Form 1120-PC U.S. Property and Casualty Insurance Company Income Tax

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Form

1120-PC

U.S. Property and Casualty Insurance Company
Income Tax Return
For calendar year 2011, or tax year beginning

Department of the Treasury
Internal Revenue Service
A

Check if:

1

Consolidated return
(attach Form 851) .
Life-nonlife consolidated return . .
Schedule M-3
(Form 1120-PC)
attached . . .

2
3

Tax Computation and Payments

E

(1)

Check if:

▶

Please
print
or
type
Final return

, 2011, and ending

OMB No. 1545-1027
, 20

Name

B Employer identification number

Number, street, and room or suite no. If a P.O. box, see instructions.

C Date incorporated

City or town, state, and ZIP code

D Check applicable box if an election
has been made under section(s):

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(2)

(3)

Name change

(4)

Address change

953(c)(3)(C)

Amended return

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Taxable income (Schedule A, line 37) . . . . . . . . . . . . .
Taxable investment income for electing small companies (Schedule B, line 21) .
Check if a member of a controlled group (attach Schedule O (Form 1120)) . .

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Income tax
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Enter amount of tax that a reciprocal must include .
Alternative minimum tax (attach Form 4626) . . .

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b

Add lines 4 through 6
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Foreign tax credit (attach Form 1118) . . . . .
Credit from Form 8834, line 30 (attach Form 8834) .

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8a
8b

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General business credit (attach Form 3800) . . .
Credit for prior year minimum tax (attach Form 8827)
Bond credits from Form 8912 . . . . . . .

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Total credits. Add lines 8a through 8e . . . . . . . . . .
Subtract line 8f from line 7 . . . . . . . . . . . . . .
Foreign corporations—Tax on income not connected with U.S. business

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Personal holding company tax (attach Schedule PH (Form 1120))
Other taxes. Check if from:
Form 4255
Form 8611
Total tax. Add lines 9 through 12 . . . . . . . . . .

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b

2010 overpayment credited to 2011 . . .
Prior year(s) special estimated tax payments
to be applied . . . . . . . . . .

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Other (attach schedule) .
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953(d)

8c
8d
8e

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14a

14b
14c
2011 special estimated tax payments (Do not include on line 14f)
14e (
2011 refund applied for on Form 4466 . . .

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2011 estimated tax payments (see instructions) .

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Enter the total of lines 14a through 14c less line 14e . . . . . .
Tax deposited with Form 7004 . . . . . . . . . . . . .
Credit by reciprocal for tax paid by attorney-in-fact under section 835(d)

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14g

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Other credits and payments
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Refundable credits from Form 3800, line 17c, and Form 8827, line 8c .
Estimated tax penalty (see instructions). Check if Form 2220 is attached

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Amount owed. If line 14k is smaller than the total of lines 13 and 15, enter amount owed
Overpayment. If line 14k is larger than the total of lines 13 and 15, enter amount overpaid
Enter amount from line 17: Credited to 2012 estimated tax ▶

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Refunded ▶

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Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true,
correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

Date

Signature of officer

Paid
Preparer
Use Only

Print/Type preparer’s name

Firm’s name

▶

Firm's address

▶

Preparer's signature

For Paperwork Reduction Act Notice, see separate instructions.

▲

▲

Sign
Here

2011

.

See separate instructions.

May the IRS discuss this return
with the preparer shown below
(see instructions)?
Yes No

Title
Date

Check
if
self-employed
Firm's EIN

PTIN

▶

Phone no.
Cat. No. 64270Q

Form 1120-PC (2011)

Page 2

Form 1120-PC (2011)

Schedule A
1
2

Taxable Income—Section 832 (see instructions)

Premiums earned (Schedule E, line 7) .
Dividends (Schedule C, line 14)
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(a) Interest received

3a

Deductions (See instructions for limitations on deductions.)

Income

b

Gross interest .

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(b) Amortization of
premium

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Interest exempt under section 103 .

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Subtract line 3b from line 3a
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Taxable interest. Subtract line 3c, column (b) from line 3c, column (a)
Gross rents . . . . . . . . . . . . . . . . .

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3d
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7

Gross royalties . . . . . . . . . . . . . . . .
Capital gain net income (attach Schedule D (Form 1120)) . . . .
Net gain or (loss) from Form 4797, Part II, line 17 (attach Form 4797)

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7

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9
10

Certain mutual fire or flood insurance company premiums (section 832(b)(1)(D))
Income on account of special income and deduction accounts . . . . .
Income from protection against loss account (see instructions) . . . . .

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14
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16

Mutual interinsurers or reciprocal underwriters—decrease in subscriber accounts
Income from a special loss discount account (attach Form 8816) . . . . .
Other income (attach schedule)
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Gross income. Add lines 1 through 13
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Compensation of officers (attach schedule) (see instructions) .
Salaries and wages (less employment credits) . . . . .

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16

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18
19

Agency balances and bills receivable that became worthless during the tax year
Rents . . . . . . . . . . . . . . . . . . . . . .
Taxes and licenses . . . . . . . . . . . . . . . . . .

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19

20a
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22

Interest ▶
Charitable contributions . . .
Depreciation (attach Form 4562)

c Bal. ▶
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20c
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25

Depletion . . . . . . . .
Pension, profit-sharing, etc., plans
Employee benefit programs
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Losses incurred (Schedule F, line 14) . . . . .
Additional deduction (attach Form 8816) . . . .
Other capital losses (Schedule G, line 12, column (g))

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b Less tax-exempt interest exp. ▶
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31

Dividends to policyholders . . . . . . . . . . . . . . . . .
Mutual interinsurers or reciprocal underwriters—increase in subscriber accounts .
Other deductions (see instructions) (attach schedule) . . . . . . . . .

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32
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34a

Total deductions. Add lines 15 through 31
Subtotal. Subtract line 32 from line 14 .
Special deduction for section 833
line 6) . . . . . . . . . . .

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(Schedule H,
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34a
Deduction on account of special income and deduction accounts . . .
34b
Total. Add lines 34a and 34b . . . . . . . . . . . . . . . . .

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34c

Subtotal. Subtract line 34c from line 33 . . . .
Dividends-received deduction (Schedule C, line 25)
Net operating loss deduction . . . . . . .

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36b

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35

Total. Add lines 36a and 36b

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36c

Taxable income (subtract line 36c from line 35). Enter here and on page 1, line 1 .

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37

b
c
35
36a
b
c
37

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Form 1120-PC (2011)

Page 3

Form 1120-PC (2011)

Schedule B

Part I—Taxable Investment Income of Electing Small Companies—Section 834 (see instructions)
(b) Amortization of
premium

(a) Interest received

Deductions

Income

1a

Gross interest .

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Interest exempt under section 103 .

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d

Subtract line 1b from line 1a
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Taxable interest. Subtract line 1c, column (b) from line 1c, column (a)

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1d

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3
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Dividends (Schedule C, line 14)
Gross rents . . . . . .
Gross royalties . . . . .

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7

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9
10

Gross income from a trade or business, other than an insurance business, and from Form 4797
Income from leases described in sections 834(b)(1)(B) and 834(b)(1)(C) . . . . . . . .
Gain from Schedule D (Form 1120), line 14 . . . . . . . . . . . . . . . .
Gross investment income. Add lines 1d through 7 . . . . . . . . . . . . . .
Real estate taxes . . . .
Other real estate expenses .

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12
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Depreciation (attach Form 4562) . . . . . . . . . . . . . .
Depletion . . . . . . . . . . . . . . . . . . . . .
Trade or business deductions as provided in section 834(c)(8) (attach schedule)

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13

14
15
16

Interest
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Other capital losses (Schedule G, line 12, column (g))
Total. Add lines 9 through 15 . . . . . . .

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14
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16

17
18
19

Investment expenses (attach schedule)
Total deductions. Add lines 16 and 17
Subtract line 18 from line 8 . . . .

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19

20

Dividends-received deduction (Schedule C, line 25)

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21

Taxable investment income. Subtract line 20 from line 19. Enter here and on page 1, line 2

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21

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Part II—Invested Assets Book Values
(Complete only if claiming a deduction for general expenses allocated to investment income.)
(a) Beginning of tax year

(b) End of tax year

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25
26
27
28
29
30
31

22
23
24
25
26
27
28
29
30
31

Real estate . . . . . . . . . . .
Mortgage loans . . . . . . . . .
Collateral loans
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Policy loans, including premium notes . . .
Bonds of domestic corporations
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Stock of domestic corporations . . . . .
Government obligations, etc. . . . . .
Bank deposits bearing interest . . . . .
Other interest-bearing assets (attach schedule)
Total. Add lines 22 through 30 . . . . .

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32
33

Add columns (a) and (b), line 31 . . . . . . . . . . .
Mean of invested assets for the tax year. Enter one-half of line 32 .

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33

34
35

Multiply line 33 by .0025 . . . . . . . . . . . . . . . . . . .
Income base. Line 1b, column (a) plus line 8 less the sum of line 1b, column (b)
and line 16 . . . . . . . . . . . . . . . . . . . . .
35

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34

36
37
38

Multiply line 33 by .0375 . . . . . . . . . .
Subtract line 36 from line 35. Do not enter less than zero
Multiply line 37 by .25
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37
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38

39

Limitation on deduction for investment expenses. Add lines 34 and 38

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39

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Form 1120-PC (2011)

Page 4

Form 1120-PC (2011)

Schedule C

1

Dividends and Special Deductions
(see instructions)
Income

Dividends-Received
(a) Subject to section
832(b)(5)(B)

Dividends from less-than-20%-owned domestic corporations (other than debtfinanced stock)
. . . . . . . . . . . . . . . . . . . . .

1

Dividends from 20%-or-more-owned domestic corporations (other than debt-financed
stock) . . . . . . . . . . . . . . . . . . . . . . . .

2

3

Dividends on debt-financed stock of domestic and foreign corporations .

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3

4

Dividends on certain preferred stock of less-than-20%-owned public utilities

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5

Dividends on certain preferred stock of 20%-or-more-owned public utilities .

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5

6

Dividends on stock of certain less-than-20%-owned foreign corporations and certain
FSCs . . . . . . . . . . . . . . . . . . . . . . . .

6

Dividends on stock of certain 20%-or-more-owned foreign corporations and certain
FSCs . . . . . . . . . . . . . . . . . . . . . . . .

7

8

Dividends from wholly owned foreign subsidiaries and certain FSCs .

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9

Dividends from affiliated companies

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10

Other dividends from foreign corporations not included on lines 3, 6, 7, or 8 .

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11

Income from controlled foreign corporations under subpart F (attach Forms 5471) .

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Foreign dividend gross-up (section 78)

13

Other dividends (attach schedule) .

14

2

7

(b) Total dividendsreceived

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13

Total dividends. Add lines 1 through 13. Enter here and on Schedule A, line 2, or
Schedule B, line 2, whichever applies . . . . . . . . . . . . . . .

14

.

Dividends-Received Deduction
(a) Subject to section
832(b)(5)(B)

Deduction
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16
17
18
19
20
21
22
23

Multiply line 1 by 70% . . . . . . . . . . . .
Multiply line 2 by 80% . . . . . . . . . . . .
Deduction for line 3 (see instructions) . . . . . . . .
Multiply line 4 by 42% . . . . . . . . . . . .
Multiply line 5 by 48% . . . . . . . . . . . .
Multiply line 6 by 70% . . . . . . . . . . . .
Multiply line 7 by 80% . . . . . . . . . . . .
Enter the amount from line 8
. . . . . . . . . .
Total. Add lines 15 through 22. (See instructions for limitation.)

24

Total. Add line 23, column (a), and line 9, column (a). Enter here and on Schedule F,
line 10 . . . . . . . . . . . . . . . . . . . . . . . .

25

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(b) Total dividendsreceived deduction

15
16
17
18
19
20
21
22
23

24
Total deductions. Add line 23, column (b), and line 9, column (b). Enter here and on Schedule A, line 36a, or
Schedule B, line 20, whichever applies
. . . . . . . . . . . . . . . . . . . . .

25
Form 1120-PC (2011)

Page 5

Form 1120-PC (2011)

Schedule E
1
2

Premiums Earned—Section 832 (see instructions)

Net premiums written . . . . . . . . . . . . . . . . . . .
Unearned premiums on outstanding business at the end of the preceding tax year:

.

a

Enter 100% of life insurance reserves included in unearned premiums
(section 832(b)(7)(A)) and unearned premiums of section 833 organizations
(see instructions) . . . . . . . . . . . . . . . . . . .

2a

b
c

Enter 90% of unearned premiums attributable to insuring certain securities .
Discounted unearned premiums attributable to title insurance . . . . .

.
.

2b
2c

d
e
3

Enter 80% of all other unearned premiums (see instructions)
Total. Add lines 2a through 2d . . . . . . . . .
Total. Add lines 1 and 2e
. . . . . . . . . .

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4

Unearned premiums on outstanding business at the end of the current tax year:

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1

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2d
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2e
3

a

Enter 100% of life insurance reserves included in unearned premiums
(section 832(b)(7)(A)) and unearned premiums of section 833 organizations
(see instructions) . . . . . . . . . . . . . . . . . . .

b
c
d

Enter 90% of unearned premiums attributable to insuring certain securities .
Discounted unearned premiums attributable to title insurance . . . . .
Enter 80% of all other unearned premiums (see instructions) . . . . .

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e

Total. Add lines 4a through 4d . . . . . . . . . . . . .
Subtract line 4e from line 3 . . . . . . . . . . . . . .
Transitional adjustments under section 832(b)(7)(D) (see instructions) . .
Premiums earned. Add lines 5 and 6. Enter here and on Schedule A, line 1

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4e
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1

5
6
7

Schedule F

4a
4b
4c
4d

Losses Incurred—Section 832 (see instructions)

7

1

Losses paid during the tax year (attach schedule)

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2

Balance outstanding at the end of the current tax year for:
Unpaid losses on life insurance contracts . . . . . .
Discounted unpaid losses . . . . . . . . . .

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Total. Add lines 2a and 2b . . . . . . . . . . .
Add lines 1 and 2c
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Balance outstanding at the end of the preceding tax year for:

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2c
3

Unpaid losses on life insurance contracts .
Discounted unpaid losses . . . . .
Total. Add lines 4a and 4b . . . . .

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4a
4b
. .

a
b
c
3
4
a
b
c
5
6
7
8
9
10
11
12
13
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2a
2b

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4c

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5
6
7

Losses incurred (line 5 plus line 6 less line 7) . . . . . . . . . . . . .
Tax-exempt interest subject to section 832(b)(5)(B) . . . . . . . . .
9
Dividends-received deduction subject to section 832(b)(5)(B) (Schedule C, line
24) . . . . . . . . . . . . . . . . . . . . . . .
10
The increase in policy cash value of section 264(f) policies as defined in section
805(a)(4)(F) . . . . . . . . . . . . . . . . . . . . .
11

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8

Subtract line 4c from line 3 . . . . . . . . . . . . . . . . .
Estimated salvage and reinsurance recoverable at the end of the preceding tax year
Estimated salvage and reinsurance recoverable at the end of the current tax year .

Total. Add lines 9, 10, and 11 . . . . . . . . . . . . . . . . . . . . . . . .
Reduction of deduction under section 832(b)(5)(B). Multiply line 12 by .15 . . . . . . . . . . .
Losses incurred deductible under section 832(c)(4). Subtract line 13 from line 8. Enter here and on
Schedule A, line 26 . . . . . . . . . . . . . . . . . . . . . . . . . . .

12
13
14

Form 1120-PC (2011)

Page 6

Form 1120-PC (2011)

Schedule G

Other Capital Losses (see instructions)
(Capital assets sold or exchanged to meet abnormal insurance losses and to pay dividends and similar
distributions to policyholders.)

1

Dividends and similar distributions paid to policyholders

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1

2
3
4

Losses paid
. . . . .
Expenses paid . . . . .
Total. Add lines 1, 2, and 3 .

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2
3
4

5
6

Note. Adjust lines 5 through 8 to cash method if necessary.
Interest received . . . . . . . . . . . . . .
Dividends-received (Schedule C, line 14) . . . . . . .

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7
Net premiums received . . . . . . . . . . . . . . . . .
8
Total. Add lines 5 through 8 . . . . . . . . . . . . . . . . . . . . . .
Limitation on gross receipts from sales of capital assets. Line 4 less line 9. If zero or less, enter -0- .

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9
10

7

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5
6

Gross rents, gross royalties, lease income, etc., and gross income from a trade
or business other than an insurance business including income from Form 4797
(include gains for invested assets only)
. . . . . . . . . . . .

8
9
10

(a) Description of capital
asset

(b) Date
acquired

11

12

(c) Gross
sales price

(d) Cost or
other basis

(e) Expense
of sale

(g) Loss
((d) plus (e) less
the sum of (c) and (f))

(f) Depreciation allowed
(or allowable)

Totals—column (c) must not be more
than line 10. (Enter amount from column
(g) in Schedule A, line 28, or Schedule
B, line 15, whichever applies) . . .

Schedule H

Special Deduction And Ending Adjusted Surplus for Section 833 Organizations
(see instructions)

1

Health care claims incurred during the tax year and liabilities incurred during the tax year under cost-plus
contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

Expenses incurred during the tax year in connection with the administration, adjustment, or settlement of
health care claims or in connection with the administration of cost-plus contracts . . . . . . . . .

3
4

Total. Add lines 1 and 2 .
Multiply line 3 by .25 . .

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3
4

5

Beginning adjusted surplus .

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5

6

Special deduction. If you checked "No" on line 14 of Schedule I, enter -0- here, you cannot take the special
deduction. All others subtract line 5 from line 4. If zero or less, enter -0-. Enter amount here and on
Schedule A, line 34a. (See instructions for limitation.) . . . . . . . . . . . . . . . . .

7
8

Net operating loss deduction (Schedule A, line 36b) .
Net exempt income:
Adjusted tax-exempt income . . . . . . .

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8a

Adjusted dividends-received deduction . . .
Taxable income (Schedule A, line 37) . . . .
Ending adjusted surplus. Add lines 5 through 9

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8b
9
10

a
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10

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6
7

Form 1120-PC (2011)

Page 7

Form 1120-PC (2011)

Schedule I

Other Information (see instructions)
Yes No

1
a
b
c
2
a
b
3

Check method of accounting:
Cash
Accrual
Other (specify) ▶
Check box for kind of company:
Mutual
Stock

f
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a
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a
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/
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5
0
b

Does the corporation discount any of the loss
reserves shown on its annual statement? . . .

10

Enter the amount of tax-exempt interest received or
accrued during the tax year ▶ $

11

If the corporation has an NOL for the tax year
and is electing to forgo the carryback period,
check here . . . . . . . . . . ▶

If the corporation is filing a consolidated return, the
statement required by Regulations section
1.1502-21(b)(3) must be attached or the election
will not be valid.

12

Enter the available NOL carryover from prior tax
years. (Do not reduce it by any deduction on line
36b, Schedule A.) . . . ▶ $

13

Is the corporation required to file Schedule UTP
(Form 1120), Uncertain Tax Position Statement (see
instructions)? If "Yes," complete and attach
Schedule UTP . . . . . . . . . . .

14

If the corporation is a Blue Cross or Blue Shield
organization described in section 833(c)(2), or other
organization described in section 833(c)(3), did it
meet the medical loss ratio (MLR) requirements of
section 833(c)(5)? . . . . . . . . . .

Enter percentage owned ▶

(a) Percentage owned ▶
country ▶

and (b) Owner’s

(c) The corporation may have to 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. Enter number of Forms
5472 attached ▶

$
$

9

At the end of the tax year, did any individual,
partnership, corporation, estate, or trust own, directly
or indirectly, 50% or more of the corporation’s voting
stock? (For rules of attribution, see section 267(c).)

At any time during the tax year, did one foreign
person own, directly or indirectly, 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? If “Yes,”
enter:

$

(2) for the previous tax year: $
Enter the total unpaid loss adjustment expenses
shown on the corporation’s annual statement:
(1) for the current tax year:
(2) for the previous tax year:

Is the corporation a subsidiary in an affiliated group
or a parent-subsidiary controlled group? . . .

If “Yes,” attach a schedule showing name and
identifying number. (Do not include any information
already entered in 4 above.)
6

Enter the total unpaid losses shown on the
corporation’s annual statement:
(1) for the current tax year:

At the end of the tax year, did the corporation own,
directly or indirectly, 50% or more of the voting
stock of a domestic corporation? (For rules of
attribution, see section 267(c).) . . . . . .

If “Yes,” enter name and EIN of the parent
corporation ▶

5

Has the corporation elected to use its own payout
pattern for discounting unpaid losses and unpaid
loss adjustment expenses? . . . . . . .

8a

If “Yes,” attach a schedule showing:
(a) name and employer identification number (EIN);
(b) percentage owned; and (c) taxable income or
(loss) before NOL and special deductions of such
corporation for the tax year ending with or within
your tax year.
4

Yes No
7

Form 1120-PC (2011)

Page 8

Form 1120-PC (2011)

Schedule L

Balance Sheets per Books (All filers are required to complete this schedule.)
Beginning of tax year

Assets
1
2a
b
3
4
5
6
7
8
9
10a
b
11a
b
12
13a
b
14
15

(a)

Cash
. . . . . . . . . .
Trade notes and accounts receivable .
Less allowance for bad debts . . .
Inventories . . . . . . . . .
U.S. government obligations
. . .
Tax-exempt securities (see instructions)
Other current assets (attach schedule) .
Loans to shareholders . . . . .
Mortgage and real estate loans . . .
Other investments (attach schedule) .
Buildings and other depreciable assets
Less accumulated depreciation . . .
Depletable assets . . . . . . .
Less accumulated depletion . . . .
Land (net of any amortization) . . .
Intangible assets (amortizable only)
.
Less accumulated amortization . . .
Other assets (attach schedule) . . .
Total assets
. . . . . . . .

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End of tax year
(b)

(c)

(d)

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(

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(

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(

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(

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(

)

(

)

(

)

(

)

Liabilities and Shareholders’ Equity
16
17
18
19
20
21
22
23
24
25
26
27
28
29

Accounts payable . . . . . . . .
Mortgages, notes, bonds payable in less than 1 year
Insurance liabilities (see instructions) . .
Other current liabilities (attach schedule) .
Loans from shareholders . . . . . .
Mortgages, notes, bonds payable in 1 year or more
Other liabilities (attach schedule) . . .
Capital stock: a Preferred stock
b Common stock
Additional paid-in capital . . . . . .
Retained earnings—Appropriated (attach schedule)
Retained earnings—Unappropriated . .
Adjustments to shareholders’ equity (attach schedule)
Less cost of treasury stock . . . . .
Total liabilities and shareholders’ equity .

Schedule M-1

5

Expenses recorded on books this year not
deducted in this return (itemize)

7
a
8

Travel and entertainment $

a

9
10

Add lines 1 through 5 .

.

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.

.

1
2

Balance at beginning of year
Net income (loss) per books .
Other increases (itemize)

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.

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.

.
.

.
.

.

Tax-exempt interest $
Deductions in this tax return not charged
against book income this year (itemize)

b

6

Depreciation $
Charitable contributions $
Add lines 7 and 8
. . . . . .
Income (Schedule A, line 35 or Schedule B,
line 19, if applicable)—line 6 less line 9 .

Analysis of Unappropriated Retained Earnings per Books (line 26, Schedule L)
5

6
7
4

)

Income recorded on books this year not
included in this return (itemize)

Depreciation $
Charitable contributions $

Schedule M-2

(

Note: Schedule M-3 required instead of Schedule M-1 if total assets are $10 million or more—See instructions.

Net income (loss) per books . . . . .
Federal income tax per books . . . .
Excess of capital losses over capital gains
Income subject to tax not recorded on
books this year (itemize)

3

)

Reconciliation of Income (Loss) per Books with Income (Loss) per Return

1
2
3
4

a
b
c

(

Add lines 1, 2, and 3 .

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.

8

Distributions:

a Cash
b Stock

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c Property
Other decreases (itemize)
Add lines 5 and 6

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Balance at end of year (line 4 less line 7)

Form 1120-PC (2011)