance company that directly 
                                                              date it dissolved.
manufactures funeral supplies or performs funeral 
services is taxable under section 831 and should file Form      However, a corporation with a fiscal tax year ending 
1120-PC.                                                      June 30 must file by the 15th day of the 3rd month after 
                                                              the end of its tax year. A corporation with a short tax year 
Definitions
                                                              ending any time in June will be treated as if the short year 
An “insurance company” means any corporation if more          ended on June 30, and must file by the 15th day of the 3rd 
than half of its business during the tax year is from the     month after the end of its tax year.
issuance of insurance or annuity contracts or the 
reinsuring of risks underwritten by insurance companies.        If the due date falls on a Saturday, Sunday, or legal 
                                                              holiday, the corporation can file on the next business day.
A “life insurance company” is an insurance company in 
the business of issuing life insurance and annuity            Private Delivery Services
contracts either separately or combined with health and       Corporations can use certain private delivery services 
accident insurance, or noncancelable contracts of health      (PDSs) designated by the IRS to meet the “timely mailing 
and accident insurance that meet the reserves test in         as timely filing” rule for tax returns. Go to IRS.gov/PDS for 
section 816(a). Guaranteed renewable life, health, and        the current list of designated services.
accident insurance that the corporation cannot cancel but 
reserves the right to adjust premium rates by classes,          The PDS can tell you how to get written proof of the 
according to experience under the kind of policy involved,    mailing date.
are treated as noncancelable.
                                                                For the IRS mailing address to use if you're using a 
The “reserves test” requires that life insurance              PDS, go to IRS.gov/PDSStreetAddresses.
reserves, as defined in section 816(b), plus unearned                 PDSs cannot deliver items to P.O. boxes. You 
premiums and unpaid losses (whether or not ascertained)         !     must use the U.S. Postal Service to mail any item 
on noncancelable life, health, or accident policies not       CAUTION to an IRS P.O. box address.
included in life insurance reserves must make up more 
than 50% of total reserves as defined in section 816(c). 
When determining whether the reserves test has been           Extension of Time To File
met:                                                          File Form 7004, Application for Automatic Extension of 
1. Life insurance reserves and total reserves must            Time To File Certain Business Income Tax, Information, 
each be reduced by an amount equal to the mean of the         and Other Returns, to request an extension of time to file. 
aggregates, at the beginning and end of the tax year, of      Generally, file Form 7004 by the regular due date of the 
the policy loans outstanding with respect to contracts for    return. See the Instructions for Form 7004.

which life insurance reserves are maintained;                 Who Must Sign
2. Amounts set aside and held at interest to satisfy          The return must be signed and dated by:
obligations under contracts that do not contain permanent     • The president, vice-president, treasurer, assistant 
guarantees with respect to life, accident, or health          treasurer, chief accounting officer; or
contingencies must not be included in either life insurance   • Any other corporate officer (such as tax officer) 
reserves (section 816(c)(1)) or other reserves required by    authorized to sign.
law (section 816(c)(3)); and
3. Deficiency reserves must not be included in either           If a return is filed on behalf of a corporation by a 
life insurance reserves or total reserves.                    receiver, trustee, or assignee, the fiduciary must sign the 
                                                              return, instead of the corporate officer. Returns and forms 
Electronic Filing                                             signed by a receiver or trustee in bankruptcy on behalf of 
Corporations can generally electronically file (e-file) Form  a corporation must be accompanied by a copy of the order 
7004 (automatic extension of time to file) and Forms 940,     or instructions of the court authorizing signing of the return 
941, and 944 (employment tax returns). If there is a          or form.
balance due, the corporation can authorize an electronic      Paid Preparer Use Only section.     If an employee of the 
funds withdrawal while e-filing. Form 1099 and other          corporation completes Form 1120-L, the paid preparer 
information returns can also be electronically filed. The     section should remain blank. Anyone who prepares Form 
option to e-file does not, however, apply to certain returns. 1120-L but does not charge the corporation should not 
                                                              complete that section. Generally, anyone who is paid to 
For more information, go to IRS.gov/Filing. Click on the      prepare the return must sign it and complete the section.
links for “Businesses & Self-Employed” and 
                                                                The paid preparer must complete the required preparer 
“Corporations.”
                                                              information and:

Instructions Form 1120-L (2023)                                                                                           3

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

If the corporation's principal business, office, or agency is located in:  Use the following address:
                                                                           Department of the Treasury 
The United States                                                          Internal Revenue Service Center
                                                                           Ogden, UT 84201-0012
                                                                           Internal Revenue Service Center
A foreign country or U.S. territory                                        P.O. Box 409101
                                                                           Ogden, UT 84409

• Sign the return in the space provided for the preparer's                statement was used as the basis for computing taxable 
signature,                                                                income, attach that annual statement to Form 1120-L. 
• Include their Preparer Tax Identification Number (PTIN),                However, see Electronic filing next.
and                                                                       Electronic filing. If a domestic or foreign life insurance 
• Give a copy of the return to the taxpayer.                              company files Form 1120-L electronically, don’t attach the 
                                                                          annual statement or pro forma annual statement to the 
Note. A paid preparer may sign original or amended                        electronically filed return. However, if the full annual 
returns by rubber stamp, mechanical device, or computer                   statement is not attached, you must provide a copy of the 
software program.                                                         annual statement or pro forma annual statement to the 
                                                                          IRS if requested and retain it with your other tax records 
Paid Preparer Authorization
                                                                          for the period required by the regulations.
If the corporation wants to allow the IRS to discuss its                  Reconciliation. Corporations that do not file 
2023 tax return with the paid preparer who signed it,                     Schedule M-3 (Form 1120-L) with Form 1120-L must 
check the “Yes” box in the signature area of the return.                  attach a statement that reconciles Form 1120-L with the 
This authorization applies only to the individual whose                   annual statement used as the basis for computing taxable 
signature appears in the “Paid Preparer Use Only” section                 income reported on Form 1120-L. Also, see the Note 
of the return. It doesn’t apply to the firm, if any, shown in             under the instructions for Schedule F, later, for additional 
that section.                                                             required reconciliations.
  If the “Yes” box is checked, the corporation is 
                                                                          Assembling the Return
authorizing the IRS to call the paid preparer to answer any 
questions that may arise during the processing of its                     To ensure that the corporation's tax return is correctly 
return. The corporation is also authorizing the paid                      processed, attach all schedules and other forms after 
preparer to:                                                              page 5 of Form 1120-L in the following order.
• Give the IRS any information that is missing from the                   1. Schedule N (Form 1120).
return;                                                                   2. Form 4626.
• Call the IRS for information about the processing of the 
                                                                          3. Form 4136.
return or the status of any related refund or payment(s); 
and                                                                       4. Form 8978.
• Respond to certain IRS notices about math errors,                       5. Form 965-B.
offsets, and return preparation.                                          6. Form 8941.
  The corporation is not authorizing the paid preparer to                 7. Form 3800.
receive any refund check, bind the corporation to anything                8. Additional schedules in alphabetical order.
(including any additional tax liability), or otherwise                    9. Additional forms in numerical order.
represent the corporation before the IRS.
                                                                          10. Supporting statements and attachments.
  The authorization will automatically end no later than 
                                                                          Complete every applicable entry space on Form 
the due date (excluding extensions) for filing the 
                                                                          1120-L. Do not enter “See Attached” or “Available Upon 
corporation's 2024 tax return. If the corporation wants to 
                                                                          Request” instead of completing the entry spaces. If more 
expand the paid preparer's authorization or revoke the 
                                                                          space is needed on the forms or schedules, attach 
authorization before it ends, see Pub. 947, Practice Before 
                                                                          separate sheets using the same size and format as on the 
the IRS and Power of Attorney.
                                                                          printed forms. If there are supporting statements and 
Statements                                                                attachments, arrange them in the same order as the 
                                                                          schedules or forms they support and attach them last. 
Annual statement. In general, every domestic or foreign                   Show the totals on the printed forms. Enter the 
life insurance company must attach a copy of the National                 corporation's name and employer identification number 
Association of Insurance Commissioners (NAIC) annual                      (EIN) on each supporting statement or attachment.
statement filed with the state of domicile and used as the 
basis for computing taxable income. If a different annual 

4                                                                                                  Instructions Form 1120-L (2023)

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Tax Payments less than originally estimated, it may have to refigure its
required installments. If earlier installments were
Generally, the corporation must pay any tax due in full no underpaid, the corporation may owe a penalty. See
later than the due date for filing its tax return (not including Estimated tax penalty below.
extensions). See the instructions for line 30. If the due If the corporation overpaid estimated tax, it may be able
•
date falls on a Saturday, Sunday, or legal holiday, the to get a quick refund by filing Form 4466, Corporation
payment is due on the next day that isn't a Saturday, Application for Quick Refund of Overpayment of
Sunday, or legal holiday. Estimated Tax. See the instructions for line 27c, later.
Electronic Deposit Requirement See section 6655 and Pub. 542, Corporations, for more
Corporations must use electronic funds transfers to make information on how to figure estimated taxes.
all federal tax deposits (such as deposits of employment, Estimated tax penalty. A corporation that does not
excise, and corporate income tax). Generally, electronic make estimated tax payments when due may be subject
funds transfers are made using the Electronic Federal Tax to an underpayment penalty for the period of
Payment System (EFTPS). underpayment. Generally, a corporation is subject to the
penalty if its tax liability is $500 or more and it did not
If the corporation does not want to use EFTPS, it can
timely pay at least the smaller of:
arrange for its tax professional, financial institution, payroll
• Its tax liability for the current year, or
service, or other trusted third party to make deposits on its
• Its prior year's tax.
behalf. Also, it can arrange for its financial institution to
submit a same-day wire payment (discussed later) on its See section 6655 for details and exceptions, including
behalf. EFTPS is a free service provided by the special rules for large corporations.
Department of the Treasury. Services provided by a tax Use Form 2220, Underpayment of Estimated Tax by
professional, financial institution, payroll service, or other Corporations, to see if the corporation owes a penalty and
third party may have a fee. to figure the amount of the penalty. If Form 2220 is
completed, enter the penalty on line 29. See the
To get more information about EFTPS or to enroll in instructions for line 29. Also, see Relief from additions to
EFTPS, visit EFTPS.gov or call 800-555-4477. To contact tax for underpayments applicable to the new corporate
EFTPS using Telecommunications Relay Services (TRS) alternative minimum tax, earlier.
for people who are deaf, hard of hearing, or have a speech
disability, dial 711 and provide the TRS assistant the Interest and Penalties
800-555-4477 number above or 800-733-4829.
If the corporation receives a notice about penalties
Depositing on time. To make your EFTPS deposits on ! after it files its return, send the IRS an explanation
time, the corporation must submit the transaction by 8 CAUTION and we will determine if the corporation meets
p.m. Eastern time the day before the date the deposit is reasonable-cause criteria. Do not attach an explanation
due. If the corporation uses a third party to make deposits when the corporation's return is filed.
on its behalf, they may have different cutoff times.
Same-day wire payment option. If the corporation fails Interest. Interest is charged on taxes paid late even if an
to submit a deposit transaction on EFTPS by 8 p.m. extension of time to file is granted. Interest is also charged
Eastern time the day before the date a deposit is due, it on penalties imposed for failure to file, negligence, fraud,
can still make the deposit on time by using the Federal Tax substantial valuation misstatements, substantial
Collection Service (FTCS). To use the same-day wire understatements of tax, and reportable transaction
payment method, the corporation will need to make understatements from the due date (including extensions)
arrangements with its financial institution ahead of time to the date of payment. The interest charge is figured at a
regarding availability, deadlines, and costs. Financial rate determined under section 6621.
institutions may charge a fee for payments made this way. Late filing of return. A corporation that does not file its
To learn more about making a same-day wire payment, go tax return by the due date, including extensions, may be
to IRS.gov/SameDayWire. penalized 5% of the unpaid tax for each month or part of a
month the return is late, up to a maximum of 25% of the
Estimated Tax Payments unpaid tax. The minimum penalty for a tax return required
to be filed in 2024 that is over 60 days late is the smaller of
Generally, the following rules apply to the corporation's the tax due or $485 (adjusted for inflation). The penalty
payments of estimated tax. will not be imposed if the corporation can show that the
• The corporation must make installment payments of failure to file on time was due to reasonable cause. See
estimated tax if it expects its total tax for the year (less Caution, earlier.
applicable credits) to be $500 or more.
Late payment of tax. A corporation that does not pay
• The installments are due by the 15th day of the 4th, 6th, 1 2
the tax when due may generally be penalized / of 1% of
9th, and 12th months of the tax year. If any date falls on a
the unpaid tax for each month or part of a month the tax is
Saturday, Sunday, or legal holiday, the installment is due
not paid, up to a maximum of 25% of the unpaid tax. See
on the next regular business day.
Caution, earlier.
• The corporation must use electronic funds transfers to
make installment payments of estimated tax. Trust fund recovery penalty. This penalty may apply if
• If, after the corporation figures and deposits estimated certain excise, income, social security, and Medicare
tax, it finds that its tax liability for the year will be more or taxes that must be collected or withheld are not collected

Instructions Form 1120-L (2023) 5

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or withheld, or these taxes are not paid. These taxes are Rounding Off to Whole Dollars
generally reported on:
• Form 720, Quarterly Federal Excise Tax Return; The corporation may enter decimal points and cents when
• Form 941, Employer's QUARTERLY Federal Tax completing its return. However, the corporation should
Return; round off cents to whole dollars on its return, forms, and
• Form 944, Employer's ANNUAL Federal Tax Return; or schedules to make completing its return easier. The
• Form 945, Annual Return of Withheld Federal Income corporation must either round off all amounts on its return
Tax. to whole dollars, or use cents for all amounts. To round,
drop amounts under 50 cents and increase amounts from
The trust fund recovery penalty may be imposed on all 50 to 99 cents to the next dollar. For example, $8.40
persons who are determined by the IRS to be responsible rounds to $8 and $8.50 rounds to $9.
for collecting, accounting for, or paying over these taxes,
and who acted willfully in not doing so. The penalty is If two or more amounts must be added to figure the
equal to the full amount of the unpaid trust fund tax. See amount to enter on a line, include cents when adding the
the Instructions for Form 720; and Pub. 15 (Circular E), amounts and round off only the total.
Employer's Tax Guide, for details, including the definition
of responsible persons. Recordkeeping
Keep the corporation's records for as long as they may be
Note. The trust fund recovery penalty will not apply to any needed for the administration of any provision of the
amount of trust fund taxes an employer holds back in Internal Revenue Code. Usually, records that support an
anticipation of the credit for qualified sick and family leave item of income, deduction, or credit on the return must be
wages or the employee retention credit that they are kept for 3 years from the date the return is due or filed,
entitled to. See Pub. 15 for more information. whichever is later. Keep records that verify the
Other penalties. Other penalties can be imposed for corporation's basis in property for as long as they are
negligence, substantial understatement of tax, reportable needed to figure the basis of the original or replacement
transaction understatements, and fraud. See sections property.
6662, 6662A, and 6663.
The corporation should keep copies of all filed returns.
Accounting Methods They help in preparing future and amended returns and in
The return of a life insurance company must be filed using the calculation of earnings and profits.

the accrual method of accounting or, to the extent Other Forms and Statements That
permitted under regulations, a combination of the accrual
method with any other method, except the cash receipts May Be Required
and disbursements method. In all cases, the method used Reportable transaction disclosure statement.
must clearly show life insurance company taxable income Disclose information for each reportable transaction in
(LICTI). which the corporation participated. Form 8886,
Change in accounting method. Generally, the Reportable Transaction Disclosure Statement, must be
corporation must get IRS consent to change either an filed for each tax year that the federal income tax liability
overall method of accounting or the accounting treatment of the corporation is affected by its participation in the
of any material item for income tax purposes. To obtain transaction. The following are reportable transactions.
consent, the corporation must generally file Form 3115, 1. Any listed transaction, which is a transaction that is
Application for Change in Accounting Method, during the the same as or substantially similar to one of the types of
tax year for which the change is requested. See the transactions that the IRS has determined to be a tax
Instructions for Form 3115 and Pub. 538 for more avoidance transaction and identified by notice, regulation,
information and exceptions. Also, see the Instructions for or other published guidance as a listed transaction.
Form 3115 for procedures that may apply for obtaining
2. Any transaction offered under conditions of
automatic consent to change certain methods of
confidentiality for which the corporation (or a related party)
accounting, non-automatic change procedures, and
paid an advisor a fee of at least $250,000.
reduced Form 3115 filing requirements.
3. Certain transactions for which the corporation (or a
Accounting Period related party) has contractual protection against
An insurance company must figure its taxable income on disallowance of the tax benefits.
the basis of a tax year. A tax year is the annual accounting 4. Certain transactions resulting in a loss of at least
period an insurance company uses to keep its records $10 million in any single year or $20 million in any
and report its income and expenses. combination of years.
As a general rule under section 843, the tax year for 5. Any transaction identified by the IRS by notice,
every insurance company is the calendar year. However, if regulation, or other published guidance as a “transaction
an insurance company joins in the filing of a consolidated of interest.”
return, it may adopt the tax year of the common parent For more information, see Regulations section
corporation even if that year is not a calendar year. 1.6011-4. Also see the Instructions for Form 8886.
Penalties. The corporation may have to pay a penalty if
it is required to disclose a reportable transaction under
section 6011 and fails to properly complete and file Form

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8886. Penalties also apply under section 6707A if the be filed in accordance with Regulations section 1.362-4(d)
corporation fails to file Form 8886 with its corporate return, (3).
fails to provide a copy of Form 8886 to the Office of Tax
Form 8975, Country-by-Country Report. Certain U.S.
Shelter Analysis (OTSA), or files a form that fails to include
persons that are the ultimate parent entity of a U.S.
all the information required (or includes incorrect
multinational enterprise group with annual revenue for the
information). Other penalties, such as an accuracy-related
preceding reporting period of $850 million or more are
penalty under section 6662A, also apply. See the
required to file Form 8975. Form 8975 and Schedule A
Instructions for Form 8886 for details on these and other
(Form 8975) must be filed with the income tax return of the
penalties.
ultimate parent entity of a U.S. multinational enterprise
Reportable transactions by material advisors. group for the tax year in or within which the reporting
Material advisors to any reportable transaction must period covered by Form 8975 ends. For more information,
disclose certain information about the reportable see Form 8975, Schedule A (Form 8975), and the
transaction by filing Form 8918, Material Advisor Instructions for Form 8975 and Schedule A (Form 8975).
Disclosure Statement, with the IRS. See the Instructions
Additional forms and statements. See Pub. 542,
for Form 8918.
Corporations, for a list of other forms and statements a
Transfers to a corporation controlled by the transfer- corporation may need to file in addition to the forms and
or. Every significant transferor (as defined in Regulations statements discussed throughout these instructions.
section 1.351-3(d)(1)) that receives stock of a corporation
in exchange for property in a nonrecognition event must
include the statement required by Regulations section Specific Instructions
1.351-3(a) on or with the transferor's tax return for the tax
year of the exchange. The transferee corporation must Period Covered
include the statement required by Regulations section Section 843 requires all insurance companies to file on a
1.351-3(b) on or with its return for the tax year of the calendar year basis, unless they join in the filing of a
exchange, unless all the required information is included consolidated return. If a consolidated return is filed,
in any statement(s) provided by a significant transferor indicate the period covered on the parent corporation's
that is attached to the same return for the same section return.
351 exchange. If the transferor or transferee corporation is
Name and Address
a controlled foreign corporation (CFC), each U.S.
shareholder (within the meaning of section 951(b)) must Enter the corporation's true name (as set forth in the
include the required statement on or with its return. charter or other legal document creating it), address, and
EIN on the appropriate lines. Enter the address of the
Distributions under section 355. Every corporation that corporation's principal office or place of business. Include
makes a distribution of stock or securities of a controlled the suite, room, or other unit number after the street
corporation, as described in section 355 (or so much of address. If the post office does not deliver mail to the
section 356 as it relates to section 355), must include the street address and the corporation has a P.O. box, show
statement required by Regulations section 1.355-5(a) on the box number instead.
or with its return for the year of the distribution. A
significant distributee (as defined in Regulations section Note. Do not use the address of the registered agent for
1.355-5(c)) that receives stock or securities of a controlled the state in which the corporation is incorporated. For
corporation must include the statement required by example, if a business is incorporated in Delaware or
Regulations section 1.355-5(b) on or with its return for the Nevada and the corporation's principal office is located in
year of receipt. If the distributing or distributee corporation Little Rock, Arkansas, the corporation should enter the
is a CFC, each U.S. shareholder (within the meaning of Little Rock address.
section 951(b)) must include the statement on or with its
return. If the corporation receives its mail in care of a third
party (such as an accountant or an attorney), enter on the
Dual consolidated losses. If a domestic corporation street address line “C/O” followed by the third party's
incurs a dual consolidated loss (as defined in Regulations name and street address or P.O. box.
section 1.1503-2(c)(5)), the corporation (or consolidated
group) may need to attach an elective relief agreement If the corporation has a foreign address, include the city
and/or an annual certification as provided in Regulations or town, state or province, country, and foreign postal
section 1.1503-2(g)(2). code. Do not abbreviate the country name. Follow the
Election to reduce basis under section 362(e)(2)(C). country's practice for entering the name of the state or
If property is transferred to a corporation subject to section province and postal code.
362(e)(2), the transferor and the transferee corporation
Item A. Identifying Information
may elect, under section 362(e)(2)(C), to reduce the
transferor's basis in the stock received instead of reducing Consolidated Return
the transferee corporation's basis in the property
transferred. Once made, the election is irrevocable. For If an affiliated group of corporations includes one or more
more information, see section 362(e)(2) and Regulations domestic life insurance companies taxed under section
section 1.362-4. If an election is made, a statement must 801, the common parent may elect to treat those life
insurance companies as includible corporations. The life
insurance companies must have been members of the

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group for the 5 tax years immediately preceding the tax requirement is satisfied by checking box 2 of item A on
year for which the election is made. See section 1504(c) page 1.
(2) and Regulations section 1.1502-47(b)(12). • Show any setoffs required by paragraphs (e), (h), and
(j) of Regulations section 1.1502-47.
Note. The eligibility requirements (the tacking rule) for a • Report separately the nonlife consolidated taxable
life insurance company to join in the filing of a income or loss, determined under Regulations section
consolidated return with nonlife companies are covered in 1.1502-47(f), on a Form 1120 or 1120-PC (whether filed
Regulations section 1.1502-47(b)(12)(v). by the common parent or as an attachment to the
consolidated return), for all nonlife members of the
Note. If an election under section 1504(c)(2) is in effect consolidated group.
for an affiliated group for the tax year, all items of Report separately the consolidated LICTI (as defined by
•
members of the group that are not life insurance Regulations section 1.1502-47(g)(1)), determined under
companies must not be taken into account in figuring the Regulations section 1.1502-11, on a Form 1120-L
tentative LICTI of members that are life insurance (whether filed by the common parent or as an attachment
companies. to the consolidated return), for all life members of the
Corporations filing a consolidated return must check consolidated group.
box 1 of item A and attach Form 851, Affiliations
Schedule, and other supporting statements to the return. Note. If a nonlife insurance company is a member of an
Also, for the first year a subsidiary corporation is being affiliated group, file Form 1120-PC as an attachment to the
included in a consolidated return, attach Form 1122, consolidated return in addition to the supporting
Authorization and Consent of Subsidiary Corporation To statements discussed earlier under Consolidated Return.
Be Included in a Consolidated Income Tax Return, to the Across the top of page 1 of Form 1120-PC, write
parent's consolidated return. Attach a separate Form 1122 “Supporting Statement to Consolidated Returns.”

for each new subsidiary being included in the Schedule M-3 (Form 1120-L)
consolidated return.
A life insurance company with total assets
File supporting statements for each corporation (non-consolidated or consolidated for all companies
included in the consolidated return. Do not use Form included within a tax consolidation group) of $10 million or
1120-L as a substitute for the supporting statement. On more on the last day of the tax year must file
the supporting statement, use columns to show the Schedule M-3 (Form 1120-L), Net Income (Loss)
following, both before and after adjustments. Reconciliation for U.S. Life Insurance Companies With
1. Items of gross income and deductions. Total Assets of $10 Million or More. A corporation filing
Form 1120-L that is not required to file Schedule M-3 may
2. A computation of taxable income.
voluntarily file Schedule M-3.
3. Balance sheets as of the beginning and end of the
tax year. If you are filing Schedule M-3 (Form 1120-L), check
box 3, of item A, “Schedule M-3 (Form 1120-L) attached”
4. A reconciliation of income per books with income at the top of page 1 of Form 1120-L. See the Instructions
per return. for Schedule M-3 (Form 1120-L) for more details.
5. A reconciliation of retained earnings.
Note. If you do not file Schedule M-3 (Form 1120-L) with
Enter on Form 1120-L the totals for each item of Form 1120-L, see Reconciliation under Statements,
income, gain, loss, expense, or deduction, net of earlier.
eliminating entries for intercompany transactions between
corporations within the consolidated group. Attach Item B. Employer Identification
consolidated balance sheets and a reconciliation of
consolidated retained earnings. Number (EIN)
Enter the corporation's EIN. If the corporation does not
For more information on consolidated returns, see the have an EIN, it must apply for one. An EIN can be applied
regulations under section 1502. for in one of the following ways.
• Online—Click on the Employer ID Numbers link at
Life-Nonlife Consolidated Return IRS.gov/EIN. The EIN is issued immediately once the
If the corporation is the common parent of a life-nonlife application information is validated.
consolidated group, check boxes 1 and 2 of item A. • By faxing or mailing Form SS-4, Application for
Filing requirements. The common parent of a Employer Identification Number.
life-nonlife consolidated group must satisfy the following Corporations located in the United States or U.S.
filing requirements. ! territories can use the online application. Foreign
• File the applicable consolidated corporate income tax CAUTION corporations should call 1-267-941-1099 (not a
return: a Form 1120-L, where the common parent is a life toll-free number) for more information on obtaining an EIN.
insurance company; a Form 1120-PC, where the common See the Instructions for Form SS-4.
parent is an insurance company, other than a life
insurance company; or a Form 1120, where the common EIN applied for, but not received. If the corporation has
parent is any other type of corporation. not received its EIN by the time the return is due, enter
• Indicate clearly on the face of the return that the “Applied For” and the date the corporation applied in the
corporate tax return is a life-nonlife return. This space for the EIN. However, if the corporation is filing its

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return electronically, an EIN is required at the time the
return is filed. An exception applies to subsidiaries of Life Insurance Company Taxable
corporations whose returns are filed with the parent's
electronically filed consolidated Form 1120. These Income
subsidiaries should enter “Applied For” in the space for the
Income
EIN on their returns. The subsidiaries' returns are
identified under the parent corporation's EIN. Except as otherwise provided in the Internal Revenue
Code, gross income includes all income from whatever
For more information, see the Instructions for Form source derived.
SS-4.
Line 1. Enter gross premiums and other consideration
Item D. Section 953 Elections received on insurance and annuity contracts less return
Check the appropriate box if the corporation is a foreign premiums and premiums and other consideration paid for
corporation and elects under: indemnity reinsurance.
1. Section 953(c)(3)(C) to treat its related person Gross premiums and other consideration includes
insurance income as effectively connected with the advance premiums, deposits, fees, assessments,
conduct of a trade or business in the United States, or consideration received for assuming liabilities under
contracts not issued by the corporation, and any amount
2. Section 953(d) to be treated as a domestic treated as premiums received under section 808(e).
corporation.
Return premiums include amounts rebated or refunded
Generally, a foreign corporation making either election due to policy cancellations or incorrectly computed
must file its return by sending it to: premiums, but do not include amounts returned to
policyholders when such amounts are not fixed in the
Internal Revenue Service Center contract but instead depend on the corporation's
P.O. Box 409101 experience or the management's discretion.
Ogden, UT 84409
Line 3a. Decrease in reserves under section 807(f). If
See Notice 87-50, 1987-2 C.B. 357; and Rev. Proc. the amount of any item referred to in section 807(c)
2003-47, 2003-28 I.R.B. 55, for the procedural rules, decreased as a result of a change in the basis used to
election statement formats, and filing addresses for determine that item, then enter the section 807(f)
making the respective elections under section 953(c)(3) prescribed portion of the change that must be included in
(C) or section 953(d). life insurance company gross income (LICGI).

Note. Once either election is made, it will apply to the tax Note. If a corporation no longer qualifies as a life
year for which it was made and all subsequent tax years insurance company, the balance of any adjustments under
unless revoked with the consent of the IRS. Also, any loss section 807(f) must be taken into account in the last tax
of a foreign corporation electing to be treated as a year the corporation is qualified to file Form 1120-L. See
domestic insurance company under section 953(d) will be section 807(f)(2).
treated as a dual-consolidated loss and may not be used Line 3b. Income from Reserve Transition Relief. If
to reduce the taxable income of any other member of the section 807(d) (as amended by P.L. 115-97) decreased
affiliated group for the tax year or any other tax year. the amount of the reserve for any contract as of the close
of the tax year preceding the first tax year beginning after
Note. If a section 953(d) election is made, include the 2017, enter the portion of the change that must be
additional tax required to be paid on line 11 of included in LICGI as prescribed by section 13517(c)(3) of
Schedule K. On the dotted line to the left of line 11 of P.L. 115-97. See Rev. Proc. 2019-34, 2019-35 I.R.B. 669,
Schedule K, write “Section 953(d)” and the amount. for more information.
Attach a statement showing the computation. See section
953(d) for more details. Line 4. Investment income. Enter the amount from
Schedule B, line 6, less 50% of interest income of an
Item E. Final Return, Name Change, employee stock ownership plan (ESOP) loan made prior
to August 20, 1996. Also, see section 1602 of P.L.
Address Change, or Amended Return
104-188 for binding contracts and refinancing rules.
Indicate if this is a final return, name change, address
change, or amended return by checking the appropriate Line 5. Capital gain net income. Unless specifically
box. excluded by section 1221, each asset held by a
corporation (whether or not connected with its business) is
Note. If a change of address or responsible party occurs a "capital asset."
after the return is filed, use Form 8822-B, Change of Under section 1221, capital asset does not include the
Address or Responsible Party—Business, to notify the following.
IRS of the new address.
1. Assets that can be inventoried or property held
mainly for sale to customers.
2. Depreciable or real property used in the trade or
business.

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3. Certain copyrights; or literary, musical, or artistic meaning of section 367(a)(3)(C), as in effect before its
compositions. repeal) to a foreign corporation with respect to which you
4. Accounts or notes receivable acquired in the were a U.S. shareholder immediately after the transfer as
ordinary course of trade or business for services rendered other income. Under section 91(d), transferred loss
or from the sale of property described in (1) above. amounts recognized are treated as derived from sources
within the United States.
5. Certain publications of the U.S. Government.
• Part or all of the proceeds received from certain
Section 818(b) modifies the above definition so only corporate-owned life insurance contracts issued after
property used in carrying on an insurance business will be August 17, 2006. Corporations that own one or more
considered as “depreciable or real property used in the employer-owned life insurance contracts issued after
corporation's trade or business.” For life insurance August 17, 2006, must file Form 8925, Report of
companies, gains or losses from the sale or exchange of Employer-Owned Life Insurance Contracts. See Form
depreciable assets of any business other than an 8925.
insurance business will be treated as gains or losses from • Income from cancellation of debt (COD) for the
the sale or exchange of capital assets. repurchase of a debt instrument for less than its adjusted
See section 818(c) and the related regulations for how issue price.
to limit the gain from the sale or exchange of any section • The corporation's share of the following income from
818(c) property. Form 8621, Information Return by a Shareholder of a
Passive Foreign Investment Company or Qualified
Note. Form 8949, Sales and Other Dispositions of Capital Electing Fund.
Assets, must be attached to Schedule D (Form 1120), as See Form 8621 and the Instructions for Form 8621 for
required. details.
Line 7. Other income. Enter any other taxable income, 1. Ordinary earnings of a qualified electing fund
includible in LICGI, not reported on lines 1 through 6. List (QEF).
the type and amount of income on an attached statement. 2. Gain or loss from marking passive foreign
If the life insurance company has only one item of other investment company (PFIC) stock to market.
income, describe it in parentheses on line 7. The following
3. Gain or loss from sale or other disposition of section
are examples of other income to report on line 7.
1296 stock.
• Gains and losses (including ordinary gains and losses)
from sales or exchanges of assets used in a trade or 4. Excess distributions from a section 1291 fund
business and from involuntary conversions reported on allocated to the current year and pre-PFIC years, if any.
Form 4797, Sales of Business Property. Section 818(b)(1) • Any amount of payroll tax credit taken by an employer
provides that, for section 1231(a), “property used in a on its 2023 employment tax returns (Forms 941, 943, and
trade or business” includes only the following. 944) for qualified paid sick leave and qualified paid family
leave under the FFCRA and the ARP (both the
1. Property used in carrying on an insurance business
nonrefundable and refundable portions). The corporation
that is either real or depreciable property held for more
must include the full amount of the credit for qualified sick
than 1 year.
and family leave wages in gross income for the tax year
2. Timber, coal, and domestic iron ore to which section that includes the last day of any calendar quarter in which
631 applies. the credit is allowed.
For (1) above, property used in a trade or business
Note. A credit is available only if the leave was taken after
does not include property includible in inventory; property
March 31, 2020, and before October 1, 2021, and only
held primarily for sale to customers; or certain copyrights,
after the qualified leave wages were paid, which might
literary, musical, or artistic compositions, letters,
under certain circumstances not occur until a quarter after
memoranda, and similar property.
September 30, 2021, including quarters in 2023.
• Any amount includible in income from Form 6478,
Biofuel Producer Credit, if applicable. Deductions
• Any amount includible in income from Form 8864,
Biodiesel, Renewable Diesel, or Sustainable Aviation
Limitations on Deductions
Fuels Credit.
• Ordinary income from trade or business activities of a Section 263A uniform capitalization rules. The
partnership from Schedule K-1 (Form 1065), Partner's uniform capitalization rules of section 263A require
Share of Income, Deductions, Credits, etc. Do not offset corporations to capitalize certain costs.
ordinary losses against ordinary income. Instead, include A small business taxpayer is not required to capitalize
the losses on line 18. Show the partnership's name, costs under section 263A. A small business taxpayer that
address, and EIN on a separate statement attached to this wants to discontinue capitalizing costs under section
return. If the amount entered is from more than one 263A must change its method of accounting. See section
partnership, identify the amount from each partnership. 263A(i) and Regulations section 1.263A-1(j). Also, see
• Section 91 Transferred Loss Amount. Enter the Change in accounting method, earlier.
transferred loss amount and identify the amount as
“Section 91 Transferred Loss Amount” required to be For more information on the uniform capitalization rules,
recognized under section 91 resulting from a transfer of see Pub. 538. Also, see Regulations sections 1.263A-1
substantially all the assets of a foreign branch (within the through 1.263A-3.

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Transactions between related taxpayers.      Generally,       need to reduce the otherwise allowable deductions for 
an accrual basis taxpayer can only deduct business            expenses used to figure the credit. This applies to credits 
expenses and interest owed to a related party in the year     such as the following.
the payment is included in the income of the related party.   • Employment credits. See Employment credits, later.
See sections 163(e)(3) and 267 for limitations on             • Credit for increasing research activities (Form 6765).
deductions for unpaid interest and expenses.                  • Orphan drug credit (Form 8820).
Limitations on business interest expense.        Business     • Disabled access credit (Form 8826).
interest expense may be limited. See section 163(j) and       • Employer credit for social security and Medicare taxes 
Form 8990, Limitation on Business Interest Expense            paid on certain employee tips (Form 8846).
Under Section 163(j). Also, see the instructions for          • Credit for small employer pension plan start-up costs 
line 15a and Schedule M, Question 17, later.                  (Form 8881).
                                                              • Credit for employer-provided childcare facilities and 
Section 291 limitations. Corporations may be required         services (Form 8882).
to adjust certain deductions. See section 291 to determine    • Credit for small employer health insurance premiums 
the amount of the adjustment.                                 (Form 8941).
Golden parachute payments.      A portion of the                If the corporation has any of these credits, figure the 
payments made by a corporation to key personnel that          current year credit before figuring the deduction for 
exceeds their usual compensation may not be deductible.       expenses on which the credit is based. If the corporation 
This occurs when the corporation has an agreement             capitalized any costs on which it figured the credit, it may 
(golden parachute) with these key employees to pay them       need to reduce the amount capitalized by the credit 
these excess amounts if control of the corporation            attributable to these costs.
changes. See section 280G and Regulations section               See the instructions for the form used to figure the 
1.280G-1.                                                     applicable credit for more information.
Business start-up and organizational costs.      A            Limitations on deductions related to property leased 
corporation can elect to deduct a limited amount of           to tax-exempt entities. If a corporation leases property 
start-up and organizational costs it paid or incurred. Any    to a governmental or other tax-exempt entity, the 
remaining costs must generally be amortized over a            corporation cannot claim deductions related to the 
180-month period. See sections 195 and 248 and the            property to the extent that they exceed the corporation's 
related regulations.                                          income from the lease payments. This disallowed 
Time for making the election.   The corporation               tax-exempt use loss can be carried over to the next tax 
generally elects to deduct start-up or organizational costs   year and treated as a deduction with respect to the 
by claiming the deduction on its income tax return filed by   property for that tax year. See section 470(d) for more 
the due date (including extensions) for the tax year in       details and exceptions.
which the active trade or business begins.
                                                              Line 9. Death benefits, etc. Enter all claims and benefits 
For more details, see the Instructions for Form 4562,         accrued and losses incurred (whether or not ascertained) 
Depreciation and Amortization.                                during the year on insurance and annuity contracts.
If the corporation timely filed its return for the year         Losses incurred (whether or not ascertained) include a 
without making an election, it can still make an election by  reasonable estimate of both losses incurred but not 
filing an amended return within 6 months of the due date      reported and of reported losses, when the amount of the 
of the return (excluding extensions). Clearly indicate the    losses cannot be determined by the end of the tax year. 
election on the amended return and write “Filed pursuant      Losses incurred must be adjusted to take into account 
to section 301.9100-2” at the top of the amended return.      recoveries (for example, for reinsurance) for those losses 
File the amended return at the same address the               together with estimates of those recoveries that may be 
corporation filed its original return. The election applies   recovered on those losses in future years.
when figuring taxable income for the current tax year and 
all subsequent years.                                               Under section 807(c), the amount of unpaid 
                                                                    losses (other than losses on life insurance 
The corporation can choose to forgo the elections             TIP
above by affirmatively electing to capitalize its start-up or       contracts) must be the amount of the discounted 
                                                              unpaid losses under section 846. See the instructions for 
organizational costs on its income tax return filed by the 
due date (including extensions) for the tax year in which     Schedule F, line 2, for more information on the discounting 
                                                              provisions.
the active trade or business begins.
Note. The election to either amortize or capitalize start-up  Line 11a. Increase in reserves under section 807(f). 
costs is irrevocable and applies to all start-up costs that   If the amount of any item referred to in section 807(c) 
are related to the trade or business.                         increased as a result of a change in the basis used to 
                                                              determine that item, then enter the section 807(f) 
Report the deductible amount of start-up and                  prescribed portion of the change that is a deduction in 
organizational costs and any amortization on line 18. For     computing LICTI.

amortization that begins during the current year, complete    Note. If a corporation ceases to qualify as a life insurance 
and attach Form 4562.                                         company, the balance of any adjustments under section 
Reducing certain expenses for which credits are al-           807(f) must be taken into account in the last year that the 
lowable. If the corporation claims certain credits, it may 

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corporation is qualified to file Form 1120-L. See section next year. See the Instructions for Form 8990. Also see
807(f)(2). Schedule M, Question 17, later.
Line 11b. Deduction from Reserve Transition Relief. If Consolidated groups. The limitation in section 163(j)
section 807(d) (as amended by P.L. 115-97) increased the (1) on the amount allowed as a deduction for business
amount of the reserve for any contract as of the close of interest applies at the level of the consolidated group.
the tax year preceding the first tax year beginning after Line 15b. Less tax-exempt interest expense. Enter
2017, enter the portion of the change that is a deduction in interest paid or accrued on indebtedness incurred or
computing LICTI as prescribed by section 13517(c)(3) of continued to purchase or carry obligations, the interest on
P.L. 115-97. See Rev. Proc. 2019-34, 2019-35 I.R.B. 669, which is wholly tax exempt. See section 265(b) for special
for more information. rules and exceptions for financial institutions. Also see
Line 12. Deductible policyholder dividends. A section 265(b)(7) for a de minimis exception for financial
policyholder dividend is any dividend or similar distribution institutions for certain tax-exempt bonds issued in 2009
to policyholders in their capacity as such and includes any and 2010.
amount paid or credited (including an increase in benefits) Line 18. Other deductions. Attach a statement, listing
where the amount is not fixed in the contract but depends by type and amount, all allowable deductions in
on the corporation’s experience or management’s computing LICTI (including the amortization of premiums
discretion. Enter on line 12 the amount of policyholder under section 811(b)) not included on lines 9 through 16.
dividends paid or credited during the tax year. Also, under Examples of other deductions may include the
section 808(e), any policyholder dividend that (a) following.
increases either the cash surrender value of the contract • Certain business start-up and organizational costs
or other benefits payable under the contract, or (b) (discuss earlier under Limitations on Deductions).
reduces the premium otherwise required to be paid, is • Legal and professional fees.
treated as paid to and returned by the policyholder to the • Supplies used and consumed in the business.
company as a premium. Include these amounts in income • Travel, meals, and entertainment expenses. Special
on page 1, line 1. rules apply (discussed later).
Line 13. Assumption by another person of liabilities • Utilities.
under insurance, etc., contracts. Enter the total • Ordinary losses from trade or business activities of a
consideration paid by the corporation to another person partnership from Schedule K-1 (Form 1065). Do not offset
(other than for indemnity reinsurance) for the assumption ordinary income against ordinary losses. Instead, include
by that person of liabilities under insurance and annuity the income on line 7. Show the partnership's name,
contracts (including supplementary contracts). address, and EIN on a separate statement attached to this
return. If the amount is from more than one partnership,
Line 14. Dividends reimbursable by taxpayer. Enter
identify the amount from each partnership.
the amount of policyholder dividends:
• Any extraterritorial income exclusion (from Form 8873,
1. Paid or accrued by another insurance company for Extraterritorial Income Exclusion).
policies this corporation has reinsured, and • Any applicable deduction under section 179D for the
2. That are reimbursable by the corporation under the cost of energy efficient commercial building property
terms of the reinsurance contract. placed in service during the tax year. Complete and attach
Form 7205.
Line 15a. Interest. Enter all interest paid or accrued • Dividends paid in cash on stock held by an ESOP.
during the tax year. No deduction is allowed under section However, a deduction can only be taken for the dividends
163 for interest on the items described in section 807(c). above if, according to the plan, the dividends are:
Also, do not include interest included on Schedule G, 1. Paid in cash directly to the plan participants or
line 9 (General deductions). beneficiaries;
Limitations. The deduction for interest is limited when
the corporation is a policyholder or beneficiary with 2. Paid to the plan, which distributes them in cash to
respect to a life insurance, endowment, or annuity the plan participants or their beneficiaries no later than 90
contract issued after June 8, 1997. For details, see days after the end of the plan year in which the dividends
section 264(f). Attach a statement showing the are paid;
computation of the deduction. 3. At the election of such participants or their
Business interest expense is any interest paid or beneficiaries (a) payable as provided under (1) or (2)
accrued on indebtedness properly allocable to a trade or above, or (b) paid to the plan and reinvested in qualifying
business. Under section 163(j), business interest expense employer securities; or
is generally limited to the sum of business interest income, 4. Used to make payments on a loan described in
30% of the adjusted taxable income, and floor plan section 404(a)(9).
financing interest. The amount of any business expense See section 404(k) for more details and the limitation on
that is not allowed as a deduction for the tax year is certain dividends.
carried forward to the following year. If section 163(j) Depreciation or amortization (attach Form 4562, if
•
applies, use Form 8990 to figure the amount of business required). Attach Form T (Timber), Forest Activities
expense the corporation can deduct for the current tax Schedule, if a deduction for depletion of timber is taken.
year and the amount that can be carried forward to the Foreign intangible drilling costs and foreign exploration

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and development costs must either be added to the For details, see section 162(m) and Regulations
corporation's basis for cost depletion purposes or be section 1.162-27. Also, see Notice 2007-49, 2007-25
deducted ratably over a 10-year period. See sections I.R.B. 1429.
263(i), 616, and 617. Salaries and wages. Include the total salaries and
Do not deduct the following. wages paid for the tax year. Do not include salaries and
wages deductible elsewhere on the return, such as
• Amounts paid, or incurred to, or at the direction of, a
amounts included in officers’ compensation, elective
government or governmental entity for the violation, or
contributions to a section 401(k) cash or deferred
investigation, or inquiry into the potential violation, of a
arrangement, or amounts contributed under a salary
law.
reduction SEP agreement or a SIMPLE IRA plan.
• Lobbying expenses. However, see exceptions
(discussed later). If the corporation provided taxable fringe benefits to its
Also, include on line 18 the following. employees, such as personal use of a car, do not deduct
Compensation of officers. Enter deductible officers' as wages the amount allocated for depreciation and other
compensation. See Employment credits, later, for a list of expenses claimed under Other Deductions on line 18.
employment credits that may reduce your deduction for If the corporation claims a credit for any wages
officers' compensation. Do not include compensation ! paid or incurred, it may need to reduce any
deductible elsewhere on the return, such as elective CAUTION corresponding deduction for officers’
contributions to a section 401(k) cash or deferred compensation and salaries and wages. See Reducing
arrangement or amounts contributed under a salary certain expenses for which credits are allowable, earlier.
reduction SEP agreement or a SIMPLE IRA plan.
Include only the deductible part of each officer's Also, reduce the amounts deducted as
compensation on line 18. (See Disallowance of deduction ! compensation of officers and salaries and wages
for employee compensation in excess of $1 million, later.) CAUTION by the nonrefundable and refundable portions of
Attach a statement for compensation of all officers using the CARES Act and the ARP employee retention credit
the following columns. claimed on the corporation’s employment tax return(s).

1. Name of officer. Limitation on tax benefits for remuneration under the
2. Social security number. Patient Protection and Affordable Care Act. The $1
3. Percentage of time devoted to business. million compensation limit is reduced to $500,000 for
4. Amount of compensation. remuneration for services provided by individuals for or on
behalf of certain health insurance providers in tax years
If a consolidated return is filed, each member of an beginning after December 31, 2009. The $500,000
affiliated group must furnish this information. limitation applies to remuneration that is deductible in the
Disallowance of deduction for employee compensa- tax year during which the services were performed and
tion in excess of $1 million. Publicly held corporations remuneration for services during the year that is
cannot deduct compensation to a covered employee to deductible in a future tax year (called deferred deduction
the extent that the compensation exceeds $1 million. remuneration). The $500,000 limitation is reduced by any
Generally, a covered employee is: amounts disallowed as excess parachute payments. See
• The principal executive officer of the corporation (or an section 162(m)(6) and Regulations section 1.162-31 for
individual acting in that capacity) as of the end of the tax definitions and other special rules. Also, see Notice
year, or 2011-2, 2011-2 I.R.B. 260.
• An employee whose total compensation must be Employment credits. If the corporation claims a credit
reported to shareholders under the Securities Exchange on any of the forms listed below, it may need to reduce its
Act of 1934 because the employee is among the three deduction for salaries and wages. See the applicable
highest compensated officers for that tax year (other than form(s).
the principal executive officer). • Form 5884, Work Opportunity Credit.
• Form 8844, Empowerment Zone Employment Credit, if
For this purpose, compensation does not include the
applicable.
following.
• Form 8882, Credit for Employer-Provided Childcare
• Income from certain employee trusts, annuity plans, or
Facilities and Services.
pensions.
• Form 8932, Credit for Employer Differential Wage
• Any benefit paid to an employee that is excluded from
Payments.
the employee's income.
• Form 8994, Employer Credit for Paid Family and
The deduction limit does not apply to: Medical Leave.
• Commissions based on individual performance; Pension, profit-sharing, etc., plans. Enter the
• Qualified performance-based compensation; and deduction for contributions to qualified pension,
• Income payable under a written binding contract in profit-sharing, or other funded deferred compensation
effect on February 17, 1993. plans. Employers who maintain such a plan must
The $1 million limit is reduced by amounts disallowed generally file one of the forms listed below unless exempt
as excess parachute payments under section 280G. from filing under regulations or other applicable guidance,
even if the plan is not a qualified plan under the Internal
Revenue Code. The filing requirement applies even if the
corporation does not claim a deduction for the current tax

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year. There are penalties for failure to file these forms on Contributions of $250 or more. A corporation can
time and for overstating the pension plan deduction. See deduct a contribution of $250 or more only if it gets a
sections 6652(e) and 6662(f). Also, see the instructions written acknowledgment from the donee organization that
for the applicable form. shows the amount of cash contributed, describes any
Form 5500, Annual Return Report of Employee Benefit property contributed, and either gives a description and a
Plan. good faith estimate of the value of any goods or services
provided in return for the contribution or states that no
Form 5500-SF, Short Form Annual Return/Report of goods or services were provided in return for the
Small Employee Benefit Plan, instead of Form 5500, contribution. The acknowledgment must be obtained by
generally if under 100 participants at the beginning of the the due date (including extensions) of the corporation's
plan year. return, or, if earlier, the date the return is filed. Do not
Note. Form 5500 and Form 5500-SF must be filed attach the acknowledgment to the tax return, but keep it
electronically under the computerized ERISA Filing with the corporation's records.
Acceptance System (EFAST2). For more information, see Contributions of property other than cash. If a
the EFAST2 website at www.EFAST.dol.gov. corporation contributes property other than cash and
Form 5500-EZ, Annual Return of A One-Participant claims over a $500 deduction for the property, it must
(Owners/Partners and Their Spouses) Retirement Plan or generally attach a statement to the return describing the
A Foreign Plan. File this form for a plan that only covers kind of property contributed and the method used to
the owner (or the owner and their spouse) but only if the determine its fair market value (FMV). Attach Form 8283,
owner (or the owner and their spouse) owns the entire Noncash Charitable Contributions, to the return for
business. contributions of property (other than money) if the total
claimed deduction for all property contributed was more
Charitable contributions. Enter contributions or gifts
than $5,000. Special rules apply to the contribution of
actually paid within the tax year to or for the use of
certain property. See the Instructions for Form 8283.
charitable and governmental organizations described in
section 170(c) and any unused contributions carried over Qualified conservation contributions. Special rules
from prior years. Special rules and limits apply to apply to qualified conservation contributions, including
contributions to organizations conducting lobbying contributions of certain easements on buildings located in
activities. See section 170(f)(9). a registered historic district. See section 170(h) and Pub.
Life insurance companies reporting LICTI on the 526, Charitable Contributions. For special rules applicable
accrual method can elect to treat as paid during the tax to certain qualified conservation contributions made by
year any contributions paid by the due date for filing the Native corporations, see section 170(b)(2)(C).
corporations’s tax return (not including extensions), if the Other special rules. See section 170 for special rules,
contributions were authorized by the board of directors limitations, and requirements.
during the tax year. Attach a declaration to the return
Travel, meals, and entertainment. Subject to limitations
stating that the resolution authorizing the contributions
and restrictions discussed below, a corporation can
was adopted by the board of directors during the tax year.
deduct ordinary and necessary travel, meal, and
The declaration must include the date the resolution was
nonentertainment expenses paid or incurred in its trade or
adopted. See Regulations section 1.170A-11.
business. Generally, entertainment expenses,
Limitation on deduction. The total amount claimed membership dues, and facilities used in connection with
cannot be more than 10% of LICTI computed without these activities cannot be deducted. In addition, no
regard to the following. deduction is generally allowed for qualified transportation
• Any deduction for contributions. fringe benefits. Special rules apply to deductions for gifts,
• The deduction for policyholder dividends. luxury water travel, and convention expenses. See section
• The deduction for dividends received. 274 and Pub. 463, Travel, Gift, and Car Expenses.
• Any net operating loss (NOL) carryback to the tax year Travel. The corporation cannot deduct travel expenses
under section 172. of any individual accompanying a corporate officer or
• Any capital loss carryback to the tax year under section employee, including a spouse or dependent of the officer
1212(a)(1). or employee, unless:
Carryover. Charitable contributions over the 10% • That individual is an employee of the corporation, and
limitation (or the 25% limitation, if elected; see below) • Their travel is for a bona fide business purpose and
cannot be deducted for the tax year but may be carried would otherwise be deductible by that individual.
over to the next 5 tax years. Meals. Generally, the corporation can deduct only 50%
A contributions carryover is not allowed, however, to the of the amount otherwise allowable for
extent that it increases an NOL. non-entertainment-related meal expenses paid or incurred
in its trade or business.
Cash contributions. For contributions of cash, check, or
other monetary gifts (regardless of the amount), the Meals not separately stated from entertainment are
corporation must maintain a bank record, or a receipt, generally not deductible. In addition (subject to exceptions
letter, or other written communication from the donee under section 274(k)(2)):
organization indicating the name of the organization, the • Meals must not be lavish or extravagant, and
date of the contribution, and the amount of the • An employee of the corporation must be present at the
contribution. meal.

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See section 274(n)(3) for a special rule that applies to reimbursement to the government for the costs of any
expenses for meals consumed by individuals subject to investigation or litigation are not eligible for the exceptions
the hours of service limits of the Department of and are nondeductible. See section 162(f).
Transportation.
Lobbying expenses. Generally, lobbying expenses are
Qualified transportation fringes (QTFs). Generally, not deductible. These expenses include:
no deduction is allowed under section 274(a)(4) for QTFs • Amounts paid or incurred in connection with influencing
provided by employers to their employees. QTFs are federal, state, or local legislation (but not amounts paid or
defined in section 132(f)(1) and include: incurred before December 22, 2017, in connection with
• Transportation in a commuter highway vehicle between local legislation); or
the employee's residence and place of employment, • Amounts paid or incurred in connection with any
• Any transit pass, and communication with certain federal executive branch
• Qualified parking. officials in an attempt to influence the official actions or
See section 274 and Pub. 15-B, Employer’s Tax Guide positions of the officials. See Regulations section
to Fringe Benefits, for details. 1.162-29 for the definition of “influencing legislation.”
Membership dues. The corporation can deduct Dues and other similar amounts paid to certain
amounts paid or incurred for membership dues in civic or tax-exempt organizations may not be deductible. If certain
public service organizations, professional organizations in-house lobbying expenditures do not exceed $2,000,
(such as bar and medical associations), business they are deductible.
leagues, trade associations, chambers of commerce,
boards of trade, and real estate boards. However, no Line 21b. NOL deduction. The NOL deduction is the
deduction is allowed if a principal purpose of the lesser of the aggregate of the NOL carryovers to the tax
organization is to entertain or provide entertainment year, plus the NOL carrybacks to the tax year. If this
facilities for members or their guests. In addition, deduction is taken, show its computation on an attached
corporations cannot deduct membership dues in any club statement. Generally, a life insurance company can carry
organized for business, pleasure, recreation, or other over an NOL to each tax year following the tax year of the
social purpose. This includes country clubs, golf and loss. After applying the NOL to the first tax year to which it
athletic clubs, airline and hotel clubs, and clubs operated may be carried, the portion of the loss the corporation may
to provide meals under conditions favorable to business carry to each of the remaining tax years is the excess, if
discussion. any, of the loss over the sum used as an NOL deduction in
Entertainment facilities. Generally, the corporation the carryover year. See section 172 for special rules,
cannot deduct an expense paid or incurred for a facility limitations, and definitions pertaining to the NOL
(such as a yacht or hunting lodge) used for an activity deduction and carryover.
usually considered entertainment, amusement, or If an ownership change (described in section 382(g))
recreation. occurs, the amount of the taxable income of a loss
Amounts treated as compensation. Generally, the corporation that may be offset by the pre-change loss
corporation may be able to deduct otherwise carryovers may be limited. (See section 382 and the
nondeductible entertainment, amusement, or recreation related regulations.) A loss corporation must include the
expenses if the amounts are treated as compensation to information statement as provided in Regulations section
the recipient and reported on Form W-2, Wage and Tax 1.382-11(a), with its income tax return for each tax year
Statement, for an employee or on Form 1099-NEC, that it is a loss corporation in which an ownership shift,
Nonemployee Compensation, for an independent equity structures shift, or other transaction described in
contractor. Temporary Regulations section 1.382-2T(a)(2)(i) occurs. If
the corporation makes the closing-of-the-books election,
However, if the recipient is an officer, a director, a
see Regulations section 1.382-6(b).
beneficial owner (directly or indirectly), or other “specified
individual” (as defined in section 274(e)(2)(B) and The limitations under section 382 do not apply to
Regulations section 1.274-9(b)), special rules apply. certain ownership changes after February 17, 2009, made
pursuant to a restructuring plan under the Emergency
Fines or similar penalties. Generally, no deduction is Economic Stabilization Act of 2008. See section 382(n).
allowed for fines or similar penalties paid, or incurred to, or
at the direction of, a government or governmental entity for For guidance in applying section 382 to loss
violating any law, or for the investigation or inquiry into the corporations whose instruments were acquired by the
potential violation of a law, except: Department of the Treasury under certain programs under
• Amounts that constitute restitution or remediation of the Emergency Economic Stabilization Act of 2008, see
property, Notice 2010-2, 2010-2 I.R.B. 251.
• Amounts paid to come into compliance with the law, For more details on the NOL deduction, see section
• Amounts paid or incurred as the result of certain court 172 and the Instructions for Form 1139, Corporation
orders or agreements in which no government or specified Application for Tentative Refund.
nongovernmental agency is a party, and Line 24. Phased inclusion of balance of policyhold-
• Amounts paid or incurred for taxes due. ers surplus account. Section 13514(d) of P.L. 115-97
No deduction is allowed unless the amounts are requires a one-eighth per year phased inclusion of any
specifically identified in the order or agreement and the December 31, 2017, balance of the policyholders surplus
corporation establishes that the amounts were paid for account starting in 2018. This amount cannot be reduced
that purpose. Also, any amount paid or incurred as by an NOL.

Instructions Form 1120-L (2023) 15

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Line 25. Total taxable income. The total taxable income Backup withholding. If the corporation had federal
reported on line 25 cannot be less than line 24 of the Form income tax withheld from any payments it received
1120-L. because, for example, it failed to give the payer its correct
EIN, include the amount withheld in the total for line 28.
Also, line 25 cannot be less than the largest of the
Write the amount withheld and the words “Backup
following amounts.
Withholding” in the blank space above line 28.
• The inversion gain of the corporation for the tax year, if
the corporation is an expatriated entity or a partner in an Line 29. Estimated tax penalty. Generally, the
expatriated entity. For details, see section 7874. corporation does not have to file Form 2220 with its
• The sum of the corporation's excess inclusions from income tax return because the IRS will figure the amount
Schedule Q (Form 1066), line 2c, and the corporation's of any penalty and notify the corporation of any amount
taxable income determined solely with respect to its due. However, see the Instructions for Form 2220 for
ownership and high-yield interests in FASITs. For details, circumstances where the corporation must file Form 2220
see sections 860E(a) and 860J (repealed). even if it owes no penalty.
If Form 2220 is attached, check the box on line 29 and
Tax and Payments enter the amount of any penalty on that line.
Line 27b. Estimated tax payments. Enter any If the corporation's tax liability includes a CAMT
estimated tax payments the corporation made for the ! liability, the corporation must complete and attach
current tax year. CAUTION Form 2220. The affected corporation must also
Line 27c. Current year's refund applied for on Form include an amount of estimated tax penalty on Form
4466. If the corporation overpaid estimated tax, it may be 1120-L, line 29, even if that amount is zero. Failure to
able to get a quick refund by filing Form 4466. The follow these instructions could result in the corporation
overpayment must be at least 10% of the corporation's receiving a penalty notice that will require an abatement
expected income tax liability and at least $500. File Form request to apply any penalty relief. See Notice 2023-42.
4466 after the end of the corporation's tax year, and no Line 30. Amount owed. If the corporation cannot pay
later than the due date for filing the corporation’s tax the full amount of tax owed, it can apply for an installment
return. Form 4466 must be filed before the corporation agreement online. Go to IRS.gov/OPA for the latest
files its tax return. See the instructions for Form 4466. information.
Line 27d. Combine lines 27a through 27c. Line 32. Refunded electronic deposit of tax refund of
Line 27f. Credit for tax paid on undistributed capital $1 million or more. If the corporation is due a refund of
gains. Enter any credit from Form 2439, Notice to $1 million or more and wants it electronically deposited
Shareholder of Undistributed Long-Term Capital Gains, for into its checking or savings account at any U.S. bank or
the corporation's share of the tax paid by a regulated other financial institution instead of having a check sent to
investment company (RIC) or a real estate investment the corporation, complete Form 8302, Electronic Deposit
trust (REIT) on undistributed long-term capital gains of Tax Refund of $1 Million or More, and attach it to the
included in the corporation's income. Attach Form 2439 to corporation's tax return.
Form 1120-L.
Line 27g. Credit for federal tax on fuels. Enter the total Schedule A—Dividends, Inclusions,
income tax credit claimed on Form 4136, Credit for Dividends-Received Deduction, and
Federal Tax Paid on Fuels. Attach Form 4136 to Form
1120-L. Other Special Deductions
Line 27h. U.S. income tax paid or withheld at source. For purposes of the 20% ownership test on lines 1 through
Enter the amount of any U.S. income tax paid or withheld 7, the percentage of stock owned by the corporation is
as reported on Form 1042-S, Foreign Person's U.S. based on voting power and value of the stock. Preferred
Source Income Subject to Withholding. stock described in section 1504(a)(4) is not taken into
account.
Line 27i. Elective payment election amount from
Form 3800. Enter the elective payment election amount Consolidated returns. Corporations filing a
from Form 3800, General Business Credit, Part III, line 6, consolidated return should see Regulations sections
column (i). See the Instructions for Form 3800. 1.1502-13, 1.1502-26, and 1.1502-27 before completing
Schedule A.
Line 27z. Other credits and payments. Include on Corporations filing a consolidated return must not
line 27z any other refundable credit or payment the report as dividends on Schedule A any amounts received
corporation is claiming. Attach a statement listing the type from corporations within the tax consolidation group. Such
of credit and the amount of the credit or payment. dividends are eliminated in consolidation rather than offset
Credit for tax on ozone-depleting chemicals. by the dividends-received deduction.
Include on line 27z any credit the corporation is claiming
under section 4682(g)(2) for tax on ozone-depleting Line 1, column (a). Enter dividends (except those
chemicals. received on certain debt-financed stock acquired after
July 18, 1984 (see section 246A)) that are:
Line 28. Total payments and credits. Combine the • Received from less-than-20%-owned domestic
amounts on lines 27d through 27z and enter the total on corporations subject to income tax, and
line 28.

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• Qualified for the 50% deduction under section 243(a)      is subject to income tax and is allowed the deduction 
(1).                                                        provided in section 247 (as affected by P.L. 113-295, Div. 
  Also include on line 1 the following.                     A, section 221(a)(41)(A), Dec. 19, 2014, 128 Stat. 4043) 
• Taxable distributions from an interest charge domestic    for dividends paid.
international sales corporation (IC-DISC) or former         Line 6, column (a). Enter the U.S.-source portion of 
domestic interational sales corporation (DISC) that are     dividends that:
designated as eligible for the 50% deduction and certain    • Are received from less-than-20%-owned foreign 
dividends of Federal Home Loan Banks. See section           corporations, and
246(a)(2).                                                  • Qualify for the 50% deduction under section 245(a). To 
• Dividends (except those received on certain               qualify for the 50% deduction, the corporation must own at 
debt-financed stock acquired after July 18, 1984) from a    least 10% of the stock of the foreign corporation by vote 
RIC. The amount of dividends eligible for the               and value.
dividends-received deduction under section 243 is limited 
                                                              Also include dividends received from a 
by section 854(b). The corporation should receive a notice 
                                                            less-than-20%-owned foreign sales corporation (FSC) 
from the RIC specifying the amount of dividends that 
                                                            that:
qualify for the deduction.
                                                            • Are attributable to income treated as effectively 
  Report so-called dividends or earnings received from      connected with the conduct of a trade or business within 
mutual savings banks, etc., as interest. Do not treat them  the United States (excluding foreign trade income), and
as dividends.                                               • Qualify for the 50% deduction under section 245(c)(1)
Line 2, column (a). Enter on line 2:                        (B).
• Dividends (except those received on debt-financed         Line 7, column (a). Enter the U.S.-source portion of 
stock acquired after July 18, 1984) that are received from  dividends that:
20%-or-more-owned domestic corporations subject to          • Are received from 20%-or-more-owned foreign 
income tax and that are subject to the 65% deduction        corporations, and
under section 243(c), and                                   • Qualify for the 65% deduction under sections 245(a) 
• Taxable distributions from an IC-DISC or former DISC      and 243 by reference.
that are considered eligible for the 65% deduction.
                                                              Also include dividends received from a 
Line 3, column (a). Enter the following.                    20%-or-more-owned FSC that:
• Dividends received on certain debt-financed stock         • Are attributable to income treated as effectively 
acquired after July 18, 1984, from domestic and foreign     connected with the conduct of a trade or business within 
corporations subject to income tax that would otherwise     the United States (excluding foreign trade income), and
be subject to the dividends-received deduction under        • Qualify for the 65% deduction under section 245(c)(1)
section 243(a)(1), 243(c), or 245(a). Generally,            (B).
debt-financed stock is stock that the corporation acquired 
                                                            Line 8, column (a). Enter dividends received from wholly 
by incurring a debt (for example, it borrowed money to buy 
                                                            owned foreign subsidiaries that are eligible for the 100% 
the stock).
                                                            deduction under section 245(b) but that do not qualify as 
• Dividends received from a RIC on debt-financed stock. 
                                                            “100% dividends” under section 805(a)(4)(C).
The amount of dividends eligible for the 
dividends-received deduction is limited by section 854(b).    In general, the deduction under section 245(b) applies 
The corporation should receive a notice from the RIC        to dividends paid out of the earnings and profits of a 
specifying the amount of dividends that qualify for the     foreign corporation for a tax year during which:
deduction.                                                  • All of its outstanding stock is directly or indirectly owned 
                                                            by the domestic corporation receiving the dividends, and
Line 3, columns (b) and (c). Dividends received on          • All of its gross income from all sources is effectively 
certain debt-financed stock acquired after July 18, 1984,   connected with the conduct of a trade or business within 
are not entitled to the full 50% or 65% dividends-received  the United States.
deduction under section 243 or 245(a). The 50% or 65% 
                                                              Do not include dividends received from a life insurance 
deduction is reduced by a percentage that is related to the 
                                                            company.
amount of debt incurred to acquire the stock. See section 
246A. Also, see section 245(a) before making this             Also, include on line 8, column (a), dividends from 
computation for an additional limitation that applies to    FSCs that are attributable to foreign trade income and that 
certain dividends received from foreign corporations.       are eligible for the 100% deduction provided in section 
Attach a statement showing how the amount on line 3,        245(c)(1)(A).
column (c), was figured.                                    Line 9, column (a). Enter only those dividends that 
Line 4, column (a). Enter dividends received on             qualify under section 243(b) for the 100% 
preferred stock of a less-than-20%-owned public utility     dividends-received deduction described in section 243(a)
that is subject to income tax and is allowed the deduction  (3) but that do not qualify as “100% dividends” under 
provided in section 247 (as affected by P.L. 113-295, Div.  section 805(a)(4)(C). Corporations taking this deduction 
A, section 221(a)(41)(A), Dec. 19, 2014, 128 Stat. 4043)    are subject to the provisions of section 1561. Do not 
for dividends paid.                                         include dividends received from a life insurance company.
Line 5, column (a). Enter dividends received on 
preferred stock of a 20%-or-more-owned public utility that 

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The 100% deduction does not apply to affiliated group Line 17c, column (a). Enter all other amounts included
members that are joining in the filing of a consolidated in income under section 951, which should equal the U.S.
return. shareholder's pro rata share of the sum of the amounts
Line 10, column (c). Limitation on dividends-received reported on Form(s) 5471, Schedule I, lines 1f, 2, 3, and 4.
deduction. Generally, line 10 of column (c) cannot Line 18, column (a). Enter amounts included in income
exceed the amount from the Worksheet for Schedule A, under the section 951A GILTI provision. See Form 8992,
Line 10. However, in a year in which an NOL occurs, this U.S. Shareholder Calculation of Global Intangible
limitation does not apply even if the loss is created by the Low-Taxed Income (GILTI), Part II, line 5; and the
dividends-received deduction. See section 246(b). Instructions for Form 8992. Also, consider the applicability
Line 13, column (a). In general, enter “100% dividends” of section 951A with respect to CFCs owned by domestic
as defined in section 805(a)(4)(C). That is, in general, partnerships in which the filer has an interest. If you also
enter dividends that qualify for the 100% have a Form 5471 reporting requirement, attach Form
dividends-received deduction under sections 243, 244 (as 5471.
affected by P.L. 113-295, Div. A, section 221(a)(41)(A), Line 19, column (a). Include the following.
Dec. 19, 2014, 128 Stat. 4043), and 245(b), and were not
1. Include gross-up for taxes deemed paid under
reported on line 8 or 9 because they were (a) not
section 902 (for dividends paid in pre-2022 tax years of
distributed out of tax-exempt interest or out of dividends
foreign corporations) and 960.
that do not qualify as 100% dividends, or (b) paid by a life
insurance company. 2. Dividends (other than capital gain distributions
reported on Schedule D (Form 1120) and exempt-interest
Note. Certain dividends received by a foreign corporation dividends) that are received from RICs and that are not
are not subject to proration. Attach a statement showing subject to the 50% deduction.
computations. 3. Dividends from tax-exempt organizations.
Line 14, column(a). Enter the foreign-source portion of 4. Dividends (other than capital gain distributions)
dividends: received from a REIT that, for the tax year of the trust in
• Received from specified 10%-owned foreign which the dividends are paid, qualifies under sections 856
corporations (as defined in section 245A(b)), including through 860.
gain from the sale of stock of a foreign corporation that is 5. Dividends not eligible for a dividends-received
treated as a dividend under sections 1248(a) and (i); and deduction, which include the following.
• Qualify for the 100% deduction under section 245A(a).
a. Dividends received on any share of stock held for
Line 15, column (a). Enter foreign dividends not less than 46 days during the 91-day period beginning 45
reportable on line 3, 6, 7, 8, or 14 of column (a). days before the ex-dividend date. When counting the
• Include on line 15 any hybrid dividends from a CFC. number of days the corporation held the stock, you cannot
Hybrid dividends are generally dividends received from a count certain days during which the corporation's risk of
CFC that would otherwise be reported on line 14 except loss was diminished. See section 246(c)(4) and
the CFC receives a deduction (or other tax benefit) with Regulations section 1.246-5 for more details.
respect to any income, war profits, or excess profits taxes
b. Dividends attributable to periods totaling more than
imposed by any foreign country or territory of the United
366 days that the corporation received on any share of
States.
preferred stock held for less than 91 days during the
• Also, include on line 15 the corporation’s share of
181-day period that began 90 days before the ex-dividend
distributions from a section 1291 fund from Form 8621, to
date. When counting the number of days the corporation
the extent that the amounts are taxed as dividends under held the stock, you cannot count certain days during
section 301. See Form 8621 and the Instructions for Form
which the corporation's risk of loss was diminished. See
8621.
section 246(c)(4) and Regulations section 1.246-5 for
Line 16, column (a). Reserved for future use. more details. Preferred dividends attributable to periods
totaling less than 367 days are subject to the 46-day
Line 16, column (c). Reserved for future use.
holding period rule above.
Line 17a, column (a). Enter the foreign-source portion of c. Dividends on any share of stock to the extent the
any subpart F inclusions attributable to the sale or corporation is under an obligation (including a short sale)
exchange by a CFC of stock in another foreign corporation to make related payments with respect to positions in
described in section 964(e)(4). This should equal the U.S. substantially similar or related property.
shareholder's pro rata share of the amount reported on
Form(s) 5471, Information Return of U.S. Persons With 6. Any other taxable dividend income not properly
Respect to Certain Foreign Corporations, Schedule I, reported above.
line 1a.
Line 21, column (c). Enter the section 250 deduction
Line 17b, column (a). Enter the pro rata share of claimed for FDII and GILTI. This should equal the sum of
subpart F inclusions attributable to hybrid dividends of line 8 and line 9 of Form 8993, Section 250 Deduction for
tiered corporations under section 245A(e)(2). This should Foreign-Derived Intangible Income (FDII) and Global
equal the U.S. shareholder's pro rata share of the amount Intangible Low-Taxed Income (GILTI), Part IV.
reported on Form(s) 5471, Schedule I, line 1b.

18 Instructions Form 1120-L (2023)

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                  Worksheet for Schedule A, Line 10                                                                                                  Keep for Your Records
1.   Refigure Form 1120-L, page 1, line 8, without any adjustment under section 1059, and without any 
     capital loss carryback to the tax year under section 1212(a)(1). Add this refigured line 8 amount to 
     the amount on page 1, line 25. Subtract from that total the sum of page 1, lines 9 through 18  . . . . .                                                              
2.   Add lines 9, 13, 14, and 17a, column (c), and the portion of the deduction on line 8, column (c), that 
     is attributable to dividends from FSCs that are attributable to foreign trade income . . . . . . . . . . . . . .                                                      
3.   Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       
4.   Multiply line 3 by 65% (0.65)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          
5.   Add lines 2, 5, and 7, column (c); the portion of the deduction on line 8, column (c), that is 
     attributable to wholly owned foreign subsidiaries; and the portion of the deduction on line 3, column 
     (c), that is attributable to dividends received from 20%-or-more-owned corporations . . . . . . . . . . . .                                                           
6.   Enter the smaller of line 4 or line 5. If line 5 is greater than line 4, stop here and enter the amount 
     from line 6 on line 10, column (c), and do not complete the rest of the worksheet . . . . . . . . . . . . . . .                                                       
7.   Enter the total amount of dividends from 20%-or-more-owned corporations that are included on lines 
     2, 3, 5, and 7, column (a), and the portion of the deduction on line 8, column (a), that is attributable 
     to wholly owned subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            
8.   Subtract line 7 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       
9.   Multiply line 8 by 50% (0.50)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          
10.  Subtract line 5 above from line 10, column (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                    
11.  Enter the smaller of line 9 or line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            
12. Dividends-received deduction after limitation (section 246(b)). Add lines 6 and 11. Enter the 
     result here and on line 10, column (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                

                                                            and depreciation, should be reported as “Other 
Schedule B—Investment Income                                deductions” on page 1, line 18.
Line 1. Interest. Enter the total taxable interest received Line 4. Royalties. Enter the royalties received or accrued 
or accrued during the tax year, less any amortization of    during the tax year. Report the depletion deduction on 
premium, plus any accrual of discount required by section   page 1, line 18.
811(b). Generally, the appropriate amortization of          Line 5. Leases, terminations, etc.                                                       Enter the income 
premium and accrual of discount for the tax year on         received from entering into, altering, or terminating any 
bonds, notes, debentures, or other evidence of              lease, mortgage, or other instrument from which the 
indebtedness held by a life insurance company should be     corporation derives interest, rents, or royalties.
determined:
1. Under the method regularly employed by the 
                                                            Schedule F—Increase (Decrease) in 
company, if reasonable; and
2. In all other cases, under the regulations.               Reserves (Section 807)

For bonds (as defined in section 171(d)) issued after       Note.   Attach a statement to the tax return that reconciles 
September 27, 1985, the appropriate amount of               lines 1 through 6 of Schedule F to the annual statement 
amortization of premium must be determined using the        used to prepare the tax return. If the annual statement 
yield to maturity method described in section 171(b)(3).    used to prepare the tax return is different from the NAIC 
Market discount is not required to be accrued under         annual statement filed with the state of domicile, include a 
section 811(b). Attach a statement showing the method       separate reconciliation of lines 1 through 6 of Schedule F 
and computation used.                                       to the annual statement filed with the state of domicile.
                                                                    Schedule F is used to determine if, under section 807, 
Note. The Small Business Job Protection Act of 1996         certain reserves decreased or increased for the tax year. 
repealed section 133, which provided for the 50% interest   A net decrease will be includible in gross income, while a 
income exclusion with respect to ESOP loans. The Act        net increase will be a deduction in computing LICTI.
also repealed section 812(g), which provided for the 
exclusion of interest income from ESOP loans for                    The net increase or net decrease in reserves is figured 
company/policyholder proration. The repeal of these         by comparing the opening balance for reserves to the 
exclusions is effective for ESOP loans made after August    closing balance for reserves reduced by the policyholders' 
20, 1996. See Act section 1602 for special rules for        share of tax-exempt interest (and the increase in policy 
binding contract agreements in effect prior to June 10,     cash value of section 264(f) policies as defined in section 
1996, and certain refinancings made after August 20,        805(a)(4)(F)).
1996.
                                                                    Reserve adjustments are not treated as interest 
Line 3. Rents. Enter the rents received or accrued during   expenses for allocation purposes under section 864(c). 
the tax year. Related expenses, such as repairs, taxes,     See section 818(f).

Instructions Form 1120-L (2023)                                                                                                                                           19

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There are special rules for computing reserves of For this item, the appropriate rate of interest is the
unearned premiums of certain nonlife contracts. See highest rate or rates permitted to be used to discount the
section 807(e)(5)(A). obligations by the NAIC as of the date the reserve is
determined. In no case shall the amount determined
Note. If the basis for determining the amount of any item under section 807(c)(3) for any contract be less than the
referred to in section 807(c) (life insurance reserves, etc.) net surrender value of such contract.
at the end of the tax year differs from the basis for the
determination at the beginning of the tax year, see section Line 4. Dividend accumulations and other amounts.
807(f). Enter the total dividend accumulations and other amounts
held as interest in connection with insurance and annuity
Line 1. Life insurance reserves. For rules on how to contracts.
compute life insurance reserves, see sections 807(d) and
(e). Line 5. Advance premiums. Enter the total premiums
received in advance and liabilities for premium deposit
Line 2. Unearned premiums and unpaid losses. For funds. See section 807(e)(5)(A) for special rules for
purposes of sections 807 and 805(a)(1), the amount of the treatment of certain nonlife reserves.
unpaid losses (other than losses on life insurance
contracts) must be the amount of the discounted unpaid Line 6. Special contingency reserves. Enter the total
losses determined under section 846. reasonable special contingency reserves under contracts
of group-term life insurance or group accident and health
Section 846 provides that the amount of the discounted insurance, which are established and maintained for the
unpaid losses must be figured separately by each line of provision of insurance on retired lives, premium
business (multiple peril lines must be treated as a single stabilization, or for a combination thereof.
line of business) and by each accident year and must be
equal to the present value of those losses determined by Line 8. Increase (decrease) in reserves under section
using the: 807. In figuring the amount on line 8, any decrease in
reserves must be computed without any reduction of the
1. Amount of the undiscounted unpaid losses,
closing balance of section 807 reserves by the
2. Applicable interest rate, and policyholders' share of tax-exempt interest.
3. Applicable loss payment pattern.
Line 11. Do not include the exempt portion of any of the
Special rules apply to: interest income received on an ESOP loan made prior to
• Unpaid losses related to disability insurance (other than August 21,1996. For binding contract and refinancing
credit disability insurance), rules, see section 1602 of P.L. 104-188.
• Noncancelable accident and health insurance, and
• Cancelable accident and health insurance. Schedule G—Policy Acquisition
With regard to the special rules for discounting unpaid
losses on accident and health insurance (other than Expenses
disability income insurance), unpaid losses are assumed For purposes of section 848(b), all life insurance company
to be paid in the middle of the year following the accident members of the same controlled group are treated as one
year. company. Any deduction determined for the group must
be allocated among the life insurance companies in the
Generally, the amount of undiscounted unpaid losses
group in such a manner as the IRS may prescribe.
means the unpaid losses shown in the annual statement.
The amount of discounted unpaid losses with respect to Note. Policy acquisition expenses for an annuity or life
any line of business for an accident year cannot exceed insurance contract that includes a qualified long-term care
the total amount of unpaid losses with respect to any line insurance contract as part of, or as a rider on, the annuity
of business for an accident year as reported on the annual or life insurance contract, must be capitalized using the
statement. net premium percentage for contracts that are not
The applicable interest rate for each calendar year and described in section 848(c)(1)(A) or 848(c)(1)(B). See
the applicable loss payment patterns for each accident section 848(e)(6) for more information.
year for each line of business are determined by the IRS.
Line 1. Gross premiums and other consideration.
The applicable interest rate and loss payment patterns for
Generally, gross premiums and other consideration is the
2023 are published in Rev. Proc. 2023-41, 2023-52 I.R.B
total of:
1607, available at IRS.gov/irb/2023-52_IRB#REV-
PROC-2023-41. Rev. Proc. 2023-41 also provides, for 1. All premiums and other consideration (other than
convenience, the discount factors for losses incurred in amounts on reinsurance agreements), and
earlier accident years for use in tax years beginning in 2. Net positive consideration for any reinsurance
2023. agreement (see Regulations section 1.848-2(b)).
Line 3. Supplementary contracts. Enter the amount Also include on this line:
(discounted at the appropriate rate of interest) necessary • Advanced premiums;
to satisfy the obligations under insurance and annuity • Amounts in a premium deposit fund or similar account,
contracts, but only if the obligations do not involve (at the as permitted by Regulations section 1.848-2(b)(3);
time the computation is made) life, accident, or health • Fees;
contingencies. • Assessments;

20 Instructions Form 1120-L (2023)

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• Amounts that the insurance company charges itself Do not include on line 1 any interest due under section
representing premiums with respect to benefits for its 1291(c)(3). Instead, include the amount of interest owed
employees (including full-time insurance salesmen treated on Schedule K, line 11.
as employees under section 7701(a)(20)); and For more information on reporting the deferred tax and
• The value of a new contract issued in an exchange interest, see the Instructions for Form 8621.
described in Regulations section 1.848-2(c)(2) or (3). Increase in tax attributable to partner's audit
Line 2. Return premiums and premiums and other liability under section 6226. If the corporation is filing
consideration incurred for reinsurance. For purposes Form 8978 to report adjustments shown on Form 8986,
of section 848(d)(1)(B) and Regulations section Partner’s Share of Adjustment(s) to Partnership-Related
1.848-2(e), return premiums means amounts (other than Item(s), they received from partnerships which have been
policyholder dividends or claims and benefit payments) audited and have elected to push out imputed
returned or credited to the policyholder. See Regulations underpayments to their partners, include any increase in
sections 1.848-2(f) and 1.848-3 for how to treat amounts taxes due from Form 8978, line 14, in the total for Form
returned to another insurance company under a 1120-L, Schedule K, line 1. On the dotted line next to
reinsurance agreement. line 1, enter "FROM FORM 8978" and the amount. Attach
Form 8978. If Form 8978, line 14, shows a decrease in
Line 4. Enter the applicable net premium percentage as
tax, see the instructions for Schedule K, line 6.
defined in section 848(c)(1).
Additional tax under section 197(f). A corporation
Line 5. The entries in column 5(a), 5(b), or 5(c) may be that elects to recognize gain and pay tax on the sale of a
positive or negative. section 197 intangible under the related person exception
Line 6. If the sum of columns 5(a), 5(b), and 5(c) is to the anti-churning rules should include any additional tax
negative, enter this negative amount on line 6 and due in the total for line 1. On the dotted line next to line 1,
enter -0- on lines 7 and 8. The result is a negative enter “Section 197” and the amount. See section 197(f)(9)
capitalization amount under section 848(f). (B)(ii).
Line 9. General deductions. These are deductions Line 2. Base erosion minimum tax amount. If the
under sections 161 through 198, relating to itemized corporation had gross receipts of at least $500 million in
deductions, and sections 401 through 424, relating to any 1 of the 3 preceding tax years, see section 59A and
pension, profit-sharing, stock bonus plans, etc. Also, the Instructions for Form 8991, Tax on Base Erosion
include on this line ceding commissions incurred for the Payments of Taxpayers With Substantial Gross Receipts,
reinsurance of a specified insurance contract. Do not for further guidance on the determination of the amount of
include amortization deductions of specified policy base erosion minimum tax.
acquisition expenses under section 848(a) or (b). Skip Line 3. Corporate alternative minimum tax. Enter on
line 9 if the corporation has elected out of the general Schedule K, line 3, the amount from Form 4626,
deductions limitation. See Regulations section 1.848-2(g) Alternative Minimum Tax—Corporations, Part II, line 13, if
(8). applicable. See the Instructions for Form 4626.
Note. If interest expense is included on line 9, do not also Line 5a. Foreign tax credit. To find out if a corporation
include it on page 1, line 15a. can take this credit for payment of income tax to a foreign
country or U.S. territory, see Form 1118, Foreign Tax
Line 13. Unamortized specified policy acquisition ex- Credit—Corporations.
penses from prior years. Enter the balance of
unamortized specified policy acquisition expenses from Line 5b. Credit from Form 8834. Enter any qualified
prior years as of the beginning of the tax year. See section electric vehicle passive activity credits from prior years
848(f)(1)(B). allowed for the current year from Form 8834, Qualified
Electric Vehicle Credit, line 7. Attach Form 8834.
Line 16. Phase-out amount. The amount of
amortization for members of a controlled group and the Line 5c. General business credit. Use Form 3800 to
phase-out of the group's specified policy acquisition claim any general business credits. Enter on line 5c the
expenses under section 848(b) must be allocated to each allowable credit from Form 3800, Part II, line 38. See the
member in proportion to that member's specified policy Instructions for Form 3800.
acquisition expenses for the tax year. Line 5d. Credit for prior year minimum tax. Enter any
allowable credit from Form 8827, Credit for Prior Year
Schedule K—Tax Computation Minimum Tax—Corporations. Complete and attach Form
8827.
Line 1. Corporations figure their tax by multiplying
taxable income by 21% (0.21). Line 5e. Bond credits from Form 8912. Enter the
Deferred tax under section 1291. If the corporation allowable credits from Form 8912, Credit to Holders of Tax
was a shareholder in a PFIC and received an excess Credit Bonds, line 12.
distribution or disposed of its investment in the PFIC Line 6. Total credits. Add lines 5a through 5e and enter
during the year, it must include the total increase in taxes the total on line 6.
due under section 1291(c)(2) (from Form 8621) in the total Decrease attributable to partner's audit liability
for line 1. On the dotted line to the left of line 1, enter under section 6226. If the corporation is filing Form
“Section 1291” and the amount. 8978 to report adjustments shown on Form 8986 they

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received from partnerships which have been audited and Line 11. Other taxes. Include any of the following taxes
have elected to push out imputed underpayments to their and interest in the total on line 11. Attach a statement
partners, include any decrease in taxes due (negative showing the computation of each item included in the total
amount) from Form 8978, line 14, in the total for Form for line 11 and identify the applicable Code section and
1120-L, Schedule K, line 6. On the dotted line next to the type of tax or interest.
line 6, enter "FROM FORM 8978" and the amount. Attach • Recapture of Indian employment credit. Generally, if an
Form 8978. If Form 8978, line 14, shows an increase in employer terminates the employment of a qualified
tax, see the instructions for Schedule K, line 1. employee less than 1 year after the date of initial
Line 8. Foreign corporations. A foreign corporation employment, any Indian employment credit allowed for a
carrying on a life insurance business in the United States prior tax year because of wages paid or incurred to that
is taxed as a domestic life insurance company on its employee must be recaptured. For details, see Form 8845
income effectively connected with the conduct of a trade and section 45A.
or business in the United States (see sections 864(c) and • Recapture of new markets credit (see Form 8874, New
897 for definition). Markets Credit, and Form 8874-B, Notice of Recapture
Event for New Markets Credit).
Generally, any other U.S.-source income received by
the foreign corporation is taxed at 30% (or at a lower treaty • Recapture of employer-provided childcare facilities and
services credit (see Form 8882).
rate) under section 881. If the corporation has this income,
attach a statement showing the kind and amount of • Interest on deferred tax attributable to certain nondealer
installment obligations (section 453A(c)).
income, the tax rate, and the amount of tax. Enter the tax
on line 8. However, see Reduction of section 881 tax, • Interest due on deferred gain (section 1260(b)).
later. • Interest due under section 1291(c)(3). See Form 8621
and the Instructions for Form 8621.
Note. Interest received from certain portfolio debt Line 12. Total tax. Include any deferred tax on the
investments that were issued after July 18, 1984, is not termination of a section 1294 election applicable to
subject to the tax. See section 881(c). shareholders in a QEF in the amount entered on line 12.
See section 842 for more information. Subtract any deferred tax on the corporation's share of
Minimum effectively connected net investment undistributed earnings of a QEF (see Form 8621).
income. See section 842(b) and Notice 89-96, 1989-2 How to report. Attach a statement showing the
C.B. 417, for the general rules for computing this amount. computation of each item included in, or subtracted from,
Also, see Rev. Proc. 2021-41, 2021-39 I.R.B. 443, the total for line 12. On the dotted line next to line 12,
available at IRS.gov/2021-39 IRB, for the domestic asset/ specify (a) the applicable Code section, (b) the type of tax,
liability percentages and domestic yields needed to and (c) the amount of tax.
compute this amount.
Any additional income required by section 842(b) must Schedule L
be included in LICTI (for example, page 1, line 7).
All filers must complete Parts I and II of Schedule L.
Reduction of section 881 tax. Additional taxes
resulting from the net investment income adjustment may Note. Foreign life insurance companies should report
offset a corporation's section 881 tax on U.S.-source assets and insurance liabilities for their U.S. business only.
income. The tax reduction is determined by multiplying the
section 881 tax by the ratio of the amount of income Part I—Total Assets
adjustment to income subject to the section 881 tax, For Schedule L, assets mean all assets of the corporation.
computed without the exclusion for interest on state and In valuing real property and stocks, use FMV; for other
local bonds or income exempted from taxation by treaty. assets, use the adjusted basis as determined under
See section 842(c)(1). Attach a statement showing how section 1011 and related sections, without regard to
the reduction of section 881 tax was figured. Enter the net section 818(c). An interest in a partnership or trust is not
tax imposed by section 881 on line 8. itself treated as an asset of the corporation. Instead, the
Line 9. Recapture of investment credit. If the corporation is treated as actually owning its proportionate
corporation disposed of investment credit property or share of the assets held by the partnership or trust. The
changed its use before the end of the 5-year recapture value of the corporation's share of these assets should be
period under section 50(a), enter the increase in tax from listed on line 3.
Form 4255, Recapture of Investment Credit. See
Instructions for Form 4255. Part II—Total Assets and Total Insurance
Liabilities
Line 10. Recapture of low-income housing credit. If
the corporation disposed of property (or there was a The information provided in Part II should conform
reduction in the qualified basis of the property) for which it ! with the “Assets” and “Liabilities, Surplus, and
took the low-income housing credit and the corporation CAUTION Other Funds” sections of the NAIC annual
did not follow the procedures that would have prevented statement.
recapture of the credit, it may owe a tax. See Form 8611, Foreign life insurance companies must maintain a
Recapture of Low-Income Housing Credit. Complete and minimum surplus of U.S. assets over their U.S. insurance
attach Form 8611. liabilities. The minimum required surplus is determined by
multiplying their U.S. insurance liabilities by a percentage

22 Instructions Form 1120-L (2023)

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determined by the IRS. The IRS determines the The constructive ownership rules of section 318 apply
percentage from data supplied by domestic life insurance in determining if a corporation is foreign owned. See
companies on Schedule L, Part II. See section 842. section 6038A(c)(5) and the related regulations.
For Schedule L, total insurance liabilities means the Enter on line 8a the percentage owned by the foreign
sum of the following amounts as of the end of the tax year. person specified in question 8. On line 8b, write the name
of the owner's country.
1. Total reserves as defined in section 816(c); plus
2. The items referred to in paragraphs (3), (4), (5), and Note. If there is more than one 25%-or-more foreign
(6) of section 807(c), to the extent such amounts are not owner, complete lines 8a and 8b for the foreign person
included in total reserves. with the highest percentage of ownership.
Foreign life insurance companies, see Notice 89-96 for Foreign person. The term “foreign person” means:
more information on determining total insurance liabilities • An individual who is not a citizen or resident of the
on U.S. business. United States;
• An individual who is a citizen or resident of a U.S.
territory who is not otherwise a citizen or resident of the
Schedule M—Other Information United States;
Complete the items that apply to the corporation. • Any partnership, association, company, or corporation
Question 6. Check the “Yes” box if: that is not created or organized in the United States;
• The corporation is a subsidiary in an affiliated group • Any foreign estate or trust within the meaning of section
(defined below) but is not filing a consolidated return for 7701(a)(31); or
the tax year with that group, or • A foreign government (or one of its agencies or
• The corporation is a subsidiary in a parent-subsidiary instrumentalities) to the extent that it is engaged in the
controlled group. For a definition of a parent-subsidiary conduct of a commercial activity as described in section
controlled group, see the Instructions for Schedule O 892.
(Form 1120). However, the term "foreign person" does not include
Any corporation that meets either of the requirements any foreign person who consents to the filing of a joint
above should check the “Yes” box. This applies even if the income tax return.
corporation is a subsidiary member of one group and the Owner's country. For individuals, the term “owner's
parent corporation of another. country” means the country of residence. For all others, it
is the country where incorporated, organized, created, or
Note. If the corporation is an “excluded member” of a administered.
controlled group (see definition in the Instructions for
Schedule O (Form 1120)), it is still considered a member Requirement to file Form 5472. If the corporation
of a controlled group for this purpose. checked “Yes” to question 8, it may have to file Form 5472.
Generally, a 25% foreign-owned corporation that had a
Affiliated group. An affiliated group is one or more reportable transaction with a foreign or domestic related
chains of includible corporations (section 1504(a)) party during the tax year must file Form 5472. See the
connected through stock ownership with a common Instructions for Form 5472 for filing instructions and
parent corporation. The common parent must be an penalties for failure to file.
includible corporation and the following requirements must
be met. Item 11. Enter the amount of the NOL carryover to the tax
year from prior years, even if some of the loss is used to
1. The common parent must own directly stock that
offset income on this return. The amount to enter is the
represents at least 80% of the total voting power and at
total of all NOLs generated in prior years but not used to
least 80% of the total value of the stock of at least one of
offset income (either as a carryback or carryover) in a tax
the other includible corporations.
year prior to 2023. Do not reduce the amount by any NOL
2. Stock that represents at least 80% of the total voting deduction reported on page 1, line 21b.
power and at least 80% of the total value of the stock of
each of the other corporations (except for the common Item 12. Complete item 12 to identify the state where the
parent) must be owned directly by one or more of the annual statement used to prepare the tax return was filed.
other includible corporations. Question 13. A corporation that files Form 1120-L must
For this purpose, “stock” generally does not include any file Schedule UTP (Form 1120), Uncertain Tax Position
stock that (a) is nonvoting, (b) is nonconvertible, (c) is Statement, with its 2022 income tax return if:
limited and preferred as to dividends and does not • For 2023, the corporation's total assets equal or exceed
participate significantly in corporate growth, and (d) has $10 million;
redemption and liquidation rights that do not exceed the • The corporation or a related party issued audited
issue price of the stock (except for a reasonable financial statements reporting all or a portion of a
redemption or liquidation premium). See section 1504(a) corporation's operations for all or a portion of the
(4). corporation's tax year; and
• The corporation has one or more tax positions that must
Question 8. Check the “Yes” box if one foreign person be reported on Schedule UTP.
owned at least 25% of the total voting power of all classes Attach Schedule UTP to the corporation's income tax
of stock of the corporation entitled to vote, or at least 25% return. Do not file it separately. A taxpayer that files a
of the total value of all classes of stock of the corporation.

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protective Form 1120-L must also file Schedule UTP if it current year, or prior year carryover, excess business
satisfies the requirements set forth above. interest expense allocated from the partnership.
For details, see the Instructions for Schedule UTP. Exclusions from filing. A taxpayer is not required to file
Question 14. If the corporation had gross receipts of at Form 8990 if the taxpayer is a small business taxpayer
least $500 million in any 1 of the 3 preceding tax years, and does not have excess business interest expense from
complete and attach Form 8991. For this purpose, the a partnership. A taxpayer is also not required to file Form
corporation's gross receipts include the gross receipts of 8990 if the taxpayer only has business interest expense
all persons aggregated with the corporation as specified in from the following excepted trades or businesses.
section 59A(e)(3). See the Instructions for Form 8991 to • An electing real property trade or business.
determine if the corporation is subject to the base erosion • An electing farming business.
minimum tax. • Certain utility businesses.
Question 15. Section 267A disallows a deduction for Small business taxpayer. A small business taxpayer is
certain interest and royalty payments or accruals. In not subject to the business interest expense limitation and
general, section 267A applies when: is not required to file Form 8990. A small business
taxpayer is a taxpayer that (a) is not a tax shelter (as
1. The interest or royalty is paid or accrued to a related
defined in section 448(d)(3)), and (b) meets the gross
party;
receipts test of section 448(c), discussed next.
2. Under its tax laws, the related party either:
Gross receipts test. For tax years beginning in 2023, a
a. Does not include the full amount in income, or taxpayer meets the gross receipts test if the taxpayer has
b. Is allowed a deduction with respect to the amount; average annual gross receipts of $29 million or less for the
and 3 prior tax years. A taxpayer's average annual gross
3. The amount is paid or accrued pursuant to a hybrid receipts for the 3 prior tax years is determined by adding
transaction or by, or to, a hybrid entity. the gross receipts for the 3 prior tax years and dividing the
total by 3. Gross receipts include the aggregate gross
When section 267A applies, the deduction is generally receipts from all persons treated as a single employer,
disallowed to the extent the related party does not include such as a controlled group of corporations, commonly
the amount in income or is allowed a deduction with controlled partnerships, or proprietorships, and affiliated
respect to the amount. However, the deduction is not service groups. See section 448(c) and the Instructions
disallowed to the extent the amount is included in the for Form 8990 for additional information.
gross income of a U.S. shareholder under section 951(a).
Member of controlled group, business under com-
For definitions of terms, see section 267A.
mon control, or affiliated group. For purposes of the
Question 16. The limitation on business interest expense gross receipts test, all members of a controlled group of
applies to every taxpayer with a trade or business, unless corporations (as defined in section 52(a)) and all
the taxpayer meets certain specified exceptions. A members of a group of businesses under common control
taxpayer may elect out of the limitation for certain (as defined in section 52(b)), are treated as a single
businesses otherwise subject to the business interest person, and all employees of the members of an affiliated
expense limitation. service group (as defined in sections 414(m) and (o)) shall
Certain real property trades or businesses and farming be treated as employed by a single person. If required,
businesses qualify to make an election not to limit attach Form 8990 to the corporation's income tax return.
business interest expense. This is an irrevocable election. Do not file it separately. See Limitations under Line 15a,
If you make this election, you are required to use the earlier.
alternative depreciation system to depreciate any Question 18. If the corporation is a member of a
nonresidential real property, residential rental property, controlled group, check the "Yes" box. Complete and
and qualified improvement property for an electing real attach Schedule O (Form 1120), Consent Plan and
property trade or business, and any property with a Apportionment Schedule for a Controlled Group.
recovery period of 10 years or more for an electing Component members of a controlled group must use
farming business. See section 168(g)(1)(F). Also, you are Schedule O (Form 1120) to report the apportionment of
not entitled to the special depreciation allowance for that certain tax benefits between the members of the group.
property. For a taxpayer with more than one qualifying See Schedule O (Form 1120) and the Instructions for
business, the election is made with respect to each Schedule O (Form 1120) for more information.
business.
Question 19. Check the appropriate boxes to indicate if
Check "Yes" if the corporation has an election in effect the corporation is required to file Form 4626. If the
to exclude a real property trade or business or a farming corporation does not meet the requirements of the safe
business from section 163(j). For more information, see harbor method, as provided under section 59(k)(3)(A) and
section 163(j) and the Instructions for Form 8990. Notice 2023-7, 2023-3 I.R.B. 390, available at IRS.gov/irb/
Question 17. Generally, a taxpayer with a trade or 2023-03_IRB#NOT-2023-7, for the current tax year, Form
business must file Form 8990 to claim a deduction for 4626 must be completed and attached to the corporation’s
business interest. In addition, Form 8990 must be filed by return. See the Instructions for Form 4626.
any taxpayer that owns an interest in a partnership with

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Paperwork Reduction Act Notice. We ask for the information on these forms to carry out the Internal Revenue laws of
the United States. You are required to give us the information. We need it to ensure that you are complying with these
laws and to allow us to figure and collect the right amount of tax.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act
unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be
retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax
returns and return information are confidential, as required by section 6103.
The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden
for business taxpayers filing this form is approved under OMB control number 1545-0123 and is included in the estimates
shown in the instructions for their business income tax return.
If you have comments or suggestions for making this form and related schedules simpler, we would be happy to hear
from you. You can send us comments from IRS.gov/FormComments. Or you can write to:

Internal Revenue Service
Tax Forms and Publications
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224

Do not send the tax form to this address. Instead, see Where To File, earlier.

Instructions Form 1120-L (2023) 25

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Index
 
                                       Foreign corporations     22
A                                      Foreign person 23                      R
Accounting methods, change in   6      Foreign tax credit   21                Recordkeeping   6
Accounting period (tax year) 6         Forms and publications, how to get  2  Return premiums  9
Address change    9                    Future Developments      1
Affiliated group 23                                                           S
Amended return    9                    G
                                                                              Schedule:
Amortization  11                       General business credit     21          A 16
Annual Statement  4                    Golden parachute payments      11       B 19
Assembling the return  4               Gross premiums and other                F 19
                                         consideration      9                  G 20
B                                                                              K 21
Backup withholding  16                 I                                       L, Part I 22
Business start-up expenses   11        Interest due on late payment of tax 5   L, Part II 22
                                                                               M 23
C                                      L                                      Schedule M-3 (Form 1120-L)                  8
Charitable contributions  14           Life insurance company taxable         Section 953 elections 9
Consolidated return 7                    income  9
Controlled group:                      Limitation on dividends-received       T
  Member of  21                          deduction  18                        Tax and payments:
  Parent-subsidiary 23                 Limitations on deductions    10         Estimated tax payments 16
                                       Losses incurred      11                 Prior year(s) special estimated tax 
D                                                                                payments to be applied                  16
                                       M
Deductions   10                                                               Taxpayer Advocate Service                  2
Definitions:                           Minimum tax:                           Transactions between related 
  Insurance company 3                    Alternative minimum tax   21          taxpayers    11
  Life insurance company  3              Prior year, credit for 21            Travel, meals, and entertainment:
                                                                               Meals and entertainment 14
  Reserves test  3
Depository methods of tax              N                                       Membership dues  14
  payment    5                         Name change    9                        Travel 14
Disclosure statement  6
                                       O                                      W
E                                      Operations loss deduction    15        What's New   1
Electronic deposit of tax refund of $1 Other deductions     12                When to file 3
  million or more 16                   Overpaid  16                           Where to file 4
Electronic Federal Tax Payment         Owner's country      23                Who must file 2
  System (EFTPS)    5                                                          Foreign Life Insurance Companies            2
Electronic Filing 3                    P                                       Mutual savings banks conducting life 
Employer identification number                                                   insurance business  2
  (EIN) 8                              Paid preparer authorization    4        Other insurance companies                 3
Estimated tax payments    16           Penalties 5 6 16,  ,                   Who must sign   3
Estimated tax penalty 5 16,            Pension, profit-sharing, etc. plans 13 Worksheet for Schedule A 17
Extension of time to file 3            Period covered 7
                                       Private delivery services   3
F
Final return 9

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