2023

Instructions for

Form 1120-PC

U.S. Property and Casualty Insurance Company Income Tax Return

Department of the Treasury

Internal Revenue Service

Section references are to the Internal Revenue Code 

unless otherwise noted.

Contents Page

What's New ............................... 1

Photographs of Missing Children ................ 2

The Taxpayer Advocate Service ................. 2

How To Get Forms and Publications .............. 2

General Instructions ......................... 2

Purpose of Form ......................... 2

Who Must File .......................... 2

Where To File ........................... 3

Electronic Filing ......................... 2

When To File ........................... 2

Who Must Sign .......................... 3

Paid Preparer Authorization ................. 3

Statements ............................ 4

Assembling the Return .................... 4

Tax Payments ........................... 4

Estimated Tax Payments ................... 4

Interest and Penalties ..................... 5

Accounting Methods ...................... 5

Accounting Period ....................... 6

Rounding Off to Whole Dollars ............... 6

Recordkeeping .......................... 6

Other Forms and Statements That May Be 

Required ............................ 6

Specific Instructions ......................... 6

Period Covered ......................... 6

Name and Address ....................... 7

Identifying Information ..................... 7

Employer Identification Number (EIN) .......... 8

Section 953 Elections ..................... 8

Final Return, Name Change, Address 

Change, or Amended Return .............. 8

Taxable Income ......................... 8

Tax Computation and Payments .............. 8

Schedule A ........................... 10

Schedule B, Part I ....................... 18

Schedule B, Part II ...................... 18

Schedule C ........................... 19

Schedule E ........................... 21

Schedule F ........................... 22

Schedule G ........................... 23

Schedule H ........................... 23

Schedule I ............................ 23

Schedule L ............................ 26

Contents Page

Schedule M-1 .......................... 26

Index ................................... 28

Future Developments

For the latest information about developments related to 

Form 1120-PC and its instructions, such as legislation 

enacted after they were published, go to IRS.gov/

Form1120PC.

What's New

Increase in penalty for failure to file. For tax returns 

required to be filed in 2024, the minimum penalty for 

failure to file a tax return that is more than 60 days late has 

increased to the smaller of the tax due or $485. See Late 

filing of return, later.

Expiration of 100% business meal expense deduction. The temporary 100% business meal expenses 

deduction for food and beverages provided by a 

restaurant does not apply to amounts paid or incurred 

after 2022.

Corporate alternative minimum tax (CAMT). For tax 

years beginning after 2022, certain corporations must 

determine whether they are subject to the new CAMT and 

calculate CAMT, if applicable. See the instructions for 

page 1, line 6. Also, see new Schedule I, Question 20.

Elective payment election. Applicable entities and 

electing taxpayers can elect to treat certain credits as 

elective payments. Resulting overpayment may result in 

refunds. See the instructions for line 15g. Also see the 

Instructions for Form 3800.

Relief from additions to tax for underpayments applicable to the new corporate alternative minimum tax. 

For tax year 2023, the IRS will waive the penalty for failure 

to make estimated tax payments for taxes attributable to a 

CAMT liability for affected corporations. Affected 

corporations must still file Form 2220 even if they owe no 

estimated tax penalty. However, affected corporations 

may exclude the CAMT tax liability when calculating the 

required annual payment on Form 2220. Affected 

corporations must also include an amount of estimated 

tax penalty on page 1, line 17 of Form 1120-PC even if 

that amount is zero. Failure to follow these instructions 

could result in the corporation receiving a penalty notice 

that will require an abatement request to apply the relief 

provided by Notice 2023-42. See Notice 2023-42, 

2023-26 I.R.B. 1085, available at IRS.gov/irb/ 

2023-26_IRB#NOT-2023-42. Also, see the instructions for 

page 1, line 17.

Jan 29, 2024 Cat. No. 64537I
Photographs of

Missing Children

The Internal Revenue Service 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; and

• The corporation has tried repeatedly to contact the IRS 

but no one has responded, or the IRS hasn't responded 

by the date promised.

The TAS tax 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/

Contact-Us. 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, 

print, or download 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. The IRS will process your order for 

forms and publications as soon as possible.

General Instructions

Purpose of Form

Use Form 1120-PC to report the income, gains, losses, 

deductions, and credits, and to figure the income tax 

liability of insurance companies, other than life insurance 

companies.

Who Must File

Every domestic nonlife insurance company and every 

foreign corporation that would qualify as a nonlife 

insurance company subject to taxation under section 831, 

if it were a U.S. corporation, must file Form 1120-PC. This 

includes organizations described in section 501(m)(1) that 

provide commercial-type insurance and organizations 

described in section 833.

Exceptions. A nonlife insurance company that is:

• Exempt under section 501(c)(15) should file Form 990, 

Return of Organization Exempt From Income Tax;

• Subject to taxation under section 831, and disposes of 

its insurance business and reserves, or otherwise ceases 

to be taxed under section 831, but continues its corporate 

existence while winding up and liquidating its affairs, 

should file Form 1120, U.S. Corporation Income Tax 

Return.

Life insurance companies. Life insurance companies 

should file Form 1120-L, U.S. Life Insurance Company 

Income Tax Return.

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 is 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.

Electronic Filing

Go to IRS.gov/Filing for the latest information. Also, go to 

IRS.gov/MeF and click on the link for “Modernized e-File 

Forms” for information on which forms the corporation can 

or must e-file.

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 

2 Instructions for Form 1120-PC (2023)
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.

For the IRS mailing address to use if you are using a 

PDS, go to IRS.gov/PDSstreetAddresses.

Private delivery services cannot deliver items to 

P.O. boxes. You must use the U.S. Postal Service 

to mail any item to an IRS P.O. box address.

Extension of Time To File

File Form 7004, 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, the corporation must 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 a 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.

CAUTION

!

Paid Preparer Use Only section. If an employee of the 

corporation completes Form 1120-PC, the paid preparer 

space should remain blank. Anyone who prepares Form 

1120-PC but does not charge the corporation should not 

complete that section. Generally, anyone who is paid to 

prepare the return must sign it and complete the section.

The paid preparer must complete the required preparer 

information and:

• Sign the return in the space provided for the preparer's 

signature,

• Include their Preparer Tax Identification Number (PTIN); 

and

• Give a copy of the return to the taxpayer.

Note. A paid preparer may sign original or amended 

returns by rubber stamp, mechanical device, or computer 

software program.

Paid Preparer Authorization

If the corporation wants to allow the IRS to discuss its 

2023 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 does not apply to the firm, if any, shown in 

that section.

If the “Yes” box is checked, the corporation is 

authorizing the IRS to call the paid preparer to answer any 

questions that may arise during the processing of its 

return. The corporation is also authorizing the paid 

preparer to:

• Give the IRS any information that is missing from the 

return;

• Call the IRS for information about the processing of the 

return or the status of any related refund or payment(s); 

and

• Respond to certain IRS notices about math errors, 

offsets, and return preparation.

The corporation is not authorizing the paid preparer to 

receive any refund check, bind the corporation to anything 

(including any additional tax liability), or otherwise 

represent the corporation before the IRS.

The authorization will automatically end no later than 

the due date (excluding extensions) for filing the 

corporation's 2024 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.

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:

The United States

Department of the Treasury 

Internal Revenue Service

Ogden, UT 84201-0012

A foreign country or U.S. territories

Internal Revenue Service

P.O. Box 409101

Ogden, UT 84409

Instructions for Form 1120-PC (2023) 3
Statements

NAIC annual statement. Regulations section 

1.6012-2(c) requires that the National Association of 

Insurance Commissioners (NAIC) annual statement be 

filed with Form 1120-PC. A foreign insurance company 

subject to tax under section 831 that is not required to file 

an annual statement must file a copy of the pro forma 

annual statement. A penalty for the late filing of a return 

may be imposed for not including the annual statement 

when the return is filed. However, see Electronic filing, 

next.

Electronic filing. If the domestic or foreign nonlife 

insurance company files Form 1120-PC electronically, do 

not attach the annual statement or pro forma annual 

statement to the electronically filed return. However, you 

must provide a copy of the annual statement or pro forma 

annual statement to the IRS if requested and retain it with 

your other tax records for the period required by the 

regulations.

Reconciliation. Corporations that do not file a 

Schedule M-3 (Form 1120-PC), Net Income (Loss) 

Reconciliation for U.S. Property and Casualty Insurance 

Companies With Total Assets of $10 Million or More, with 

Form 1120-PC must attach a statement that reconciles the 

NAIC annual statement to Form 1120-PC.

Assembling the Return

To ensure that the corporation's tax return is correctly 

processed, attach all schedules and other forms after 

page 9 of Form 1120-PC in the following order.

1. Schedule N (Form 1120).

2. Form 4626.

3. Form 4136.

4. Form 8978.

5. Form 965-B.

6. Form 8941.

7. Form 3800.

8. Additional schedules in alphabetical order.

9. Additional forms in numerical order.

10. Supporting statements and attachments.

Complete every applicable entry space on Form 

1120-PC. 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 the 

printed forms. If there are supporting statements and 

attachments, arrange them in the same order as the 

schedules or forms they support and attach them last. 

Show the totals on the printed forms. Enter the 

corporation's name and employer identification number 

(EIN) on each supporting statement or attachment.

Tax Payments

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 18. 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 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, go to 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 provide the TRS assistant 

the 800-555-4477 number above or 800-733-4829.

Depositing on time. To make 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 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). Before using 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.

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.

• 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 Form 1120-PC, 

line 15c.

4 Instructions for Form 1120-PC (2023)
See section 6655 and Pub. 542, Corporations, for more 

information on estimated taxes.

Estimated tax penalty. A corporation that does not 

make estimated tax payments when due may be subject 

to an underpayment penalty for the period of 

underpayment. Generally, a corporation is subject to the 

penalty if its tax liability is $500 or more and it did not 

timely pay at least the smaller of:

• Its tax liability for the current year, or

• Its prior year 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 17. See the 

instructions for line 17. Also see Relief from additions to 

tax for underpayments applicable to the new corporate 

alternative minimum tax.

Foreign insurance companies, see Notice 90-13, 

1990-1 C.B. 321, before computing estimated tax.

Interest and Penalties

If the corporation receives a notice about penalties 

after it files its return, send the IRS an explanation 

and we will determine if the corporation meets the 

criteria for the reasonable-cause exception to the 

penalties. 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 tax return required 

to be filed in 2024 that is over 60 days late is the smaller of 

the tax due or $485 (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 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;

CAUTION

!

CAUTION

!

• 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 or Pub. 15 (Circular E), 

Employer's Tax Guide, for details, including the definition 

of responsible persons.

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

Figure taxable income using the method of accounting 

regularly used in keeping the corporation's books and 

records. In all cases, the method used must clearly show 

taxable income. Permissible methods include cash, 

accrual, or any other method authorized by the Internal 

Revenue Code.

The gross amounts of underwriting and investment 

income should be computed on the basis of the Statement 

of Income of the NAIC annual statement to the extent not 

inconsistent with the Internal Revenue Code and its 

regulations. In all cases, the method used must clearly 

show taxable income.

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 was requested. See the 

Instructions for Form 3115 and Pub. 538, Accounting 

Periods and Methods, for more information and 

exceptions, including filing exceptions for qualified small 

business taxpayers. 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.

Safe harbor method of accounting for premium acquisition expenses. Insurance companies subject to tax 

under section 831 are provided with a safe harbor method 

of accounting for premium acquisition expenses. Form 

3115 must be filed in order to change to the safe harbor 

method. For more information, see the Instructions for 

Form 3115.

Certain changes in method of accounting for organizations to which section 833 applies. Blue Cross or 

Instructions for Form 1120-PC (2023) 5
Blue Shield organizations under section 833(c)(2), or 

organizations described in section 833(c)(3), can obtain 

automatic consent to change the method of accounting for 

unearned premiums resulting from either a failure to meet 

the medical loss ratio (MLR) requirements of section 

833(c)(5), or meeting the MLR requirements after failing to 

do so in a prior year. Form 3115 must be filed in order to 

make this change in accounting method. See the 

Instructions for Form 3115.

Accounting Period

An insurance company must figure its taxable income on 

the basis of a tax year. A tax year is the annual accounting 

period an insurance company uses to keep its records 

and report its income and expenses.

As a general rule under section 843, the tax year for 

every insurance company is the calendar year. However, if 

an insurance company joins in the filing of a consolidated 

return, it may adopt the tax year of the common parent 

corporation even if that year is not a calendar year.

Rounding Off to Whole Dollars

The corporation may enter decimal points and cents when 

completing its tax 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, 

whichever is later. Keep records that verify the 

corporation's basis in property for as long as they are 

needed to figure the basis of the original or replacement 

property.

The corporation should keep copies of all filed returns. 

They help in preparing future and amended returns and in 

the calculation of earnings and profits.

Other Forms and Statements That 

May Be Required

Reportable transaction disclosure statement. 

Participants in any reportable transaction must file Form 

8886, Reportable Transaction Disclosure Statement. See 

the Instructions for Form 8886.

Reportable transactions by material advisors. 

Material advisors to any reportable transaction must file 

Form 8918, Material Advisor Disclosure Statement. 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)(1)) 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 (CFC), 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 corporation 

is a CFC, each U.S. shareholder (within the meaning of 

section 951(b)) must include the statement on or with its 

return.

Dual-consolidated losses. If a domestic corporation 

incurs a dual-consolidated loss (as defined in Regulations 

section 1.1503(d)-1(b)(5)), the corporation (or 

consolidated group) may need to attach a domestic use 

agreement and/or an annual certification, as provided in 

Regulations sections 1.1503(d)-6(d) and (g).

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 transferee corporation 

may elect, under section 362(e)(2)(C), to reduce the 

transferor's basis in the stock received instead of reducing 

the transferee 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).

Other forms and statements. See Pub. 542, 

Corporations, for a list of other forms and statements a 

corporation may need to file in addition to the forms and 

statements discussed throughout these instructions.

Specific Instructions

Period Covered

Generally, file the 2023 return for calendar year 2023. 

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. For a fiscal or short tax year return, fill in the 

tax year space at the top of the form.

6 Instructions for Form 1120-PC (2023)
Name and Address

Enter the corporation's true name (as set forth in the 

charter or other legal document creating it), address, and 

EIN on the appropriate lines. Enter the address of the 

corporation's principal office or place of business. Include 

the suite, room, or other unit number after the street 

address. If the post office does not deliver mail to the 

street address and the corporation has a P.O. box, show 

the box number instead.

Note. Do not use the address of the registered agent for 

the state in which the corporation is incorporated. For 

example, if a business is incorporated in Delaware or 

Nevada and the corporation's principal office is located in 

Little Rock, Arkansas, the corporation should enter the 

Little Rock address.

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.

If the corporation receives its mail in care of a third 

party (such as an accountant or an attorney), enter on the 

street address line “C/O” followed by the third party's 

name and street address or P.O. box.

Item A. Identifying Information

Consolidated Return

If an affiliated group of corporations includes one or more 

domestic life insurance companies taxed under section 

801, the common parent may elect to treat those 

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(b)(12).

Corporations filing a consolidated return must check 

Item A, box 1, 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-PC 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-PC 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.

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. Across the top of page 1 of 

Form 1120-PC, enter “Supporting Statement to 

Consolidated Return.”

Life-Nonlife Consolidated Return

If the corporation is the common parent of a life-nonlife 

consolidated group, check Item A, boxes 1 and 2.

Filing requirements. The common parent of a 

life-nonlife consolidated group is required to do the 

following.

• File the applicable consolidated corporate income tax 

return as one of the following: 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 Item A, boxes 1 and 

2.

• 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 life insurance 

company taxable income (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.

Schedule M-3 (Form 1120-PC)

A nonlife insurance company with total assets 

(nonconsolidated 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-PC) instead of Schedule M-1. 

A corporation filing Form 1120-PC that is not required to 

file Schedule M-3 may voluntarily file Schedule M-3 

instead of Schedule M-1.

If you are filing Schedule M-3 (Form 1120-PC), check 

Item A, box 3, at the top of page 1 of Form 1120-PC. See 

the Instructions for Schedule M-3 (Form 1120-PC) for 

more details.

Note. If you do not file Schedule M-3 (Form 1120-PC) 

with Form 1120-PC, see Reconciliation under Statements, 

earlier.

Instructions for Form 1120-PC (2023) 7
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 any of the following ways.

• Online—Go to

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. 

territories can use the online application. Foreign 

corporations may call 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.

For more information, see the Instructions for Form 

SS-4.

Item D. Section 831(b) and Section 

953 Elections

Check the applicable box(es) if an election is made under 

section(s) 831(b), 953(c)(3)(C), or 953(d).

Section 831(b) election. Check the 831(b) box if the 

insurance company elects to be taxed on taxable 

investment income in lieu of the tax otherwise applicable 

under section 831(a). Section 831(b) applies to a small 

company, as defined under section 831(b)(2)(A), if such 

company meets the diversification requirements of section 

831(b)(2)(B) and such corporation elects the application 

of section 831(b) for such tax year under section 831(b)(2)

(A)(iii). See the instructions for Schedule I, Question 14, 

later. See Regulations section 301.9100-8(a) for the rules 

regarding the timing and manner of making the election 

under section 831(b)(2)(A)(iii).

Note. The election under section 831(b)(2)(A)(iii) applies 

to the tax year for which made and for all subsequent tax 

years for which a corporation is a small company, as 

defined under section 831(b)(2)(A), and such corporation 

meets the diversification requirements of section 831(b)

(2)(B). Once made, an election under section 831(b)(2)(A)

(iii) may only be revoked with the consent of the Secretary.

Section 953 elections. Check the applicable 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

CAUTION

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2. Section 953(d) to be treated as a domestic 

corporation.

Generally, a foreign corporation making either section 

953 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).

Once either election is made, it will apply to the tax year 

for which made and all subsequent tax years unless 

revoked with the consent of the IRS. Also, any loss of a 

foreign corporation electing to be treated as a domestic 

insurance company under section 953(d) will be treated 

as a dual-consolidated loss and may not be used to 

reduce the taxable income of any other member of the 

affiliated group for this tax year or any other tax year.

If a section 953(d) election is made, include the 

additional tax required to be paid on page 1, line 14. On 

the dotted line to the left of line 14, enter “Section 953(d)” 

and the amount. Attach a statement showing the 

computation. See section 953(d) for more details.

Note. A captive insurance company can make an election 

under section 831(b) and an election under section 953(d) 

if it is a foreign insurance company.

Item E. Final Return, Name Change, 

Address Change, or Amended Return

Indicate a final return, name change, address change, or 

amended return by checking the appropriate box.

Note. If a change in 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. See the instructions for Form 8822-B for details.

Taxable Income

Line 1, Taxable income, and line 2, Taxable investment income. If the corporation is a small company as 

defined in section 831(b)(2) and elects under section 

831(b)(2)(A)(iii) to be taxed on taxable investment income, 

complete Schedule B (ignore Schedule A) and enter the 

amount from Schedule B, line 21, on page 1, line 2. Also, 

complete Schedule I, Question 14. All other corporations 

should complete Schedule A (ignore Schedule B) and 

enter on page 1, line 1, the amount from Schedule A, 

line 37.

Tax Computation and Payments

Line 3. Income tax. Multiply taxable income (page 1, 

line 1) by 21%. (0.21). Enter this amount on line 3.

Deferred tax under section 1291. If the corporation 

was a shareholder in a passive foreign investment 

company (PFIC) and received an excess distribution or 

disposed of its investment in the PFIC during the year, it 

must include the total increase in taxes due under section 

8 Instructions for Form 1120-PC (2023)
1291(c)(2) from Form 8621 in the amount entered on 

line 3. On the dotted line next to line 3, enter “Section 

1291” and the amount.

Do not include on line 3 any interest due under section 

1291(c)(3). Instead, include the amount of interest owed 

on line 12z.

For more information on reporting the deferred tax and 

interest, see the Instructions for Form 8621.

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 3. On the dotted line next to line 3, 

enter “Section 197” and the amount. See section 197(f)(9)

(B)(ii).

Line 4. Enter amount of tax that a reciprocal must include. A mutual insurance company that is an 

interinsurer or reciprocal underwriter may elect, under 

section 835, to limit the deduction for amounts paid or 

incurred to a qualifying attorney-in-fact to the amount of 

the deductions of the attorney-in-fact allocable to the 

income received by the attorney-in-fact from the 

reciprocal. If this election is made, any increase in taxable 

income of a reciprocal as a result of this limitation is taxed 

at the highest rate of tax specified in section 11(b).

Make no entry on line 4 if the mutual insurance 

company's taxable income before including the section 

835(b) amount is $100,000 or more. Otherwise, this tax is 

21% of the section 835(b) amount. If an entry is made on 

line 4, attach a statement showing how the tax was 

computed.

Reciprocal underwriters making the section 835(a) 

election are allowed a credit on line 15f for the amount of 

tax paid by the attorney-in-fact that is related to the 

income received by the attorney-in-fact from the reciprocal 

in the tax year.

See section 835 and the related regulations for special 

rules and information regarding the statements required to 

be attached to the return.

Line 5. 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 for further guidance on the 

determination of the amount of base erosion minimum tax.

Line 6. Corporate alternative minimum tax. Enter on 

line 6 the amount from Form 4626, Alternative Minimum 

Tax—Corporations, Part II, line 13, if applicable. See the 

Instructions for Form 4626.

Line 8a. Foreign tax credit. To find out when a 

corporation can take the credit for payment of income tax 

to a foreign country or U.S. territory, see Form 1118, 

Foreign Tax Credit—Corporations.

Line 8b. Credit from Form 8834. Enter any qualified 

electric vehicle passive activity credits from prior years 

allowed for the current tax year from Form 8834, Qualified 

Electric Vehicle Credit, line 7. Attach Form 8834.

Line 8c. General business credit. Enter on line 8c the 

allowable credit from Form 3800, General Business 

Credit, Part II, line 38. See the Instructions for Form 3800.

Line 8d. Credit for prior year minimum tax. Enter any 

allowable credit from Form 8827, Credit for Prior Year 

Minimum Tax—Corporations. Complete and attach Form 

8827.

Line 8e. Bond credits from Form 8912. Enter the 

allowable credits from Form 8912, Credit to Holders of Tax 

Credit Bonds, line 12.

Line 8f. Total credits. Add lines 8a through 8e. Enter the 

total on line 8f.

Line 10. Foreign corporations. A foreign corporation 

carrying on an insurance business in the United States is 

taxed as a domestic insurance company on its income 

effectively connected with the conduct of a trade or 

business in the United States (see sections 864(c) and 

897 for a 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 10. However, see Reduction of section 881 tax, 

later.

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. 2023-21, 2023-19 I.R.B. 837 (or any 

successor), available at IRS.gov/irb/2023-19_IRB#REVPROC-2023-21, for the domestic asset/liability 

percentages and domestic investment yields needed to 

compute this amount.

Any additional income required by section 842(b) must 

be included in taxable income (for example, Schedule A, 

line 13).

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 under section 881 was figured. Enter the net 

tax imposed by section 881 on line 10.

Line 11. Personal holding company tax. A corporation 

(other than a corporation described in section 542(c)) is 

taxed as a personal holding company (PHC) under 

section 542 if:

• At least 60% of its adjusted ordinary gross income for 

the tax year is PHC income, and

• At any time during the last half of the tax year more than 

50% in value of its outstanding stock is directly or 

indirectly owned by five or fewer individuals.

Instructions for Form 1120-PC (2023) 9
See Schedule PH (Form 1120), U.S. Personal Holding 

Company (PHC) Tax, for definitions and details on how to 

figure the tax.

Line 12a. Recapture of investment credit. If the 

corporation disposed of investment credit property or 

changed its use before the end of the 5-year recapture 

period under section 50(a), enter the increase in tax from 

Form 4255, Recapture of Investment Credit. See the 

Instructions for Form 4255.

Line 12b. 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. Complete and 

attach Form 8611.

Line 12z. Other. If the corporation includes any 

additional taxes and interest such as the items discussed 

below, attach a statement showing the computation of 

each item included in the total for line 12z and identify the 

applicable Code section and the type of tax or interest.

• 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. See Form 8845 and 

section 45A.

• Recapture of new markets credit (see Form 8874, New 

Markets Credit, and Form 8874-B, Notice of Recapture 

Event for 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 (see section 453A(c)).

• Interest due on deferred gain (see section 1260(b)).

• Interest due under section 1291(c)(3). See Form 8621 

and its instructions.

• Alternative tax on qualifying shipping activities (see 

Form 8902).

Line 14. Total tax. Include any deferred tax on the 

termination of a section 1294 election applicable to 

shareholders in a qualified electing fund (QEF) in the 

amount entered on line 14.

Subtract any deferred tax on the corporation's share of 

undistributed earnings of a QEF (see Form 8621).

How to report. Attach a statement showing the 

computation of each item included in, or subtracted from, 

the total for line 14. On the dotted line next to line 14, 

specify (a) the applicable Code section, (b) the type of tax, 

and (c) the amount of tax.

Line 15c. Current year’s refund applied for on Form 

4466. 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 15f. Credit by reciprocal for tax paid by attorney-in-fact under section 835(d). Enter the amount of 

tax paid by an attorney-in-fact as a result of income 

received by the attorney-in-fact from the reciprocal during 

the tax year. For more information, see section 835 and 

the related regulations, and the instructions for line 4, 

earlier.

Line 15g. Elective payment election amount from 

Form 3800. Enter on line 15g the total net elective 

payment election amount from Form 3800, Part III, line 6, 

column (i). See the Instructions for Form 3800.

Line 15z. Other credits and payments. Enter the 

amount of any other credits the corporation may take 

and/or payments made. Enter an explanation of the entry 

to the left of the entry space.

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 15z. 

Enter the amount withheld and the words “Backup 

Withholding” on the dotted line to the left of the entry 

space for line 15z.

Line 16. Total. Combine the amounts on lines 15d 

through 15z and enter the total on line 16.

Line 17. 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 the corporation must file Form 2220 

even if it owes no penalty.

If Form 2220 is attached, check the box on line 17 and 

enter any penalty on this line.

If the corporation's tax liability includes a CAMT 

liability, the corporation must complete and attach 

Form 2220. The affected corporation must also 

include an amount of estimated tax penalty on Form 

1120-PC, line 17, even if that amount is zero. Failure to 

follow these instructions could result in the corporation 

receiving a penalty notice that will require an abatement 

request to apply any penalty relief. See Notice 2023-42.

Line 18. 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.

Line 20. Electronic deposit of tax refund of $1 million 

or more. If the corporation is due a refund of $1 million or 

more and wants it electronically deposited into its 

checking or savings account at any U.S. bank or other 

financial institution instead of having a check sent to the 

corporation, complete Form 8302 and attach it to the 

corporation's tax return.

Schedule A—Taxable Income

Gross income. Under section 832, gross amounts of 

underwriting and investment income should be computed 

on the basis of the Statement of Income of the NAIC 

CAUTION

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10 Instructions for Form 1120-PC (2023)
annual statement to the extent not inconsistent with the 

Internal Revenue Code and its regulations.

Income from qualifying shipping activities. Gross 

income does not include income from qualifying shipping 

activities if the corporation makes an election under 

section 1354 to be taxed on its notional shipping income 

(as defined in section 1353) at the highest corporate tax 

rate specified in section 11. If the election is made, the 

corporation may generally not claim any loss, deduction, 

or credit with respect to qualifying shipping activities. A 

corporation making this election may also elect to defer 

gain on the disposition of a qualifying vessel.

Use Form 8902, Alternative Tax on Qualifying Shipping 

Activities, to figure the tax. Include the alternative tax on 

Form 1120-PC, page 1, line 12z.

Note. In computing the amounts for lines 2, 3, and 4, take 

all interest, dividends, or rents received during the year; 

add interest, dividends, or rents due and accrued at the 

end of the tax year; and deduct interest, dividends, or 

rents due and accrued at the end of the preceding tax 

year. For rules regarding the accrual of dividends, see 

Regulations section 1.301-1(b).

Line 3a, column (a). Interest (including tax-exempt 

interest). Enter the gross amount of interest income, 

including all tax-exempt interest.

Line 3b, column (a). Interest exempt under section 

103. Section 103(a) excludes interest on state or local 

bonds from gross income.

This exclusion does not apply to any:

1. Private activity bond which is not a qualified bond, 

as defined by section 141;

2. Arbitrage bond, as defined by section 148; or

3. Bonds not meeting the requirements of section 149 

(regarding the registration of tax-exempt bonds).

Lines 3a and 3b, column (b). Amortization of premium. Enter on line 3a, column (b), the total amortization of 

bond premium, including amortization on tax-exempt 

bonds. Enter on line 3b, column (b), the amortization of 

bond premium on tax-exempt bonds only.

Note. Insurance companies electing to amortize discount 

for tax purposes must reduce the amortization of premium 

by any amortization of discount.

Line 4. Gross rents. Enter gross rents, computed as 

indicated under Gross income, earlier. Deduct expenses, 

such as repairs, interest, taxes, and depreciation, on the 

proper lines for deductions.

Line 6. Capital gain net income. Every sale or 

exchange of a capital asset must be reported in detail on 

Schedule D (Form 1120), Capital Gains and Losses, even 

if there is no gain or loss.

Generally, losses from sales or exchanges of capital 

assets are only allowed to the extent of gains. However, 

corporations taxed under section 831 may claim losses 

from capital assets sold or exchanged to get funds to 

meet abnormal insurance losses and to pay dividends and 

similar distributions to policyholders. Do not include those 

types of losses here; instead, report them on Schedule G.

The net capital loss for these corporations is the 

amount by which losses for the year from sales or 

exchanges of capital assets exceed the gains from these 

sales or exchanges plus the smaller of:

1. Taxable income (computed without gains or losses 

from sales or exchanges of capital assets); or

2. Losses from the sale or exchange of capital assets 

sold or exchanged to obtain funds to meet abnormal 

insurance losses and to provide for the payment of 

dividends and similar distributions to policyholders.

Subject to the limitations in section 1212(a), a net 

capital loss can be carried back 3 years and forward 5 

years as a short-term capital loss.

Line 8. Certain mutual fire or flood insurance company premiums. A mutual fire or flood insurance company 

whose principal business is the issuance of policies (1) for 

which the premium deposits are the same (regardless of 

the length of the term the policies are written for), and (2) 

under which the unabsorbed portion of such premium 

deposits not required for losses, expenses, or 

establishment of reserves is returned or credited to the 

policyholder on cancellation or expiration of the policy, 

must include in income an amount equal to 2% of the 

premiums earned on insurance contracts during the tax 

year with respect to such policies after deduction of 

premium deposits returned or credited during the same 

tax year.

Line 9. Income on account of special income and deduction accounts. Corporations which write the kinds of 

insurance below must maintain the following special 

accounts. A corporation which writes:

1. Mortgage guaranty insurance must maintain a 

mortgage guaranty account,

2. Lease guaranty insurance must maintain a lease 

guaranty account, and

3. Insurance on obligations the interest on which is 

excludable from gross income under section 103 must 

maintain an account with respect to insurance on state 

and local obligations.

Amounts required to be subtracted from these 

accounts under sections 832(e)(5) and 832(e)(6) must be 

reported as income on line 9. See section 832(e) for more 

information.

Line 10. Income from protection against loss account. Although section 1024 of P.L. 99-514 repealed 

section 824 relating to the protection against loss (PAL) 

account, PAL account balances are includible in income 

as though section 824 were still in effect. Attach a 

statement showing the computation.

Line 11. Mutual interinsurers or reciprocal underwriters—decrease in subscriber accounts. Enter the 

decrease for the tax year in savings credited to subscriber 

accounts of a mutual insurance company that is an 

interinsurer or a reciprocal underwriter.

Line 13. Other income. Enter any other taxable income 

not reported on lines 1 through 11. List the type and 

amount of income on an attached statement. If the 

corporation has only one item of other income, describe it 

Instructions for Form 1120-PC (2023) 11
in parentheses on line 13. Examples of other income to 

report on line 13 include the following.

• Any income under P.L. 115-97, section 13517(c)(3)(B)

(ii) (transitional relief for change in reserve).

• Any amount includible in income from Form 6478, 

Biofuel Producer Credit.

• Any amount includible in income from Form 8864, 

Biodiesel, Renewable Diesel, or Sustainable Aviation 

Fuels Credit.

• Refunds of taxes deducted in prior years to the extent 

they reduced income subject to tax imposed. See section 

111 and the related regulations. Do not offset current-year 

taxes against tax refunds.

• Ordinary income from trade or business activities of a 

partnership from Schedule K-1 (Form 1065). Do not offset 

ordinary losses against ordinary income. Instead, include 

the losses on line 31. 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.

• The transferred loss amount identified as “Section 91 

Transferred Loss Amount.” This amount is 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 specified 10%-owned foreign corporation (as 

defined in section 245A(b)) with respect to which the 

corporation was 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.

• One-eighth of any adjustment attributable to the 

application of the discount factors published in Rev. Proc. 

2019-06, 2019-02 I.R.B 284, available at IRS.gov/irb/

2019-02_IRB#RP-2019-06, to unpaid losses for the tax 

year preceding the first tax year beginning after December 

31, 2017.

• 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.

1. Ordinary earnings of a QEF.

2. Gain or loss from marking 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.

See Form 8621 and its instructions for details.

• Any payroll tax credit taken by an employer on its 2023 

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.

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 2023.

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 the 

Instructions for Form 3115.

For more information on the uniform capitalization rules, 

see Pub. 538. Also, see Regulations sections 1.263A-1 

through 1.263A-3.

Transactions between related taxpayers. Generally, 

an accrual basis taxpayer can only deduct business 

expenses and interest owed to a related party in the year 

the payment is included in the income of the related party. 

See sections 163(e)(3) 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 Limitation on deduction in 

the instructions for Schedule A, Line 20a and Schedule I, 

Question 18, 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. Also, see the instructions for line 15.

Business start-up and organizational costs. A 

corporation can elect to deduct a limited amount of 

start-up and organizational costs it paid or 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 an election. The corporation 

generally elects to deduct startup 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. For more 

details including special rules for costs paid or incurred 

12 Instructions for Form 1120-PC (2023)
before September 9, 2008, see the Instructions for Form 

4562, Depreciation and Amortization.

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 enter “Filed pursuant 

to Regulations 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 election 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.

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 such costs and any 

amortization on Schedule A, line 31. For amortization that 

begins during the current tax year, complete and attach 

Form 4562.

Reducing certain expenses for which credits are allowable. If the corporation claims certain credits, it may 

need to reduce 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.

See the instructions for the form used to figure the 

applicable credit for more details.

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 

exceptions.

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. 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.

Line 15. Compensation of officers. Enter deductible 

officers' compensation on line 15. See Employment 

credits, later, for employment credits that may reduce your 

deduction for officers' compensation. Do not include 

compensation deductible elsewhere on the return, such 

as elective contributions to a section 401(k) cash or 

deferred arrangement, or amounts contributed under a 

salary reduction SEP agreement or a SIMPLE IRA plan.

Include only the deductible part of each officer's 

compensation on line 15. (See Disallowance of deduction 

for employee compensation in excess of $1 million, later). 

Attach a statement for all officers using the following 

columns.

1. Name of officer.

2. Social security number.

3. Percentage of time devoted to business.

4. Amount of compensation.

If a consolidated return is filed, each member of an 

affiliated group must furnish this information.

Disallowance of deduction for employee compensation in excess of $1 million. Publicly held corporations 

cannot deduct compensation to a “covered employee” to 

the extent that the compensation exceeds $1 million. 

Generally, a covered employee is:

• The principal executive officer of the corporation (or an 

individual acting in that capacity) as of the end of the tax 

year, or

• An employee whose total compensation must be 

reported to shareholders under the Securities 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.

Instructions for Form 1120-PC (2023) 13
See section 162(m) and Regulations section 1.162-27. 

Also, see Notice 2007-49, 2007-25 I.R.B. 1429.

Limitations on tax benefits for executive compensation under the Treasury Troubled Asset Relief Program (TARP). The $1 million compensation limit is 

reduced to $500,000 for executive remuneration and 

deferred deduction executive remuneration paid to 

covered executives by any entity that receives or has 

received financial assistance under 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, a portion of any parachute payments made 

to a covered executive by an applicable employer 

participating in a TARP is not deductible as compensation 

if the payments are made because of a severance from 

employment during an applicable tax year. For this 

purpose, a parachute payment is any payment to a senior 

executive officer for departure from a company for any 

reason, except for payments for services performed or 

benefits accrued. These limits do not apply to a payment 

already treated as a parachute payment. See section 

280G(e) and Notice 2008-94.

Line 16. Salaries and wages. Enter 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 the personal use of a car, do not 

deduct as wages the amount allocated for depreciation 

and other expenses that are claimed elsewhere on the 

return (for example, on Schedule A, line 22 or line 31).

If the corporation claims a credit for any wages 

paid or incurred, it may need to reduce any 

corresponding deduction for salaries and wages. 

See Employment credits below.

Employment credits. If the corporation claims a credit 

on any of the forms below, it may need to reduce its 

deduction for officers’ compensation and salaries and 

wages. See the applicable form for details.

• Form 5884, Work Opportunity Credit.

• Form 8844, Empowerment Zone Employment Credit.

• Form 8932, Credit for Employer Differential Wage 

Payments.

• Form 8994, Employer Credit for Paid Family and 

Medical Leave.

Line 18. Rents. If the corporation rented or leased a 

vehicle, enter the total annual rent or lease expense paid 

or incurred during the year. Also, complete Form 4562, 

Part V. If the corporation leased a vehicle for a term of 30 

days or more, the deduction for the vehicle lease expense 

may have to be reduced by an amount includible in 

income called the inclusion amount. The corporation may 

have an inclusion amount if:

CAUTION

!

The lease term began:

And the vehicle's FMV on the 

first day of the lease exceeded:

Cars (excluding trucks and vans)

After 12/31/22 but before 1/1/2024 ...... $60,000

After 12/31/21 but before 1/1/23 ....... $56,000

After 12/31/20 but before 1/1/22 ....... $51,000

After 12/31/17 but before 1/1/21 ....... $50,000

After 12/31/12 but before 1/1/18 ....... $19,000

Trucks and Vans

After 12/31/22 but before 1/1/24 ....... $60,000

After 12/31/21 but before 1/1/23 ....... $56,000

After 12/31/20 but before 1/1/22 ....... $51,000

After 12/31/17 but before 1/1/21 ....... $50,000

After 12/31/13 but before 1/1/18 ....... $19,500

After 12/31/09 but before 1/1/14 ....... $19,000

See Pub. 463, Travel, Gift, and Car Expenses, for 

instructions on figuring the inclusion amount.

Note. The inclusion amount for lease terms beginning in 

2024 will be published in the Internal Revenue Bulletin in 

early 2024.

Line 19. Taxes and licenses. Enter taxes paid or 

accrued during the tax year, but do not include the 

following.

• Federal income taxes.

• Foreign or U.S. territories income taxes if a tax credit is 

claimed.

• Taxes not imposed on the corporation.

• Taxes, including state or local sales taxes, that are paid 

or incurred in connection with an acquisition or disposition 

of property (these taxes must be treated as a part of the 

cost of the acquired property or, in the case of a 

disposition, as a reduction in the amount realized on the 

disposition).

• Taxes assessed against local benefits that increase the 

value of the property assessed (such as for paving, etc.).

• Taxes deducted elsewhere on the return.

See section 164(d) for information on the 

apportionment of taxes on real property between a seller 

and a purchaser.

Note. Section 9010 of the Patient Protection and 

Affordable Care Act imposes a fee on each covered entity 

engaged in the business of providing health insurance for 

U.S. health risks. The fee is treated as a tax described in 

section 275 relating to taxes for which no deduction is 

allowed. For more information, see the final regulations 

and Rev. Rul. 2013-27.

Do not reduce the corporation's deduction for 

social security and Medicare taxes by the 

nonrefundable and refundable portions of any 

FFCRA and ARP credits for qualified sick and family leave 

wages claimed on its employment tax returns. Instead, 

report this amount as income on line 13.

Line 20a. Interest. 

Note. Do not offset interest income against interest 

expense.

The corporation must allocate the interest expense if 

the proceeds of a loan were used for more than one 

CAUTION

!

14 Instructions for Form 1120-PC (2023)
purpose (for example, to purchase a portfolio investment 

and to acquire an interest in a passive activity). See 

Temporary Regulations section 1.163-8T for the interest 

allocation rules.

Do not deduct the following interest.

• Interest on indebtedness incurred or continued to 

purchase or carry obligations if the interest is wholly 

exempt from income tax. See section 265(b) for special 

rules and exceptions for financial institutions. Also, see 

section 265(b)(7) for a temporary de minimis exception for 

financial institutions for certain tax-exempt bonds issued in 

2009 and 2010.

• Interest and carrying charges on straddles. Generally, 

these amounts must be capitalized. See section 263(g).

• Interest on debt allocable to the production of 

designated property by a corporation for its own use or for 

sale. The corporation must capitalize this interest. Also, 

capitalize any interest on debt allocable to an asset used 

to produce the property. See section 263A(f) and 

Regulations sections 1.263A-8 through 1.263A-15 for 

definitions and more information.

• Interest on unpaid taxes attributable to nondisclosed 

reportable transactions. See section 163(m).

Limitation on deduction. 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 interest 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 interest 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 I, 

Question 18, later.

Special rules apply to the following.

• Forgone interest on certain below-market-rate loans 

(see section 7872).

• Original issue discount (OID) on certain high-yield 

discount obligations. See section 163(e)(5) to determine 

the disqualified amount of the deduction for OID that is 

deferred and the amount that is disallowed on a high-yield 

discount obligation. The rules under section 163(e)(5) do 

not apply to certain high-yield discount obligations issued 

before January 1, 2011. See section 163(e)(5)(F), and 

Notice 2010-11, 2010-4 I.R.B. 326.

• Interest which is allocable to unborrowed policy cash 

values of life insurance, endowment, or annuity contracts 

issued after June 8, 1997. See section 264(f). Attach a 

statement showing the computation of the deduction.

Line 20b. Less tax-exempt interest expense. Enter 

interest paid or accrued during the tax year on 

indebtedness incurred or continued to purchase or carry 

obligations if the interest is wholly exempt from income 

tax. See section 265.

Line 21. Charitable contributions. Include charitable 

contributions, as provided in section 170. See section 170 

and its regulations for limitations, carryover, exclusions, 

requirements, substantiation, and other rules.

For more information on charitable contributions, 

including substantiation and recordkeeping requirements, 

see section 170 and the related regulations and Pub. 526. 

For other special rules that apply to corporations, see Pub. 

542.

Line 22. Depreciation. Include on line 22 depreciation 

and the cost of certain property that the corporation 

elected to expense under section 179. See Form 4562 

and the Instructions for Form 4562.

Line 23. Depletion. If the corporation has an economic 

interest in mineral property or standing timber, it can take 

a deduction for depletion. In the case of leased property, 

the depletion deduction is divided between the lessor and 

the lessee.

See sections 613 and 613A for percentage depletion 

rates applicable to natural deposits. Also, see section 291 

for the limitation on the depletion deduction for iron ore 

and coal (including lignite).

Attach Form T (Timber), Forest Activities Schedule, if a 

deduction for depletion of timber is taken.

There are special rules for intangible drilling and 

development costs incurred outside the United States. 

See section 263(i).

Line 24. Pension, profit-sharing, etc., plans. Enter the 

deduction for contributions to qualified pension, 

profit-sharing, or other funded deferred compensation 

plans.

Note. Employers who maintain a plan are generally 

required to file Form 5500, Form 5500-SF, or Form 

5500-EZ. Go to www.EFAST.dol.gov and IRS.gov/

Form5500EZ for more information.

Line 25. Employee benefit programs. Enter 

contributions to employee benefit programs not claimed 

elsewhere on the return (for example, insurance, health 

and welfare programs, etc.) that are not an incidental part 

of a pension, profit-sharing, etc., plan included on line 24.

Line 29. Dividends to policyholders. Enter the total 

dividends and similar distributions paid or declared to 

policyholders, as policyholders, except in the case of a 

mutual fire insurance company exclusively issuing 

perpetual policies. Whether dividends have been paid or 

declared should be determined according to the method 

of accounting employed by the insurance company.

Dividends and similar distributions. Include amounts 

returned or credited to policyholders on cancellation or 

expiration of policies issued by a mutual fire or flood 

insurance company:

1. Where the premium deposits for the policy are the 

same (regardless of the length of the policy); and

2. The unabsorbed portion of the premium deposits 

not required for losses, expenses, or establishment of 

reserves is returned or credited to the policyholder on 

cancellation or expiration of the policy.

In the case of a qualified group self-insurers fund, the 

fund's deduction for policyholder dividends is allowed no 

earlier than the date the state regulatory authority 

determines the amount of the policyholder dividend that 

may be paid. See section 6076 of the Technical and 

Miscellaneous Revenue Act of 1988.

Line 30. Mutual interinsurers or reciprocal underwriters—increase in subscriber accounts. A mutual 

Instructions for Form 1120-PC (2023) 15
insurance company that is an interinsurer or reciprocal 

underwriter may deduct the increase in savings credited 

to subscriber accounts for the tax year.

Savings credited to subscriber accounts means the 

surplus credited to the individual accounts of subscribers 

before the 16th day of the 3rd month following the close of 

the tax year. This is true only if the corporation would be 

required to pay this amount promptly to a subscriber if the 

subscriber ended the contract when the corporation's tax 

year ends.

Line 31. Other deductions. Attach a statement listing by 

type and amount all allowable deductions under sections 

832(c)(1) and (10) (net of the annual statement change in 

undiscounted unpaid loss adjustment expenses) that are 

not deductible on lines 15 through 30.

Examples of other deductions may include the 

following.

• Any deduction under P.L. 115-97, section 13517(c)(3)

(B)(i) (transitional relief for change in reserve).

• Any energy efficient commercial buildings deduction for 

property placed in service during the tax year. Complete 

and attach Form 7205.

• Certain business startup and organizational costs 

(discussed 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 13. 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.

• Any extraterritorial income exclusion from Form 8873, 

Extraterritorial Income Exclusion.

• Dividends paid in cash on stock held by an employee 

stock ownership plan (ESOP). However, a deduction may 

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 the participants or their 

beneficiaries (a) payable as provided under (1) or (2) 

above, or (b) paid to the plan and reinvested in qualifying 

employer securities; or

4. Used to make payments on a loan described in 

section 404(a)(9).

See section 404(k) for more details and the limitation 

on certain dividends.

Do not deduct expenses such as the following.

• Amounts paid to, or at the direction of, a government or 

specified nongovernmental entity for the violation, or 

investigation or inquiry, of a law. However, see the 

exceptions discussed later.

• Lobbying expenses. However, see the exceptions 

discussed later.

• Amounts paid or incurred for any settlement, payout, or 

attorney fees related to sexual harassment or sexual 

abuse, if such payments are subject to a nondisclosure 

agreement. See section 162(q).

Travel, meals, and entertainment. Subject to limitations 

and restrictions discussed below, a corporation can 

deduct ordinary and necessary travel, meals, and 

non-entertainment 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. Also, special rules apply to deductions for 

gifts, luxury water travel, and convention expenses. See 

section 274 and Pub. 463 for details.

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

• That individual’s 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 or business. 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.

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. This includes 

country clubs, golf and athletic clubs, airline and hotel 

clubs, and clubs operated to provide meals under 

conditions favorable to business discussion.

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, for details.

Entertainment facilities. Generally, the corporation 

cannot deduct an expense paid or incurred for a facility 

(such as a yacht or hunting lodge) used for an activity 

usually considered entertainment, amusement, or 

recreation.

16 Instructions for Form 1120-PC (2023)
Amounts treated as compensation. Generally, the 

corporation may be able to deduct otherwise 

nondeductible entertainment, amusement, or recreation 

expenses if the amounts are treated as compensation to 

the recipient and reported on Form W-2 for an employee 

or on Form 1099-NEC for an independent contractor.

However, if the recipient is an officer, director, 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.

Fines and 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,

• 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 

governmental entity 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 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 taxexempt organizations may not be deductible. If certain inhouse lobbying expenditures do not exceed $2,000, they 

are deductible.

Line 32. Total deductions. Section 848 (capitalization of 

certain policy acquisition expenses) requires insurance 

companies to capitalize specified policy acquisition 

expenses and deduct them ratably over time. Attach a 

statement showing all computations. See section 848 and 

its regulations.

Line 34b. Deduction on account of the special income and deduction accounts. Enter the total of the 

amounts required to be added under sections 832(e)(4) 

and (6). However, no deduction is permitted unless tax 

and loss bonds are purchased in an amount equal to the 

tax benefit of the deduction. See section 832(e).

Note. The deduction on account of the special income 

and deduction accounts is limited to taxable income for 

the tax year (computed without regard to this deduction or 

to any carryback of a net operating loss (NOL)).

Line 36b. Net operating loss deduction. Section 172 

provides for an NOL deduction, limitation, carryovers, and 

carrybacks. Attach a statement showing the computation 

of the NOL deduction.

The following special rules apply.

• Section 382 provides a limitation on NOL carryforwards 

and certain built-in losses following ownership change.

• If a corporation acquires control of another corporation 

(or acquires its assets in a reorganization), the amount of 

pre-acquisition losses that may offset recognized built-in 

gain may be limited (see section 384).

• If a corporation elects the alternative tax on qualifying 

shipping activities under section 1354, no deduction is 

allowed for an NOL attributable to the qualifying shipping 

activities to the extent that the loss is carried forward from 

a tax year preceding the first tax year for which the 

alternative tax election was made. See section 1358(b)(2).

• Section 831(b)(3) provides for a limitation on use of 

NOLs.

For more details on the NOL deduction, see section 

172 and the Instructions for Form 1139, Corporation 

Application for Tentative Refund.

Line 37. Taxable income. If line 37 (figured without 

regard to the items listed under Minimum taxable income 

below) is zero or less, the corporation may have an NOL 

that can be carried back or forward as a deduction to other 

tax years.

Minimum taxable income. The corporation's taxable 

income 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. See section 7874(a).

• The sum of the corporation's excess inclusions from its 

residual interest in a real estate mortgage investment 

conduit (REMIC) from Schedules Q (Form 1066), line 2c, 

and the corporation's taxable income determined solely 

with respect to its ownership and high-yield interests in 

financial asset securitization investment trusts (FASITs). 

See section 860E(a).

Net operating loss. Only certain losses can be carried 

back. The carryback period for these losses is 2 years. 

For NOLs that can be carried back, the corporation can 

elect to waive the carryback period and instead carry the 

NOL forward to future tax years.

See the Instructions for Form 1139. See the 

instructions for Schedule I, Item 10 for information on 

making the election to waive the entire carryback period.

The NOL deduction for tax year 2023 generally cannot 

exceed the aggregate amount of NOLs arising in tax years 

beginning before January 1, 2018, carried to such year 

plus the lesser of:

1. The aggregate amount of NOLs arising in tax years 

beginning after December 31, 2017, carried to such tax 

year; or

2. 80% of the excess, if any, of taxable income 

determined without any NOL deduction, section 199A 

deduction, or section 250 deduction, over any NOL 

carryover to the tax year from tax years beginning before 

January 1, 2018.

Instructions for Form 1120-PC (2023) 17
An exception applies for NOLs of insurance companies 

other than life insurance companies. The 80% taxable 

income limit does not apply to these entities. See sections 

172(b) and (f).

See the Instructions for Form 1139 for other special 

rules and elections.

Schedule B, Part I—Taxable 

Investment Income of Electing Small 

Companies

Note. (1) Once an election under section 831(b) is made 

to be taxed only on investment income, it can only be 

revoked with the consent of the Secretary; and (2) a 

corporation making this election must include on 

Schedule B, line 8, any amount subtracted from a PAL 

account.

Income

Line 1a, column (a). Interest (including tax-exempt 

interest). Enter the gross amount of interest income, 

including all tax-exempt interest income.

Line 1b, column (a). Interest exempt under section 

103. Enter the amount of interest on state and local 

bonds that is exempt from taxation under section 103. See 

the instructions for Schedule A, line 3b, column (a), for 

more information.

Lines 1a and 1b, column (b). Amortization of premium. Enter on line 1a, column (b), the total amortization of 

bond premium, including amortization on tax-exempt 

bonds.

Enter on line 1b, column (b), the amortization of bond 

premium on tax-exempt bonds.

Note. Insurance companies electing to amortize discount 

for tax purposes must reduce the amortization of premium 

by any amortization of discount.

Line 3. Rents. Enter the gross rents received or accrued 

during the tax year. Deduct rental expenses such as 

repairs, interest, taxes, and depreciation on the proper 

lines in the Deductions section.

Line 5. Gross income from a trade or business, other 

than an insurance business, and from Form 4797. 

Enter the gross income from a trade or business, other 

than an insurance business, carried on by the insurance 

company or by a partnership of which the insurance 

company is a partner. Include section 1245 and section 

1250 gains (as modified by section 291) and other gains 

from Form 4797, on investment assets only.

Line 6. Income from leases described in sections 

834(b)(1)(B) and 834(b)(1)(C). Enter gross income 

from entering into, changing, or ending any lease, 

mortgage, or other instrument or agreement from which 

the company earns interest, rents, or royalties.

Line 8. Gross investment income. If gross investment 

income includes an amount subtracted from the PAL 

account, enter on the dotted line next to line 8, “PAL” and 

the amount.

Deductions

Line 9. Real estate taxes. Enter taxes paid or accrued 

on real estate owned by the corporation and deductible 

under section 164.

Line 10. Other real estate expenses. Enter all ordinary 

and necessary real estate expenses, such as fire 

insurance, heat, light, and labor. Also, enter the cost of 

incidental repairs, such as labor and supplies, that do not 

add to the property's value or appreciably prolong its life. 

Do not include any amount paid for new buildings or for 

permanent improvements or betterments made to 

increase the value of any property. Do not include any 

amount spent on foreclosed property before the property 

is held for rent.

Line 11. Depreciation. Enter depreciation on assets 

only to the extent that the assets are used to produce 

gross investment income reported on Schedule B, lines 1 

through 7. For more information, see the instructions for 

Schedule A, line 22.

Note. See section 834(d)(1) regarding the limitation of 

expenses on real estate owned and occupied in part or in 

whole by a mutual insurance company.

Line 12. Depletion. Enter any allowable depletion on 

royalty income reported on Schedule B, line 4. See the 

instructions for Schedule A, line 23 for more information.

Line 13. Trade or business deductions. Enter the total 

deductions related to any trade or business income 

included in gross investment income under section 834(b)

(2). Do not include deductions for any insurance business. 

Do not include losses from sales or exchanges of capital 

assets or property used in the business, or from the 

compulsory or involuntary conversion of property used in 

the trade or business.

Line 14. Interest. See the instructions for Schedule A, 

lines 20a and 20b.

Line 17. Investment expenses. Enter expenses that are 

properly chargeable as investment expenses. If general 

expenses are allocated to investment expenses, the total 

deduction cannot be more than the amount on 

Schedule B, Part II, line 39. Attach a statement showing 

the kind and amount of general expenses. Minor items 

may be grouped together.

See section 267 for the limitation on deductions for 

unpaid expenses and interest in transactions between 

related taxpayers.

Schedule B, Part II—Invested Assets 

Book Values

Use Schedule B, Part II, to compute the limitation on 

investment expenses under section 834(c)(2) when any 

general expenses are in part assigned to, or included in, 

the investment expenses deducted on Schedule B, Part I, 

line 17.

18 Instructions for Form 1120-PC (2023)
Schedule C—Dividends, Inclusions, 

Dividends-Received Deduction, and 

Other Special Deductions

Definitions

Prorated amounts. Prorated amounts mean tax-exempt 

interest and dividends for which a deduction is allowable 

under section 243, 244 (as affected by P.L. 113-295, Div. 

A, section 221(a)(41)(A), December 19, 2014, 128 Stat. 

4043), or 245 (other than 100% dividends).

100% dividend. 100% dividend means any dividend if 

the percentage used for purposes of determining the 

deduction allowable under section 243, 244 (as affected 

by P.L. 113-295, Div. A, section 221(a)(41)(A), December 

19, 2014, 128 Stat. 4043), or 245(b) is 100%. See section 

243, section 244 as affected by P.L. 113-295, and section 

245.

Lines 1 Through 25

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 consolidated 

returns should see Regulations sections 1.1502-13, 

1.1502-26, and 1.1502-27 before completing Schedule C.

Lines 1 through 9, column (a). Enter in column (a) of 

the appropriate line those dividends that are subject to the 

provisions of section 832(b)(5)(B).This will include:

1. All dividends (other than 100% dividends) received 

on stock acquired after August 7, 1986; and

2. 100% dividends received on stock acquired after 

August 7, 1986, to the extent that such dividends are 

attributable to prorated amounts (see definition earlier).

In the case of an insurance company that files a 

consolidated return, the determination with respect to any 

dividend paid by a member to another member of the 

affiliated group is made as if no consolidated return was 

filed. See section 832(g).

Line 1. 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

• Qualified for the 50% deduction under section 243(a)

(1).

See section 246 and section 854 for limitations and 

exclusions.

Report so-called dividends or earnings received from 

mutual savings banks, etc., as interest. Do not treat them 

as dividends.

Line 2. Enter on line 2:

• Dividends (except those received on certain 

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 interest charge domestic 

international sales corporation (IC-DISC) or former 

domestic international sales corporation (DISC) that are 

considered eligible for the 65% deduction.

Line 3. 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 regulated investment 

company (RIC) on certain 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.

Line 4. 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 P.L. 113-295, Div. A, section 

221(a)(41)(A), December 19, 2014, 128 Stat. 4043) for 

dividends paid.

Line 5. 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 P.L. 113-295, Div. A, section 221(a)(41)(A), 

December 19, 2014, 128 Stat. 4043) for dividends paid.

Line 6. 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. Enter the U.S.-source portion of dividends that:

• Are received from 20%-or-more-owned foreign 

corporations, and

• Qualify for the 65% deduction under sections 245(a) 

and 242 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 provided in section 

245(c)(1)(B).

Instructions for Form 1120-PC (2023) 19
Line 8. Enter dividends received from wholly owned 

foreign subsidiaries that are eligible for the 100% 

deduction under section 245(b).

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.

Also, include on line 8 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. Enter only those dividends that qualify under 

section 243(b) for the 100% dividends-received deduction 

described in section 243(a)(3).

The 100% deduction does not apply to affiliated group 

members that are joining in the filing of a consolidated 

return.

Line 10, column (b). Enter the foreign-source portion of 

dividends that:

• Are received from specified 10%-owned foreign 

corporations (as defined in section 245A(b)), including, for 

example, gain from the sale of stock of a foreign 

corporation that is treated as a dividend under sections 

1248(a) and (j); and

• Qualify for the 100% deduction under section 245A(a) 

(excluding any hybrid dividends; see the instructions for 

line 11 below).

Line 11, column (b). Enter the foreign dividends not 

reportable on line 3, 6, 7, 8, or 10 of column (b).

Include on line 11 the foreign-source portion of any 

dividend that does not qualify for the section 245A 

deduction (for example, hybrid dividends within the 

meaning of section 245A(e), ineligible amounts of 

dividends within the meaning of Regulations section 

1.245A-5(b), dividends that fail to meet the holding period 

requirement under section 246(c)(5), etc.).

Also, include on line 11 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 its instructions.

Attach a statement identifying the amount of each 

dividend reported on line 11 and the provision pursuant to 

which a deduction is not allowed with respect to such 

dividend.

Line 12a, column (b). 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 sum 

of the amounts reported by the U.S. shareholder on 

Form(s) 5471, Schedule I, line 1a. (Do not include on 

line 12a any portion of such subpart F inclusion that is not 

eligible for the section 245A deduction pursuant to 

Regulations section 1.245A-5(g)(2). Include such 

amounts on line 12c.)

Line 12b, column (b). Enter the total subpart F 

inclusions attributable to tiered hybrid dividends. This 

should equal the sum of the amounts reported by the U.S. 

shareholder on Form(s) 5471, Schedule I, line 1b.

Line 12c, column (b). Enter all other amounts included 

in income under section 951, other than amounts on 

line 15. This should equal the sum of the amounts 

reported by the U.S. shareholder on Form(s) 5471, 

Schedule I, lines 1c–1h, 2, and 4.

Line 13, column (b). Enter amounts included in income 

under the section 951. See Form 8992, Part II, line 5; and 

the Instructions for Form 8992. If you also have a Form 

5471 reporting requirement, attach Form 5471.

Line 15, column (b). Reserved for future use.

Line 16, column (b). Include the following.

1. 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.

2. Dividends from tax-exempt organizations.

3. Dividends (other than capital gain distributions) 

received from a real estate investment trust (REIT) that, 

for the tax year of the trust in which the dividends are paid, 

qualifies under sections 856 through 860.

4. 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 received on any share of preferred stock 

which are attributable to periods totaling more than 366 

days, if such stock was 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.

5. Any other taxable dividend income not properly 

reported elsewhere on Schedule C.

Line 20. Dividends received on certain debt-financed 

stock acquired after July 18, 1984, are not entitled to the 

full 50% or 65% dividends-received deduction. 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 dividends received from foreign corporations. 

Attach a statement showing how the amount on line 20 

was figured.

20 Instructions for Form 1120-PC (2023)
Line 26, column (b). Generally, line 26, column (b), 

cannot exceed the amount from the Worksheet for 

Schedule C, Line 26, above. 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 

sections 172(d) and 246(b).

Line 28, column (b). Enter the section 250 deduction 

claimed for foreign-derived intangible income (FDII) and 

global intangible low-taxed income (GILTI). This should 

equal the sum of Form 8993, Part III, lines 28 and 29.

Line 29. Reserved for future use.

Schedule E—Premiums Earned

Definitions

Undiscounted unearned premiums. Undiscounted 

unearned premiums means the unearned premiums 

shown in the annual statement filed for the year ending 

with or within the tax year.

Applicable interest rate. Applicable interest rate means 

the annual rate determined under section 846(c)(2) for the 

calendar year the premiums are received.

Applicable statutory premium recognition pattern. 

Applicable statutory premium recognition pattern means 

the statutory premium recognition pattern in effect for the 

calendar year the premiums are received, and is based on 

the statutory premium recognition pattern which applies to 

premiums received by the corporation in that calendar 

year. For purposes of the preceding sentence, premiums 

received during any calendar year will be treated as 

received in the middle of such year.

Medical loss ratio (MLR). Section 833(c)(5) limits the 

100% deduction of unearned premiums by Blue Cross 

and Blue Shield organizations described in section 833(c)

(2), and other organizations described in section 833(c)

(3), to those with an MLR of 85% or more. Organizations 

with an MLR less than 85% are allowed to deduct only 

80% of unearned premiums. See section 833(c)(5) and 

Regulations section 1.833-1.

Line 1. Enter gross premiums written on insurance 

contracts during the tax year, less return premiums and 

premiums paid for reinsurance. See Regulations section 

1.832-4.

Lines 2a and 4a. Include on lines 2a and 4a the 

following.

1. All life insurance reserves, as defined in section 

816(b) (but determined under section 807).

2. Generally, all section 833 organizations with an 

MLR of 85% or more (discussed earlier) are permitted to 

enter 100% of unearned premiums on lines 2a and 4a. 

Section 833 organizations with an MLR of less than 85% 

must change to an 80% Unearned Premium Reserve. For 

more information, see Change in accounting method, 

earlier.

Lines 2b and 4b. Include on lines 2b and 4b 90% of 

unearned premiums for insurance against default in the 

payment of principal or interest on securities described in 

section 165(g)(2)(C) (relating to worthless securities) with 

maturities of more than 5 years. See section 832(b)(7)(B).

Lines 2c and 4c. The amount of discounted unearned 

premiums at the end of any tax year must be the present 

value of those premiums (as of such time and separately 

with respect to premiums received in each calendar year) 

determined by using:

1. The amount of the undiscounted unearned 

premiums at such time,

Worksheet for Schedule C, Line 26 Keep for Your Records

1. Refigure the amount from Schedule A, line 35, or Schedule B, line 19, whichever applies, without 

any adjustment under section 1059, and without any capital loss carryback to the tax year under 

section 1212(a)(1) ..................................................................

2. Enter the sum of the amounts from line 25, column (b) (without regard to wholly owned foreign 

subsidiary dividends), and line 9, column (b) .............................................

3. Subtract line 2 from line 1 ............................................................

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

5. Add lines 19, 22, 24, and 25, column (b) (without regard to FSC dividends), and the portion of the 

deduction on line 20, column (b), 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; enter the amount from 

line 6 on line 26, column (b), and do not complete the rest of this worksheet ...................

7. Enter the total amount of dividends received from 20%-or-more-owned corporations that are 

included on lines 2, 3, 5, 7, and 8, column (b) (without regard to FSC dividends) ...............

8. Subtract line 7 from line 3 ............................................................

9. Multiply line 8 by 50% (0.50) ..........................................................

10. Subtract line 5 from line 26, column (b) (without regard to FSC dividends) .....................

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 26, column (b) ..................................................

Instructions for Form 1120-PC (2023) 21
2. The applicable interest rate, and

3. The applicable statutory premium recognition 

pattern.

Lines 2d and 4d. Include on lines 2d and 4d 80% of the 

total of all unearned premiums not reported on lines 2a 

through 2c, or 4a through 4c, respectively.

A reciprocal or interinsurer required under state law to 

reflect unearned premiums on its annual statement net of 

premium acquisition expenses should increase its 

unearned premiums by the amount of such acquisition 

expenses prior to making the computation on lines 2d and 

4d. See section 832(b)(7)(E).

Line 6. Transitional adjustments apply to companies 

which become taxable under section 831(a). See section 

832(b)(7)(D).

Schedule F—Losses Incurred

Line 1. Losses paid. Enter the total losses paid on 

insurance contracts during the tax year less salvage and 

reinsurance recovered during the tax year. Attach a 

statement that reconciles the amount entered on line 1 to 

the amount reported on the corporation's annual 

statement.

Lines 2a and 4a. Unpaid losses on life insurance contracts. Unpaid losses must be adjusted for recoveries of 

reinsurance. The amounts of expected recoveries should 

be estimated based on the facts in each case and the 

corporation's experience with similar cases. See 

Regulations section 1.832-4(b).

Lines 2b and 4b. Discounted unpaid losses outstanding. Enter all discounted unpaid losses, as defined in 

section 846.

Section 846 provides that the amount of 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.

Section 846(e)(6) provides that any determination 

under section 846(a) (discounted losses determined) with 

respect to unpaid losses relating to accident and health 

insurance lines of businesses (other than credit disability 

insurance) must be made (a) in the case of unpaid losses 

relating to disability income, by using the general rules 

prescribed under section 807(d) applicable to 

noncancelable accident and health insurance contracts 

and using a mortality or morbidity table reflecting the 

taxpayer’s experience, except that the limitation of section 

846(a)(3) (Limitation on amount of discounted losses) will 

apply; and (b) in all other cases, by using an assumption 

(in lieu of a loss payment pattern) that unpaid losses are 

paid in the middle of the year following the accident year.

A separate series of discount factors are computed for, 

and applied to, undiscounted unpaid losses attributable to 

each accident year of each line of business shown on the 

annual statement (as defined by section 846(e)(3)) filed 

for the calendar year ending with or within the tax year. 

See section 1.832-4(b) relating to the determination of 

unpaid losses.

Section 832(b)(5)(A) provides rules for figuring losses 

incurred. Section 832(b)(5)(B) provides rules for reducing 

the deduction figured in section 832(b)(5)(A).

Rev. Proc. 2023-41, 2023-52, I.R.B. 1607, available at 

IRS.gov/irb/2023-52_IRB#REV-PROC-2023-41, 

prescribes discount factors for the 2023 accident year for 

use by insurance companies in computing discounted 

unpaid losses under section 846 and discounted 

estimated salvage recoverable under section 832. Rev. 

Proc. 2023-41 also provides, for convenience, discount 

factors for losses incurred in earlier accident years for use 

in tax years beginning in 2023. The discount factors set 

forth in Rev. Proc. 2023-41 are determined under section 

846 and Regulations section 1.846-1.

Note. P.L. 115-97, section 13523, modified discounting 

rules for property and casualty insurance companies, 

modified the rate of interest used to discount unpaid 

losses, modified computational rules for loss payment 

patterns, and repealed the historical payment pattern 

election. These amendments apply to tax years beginning 

after 2017. An 8-year transition rule also applies. See 

section 846 of the Internal Revenue Code, as modified by 

P.L. 115-97, section 13523.

Note. There is a special application of the “fresh start” 

provision for an insurance company that is not subject to 

tax under section 831(a) for its first tax year beginning 

after December 31, 1986, because (1) it is described in 

section 501(c), or (2) it is subject to tax under section 

831(b) on its investment income.

If the insurance company later becomes subject to tax 

under section 831(a), the rules relating to the fresh start 

under the discounting provisions are applied by treating 

the last tax year before the year in which the insurance 

company becomes subject to tax under section 831(a) as 

the insurance company's last tax year beginning before 

1987. See section 1010(e) of the Technical and 

Miscellaneous Revenue Act of 1988 and Notice 88-100, 

1988-2 C.B. 439.

Lines 6 and 7. Estimated salvage and reinsurance recoverable. Enter on lines 6 and 7 the amount of 

estimated salvage and reinsurance recoverable. See Rev. 

Proc. 2023-41 for the latest information and guidance.

Line 9. Tax-exempt interest subject to section 832(b)

(5)(B). Enter the amount of tax-exempt interest received 

or accrued during the tax year on investments made after 

August 7, 1986. For information regarding the 

determination of the acquisition date of an investment, see 

the instructions for Schedule C.

Line 13. Reduction of deduction under section 832(b)

(5)(B). Multiply line 12 by the applicable percentage, 

which is 25% (5.25% divided by the highest corporate tax 

rate).

22 Instructions for Form 1120-PC (2023)
Schedule G—Other Capital Losses

Capital assets are considered sold or exchanged to 

provide funds to meet abnormal insurance losses and to 

pay dividends and make similar distributions to 

policyholders to the extent that the gross receipts from 

their sale or exchange are not more than the amount by 

which the sum of dividends and similar distributions paid 

to policyholders, losses paid, and expenses paid for the 

tax year is more than the total on Schedule G, line 9.

Total gross receipts from sales of capital assets 

(line 12, column (c)) must not be more than line 10. If 

necessary, the corporation may report part of the gross 

receipts from a particular sale of a capital asset on this 

schedule and the rest on Schedule D (Form 1120). 

Otherwise, do not include on Schedule D (Form 1120) any 

sales reported on this schedule.

Schedule H—Special Deduction and 

Ending Adjusted Surplus for Section 

833 Organizations

Section 833(c)(5) provides that section 833(a)(2) and 

section 833(a)(3) do not apply to any organization with an 

MLR of less than 85%. See section 833(c)(5). Also, see 

Medical loss ratio, earlier.

Line 5. Beginning adjusted surplus. If the corporation 

was a section 833 organization in 2022, it should enter the 

amount from its 2022 Form 1120-PC, Schedule H, line 10.

Generally, the adjusted surplus as of the beginning of 

any tax year is an amount equal to the adjusted surplus as 

of the beginning of the preceding tax year:

1. Increased by the amount of any adjusted taxable 

income for the preceding tax year, or

2. Decreased by the amount of any adjusted NOL for 

the preceding tax year.

If 2023 is the first tax year the taxpayer qualifies as a 

section 833 organization, see section 833(c)(3)(C) to 

determine the adjusted surplus as of the beginning of the 

2023 tax year.

For purposes of the computation of the adjusted 

surplus, the terms “adjusted taxable income” and 

“adjusted net operating loss” mean the taxable income or 

the NOL, respectively, determined with the following 

modifications.

1. Without regard to the deduction determined under 

section 833(b)(1).

2. Without regard to any carryover or carryback to that 

tax year.

3. By increasing gross income by an amount equal to 

the net exempt income for the tax year.

Line 6. Special deduction. The special deduction under 

section 833(b) cannot be taken if the MLR is less than 

85%. If the MLR is less than 85%, enter zero on line 6 and 

Schedule A, line 34a.

Note. The deduction for any tax year is limited to taxable 

income for that tax year determined without regard to this 

deduction.

Note. Any determination under section 833(b) must be 

made by only taking into account items from the 

health-related business of the corporation.

Line 8a. Adjusted tax-exempt income. Reduce the 

total tax-exempt interest received or accrued during the 

tax year by any amount (not otherwise deductible) which 

would have been allowable as a deduction for the tax year 

if such interest were not tax exempt. Enter the result on 

line 8a.

Line 8b. Adjusted dividends-received deduction. 

Reduce the total amount allowed as a deduction under 

sections 243, 244 (as affected by P.L. 113-295, Div. A, 

section 221(a)(41)(A), December 19, 2014, 128 Stat. 

4043), and 245 by the amount of any decrease in 

deductions allowable for the tax year because of section 

832(b)(5)(B) when the decrease is caused by the 

deductions under sections 243, 244 (as affected by P.L. 

113-295, Div. A, section 221(a)(41)(A), December 19, 

2014, 128 Stat. 4043), and 245. Enter the result on 

line 8b.

Schedule I—Other Information

Complete all items that apply to the corporation.

Question 4

Check the “Yes” box if:

• The corporation is a subsidiary in an affiliated group 

(defined later), 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 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 the 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 (as defined in section 

1504(b)) connected through stock ownership with a 

common parent corporation. See section 1504(a). The 

common parent must be an includible corporation and the 

following requirements must be met.

1. The common parent must own directly stock that 

represents at least 80% of the total voting power and at 

least 80% of the total value of the stock of at least one of 

the other includible corporations.

2. Stock that represents at least 80% of the total voting 

power and at least 80% of the total value of the stock of 

each of the other corporations (except for the common 

parent) must be owned directly by one or more of the 

other includible corporations.

For this purpose, the term “stock” generally does not 

include any stock that (a) is nonvoting, (b) is 

nonconvertible, (c) is limited and preferred as to dividends 

Instructions for Form 1120-PC (2023) 23
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).

Question 6

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 6a the percentage owned by the foreign 

person specified in question 6. On line 6b, enter the name 

of the owner's country.

Note. If there is more than one 25%-or-more foreign 

owner, complete lines 6a and 6b 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. 

territory 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.

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.

Requirement to file Form 5472. If the corporation 

checked “Yes,” 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 9

Show any tax-exempt interest received or accrued. 

Include any exempt-interest dividends received as a 

shareholder in a mutual fund or other RIC. Also, if 

required, include the same amount on Schedule M-1, 

line 7 (or Schedule M-3 (Form 1120-PC), Part II, line 13, if 

applicable).

Item 10

Generally, if the corporation has an NOL for tax year 2023, 

it can generally elect to waive the entire carryback period 

for the NOL and instead carry the NOL forward to future 

tax years. To do so, check the box on line 10 and file the 

tax return by its due date, including extensions. Do not 

attach the statement described in Temporary Regulations 

section 301.9100-12T. Generally, once made, the election 

is irrevocable.

If the corporation timely filed its return for the loss year 

without making the election, it can make the election on an 

amended return filed within 6 months of the due date of 

the loss year return (excluding extensions). Attach the 

election to the amended return and enter "Filed pursuant 

to section 301.9100-2" on the election statement. See the 

Instructions for Form 1139.

Corporations filing a consolidated return that elect to 

waive the entire carryback period for the group must also 

attach the statement required by Regulations section 

1.1502-21(b)(3) or the election will not be valid.

Item 11

Enter the amount of the NOL carryover to this 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 2023. Do not reduce the amount by any NOL 

deduction reported on Schedule A, line 36b.

Question 12

Schedule UTP (Form 1120) asks for information about tax 

positions that affect the U.S. federal income tax liabilities 

of certain corporations that issue or are included in 

audited financial statements and have assets that equal or 

exceed $10 million. For details, see the Instructions for 

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-PC must also file Schedule UTP if it 

satisfies the requirements set forth above.

Question 13

Section 833(c)(5) provides that section 833(a)(2) and 

section 833(a)(3) do not apply to a Blue Cross or Blue 

Shield organization described in section 833(c)(2), or 

other organization described in section 833(c)(3), unless it 

has an MLR of 85% or more for the tax year.

For purposes of section 833(c)(5), the MLR is equal to 

the amount expended on reimbursement for clinical 

services provided to enrollees (as defined in 45 C.F.R. 

158.140) and for activities that improve health care quality 

(as defined in 45 C.F.R. 158.150) under its policies during 

the tax year (section 833(c)(5) MLR numerator) divided by 

the total premium revenue (section 833(c)(5) MLR 

denominator). See section 833(c)(5) and Regulations 

section 1.833-1. Also, see Medical loss ratio, earlier.

Check the “Yes” box if the corporation is a Blue Cross 

or Blue Shield organization described in section 833(c)(2), 

or other organization described in section 833(c)(3), that 

has satisfied the MLR requirements of section 833(c)(5).

If you checked “Yes,” you must enter:

• The section 833(c)(5) MLR numerator on line 13(a),

• The section 833(c)(5) MLR denominator on line 13(b), 

and

24 Instructions for Form 1120-PC (2023)
• The section 833(c)(5) percentage on line 13(c).

If you checked “No,” enter zero on Schedule H, line 6, 

and Schedule A, line 34a. You cannot take the special 

deduction. See the instructions for Schedule H.

Also, if you checked “No,” your deduction of unearned 

premiums is limited. See the instructions for Schedule E 

for more information.

Question 14

Only a corporation that qualifies as a small company 

under section 831(b)(2) is eligible to elect to be taxed on 

taxable investment income under section 831(b) in lieu of 

the tax otherwise applicable under section 831(a). See 

section 831(b)(2)(A)(iii). Section 831(b)(2)(A)(ii) provides 

that a corporation must meet the diversification 

requirements in section 831(b)(2)(B) to qualify as a small 

company. A corporation meets the diversification 

requirements if under section 831(b)(2)(B)(i)(I) no more 

than 20% of the net written premiums (or, if greater, direct 

written premiums) of such corporation for the tax year is 

attributable to any one policyholder. However, a 

corporation that does not meet this 20% test can meet the 

diversification requirement under section 831(b)(2)(B) if 

no person who holds (directly or indirectly) an interest in 

such insurance company is a specified holder who holds 

(directly or indirectly) aggregate interest in such insurance 

company which constitutes a percentage of the entire 

interests in such insurance company which is more than 

2% higher than the percentage of interests in the specified 

assets with respect to such insurance company held 

(directly or indirectly) by such specified holder under 

section 831(b)(2)(B)(i)(II).

A corporation making an election under section 831(b)

(2)(A)(iii) must complete question 14 to indicate whether it 

qualifies as a small company, and, therefore, is eligible to 

make the election to be taxed on taxable investment 

income because it meets the diversification requirements 

of the 20% test in section 831(b)(2)(B)(i)(I). If the 

corporation answers “No” for question 14(a), then the 

corporation must satisfy the specified holder/specified 

asset test in section 831(b)(2)(B)(i)(II) to qualify to make 

the section 831(b)(2)(A)(iii) election to be taxed on taxable 

investment income. If the corporation satisfies the 

specified holder/specified asset test in section 831(b)(2)

(B)(i)(II), the corporation should answer “Yes” for question 

14(b). If the corporation does not satisfy either the 

diversification requirements of section 831(b)(2)(B)(i)(I) or 

section 831(b)(2)(B)(i)(II) for the tax year (answering “No” 

for both questions), the corporation is not a small 

company and, therefore, is not eligible to be taxed on 

taxable investment income under section 831(b) in lieu of 

the tax otherwise applicable under section 831(a).

Question 15

If the corporation had gross receipts of at least $500 

million in any 1 of the 3 preceding tax years, complete 

Form 8991 and attach it to this return. 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.

Question 16

If the corporation paid or accrued any interest or royalty for 

which a deduction is not allowed under section 267A, 

check "Yes" and enter the total amount of interest and 

royalty paid or accrued by the corporation (including the 

corporation's allocable share through a partnership) for 

which a deduction is not allowed.

Payments to which section 267A applies. Interest or 

royalty paid or accrued by a domestic corporation 

(including, in the case of a domestic corporation that is a 

partner in a partnership, the domestic corporation's 

allocable share of interest or royalty paid or accrued by the 

partnership) is subject to section 267A. Section 267A 

generally applies to interest or royalty paid or accrued 

according to a hybrid arrangement (such as, for example, 

a payment according to a hybrid instrument, or a payment 

to a reverse hybrid), provided that the payment or accrual 

is to a related party (or according to a structured 

arrangement). In addition, under an imported mismatch 

rule, section 267A generally applies to interest or royalties 

paid or accrued according to a non-hybrid arrangement 

where the income attributable to that payment or accrual 

is directly or indirectly offset by certain deductions 

involving hybridity incurred by a related party or according 

to a structured arrangement. However, section 267A does 

not apply if a de minimis exception is satisfied. See 

Regulations section 1.267A-1(c). For purposes of section 

267A, interest and royalties are defined broadly. For 

additional information about arrangements subject to 

section 267A, see Regulations sections 1.267A-2 and 

1.267A-4. Also, see the anti-avoidance rule under 

Regulations section 1.267A-5(b)(6).

Extent to which deduction is disallowed. When 

section 267A applies to interest or royalties paid or 

accrued pursuant to a hybrid arrangement, it generally 

disallows a deduction for the amount to the extent that, 

under the foreign tax law, there is not a corresponding 

income inclusion (including long-term deferral). However, 

the deduction is not disallowed to the extent the amount is 

directly or indirectly included in income in the United 

States, such as if the amount is taken into account with 

respect to a U.S. shareholder under section 951(a) or 

section 951A. For additional information, see Regulations 

sections 1.267A-2 through 1.267A-4. For examples 

illustrating the application of section 267A, see 

Regulations section 1.267A-6.

Question 17

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.

Question 18

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 

Instructions for Form 1120-PC (2023) 25
(defined below) 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.

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 2023, a 

taxpayer meets the gross receipts test if the taxpayer has 

average annual gross receipts of $29 million or less for the 

3 prior tax years. See section 448(c) and the Instructions 

for Form 8990 for additional information.

Question 19

If the corporation is a member of a controlled group, check 

the “Yes” box. 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 to report the apportionment 

of certain tax benefits between the members of the group. 

See Schedule O and the Instructions for Schedule O for 

more information.

Question 20

Check the appropriate boxes to indicate if the corporation 

is required to file Form 4626. If the corporation does not 

meet the requirements of the safe harbor method, as 

provided under section 59(k)(3)(A) and Notice 2023-7, 

2023-3 I.R.B. 390, available at IRS.gov/irb/

2023-03_IRB#NOT-2023-7, complete and attach Form 

4626 to the corporation's return. See the Instructions for 

Form 4626.

Schedule L—Balance Sheets per 

Books

Note. All insurance companies required to file Form 

1120-PC must complete Schedule L.

The balance sheets should agree with the corporation's 

books and records.

If filing a consolidated return, report total consolidated 

assets, liabilities, and shareholders’ equity for all 

corporations joining in the return. See Consolidated 

returns, earlier.

Corporations with total assets (nonconsolidated or 

consolidated for all corporations included within the tax 

consolidation group) of $10 million or more on the last day 

of the tax year must file Schedule M-3 (Form 1120-PC) 

instead of Schedule M-1. See the separate Instructions for 

Schedule M-3 (Form 1120-PC) for provisions that also 

affect Schedule L.

Line 1. Cash. Include certificates of deposit as cash on 

this line.

Line 5. Tax-exempt securities. Include on this line:

• State and local government obligations, the interest on 

which is excludable from gross income under section 

103(a); and

• Stock in a mutual fund or other RIC that distributed 

exempt-interest dividends during the tax year of the 

corporation.

Line 18. Insurance liabilities. Include on this line:

• Undiscounted unpaid losses,

• Loss adjustment expenses, and

• Unearned premiums.

See section 846 for more information.

Line 27. Adjustments to shareholders' equity. Some 

examples of adjustments to report on this line include:

• Unrealized gains and losses on securities held 

“available for sale,”

• Foreign currency translation adjustments,

• The excess of additional pension liability over 

unrecognized prior service cost,

• Guarantees of ESOP debt, and

• Compensation related to employee stock award plans.

If the total adjustment to be entered on line 27 is a 

negative amount, enter the amount in parentheses.

Schedule M-1— Reconciliation of 

Income (Loss) per Books With 

Income (Loss) per Return

In completing Schedule M-1, the following apply.

• All insurance companies required to file Form 1120-PC 

with total assets (nonconsolidated or consolidated for all 

corporations included within the tax consolidation group) 

of $10 million or more on the last day of the tax year must 

file Schedule M-3 (Form 1120-PC) instead of 

Schedule M-1. See Schedule M-3 (Form 1120-PC), 

earlier.

• A corporation filing Form 1120-PC that is not required to 

file Schedule M-3 (Form 1120-PC) may voluntarily file 

Schedule M-3 (Form 1120-PC) instead of Schedule M-1. 

See the Instructions for Schedule M-3 (Form 1120-PC) for 

more information.

Line 5c. Travel and entertainment. Include on line 5c 

any of the following.

• Entertainment expenses not deductible under section 

274(a).

• Meal expenses not deductible under section 274(n).

• Expenses for the use of an entertainment facility.

• The part of business gifts over $25.

• Expenses of an individual over $2,000, allocable to 

conventions on cruise ships.

• Employee achievement awards of nontangible or 

tangible property over $400 ($1,600 if part of a qualified 

plan).

• The cost of skyboxes.

• Nondeductible club dues.

• The part of luxury water travel expenses not deductible 

under section 274(m).

• Expenses for travel as a form of education.

• Other nondeductible travel and entertainment 

expenses.

26 Instructions for Form 1120-PC (2023)
Line 7a. Tax-exempt interest. Report any tax-exempt 

interest received or accrued, including any 

exempt-interest dividends received as a shareholder in a 

mutual fund or other RIC. Also, report this same amount 

on Schedule I, item 10.

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 through 

IRS.gov/FormComments. Or you can write to:

Internal Revenue Service

Tax Forms and Publications

1111 Constitution Ave. NW, IR-6526

Washington, DC 20224

Do not send the tax form to this address. Instead, see 

Where To File, earlier.

Instructions for Form 1120-PC (2023) 27
Index

A

Accounting methods 5

Accounting methods, change in 5

Accounting period (tax year) 6

Address change 8

Adjustments to shareholders' 

equity 26

Affiliated group 23

Amended return 8

Amortization 12

Assembling the return 4

B

Backup withholding 10

Base erosion minimum tax 9

Blue Cross or Blue Shield 21, 24

Business start-up expenses 12

C

CAMT 9

Charitable contributions 15

Consolidated return 7

Corporate alternative minimum tax 9

D

Deductions 12

Definitions 19

100% dividend 19

Applicable interest rate 21

Applicable statutory premium 

recognition pattern 21

Prorated amounts 19

Undiscounted unearned premiums 21

Depository methods of tax 

payment 4

Disclosure statement 6

E

Elective payment election 10

Electronic deposit of tax refund of $1 

million or more 10

Electronic federal tax payment 

system (EFTPS) 4

Electronic filing 2

Employer identification number 

(EIN) 8

Estimated tax:

Payments 4

Penalty 5, 10

Extension of time to file 3

F

Final return 8

Foreign corporations 9

Foreign person 24

Foreign tax credit 9

Form 3800 10

Forms and publications, how to get 2

G

General business credit 9

Golden parachute payments 12

I

Insurance liabilities 26

Interest due on late payment of tax 5

L

Limitation on dividends-received 

deduction 21

Limitations on deductions 12

Lobbying expenses 17

M

Medical loss ratio 5, 21, 23, 24

Medical loss ratio (MLR) 21

Minimum tax:

Prior year, credit for 9

N

NAIC annual statement 4

Name change 8

Net operating loss 17

O

Other deductions 16

Owner's country 24

P

Paid preparer authorization 3

Penalties 5, 10

Pension, profit-sharing, etc. plans 15

Period covered 6

Personal holding company tax 9

Private delivery services 3

R

Recordkeeping 6

Related party transactions 12

S

Schedule:

A 10

B, Part I 18

B, Part II 18

C 19

E 21

F 22

G 23

H 23

I 23

L 26

M-1 26

M-3 7

Section 953 election 8

T

Tax and payments 8

Tax issues, unresolved 2

Tax rate 8

Tax-exempt securities 26

Travel, meals, and entertainment 16

U

Uncertain tax positions 24

W

When to file, extension 3

Where to file 3

Who must file:

Exceptions 2

Life insurance companies 2

Who must sign 3

Worksheet for Schedule C 21

28