1120-L Instructions for Form 1120-L

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2022

Instructions for Form 1120-L

Department of the Treasury
Internal Revenue Service

U.S. Life Insurance Company Income Tax Return

DRAFT AS OF
December 8, 2022
Contents

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

Contents

Future Developments . . . . . . .
What's New . . . . . . . . . . . . .
Photographs of Missing Children
The Taxpayer Advocate Service
How To Get Forms and
Publications . . . . . . . . . .
General Instructions . . . . . . . .
Purpose of Form . . . . . . .
Who Must File . . . . . . . .
Definitions . . . . . . . . . . .
Electronic Filing . . . . . . .
When To File . . . . . . . . .
Where To File . . . . . . . . .
Who Must Sign . . . . . . . .
Paid Preparer Authorization
Statements . . . . . . . . . .
Assembling the Return . . .
Tax Payments . . . . . . . .
Interest and Penalties . . . .
Accounting Methods . . . .
Accounting Period . . . . . .
Rounding Off to Whole
Dollars . . . . . . . . . . .
Recordkeeping . . . . . . . .
Other Forms and
Statements That May Be
Required . . . . . . . . . .
Specific Instructions . . . . . . . .
Period Covered . . . . . . .
Name and Address . . . . .
Item A. Identifying
Information . . . . . . . .
Item B. Employer
Identification Number
(EIN) . . . . . . . . . . . .
Item D. Section 953
Elections . . . . . . . . . .
Item E. Final Return, Name
Change, Address
Change, or Amended
Return . . . . . . . . . . .
Life Insurance Company
Taxable Income . . . . .
Schedule A—Dividends,
Inclusions,
Dividends-Received
Deduction, and Other
Special Deductions . . .
Schedule B—Investment
Income . . . . . . . . . . .
Schedule F—Increase
(Decrease) in Reserves
(Section 807) . . . . . . .
Schedule G—Policy
Acquisition Expenses . .
Schedule K—Tax
Computation . . . . . . .
Dec 8, 2022

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Page

Schedule L . . . . . . . . . . . . . . 22
Schedule M—Other
Information . . . . . . . . . . . . 22
Index . . . . . . . . . . . . . . . . . . . . . 25

Future Developments

For the latest information about
developments related to Form 1120-L
and its instructions, such as
legislation enacted after they were
published, go to IRS.gov/Form1120L.

What's New
COVID-19 related credit for qualified sick and family leave.
Generally, the credit for qualified sick
and family leave wages, as enacted
under the Families First Coronavirus
Response Act (FFCRA) and amended
and extended by the COVID-related
Tax Relief Act of 2020, and the credit
for qualified sick and family leave
wages, as enacted under the
American Rescue Plan Act of 2021
(the ARP), have expired. However,
employers that paid qualified sick and
family leave wages in 2022 for leave
taken after March 31, 2020, and
before October 1, 2021, may be
eligible to claim a credit for qualified
sick and family leave wages in 2022.
See the March 2022 revision of the
Instructions for Form 941and the 2022
Instructions for Form 944 for more
information.
Increase in penalty for failure to
file. For returns required to be filed
after December 31, 2022, the
minimum penalty for failure to file a
return that is more than 60 days late
has increased to the smaller of the tax
due or $450. See Late filing of return,
later.
Form 1120-W now historical. Form
1120-W, Estimated Tax for
Corporations, and the Instructions for
Form 1120-W are now historical. The
2022 Form 1120-W (released in 2021)
and the 2022 Instructions for Form
1120-W (released in 2021) will be the
last revisions of the form and its

. . . . 20
Cat. No. 11485H

instructions. Prior versions will be
available on IRS.gov.

Alternative minimum tax. For tax
years beginning after December 31,
2022, the Inflation Reduction Act of
2022 (the IRA) imposes a corporate
alternative minimum tax (AMT).
Applicable corporations (within the
meaning of section 59(k)) may be
required to pay this AMT. Short-period
filers with a tax year beginning after
December 31, 2022, and ending
before December 31, 2023, see
section 55 and the instructions for
Schedule K, line 9, later.

Advanced manufacturing investment credit. An eligible corporation
that claims the advanced
manufacturing investment credit for
tax years ending after December 31,
2022, can make a deemed payment
election under section 48D. If the
election is made, the corporation is
treated as making a payment against
tax by the amount of the credit. See
section 48D and the Instructions for
Form 3468.

Photographs of Missing
Children

The IRS is a proud partner with the
National Center for Missing &
Exploited Children® (NCMEC).
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 (1-800-843-5678) if
you recognize a child.

The Taxpayer Advocate
Service

The Taxpayer Advocate Service
(TAS) is an independent
organization within the IRS that helps
taxpayers and protects taxpayer
rights. TAS's job is to ensure that
every taxpayer is treated fairly and
knows and understands their rights
under the Taxpayer Bill of Rights.

As a taxpayer, the corporation has
rights that the IRS must abide by in its
dealings with the corporation. TAS
can help the corporation if:

• A problem is causing financial

difficulty for the business;
• The business is facing an
immediate threat of adverse action; or
• The corporation has tried
repeatedly to contact the IRS but no
one has responded, or the IRS hasn't
responded by the date promised.

General Instructions

the instructions for Schedule K, line 8,
later.

Purpose of Form

Foreign-owned domestic disregarded entities. If a foreign person,
including a foreign corporation, wholly
owns a domestic disregarded entity
(DE), the domestic DE is treated as a
domestic corporation separate from
its owner (the foreign corporation) for
purposes of the reporting
requirements under section 6038A
that apply to 25% foreign-owned
domestic corporations. These rules
apply to a domestic DE owned by a
foreign insurance company that
makes an election under section
953(c)(3)(C) but do not apply to a
domestic DE owned by a foreign
insurance company that makes an
election under section 953(d) (for
information on these elections, see
the instructions for item D). If a foreign
insurance company electing under
section 953(c)(3)(C) wholly owns a
domestic DE, the DE may be required
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.
For additional information and
coordination with Form 5472 filing by
the domestic DE, see the Instructions
for Form 5472.

Use Form 1120-L to report the
income, gains, losses, deductions,
and credits, and to figure the income
tax liability of life insurance
companies.

DRAFT AS OF
December 8, 2022

The TAS toolkit at
TaxpayerAdvocate.IRS.gov can help
the corporation understand these
rights.

TAS has offices in every state, the
District of Columbia, and Puerto Rico.
Local advocates' numbers are in their
local directories and at
TaxpayerAdvocate.IRS.gov/ContactUs. The corporation can also call TAS
at 877-777-4778.
TAS also works to resolve
large-scale or systemic problems that
affect many taxpayers. If the
corporation knows of one of these
broad issues, please report it to TAS
through the Systemic Advocacy
Management System at IRS.gov/
SAMS.
For more information, go to
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 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.
Tax forms and publications. The
corporation can view, download, or
print all of the forms and publications
it may need on IRS.gov/FormsPubs.
Otherwise, the corporation can go to
IRS.gov/OrderForms to place an
order and have forms mailed to it.

Who Must File

Every domestic life insurance
company and certain foreign
corporations 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.

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 Form
1120, Schedule J, line 2. File Form
1120 and attach Form 1120-L as a
statement (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
-2-

Note. A domestic DE is generally a
transparent entity. Any insurance
company that must file Form 1120-L
will include on Form 1120-L any tax
items of a wholly owned domestic DE
that are subject to reporting.
Qualified opportunity investment.
If the corporation held a qualified
investment in a qualified opportunity
fund (QOF) at any time during the
year, the corporation must file its
return with Form 8997, Initial and
Annual Statement of Qualified
Opportunity Fund (QOF) Investments,
attached. See the Instructions for
Form 8997.

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.
Instructions Form 1120-L (2022)

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.

Where To File
File the corporation's return at the applicable IRS address listed below.
If the corporation's principal business, office,
or agency is located in:

Use the following address:

DRAFT AS OF
December 8, 2022

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.

Electronic Filing

Corporations can generally
electronically file (e-file) Form 7004
(automatic extension of time to file)
and Forms 940, 941, and 944
(employment tax returns). If there is a

Instructions Form 1120-L (2022)

The United States

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

A foreign country or U.S. possession

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

balance due, the corporation can
authorize an electronic funds
withdrawal while e-filing. Form 1099
and other information returns can also
be electronically filed. The option to
e-file does not, however, apply to
certain returns.
For more information, go to
IRS.gov/Filing. Click on the links for
“Businesses & Self-Employed” and
“Corporations.”

When To File

Generally, a corporation must file its
income tax return by the 15th day of
the 4th 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 4th month after
the short period ends. A corporation
that has dissolved must generally file
by the 15th day of the 4th month after
the date it dissolved.
However, a corporation with a fiscal
tax year ending June 30 must file by
the 15th day of the 3rd month after the
end of its tax year. A corporation with
a short tax year ending any time in
June will be treated as if the short year
ended on June 30, and must file by
the 15th day of the 3rd month after the
end of its tax year.
If the due date falls on a Saturday,
Sunday, or legal holiday, the
corporation can file on the next
business day.

Private Delivery Services

Corporations can use certain private
delivery services (PDSs) designated
by the IRS to meet the “timely mailing
as timely filing” rule for tax returns. Go
to IRS.gov/PDS for the current list of
designated services.

The PDS can tell you how to get
written proof of the mailing date.
-3-

For the IRS mailing address to use
if you're using a PDS, go to IRS.gov/
PDSStreetAddresses.
PDSs cannot deliver items to
P.O. boxes. You must use the
CAUTION U.S. Postal Service to mail
any item to an IRS P.O. box address.

!

Extension of Time To File

File Form 7004, Application for
Automatic Extension of Time To File
Certain Business Income Tax,
Information, and Other Returns, to
request an extension of time to file.
Generally, file Form 7004 by the
regular due date of the return. See the
Instructions for Form 7004.

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
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 section 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 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,
and
• Give a copy of the return to the
taxpayer.

Commissioners (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.

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
employer identification number (EIN)
on each supporting statement or
attachment.

Electronic filing. If a domestic or
foreign life insurance company files
Form 1120-L electronically, don’t
attach the annual statement or pro
forma annual statement to the
electronically filed return. However, if
the full annual statement is not
attached, you must provide a copy of
the annual statement or pro forma
annual statement to the IRS if
requested and retain it with your other
tax records for the period required by
the regulations.

Tax Payments

DRAFT AS OF
December 8, 2022

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 2022 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 Use
Only” section of the return. It doesn’t
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 2023 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
National Association of Insurance

Reconciliation. Corporations that
do not file Schedule M-3 (Form
1120-L) with Form 1120-L must attach
a statement 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, later, 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 5 of Form 1120-L in the
following order.
1. Schedule N (Form 1120).
2. Form 4136.
3. Form 8978.
4. Form 965-B.
5. Form 8941.
6. Form 3800.
7. Additional schedules in
alphabetical order.
8. Additional forms in numerical
order.
9. Supporting statements and
attachments.
Complete every applicable entry
space on Form 1120-L. Do not enter
“See Attached” or “Available Upon
Request” instead of completing 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
-4-

Generally, the corporation must pay
any tax due in full no later than the
due date for filing its tax return (not
including extensions). See the
instructions for line 30. If the due date
falls on a Saturday, Sunday, or legal
holiday, the payment is due on the
next day that isn't a Saturday,
Sunday, or legal holiday.

Electronic Deposit
Requirement

Corporations must use electronic
funds transfer to make all federal tax
deposits (such as deposits of
employment, excise, and corporate
income tax). Generally, electronic
funds transfers are made using the
Electronic Federal Tax Payment
System (EFTPS).
If the corporation does not want to
use EFTPS, it can arrange for its tax
professional, financial institution,
payroll service, or other trusted third
party to make deposits on its behalf.
Also, it can arrange for its financial
institution to submit a same-day wire
payment (discussed later) on its
behalf. EFTPS is a free service
provided by the Department of the
Treasury. Services provided by a tax
professional, financial institution,
payroll service, or other third party
may have a fee.
To get more information about
EFTPS or to enroll in EFTPS, visit
EFTPS.gov or call 800-555-4477. To
contact EFTPS using
Telecommunications Relay Services
(TRS) for people who are deaf, hard
of hearing, or have a speech
disability, dial 711 and then provide
the TRS assistant the 800-555-4477
number above or 800-733-4829.
Depositing on time. To make your
EFTPS deposits on time, the
corporation must submit the
transaction by 8 p.m. Eastern time the
day before the date the deposit is due.
If the corporation uses a third party to
Instructions Form 1120-L (2022)

make deposits on its behalf, they may
have different cutoff times.
Same-day wire payment option. If
the corporation fails to submit a
deposit transaction on EFTPS by 8
p.m. Eastern time the day before the
date a deposit is due, it can still make
the deposit on time by using the
Federal Tax Collection Service
(FTCS). To use the same-day wire
payment method, the corporation will
need to make arrangements with its
financial institution ahead of time
regarding availability, deadlines, and
costs. Financial institutions may
charge a fee for payments made this
way. To learn more about making a
same-day wire payment, go to
IRS.gov/SameDayWire.

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 at least the smaller
of:
• Its tax liability for the current year,
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. If Form 2220 is completed,
enter the penalty on line 29. See the
instructions for line 29, later.

part of a month the tax is not paid, up
to a maximum of 25% of the unpaid
tax. See Caution, earlier.
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, or 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; and Pub. 15
(Circular E), Employer's Tax Guide,
for details, including the definition of
responsible persons.

DRAFT AS OF
December 8, 2022

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.
• The corporation must use electronic
funds transfer to make installment
payments of estimated tax.
• If, after the corporation figures and
deposits estimated tax, it finds that its
tax liability for the year will be more or
less than originally estimated, it may
have to refigure its required
installments. If earlier installments
were underpaid, the corporation may
owe a penalty. See Estimated tax
penalty below.
• If the corporation overpaid
estimated tax, it may be able to get a
quick refund by filing Form 4466,
Corporation Application for Quick
Refund of Overpayment of Estimated
Tax. See the instructions for line 28d,
later.
See section 6655 for for more
information on how to figure estimated
taxes. Also, see the instructions for
line 28c, later.
Estimated tax penalty. A
corporation that does not make
estimated tax payments when due
Instructions Form 1120-L (2022)

Interest and Penalties
If the corporation receives a
notice about penalties after it
CAUTION files its return, send the IRS
an explanation and we will determine
if the corporation meets
reasonable-cause criteria. Do not
attach an explanation when the
corporation's return is filed.

!

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
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 $450 (adjusted for inflation). The
penalty will not be imposed if the
corporation can show that the failure
to file on time was due to reasonable
cause. See Caution, earlier.
Late payment of tax. A corporation
that does not pay the tax when due
may generally be penalized 1/2 of 1%
of the unpaid tax for each month or
-5-

Note. The trust fund recovery penalty
will not apply to any amount of trust
fund taxes an employer holds back in
anticipation of the credit for qualified
sick and family leave wages or the
employee retention credit that they
are entitled to. See Pub. 15 for more
information.
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, the method used
must clearly show life insurance
company taxable income (LICTI).
Change in accounting method.
Generally, the corporation must get
IRS consent to change either an
overall method of accounting or the
accounting treatment of any material

item for income tax purposes. To
obtain consent, the corporation must
generally file Form 3115, Application
for Change in Accounting Method,
during the tax year for which the
change is requested. See the
Instructions for Form 3115 and Pub.
538 for more information and
exceptions. Also, see the Instructions
for Form 3115 for procedures that
may apply for obtaining automatic
consent to change certain methods of
accounting, non-automatic change
procedures, and reduced Form 3115
filing requirements.

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.

Accounting Period

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.”

The corporation should keep
copies of all filed returns. They help in
preparing future and amended returns
and in the calculation of earnings and
profits.

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, also apply. See the
Instructions for Form 8886 for details
on these and other penalties.

DRAFT AS OF
December 8, 2022

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 may enter decimal
points and cents when completing its
return. However, the corporation
should round off cents to whole
dollars on its return, forms, and
schedules to make completing its
return easier. The corporation must
either round off all amounts on its
return to whole dollars, or use cents
for all amounts. To round, drop
amounts under 50 cents and increase
amounts from 50 to 99 cents to the
next dollar. For example, $8.40
rounds to $8 and $8.50 rounds to $9.
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,

Other Forms and
Statements That May Be
Required

For more information, see
Regulations section 1.6011-4. Also
see the Instructions for Form 8886.
Penalties. The corporation may
have to pay a penalty if it is required to
disclose a reportable transaction
under section 6011 and fails to
properly complete and file Form 8886.
Penalties also apply under section
6707A if the corporation fails to file
-6-

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 include the
statement required by Regulations
section 1.351-3(a) on or with the
transferor's tax return for the tax year
of the exchange. The transferee
corporation must include the
statement required by Regulations
section 1.351-3(b) on or with its return
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
include the statement required by
Regulations section 1.355-5(a) on or
with its return for the year of the
distribution. A significant distributee
(as defined in Regulations section
1.355-5(c)) that receives stock or
securities of a controlled corporation
must include the statement required
by Regulations section 1.355-5(b) on
or with its return for the year of receipt.
If the distributing or distributee
Instructions Form 1120-L (2022)

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.

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.

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).

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.

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 LICTI of members that are
life insurance companies.

DRAFT AS OF
December 8, 2022

Election to reduce basis under
section 362(e)(2)(C). If property is
transferred to a corporation subject to
section 362(e)(2), the transferor and
the acquiring corporation may elect,
under section 362(e)(2)(C), to reduce
the transferor's basis in the stock
received instead of reducing the
acquiring corporation's basis in the
property transferred. Once made, the
election is irrevocable. For more
information, see section 362(e)(2) and
Regulations section 1.362-4. If an
election is made, a statement must be
filed in accordance with Regulations
section 1.362-4(d)(3).

Form 8975, Country-by-Country
Report. Certain U.S. persons that are
the ultimate parent entity of a U.S.
multinational enterprise group with
annual revenue for the preceding
reporting period of $850 million or
more are required to file Form 8975.
Form 8975 and Schedule A (Form
8975) must be filed with the income
tax return of the ultimate parent entity
of a U.S. multinational enterprise
group for the tax year in or within
which the reporting period covered by
Form 8975 ends. For more
information, see Form 8975,
Schedule A (Form 8975), and the
Instructions for Form 8975 and
Schedule A (Form 8975).
Additional 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
Instructions Form 1120-L (2022)

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 office is located
in Little Rock, Arkansas, the
corporation should enter the Little
Rock address.
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.
If the corporation has a foreign
address, include the city or town,
state or province, country, and foreign
postal code. Do not abbreviate the
country name. Follow the country's
practice for entering the name of the
state or province and postal code.

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
-7-

Corporations filing a consolidated
return must check box 1 of item A and
attach Form 851, Affiliations
Schedule, 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 new 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.
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 the corporation is the common
parent of a life-nonlife consolidated
group, check boxes 1 and 2 of item A.
Filing requirements. The common
parent of a life-nonlife consolidated
group must satisfy the following filing
requirements.
• File the applicable consolidated
corporate income tax return: a Form
1120-L, where the common parent is
a life insurance company; a Form
1120-PC, where the common parent
is an insurance company, other than a
life insurance company; or a Form
1120, where the common parent is
any other type of corporation.
• Indicate clearly on the face of the
return that the corporate tax return is a
life-nonlife return. This requirement is
satisfied by checking box 2 of item A
on page 1.
• Show any setoffs required by
paragraphs (e), (h), and (j) of
Regulations section 1.1502-47.
• Report separately the nonlife
consolidated taxable income or loss,
determined under Regulations section
1.1502-47(f), on a Form 1120 or
1120-PC (whether filed by the
common parent or as an attachment
to the consolidated return), for all
nonlife members of the consolidated
group.
• Report separately the consolidated
LICTI (as defined by Regulations
section 1.1502-47(b)(3)), determined
under Regulations section 1.1502-47,
on a Form 1120-L (whether filed by
the common parent or as an
attachment to the consolidated
return), for all life members of the
consolidated group.

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.

For more information, see the
Instructions for Form SS-4.

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.

DRAFT AS OF
December 8, 2022

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 file
Schedule M-3 (Form 1120-L), Net

Note. If you do not file Schedule M-3
(Form 1120-L) with Form 1120-L, see
Reconciliation under Statements,
earlier.

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 in one of the following
ways.
• Online—Click on the Employer ID
Numbers link at IRS.gov/EIN. The EIN
is issued immediately once the
application information is validated.
• By faxing or mailing Form SS-4,
Application for Employer Identification
Number.
Corporations located in the
United States or U.S.
CAUTION possessions can use the
online application. Foreign
corporations should call
1-267-941-1099 (not a toll-free
number) for more information on
obtaining an EIN. See the Instructions
for Form SS-4.

!

EIN applied for, but not received. If
the corporation has not received its
EIN by the time the return is due,
enter “Applied For” and the date the
corporation applied in the space for
the EIN. However, if the corporation is
filing its return electronically, an EIN is
required at the time the return is filed.
An exception applies to subsidiaries
of corporations whose returns are
filed with the parent's electronically
filed consolidated Form 1120. These
subsidiaries should enter “Applied
For” in the space for the EIN on their
returns. The subsidiaries' returns are
identified under the parent
corporation's EIN.
-8-

Generally, a foreign corporation
making either election must file its
return by sending it to:

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 it
was 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 9 of
Schedule K. On the dotted line to the
left of line 9 of Schedule K, write
“Section 953(d)” and the amount.
Attach a statement showing the
computation. See section 953(d) for
more details.

Item E. Final Return, Name
Change, Address Change,
or Amended Return

Indicate if this is a final return, name
change, address change, or amended
return by checking the appropriate
box.
Instructions Form 1120-L (2022)

Note. If a change of address or
responsible party occurs after the
return is filed, use Form 8822-B,
Change of Address or Responsible
Party—Business, to notify the IRS of
the new address.

Life Insurance Company
Taxable Income

beginning after 2017, enter the portion
of the change that must be included in
LICGI as prescribed by section
13517(c)(3) of Public Law 115-97.
See Rev. Proc. 2019-34, 2019-35
I.R.B. 669, for more information.
Line 4. Investment income. Enter
the amount from Schedule B, line 6,
less 50% of interest income of an
employee stock ownership plan
(ESOP) loan made prior to August 20,
1996. Also, see Public Law 104-188,
section 1602, for binding contracts
and refinancing rules.

on an attached statement. 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.
• 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 the following.
1. Property used in carrying on an
insurance business that is either real
or depreciable property held for more
than 1 year.
2. Timber, coal, and domestic iron
ore to which section 631 applies.

DRAFT AS OF
December 8, 2022

Income

Except as otherwise provided in the
Internal Revenue Code, gross income
includes all income from whatever
source derived.

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.
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).
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 3a. Decrease in reserves under section 807(f). If the amount of
any item referred to in section 807(c)
decreased as a result of a change in
the basis used to determine that item,
then enter the section 807(f)
prescribed portion of the change that
must be included in life insurance
company gross income (LICGI).
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 3b. Income from Reserve
Transition Relief. If section 807(d)
(as amended by Public Law 115-97)
decreased the amount of the reserve
for any contract as of the close of the
tax year preceding the first tax year
Instructions Form 1120-L (2022)

Line 5. Capital gain net income.
Unless specifically excluded by
section 1221, each asset held by a
corporation (whether or not connected
with its business) is a "capital asset."
Under section 1221, capital asset
does not include the following.
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.
Note. Form 8949, Sales and Other
Dispositions of Capital Assets, must
be attached to Schedule D (Form
1120), as required.
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
-9-

For (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 Form 6478, Biofuel Producer
Credit, if applicable.
• The amount included in income
from Form 8864, Biodiesel,
Renewable Diesel, or Sustainable
Aviation 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. 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.
• Section 91 Transferred Loss
Amount. Enter the transferred loss
amount and identify the amount as
“Section 91 Transferred Loss Amount”
required to be recognized under
section 91 resulting from a transfer of
substantially all the assets of a foreign
branch (within the meaning of section
367(a)(3)(C), as in effect before its
repeal) to a foreign corporation with
respect to which you were a U.S.
shareholder immediately after the
transfer as other income. Under

section 91(d), transferred loss
amounts recognized are treated as
derived from sources within the
United States.
• 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. See Form 8925.
• Income from cancellation of debt
(COD) for the repurchase of a debt
instrument for less than its adjusted
issue price.
• The corporation's share of the
following income from Form 8621,
Information Return by a Shareholder
of a Passive Foreign Investment
Company or Qualified Electing Fund.
See Form 8621 and the
Instructions for Form 8621 for details.
1. Ordinary earnings of a qualified
electing fund (QEF).
2. Gain or loss from marking
passive foreign investment company
(PFIC) stock to market.
3. Gain or loss from sale or other
disposition of section 1296 stock.
4. Excess distributions from a
section 1291 fund allocated to the
current year and pre-PFIC years, if
any.
• The amount of payroll tax credit
taken by an employer on its 2022
employment tax returns (Forms 941,
943, and 944) for qualified paid sick
leave and qualified paid family leave
under the FFCRA and the ARP (both
the nonrefundable and refundable
portions). The corporation must
include the full amount of the credit for
qualified sick and family leave wages
in gross income for the tax year that
includes the last day of any calendar
quarter in which the credit is allowed.

Deductions
Limitations on Deductions
Section 263A uniform capitalization rules. The uniform capitalization
rules of section 263A require
corporations to capitalize certain
costs.
A small business taxpayer is not
required to capitalize costs under
section 263A. A small business
taxpayer that wants to discontinue
capitalizing costs under section 263A
must change its method of
accounting. See section 263A(i) and
Regulations section 1.263A-1(j). Also,
see Change in accounting method,
earlier.
For more information on the
uniform capitalization rules, see Pub.
538. Also, see Regulations sections
1.263A-1 through 1.263A-3.

incurred. Any remaining costs must
generally be amortized over a
180-month period. See sections 195
and 248 and the related regulations.
Time for making the election.
The corporation generally elects to
deduct start-up or organizational costs
by claiming the deduction on its
income tax return filed by the due date
(including extensions) for the tax year
in which the active trade or business
begins. However, for start-up or
organizational costs paid or incurred
before September 9, 2008, the
corporation is required to attach a
statement to its return to elect to
deduct such costs.
For more details including special
rules for costs paid or incurred before
September 9, 2008, see the
Instructions for Form 4562,
Depreciation and Amortization. Also,
see Pub. 535, Business Expenses.
If the corporation timely filed its
return for the year without making an
election, it can still make an election
by filing an amended return within 6
months of the due date of the return
(excluding extensions). Clearly
indicate the election on the amended
return and write “Filed pursuant to
section 301.9100-2” at the top of the
amended return. File the amended
return at the same address the
corporation filed its original return.
The election applies when figuring
taxable income for the current tax year
and all subsequent years.
The corporation can choose to
forgo the elections above by
affirmatively electing to capitalize its
start-up or organizational costs on its
income tax return filed by the due date
(including extensions) for the tax year
in which the active trade or business
begins.

DRAFT AS OF
December 8, 2022

Note. A credit is available only if the
leave was taken after March 31, 2020,
and before October 1, 2021, and only
after the qualified leave wages were
paid, which might under certain
circumstances not occur until a
quarter after September 30, 2021,
including quarters in 2022.

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)
and 267 for limitations on deductions
for unpaid interest and expenses.
Limitations on business interest
expense. Business interest expense
may be limited. See section 163(j) and
Form 8990, Limitation on Business
Interest Expense Under Section
163(j). Also, see the instructions for
line line 15a and Schedule M,
Question 17, later.
Section 291 limitations.
Corporations may be required to
adjust certain deductions. See section
291 to determine the amount of the
adjustment.
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. A corporation can elect
to deduct a limited amount of start-up
and organizational costs it paid or
-10-

Note. The election to either amortize
or capitalize start-up costs is
irrevocable and applies to all start-up
costs that are related to the trade or
business.
Report the deductible amount of
start-up and organizational costs and
any amortization on line 18. For
amortization that begins during the
current year, complete and attach
Form 4562.
Reducing certain expenses for
which credits are allowable. If the
corporation claims certain credits, it
Instructions Form 1120-L (2022)

may need to reduce the otherwise
allowable deductions for expenses
used to figure the credit. This applies
to credits such as the following.
• Employment credits. See
Employment credits, later.
• Credit for increasing research
activities (Form 6765).
• Orphan drug credit (Form 8820).
• Disabled access credit (Form
8826).
• Employer credit for social security
and Medicare taxes paid on certain
employee tips (Form 8846).
• Credit for small employer pension
plan start-up costs (Form 8881).
• Credit for employer-provided
childcare facilities and services (Form
8882).
• Credit for small employer health
insurance premiums (Form 8941).
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.
Any wages that are used to
calculate the tax credits for sick leave
or family leave related to coronavirus
cannot be used again to figure the
credit for family and medical leave.
See the instructions for the form
used to figure the applicable credit for
more information.

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 (for example, for
reinsurance) for those losses together
with estimates of those recoveries that
may be recovered on those losses in
future years.

any policyholder dividend that (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 page 1,
line 1.

DRAFT AS OF
December 8, 2022

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(d) 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) include a reasonable
estimate of both losses incurred but
Instructions Form 1120-L (2022)

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 11a. Increase in reserves under section 807(f). If the amount of
any item referred to in section 807(c)
increased as a result of a change in
the basis used to determine that item,
then enter the section 807(f)
prescribed portion of the change that
is a deduction in computing LICTI.
Note. 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 11b. Deduction from Reserve
Transition Relief. If section 807(d)
(as amended by Public Law 115-97)
increased the amount of the reserve
for any contract as of the close of the
tax year preceding the first tax year
beginning after 2017, enter the portion
of the change that is a deduction in
computing LICTI as prescribed by
section 13517(c)(3) of Public Law
115-97. See Rev. Proc. 2019-34,
2019-35 I.R.B. 669, for more
information.
Line 12. Deductible policyholder
dividends. A policyholder dividend is
any dividend or similar distribution to
policyholders in their capacity as such
and includes any amount 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. Enter on
line 12 the amount of policyholder
dividends paid or credited during the
tax year. Also, under section 808(e),
-11-

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.
Business interest expense is any
interest paid or accrued on
indebtedness properly allocable to a
trade or business. Under section
163(j), business interest expense is
generally limited to the sum of
business interest income, 30% of the
adjusted taxable income, and floor
plan financing interest. The amount of
any business expense that is not
allowed as a deduction for the tax
year is carried forward to the following
year. If section 163(j) applies, use
Form 8990 to figure the amount of
business expense the corporation can

deduct for the current tax year and the
amount that can be carried forward to
the next year. See the Instructions for
Form 8990. Also see Schedule M,
Question 17, later.
Consolidated groups. The
limitation in section 163(j)(1) on the
amount allowed as a deduction for
business interest applies at the level
of the consolidated group.

• Dividends paid in cash on stock
held by an ESOP. 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).

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,
later.) Attach a statement 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.

DRAFT AS OF
December 8, 2022

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 de minimis exception
for financial institutions for certain
tax-exempt bonds issued in 2009 and
2010.

Line 18. Other deductions. Attach a
statement, 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 16.
Examples of other deductions may
include the following. See Pub. 535
for details on other deductions that
may apply to corporations.
• Certain business start-up and
organizational costs (discuss earlier
under Limitations on Deductions).
• Legal and professional fees.
• Supplies used and consumed in the
business.
• Travel, meals, and entertainment
expenses. Special rules apply
(discussed later).
• Utilities.
• Ordinary losses from trade or
business activities of a partnership
from Schedule K-1 (Form 1065). 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).
• Any applicable deduction under
section 179D for the cost of energy
efficient commercial building property
placed in service during the tax year.
Complete and attach new Form 7205.

See section 404(k) for more details
and the limitation on certain
dividends.
• 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.
• Amounts paid, or incurred to, or at
the direction of, a government or
governmental entity for the violation,
or investigation, or inquiry into the
potential violation, of a law.
• Lobbying expenses. However, see
exceptions (discussed later).
Also, include on line 18 the
following.
Compensation of officers. Enter
deductible officers' compensation.
See Employment credits, later, 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.

-12-

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
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.

Instructions Form 1120-L (2022)

Limitations on tax benefits for executive compensation under the
Treasury Troubled 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 the TARP. The limit applies for
each period in which obligations
arising from financial assistance
under the 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, any excess parachute
payments made to a covered
executive by an applicable employer
participating in a TARP are not
deductible as compensation if the
payments are made because of a
severance from employment during
an applicable 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.

If the corporation claims a
credit for any wages paid or
CAUTION incurred, it may need to
reduce any corresponding deduction
for officers’ compensation and
salaries and wages. See Reducing
certain expenses for which credits are
allowable, earlier.

!

profit-sharing, or other funded
deferred compensation plans.
Employers who maintain such a plan
must generally file one of the forms
listed below unless exempt from filing
under regulations or other applicable
guidance, even if the plan is not a
qualified plan under the Internal
Revenue Code. The filing requirement
applies even if the corporation does
not claim a deduction for the current
tax 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). Also, see the instructions for
the applicable form.

DRAFT AS OF
December 8, 2022

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 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.

Also, reduce the amounts
deducted as compensation of
CAUTION officers and salaries and
wages by the nonrefundable and
refundable portions of the CARES Act
and the ARP employee retention
credit claimed on the corporation’s
employment tax return(s).

!

Limitation on tax benefits for remuneration under the Patient Protection and Affordable Care Act.
The $1 million compensation limit is
reduced to $500,000 for remuneration
for services provided by individuals for
or on behalf of certain health
insurance providers in tax years
beginning after December 31, 2009.
The $500,000 limitation applies to
remuneration that is deductible in the
tax year during which the services
were performed and remuneration for
services during the year that is
deductible in a future tax year (called
deferred deduction remuneration).
The $500,000 limitation is reduced by
any amounts disallowed as excess
parachute payments. See section
162(m)(6) and Regulations section
1.162-31 for definitions and other
special rules. Also, see Notice
2011-2, 2011-2 I.R.B. 260.

Employment credits. If the
corporation claims a credit on any of
the forms listed below, it may need to
reduce its deduction for salaries and
wages. See the applicable form(s).
• Form 5884, Work Opportunity
Credit.
• Form 8844, Empowerment Zone
Employment Credit, if applicable.
• Form 8845, Indian Employment
Credit, if applicable.
• Form 8882, Credit for
Employer-Provided Childcare
Facilities and Services.
• Form 8932, Credit for Employer
Differential Wage Payments.
• Form 8994, Employer Credit for
Paid Family and Medical Leave.
Pension, profit-sharing, etc.,
plans. Enter the deduction for
contributions to qualified pension,

Instructions Form 1120-L (2022)

-13-

Form 5500, Annual Return Report of
Employee Benefit Plan.

Form 5500-SF, Short Form Annual
Return/Report of Small Employee
Benefit Plan, instead of Form 5500,
generally if under 100 participants at
the beginning of the plan year.
Note. Form 5500 and Form 5500-SF
must be filed electronically under the
computerized ERISA Filing
Acceptance System (EFAST2). For
more information, see the EFAST2
website at www.EFAST.dol.gov.
Form 5500-EZ, Annual Return of A
One-Participant (Owners/Partners
and Their Spouses) Retirement Plan
or A Foreign Plan. File this form for a
plan that only covers the owner (or the
owner and their spouse) but only if the
owner (or the owner and their spouse)
owns the entire business.
Charitable contributions. Enter
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 due date for
filing the corporations’s tax return (not
including extensions), 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.
• Any net operating loss (NOL)
carryback to the tax year under
section 172.
• Any capital loss carryback to the tax
year under section 1212(a)(1).

statement 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.

or business. However, the corporation
can deduct 100% of business meal
expenses if the meals are food and
beverages provided by a restaurant.
This applies only to amounts paid or
incurred after December 31, 2020,
and before January 1, 2023.
Meals not separately stated from
entertainment are generally not
deductible. In addition (subject to
exceptions under section 274(k)(2)):
• Meals must not be lavish or
extravagant, 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.

DRAFT AS OF
December 8, 2022

Carryover. Charitable
contributions over the 10% limitation
(or the 25% limitation, if elected; see
below) 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 NOL.

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 of the organization, the date
of the contribution, and the amount of
the contribution.
Contributions of $250 or more. A
corporation can deduct a contribution
of $250 or more only if it 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

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. For special rules
applicable to certain qualified
conservation contributions made by
Native corporations, see section
170(b)(2)(C).
Other special rules. See section
170 for special rules, limitations, and
requirements.

Travel, meals, and entertainment.
Subject to limitations and restrictions
discussed below, a corporation can
deduct ordinary and necessary travel,
meal, and nonentertainment
expenses paid or incurred in its trade
or business. Generally, entertainment
expenses, membership dues, and
facilities used in connection with these
activities cannot be deducted. In
addition, no deduction is generally
allowed for qualified transportation
fringe benefits. Special rules apply to
deductions for gifts, luxury water
travel, and convention expenses. See
section 274 and Pub. 463, Travel,
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
• Their travel is for a bona fide
business purpose and would
otherwise be deductible by that
individual.
Meals. Generally, the corporation
can deduct only 50% of the amount
otherwise allowable for
non-entertainment-related meal
expenses paid or incurred in its trade
-14-

Qualified transportation fringes
(QTFs). Generally, no deduction is
allowed under section 274(a)(4) for
QTFs provided by employers to their
employees. QTFs are defined in
section 132(f)(1) and include:
• Transportation in a commuter
highway vehicle between the
employee's residence and place of
employment,
• Any transit pass, and
• Qualified parking.
See section 274; Pub. 15-B,
Employer’s Tax Guide to Fringe
Benefits; and Pub. 535 for details.
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.
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.
Generally, the corporation cannot
deduct an expense paid or incurred
Instructions Form 1120-L (2022)

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,
Wage and Tax Statement, for an
employee or on Form 1099-NEC,
Nonemployee Compensation, for an
independent contractor.
However, if the recipient is an
officer, a director, a beneficial owner
(directly or indirectly), or other
“specified individual” (as defined in
section 274(e)(2)(B) and Regulations
section 1.274-9(b)), special rules
apply.

December 22, 2017, in connection
with 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.
If certain in-house lobbying
expenditures do not exceed $2,000,
they are deductible.

For guidance in applying section
382 to loss corporations whose
instruments were acquired by the
Department of the Treasury under
certain programs under the
Emergency Economic Stabilization
Act of 2008, see Notice 2010-2,
2010-2 I.R.B. 251.
For more details on the NOL
deduction, see section 172 and the
Instructions for Form 1139,
Corporation Application for Tentative
Refund.

DRAFT AS OF
December 8, 2022

Fines or similar penalties.
Generally, no deduction is allowed for
fines or similar penalties paid, or
incurred to, or at the direction of, a
government or governmental entity for
violating any law, or for the
investigation or inquiry into the
potential violation of a law, except:
• Amounts that constitute restitution
or remediation of property,
• Amounts paid to come into
compliance with the law,
• Amounts paid or incurred as the
result of certain court orders or
agreements in which no government
or specified nongovernmental agency
is a party, and
• Amounts paid or incurred for taxes
due.
No deduction is allowed unless the
amounts are specifically identified in
the order or agreement and the
corporation establishes that the
amounts were paid for that purpose.
Also, any amount paid or incurred as
reimbursement to the government for
the costs of any investigation or
litigation are not eligible for the
exceptions and are nondeductible.
See section 162(f).
Lobbying expenses. Generally,
lobbying expenses are not deductible.
These expenses include:
• Amounts paid or incurred in
connection with influencing federal,
state, or local legislation (but not
amounts paid or incurred before

Instructions Form 1120-L (2022)

Line 21b. NOL deduction. The NOL
deduction is the lesser of the
aggregate of the NOL carryovers to
the tax year, plus the NOL carrybacks
to the tax year. If this deduction is
taken, show its computation on an
attached statement. Generally, a life
insurance company can carry over an
NOL to each tax year following the tax
year of the loss. After applying the
NOL 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 used
as an NOL deduction in the carryover
year. See section 172 for special
rules, limitations, and definitions
pertaining to the NOL deduction and
carryover.
If an ownership change (described
in section 382(g)) occurs, the amount
of the taxable income of a loss
corporation that may be offset by the
pre-change 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 for 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) occurs. 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).
-15-

Line 24. Phased inclusion of balance of policyholders surplus account. Section 13514(d) of Public
Law 115-97 requires a one-eighth per
year phased inclusion of any
December 31, 2017, balance of the
policyholders surplus account starting
in 2018. This amount cannot be
reduced by an NOL.
Line 25. Total taxable income. The
total taxable income reported on
line 25 cannot be less than line 24 of
the Form 1120-L.
Also, line 25 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 Schedule Q
(Form 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 (repealed).
Line 27. Reserved for future use.

Tax and Payments
Line 28c. 2022 estimated tax payments. Enter any estimated tax
payments the corporation made for
the tax year.
Line 28d. 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 due
date for filing the corporation’s tax
return. Form 4466 must be filed
before the corporation files its tax

return. See the instructions for Form
4466.
Line 28e. Combine lines 28a through
28d.
Line 28g. Credits. Enter the
applicable credit on line 28g.
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.

the corporation must file Form 2220
even if it owes no penalty.
If Form 2220 is attached, check the
box on line 29 and enter the amount
of any penalty on that line. See
Estimated tax penalty, earlier.
Line 30. Amount owed. If the
corporation cannot pay the full amount
of tax owed, it can apply for an
installment agreement online. Go to
IRS.gov/OPA for the latest
information.

• Qualified for the 50% deduction
under section 243(a)(1).
Also include on line 1 the following.
• Taxable distributions from an
interest charge domestic international
sales corporation (IC-DISC) or former
domestic interational sales
corporation (DISC) that are
designated as eligible for the 50%
deduction and certain dividends of
Federal Home Loan Banks. See
section 246(a)(2).
• Dividends (except those received
on certain debt-financed stock
acquired after July 18, 1984) from a
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.

DRAFT AS OF
December 8, 2022

Credit for federal tax on fuels.
Enter the total income tax credit
claimed on Form 4136, Credit for
Federal Tax Paid on Fuels. Attach
Form 4136 to Form 1120-L.
Credit for tax on ozone-depleting
chemicals. Include on line 28g 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 28h. 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 28i. Reserved for future use.
Line 28j. Reserved for future use.
Line 28k. Total payments. Add the
amounts on lines 28e through 28h
and enter the total on line 28k.
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 28k. Write the amount
withheld and the words “Backup
Withholding” in the blank space above
line 28k.
Line 29. Estimated tax penalty.
Generally, the corporation does not
have to file Form 2220 with its income
tax return because the IRS will figure
the amount of any penalty and notify
the corporation of any amount due.
However, see the Instructions for
Form 2220 for circumstances where

Line 32. Refunded 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,
Electronic Deposit of Tax Refund of
$1 Million or More, and attach it to the
corporation's tax return.

Schedule A—Dividends,
Inclusions,
Dividends-Received
Deduction, and Other
Special Deductions

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.
Consolidated returns. 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 certain
debt-financed stock acquired after
July 18, 1984 (see section 246A)) that
are:
• Received from
less-than-20%-owned domestic
corporations subject to income tax,
and
-16-

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 65%
deduction under section 243(c), and
• Taxable distributions from an
IC-DISC or former DISC that are
considered eligible for the 65%
deduction.
Line 3, column (a). Enter the
following.
• Dividends received on certain
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.
Instructions Form 1120-L (2022)

Line 3, columns (b) and (c).
Dividends received on certain
debt-financed stock acquired after
July 18, 1984, are not entitled to the
full 50% or 65% dividends-received
deduction under section 243 or
245(a). The 50% or 65% 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
certain dividends received from
foreign corporations. Attach a
statement showing how the amount
on line 3, column (c), was figured.

• Qualify for the 65% deduction
under sections 245(a) and 243 by
reference.
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 65% deduction
under section 245(c)(1)(B).

However, in a year in which an NOL
occurs, this limitation does not apply
even if the loss is created by the
dividends-received deduction. See
section 246(b).
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
(as affected by Public Law 113-295,
Div. A, section 221(a)(41)(A), Dec. 19,
2014, 128 Stat. 4043), 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.

DRAFT AS OF
December 8, 2022

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 (as affected by Public
Law 113-295, Div. A, section 221(a)
(41)(A), Dec. 19, 2014, 128 Stat.
4043) 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
(as affected by Public Law 113-295,
Div. A, section 221(a)(41)(A), Dec. 19,
2014, 128 Stat. 4043) 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 50% deduction
under section 245(a). To qualify for
the 50% 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 foreign
sales corporation (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 50% deduction
under section 245(c)(1)(B).
Line 7, column (a). Enter the
U.S.-source portion of dividends that:
• Are received from
20%-or-more-owned foreign
corporations, and
Instructions Form 1120-L (2022)

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%
dividends-received 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 for Schedule A, Line 10.
-17-

Note. Certain dividends received by
a foreign corporation are not subject
to proration. Attach a statement
showing computations.
Line 14, column(a). Enter the
foreign-source portion of dividends:
• Received from specified
10%-owned foreign corporations (as
defined in section 245A(b)), including
gain from the sale of stock of a foreign
corporation that is treated as a
dividend under sections 1248(a) and
(i); and
• Qualify for the 100% deduction
under section 245A(a).
Line 15, column (a). Enter foreign
dividends not reportable on line 3, 6,
7, 8, or 14 of column (a).
• Include on line 15 any hybrid
dividends from a CFC. Hybrid
dividends are generally dividends
received from a CFC that would
otherwise be reported on line 14
except the CFC receives a deduction
(or other tax benefit) with respect to
any income, war profits, or excess
profits taxes imposed by any foreign
country or possession of the United
States.
• Also, include on line 15 the
corporation’s share of distributions
from a section 1291 fund from Form
8621, to the extent that the amounts
are taxed as dividends under section
301. See Form 8621 and the
Instructions for Form 8621.
Line 16, column (a). Reserved for
future use.
Line 16, column (c). Reserved for
future use.

Worksheet for Schedule A, Line 10

Keep for Your Records

1. Refigure Form 1120-L, page 1, line 8, without any adjustment
under section 1059, and without any capital loss carryback to
the tax year under section 1212(a)(1). Add this refigured line 8
amount to the amount on page 1, line 25. Subtract from that total
the sum of page 1, lines 9 through 18 . . . . . . . . . . . . . . . . . . . .
2. Add lines 9, 13, 14, and 17a, column (c), and the portion of the
deduction on line 8, column (c), that is attributable to dividends
from FSCs that are attributable to foreign trade income . . . . . . .
3. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4. 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.
5. 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
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.
6. Any other taxable dividend
income not properly reported above.

DRAFT AS OF
December 8, 2022

4. Multiply line 3 by 65% (0.65) . . . . . . . . . . . . . . . . . . . . . . . . . . .

5. Add lines 2, 5, and 7, column (c); the portion of the deduction on
line 8, column (c), that is attributable to wholly owned foreign
subsidiaries; and the portion of the deduction on line 3, column
(c), that is attributable to dividends received from
20%-or-more-owned corporations . . . . . . . . . . . . . . . . . . . . . . .
6. Enter the smaller of line 4 or line 5. If line 5 is greater than line 4,
stop here and enter the amount from line 6 on line 10, column
(c), and do not complete the rest of the worksheet . . . . . . . . . .
7. Enter the total amount of dividends from 20%-or-more-owned
corporations that are included on lines 2, 3, 5, and 7, column (a),
and the portion of the deduction on line 8, column (a), that is
attributable to wholly owned subsidiaries . . . . . . . . . . . . . . . . . .
8. Subtract line 7 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9. Multiply line 8 by 50% (0.50) . . . . . . . . . . . . . . . . . . . . . . . . . . .
10. Subtract line 5 above from line 10, column (c) . . . . . . . . . . . . . .
11. Enter the smaller of line 9 or line 10 . . . . . . . . . . . . . . . . . . . . . .
12. Dividends-received deduction after limitation (section
246(b)). Add lines 6 and 11. Enter the result here and on
line 10, column (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Line 17a, column (a). Enter the
foreign-source portion of any subpart
F inclusions attributable to the sale or
exchange by a CFC of stock in
another foreign corporation described
in section 964(e)(4). This should
equal the U.S. shareholder's pro rata
share of the amount reported on
Form(s) 5471, Information Return of
U.S. Persons With Respect to Certain
Foreign Corporations, Schedule I,
line 1a.
Line 17b, column (a). Enter the pro
rata share of subpart F inclusions
attributable to hybrid dividends of
tiered corporations under section
245A(e)(2). This should equal the
U.S. shareholder's pro rata share of
the amount reported on Form(s) 5471,
Schedule I, line 1b.
Line 17c, column (a). Enter all
other amounts included in income
under section 951, which should
equal the U.S. shareholder's pro rata
share of the sum of the amounts
reported on Form(s) 5471, Schedule I,
lines 1f, 2, 3, and 4.

Line 18, column (a). Enter amounts
included in income under the section
951A GILTI provision. See Form
8992, U.S. Shareholder Calculation of
Global Intangible Low-Taxed Income
(GILTI), Part II, line 5; and the
Instructions for Form 8992. Also,
consider the applicability of section
951A with respect to CFCs owned by
domestic partnerships in which the
filer has an interest. If you also have a
Form 5471 reporting requirement,
attach Form 5471.
Line 19, column (a). Include the
following.
1. Include gross-up for taxes
deemed paid under section 902 (for
dividends paid in pre-2022 tax years
of foreign corporations) and 960.
2. 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 50% deduction.
3. Dividends from tax-exempt
organizations.
-18-

Line 21, column (c). Enter the
section 250 deduction claimed for
FDII and GILTI. This should equal the
sum of line 8 and line 9 of Form 8993,
Section 250 Deduction for
Foreign-Derived Intangible Income
(FDII) and Global Intangible
Low-Taxed Income (GILTI), Part IV.

Schedule B—Investment
Income
Line 1. Interest. Enter the total
taxable interest received or accrued
during the tax year, less any
amortization of premium, plus any
Instructions Form 1120-L (2022)

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.

Schedule F—Increase
(Decrease) in Reserves
(Section 807)
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 from 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 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.

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.

DRAFT AS OF
December 8, 2022

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
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. Rents. Enter the rents
received or accrued during the tax
year. Related expenses, such as
repairs, taxes, and depreciation,
should be reported as “Other
deductions” on page 1, line 18.
Line 4. Royalties. Enter the royalties
received or accrued during the tax
year. Report the depletion deduction
on page 1, line 18.
Line 5. Leases, terminations, etc.
Enter the income received from
entering into, altering, or terminating
any lease, mortgage, or other
instrument from which the corporation
derives interest, rents, or royalties.

Instructions Form 1120-L (2022)

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)(5)(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).
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.
-19-

Special rules apply to:

• Unpaid losses related to disability

insurance (other than credit disability
insurance),
• Noncancelable accident and health
insurance, and
• Cancelable accident and health
insurance.
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 2022 are
published in Rev. Proc. 2022-XX,
2022-XX I.R.B. XXX, available at
IRS.gov/irb/
2022-XX_IRB#REV-PROC-2022-XX.
Rev. Proc. 2022-XX also provides, for
convenience, the discount factors for
losses incurred in earlier accident
years for use in tax years beginning in
2022.
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 highest rate or rates
permitted to be used to discount the
obligations by the NAIC as of the date
the reserve is determined. In no case
shall the amount determined under
section 807(c)(3) for any contract be
less than the net surrender value of
such contract.

Note. 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 using the net premium
percentage for contracts that are not
described in section 848(c)(1)(A) or
848(c)(1)(B). See section 848(e)(6)
for more information.

Line 6. If the sum of columns 5(a),
5(b), and 5(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 section
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).

DRAFT AS OF
December 8, 2022

Line 4. Dividend accumulations
and other amounts. Enter the total
dividend accumulations and other
amounts held as 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)(5)
(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 under section 807. 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.
Line 11. 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
Public Law 104-188, section 1602.

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
returned to another insurance
company under a reinsurance
agreement.
Line 4. Enter the applicable net
premium percentage as defined in
section 848(c)(1).
Line 5. The entries in column 5(a),
5(b), or 5(c) may be positive or
negative.

-20-

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 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), Consent
Plan and Apportionment Schedule for
a Controlled Group. Component
members of a controlled group must
use Schedule O (Form 1120) to report
the apportionment of certain tax
benefits between the members of the
group. See Schedule O (Form 1120)
and the Instructions for Schedule O
(Form 1120) for more information.

Instructions Form 1120-L (2022)

Line 2. Corporations figure their tax
by multiplying taxable income by 21%
(0.21).
Deferred tax under section
1291. If the corporation was a
shareholder in a 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)
(from Form 8621) 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, include the amount of interest
owed on Schedule K, line 9.
For more information on reporting
the deferred tax and interest, see the
Instructions for Form 8621.

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.
Enter any qualified electric vehicle
passive activity credits from prior
years allowed for the current year
from Form 8834, Qualified Electric
Vehicle Credit. Attach Form 8834.

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 statement 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, later.

DRAFT AS OF
December 8, 2022

Increase in tax attributable to
partner's audit liability under
section 6226. If the corporation is
filing Form 8978 to report adjustments
shown on Form 8986, Partner’s Share
of Adjustment(s) to
Partnership-Related Item(s), they
received from partnerships which
have been audited and have elected
to push out imputed underpayments
to their partners, include any increase
in taxes due from Form 8978, line 14,
in the total for Form 1120-L,
Schedule K, line 2. On the dotted line
next to line 2, enter "FROM FORM
8978" and the amount. Attach Form
8978. If Form 8978, line 14, shows a
decrease in tax, see the instructions
for Schedule K, line 6.
Additional tax under section
197(f). A corporation that elects to
recognize gain and pay tax on the
sale of a section 197 intangible under
the related person exception to the
anti-churning rules should include any
additional tax due in the total for
line 2. On the dotted line next to line 2,
enter “Section 197” and the amount.
See section 197(f)(9)(B)(ii).
Line 3. Base erosion minimum tax
amount. If the corporation had gross
receipts of at least $500 million in any
1 of the 3 preceding tax years, see
section 59A and the Instructions for
Form 8991, Tax on Base Erosion
Payments of Taxpayers With
Substantial Gross Receipts, for further
guidance on the determination of the
amount of base erosion minimum tax.

Instructions Form 1120-L (2022)

Line 5c. General business credit.
Enter on line 5c the corporation's
allowable credit from Form 3800, Part
II, line 38.
The corporation is required to file
Form 3800 to claim most business
credits. See the Instructions for Form
3800 for exceptions. 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, complete and attach Form
8827, Credit for Prior Year Minimum
Tax—Corporations.
Line 5e. Bond credits from Form
8912. Enter the allowable credits
from Form 8912, Credit to Holders of
Tax Credit Bonds, line 12.
Line 6. Total credits. Add lines 5a
through 5e and enter the total on
line 6.
Decrease attributable to
partner's audit liability under
section 6226. If the corporation is
filing Form 8978 to report adjustments
shown on Form 8986 they received
from partnerships which have been
audited and have elected to push out
imputed underpayments to their
partners, include any decrease in
taxes due (negative amount) from
Form 8978, line 14, in the total for
Form 1120-L, Schedule K, line 6. On
the dotted line next to line 6, enter
"FROM FORM 8978" and the amount.
Attach Form 8978. If Form 8978,
line 14, shows an increase in tax, see
the instructions for Schedule K, line 2.
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
-21-

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
net 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. 2021-41, 2021-39 I.R.B.
443, available at IRS.gov/2021-39
IRB, 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, page 1, line 7).
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. See section 842(c)(1). Attach a
statement showing how the reduction
of section 881 tax was figured. Enter
the net tax imposed by section 881 on
line 8.
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 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 and the
corporation did not follow the
procedures that would have
prevented recapture of the credit, it
may owe a tax. See Form 8611,
Recapture of Low-Income Housing
Credit.

line 9 and identify the applicable Code
section and the type of tax or interest.

insurance companies on Schedule L,
Part II. See section 842.

Line 10. Total tax. Include any
deferred tax on the termination of a
section 1294 election applicable to
shareholders in a QEF in the amount
entered on line 10.
Subtract any deferred tax on the
corporation's share of undistributed
earnings of a QEF (see Form 8621).

For Schedule L, total insurance
liabilities means the sum of the
following amounts as of the end of the
tax year.
1. Total reserves as defined in
section 816(c); plus

DRAFT AS OF
December 8, 2022

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, later, for
details on reporting these amounts on
an attached statement.
• 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).
• Interest on deferred tax attributable
to certain nondealer installment
obligations (section 453A(c)).
• Interest due on deferred gain
(section 1260(b)).
• Interest due under section 1291(c)
(3). See Form 8621 and the
Instructions for Form 8621.

Alternative minimum tax.
Applicable corporations filing a return
for a short tax year that begins in 2023
and ends in 2023, include on line 9
any corporate AMT imposed under
section 55 by the Inflation Reduction
Act of 2022. On the dotted line next to
line 9, enter “CAMT” and the AMT
amount. Attach a detailed statement
showing the computation of the AMT.
Include a computation of adjusted
financial statement income. Label the
statement "CAMT."
How to report. If the corporation
checked the “Other” box, attach a
statement showing the computation of
each item included in the total for

How to report. Attach a statement
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 mean all
assets of the corporation. In valuing
real property and stocks, use FMV; 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
The information provided in
Part II should conform with the
CAUTION “Assets” and “Liabilities,
Surplus, and Other Funds” sections of
the NAIC annual statement.

!

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
-22-

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.
Instructions Form 1120-L (2022)

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

However, the term "foreign person"
does not include any foreign person
who consents to the filing of a joint
income tax return.
Owner's country. For individuals,
the term “owner's country” means the
country of residence. For all others, it
is the country where incorporated,
organized, created, or administered.

Question 14. If the corporation had
gross receipts of at least $500 million
in any 1 of the 3 preceding tax years,
complete and attach Form 8991. For
this purpose, the corporation's gross
receipts include the gross receipts of
all persons aggregated with the
corporation as specified in section
59A(e)(3). See the Instructions for
Form 8991 to determine if the
corporation is subject to the base
erosion minimum tax.

DRAFT AS OF
December 8, 2022

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).

Question 8. Check the “Yes” box if
one foreign person owned at least
25% of the total voting power of all
classes of stock of the corporation
entitled to vote, or at least 25% of the
total value of all classes of stock of the
corporation.
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:
• An individual who is not a citizen or
resident of the United States;
• An individual who is a citizen or
resident of a U.S. possession who is
not otherwise a citizen or resident of
the United States;
• Any partnership, association,
company, or corporation that is not
created or organized in the United
States;
• 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.

Instructions Form 1120-L (2022)

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

Item 11. Enter the amount of the
NOL carryover to the tax year from
prior years, even if some of the loss is
used to offset income on this return.
The amount to enter is the total of all
NOLs generated in prior years but not
used to offset income (either as a
carryback or carryover) in a tax year
prior to 2022. Do not reduce the
amount by any NOL deduction
reported on page 1, line 21b.
Item 12. Complete item 12 to identify
the state where the annual statement
used to prepare the tax return was
filed.
Question 13. A corporation that files
Form 1120-L must file Schedule UTP
(Form 1120), Uncertain Tax Position
Statement, with its 2022 income tax
return if:
• For 2022, the corporation's total
assets equal or exceed $10 million;
• The corporation or a related party
issued audited financial statements
reporting all or a portion of a
corporation's operations for all or a
portion of the corporation's tax year;
and
• The corporation has one or more
tax positions that must be reported on
Schedule UTP.
Attach Schedule UTP to the
corporation's income tax return. Do
not file it separately. A taxpayer that
files a protective Form 1120-L must
also file Schedule UTP if it satisfies
the requirements set forth above.
For details, see the Instructions for
Schedule UTP.

-23-

Question 15. Section 267A disallows
a deduction for certain interest and
royalty payments or accruals. In
general, section 267A applies when:
1. The interest or royalty is paid or
accrued to a related party;
2. Under its tax laws, the related
party either:
a. Does not include the full amount
in income, or
b. Is allowed a deduction with
respect to the amount; and
3. The amount is paid or accrued
pursuant to a hybrid transaction or by,
or to, a hybrid entity.
When section 267A applies, the
deduction is generally disallowed to
the extent the related party does not
include the amount in income or is
allowed a deduction with respect to
the amount. However, the deduction
is not disallowed to the extent the
amount is included in the gross
income of a U.S. shareholder under
section 951(a).
For definitions of terms, see section
267A.
Question 16. The limitation on
business interest expense applies to
every taxpayer with a trade or
business, unless the taxpayer meets
certain specified exceptions. A
taxpayer may elect out of the
limitation for certain businesses
otherwise subject to the business
interest expense limitation.
Certain real property trades or
businesses and farming businesses
qualify to make an election not to limit
business interest expense. This is an
irrevocable election. If you make this
election, you are required to use the
alternative depreciation system to
depreciate any nonresidential real
property, residential rental property,
and qualified improvement property
for an electing real property trade or
business, and any property with a

recovery period of 10 years or more
for an electing farming business. See
section 168(g)(1)(F). Also, you are not
entitled to the special depreciation
allowance for that property. For a
taxpayer with more than one
qualifying business, the election is
made with respect to each business.
Check "Yes" if the corporation has
an election in effect to exclude a real
property trade or business or a
farming business from section 163(j).
For more information, see section
163(j) and the Instructions for Form
8990.

and does not have excess business
interest expense from a partnership. A
taxpayer is also not required to file
Form 8990 if the taxpayer only has
business interest expense from the
following excepted trades or
businesses.
• An electing real property trade or
business.
• An electing farming business.
• Certain utility businesses.

receipts for the 3 prior tax years and
dividing the total by 3. Gross receipts
include the aggregate gross receipts
from all persons treated as a single
employer, such as a controlled group
of corporations, commonly controlled
partnerships, or proprietorships, and
affiliated service groups. See section
448(c) and the Instructions for Form
8990 for additional information.

DRAFT AS OF
December 8, 2022

Question 17. Generally, a taxpayer
with a trade or business must file
Form 8990 to claim a deduction for
business interest. In addition, Form
8990 must be filed by any taxpayer
that owns an interest in a partnership
with current year, or prior year
carryover, excess business interest
expense allocated from the
partnership.

Exclusions from filing. A taxpayer
is not required to file Form 8990 if the
taxpayer is a small business taxpayer

Small business taxpayer. A small
business taxpayer is not subject to the
business interest expense limitation
and is not required to file Form 8990.
A small business taxpayer is a
taxpayer that (a) is not a tax shelter
(as defined in section 448(d)(3)), and
(b) meets the gross receipts test of
section 448(c), discussed next.
Gross receipts test. For tax years
beginning in 2022, a taxpayer meets
the gross receipts test if the taxpayer
has average annual gross receipts of
$27 million or less for the 3 prior tax
years. A taxpayer's average annual
gross receipts for the 3 prior tax years
is determined by adding the gross

Member of controlled group, business under common control, or affiliated group. For purposes of the
gross receipts test, all members of a
controlled group of corporations (as
defined in section 52(a)) and all
members of a group of businesses
under common control (as defined in
section 52(b)), are treated as a single
person, and all employees of the
members of an affiliated service group
(as defined in sections 414(m) and
(o)) shall be treated as employed by a
single person. If required, attach Form
8990 to the corporation's income tax
return. Do not file it separately. See
Limitations under Line 15a, earlier.

Paperwork Reduction Act Notice. We ask for the information on these forms to carry out the Internal Revenue laws of
the United States. You are required to give us the information. We need it to ensure that you are complying with these
laws and to allow us to figure and collect the right amount of tax.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act
unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be
retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax
returns and return information are confidential, as required by section 6103.
The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden
for business taxpayers filing this form is approved under OMB control number 1545-0123 and is included in the
estimates shown in the instructions for their business income tax return.
If you have comments or suggestions for making this form and related schedules simpler, we would be happy to hear
from you. You can send us comments from IRS.gov/FormComments. Or you can write to:
Internal Revenue Service
Tax Forms and Publications
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
Do not send the tax form to this address. Instead, see Where To File, earlier.

-24-

Instructions Form 1120-L (2022)

Index

A
Accounting methods,
change in 5
Accounting period (tax
year) 6
Address change 8
Affiliated group 22
Amended return 8
Amortization 10
Annual Statement 4
Assembling the return 4

B

Electronic Federal Tax
Payment System
(EFTPS) 4
Electronic Filing 3
Employer identification
number (EIN) 8
Estimated tax payments 15
Estimated tax penalty 5, 16
Extension of time to file 3

N

K 20
L, Part I 22
L, Part II 22
M 22
Schedule M-3 (Form
1120-L) 8
Section 953 elections 8

Name change 8

T

O

Tax and payments:
Estimated tax payments 15
Prior year(s) special
estimated tax payments
to be applied 15
Taxpayer Advocate
Service 1
Transactions between
related taxpayers 10
Travel, meals, and
entertainment:
Meals and
entertainment 14
Membership dues 14
Travel 14

M
Minimum tax:
Alternative minimum tax 21
Prior year, credit for 21

DRAFT AS OF
December 8, 2022

Backup withholding 16
Business start-up
expenses 10

C
Charitable contributions 13
Consolidated return 7
Controlled group:
Member of 20
Parent-subsidiary 22

D
Deductions 10
Definitions:
Insurance company 3
Life insurance company 3
Reserves test 3
Depository methods of tax
payment 4
Disclosure statement 6

E
Electronic deposit of tax
refund of $1 million or
more 16

F

Final return 8
Foreign corporations 21
Foreign person 23
Foreign tax credit 21
Forms and publications,
how to get 2
Future Developments 1

G
General business credit 21
Golden parachute
payments 10
Gross premiums and other
consideration 9

I
Interest due on late
payment of tax 5

L
Life insurance company
taxable income 9
Limitation on
dividends-received
deduction 17
Limitations on
deductions 10
Losses incurred 11

Operations loss
deduction 15
Other deductions 12
Other taxes 21
Overpaid 15
Owner's country 23
Ozone-depleting chemicals,
credit for tax on 16

P
Paid preparer
authorization 4
Penalties 5, 16
Pension, profit-sharing, etc.
plans 13
Period covered 7
Private delivery services 3

R
Recordkeeping 6
Return premiums 9

S
Schedule:
A 16
B 18
F 19
G 20

-25-

W
What's New 1
When to file 3
Where to file 3
Who must file 2
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 17