U.S. Life Insurance Company Income Tax Return

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Instructions for Form 1120-L (2009)

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16:04 - 13-JAN-2010

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2009

Department of the Treasury
Internal Revenue Service

Instructions for Form 1120-L
U.S. Life Insurance Company Income Tax Return
Section references are to the Internal
Revenue Code unless otherwise noted.

What’s New

Contents
Page
Photographs of Missing
Children . . . . . . . . . . . . . . . . . . . 1
Unresolved Tax Issues . . . . . . . . . . 1
How To Get Forms and
Publications . . . . . . . . . . . . . . . . 2
IRS E-Services . . . . . . . . . . . . . . . . 2
General Instructions . . . . . . . . . . . 2
Purpose of Form . . . . . . . . . . . . . . . 2
Who Must File . . . . . . . . . . . . . . . . 2
Definitions . . . . . . . . . . . . . . . . . . . 2
When To File . . . . . . . . . . . . . . . . . 3
Where To File . . . . . . . . . . . . . . . . . 3
Who Must Sign . . . . . . . . . . . . . . . . 3
Paid Preparer Authorization . . . . . 4
Statements . . . . . . . . . . . . . . . . . . . 4
Assembling the Return . . . . . . . . . . 4
Depository Methods of Tax
Payment . . . . . . . . . . . . . . . . . . . 4
Estimated Tax Payments . . . . . . . . 5
Interest and Penalties . . . . . . . . . . . 5
Accounting Methods . . . . . . . . . . . . 5
Accounting Period . . . . . . . . . . . . . 6
Rounding Off to Whole
Dollars . . . . . . . . . . . . . . . . . . . . 6
Recordkeeping . . . . . . . . . . . . . . . . 6
Other Forms and Statements
That May Be Required . . . . . . . . 6
Specific Instructions . . . . . . . . . . 7
Period Covered . . . . . . . . . . . . . . . 7
Name and Address . . . . . . . . . . . . . 7
Identifying Information . . . . . . . . . . 7
Employer Identification
Number (EIN) . . . . . . . . . . . . . . . 8
Section 953 Elections . . . . . . . . . . . 8
Final Return, Name Change,
Address Change, or
Amended Return . . . . . . . . . . . . . 8
Life Insurance Company
Taxable Income . . . . . . . . . . . . . 8
Schedule A . . . . . . . . . . . . . . . . . . 15
Schedule B . . . . . . . . . . . . . . . . . . 17
Schedule F . . . . . . . . . . . . . . . . . . 18
Schedule G . . . . . . . . . . . . . . . . . 19
Schedule H . . . . . . . . . . . . . . . . . . 20
Schedule I . . . . . . . . . . . . . . . . . . 20
Schedule J . . . . . . . . . . . . . . . . . . 20
Schedule K . . . . . . . . . . . . . . . . . . 21
Schedule L . . . . . . . . . . . . . . . . . . 22
Schedule M . . . . . . . . . . . . . . . . . 23
Index . . . . . . . . . . . . . . . . . . . . . . 25

• For tax years beginning after 2009,
policy acquisition expenses for an
annuity or life insurance contract that
includes a qualified long-term care
insurance contract as part of, or as a
rider on, the annuity or life insurance
contract, must be capitalized at the
rate of 7.7 percent of the net
premiums.
• Under section 6050U(b), specified
information must be reported to
persons who make a charge against
the cash value of an annuity contract
or the cash surrender value of a life
insurance contract after 2009, as
payment for coverage under certain
long-term care life insurance
contracts. See the Instructions for the
2010 Form 1099-R for more
information.
• The corporation can elect to defer
income from cancellation of debt in
connection with an applicable debt
instrument reacquired after
December 31, 2008, and before
January 1, 2011, and include the
deferred income over a 5-year period.
See section 108(i). In addition, any
original issue discount (OID) subject
to section 108(i) generally is allowed
as a deduction ratably over the 5-year
period that the income from
cancellation of debt is includible in
income. Also see the instructions for
line 7 on page 9 and line 15a on page
10.
• The American Recovery and
Reinvestment Act of 2009 expanded
the rules that apply to limitations on
deductions for executive
compensation. These rules now apply
to any entity that receives or has
received financial assistance under
the Troubled Asset Relief Program
(TARP). See the instructions for line
18 on page 12.
• The limitations on net operating
loss (NOL) carryforward following
ownership change do not apply to
certain ownership changes after
February 17, 2009, made according
to a restructuring plan under the
Emergency Stabilization Act of 2008.
See the instructions for line 21b on
page 14.
Cat. No. 11485H

• The Worker, Homeownership, and

Business Assistance Act of 2009
allows life insurance companies to
elect a 4 or 5-year carryback period
for an applicable loss from operations
for a tax year ending after December
31, 2007, and beginning before
January 1, 2010. However, this relief
is not available for a corporation that
received payments under TARP.
Other special rules apply. See Rev.
Proc. 2009-52, 2009-49 I.R.B. 744.
Also, see the instructions for line 21b
on page 14.
• The election to accelerate the
minimum tax and research credits in
lieu of claiming any additional first
year special depreciation allowance
for eligible qualified property has
been extended to eligible qualified
extension property. See the
instructions for line 29j on page 15.
• Certain tax benefits for Midwestern
disaster areas, including special
charitable contribution benefits, have
expired. See Pub. 4492-B,
Information for Affected Taxpayers in
the Midwestern Disaster Areas.
For the latest information, see
www.irs.gov/formspubs.

Photographs of Missing
Children
The Internal Revenue Service is a
proud partner with the National
Center for Missing and Exploited
Children. Photographs of missing
children selected by the Center may
appear in instructions on pages that
would otherwise be blank. You can
help bring these children home by
looking at the photographs and
calling 1-800-THE-LOST (1-800843-5678) if you recognize a child.

Unresolved Tax Issues
The Taxpayer Advocate Service
(TAS) is an independent organization
within the IRS whose employees
assist taxpayers who are
experiencing economic harm, who
are seeking help in resolving tax
problems that have not been resolved
through normal channels, or who
believe that an IRS system or
procedure is not working as it should.

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Instructions for Form 1120-L (2009)

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The service is free, confidential,
tailored to meet your needs, and is
available for businesses, as well as
individuals.
The corporation can contact the
TAS as follows.
• Call the TAS toll-free line at
1-877-777-4778 or TTY/TDD
1-800-829-4059 to see if the
corporation is eligible for assistance.
• Call or write the corporation’s local
taxpayer advocate, whose phone
number and address are listed in the
local telephone directory and in Pub.
1546, Taxpayer Advocate Service –
Your Voice at the IRS.
• File Form 911, Request for
Taxpayer Advocate Service
Assistance (And Application for
Taxpayer Assistance Order), or ask
an IRS employee to complete it on
the corporation’s behalf.
For more information, go to
www.irs.gov/advocate.

How To Get Forms and
Publications
Internet. You can access the IRS
website 24 hours a day, 7 days a
week, at www.irs.gov to:
• Download forms, instructions, and
publications;
• Order IRS products online;
• Research your tax questions
online;
• Search publications online by topic
or keyword;
• View Internal Revenue Bulletins
(IRBs) published in recent years; and
• Sign up to receive local and
national tax news by email.
IRS Tax Products DVD. You can
order Pub. 1796, IRS Tax Products
DVD, and obtain the following.

• Current-year forms, instructions,

and publications.
• Prior-year forms, instructions, and
publications.
• Tax Map: an electronic research
tool and finding aid.
• Tax law frequently asked questions
(FAQs).
• Tax Topics from the IRS telephone
response system.
• Internal Revenue Code – Title 26
of the U.S. Code.
• Fill-in, print, and save features for
most tax forms.
• Internal Revenue Bulletins.
• Toll-free and email technical
support.
• Two releases during the year.
– The first release will ship early in
January.

– The final release will ship early in
March.
Buy the DVD from the National
Technical Information Service (NTIS)
at www.irs.gov/cdorders for $30 (no
handling fee) or call 1-877-233-6767
toll free to buy the DVD for $30 (plus
a $6 handling fee).
By phone and in person. You can
order forms and publications by
calling 1-800-TAX-FORM
(1-800-829-3676). You can also get
most forms and publications at your
local IRS office.

IRS E-Services Make
Taxes Easier
Now more than ever before,
businesses can enjoy the benefits of
filing and paying their federal taxes
electronically. Whether you rely on a
tax professional or handle your own
taxes, the IRS offers you convenient
programs to make taxes easier.
• You can e-file Form 7004,
Application for Automatic Extension
of Time To File Certain Business
Income Tax, Information, and Other
Returns, Form 940, Employer’s
Annual Federal Unemployment
(FUTA) Tax Return, 941, Employer’s
Quarterly Federal Tax Return, Form
1099-MISC, Miscellaneous Income,
and other information returns. Visit
www.irs.gov/efile for details.
• You can pay taxes online or by
phone using the free Electronic
Federal Tax Payment System
(EFTPS). Visit www.eftps.gov or call
1-800-555-4477 for details.
Use these electronic options to
make filing and paying taxes easier.

General Instructions
Purpose of Form
Use Form 1120-L, U.S. Life
Insurance Company Income Tax
Return, to report the income, gains,
losses, deductions, credits, and to
figure the income tax liability of life
insurance companies.

Who Must File
Every domestic life insurance
company and every foreign
corporation that would qualify as a life
insurance company if it were a U.S.
corporation must file Form 1120-L.
This includes organizations described
in section 501(m)(1) that provide
commercial-type life insurance.
-2-

Mutual Savings Banks
Conducting Life Insurance
Business
Mutual savings banks conducting life
insurance business and meeting the
requirements of section 594 are
subject to an alternative tax
consisting of:
• A partial tax computed on Form
1120, U.S. Corporation Income Tax
Return, on the taxable income of the
bank excluding the life insurance
department, and
• A partial tax on the taxable income
computed on Form 1120-L of the life
insurance department.
Enter the combined tax on line 2 of
Schedule J, Form 1120. File Form
1120 and attach Form 1120-L as a
schedule (and identify it as such) or
attach a statement showing the
computation of the taxable income of
the life insurance department
(including all relevant information that
would be reported on Form 1120-L).

Foreign Life Insurance
Companies
A foreign life insurance company that
sells a U.S. real property interest
must file Form 1120-L and Schedule
D (Form 1120) to report the sale.
Gain or loss from the sale of a U.S.
real property interest is considered
effectively connected with the
conduct of a U.S. business, even
though the foreign life insurance
company does not carry on any
insurance business in the United
States and is not otherwise required
to file a U.S. income tax return. See
sections 842 and 897, and the
Schedule K, line 8, instructions on
page 22 for additional information.

Other Insurance Companies
Insurance companies, other than life
insurance companies, should file
Form 1120-PC, U.S. Property and
Casualty Insurance Company Income
Tax Return. A burial or funeral benefit
insurance company that directly
manufactures funeral supplies or
performs funeral services is taxable
under section 831 and should file
Form 1120-PC.

Definitions
An “insurance company” means any
corporation if more than half of its
business during the tax year is from
the issuance of insurance or annuity
contracts or the reinsuring of risks
underwritten by insurance
companies.
Instructions for Form 1120-L (2009)

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A “life insurance company” is an
insurance company in the business of
issuing life insurance and annuity
contracts either separately or
combined with health and accident
insurance, or noncancelable
contracts of health and accident
insurance that meet the reserves test
in section 816(a). Guaranteed
renewable life, health, and accident
insurance that the corporation cannot
cancel but reserves the right to adjust
premium rates by classes, according
to experience under the kind of policy
involved, are treated as
noncancelable.
The “reserves test” requires that
life insurance reserves, as defined in
section 816(b), plus unearned
premiums and unpaid losses
(whether or not ascertained) on
noncancelable life, health, or accident
policies not 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
met:
1. Life insurance reserves and
total reserves must each be reduced
by an amount equal to the mean of
the aggregates, at the beginning and
end of the tax year, of the policy
loans outstanding with respect to
contracts for which life insurance
reserves are maintained;
2. Amounts set aside and held at
interest to satisfy obligations under
contracts that do not contain
permanent guarantees with respect to
life, accident, or health contingencies
must not be included in either life
insurance reserves (section
816(c)(1)) or other reserves required
by law (section 816(c)(3)); and
3. Deficiency reserves must not
be included in either life insurance
reserves or total reserves.

When To File
Generally, a corporation must file its
income tax return by the 15th day of
the 3rd month after the end of its tax
year. A new corporation filing a
short-period return must generally file
by the 15th day of the 3rd month after
the short period ends. A corporation
that has dissolved must generally file
by the 15th day of the 3rd month after
the date it dissolved.
If the due date falls on a Saturday,
Sunday, or legal holiday, the
corporation can file on the next
business day.
Instructions for Form 1120-L (2009)

Private Delivery Services
Corporations can use certain private
delivery services designated by the
IRS to meet the “timely mailing as
timely filing/paying” rule for tax
returns and payments. These private
delivery services include only the
following.

• DHL Express (DHL): DHL Same

Day Service.
• Federal Express (FedEx): FedEx
Priority Overnight, FedEx Standard
Overnight, FedEx 2Day, FedEx
International Priority, and FedEx
International First.
• United Parcel Service (UPS): UPS
Next Day Air, UPS Next Day Air
Saver, UPS 2nd Day Air, UPS 2nd
Day Air A.M., UPS Worldwide
Express Plus, and UPS Worldwide
Express.
The private delivery service can
tell you how to get written proof of the
mailing date.

Private delivery services
cannot deliver items to P.O.
CAUTION boxes. You must use the U.S.
Postal Service to mail any item to an
IRS P.O. box address.

!

Extension of Time To File
File Form 7004 to request a 6-month
extension of time to file. Generally,
file Form 7004 by the regular due
date of the return.

Who Must Sign
The return must be signed and dated
by:
• The president, vice-president,
treasurer, assistant treasurer, chief
accounting officer; or
• Any other corporate officer (such
as tax officer) authorized to sign.
If a return is filed on behalf of a
corporation by a receiver, trustee, or
assignee, the fiduciary must sign the
return, instead of the corporate
officer. Returns and forms signed by
a receiver or trustee in bankruptcy on
behalf of a corporation must be
accompanied by a copy of the order

Where To File
File the corporation’s return at the applicable IRS address listed below.
And the total assets at the
If the corporation’s principal end of the tax year (Form
business, office, or agency 1120-L, Schedule L, Part I,
is located in:
line 6, column (b)) are:
Use the following address:
Connecticut, Delaware, District
of Columbia, Georgia, Illinois,
Indiana, Kentucky, Maine,
Maryland, Massachusetts,
Michigan, New Hampshire,
New Jersey, New York, North
Carolina, Ohio, Pennsylvania,
Rhode Island, South Carolina,
Tennessee, Vermont, Virginia,
West Virginia, Wisconsin

Less than $10 million and
Schedule M-3 is not filed

Department of the Treasury
Internal Revenue Service Center
Cincinnati, OH 45999-0012

$10 million or more or
less than $10 million and
Schedule M-3 is filed

Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0012

Alabama, Alaska, Arizona,
Arkansas, California,
Colorado, Florida, Hawaii,
Idaho, Iowa, Kansas,
Louisiana, Minnesota,
Mississippi, Missouri,
Montana, Nebraska, Nevada,
New Mexico, North Dakota,
Oklahoma, Oregon, South
Dakota, Texas, Utah,
Washington, Wyoming

Any amount

A foreign country or U.S.
possession

Any amount

Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0012

Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409

A group of corporations with members located in more than one service
center area will often keep all the books and records at the principal office of
the managing corporation. In this case, the tax returns of the corporations may
be filed with the service center for the area in which the principal office of the
managing corporation is located.
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or instructions of the court authorizing
signing of the return or form.
If an employee of the corporation
completes Form 1120-L, the paid
preparer’s space should remain
blank. Anyone who prepares Form
1120-L but does not charge the
corporation should not complete that
section. Generally, anyone who is
paid to prepare the return must sign it
and fill in the “Paid Preparer’s Use
Only” area.
The paid preparer must complete
the required preparer information
and:
• Sign the return in the space
provided for the preparer’s signature.
• Give a copy of the return to the
taxpayer.
Note. A paid preparer may sign
original or amended returns by rubber
stamp, mechanical device, or
computer software program.

Paid Preparer
Authorization
If the corporation wants to allow the
IRS to discuss its 2009 tax return with
the paid preparer who signed it,
check the “Yes” box in the signature
area of the return. This authorization
applies only to the individual whose
signature appears in the “Paid
Preparer’s Use Only” section of the
return. It does not apply to the firm, if
any, shown in that section.
If the “Yes” box is checked, the
corporation is authorizing the IRS to
call the paid preparer to answer any
questions that may arise during the
processing of its return. The
corporation is also authorizing the
paid preparer to:
• Give the IRS any information that is
missing from the return,
• Call the IRS for information about
the processing of the return or the
status of any related refund or
payment(s), and
• Respond to certain IRS notices
about math errors, offsets, and return
preparation.
The corporation is not authorizing
the paid preparer to receive any
refund check, bind the corporation to
anything (including any additional tax
liability), or otherwise represent the
corporation before the IRS.
The authorization will automatically
end no later than the due date
(excluding extensions) for filing the
corporation’s 2010 tax return. If the
corporation wants to expand the paid
preparer’s authorization or revoke the
authorization before it ends, see Pub.

947, Practice Before the IRS and
Power of Attorney.

Statements
Annual Statement. In general,
every domestic or foreign life
insurance company must attach a
copy of the NAIC annual statement
filed with the state of domicile and
used as the basis for computing
taxable income. If a different annual
statement was used as the basis for
computing taxable income, attach
that annual statement to Form
1120-L. However, see Electronic
filing, next.
Electronic filing. If a domestic or
foreign life insurance company files
the Form 1120-L electronically, do not
attach the annual statement or pro
forma annual statement to the
electronically filed return. However,
you must provide a copy of the
annual statement or pro forma annual
statement to the Internal Revenue
Service if requested and retain it with
your other tax records for the period
required by the regulations.
Reconciliation. Corporations that
do not file Schedule M-3 (Form
1120-L) with Form 1120-L must
attach a schedule that reconciles
Form 1120-L with the annual
statement used as the basis for
computing taxable income reported
on Form 1120-L. Also, see the Note
under the instructions for Schedule F
for additional required reconciliations.

Assembling the Return
To ensure that the corporation’s tax
return is correctly processed, attach
all schedules and other forms after
page 8 of Form 1120-L in the
following order.
1. Schedule N (Form 1120),
Foreign Operations of U.S.
Corporations.
2. Schedule O (Form 1120),
Consent Plan and Apportionment
Schedule for a Controlled Group.
3. Form 4626, Alternative
Minimum Tax —Corporations.
4. Form 8302, Electronic Deposit
of Tax Refund of $1 Million or More.
5. Form 4136, Credit for Federal
Tax Paid on Fuels.
6. Form 851, Affiliations Schedule.
7. Additional schedules in
alphabetical order.
8. Additional forms in numerical
order.
Complete every applicable entry
space on Form 1120-L. Do not enter
“See Attached” instead of completing
-4-

the entry spaces. If more space is
needed on the forms or schedules,
attach separate sheets using the
same size and format as on the
printed forms. If there are supporting
statements and attachments, arrange
them in the same order as the
schedules or forms they support and
attach them last. Show the totals on
the printed forms. Enter the
corporation’s name and EIN on each
supporting statement or attachment.

Depository Methods of
Tax Payment
The corporation must pay any tax due
in full no later than the 15th day of the
3rd month after the end of the tax
year. The two methods of depositing
taxes are discussed below.

Electronic Deposit
Requirement
The corporation must make electronic
deposits of all depository taxes (such
as employment tax, excise tax, and
corporate income tax) using the
Electronic Federal Tax Payment
System (EFTPS) in 2010 if:
• The total deposits of such taxes in
2008 were more than $200,000 or
• The corporation was required to
use EFTPS in 2009.
If the corporation is required to use
EFTPS and fails to do so, it may be
subject to a 10% penalty. If the
corporation is not required to use
EFTPS, it can participate voluntarily.
To enroll in or get more information
about EFTPS, call 1-800-555-4477.
To enroll online, visit www.eftps.gov.
Depositing on time. For EFTPS
deposits to be made timely, the
corporation must initiate the
transaction at least 1 business day
before the date the deposit is due.

Deposits With Form 8109
If the corporation does not use
EFTPS, deposit corporation income
tax payments (and estimated tax
payments) with Form 8109, Federal
Tax Deposit Coupon. If you do not
have a preprinted Form 8109, use
Form 8109-B to make deposits. You
can get this form by calling
1-800-829-4933 or visiting an IRS
taxpayer assistance center. Have
your EIN ready when you call or visit.
Do not send deposits directly to an
IRS office; otherwise, the corporation
may have to pay a penalty. Mail or
deliver the completed Form 8109 with
the payment to an authorized
depositary (a commercial bank or
other financial institution authorized to
Instructions for Form 1120-L (2009)

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accept federal tax deposits). Make
checks or money orders payable to
the depositary. Records of the
deposits will be sent to the IRS.
If the corporation prefers, it can
mail the coupon and payment to:
Financial Agent, Federal Tax Deposit
Processing, P.O. Box 970030, St.
Louis, MO 63197. Make the check or
money order payable to “Financial
Agent.”
The financial agent cannot process
foreign checks. If the corporation
sends a check written on a foreign
bank to pay a federal tax deposit, it
may be charged a deposit penalty.
To help ensure proper crediting,
enter the corporation’s EIN, the tax
period to which the deposit applies,
and “Form 1120-L” on the check or
money order. On the coupon, darken
the “1120” box under “Type of Tax”
and the appropriate “Quarter” box
under “Tax Period.” See the
Instructions for Form 8109 for details
on how to complete the appropriate
“Quarter” box for income tax deposits.
If the corporation owes tax
when it files Form 1120-L, do
CAUTION not include the payment with
the tax return. Instead, mail or deliver
the payment with Form 8109 to an
authorized depositary, or use EFTPS,
if applicable.
For more information on deposits,
see the instructions for Form 8109
and Pub. 15 (Circular E), Employer’s
Tax Guide.

!

Estimated Tax Payments
Generally, the following rules apply to
the corporation’s payments of
estimated tax.
• The corporation must make
installment payments of estimated tax
if it expects its total tax for the year
(less applicable credits) to be $500 or
more.
• The installments are due by the
15th day of the 4th, 6th, 9th, and 12th
months of the tax year. If any date
falls on a Saturday, Sunday, or legal
holiday, the installment is due on the
next regular business day.
• Use Form 1120-W, Estimated Tax
for Corporations, as a worksheet to
compute estimated tax.
• If the corporation does not use
EFTPS, use the deposit coupons
(Forms 8109) to make deposits of
estimated tax. See the Instructions for
Form 8109 for more information on
completing the coupon for estimated
tax coupons.
• If the corporation overpaid
estimated tax, it may be able to get a
Instructions for Form 1120-L (2009)

quick refund by filing Form 4466,
Corporation Application for Quick
Refund of Overpayment of Estimated
Tax. See the Instructions for Form
8109 for details on how to complete
the coupon for estimated tax
deposits.
See the instructions for lines 29c
and 29e on pages 14 and 15,
respectively.
Estimated tax penalty. A
corporation that does not make
estimated tax payments when due
may be subject to an underpayment
penalty for the period of
underpayment. Generally, a
corporation is subject to the penalty if
its tax liability is $500 or more and it
did not timely pay the smaller of:
• Its tax liability for 2009 or
• Its prior year’s tax.
See section 6655 for details and
exceptions, including special rules for
large corporations.
Use Form 2220, Underpayment of
Estimated Tax by Corporations, to
see if the corporation owes a penalty
and to figure the amount of the
penalty. Generally, the corporation
does not have to file this form
because the IRS can figure the
amount of any penalty and bill the
corporation for it. However, even if
the corporation does not owe the
penalty, complete and attach Form
2220 if:
• The annualized income or adjusted
seasonal installment method is used,
or
• The corporation is a large
corporation computing its first
required installment based on the
prior year’s tax. See the Instructions
for Form 2220 for the definition of a
large corporation.
Also, see the instructions for line
30 on page 15.

Interest and Penalties
Interest. Interest is charged on
taxes paid late even if an extension of
time to file is granted. Interest is also
charged on penalties imposed for
failure to file, negligence, fraud,
substantial valuation misstatements,
substantial understatements of tax,
and reportable transaction
understatements from the due date
(including extensions) to the date of
payment. The interest charge is
figured at a rate determined under
section 6621.
Late filing of return. A corporation
that does not file its tax return by the
due date, including extensions, may
be penalized 5% of the unpaid tax for
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each month or part of a month the
return is late, up to a maximum of
25% of the unpaid tax. The minimum
penalty for a return that is over 60
days late is the smaller of the tax due
or $135. The penalty will not be
imposed if the corporation can show
that the failure to file on time was due
to reasonable cause. Corporations
that file late should attach a
statement explaining the reasonable
cause.
Late payment of tax. A corporation
that does not pay the tax when due
generally may be penalized 1/2 of 1%
of the unpaid tax for each month or
part of a month the tax is not paid, up
to a maximum of 25% of the unpaid
tax. The penalty will not be imposed if
the corporation can show that the
failure to pay on time was due to
reasonable cause.
Trust fund recovery penalty. This
penalty may apply if certain excise,
income, social security, and Medicare
taxes that must be collected or
withheld are not collected or withheld,
or these taxes are not paid. These
taxes are generally reported on:
• Form 720, Quarterly Federal
Excise Tax Return;
• Form 941, Employer’s
QUARTERLY Federal Tax Return;
• Form 944, Employer’s ANNUAL
Federal Tax Return; or
• Form 945, Annual Return of
Withheld Federal Income Tax.
The trust fund recovery penalty
may be imposed on all persons who
are determined by the IRS to be
responsible for collecting, accounting
for, and paying over these taxes, and
who acted willfully in not doing so.
The penalty is equal to the full
amount of the unpaid trust fund tax.
See the Instructions for Form 720 or
Pub. 15 (Circular E), for details,
including the definition of responsible
persons.
Other penalties. Other penalties
can be imposed for negligence,
substantial understatement of tax,
reportable transaction
understatements, and fraud. See
sections 6662, 6662A, and 6663.

Accounting Methods
The return of a life insurance
company must be filed using the
accrual method of accounting or, to
the extent permitted under
regulations, a combination of the
accrual method with any other
method, except the cash receipts and
disbursements method. In all cases,

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the method used must clearly show
LICTI.
Change in accounting method.
Generally, the corporation must get
IRS consent to change the method of
accounting used to report taxable
income (for income as a whole or for
the treatment of any material item).
To do so, the corporation generally
must file Form 3115, Application for
Change in Accounting Method.
See Form 3115, the Instructions
for Form 3115, and Pub. 538,
Accounting Periods and Methods, for
more information on accounting
methods.
There are some instances when
the corporation can obtain automatic
consent from the IRS to change to
certain accounting methods. See
Rev. Proc. 2008-52, 2008-36 I.R.B.
587, and Rev. Proc. 2009-39,
2009-38 I.R.B. 371. Also, see the
Instructions for Form 3115.

Accounting Period
An insurance company must figure its
taxable income on the basis of a tax
year. A tax year is the annual
accounting period an insurance
company uses to keep its records
and report its income and expenses.
As a general rule under section
843, the tax year for every insurance
company is the calendar year.
However, if an insurance company
joins in the filing of a consolidated
return, it may adopt the tax year of
the common parent corporation even
if that year is not a calendar year.

Rounding Off to Whole
Dollars
The corporation can round off cents
to whole dollars on its return and
schedules. If the corporation does
round to whole dollars, it must round
all amounts. To round, drop amounts
under 50 cents and increase amounts
from 50 to 99 cents to the next dollar.
For example, $1.39 becomes $1 and
$2.50 becomes $3.
If two or more amounts must be
added to figure the amount to enter
on a line, include cents when adding
the amounts and round off only the
total.

Recordkeeping
Keep the corporation’s records for as
long as they may be needed for the
administration of any provision of the
Internal Revenue Code. Usually,
records that support an item of
income, deduction, or credit on the

return must be kept for 3 years from
the date the return is due or filed,
whichever is later. Keep records that
verify the corporation’s basis in
property for as long as they are
needed to figure the basis of the
original or replacement property.
The corporation should keep
copies of all filed returns. They help in
preparing future and amended
returns.

Other Forms and
Statements That May Be
Required
Reportable transaction disclosure
statement. Disclose information for
each reportable transaction in which
the corporation participated. Form
8886, Reportable Transaction
Disclosure Statement, must be filed
for each tax year that the federal
income tax liability of the corporation
is affected by its participation in the
transaction. The following are
reportable transactions.
1. Any listed transaction, which is
a transaction that is the same as or
substantially similar to one of the
types of transactions that the IRS has
determined to be a tax avoidance
transaction and identified by notice,
regulation, or other published
guidance as a listed transaction.
2. Any transaction offered under
conditions of confidentiality for which
the corporation (or a related party)
paid an advisor a fee of at least
$250,000.
3. Certain transactions for which
the corporation (or a related party)
has contractual protection against
disallowance of the tax benefits.
4. Certain transactions resulting in
a loss of at least $10 million in any
single year or $20 million in any
combination of years.
5. Any transaction identified by the
IRS by notice, regulation, or other
published guidance as a “transaction
of interest.” See Notice 2009-55,
2009-31 I.R.B. 170.
For more information, see
Regulations section 1.6011-4, Notice
2009-55, 2009-31 I.R.B. 170, Notice
2009-59, 2009-31 I.R.B. 170, and 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
8886. Penalties also apply under
section 6707A if the corporation fails
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to file Form 8886 with its corporate
return, fails to provide a copy of Form
8886 to the Office of Tax Shelter
Analysis (OTSA), or files a form that
fails to include all the information
required (or includes incorrect
information). Other penalties, such as
an accuracy-related penalty under
section 6662A, may also apply. See
the Instructions for Form 8886 for
details on these and other penalties.
Reportable transactions by
material advisors. Material
advisors to any reportable transaction
must disclose certain information
about the reportable transaction by
filing Form 8918, Material Advisor
Disclosure Statement, with the IRS.
See the Instructions for Form 8918.
Transfers to a corporation
controlled by the transferor. Every
significant transferor (as defined in
Regulations section 1.351-3(d)) that
receives stock of a corporation in
exchange for property in a
nonrecognition event must attach the
statement required by Regulations
section 1.351-3(a) to its return for the
tax year of the exchange. The
transferee corporation must include
the statement required by
Regulations section 1.351-3(b) for the
tax year of the exchange, unless all
the required information is included in
any statement(s) provided by a
significant transferor that is attached
to the same return for the same
section 351 exchange. If the
transferor or transferee corporation is
a controlled foreign corporation, each
U.S. shareholder (within the meaning
of section 951(b)) must include the
required statement on or with its
return.
Distributions under section 355.
Every corporation that makes a
distribution of stock or securities of a
controlled corporation, as described
in section 355 (or so much of section
356 as it relates to section 355), must
attach the statement required by
Regulations section 1.355-5 to its
return for the year of the distribution.
If the distributing corporation is a
controlled foreign corporation, each
U.S. shareholder (within the meaning
of section 951(b)), must include the
statement on or with its return.
Dual consolidated losses. If a
domestic corporation incurs a dual
consolidated loss (as defined in
Regulations section 1.1503-2(c)(5)),
the corporation (or consolidated
group) may need to attach an elective
relief agreement and/or an annual
certification as provided in
Regulations section 1.1503-2(g)(2).
Instructions for Form 1120-L (2009)

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Election to reduce basis under
section 362(e)(2)(C). The transferor
and transferee in certain section 351
transactions can make a joint election
under section 362(e)(2)(C) to limit the
transferor’s basis in the stock
received instead of the transferee’s
basis in the transferred property. The
transferor and transferee can make
the election by attaching the
statement as provided in Notice
2005-70, 2005-41 I.R.B. 694, to their
tax returns filed by the due date
(including extensions) for the tax year
in which the transaction occurred. If
the transferor is a controlled foreign
corporation, its controlling U.S.
shareholder(s) can make the election.
The common parent of a consolidated
group can make the election for the
group.
Once made, the election is
irrevocable. See section 362(e)(2)(C)
and Notice 2005-70.
Other forms and statements. See
Pub. 542, Corporations, for a list of
other forms and statements a
corporation may need to file in
addition to the forms and statements
discussed throughout these
instructions.

Specific Instructions
Period Covered
Section 843 requires all insurance
companies to file on a calendar year
basis, unless they join in the filing of
a consolidated return. If a
consolidated return is filed, indicate
the period covered on the parent
corporation’s return.

Name and Address
Enter the corporation’s true name (as
set forth in the charter or other legal
document creating it), address, and
EIN on the appropriate lines. Enter
the address of the corporation’s
principal office or place of business.
Include the suite, room, or other unit
number after the street address. If the
post office does not deliver mail to the
street address and the corporation
has a P.O. box, show the box number
instead.
Note. Do not use the address of the
registered agent for the state in which
the corporation is incorporated. For
example, if a business is incorporated
in Delaware or Nevada and the
corporation’s principal place office is
located in Little Rock, AR, the
corporation should enter the Little
Rock address.
Instructions for Form 1120-L (2009)

If the corporation receives its mail
in care of a third party (such as an
accountant or an attorney), enter on
the street address line “C/O” followed
by the third party’s name and street
address or P.O. box.

Item A. Identifying
Information
Consolidated Return
If an affiliated group of corporations
includes one or more domestic life
insurance companies taxed under
section 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 group for
the 5 tax years immediately
preceding the tax year for which the
election is made. See section
1504(c)(2) and Regulations section
1.1502-47(d)(12).
Note. The eligibility requirements
(the tacking rule) for a life insurance
company to join in the filing of a
consolidated return with nonlife
companies are covered in
Regulations section
1.1502-47(d)(12)(v).
Note. If an election under section
1504(c)(2) is in effect for an affiliated
group for the tax year, all items of
members of the group that are not life
insurance companies must not be
taken into account in figuring the
tentative life insurance company
taxable income (LICTI) of members
that are life insurance companies.
Corporations filing a consolidated
return must check box 1 of item A
and attach Form 851 and other
supporting statements to the return.
Also, for the first year a subsidiary
corporation is being included in a
consolidated return, attach Form
1122, Authorization and Consent of
Subsidiary Corporation To Be
Included in a Consolidated Income
Tax Return, to the parent’s
consolidated return. Attach a
separate Form 1122 for each
subsidiary being included in the
consolidated return.
File supporting statements for
each corporation included in the
consolidated return. Do not use Form
1120-L as a substitute for the
supporting statement. On the
supporting statement, use columns to
show the following, both before and
after adjustments.
1. Items of gross income and
deductions.
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2. A computation of taxable
income.
3. Balance sheets as of the
beginning and end of the tax year.
4. A reconciliation of income per
books with income per return.
5. A reconciliation of retained
earnings.
Enter on Form 1120-L the totals for
each item of income, gain, loss,
expense, or deduction, net of
eliminating entries for intercompany
transactions between corporations
within the consolidated group. Attach
consolidated balance sheets and a
reconciliation of consolidated retained
earnings.
For more information on
consolidated returns, see the
regulations under section 1502.

Life-Nonlife Consolidated
Return
If box A1 is checked and nonlife
insurance companies are included in
the consolidated return, also check
box A2. See Regulations section
1.1502-47T(s) for the filing
requirements of a life-nonlife
consolidated group.
Note. If a nonlife insurance
company is a member of an affiliated
group, file Form 1120-PC as an
attachment to the consolidated return
in addition to the supporting
statements discussed earlier under
Consolidated Return. Across the top
of page 1 of Form 1120-PC, write
“Supporting Statement to
Consolidated Returns.”

Schedule M-3 (Form 1120-L)
A life insurance company with total
assets (non-consolidated or
consolidated for all companies
included within a tax consolidation
group) of $10 million or more on the
last day of the tax year must
complete Schedule M-3 (Form
1120-L), Net Income (Loss)
Reconciliation for U.S. Life Insurance
Companies With Total Assets of $10
Million or More. A corporation filing
Form 1120-L that is not required to
file Schedule M-3 may voluntarily file
Schedule M-3.
If you are filing Schedule M-3
(Form 1120-L), check box 3 of Item
A, “Schedule M-3 (Form 1120-L)
attached” at the top of page 1 of
Form 1120-L. See the Instructions for
Schedule M-3 (Form 1120-L) for
more details.
Note. If you do not file Schedule M-3
(Form 1120-L) with Form 1120-L, see

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Reconciliation under Statements on
page 4.

Item B. Employer
Identification Number
(EIN)
Enter the corporation’s EIN. If the
corporation does not have an EIN, it
must apply for one. An EIN can be
applied for:
• Online—Click on the EIN link at
www.irs.gov/businesses/small. The
EIN is issued immediately once the
application information is validated.
• By telephone at 1-800-829-4933 on
Monday through Friday from 7:00
a.m. to 10:00 p.m. in the corporation’s
local time zone.
• By mailing or faxing Form SS-4,
Application for Employer Identification
Number.
If the corporation has not received
its EIN by the time the return is due,
enter “Applied for” and the date you
applied in the space for the EIN. For
more information, see the Instructions
for Form SS-4.
Note. Only corporations located in
the United States or U.S.
possessions can use the online
application.

Item D. Section 953
Elections
Check the appropriate box if the
corporation is a foreign corporation
and elects under:
1. Section 953(c)(3)(C) to treat its
related person insurance income as
effectively connected with the
conduct of a trade or business in the
United States or
2. Section 953(d) to be treated as
a domestic corporation.
Generally, a foreign corporation
making either election must file its
return with the Internal Revenue
Service Center, P.O. Box 409101,
Ogden, UT 84409. See Notice 87-50,
1987-2 C.B. 357, and Rev. Proc.
2003-47, 2003-28 I.R.B. 55, for the
procedural rules, election statement
formats, and filing addresses for
making the respective elections under
section 953(c)(3)(C) or section
953(d).
Note. Once either election is made,
it will apply to the tax year for which
made and all subsequent tax years
unless revoked with the consent of
the IRS. Also, any loss of a foreign
corporation electing to be treated as a
domestic insurance company under

section 953(d) will be treated as a
dual-consolidated loss and may not
be used to reduce the taxable income
of any other member of the affiliated
group for the tax year or any other tax
year.
Note. If a section 953(d) election is
made, include the additional tax
required to be paid on line 10,
Schedule K. On the dotted line to the
left of line 10, Schedule K, write
“Section 953(d)” and the amount.
Attach a schedule showing the
computation. See section 953(d) for
more details.

Item E. Final Return,
Name Change, Address
Change, or Amended
Return
Indicate a final return, name change,
address change, or amended return
by checking the appropriate box.
Note. If a change of address occurs
after the return is filed, use Form
8822, Change of Address, to notify
the IRS of the new address.

Life Insurance Company
Taxable Income
Income
Except as otherwise provided in the
Internal Revenue Code, gross income
includes all income from whatever
source derived.
Income from qualifying shipping
activities. Gross income does not
include income from qualifying
shipping activities if the corporation
makes an election under section
1354 to be taxed on its notional
shipping income (as defined in
section 1353) at the highest corporate
tax rate (35%). If the election is
made, the corporation generally may
not claim any loss, deduction, or
credit with respect to qualifying
shipping activities. A corporation
making this election also may elect to
defer gain on the disposition of a
qualifying vessel.
Use Form 8902, Alternative Tax on
Qualifying Shipping Activities, to
figure the tax. Include the alternative
tax on Schedule K, line 9.
Line 1. Enter gross premiums and
other consideration received on
insurance and annuity contracts less
return premiums and premiums and
other consideration paid for indemnity
reinsurance.
-8-

Gross premiums and other
consideration includes advance
premiums, deposits, fees,
assessments, consideration received
for assuming liabilities under
contracts not issued by the
corporation, and any amount treated
as premiums received under section
808(e) (see the instructions for
Schedule F, line 18a, on page 19).
Return premiums include amounts
rebated or refunded due to policy
cancellations or incorrectly computed
premiums, but do not include
amounts returned to policyholders
when such amounts are not fixed in
the contract but instead depend on
the corporation’s experience or the
management’s discretion.
Line 2. Net decrease in reserves.
If there is a decrease in reserves,
complete line 2 by doing the
following:
1. Pencil in the amount from line
8, Schedule F, on line 2, to tentatively
compute life insurance company
gross income (LICGI).
2. Enter this tentative LICGI on
Schedule F, line 12, and complete the
remainder of Schedule F.
After completing steps 1 and 2
above, erase the numbers penciled in
for step 1 and then enter on line 2 the
net decrease in reserves shown on
line 35, Schedule F.
Line 3. 10% of certain decreases in
reserves under section
807(f)(1)(B)(ii). If the amount of any
item referred to in section 807(c)
decreases as a result of a change in
the basis used to determine that item,
10% of the decrease must be
included in LICGI for each of the 10
succeeding tax years. See section
807(f)(1).
Note. If a corporation no longer
qualifies as a life insurance company,
the balance of any adjustments under
section 807(f) must be taken into
account in the last tax year the
corporation is qualified to file Form
1120-L. See section 807(f)(2).
Line 4. Investment income. Enter
the amount from Schedule B, line 8,
less 50% of interest income of an
ESOP loan made prior to August 20,
1996. Also, see Act section 1602 of
the Small Business Job Protection
Act of 1996 for binding contracts and
refinancing rules.
Line 5. Net capital gain. Unless
specifically excluded by section 1221,
each asset held by a corporation
(whether or not connected with its
business) is a ‘‘capital asset.’’
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Under section 1221, capital asset
does not include:
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.
3. Certain copyrights; or, literary,
musical, or artistic compositions.
4. Accounts or notes receivable
acquired in the ordinary course of
trade or business for services
rendered or from the sale of property
described in 1 above.
5. Certain publications of the U.S.
Government.
Section 818(b) modifies the above
definition so only property used in
carrying on an insurance business
will be considered as “depreciable or
real property used in the corporation’s
trade or business.” For life insurance
companies, gains or losses from the
sale or exchange of depreciable
assets of any business other than an
insurance business will be treated as
gains or losses from the sale or
exchange of capital assets.
See section 818(c) and the related
regulations for how to limit the gain
from the sale or exchange of any
section 818(c) property.
Line 6. Income from a special loss
discount account. Enter the total
from Part II, line 6, of Form 8816,
Special Loss Discount Account and
Special Estimated Tax Payments for
Insurance Companies. See section
847(5) and the Instructions for Form
8816 for more information.
Line 7. Other income. Enter any
other taxable income, includible in
LICGI, not reported on lines 1 through
6. List the type and amount of income
on an attached schedule. If the life
insurance company has only one item
of other income, describe it in
parentheses on line 7. The following
are examples of other income to
report on line 7.
• All income from noninsurance
business (defined in section
806(b)(3)), but list it separately from
all other income.
• Gains and losses (including
ordinary gains and losses) from sales
or exchanges of assets used in a
trade or business and from
involuntary conversions reported on
Form 4797, Sales of Business
Property. Section 818(b)(1) provides
that, for section 1231(a), “property
used in a trade or business” includes
only:
1. Property used in carrying on an
insurance business that is either real
Instructions for Form 1120-L (2009)

or depreciable property held for more
than 1 year.
2. Timber, coal, and domestic iron
ore to which section 631 applies.
For paragraph 1 above, property
used in a trade or business does not
include property includible in
inventory, property held primarily for
sale to customers, or certain
copyrights, literary, musical, or artistic
compositions, letters, memoranda,
and similar property.
• The amount included in income
from line 6 of Form 6478, Alcohol and
Cellulosic Biofuel Fuels Credit.
• The amount included in income
from line 8 of Form 8864, Biodiesel
and Renewable Diesel Fuels Credit.
• Ordinary income from trade or
business activities of a partnership
(from Schedule K-1 (Form 1065),
Partner’s Share of Income,
Deductions, Credits, etc., or from
Schedule K-1, (Form 1065-B),
Partner’s Share of Income (Loss)
From an Electing Large Partnership).
Do not offset ordinary losses against
ordinary income. Instead, include the
losses on line 18. Show the
partnership’s name, address, and EIN
on a separate statement attached to
this return. If the amount entered is
from more than one partnership,
identify the amount from each
partnership.
• Part or all of the proceeds received
from certain corporate-owned life
insurance contracts issued after
August 17, 2006. Corporations that
own one or more employer-owned life
insurance contracts issued after
August 17, 2006, must file Form
8925, Report of Employer-Owned Life
Insurance Contracts.
• Income from cancellation of debt
for the repurchase of a debt
instrument for less than its adjusted
issue price. However, for a
reacquisition of an applicable debt
instrument after December 31, 2008,
and before January 1, 2011, a
corporation can elect, under section
108(i), to defer the income from
cancellation of debt in connection
with the election. If the corporation
makes the election, the income is
deferred and ratably included in
income over the 5-year period
beginning with:
1. For a reacquisition occurring in
2009, the fifth tax year following the
tax year in which the reacquisition
occurs, and
2. For a reacquisition occurring in
2010, the fourth tax year following the
tax year in which the reacquisition
occurs.
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To make the election, attach a
statement to the corporation’s return
for the tax year in which the
applicable reacquisition occurs. The
statement must clearly identify the
applicable instrument and include the
amount of income to which the
election applies. Once made, the
election is irrevocable. For more
information, see section 108(i) and
Rev. Proc. 2009-37, 2009-36 I.R.B.
309.

Deductions
Limitations on Deductions
Section 263A uniform
capitalization rules. The uniform
capitalization rules of section 263A
require corporations to capitalize
certain costs.
For details on the uniform
capitalization rules, see Regulations
sections 1.263A-1 through 1.263A-3.
Transactions between related
taxpayers. Generally, an accrual
basis taxpayer can only deduct
business expenses and interest owed
to a related party in the year the
payment is included in the income of
the related party. See sections
163(e)(3), 163(j), and 267 for
limitations on deductions for unpaid
interest and expenses.
Corporations use Form 8926,
Disqualified Corporate Interest
Expense Disallowed Under Section
163(j) and Related Information, to
figure the amount of any corporate
interest expense disallowed by
section 163(j).
Section 291 limitations.
Corporations may be required to
adjust certain deductions. See
section 291 to determine the amount
of the adjustment. Also, see section
43.
Golden parachute payments. A
portion of the payments made by a
corporation to key personnel that
exceeds their usual compensation
may not be deductible. This occurs
when the corporation has an
agreement (golden parachute) with
these key employees to pay them
these excess amounts if control of the
corporation changes. See section
280G and Regulations section
1.280G-1.
Business start-up and
organizational costs. For business
start-up and organizational costs paid
or incurred after September 8, 2008,
a corporation can deduct up to
$5,000 of such cost for the year it
begins business (unless the

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corporation elects to capitalize all
such costs). The $5,000 deduction is
reduced by the amount the total costs
exceed $50,000. If the total costs are
$55,000 or more, the deduction is
reduced to zero. Any cost not
deducted must be amortized ratably
over a 180-month period, beginning
with the month the corporation begins
business. The corporation is not
required to attach a statement or
specifically identify the amount
deducted in order for the election to
be effective. The corporation can
choose to forego the deduction and
instead elect to capitalize all such
costs. The election to deduct or
capitalize costs is irrevocable. See
Temporary Regulations sections
1.195-1T and 1.248-1T.
For business start-up and
organizational costs paid or incurred
after October 22, 2004, and before
September 9, 2008, a corporation can
elect to deduct up to $5,000 of such
costs for the year it begins business
(otherwise the corporation must
capitalize all such costs). The $5,000
deduction is reduced by the amount
the total costs exceed $50,000. If the
total costs are $55,000 or more, the
deduction is reduced to zero. Any
costs not deducted must be
amortized ratably over a 180-month
period, beginning with the month the
corporation begins business. If the
election is made, the corporation
must attach any statement required
by Regulations sections 1.195-1(b)
and 1.248-1(c) (as in effect before
September 8, 2008). However, the
corporation can apply the provisions
of Temporary Regulations sections
1.195-1T and 1.248-1T to all
expenses paid or incurred after
October 22, 2004, provided the
period of limitations on assessment
has not expired for the year of the
election. Otherwise the provisions
under Regulations sections
1.195-1(b) and 1.248-1(c) will apply.
For business start-up and
organizational costs paid or incurred
before October 23, 2004, a
corporation can elect to amortize
such costs over a period of 60
months or more.
Report the deductible amount of
such costs and any amortization on
line 18. For amortization that begins
during the 2009 tax year, complete
and attach Form 4562, Depreciation
and Amortization. For more details on
business start-up and organizational
costs, see Pub. 535, Business
Expenses.

Reducing certain expenses for
which credits are allowable. If the
corporation claims any of the
following credits, it may need to
reduce the otherwise allowable
deductions for expenses used to
figure the credit.
• Employment credits. See
Employment credits on page 12.
• Research credit.
• Orphan drug credit.
• Disabled access credit.
• Employer credit for social security
and Medicare taxes paid on certain
employee tips (Form 8846).
• Credit for small employer pension
plan startup costs (Form 8881).
• Credit for employer-provided
childcare facilities and services (Form
8882).
If the corporation has any of these
credits, figure the current year credit
before figuring the deduction for
expenses on which the credit is
based. If the corporation capitalized
any costs on which it figured the
credit, it may need to reduce the
amount capitalized by the credit
attributable to these costs.
See the instructions for the form
used to figure the applicable credit for
more information.
Limitations on deductions related
to property leased to tax-exempt
entities. If a corporation leases
property to a governmental or other
tax-exempt entity, the corporation
cannot claim deductions related to
the property to the extent that they
exceed the corporation’s income from
the lease payments. This disallowed
tax-exempt use loss can be carried
over to the next tax year and treated
as a deduction with respect to the
property for that tax year. See section
470 for more details and exceptions.
Line 9. Death benefits, etc. Enter
all claims and benefits accrued and
losses incurred (whether or not
ascertained) during the year on
insurance and annuity contracts.
Losses incurred (whether or not
ascertained) includes a reasonable
estimate both of losses incurred but
not reported and of reported losses,
when the amount of the losses
cannot be determined by the end of
the tax year. Losses incurred must be
adjusted to take into account
recoveries (e.g., for reinsurance) for
those losses together with estimates
of those recoveries that may be
recovered on those losses in future
years.
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Under section 807(c), the
TIP amount of unpaid losses
(other than losses on life
insurance contracts) must be the
amount of the discounted unpaid
losses under section 846. See the
instructions for Schedule F, line 2, for
more information on the discounting
provisions.
Line 11. 10% of increase in
reserves under section
807(f)(1)(B)(i). If the amount of any
item referred to in section 807(c)
increases as a result of a change in
the basis used to determine that item,
10% of the increase will be allowed
as a deduction in computing LICTI for
each of the 10 succeeding tax years.
See section 807(f)(1).
Termination as life insurance
company. If a corporation ceases to
qualify as a life insurance company,
the balance of any adjustments under
section 807(f) must be taken into
account in the last year that the
corporation is qualified to file Form
1120-L. See section 807(f)(2).
Line 13. Assumption by another
person of liabilities under
insurance, etc., contracts. Enter
the total consideration paid by the
corporation to another person (other
than for indemnity reinsurance) for
the assumption by that person of
liabilities under insurance and annuity
contracts (including supplementary
contracts).
Line 14. Dividends reimbursable by
taxpayer. Enter the amount of
policyholder dividends:
1. Paid or accrued by another
insurance company for policies this
corporation has reinsured and
2. That are reimbursable by the
corporation under the terms of the
reinsurance contract.
Line 15a. Interest. Enter all interest
paid or accrued during the tax year.
No deduction is allowed under
section 163 for interest on the items
described in section 807(c). Also, do
not include interest included on
Schedule G, line 9 (general
deductions).
Limitations. The deduction for
interest is limited when the
corporation is a policyholder or
beneficiary with respect to a life
insurance, endowment, or annuity
contract issued after June 8, 1997.
For details, see section 264(f). Attach
a statement showing the computation
of the deduction.
Section 108(i) OID deduction. If
the corporation issued a debt
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instrument with original issue
discount (OID) that is subject to
section 108(i)(2) because of an
election under section 108(i) to defer
the recognition of income from the
cancellation of debt (COD), the
deduction for all or a portion of the
OID that accrues prior to the first tax
year the COD is includible in income
is deferred until the COD is includible
in income. The aggregate amount of
OID that is deferred during this period
is generally allowed as a deduction
ratably over the five-year period the
COD is includible in income under
section 108(i). The amount deferred
is limited to the amount of COD
subject to the section 108(i) election.
Line 15b. Less tax-exempt interest
expense. Enter interest paid or
accrued on indebtedness incurred or
continued to purchase or carry
obligations, the interest on which is
wholly tax-exempt. See section
265(b) for special rules and
exceptions for financial institutions.
Also see section 265(b)(7) for a
temporary de minimis exception for
financial institutions for certain
tax-exempt bonds issued in 2009 and
2010.
Line 17. Additional deduction.
Enter the total from Form 8816, Part
II, line 5.
Any insurance company taking the
additional deduction must:
• Make special estimated tax
payments equal to the tax benefit
from the deduction and
• Establish and maintain a Special
Loss Discount Account. See section
847 and Form 8816 for more
information.
Line 18. Other deductions. Attach
a schedule, listing by type and
amount, all allowable deductions in
computing LICTI (including the
amortization of premiums under
section 811(b)) not included on lines
9 through 17.
Examples of other deductions
include the following. See Pub. 535
and Pub. 542 for details on other
deductions that may apply to
corporations.
• The domestic production activities
deduction. See Form 8903, Domestic
Production Activities Deduction.
• Certain business start-up and
organizational costs that the
corporation elects to deduct. See
page 9.
• Legal and professional fees.
• Supplies used and consumed in
the business.
Instructions for Form 1120-L (2009)

• Travel, meals, and entertainment

expenses. Special rules apply
(discussed on page 13).
• Utilities.
• Ordinary losses from trade or
business activities of a partnership
(from Schedule K-1 (Form 1065 or
1065-B)). Do not offset ordinary
income against ordinary losses.
Instead, include the income on line 7.
Show the partnership’s name,
address, and EIN on a separate
statement attached to this return. If
the amount is from more than one
partnership, identify the amount from
each partnership.
• Any extraterritorial income
exclusion (from Form 8873,
Extraterritorial Income Exclusion, line
52).
• Deduction for certain energy
efficient commercial building property
placed in service during the tax year.
See section 179D, and Notice
2008-40, 2008-14 I.R.B. 725, and
Notice 2006-52, 2006-26 I.R.B. 1175.
• Qualified demolition and clean-up
costs attributable to damages in the
Kansas and Midwestern disaster
areas. See Pubs. 4492-A and
4492-B.
• Certain environmental remediation
costs that the corporation elects to
deduct. See section 198.
• Certain qualified disaster expenses
that the corporation elects to deduct.
See section 198A.
• Dividends paid in cash on stock
held by an employee stock ownership
plan. However, a deduction can only
be taken for the dividends above if,
according to the plan, the dividends
are:
1. Paid in cash directly to the plan
participants or beneficiaries;
2. Paid to the plan, which
distributes them in cash to the plan
participants or their beneficiaries no
later than 90 days after the end of the
plan year in which the dividends are
paid;
3. At the election of such
participants or their beneficiaries (a)
payable as provided under 1 or 2
above or (b) paid to the plan and
reinvested in qualifying employer
securities; or
4. Used to make payments on a
loan described in section 404(a)(9).
See section 404(k) for more details
and the limitation on certain
dividends.
• Deductions from any noninsurance
business (defined in section
806(b)(3)). Deductions from any
noninsurance business should be
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listed separately from all other
deductions.
• Depreciation or amortization
(attach Form 4562, if required).
Attach Form T (Timber), Forest
Activities Schedule, if a deduction for
depletion of timber is taken. Foreign
intangible drilling costs and foreign
exploration and development costs
must either be added to the
corporation’s basis for cost depletion
purposes or be deducted ratably over
a 10-year period. See sections 263(i),
616, and 617.
Do not deduct the following.
• Fines or penalties paid to a
government for violating any law.
• Lobbying expenses. However, see
exceptions (discussed below).
Also include on line 18 the
following.
Compensation of officers.
Include deductible officers’
compensation. See Employment
credits on page 12 for a list of
employment credits that may reduce
your deduction for officers’
compensation. Do not include
compensation deductible elsewhere
on the return, such as elective
contributions to a section 401(k) cash
or deferred arrangement or amounts
contributed under a salary reduction
SEP agreement or a SIMPLE IRA
plan.
Include only the deductible part of
each officer’s compensation on line
18. (See Disallowance of deduction
for employee compensation in excess
of $1 million below.) Attach a
schedule for compensation of all
officers using the following columns.
1. Name of officer.
2. Social security number.
3. Percentage of time devoted to
business.
4. Amount of compensation.
If a consolidated return is filed,
each member of an affiliated group
must furnish this information.
Disallowance of deduction for
employee compensation in excess
of $1 million. Publicly held
corporations cannot deduct
compensation to a covered employee
to the extent that the compensation
exceeds $1 million. Generally, a
covered employee is:
• The principal executive officer of
the corporation (or an individual
acting in that capacity) as of the end
of the tax year or
• An employee whose total
compensation must be reported to
shareholders under the Securities

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Exchange Act of 1934 because the
employee is among the three highest
compensated officers for that tax year
(other than the principal executive
officer).
For this purpose, compensation
does not include the following.
• Income from certain employee
trusts, annuity plans, or pensions.
• Any benefit paid to an employee
that is excluded from the employee’s
income.
The deduction limit does not apply
to:
• Commissions based on individual
performance,
• Qualified performance-based
compensation, and
• Income payable under a written
binding contract in effect on February
17, 1993.
The $1 million limit is reduced by
amounts disallowed as excess
parachute payments under section
280G.
For details, see section 162(m)
and Regulations section 1.162-27.
Also see Notice 2007-49, 2007-25
I.R.B. 1429.
Limitations on tax benefits for
executive compensation under the
Treasury Troubled Asset Relief
Program (TARP). The $1 million
compensation limit is reduced to
$500,000 for executive remuneration
and deferred deduction executive
remuneration paid to covered
executives by any entity that receives
or has received financial assistance
under TARP. The limit applies for
each period in which obligations
arising from financial assistance
under TARP remain outstanding. The
$500,000 is reduced by any amounts
disallowed as excess parachute
payments. See section 162(m)(5) for
definitions and other special rules.
Also see Notice 2008-94, 2008-44
I.R.B. 1070, for additional guidance.
In addition, a portion of any
parachute payments made to a
covered executive by an applicable
employer participating in a Treasury
troubled asset relief program is not
deductible as compensation if the
payments are made because of a
severance from employment during
an applicable tax year. For this
purpose, a parachute payment is any
payment to a senior executive officer
for departure from a company for any
reason, except for payments for
services performed or benefits
accrued. These limits do not apply to
a payment already treated as a

parachute payment. See section
280G(e) and Notice 2008-94.
Salaries and wages. Include the
total salaries and wages paid for the
tax year. Do not include salaries and
wages deductible elsewhere on the
return, such as amounts included in
officers’ compensation, elective
contributions to a section 401(k) cash
or deferred arrangement, or amounts
contributed under a salary reduction
SEP agreement or a SIMPLE IRA
plan.
If the corporation provided
taxable fringe benefits to its
CAUTION employees, such as personal
use of a car, do not deduct as wages
the amount allocated for depreciation
and other expenses claimed under
Other Deductions on line 18.
Employment credits. If the
corporation claims a credit on any of
the following forms, it may need to
reduce its deduction for officer’s
compensation and salaries and
wages. See the applicable forms for
details.
• Form 5884, Work Opportunity
Credit;
• Form 5884-A, Credits for Affected
Midwestern Disaster Area Employers;
• Form 8844, Empowerment Zone
and Renewal Community
Employment Credit;
• Form 8845, Indian Employment
Credit; and
• Form 8932, Credit for Employer
Differential Wage Payments.
Pension, profit-sharing, etc.
plans. Include the deduction for
contributions to qualified pension,
profit-sharing, or other funded
deferred compensation plans.
Employers who maintain such a plan
generally must file one of the forms
listed below, 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 year.
There are penalties for failure to file
these forms on time and for
overstating the pension plan
deduction. See sections 6652(e) and
6662(f).
Form 5500, Annual Return/Report
of Employee Benefit Plan. File this
form for a plan that is not a
one-participant plan (see below).
Form 5500-EZ, Annual Return of
One-Participant (Owners and Their
Spouses) Retirement Plan. File this
form for a plan that only covers the
owner (or the owner and his or her
spouse) but only if the owner (or the

!

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owner and his or her spouse) owns
the entire business.
Charitable contributions.
Include contributions or gifts actually
paid within the tax year to or for the
use of charitable and governmental
organizations described in section
170(c) and any unused contributions
carried over from prior years. Special
rules and limits apply to contributions
to organizations conducting lobbying
activities. See section 170(f)(9).
Life insurance companies reporting
LICTI on the accrual method can
elect to treat as paid during the tax
year any contributions paid by the
15th day of the 3rd month after the
end of the tax year if the contributions
were authorized by the board of
directors during the tax year. Attach a
declaration to the return stating that
the resolution authorizing the
contributions was adopted by the
board of directors during the tax year.
The declaration must include the date
the resolution was adopted. See
Regulations section 1.170A-11.
Limitation on deduction. The
total amount claimed cannot be more
than 10% of LICTI computed without
regard to the following.
• Any deduction for contributions.
• The deduction for policyholder
dividends.
• The deduction for dividends
received.
• The small life insurance company
deduction.
• The domestic production activities
deduction under section 199.
• Any operations loss carryback to
the tax year under section 810.
• Any capital loss carryback to the
tax year under section 1212(a)(1).
Carryover. Charitable
contributions over the 10% limitation
cannot be deducted for the tax year
but may be carried over to the next 5
tax years.
A contributions carryover is not
allowed, however, to the extent that it
increases an operations loss.
Cash Contributions. For
contributions of cash, check, or other
monetary gifts (regardless of the
amount), the corporation must
maintain a bank record, or a receipt,
letter, or other written communication
from the donee organization
indicating the name or the
organization, the date of the
contribution, and the amount of the
contribution.
Contributions of $250 or more.
Generally, no deduction is allowed for
any contribution of $250 or more
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unless the corporation gets a written
acknowledgment from the donee
organization that shows the amount
of cash contributed, describes any
property contributed, and, either gives
a description and a good faith
estimate of the value of any goods or
services provided in return for the
contribution or states that no goods or
services were provided in return for
the contribution. The
acknowledgment must be obtained by
the due date (including extensions) of
the corporation’s return, or, if earlier,
the date the return is filed. Do not
attach the acknowledgment to the tax
return, but keep it with the
corporation’s records.
Contributions of property other
than cash. If a corporation
contributes property other than cash
and claims over a $500 deduction for
the property, it must, generally, attach
a schedule to the return describing
the kind of property contributed and
the method used to determine its fair
market value (FMV). Attach Form
8283, Noncash Charitable
Contributions, to the return for
contributions of property (other than
money) if the total claimed deduction
for all property contributed was more
than $5,000. Special rules apply to
the contribution of certain property.
See the Instructions for Form 8283.
Qualified conservation
contributions. Special rules apply
to qualified conservation
contributions, including contributions
of certain easements on buildings
located in a registered historic district.
See Section 170(h) and Pub. 526,
Charitable Contributions.
Other special rules. The
corporation must reduce its deduction
for contributions of certain capital
gain property. See sections 170(e)(1)
and 170(e)(5).
A larger deduction is allowed for
certain contributions of:
• Inventory and other property to
certain organizations for use in the
care of the ill, needy, or infants
(section 170(e)(3)), including
contributions of “apparently
wholesome food” (see section
170(c)(3)(C)), and contributions of
qualified book inventory to public
schools (see section 170(c)(3)(D);
• Scientific equipment used for
research to institutions of higher
learning or to certain scientific
research organizations (other than by
personal holding companies and
service organizations (section
170(e)(4)); and
Instructions for Form 1120-L (2009)

• Computer technology and

equipment for educational purposes
(section 170(e)(6)).
For more information on charitable
contributions, including substantiation
and recordkeeping requirements, see
section 170 and the related
regulations and Pub. 526. For other
special rules that apply to
corporations, see Pub. 542.
Travel, meals, and
entertainment. Subject to
limitations and restrictions discussed
below, a corporation can deduct
ordinary and necessary travel, meals,
and entertainment expenses paid or
incurred in its trade or business. Also,
special rules apply to deductions for
gifts, skybox rentals, luxury water
travel, convention expenses, and
entertainment tickets. See section
274 and Pub. 463, Travel,
Entertainment, Gift, and Car
Expenses.
Travel. The corporation cannot
deduct travel expenses of any
individual accompanying a corporate
officer or employee, including a
spouse or dependent of the officer or
employee, unless:
• That individual is an employee of
the corporation, and
• His or her travel is for a bona fide
business purpose and would
otherwise be deductible by that
individual.
Meals and entertainment.
Generally, the corporation can deduct
only 50% of the amount otherwise
allowable for meals and
entertainment expenses paid or
incurred in its trade or business. In
addition (subject to exceptions under
section 274(k)(2)):
• Meals must not be lavish or
extravagant;
• A bona fide business discussion
must occur during, immediately
before, or immediately after the meal;
and
• An employee of the corporation
must be present at the meal.
See section 274(n)(3) for a special
rule that applies to expenses for
meals consumed by individuals
subject to the hours of service limits
of the Department of Transportation.
Membership dues. The
corporation can deduct amounts paid
or incurred for membership dues in
civic or public service organizations,
professional organizations (such as
bar and medical associations),
business leagues, trade associations,
chambers of commerce, boards of
trade, and real estate boards.
-13-

However, no deduction is allowed if a
principal purpose of the organization
is to entertain, or provide
entertainment facilities for, members
or their guests. In addition,
corporations cannot deduct
membership dues in any club
organized for business, pleasure,
recreation, or other social purpose.
This includes country clubs, golf and
athletic clubs, airline and hotel clubs,
and clubs operated to provide meals
under conditions favorable to
business discussion.
Entertainment facilities. The
corporation cannot deduct an
expense paid or incurred for a facility
(such as a yacht or hunting lodge)
used for an activity usually
considered entertainment,
amusement, or recreation.
Amounts treated as
compensation. Generally, the
corporation may be able to deduct
otherwise nondeductible
entertainment, amusement, or
recreation expenses if the amounts
are treated as compensation to the
recipient and reported on Form W-2
for an employee or on Form
1099-MISC for an independent
contractor.
However, if the recipient is an
officer, director, or beneficial owner
(directly or indirectly) of more than
10% of any class of stock, the
deductible expense is limited. See
section 274(e)(2) and Notice
2005-45, 2005-24 I.R.B. 1228.
Lobbying expenses. Generally,
lobbying expenses are not deductible.
These expenses include:
• Amounts paid or incurred in
connection with influencing federal or
state legislation (but not local
legislation) or
• Amounts paid or incurred in
connection with any communication
with certain federal executive branch
officials in an attempt to influence the
official actions or positions of the
officials. See Regulations section
1.162-29 for the definition of
“influencing legislation.”
Dues and other similar amounts
paid to certain tax-exempt
organizations may not be deductible.
See section 162(e)(3). If certain
in-house lobbying expenditures do
not exceed $2,000, they are
deductible.
Line 21b. Operations loss
deduction. The operations loss
deduction (OLD) is the total of the
operations loss carryovers from prior
tax years. However, the OLD cannot

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exceed the corporation’s LICTI (after
the dividends-received deduction).
See section 810(c). If this deduction
is taken, show its computation on an
attached schedule.
Generally, a life insurance
company can carry an operating loss
back to each of the 3 years preceding
the year of the loss and carry it over
to each of the 15 years following the
year of the loss. However, see
Extended carryback period for an
applicable 2008 or 2009 loss from
operations for exceptions.
There is also an irrevocable
election to waive the carryback period
and instead carry an operating loss
forward to years following the year of
the loss. To make this election, check
the box in line 12, Schedule M. To be
valid, the election must be made by
the due date (including extensions)
for filing Form 1120-L. If the life
insurance company is a new
company for the loss year, the loss
may be carried over to each of the 18
years following the year of the loss.
After applying the operating loss to
the first tax year to which it may be
carried, the portion of the loss the
corporation may carry to each of the
remaining tax years is the excess, if
any, of the loss over the sum of the
offsets for each of the prior tax years
to which the corporation may carry
the loss. See section 810(b)(2).
See section 810 for special rules,
limitations, and definitions pertaining
to operating loss carrybacks and
carryovers.
If an ownership change occurs, the
amount of the taxable income of a
loss corporation that may be offset by
the pre-change operations loss
carryovers may be limited. See
section 382 and the related
regulations. A loss corporation must
include the information statement as
provided in Regulations section
1.382-11(a), with its income tax return
each tax year that it is a loss
corporation in which an ownership
shift, equity structures shift, or other
transaction described in Temporary
Regulations section 1.382-2T(a)(2)(i)
occur. If the corporation makes the
closing-of-the-books election, see
Regulations section 1.382-6(b).
The limitations under section 382
do not apply to certain ownership
changes after February 17, 2009,
made pursuant to a restructuring plan
under the Emergency Economic
Stabilization Act of 2008. See section
382(n).

For guidance in applying section
382 to loss corporations whose
instruments were acquired by
Treasury under certain programs
under the Emergency Economic
Stabilization Act of 2008, see Notice
2010-2, 2010-2 I.R.B. 251.
If a corporation elects the
alternative tax on qualifying shipping
activities under section 1354, no
deduction is allowed for an operations
loss attributable to the qualifying
shipping activities to the extent that
the loss is carried forward from a tax
year preceding the first tax year for
which the alternative tax election was
made. See section 1358(b)(2).
See section 844 for special loss
carryover rules for an insurance
company that has changed its form of
organization or has had a change in
the nature of its insurance business.
Extended carryback period for
an applicable 2008 or 2009 loss
from operations. A life insurance
company can elect a 4 or 5-year
carryback period for an applicable
loss from operations for a tax year
ending after December 31, 2007, and
beginning before January 1, 2010.
However, this relief is not available
for a corporation that received
payments under the Troubled Asset
Relief Program (TARP). An
operations loss carried back 5 years
may offset no more than 50 percent
of a life insurance company’s taxable
income in that fifth preceding year.
This limitation does not apply to the
fourth preceding year.
The corporation can make the
election by attaching an election
statement to Form 1120-L, or
amended Form 1120-L, for the year
of the applicable operations loss. The
election must be filed by the due date
(including extensions) for filing the
corporation’s tax return for its last tax
year beginning in 2009. The
statement must indicate that the
corporation is electing to apply
section 810(b)(4) under Rev. Proc.
2009-52, and that the corporation is
not a TARP recipient, nor in 2008 or
2009, an affiliate of a TARP recipient.
The statement must also specify the
length of the operations loss
carryback period (4 or 5 years) the
corporation elects. If the corporation
previously filed a carryback claim, the
statement must also indicate that the
election amends a previous carryback
claim. Once made, the election is
irrevocable.
A corporation that made an
election under section 810(b)(3) to
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waive the carryback period for an
applicable NOL arising in a tax year
ending before November 6, 2009, can
revoke that election, and make the
election under Rev. Proc. 2009-52 to
use the 4 or 5-year carryback period.
For more information on making
the election, see Rev. Proc. 2009-52.
Line 27. Total taxable income. The
total taxable income reported on line
27 cannot be less than line 26 of the
Form 1120-L.
Also, line 27 cannot be less than
the largest of the following amounts.
• The inversion gain of the
corporation for the tax year, if the
corporation is an expatriated entity or
a partner in an expatriated entity. For
details, see section 7874.
• The sum of the corporation’s
excess inclusions from Schedules Q
(1066), line 2c, and the corporation’s
taxable income determined solely
with respect to its ownership and
high-yield interests in FASITs. For
details, see sections 860E(a) and
860J.

Tax and Payments
Line 29b. Prior year(s) special
estimated tax payments to be
applied. The amount entered on line
29b must agree with the amount(s)
from Form 8816, Part III, line 11. See
Form 8816 and section 847(2) for
additional information.
Line 29c. Estimated tax payments.
Enter any estimated tax payments the
corporation made for the tax year. Do
not include any amount being applied
on line 29d.
Line 29d. Special estimated tax
payments. If the deduction under
section 847 is claimed on line 17,
page 1, special estimated tax
payments must be made in an
amount equal to the tax benefit of the
deduction. These payments must be
made on or before the due date
(without regard to extensions) of this
tax return. See Form 8816 and
section 847(2) for additional
information.
Tax benefit rule. Section 847(8)
requires that if a corporation carries
back net operating losses or capital
losses that arise in years after a year
in which a section 847 deduction was
claimed, then the corporation must
recompute the tax benefit attributable
to the previously claimed section 847
deduction taking into account the loss
carrybacks. Tax benefits also include
those derived from filing a
consolidated return with another
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insurance company (without regard to
section 1503(c)).
Therefore, if the recomputation
changes the amount of the section
847 tax benefit, then the taxpayer
must provide a computation schedule
and attach it to Form 8816.
Line 29e. Overpaid Estimated Tax.
If the corporation overpaid estimated
tax, it may be able to get a quick
refund by filing Form 4466. The
overpayment must be at least 10% of
the corporation’s expected income
tax liability and at least $500. File
Form 4466 after the end of the
corporation’s tax year, and no later
than the 15th day of the third month
after the end of the tax year. Form
4466 must be filed before the
corporation files its tax return.
Line 29f. Enter the total of lines 29a
through 29c less line 29e. Do not
include line 29d in the total for line
29f.
Line 29h. Credits. Enter the
applicable credit on line 29h.
Credit for tax paid on undistributed
capital gains. Enter any credit from
Form 2439, Notice to Shareholder of
Undistributed Long-Term Capital
Gains, for the corporation’s share of
the tax paid by a regulated
investment company (RIC) or a real
estate investment trust (REIT) on
undistributed long-term capital gains
included in the corporation’s income.
Attach Form 2439 to Form 1120-L.
Credit for federal tax paid on fuels.
Enter any credit from Form 4136.
Attach Form 4136 to Form 1120-L.
Credit for tax on ozone-depleting
chemicals. Include on line 29h any
credit the corporation is claiming
under section 4682(g)(2) for tax on
ozone-depleting chemicals. Enter
“ODC” next to the entry space.
Line 29i. U.S. income tax paid or
withheld at source. Enter the
amount of any U.S. income tax paid
or withheld as reported on Form
1042-S, Foreign Person’s U.S.
Source Income Subject to
Withholding.
Line 29j. Refundable Credits from
Forms 3800 and 8827, Credit for
Prior Year Minimum
Tax—Corporations. The
corporation can elect to claim certain
unused research and minimum tax
credits instead of claiming any
additional first-year special
depreciation allowance for eligible
qualified property or qualified
extension property placed in service
during the tax year. If the corporation
makes the election, enter on line 29j
Instructions for Form 1120-L (2009)

the amounts from line 19c of Form
3800 and line 8c of Form 8827, if
applicable. See the instructions for
these forms, Rev. Proc. 2008-65,
2008-44 I.R.B. 1082, Rev. Proc.
2009-16, 2009-6 I.R.B. 449, and Rev.
Proc. 2009-33, 2009-29 I.R.B.150.
Line 29k. Total payments. Add the
amounts on lines 29f through 29j and
enter the total on line 29k.
Backup withholding. If the
corporation had federal income tax
withheld from any payments it
received because, for example, it
failed to give the payer its correct
EIN, include the amount withheld in
the total for line 29k. Write the
amount withheld and the words
“Backup Withholding” in the blank
space above line 29k.
Line 30. Estimated tax penalty. If
Form 2220 is attached, check the box
on line 30 and enter the amount of
any penalty on that line.
Line 33. Electronic deposit of tax
refund of $1 million or more. If the
corporation is due a refund of $1
million or more and wants it
electronically deposited into its
checking or savings account at any
U.S. bank or other financial institution
instead of having a check sent to the
corporation, complete Form 8302 and
attach it to the corporation’s tax
return.

July 18, 1984 (see section 246A))
that are:
• Received from
less-than-20%-owned domestic
corporations subject to income tax,
and
• Qualified for the 70% deduction
under section 243(a)(1).
Also include on line 1 the following.
• Taxable distributions from an
IC-DISC or former DISC that are
designated as eligible for the 70%
deduction and certain dividends of
Federal Home Loan Banks. See
section 246(a)(2).
• Dividends (except those received
on debt-financed stock acquired after
July 18, 1984) from a regulated
investment company (RIC). The
amount of dividends eligible for the
dividends-received deduction under
section 243 is limited by section
854(b). The corporation should
receive a notice from the RIC
specifying the amount of dividends
that qualify for the deduction.
Report so-called dividends or
earnings received from mutual
savings banks, etc., as interest. Do
not treat them as dividends.

Schedule A—Dividend
Income and
Dividends-Received
Deduction

Line 2, column (a). Enter on line 2:
• Dividends (except those received
on debt-financed stock acquired after
July 18, 1984) that are received from
20%-or-more-owned domestic
corporations subject to income tax
and that are subject to the 80%
deduction under section 243(c), and
• Taxable distributions from an
IC-DISC or former DISC that are
considered eligible for the 80%
deduction.

For purposes of the 20% ownership
test on lines 1 through 7, the
percentage of stock owned by the
corporation is based on voting power
and value of the stock. Preferred
stock described in section 1504(a)(4)
is not taken into account.
Corporations filing a consolidated
return should see Regulations
sections 1.1502-13, 1.1502-26, and
1.1502-27 before completing
Schedule A.
Corporations filing a consolidated
return must not report as dividends
on Schedule A any amounts received
from corporations within the tax
consolidation group. Such dividends
are eliminated in consolidation rather
than offset by the dividends-received
deduction.
Line 1, column (a). Enter dividends
(except those received on
debt-financed stock acquired after

Line 3, column (a). Enter the
following.
• Dividends received on
debt-financed stock acquired after
July 18, 1984, from domestic and
foreign corporations subject to
income tax that would otherwise be
subject to the dividends-received
deduction under section 243(a)(1),
243(c), or 245(a). Generally,
debt-financed stock is stock that the
corporation acquired by incurring a
debt (for example, it borrowed money
to buy the stock).
• Dividends received from a RIC on
debt-financed stock. The amount of
dividends eligible for the
dividends-received deduction is
limited by section 854(b). The
corporation should receive a notice
from the RIC specifying the amount of
dividends that qualify for the
deduction.

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Worksheet for Schedule A, line 10

Keep for Your Records

1. Refigure line 8, page 1, without any domestic production
activities deduction, 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 line 25, page 1. Subtract from that total the sum
of lines 9 through 18, page 1 . . . . . . . . . . . . . . . . . . . . . .
2. Complete line 13, column (c) and enter the total of that
amount, line 9, 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 80% . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 70% . . . . . . . . . . . . . . . . . . . . . . . . . . .
10. Subtract line 5 above from line 10 of 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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Line 3, columns (b) and (c).
Dividends received on debt-financed
stock acquired after July 18, 1984,
are not entitled to the full 70% or 80%
dividends-received deduction. The
70% or 80% deduction is reduced by
a percentage that is related to the
amount of debt incurred to acquire
the stock. See section 246A. Also,
see section 245(a) before making this
computation for an additional
limitation that applies to dividends
received from foreign corporations.
Attach a schedule showing how the
amount on line 3, column (c), was
figured.
Line 4, column (a). Enter dividends
received on preferred stock of a
less-than-20%-owned public utility
that is subject to income tax and is
allowed the deduction provided in
section 247 for dividends paid.
Line 5, column (a). Enter dividends
received on preferred stock of a
20%-or-more-owned public utility that
is subject to income tax and is

allowed the deduction provided in
section 247 for dividends paid.
Line 6, column (a). Enter the
U.S.-source portion of dividends that:
• Are received from
less-than-20%-owned foreign
corporations, and
• Qualify for the 70% deduction
under section 245(a). To qualify for
the 70% deduction, the corporation
must own at least 10% of the stock of
the foreign corporation by vote and
value.
Also include dividends received
from a less-than-20%-owned FSC
that:
• Are attributable to income treated
as effectively connected with the
conduct of a trade or business within
the United States (excluding foreign
trade income), and
• Qualify for the 70% deduction
under 245(c)(1)(B).
Line 7, column (a). Enter the
U.S.-source portion of dividends that:
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• Are received from

20%-or-more-owned foreign
corporations, and
• Qualify for the 80% deduction
under section 245(a).
Also include dividends received
from a 20%-or-more-owned FSC that:
• Are attributable to income treated
as effectively connected with the
conduct of a trade or business within
the United States (excluding foreign
trade income), and
• Qualify for the 80% deduction
under section 245(c)(1)(B).
Line 8, column (a). Enter dividends
received from wholly owned foreign
subsidiaries that are eligible for the
100% deduction under section 245(b)
but that do not qualify as “100%
dividends” under section
805(a)(4)(C).
In general, the deduction under
section 245(b) applies to dividends
paid out of the earnings and profits of
a foreign corporation for a tax year
during which:
• All of its outstanding stock is
directly or indirectly owned by the
domestic corporation receiving the
dividends, and
• All of its gross income from all
sources is effectively connected with
the conduct of a trade or business
within the United States.
Do not include dividends received
from a life insurance company.
Also, include on line 8, column (a),
dividends from FSCs that are
attributable to foreign trade income
and that are eligible for the 100%
deduction provided in section
245(c)(1)(A).
Line 9, column (a). Enter only those
dividends that qualify under section
243(b) for the 100% dividendsreceived deduction described in
section 243(a)(3) but that do not
qualify as “100% dividends” under
section 805(a)(4)(C). Corporations
taking this deduction are subject to
the provisions of section 1561. Do not
include dividends received from a life
insurance company.
The 100% deduction does not
apply to affiliated group members that
are joining in the filing of a
consolidated return.
Line 10, column (c). Limitation on
dividends-received deduction.
Generally, line 10 of column (c)
cannot exceed the amount from the
worksheet on this page. However, in
a year in which a loss from operations
occurs, this limitation does not apply
even if the loss is created by the
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dividends-received deduction. See
sections 246(b) and 810.
Line 13, column (a). In general,
enter “100% dividends” as defined in
section 805(a)(4)(C). That is, in
general, enter dividends that qualify
for the 100% dividends-received
deduction under sections 243, 244,
and 245(b), and were not reported on
line 8 or 9 because they were (a) not
distributed out of tax-exempt interest
or out of dividends that do not qualify
as 100% dividends or (b) paid by a
life insurance company.
Note. Certain dividends received by
a foreign corporation are not subject
to proration. Attach a schedule
showing computations.
Line 14, column (a). Include the
following.
1. Foreign dividends not
reportable on lines 3, 6, 7, or 8, of
column (a). Include on line 14 the
corporation’s share of the ordinary
earnings of a qualified electing fund
from line 1c of Form 8621, Return by
a Shareholder of a Passive Foreign
Investment Company or Qualified
Electing Fund. Exclude distributions
of amounts constructively taxed in the
current year or in prior years under
subpart F (sections 951 through 964).
2. Income constructively received
from CFCs under subpart F. This
amount should equal the total subpart
F income reported on Schedule I,
Form 5471, Information Return of
U.S. Persons With Respect to Certain
Foreign Corporations.
3. Gross-up of dividends for taxes
deemed paid under sections 902 and
960.
4. Dividends (other than capital
gain distributions reported on
Schedule D (Form 1120) and
exempt-interest dividends) that are
received from RICs and that are not
subject to the 70% deduction.
5. Dividends from tax-exempt
organizations.
6. Dividends (other than capital
gain distributions) received from a
REIT that, for the tax year of the trust
in which the dividends are paid,
qualifies under sections 856 through
860.
7. Dividends not eligible for a
dividends-received deduction, which
include the following.
a. Dividends received on any
share of stock held for less than 46
days during the 91-day period
beginning 45 days before the
ex-dividend date. When counting the
number of days the corporation held
the stock, you cannot count certain
Instructions for Form 1120-L (2009)

days during which the corporation’s
risk of loss was diminished. See
section 246(c)(4) and Regulations
section 1.246-5 for more details.
b. Dividends attributable to
periods totaling more than 366 days
that the corporation received on any
share of preferred stock held for less
than 91 days during the 181-day
period that began 90 days before the
ex-dividend date. When counting the
number of days the corporation held
the stock, you cannot count certain
days during which the corporation’s
risk of loss was diminished. See
section 246(c)(4) and Regulations
section 1.246-5 for more details.
Preferred dividends attributable to
periods totaling less than 367 days
are subject to the 46-day holding
period rule above.
c. Dividends on any share of stock
to the extent the corporation is under
an obligation (including a short sale)
to make related payments with
respect to positions in substantially
similar or related property.
8. Any other taxable dividend
income not properly reported above.

Schedule B—Gross
Investment Income
Line 1. Interest. Enter the total
taxable interest received or accrued
during the tax year, less any
amortization of premium, plus any
accrual of discount required by
section 811(b). Generally, the
appropriate amortization of premium
and accrual of discount for the tax
year on bonds, notes, debentures, or
other evidence of indebtedness held
by a life insurance company should
be determined:
1. Under the method regularly
employed by the company, if
reasonable, and
2. In all other cases, under the
regulations.
For bonds (as defined in section
171(d)) issued after September 27,
1985, the appropriate amount of
amortization of premium must be
determined using the yield to maturity
method described in section
171(b)(3). Market discount is not
required to be accrued under section
811(b). Attach a statement showing
the method and computation used.
Note. The Small Business Job
Protection Act of 1996 repealed
section 133, which provided for the
50% interest income exclusion with
respect to ESOP loans. The Act also
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repealed section 812(g), which
provided for the exclusion of interest
income from ESOP loans for
company/policyholder proration. The
repeal of these exclusions is effective
for ESOP loans made after August
20, 1996. See Act section 1602 for
special rules for binding contract
agreements in effect prior to June 10,
1996, and certain refinancings made
after August 20, 1996.
Line 3. Gross rents. Enter the
gross rents received or accrued
during the tax year. Related
expenses, such as repairs, taxes, and
depreciation should be reported as
“Other deductions” on line 18, page 1.
Line 4. Gross royalties. Enter the
gross royalties received or accrued
during the tax year. Report the
depletion deduction on line 18, page
1.
Line 5. Leases, terminations, etc.
Enter the gross income received from
entering into, altering, or terminating
any lease, mortgage, or other
instrument from which the corporation
derives interest, rents, or royalties.
Line 6. Excess of net short-term
capital gain over net long-term
capital loss. See the instructions for
line 5, page 1, on page 8, for a
definition of capital assets.
Line 7. Gross income from a trade
or business other than insurance.
Enter the gross income from a trade
or business (other than insurance
carried on by the life insurance
company or by a partnership of which
the life insurance company is a
partner). Include section 1245,
section 1250, and other ordinary
gains on assets used in a
noninsurance business from Form
4797. Report expenses related to any
trade or business other than
insurance on line 18, page 1.
Line 10. The increase in policy
cash value of section 264(f)
policies as defined in section
805(a)(4)(F). Generally, this applies
to contracts issued after June 8,
1997, in tax years ending after that
date. However, it also applies to
contracts issued prior to June 9,
1997, that have been subject to a
material increase in death benefits or
other material change. See section
1084(d) of the Taxpayer Relief Act of
1997.
See Rev. Proc. 2007-61 for a safe
harbor related to certain life insurance
contracts described in section
264(f)(4).
Line 12. 100% qualifying dividends.
Enter the total amount of dividends if

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the percentage used to determine the
deduction allowable under sections
243, 244, and 245(b) is 100%. Do not
include dividends to the extent they
are funded with tax-exempt interest or
dividends that would not qualify as
100% dividends in the hands of the
corporation. See section 812(e).
Note. Multi-tiered corporate
arrangements cannot be used to
change the character of the
tax-exempt interest income and
dividends received in an attempt to
avoid exclusion.

Schedule F—Increase
(Decrease) in Reserves
and Company/
Policyholder Share
Percentage
Note. Attach a statement to the tax
return that reconciles lines 1 through
6 of Schedule F to the annual
statement used to prepare the tax
return. If the annual statement used
to prepare the tax return is different
than the NAIC annual statement filed
with the state of domicile, include a
separate reconciliation of lines 1
through 6 of Schedule F to the annual
statement filed with the state of
domicile.
Schedule F is used to figure:
1. The company’s share
percentage used in determining the
company’s share of the dividendsreceived deduction under section
805(a)(4);
2. The policyholders’ share
percentage used in determining the
policyholders’ share of tax-exempt
interest for determining the increase
or decrease in reserves under section
807 (and the increase in policy cash
value of section 264(f) policies as
defined in section 805(a)(4)(F)); and
3. To determine if, under section
807, certain reserves decreased or
increased for the tax year. A net
decrease will be includible in gross
income, while a net increase will be a
deduction in computing LICTI.
The net increase or net decrease
in reserves is figured by comparing
the opening balance for reserves to
the closing balance for reserves
reduced by the policyholders’ share
of tax-exempt interest (and the
increase in policy cash value of
section 264(f) policies as defined in
section 805(a)(4)(F)).

Reserve adjustments are not
treated as interest expenses for
allocation purposes under section
864(c). See section 818(f).
There are special rules for
computing reserves of unearned
premiums of certain nonlife contracts.
See section 807(e)(7)(A).
Note. If the basis for determining the
amount of any item referred to in
section 807(c) (life insurance
reserves, etc.) at the end of the tax
year differs from the basis for the
determination at the beginning of the
tax year, see section 807(f).
Line 1. Life insurance reserves.
For rules on how to compute life
insurance reserves, see sections
807(d) and (e). Section 807(d)(2)(B)
provides that the interest rate used to
compute life insurance reserves is the
greater of the applicable federal
interest rate (AFIR) or the prevailing
state assumed interest rate (SAIR).
The applicable rates for tax years
beginning in 2009 will be published in
the Internal Revenue Bulletin when
available. The applicable rates for tax
years beginning in 2008 are
published in Rev. Rul. 2009-3, 2009-5
I.R.B. 382. For modified guaranteed
contracts described in section 817A,
see Regulations section 1.817A-1.
Note. A change in a life insurance
company’s computation of existing
life insurance reserves for annuity
contracts to take into account specific
factors issued by the NAIC is a
change in basis subject to section
807(f). See Rev. Rul. 2002-6, 2002-6
I.R.B. 460.
Line 2. Unearned premiums and
unpaid losses. For purposes of
sections 807 and 805(a)(1), the
amount of the unpaid losses (other
than losses on life insurance
contracts) must be the amount of the
discounted unpaid losses determined
under section 846.
Section 846 provides that the
amount of the discounted unpaid
losses must be figured separately by
each line of business (multiple peril
lines must be treated as a single line
of business) and by each accident
year and must be equal to the
present value of those losses
determined by using the:
1. Amount of the undiscounted
unpaid losses,
2. Applicable interest rate, and
3. Applicable loss payment
pattern.
Special rules apply with respect to
unpaid losses related to disability
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insurance (other than credit disability
insurance), noncancelable accident
and health insurance, cancelable
accident and health insurance, and to
the international and reinsurance
lines of business. With regard to the
special rules for discounting unpaid
losses on accident and health
insurance (other than disability
income insurance), unpaid losses are
assumed to be paid in the middle of
the year following the accident year.
Generally, the amount of
undiscounted unpaid losses means
the unpaid losses shown in the
annual statement. The amount of
discounted unpaid losses with
respect to any line of business for an
accident year cannot exceed the total
amount of unpaid losses with respect
to any line of business for an accident
year as reported on the annual
statement.
The applicable interest rate for
each calendar year and the
applicable loss payment patterns for
each accident year for each line of
business are determined by the IRS.
The applicable interest rate and loss
payment patterns for tax years
beginning in 2009 are published in
Rev. Proc. 2009-55, 2009-52 I.R.B.
982. The applicable interest rate and
loss payment patterns for 2007 and
2008 are published in Rev. Proc.
2008-10, 2008-3 I.R.B. 290, and Rev.
Proc. 2008-70, 2008-49 I.R.B. 1240,
respectively.
Corporations having sufficient
historical experience to determine a
loss payment pattern may, under
certain circumstances, elect under
section 846(e) to use their own
historical experience (instead of the
loss payment patterns determined by
the IRS). If this election is made, the
loss payment patterns will be based
on the most recent calendar year for
which an annual statement was filed
before the beginning of the accident
year. The election will not apply to
any international or reinsurance line
of business. If the corporation makes
this election, check the “Yes” column
for question 9 in Schedule M, Other
Information. For more information,
see section 846(e), Regulations
section 1.846-2, and Rev. Proc.
92-76, 1992-2 C.B. 453.
Section 807(d)(4)(A)(ii) permits an
election to recompute the federal
interest rate every 5 years. In
general, a life insurance company
would apply the greater of the AFIR
or the prevailing SAIR for the
calendar year in which the contract is
issued and the following 4 calendar
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years. In the 5th calendar year after
the calendar year in which the
contract was issued, the life
insurance company would begin
using the AFIR in effect for that 5th
calendar year or the prevailing SAIR
for the calendar year in which the
contract was issued, whichever is
greater. This rate would then remain
in effect for the 4 subsequent years.
For each subsequent 5-year period, a
similar recomputation would be
required. Once made, the election is
effective for contracts issued during
that calendar year and any
subsequent years, and may only be
revoked with the consent of the IRS.
Line 3. Supplementary contracts.
Enter the amount (discounted at the
appropriate rate of interest)
necessary to satisfy the obligations
under insurance and annuity
contracts, but only if the obligations
do not involve (at the time the
computation is made) life, accident,
or health contingencies.
For this item, the appropriate rate
of interest is the higher of the
prevailing SAIR at the time the
obligation first did not involve life,
accident, or health contingencies or
the rate of interest assumed by the
corporation (at that time) in
determining the guaranteed benefit.
However, the amount of any contract
may not be less than the net
surrender value of the contract.
Line 4. Dividend accumulations
and other amounts. Enter the total
dividend accumulations and other
amounts held at interest in
connection with insurance and
annuity contracts.
Line 5. Advance premiums. Enter
the total premiums received in
advance and liabilities for premium
deposit funds. See section
807(e)(7)(A) for special rules for
treatment of certain nonlife reserves.
Line 6. Special contingency
reserves. Enter the total reasonable
special contingency reserves under
contracts of group term life insurance
or group accident and health
insurance, which are established and
maintained for the provision of
insurance on retired lives, premium
stabilization, or for a combination
thereof.
Line 8. Increase (decrease) in
reserves. In figuring the amount on
line 8, any decrease in reserves must
be computed without any reduction of
the closing balance of section 807
reserves by the policyholders’ share
of tax-exempt interest.
Instructions for Form 1120-L (2009)

Note. In figuring the company’s and
policyholders’ share percentages,
carry the computations to enough
decimal places to ensure substantial
accuracy and to eliminate any
significant error in the resulting tax.
Lines 9 and 12. Do not include any
of the interest income received on an
ESOP loan made prior to August 21,
1996. For binding contract and
refinancing rules, see section 1602 of
the Small Business Job Protection
Act of 1996.
Line 12. If there is an increase in
reserves, enter the amount from page
1, line 8. If there is a decrease in
reserves, see the instructions for line
2, page 1.
Line 13. Do not include the exempt
portion of any of the interest income
received on an ESOP loan made
prior to August 21,1996. For binding
contract and refinancing rules, see
section 1602 of the Small Business
Job Protection Act of 1996.
Line 16. In computing the amount
entered on line 16, any decrease in
reserves must be figured without any
reduction of the closing balance of
section 807 reserve items by the
policyholders’ share of tax-exempt
interest.
Line 18a. A policyholder dividend is
any dividend or similar distribution to
policyholders in their capacity as
such.
Enter on line 18a policyholder
dividends paid or credited (including
an increase in benefits) where the
amount is not fixed in the contract but
depends on the corporation’s
experience or management’s
discretion.
Also, under section 808(e), any
policyholder dividend which (a)
increases either the cash surrender
value of the contract or other benefits
payable under the contract or (b)
reduces the premium otherwise
required to be paid, is treated as paid
to and returned by the policyholder to
the company as a premium. Include
these amounts in income on line 1,
page 1.
Line 18b. Excess interest means
any amount in the nature of interest:
• Paid or credited to policyholders in
their capacity as such and
• In excess of interest determined at
the prevailing SAIR for such contract.
Line 18c. Premium adjustment
means any reduction in the premium
under an insurance or annuity
contract which (except for the
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reduction) would have been required
to be paid under the contract.
Line 18d. Experience-rated refund
means any refund or credit based on
the experience of the contract or
group involved.
Line 28. Multiply gross investment
income (line 9) by 90% or, in the case
of gross investment income related to
assets held in segregated asset
accounts under variable contracts, by
95%. Enter the result on line 28.

Schedule G—Policy
Acquisition Expenses
For purposes of section 848(b), all life
insurance company members of the
same controlled group are treated as
one company. Any deduction
determined for the group must be
allocated among the life insurance
companies in the group in such a
manner as the IRS may prescribe.
Line 1. Gross premiums and other
consideration. Generally, gross
premiums and other consideration is
the total of:
1. All premiums and other
consideration (other than amounts on
reinsurance agreements) and
2. Net positive consideration for
any reinsurance agreement (see
Regulations section 1.848-2(b)).
Also include on this line:

• Advanced premiums,
• Amounts in a premium deposit fund

or similar account, as permitted by
Regulations section 1.848-2(b)(3),
• Fees,
• Assessments,
• Amounts that the insurance
company charges itself representing
premiums with respect to benefits for
its employees (including full-time
insurance salesmen treated as
employees under section
7701(a)(20)), and
• The value of a new contract issued
in an exchange described in
Regulations section 1.848-2(c)(2) or
(3).
Line 2. Return premiums and
premiums and other consideration
incurred for reinsurance. For
purposes of section 848(d)(1)(B) and
Regulations section 1.848-2(e), return
premiums means amounts (other
than policyholder dividends or claims
and benefit payments) returned or
credited to the policyholder. See
Regulations sections 1.848-2(f) and
1.848-3 for how to treat amounts
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company under a reinsurance
agreement.
Line 5. The entries in columns 5(a),
(b), or (c) may be positive or
negative.
Line 6. If the sum of columns 5(a),
(b), and (c) is negative, enter this
negative amount on line 6 and enter
-0- on lines 7 and 8. The result is a
negative capitalization amount under
section 848(f).
Line 9. General deductions. These
are deductions under sections 161
through 198, relating to itemized
deductions, and sections 401 through
424, relating to pension,
profit-sharing, stock bonus plans, etc.
Also, include on this line ceding
commissions incurred for the
reinsurance of a specified insurance
contract. Do not include amortization
deductions of specified policy
acquisition expenses under sections
848(a) or (b). Skip line 9 if the
corporation has elected out of the
general deductions limitation. See
Regulations section 1.848-2(g)(8).
Note. If interest expense is included
on line 9, do not also include it on
page 1, line 15a.
Line 13. Unamortized specified
policy acquisition expenses from
prior years. Enter the balance of
unamortized specified policy
acquisition expenses from prior years
as of the beginning of the tax year.
See section 848(f)(1)(B).
Line 16. Phase-out amount. The
amount of amortization for members
of a controlled group and the
phase-out of the group’s specified
policy acquisition expenses under
section 848(b) must be allocated to
each member in proportion to that
member’s specified policy acquisition
expenses for the tax year.

Schedule H—Small Life
Insurance Company
Deduction
To qualify for the small life insurance
company deduction, a life insurance
company must have less than:
• $15 million of tentative LICTI and
• $500 million in assets.
The deduction for qualifying small
life insurance companies is 60% of
the first $3 million of tentative LICTI
for the tax year. If tentative LICTI
exceeds $3 million, the deduction is
phased out. The reduction in the
deduction is equal to 15% of the
tentative LICTI for the tax year that
exceeds $3 million.

In computing the small life
insurance company deduction, all life
insurance company members of the
same controlled group are treated as
one company. Any small life
insurance company deduction
determined for the group must be
allocated among the life insurance
companies in the group in proportion
to their respective tentative LICTIs.
Do not include any items from
noninsurance businesses when
figuring tentative LICTI for purposes
of computing the small life insurance
company deduction.
Noninsurance business generally
means any activity which is not an
insurance business. However, under
section 806(b)(3)(B), any activity
which is not an insurance business
shall be treated as an insurance
business if:
1. It is of a type traditionally
carried on by life insurance
companies for investment purposes,
but only if the carrying on of the
activity (other than real estate) does
not constitute the active conduct of a
trade or business or
2. It involves the performance of
administrative services in connection
with plans providing life insurance,
pension, or accident and health
benefits.
For the assets test, the assets of
all members of a controlled group, as
defined in section 806(c)(3), must be
included, whether or not they are life
insurance companies. For information
regarding the valuation of assets, see
the instructions for Schedule L, Part I.

Schedule J
Part I—Shareholders
Surplus Account
Any stock life insurance company that
had a policyholders surplus account
(PSA) on December 31, 1983, will
continue to maintain a shareholders
surplus account (SSA). See section
815(c)(1) for more information.
Line 2d. Do not include the increase
in cash value for section 264(f)
policies.
Line 4. In figuring the tax liability on
line 4, adjustments must be made for
any year in which the alternative
minimum tax is imposed or the
minimum credit has been taken.
Line 6. Enter all amounts treated
under section 815 as distributions to
shareholders.
Any distribution to shareholders is
treated as having been made first out
of the SSA, to the extent thereof.

Part II—Policyholders
Surplus Account
Any stock life insurance company that
had an existing policyholders surplus
account (PSA) on December 31,
1983, will continue to maintain the
account. See section 815(d)(1). While
no additions can be made to this
account, it must be decreased by
amounts specified in section
815(d)(3). Also, section 815(f)
provides that, in general, the
provisions of subsections (d), (e), (f),
and (g) of section 815 as in effect
before the enactment of the Tax
Reform Act of 1984 (“Act of 1984”)
continue to apply for any PSA that
had a balance as of December 31,
1983.

Schedule I—Limitation
on Noninsurance Losses

Amounts subtracted from the PSA
for a tax year are added to LICTI and
are subject to tax under section 801.

Section 806(b)(3)(C) provides that, in
computing LICTI, any loss from
noninsurance business (defined
above in the instructions for Schedule
H) is limited to the smaller of:
• 35% of the loss or
• 35% of LICTI (computed by
excluding any noninsurance loss
included in arriving at LICTI on line
24, page 1).

Line 8. If the balance at the end of
the preceding tax year differs from
the balance at the beginning of the
current tax year (for example, due to
section 815(d)(5) as in effect prior to
the Act of 1984), attach a schedule
showing the adjustments made. Prior
to the Act of 1984, section 815(d)(5)
provided that, if any addition to the
PSA increases or creates a loss from
operations and part or all of the loss
cannot be used in any other year to
reduce LICTI, then the loss will
reduce the PSA at the time that the
addition was made. In this case, the
beginning balance of the PSA must

For more information on either the
computation of the allowable loss
deduction or on applicable carryback
provisions, see section 1503(c).
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be adjusted before any subtractions
for the current tax year are made.
Line 9b. To figure the tax increase
due to the amount entered on line 9a:
1. Subtract the corporation’s tax
rate from 100%,
2. Divide the distributions on line
9a by the result of step 1,
3. Subtract the amount on line 9a
from the result of step 2, and
4. Enter the result of step 3 on line
9b.
Line 9c. To figure the amount to
enter on line 9c:
1. Determine the total amount to
be subtracted from the PSA under
sections 815(d)(1) and 815(d)(4) as in
effect prior to the Act of 1984 (do this
only after the amounts on lines 9a
and 9b are subtracted from the
beginning balance in the PSA),
2. Add 100% to the corporation’s
tax rate,
3. Divide the result of step 1 by
the result of step 2, and
4. Enter the result of step 3 on line
9c. The amount entered on line 9c
must be added to the SSA at the
beginning of the next tax year.
Line 9d. Subtract the result of step
3, line 9c, from the result of step 1,
line 9c. Enter the result on line 9d.
Line 9e. Enter the total amount to
be subtracted from the PSA under
section 815(d)(2) as in effect prior to
the Act of 1984. At that time, section
815(d)(2) provided that if, for any tax
year, a corporation was not an
insurance company, or if for any 2
successive tax years a corporation
was not a life insurance company,
then any balance remaining in the
PSA at the end of the last tax year
that the corporation was a life
insurance company must be included
in taxable income for that tax year.

Schedule K—Tax
Computation
Line 1. If the corporation is a
member of a controlled group, check
the box on line 1. Complete and
attach Schedule O (Form 1120).
Component members of a controlled
group must use Schedule O (Form
1120) to report the apportionment of
taxable income, income tax, and
certain tax benefits between the
members of the group. See Schedule
O (Form 1120) and the instructions
for Schedule O for more information.
Line 2. If the corporation is a
member of a controlled group, and is
Instructions for Form 1120-L (2009)

filing Schedule O (Form 1120), enter
the corporation’s tax from Part III of
Schedule O.
Most corporations that are not
members of a controlled group and
are not filing a consolidated return
figure their tax by using the Tax Rate
Schedule, below.
Tax Rate Schedule
If taxable income on line 27, page 1 is:

Over —

But not
over —

Tax is:

Of the
amount
over —

$0
$50,000
15%
$0
50,000
75,000
$ 7,500 + 25%
50,000
75,000
100,000
13,750 + 34%
75,000
100,000
335,000
22,250 + 39%
100,000
335,000 10,000,000
113,900 + 34%
335,000
10,000,000 15,000,000 3,400,000 + 35% 10,000,000
15,000,000 18,333,333 5,150,000 + 38% 15,000,000
18,333,333
----35%
0

Note. Gain recognized by a life
insurance company from the
redemption of market discount bonds
issued before July 19, 1984, and
acquired on or before September 25,
1985, is taxed at a rate of 31.6% only
if it is less than the tax that otherwise
would be imposed. See section
1011(d) of the Tax Reform Act of
1986 as amended by The Technical
and Miscellaneous Revenue Act of
1988. On the dotted line to the left of
line 2, write “Tax differential rate of
31.6% used” and the amount.
Deferred tax under section 1291.
If the corporation was a shareholder
in a passive foreign investment
company (PFIC) and received an
excess distribution or disposed of its
investment in the PFIC during the
year, it must include the total increase
in taxes due under section 1291(c)(2)
in the total for line 2. On the dotted
line to the left of line 2, enter “Section
1291” and the amount.
Do not include on line 2 any
interest due under section 1291(c)(3).
Instead, show the amount of interest
owed in the bottom margin of page 1,
Form 1120-L, and enter “Section
1291 interest.” For details, see Form
8621.
Additional tax under section
197(f). A corporation that elects to
pay tax on the gain from the sale of
an intangible under the related
person exception to the anti-churning
rules should include any additional
tax due under section 197(f)(9)(B) in
the total for line 2. On the dotted line
next to line 2, enter “Section 197” and
the amount.
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Line 3. Alternative minimum tax
(AMT).
A corporation that is not a
small corporation exempt from
CAUTION the AMT may be required to
file Form 4626, Alternative Minimum
Tax—Corporations, if it claims
certain credits, even though it does
not owe any AMT. See Form 4626 for
details.
Unless the corporation is treated
as a small corporation exempt from
the AMT, it may owe the AMT if it has
any of the adjustments and tax
preference items listed on Form
4626. A life insurance company must
file Form 4626 if its LICTI before the
operations loss deduction, combined
with these adjustments and tax
preference items, is more than the
smaller of $40,000 or the life
insurance company’s allowable
exemption amount (from Form 4626).
See Form 4626, for definitions and
details on how to figure the tax.
Note. See section 56(g)(4)(B)(ii) for
special rules for life insurance
companies for the computation of
adjusted current earnings.
Line 5a. Foreign tax credit. To find
out if a corporation can take this
credit for payment of income tax to a
foreign country or U.S. possession,
see Form 1118, Foreign Tax
Credit—Corporations.
Line 5b. Credit from Form 8834,
line 29. Enter any qualified electric
vehicle passive activity credits from
prior years allowed for the current
year from Form 8834, Qualified
Plug-In Electric and Electric Vehicle
Credit, line 29. Also include on line 5b
any credits from Form 5735,
American Samoa Economic
Development Credit. See the
Instructions for Form 5735.
Line 5c. General business credit.
Enter on line 5c the corporation’s
allowable credit from Form 3800, Part
II, line 32.
The corporation is required to file
Form 3800 to claim most business
credits. For a list of allowable credits,
see Form 3800. Also, see the
applicable credit form and its
instructions.
Line 5d. Credit for prior year
minimum tax. To figure the
minimum tax credit and any
carryforward of that credit, use Form
8827.
Line 5e. Bond credits from Form
8912. Enter the allowable credits
from Form 8912, Credit to Holders of
Tax Credit Bonds, line 18.

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Line 8. Foreign corporations. A
foreign corporation carrying on a life
insurance business in the United
States is taxed as a domestic life
insurance company on its income
effectively connected with the
conduct of a trade or business in the
United States (see sections 864(c)
and 897 for definition).
Generally, any other U.S.-source
income received by the foreign
corporation is taxed at 30% (or at a
lower treaty rate) under section 881.
If the corporation has this income,
attach a schedule showing the kind
and amount of income, the tax rate,
and the amount of tax. Enter the tax
on line 8. However, see Reduction of
section 881 tax below.
Note. Interest received from certain
portfolio debt investments that were
issued after July 18, 1984, is not
subject to the tax. See section 881(c).
See section 842 for more
information.
Minimum effectively connected
investment income. See section
842(b) and Notice 89-96, 1989-2 C.B.
417, for the general rules for
computing this amount. Also, see
Rev. Proc. 2009-34, 2009-34 I.R.B.
258, for the domestic asset/liability
percentages and domestic yields
needed to compute this amount.
Any additional income required by
section 842(b) must be included in
LICTI (for example, line 7, page 1).
Reduction of section 881 tax.
Additional taxes resulting from the net
investment income adjustment may
offset a corporation’s section 881 tax
on U.S.-source income. The tax
reduction is determined by multiplying
the section 881 tax by the ratio of the
amount of income adjustment to
income subject to the section 881 tax,
computed without the exclusion for
interest on state and local bonds or
income exempted from taxation by
treaty (section 842(c)(2)). Attach a
statement showing how the reduction
of section 881 tax was figured. Enter
the net tax imposed by section 881
on line 8.
Note. Section 842(c)(1) requires that
foreign life insurance companies
make the investment income
adjustment before claiming a small
life insurance company deduction.
Line 9. Other taxes. Include any of
the following taxes and interest in the
total on line 9. Check the appropriate
box(es) for the form, if any, used to
figure the total.

Recapture of investment credit.
If the corporation disposed of
investment credit property or changed
its use before the end of its useful life
or recovery period, it may owe a tax.
See Form 4255, Recapture of
Investment Credit.
Recapture of low-income
housing credit. If the corporation
disposed of property (or there was a
reduction in the qualified basis of the
property) for which it took the
low-income housing credit, it may
owe a tax. See Form 8611,
Recapture of Low-Income Housing
Credit.
Alternative tax on qualifying
shipping activities. Enter any
alternative tax on qualifying shipping
activities from Form 8902. Check the
“Other” box and attach Form 8902.
Other. Additional taxes and
interest amounts can be included in
the total entered on line 9. Check the
box for “Other” if the corporation
includes any additional taxes and
interest such as the items discussed
below. See How to report below for
details on reporting these amounts on
an attached schedule.
• Recapture of qualified electric
vehicle (QEV) credit. The corporation
must recapture part of the QEV credit
it claimed in a prior year if, within 3
years of the date the vehicle was
placed in service, it ceases to qualify
for the credit. See Regulations
section 1.30-1 for details on how to
figure the recapture.
• Recapture of Indian employment
credit. Generally, if an employer
terminates the employment of a
qualified employee less than 1 year
after the date of initial employment,
any Indian employment credit allowed
for a prior tax year because of wages
paid or incurred to that employee
must be recaptured. For details, see
Form 8845 and section 45A.
• Recapture of new markets credit
(see Form 8874, New Markets
Credit).
• Recapture of employer-provided
childcare facilities and services credit
(see Form 8882, Credit for
Employer-Provided Childcare
Facilities and Services).
• Interest on deferred tax attributable
to certain nondealer installment
obligations (section 453A(c)).
• Interest due on deferred gain
(section 1260(b)).
How to report. If the corporation
checked the “Other” box, attach a
schedule showing the computation of
each item included in the total for line
-22-

9 and identify the applicable Code
section and the type of tax or interest.
Line 10. Total Tax. Include any
deferred tax on the termination of a
section 1294 election applicable to
shareholders in a qualified electing
fund in the amount entered on line
10. See Form 8621, Part V, and How
to report, below.
Subtract any deferred tax on the
corporation’s share of undistributed
earnings of a qualified electing fund
(see Form 8621, Part II).
How to report. Attach a schedule
showing the computation of each item
included in, or subtracted from, the
total for line 10. On the dotted line
next to line 10, specify (a) the
applicable Code section, (b) the type
of tax, and (c) the amount of tax.

Schedule L
All filers must complete Parts I and II
of Schedule L.
Note. Foreign life insurance
companies should report assets and
insurance liabilities for their U.S.
business only.

Part I—Total Assets
For Schedule L, assets means all
assets of the corporation. In valuing
real property and stocks, use fair
market value; for other assets, use
the adjusted basis as determined
under section 1011 and related
sections, without regard to section
818(c). An interest in a partnership or
trust is not itself treated as an asset
of the corporation. Instead, the
corporation is treated as actually
owning its proportionate share of the
assets held by the partnership or
trust. The value of the corporation’s
share of these assets should be listed
on line 3.

Part II—Total Assets and
Total Insurance Liabilities
Foreign life insurance companies
must maintain a minimum surplus of
U.S. assets over their U.S. insurance
liabilities. The minimum required
surplus is determined by multiplying
their U.S. insurance liabilities by a
percentage determined by the IRS.
The IRS determines the percentage
from data supplied by domestic life
insurance companies in Schedule L,
Part II. See section 842.
For Schedule L, total insurance
liabilities means the sum of the
following amounts as of the end of
the tax year:
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1. Total reserves as defined in
section 816(c); plus
2. The items referred to in
paragraphs (3), (4), (5), and (6) of
section 807(c), to the extent such
amounts are not included in total
reserves.
Foreign life insurance companies,
see Notice 89-96 for more information
on determining total insurance
liabilities on U.S. business.

Schedule M—Other
Information
Complete the items that apply to the
corporation.
Question 6. Check the “Yes” box if:

• The corporation is a subsidiary in

an affiliated group (defined below),
but is not filing a consolidated return
for the tax year with that group, or
• The corporation is a subsidiary in a
parent-subsidiary controlled group.
For a definition of a parent-subsidiary
controlled group, see the instructions
for Schedule O (Form 1120).
Any corporation that meets either
of the requirements above should
check the “Yes” box. This applies
even if the corporation is a subsidiary
member of one group and the parent
corporation of another.
Note. If the corporation is an
“excluded member” of a controlled
group (see definition in the
Instructions for Schedule O (Form
1120)), it is still considered a member
of a controlled group for this purpose.
Affiliated group. An affiliated group
is one or more chains of includible
corporations (section 1504(a))
connected through stock ownership
with a common parent corporation.
The common parent must be an
includible corporation and the
following requirements must be met.
1. The common parent must own
directly stock that represents at least
80% of the total voting power and at
least 80% of the total value of the
stock of at least one of the other
includible corporations.
2. Stock that represents at least
80% of the total voting power and at
least 80% of the total value of the
stock of each of the other
corporations (except for the common

Instructions for Form 1120-L (2009)

parent) must be owned directly by
one or more of the other includible
corporations.

country of residence. For all others, it
is the country where incorporated,
organized, created, or administered.

For this purpose, “stock” generally
does not include any stock that (a) is
nonvoting, (b) is nonconvertible, (c) is
limited and preferred as to dividends
and does not participate significantly
in corporate growth, and (d) has
redemption and liquidation rights that
do not exceed the issue price of the
stock (except for a reasonable
redemption or liquidation premium).
See section 1504(a)(4). See section
1563(d)(1) for the definition of stock
for purposes of determining stock
ownership above.

Requirement to file Form 5472. If
the corporation checked “Yes” to
Question 8, it may have to file Form
5472. Generally, a 25%
foreign-owned corporation that had a
reportable transaction with a foreign
or domestic related party during the
tax year must file Form 5472,
Information Return of a 25%
Foreign-Owned U.S. Corporation or a
Foreign Corporation Engaged in a
U.S. Trade or Business (Under
Sections 6038A and 6038C of the
Internal Revenue Code).

Question 8. Check the “Yes” box if
one foreign person owned at least
25% of (a) the total voting power of
all classes of stock of the corporation
entitled to vote, or (b) the total value
of all classes of stock of the
corporation.

See Form 5472 for filing
instructions and penalties for failure
to file.

The constructive ownership rules
of section 318 apply in determining if
a corporation is foreign owned. See
section 6038A(c)(5) and the related
regulations.
Enter on line 8a the percentage
owned by the foreign person
specified in question 8. On line 8b,
write the name of the owner’s
country.
Note. If there is more than one
25%-or-more foreign owner, complete
lines 8a and 8b for the foreign person
with the highest percentage of
ownership.
Foreign person. The term “foreign
person” means:
• A foreign citizen or nonresident
alien,
• An individual who is a citizen of a
U.S. possession (but who is not a
U.S. citizen or resident),
• A foreign partnership,
• A foreign corporation,
• Any foreign estate or trust within
the meaning of section 7701(a)(31),
or
• A foreign government (or one of its
agencies or instrumentalities) to the
extent that it is engaged in the
conduct of a commercial activity as
described in section 892.
Owner’s country. For individuals,
the term “owner’s country” means the

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Item 12. If the corporation has an
operations loss deduction (OLD), it
generally may elect under section
810(b)(3) to waive the entire
carryback period for the OLD and
instead carry the OLD forward to
future tax years. To do so, check the
box on line 12 and file the tax return
by its due date, including extensions.
Do not attach the statement
described in Temporary Regulations
section 301.9100-12T. Once made,
the election is irrevocable.
However, an exception applies for
an applicable 2008 or 2009
operations loss. See the instructions
for line 21b on page 14.
Corporations filing a consolidated
return that elect to waive the entire
carryback period for the group must
also attach the statement required by
Regulations section 1.1502-21(b)(3)
or the election will not be valid.
Item 13. Enter the amount of the
operations loss carryover to the tax
year from prior years, even if some of
the loss is used to offset income on
this return. The amount to enter is the
total of all operating losses generated
in prior years but not used to offset
income (either as a carryback or
carryover) in a tax year prior to 2009.
Do not reduce the amount by any
OLD reported on line 21b.
Item 14. Complete Item 14 to
identify the state where the annual
statement used to prepare the tax
return was filed.

Page 24 of 25

Instructions for Form 1120-L (2009)

16:04 - 13-JAN-2010

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

Privacy Act and 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. Section 6109 requires return
preparers to provide their identifying numbers on the return.
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 the following forms will vary depending on individual circumstances. The
estimated average times are:

Form
1120-L
Sch. M-3 (Form 1120-L)

Recordkeeping

Learning about
the law or the form

Preparing the form

Copying,
assembling,
and sending the
form to the IRS

76 hr., 46 min.
81 hr., 04 min.

39 hr., 41 min.
4 hr., 22 min.

65 hr., 57 min.
5 hr., 53 min.

6 hr., 42 min.
-----

If you have comments concerning the accuracy of these time estimates or suggestions for making this form and
related schedule simpler, we would be happy to hear from you. You can write to the Internal Revenue Service, Tax
Products Coordinating Committee, SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave. NW, IR-6526, Washington, DC
20224.
Do not send the tax form to this office. Instead, see Where To File on page 3.

-24-

Instructions for Form 1120-L (2009)

Page 25 of 25

Instructions for Form 1120-L (2009)

16:04 - 13-JAN-2010

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

Index

A
Accounting methods, change
in . . . . . . . . . . . . . . . . . . . . . . . . 6
Accounting period (tax
year) . . . . . . . . . . . . . . . . . . . . . 6
Address change . . . . . . . . . . . . 8
Affiliated group . . . . . . . . . . . . 23
Amended return . . . . . . . . . . . . 8
Amortization . . . . . . . . . . . . . . . . 9
Annual Statement . . . . . . . . . . 4
Assembling the return . . . . . . 4
B
Backup withholding . . . . . . . . 15
Business startup
expenses . . . . . . . . . . . . . . . . . 9
C
Charitable
contributions . . . . . . . . . . . . 12
Consolidated return . . . . . . . . . 7
Controlled group:
Member of . . . . . . . . . . . . . . 21
Parent-subsidiary . . . . . . . . 23
D
Deductions . . . . . . . . . . . . . . . . . 9
Definitions:
Insurance company . . . . . . . 2
Life insurance
company . . . . . . . . . . . . . . . 3
Reserves test . . . . . . . . . . . . 3
Depository methods of tax
payment . . . . . . . . . . . . . . . . . . 4
Disclosure statement . . . . . . . 6
Dues, membership and
other . . . . . . . . . . . . . . . . . . . . 13
E
Electronic deposit of tax
refund of $1 million or
more . . . . . . . . . . . . . . . . . . . . 15
Electronic Federal Tax
Payment System
(EFTPS) . . . . . . . . . . . . . . . . . 4

Employer identification
number (EIN) . . . . . . . . . . . . . 8
Estimated tax
payments . . . . . . . . . . . . . . . 14
Estimated tax penalty . . . . . . 5,
15
Excess interest . . . . . . . . . . . . 19
Experience-rated
refund . . . . . . . . . . . . . . . . . . . 19
Extension of time to file . . . . . 3
F
Final return . . . . . . . . . . . . . . . . . 8
Foreign corporations . . . . . . . 22
Foreign person . . . . . . . . . . . . 23
Foreign tax credit . . . . . . . . . . 21
Forms and publications, how
to get . . . . . . . . . . . . . . . . . . . . 2
G
General business
credit . . . . . . . . . . . . . . . . . . . . 21
Golden parachute
payments . . . . . . . . . . . . . . . . 9
Gross premiums and other
consideration . . . . . . . . . . . . . 8
I
Interest due on late payment
of tax . . . . . . . . . . . . . . . . . . . . . 5
L
Life insurance company
taxable income . . . . . . . . . . . 8
Limitation on
dividends-received
deduction . . . . . . . . . . . . . . . 16
Limitations on
deductions . . . . . . . . . . . . . . . 9
Lobbying expenses,
nondeductibility . . . . . . . . . . 13
Losses incurred . . . . . . . . . . . 10

Instructions for Form 1120-L (2009)

M
Minimum tax:
Alternative . . . . . . . . . . . . . . . 21
Prior year, credit for . . . . . 21
N
Name change . . . . . . . . . . . . . . 8
O
Operations loss
deduction . . . . . . . . . . . . . . . 13
Other deductions . . . . . . . . . . 11
Other taxes . . . . . . . . . . . . . . . . 22
Overpaid . . . . . . . . . . . . . . . . . . 15
Owner’s country . . . . . . . . . . . 23
Ozone-depleting chemicals,
credit for tax on . . . . . . . . . . 15
P
Paid preparer
authorization . . . . . . . . . . . . . 4
Penalties . . . . . . . . . . . . . . . 5, 15
Pension, profit-sharing, etc.
plans . . . . . . . . . . . . . . . . . . . . 12
Period covered . . . . . . . . . . . . . 7
Policyholder dividends . . . . . 19
Premium adjustment . . . . . . . 19
Private delivery services . . . . 3
R
Recordkeeping . . . . . . . . . . . . . 6
Refundable credits . . . . . . . . . 15
Return premiums . . . . . . . . . . . 8
S
Schedule:
A . . . . . . . . . . . . . . . . . . . . . . . . 15
B . . . . . . . . . . . . . . . . . . . . . . . . 17
F . . . . . . . . . . . . . . . . . . . . . . . . 18
G . . . . . . . . . . . . . . . . . . . . . . . 19
H . . . . . . . . . . . . . . . . . . . . . . . . 20
I . . . . . . . . . . . . . . . . . . . . . . . . . 20
J, Part I . . . . . . . . . . . . . . . . . 20
J, Part II . . . . . . . . . . . . . . . . . 20
K . . . . . . . . . . . . . . . . . . . . . . . . 21

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L, Part I . . . . . . . . . . . . . . . . . 22
L, Part II . . . . . . . . . . . . . . . . . 22
M . . . . . . . . . . . . . . . . . . . . . . . 23
Schedule M-3 (Form
1120-L) . . . . . . . . . . . . . . . . . . 7
Section 953 elections . . . . . . . 8
Special estimated tax
payments:
Prior year(s) payments to be
applied . . . . . . . . . . . . . . . . 14
Tax benefit rule . . . . . . . . . . 14
T
Tax and payments:
Estimated tax
payments . . . . . . . . . . . . . 14
Prior year(s) special
estimated tax payments
to be applied . . . . . . . . . . 14
Special estimated tax
payments . . . . . . . . . . . . . 14
Tax issues, unresolved . . . . . 1
Tax rate schedule . . . . . . . . . 21
Transactions between related
taxpayers . . . . . . . . . . . . . . . . 9
Travel, meals, and
entertainment . . . . . . . . . . . 13
W
When to file . . . . . . . . . . . . . . . . 3
Where to file . . . . . . . . . . . . . . . . 3
Who must file:
Foreign life insurance
companies . . . . . . . . . . . . . 2
Mutual savings banks
conducting life insurance
business . . . . . . . . . . . . . . . 2
Other insurance
companies . . . . . . . . . . . . . 2
Who must sign . . . . . . . . . . . . . 3
Worksheet for Schedule
A . . . . . . . . . . . . . . . . . . . . . . . . 16

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