8816 Special Loss Discount Account and Special Estimated Tax

Form

8816

(Rev. September 2018)
Department of the Treasury
Internal Revenue Service
Name

Part I

Special Loss Discount Account and Special
Estimated Tax Payments for Insurance Companies

OMB No. 1545-0123

▶ Attach

to tax return.
▶ Go to www.irs.gov/Form8816 for the latest information.

Employer identification number

Special Loss Discount Amount
Accident year

1

Undiscounted unpaid losses

2
3

Discounted unpaid losses . .
Special loss discount limitation.
Subtract line 2 from line 1 . .

Part II

.

Special Loss Discount Account (See instructions.)

4

Balance at the beginning of the year

5

Additions—section 847(4)

6
7

Subtractions—section 847(5) . .
Balance at the end of the year. Add
lines 4 and 5 and subtract line 6
from the result . . . . . . .

Part III
8
9
10

11
12

.

.

.

Special Estimated Tax Payments (See instructions.)

Balance at the beginning of the year
Payments made for year . .
Prior section 847 payments
transferred to current year .

.

.

.

.

Payments applied for year . . .
Balance at the end of the year. Add
lines 8 through 10 and subtract line
11 from the result . . . . . .

Section references are to the Internal
Revenue Code unless otherwise noted.

Future Developments
For the latest information about
developments related to Form 8816 and its
instructions, such as legislation enacted
after they were published, go to
www.irs.gov/Form8816.

General Instructions
Purpose of form. Form 8816 must be filed
by insurance companies that elect to take
an additional deduction under section 847.
Public Law 115-97, the Tax Cuts and Jobs
Act (TCJA), repealed section 847 for tax
years beginning after December 31, 2017.
For tax years beginning after December 31,
2017, the election to apply section 847, the
additional deduction, special loss discount

account (SLDA), special estimated tax
payments (SETPs), and refundable amount
rules are eliminated.
Taxpayers with an existing SLDA balance
will need to report the entire balance in
income for the first tax year beginning after
2017. Any tax attributable to this
inclusion may be offset by the entire
amount of existing SETPs applied. The
excess of the SETPs over the amount of
tax attributable to the income inclusion
from the SLDA will be treated as estimated
tax payments under section 6655 for 2018.
Consolidated return. Each member of a
consolidated group claiming a section 847
deduction must file a separate Form 8816.
Do not combine several taxpayers on one
Form 8816. If a consolidated return is filed
on Form 1120 and one or more members
of the group is claiming a section 847

For Paperwork Reduction Act Notice, see instructions.

Cat. No. 41382N

deduction, enter “Form 8816” and the
amount on the dotted line next to line 14
on Form 1120, Schedule J, Part III. This will
assist the IRS in properly accounting for
your Special Estimated Tax Payments.
When to file. Attach Form 8816 to the
Form 1120-PC, Form 1120-L, or Form
1120 filed for the tax year of the additional
deduction and for each subsequent tax
year that has a remaining amount of unpaid
losses resulting from the deduction.

Specific Instructions
Note: All line references to Form 1120-L,
Form 1120-PC, and Form 1120 are to the
2018 forms.

Form 8816 (Rev. 9-2018)

Page 2

Form 8816 (Rev. 9-2018)

Part I. Special Loss Discount
Amount
Accident year. Enter the four-digit
accident year in the space provided at the
top of each column. For example, enter
accident year 2018 as 2018.
The computation for the SLDA in Part I,
lines 1, 2, and 3 is no longer applicable.

Part II. Special Loss Discount
Account (SLDA)
Keep a separate SLDA for each accident
year for which an additional deduction
under section 847 is claimed. Do not net
amounts from one year against amounts
from another year.
Line 4. Enter the balance in the SLDA at
the beginning of the year for which this
return is filed.
Line 5. Section 847 has been repealed. No
entry is made on line 5.
Line 6. Enter on this line and on Form
1120-PC, Schedule A, line 12; Form
1120-L, page 1, line 6; or Form 1120, page
1, line 10, amounts that are required to be
removed from the SLDA and included in
income. Section 847 was repealed, so the
entire balance in the SLDA account is
included in income. Line 6 must equal line
4. See section 847(5) prior to its
amendment by the TCJA for details.
Line 7. Line 7 must be zero.

Part III. Special Estimated Tax
Payments (SETPs)
Use Part III to reconcile the corporation’s
SETPs for each tax year it has made a
section 847 election.

Section 847(8) (tax benefit determination)
requires that if a taxpayer carries back net
operating losses or capital losses that arise
in years after a year in which a section 847
deduction was claimed, the taxpayer 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 insurance company (without
regard to section 1503(c)).
Therefore, if this recomputation changes
the amount of the section 847 tax benefit,
the taxpayer must provide a computation
schedule and attach it to Form 8816.
Line 8. The amount entered on this line
should be the same as the ending balance
for this account for the year immediately
preceding this year. If the amounts are
different, attach an explanation.
Line 9. Section 847 has been repealed. No
entry is made on line 9.
Line 10. Prior section 847 payments
transferred to the current year are no
longer applicable since section 847 has
been repealed. No entry is made on line 10.
Line 11. Enter the total payments applied
to pay additional tax due as a result of
including in income amounts required by
the repeal of section 847. The total of the
amount(s) on line 11 must agree with the
amount on Form 1120-PC, page 1, line
15b, or Form 1120-L, page 1, line 28b. For
purposes of Form 1120, this amount is
included on Form 1120, Schedule J,
Part III, line 14.
Line 12. To the extent that an SETP is not
used to offset additional tax due (that is, to
the extent there is a balance on line 12),

that SETP shall be treated as an estimated
tax payment made under section 6655.
Enter these amounts on Form 1120-PC,
page 1, line 15c, or Form 1120-L, page 1,
line 28c. For purposes of Form 1120, this
amount is included on Form 1120,
Schedule J, Part III, line 14.
Paperwork Reduction Act Notice. We
ask for the information on this form to carry
out the Internal Revenue laws of the United
States. You are required to give us the
information. We need it to ensure that you
are complying with these laws and to allow
us to figure and collect the right amount of
tax.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records relating
to a form or its instructions must be
retained as long as their contents may
become material in the administration of
any Internal Revenue law. Generally, tax
returns and return information are
confidential, as required by section 6103.
The time needed to complete and file
this form will vary depending on individual
circumstances. The estimated burden for
business taxpayers filing this form is
approved under OMB control number
1545-0123 and is included in the estimates
shown in the instructions for their business
income tax return.
If you have any comments concerning the
accuracy of these time estimates or
suggestions for making this form simpler, we
would be happy to hear from you. See the
instructions for Form 1120-PC, Form 1120-L,
or Form 1120.