2023

Instructions for Form 1120-L

U.S. Life 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

Future Developments ........................ 1

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

Photographs of Missing Children ................ 1

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

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

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

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

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

Definitions ............................. 3

Electronic Filing ......................... 3

When To File ........................... 3

Where To File ........................... 4

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

Paid Preparer Authorization ................. 4

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

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

Tax Payments ........................... 5

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

Accounting Methods ...................... 6

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

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

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

Other Forms and Statements That May Be 

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

Specific Instructions ......................... 7

Period Covered ......................... 7

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

Item A. Identifying Information ............... 7

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

Item D. Section 953 Elections ............... 9

Item E. Final Return, Name Change, Address 

Change, or Amended Return .............. 9

Life Insurance Company Taxable Income ....... 9

Schedule A—Dividends, Inclusions, 

Dividends-Received Deduction, and Other 

Special Deductions .................... 16

Schedule B—Investment Income ............ 19

Schedule F—Increase (Decrease) in 

Reserves (Section 807) ................. 19

Schedule G—Policy Acquisition Expenses ..... 20

Schedule K—Tax Computation ............. 21

Schedule L ............................ 22

Schedule M—Other Information ............. 23

Index ................................... 26

Future Developments

For the latest information about developments related to 

Form 1120-L and its instructions, such as legislation 

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

Form1120L.

What's New

Increase in penalty for failure to file. For tax returns 

required to be filed in 2024, the minimum penalty for 

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

increased to the smaller of the tax due or $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 

Schedule K, line 3. Also, see new Schedule M, Question 

19.

Elective payment election. Applicable entities and 

electing taxpayers can elect to treat certain credits as 

elective payments. Any resulting overpayment may result 

in refunds. See the instructions for line 27i, later. 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. Affected corporations must still file the 

2023 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 line 29 of 

Form 1120-L (or other appropriate line of the corporation's 

income tax return), even if that amount is zero. Failure to 

follow these instructions could result in affected 

corporations 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 line 29.

Photographs of Missing Children

The IRS is a proud partner with the National Center for 

Missing & Exploited Children® (NCMEC). Photographs of 

missing children selected by the Center may appear in 

instructions on pages that would otherwise be blank. You 

Jan 30, 2024 Cat. No. 11485H
can help bring these children home by looking at the 

photographs and calling 1-800-THE-LOST 

(1-800-843-5678) if you recognize a child.

The Taxpayer Advocate Service

The Taxpayer Advocate Service (TAS) is an independent 

organization within the IRS that helps taxpayers and 

protects taxpayer rights. TAS's job is to ensure that every 

taxpayer is treated fairly and knows and understands their 

rights under the Taxpayer Bill of Rights.

As a taxpayer, the corporation has rights that the IRS 

must abide by in its dealings with the corporation. TAS can 

help the corporation if:

• A problem is causing financial difficulty for the business;

• The business is facing an immediate threat of adverse 

action; or

• The corporation has tried repeatedly to contact the IRS 

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

by the date promised.

The TAS toolkit at TaxpayerAdvocate.IRS.gov can help 

the corporation understand these rights.

TAS has offices in every state, the District of Columbia, 

and Puerto Rico. Local advocates' numbers are in their 

local directories and at TaxpayerAdvocate.IRS.gov/

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, 

download, or print all of the forms and publications it may 

need on IRS.gov/FormsPubs. Otherwise, the corporation 

can go to IRS.gov/OrderForms to place an order and have 

forms mailed to it.

General Instructions

Purpose of Form

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

deductions, credits, and to figure the income tax liability of 

life insurance companies.

Who Must File

Every domestic life insurance company and certain 

foreign corporations that would qualify as life insurance 

companies if they were U.S. corporations must file Form 

1120-L. This includes organizations described in section 

501(m)(1) that provide commercial-type life insurance.

Mutual Savings Banks Conducting Life 

Insurance Business

Mutual savings banks conducting life insurance business 

and meeting the requirements of section 594 are subject 

to an alternative tax consisting of:

• A partial tax computed on Form 1120, U.S. Corporation 

Income Tax Return, on the taxable income of the bank, 

excluding the life insurance department; and

• A partial tax on the taxable income computed on Form 

1120-L of the life insurance department.

Enter the combined tax on Form 1120, Schedule J, 

line 1. File Form 1120 and attach Form 1120-L as a 

statement (and identify it as such) or attach a statement 

showing the computation of the taxable income of the life 

insurance department (including all relevant information 

that would be reported on Form 1120-L).

Foreign Life Insurance Companies

A foreign life insurance company that sells a U.S. real 

property interest must file Form 1120-L and Schedule D 

(Form 1120) to report the sale. Gain or loss from the sale 

of a U.S. real property interest is considered effectively 

connected with the conduct of a U.S. business, even 

though the foreign life insurance company does not carry 

on any insurance business in the United States and is not 

otherwise required to file a U.S. income tax return. See 

sections 842 and 897; and the instructions for Schedule K 

line 8, later.

Foreign-owned domestic disregarded entities. If a 

foreign person, including a foreign corporation, wholly 

owns a domestic disregarded entity (DE), the domestic 

DE is treated as a domestic corporation separate from its 

owner (the foreign corporation) for purposes of the 

reporting requirements under section 6038A that apply to 

25% foreign-owned domestic corporations. These rules 

apply to a domestic DE owned by a foreign insurance 

company that makes an election under section 953(c)(3)

(C) but do not apply to a domestic DE owned by a foreign 

insurance company that makes an election under section 

953(d) (for information on these elections, see the 

instructions for item D). If a foreign insurance company 

electing under section 953(c)(3)(C) wholly owns a 

domestic DE, the DE may be required to file Form 5472, 

Information Return of a 25% Foreign-Owned U.S. 

Corporation or a Foreign Corporation Engaged in a U.S. 

Trade or Business. For additional information and 

coordination with Form 5472 filing by the domestic DE, 

see the Instructions for Form 5472.

Note. A domestic DE is generally a transparent entity. 

Any insurance company that must file Form 1120-L will 

include on Form 1120-L any tax items of a wholly owned 

domestic DE that are subject to reporting.

Qualified opportunity investment. If the corporation 

held a qualified investment in a qualified opportunity fund 

(QOF) at any time during the year, the corporation must 

file its return with Form 8997, Initial and Annual Statement 

2 Instructions Form 1120-L (2023)
of Qualified Opportunity Fund (QOF) Investments, 

attached. See the Instructions for Form 8997.

Other Insurance Companies

Insurance companies, other than life insurance 

companies, should file Form 1120-PC, U.S. Property and 

Casualty Insurance Company Income Tax Return. A burial 

or funeral benefit insurance company that directly 

manufactures funeral supplies or performs funeral 

services is taxable under section 831 and should file Form 

1120-PC.

Definitions

An “insurance company” means any corporation if more 

than half of its business during the tax year is from the 

issuance of insurance or annuity contracts or the 

reinsuring of risks underwritten by insurance companies.

A “life insurance company” is an insurance company in 

the business of issuing life insurance and annuity 

contracts either separately or combined with health and 

accident insurance, or noncancelable contracts of health 

and accident insurance that meet the reserves test in 

section 816(a). Guaranteed renewable life, health, and 

accident insurance that the corporation cannot cancel but 

reserves the right to adjust premium rates by classes, 

according to experience under the kind of policy involved, 

are treated as noncancelable.

The “reserves test” requires that life insurance 

reserves, as defined in section 816(b), plus unearned 

premiums and unpaid losses (whether or not ascertained) 

on noncancelable life, health, or accident policies not 

included in life insurance reserves must make up more 

than 50% of total reserves as defined in section 816(c). 

When determining whether the reserves test has been 

met:

1. Life insurance reserves and total reserves must 

each be reduced by an amount equal to the mean of the 

aggregates, at the beginning and end of the tax year, of 

the policy loans outstanding with respect to contracts for 

which life insurance reserves are maintained;

2. Amounts set aside and held at interest to satisfy 

obligations under contracts that do not contain permanent 

guarantees with respect to life, accident, or health 

contingencies must not be included in either life insurance 

reserves (section 816(c)(1)) or other reserves required by 

law (section 816(c)(3)); and

3. Deficiency reserves must not be included in either 

life insurance reserves or total reserves.

Electronic Filing

Corporations can generally electronically file (e-file) Form 

7004 (automatic extension of time to file) and Forms 940, 

941, and 944 (employment tax returns). If there is a 

balance due, the corporation can authorize an electronic 

funds withdrawal while e-filing. Form 1099 and other 

information returns can also be electronically filed. The 

option to e-file does not, however, apply to certain returns.

For more information, go to IRS.gov/Filing. Click on the 

links for “Businesses & Self-Employed” and 

“Corporations.”

When To File

Generally, a corporation must file its income tax return by 

the 15th day of the 4th month after the end of its tax year. 

A new corporation filing a short-period return must 

generally file by the 15th day of the 4th month after the 

short period ends. A corporation that has dissolved must 

generally file by the 15th day of the 4th month after the 

date it dissolved.

However, a corporation with a fiscal tax year ending 

June 30 must file by the 15th day of the 3rd month after 

the end of its tax year. A corporation with a short tax year 

ending any time in June will be treated as if the short year 

ended on June 30, and must file by the 15th day of the 3rd 

month after the end of its tax year.

If the due date falls on a Saturday, Sunday, or legal 

holiday, the corporation can file on the next business day.

Private Delivery Services

Corporations can use certain private delivery services 

(PDSs) designated by the IRS to meet the “timely mailing 

as timely filing” rule for tax returns. Go to IRS.gov/PDS for 

the current list of designated services.

The PDS can tell you how to get written proof of the 

mailing date.

For the IRS mailing address to use if you're using a 

PDS, go to IRS.gov/PDSStreetAddresses.

PDSs cannot deliver items to P.O. boxes. You 

must use the U.S. Postal Service to mail any item 

to an IRS P.O. box address.

Extension of Time To File

File Form 7004, Application for Automatic Extension of 

Time To File Certain Business Income Tax, Information, 

and Other Returns, to request an extension of time to file. 

Generally, file Form 7004 by the regular due date of the 

return. See the Instructions for Form 7004.

Who Must Sign

The return must be signed and dated by:

• The president, vice-president, treasurer, assistant 

treasurer, chief accounting officer; or

• Any other corporate officer (such as tax officer) 

authorized to sign.

If a return is filed on behalf of a corporation by a 

receiver, trustee, or assignee, the fiduciary must sign the 

return, instead of the corporate officer. Returns and forms 

signed by a receiver or trustee in bankruptcy on behalf of 

a corporation must be accompanied by a copy of the order 

or instructions of the court authorizing signing of the return 

or form.

Paid Preparer Use Only section. If an employee of the 

corporation completes Form 1120-L, the paid preparer 

section should remain blank. Anyone who prepares Form 

1120-L but does not charge the corporation should not 

complete that section. Generally, anyone who is paid to 

prepare the return must sign it and complete the section.

The paid preparer must complete the required preparer 

information and:

CAUTION

!

Instructions Form 1120-L (2023) 3
• 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 doesn’t apply to the firm, if any, shown in 

that section.

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

authorizing the IRS to call the paid preparer to answer any 

questions that may arise during the processing of its 

return. The corporation is also authorizing the paid 

preparer to:

• Give the IRS any information that is missing from the 

return;

• Call the IRS for information about the processing of the 

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

and

• Respond to certain IRS notices about math errors, 

offsets, and return preparation.

The corporation is not authorizing the paid preparer to 

receive any refund check, bind the corporation to anything 

(including any additional tax liability), or otherwise 

represent the corporation before the IRS.

The authorization will automatically end no later than 

the due date (excluding extensions) for filing the 

corporation's 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.

Statements

Annual statement. In general, every domestic or foreign 

life insurance company must attach a copy of the National 

Association of Insurance Commissioners (NAIC) annual 

statement filed with the state of domicile and used as the 

basis for computing taxable income. If a different annual 

statement was used as the basis for computing taxable 

income, attach that annual statement to Form 1120-L. 

However, see Electronic filing next.

Electronic filing. If a domestic or foreign life insurance 

company files Form 1120-L electronically, don’t attach the 

annual statement or pro forma annual statement to the 

electronically filed return. However, if the full annual 

statement is not attached, you must provide a copy of the 

annual statement or pro forma annual statement to the 

IRS if requested and retain it with your other tax records 

for the period required by the regulations.

Reconciliation. Corporations that do not file 

Schedule M-3 (Form 1120-L) with Form 1120-L must 

attach a statement that reconciles Form 1120-L with the 

annual statement used as the basis for computing taxable 

income reported on Form 1120-L. Also, see the Note 

under the instructions for Schedule F, later, for additional 

required reconciliations.

Assembling the Return

To ensure that the corporation's tax return is correctly 

processed, attach all schedules and other forms after 

page 5 of Form 1120-L in the following order.

1. Schedule N (Form 1120).

2. Form 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-L. Do not enter “See Attached” or “Available Upon 

Request” instead of completing the entry spaces. If more 

space is needed on the forms or schedules, attach 

separate sheets using the same size and format as on the 

printed forms. If 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.

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 Center

Ogden, UT 84201-0012

A foreign country or U.S. territory

Internal Revenue Service Center

P.O. Box 409101

Ogden, UT 84409

4 Instructions Form 1120-L (2023)
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 30. If the due 

date falls on a Saturday, Sunday, or legal holiday, the 

payment is due on the next day that isn't a Saturday, 

Sunday, or legal holiday.

Electronic Deposit Requirement

Corporations must use electronic funds transfers to make 

all federal tax deposits (such as deposits of employment, 

excise, and corporate income tax). Generally, electronic 

funds transfers are made using the Electronic Federal Tax 

Payment System (EFTPS).

If the corporation does not want to use EFTPS, it can 

arrange for its tax professional, financial institution, payroll 

service, or other trusted third party to make deposits on its 

behalf. Also, it can arrange for its financial institution to 

submit a same-day wire payment (discussed later) on its 

behalf. EFTPS is a free service provided by the 

Department of the Treasury. Services provided by a tax 

professional, financial institution, payroll service, or other 

third party may have a fee.

To get more information about EFTPS or to enroll in 

EFTPS, visit EFTPS.gov or call 800-555-4477. To contact 

EFTPS using Telecommunications Relay Services (TRS) 

for people who are deaf, hard of hearing, or have a speech 

disability, dial 711 and provide the TRS assistant the 

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

Depositing on time. To make your EFTPS deposits on 

time, the corporation must submit the transaction by 8 

p.m. Eastern time the day before the date the deposit is 

due. If the corporation uses a third party to make deposits 

on its behalf, they may have different cutoff times.

Same-day wire payment option. If the corporation fails 

to submit a deposit transaction on EFTPS by 8 p.m. 

Eastern time the day before the date a deposit is due, it 

can still make the deposit on time by using the Federal Tax 

Collection Service (FTCS). To use the same-day wire 

payment method, the corporation will need to make 

arrangements with its financial institution ahead of time 

regarding availability, deadlines, and costs. Financial 

institutions may charge a fee for payments made this way. 

To learn more about making a same-day wire payment, go 

to IRS.gov/SameDayWire.

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 transfers to 

make installment payments of estimated tax.

• If, after the corporation figures and deposits estimated 

tax, it finds that its tax liability for the year will be more or 

less than originally estimated, it may have to refigure its 

required installments. If earlier installments were 

underpaid, the corporation may owe a penalty. See 

Estimated tax penalty below.

• If the corporation overpaid estimated tax, it may be able 

to get a quick refund by filing Form 4466, Corporation 

Application for Quick Refund of Overpayment of 

Estimated Tax. See the instructions for line 27c, later.

See section 6655 and Pub. 542, Corporations, for more 

information on how to figure 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's tax.

See section 6655 for details and exceptions, including 

special rules for large corporations.

Use Form 2220, Underpayment of Estimated Tax by 

Corporations, to see if the corporation owes a penalty and 

to figure the amount of the penalty. If Form 2220 is 

completed, enter the penalty on line 29. See the 

instructions for line 29. Also, see Relief from additions to 

tax for underpayments applicable to the new corporate 

alternative minimum tax, earlier.

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 

reasonable-cause criteria. Do not attach an explanation 

when the corporation's return is filed.

Interest. Interest is charged on taxes paid late even if an 

extension of time to file is granted. Interest is also charged 

on penalties imposed for failure to file, negligence, fraud, 

substantial valuation misstatements, substantial 

understatements of tax, and reportable transaction 

understatements from the due date (including extensions) 

to the date of payment. The interest charge is figured at a 

rate determined under section 6621.

Late filing of return. A corporation that does not file its 

tax return by the due date, including extensions, may be 

penalized 5% of the unpaid tax for each month or part of a 

month the return is late, up to a maximum of 25% of the 

unpaid tax. The minimum penalty for a 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 

CAUTION

!

Instructions Form 1120-L (2023) 5
or withheld, or these taxes are not paid. These taxes are 

generally reported on:

• Form 720, Quarterly Federal Excise Tax Return;

• Form 941, Employer's QUARTERLY Federal Tax 

Return;

• Form 944, Employer's ANNUAL Federal Tax Return; or

• Form 945, Annual Return of Withheld Federal Income 

Tax.

The trust fund recovery penalty may be imposed on all 

persons who are determined by the IRS to be responsible 

for collecting, accounting for, or paying over these taxes, 

and who acted willfully in not doing so. The penalty is 

equal to the full amount of the unpaid trust fund tax. See 

the Instructions for Form 720; and Pub. 15 (Circular E), 

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

of responsible persons.

Note. The trust fund recovery penalty will not apply to any 

amount of trust fund taxes an employer holds back in 

anticipation of the credit for qualified sick and family leave 

wages or the employee retention credit that they are 

entitled to. See Pub. 15 for more information.

Other penalties. Other penalties can be imposed for 

negligence, substantial understatement of tax, reportable 

transaction understatements, and fraud. See sections 

6662, 6662A, and 6663.

Accounting Methods

The return of a life insurance company must be filed using 

the accrual method of accounting or, to the extent 

permitted under regulations, a combination of the accrual 

method with any other method, except the cash receipts 

and disbursements method. In all cases, the method used 

must clearly show life insurance company taxable income 

(LICTI).

Change in accounting method. Generally, the 

corporation must get IRS consent to change either an 

overall method of accounting or the accounting treatment 

of any material item for income tax purposes. To obtain 

consent, the corporation must generally file Form 3115, 

Application for Change in Accounting Method, during the 

tax year for which the change is requested. See the 

Instructions for Form 3115 and Pub. 538 for more 

information and exceptions. Also, see the Instructions for 

Form 3115 for procedures that may apply for obtaining 

automatic consent to change certain methods of 

accounting, non-automatic change procedures, and 

reduced Form 3115 filing requirements.

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 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. 

Disclose information for each reportable transaction in 

which the corporation participated. Form 8886, 

Reportable Transaction Disclosure Statement, must be 

filed for each tax year that the federal income tax liability 

of the corporation is affected by its participation in the 

transaction. The following are reportable transactions.

1. Any listed transaction, which is a transaction that is 

the same as or substantially similar to one of the types of 

transactions that the IRS has determined to be a tax 

avoidance transaction and identified by notice, regulation, 

or other published guidance as a listed transaction.

2. Any transaction offered under conditions of 

confidentiality for which the corporation (or a related party) 

paid an advisor a fee of at least $250,000.

3. Certain transactions for which the corporation (or a 

related party) has contractual protection against 

disallowance of the tax benefits.

4. Certain transactions resulting in a loss of at least 

$10 million in any single year or $20 million in any 

combination of years.

5. Any transaction identified by the IRS by notice, 

regulation, or other published guidance as a “transaction 

of interest.”

For more information, see Regulations section 

1.6011-4. Also see the Instructions for Form 8886.

Penalties. The corporation may have to pay a penalty if 

it is required to disclose a reportable transaction under 

section 6011 and fails to properly complete and file Form 

6 Instructions Form 1120-L (2023)
8886. Penalties also apply under section 6707A if the 

corporation fails to file Form 8886 with its corporate return, 

fails to provide a copy of Form 8886 to the Office of Tax 

Shelter Analysis (OTSA), or files a form that fails to include 

all the information required (or includes incorrect 

information). Other penalties, such as an accuracy-related 

penalty under section 6662A, also apply. See the 

Instructions for Form 8886 for details on these and other 

penalties.

Reportable transactions by material advisors. 

Material advisors to any reportable transaction must 

disclose certain information about the reportable 

transaction by filing Form 8918, Material Advisor 

Disclosure Statement, with the IRS. See the Instructions 

for Form 8918.

Transfers to a corporation controlled by the transferor. Every significant transferor (as defined in Regulations 

section 1.351-3(d)(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 1.1503-2(c)(5)), the corporation (or consolidated 

group) may need to attach an elective relief agreement 

and/or an annual certification as provided in Regulations 

section 1.1503-2(g)(2).

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).

Form 8975, Country-by-Country Report. Certain U.S. 

persons that are the ultimate parent entity of a U.S. 

multinational enterprise group with annual revenue for the 

preceding reporting period of $850 million or more are 

required to file Form 8975. Form 8975 and Schedule A 

(Form 8975) must be filed with the income tax return of the 

ultimate parent entity of a U.S. multinational enterprise 

group for the tax year in or within which the reporting 

period covered by Form 8975 ends. For more information, 

see Form 8975, Schedule A (Form 8975), and the 

Instructions for Form 8975 and Schedule A (Form 8975).

Additional forms and statements. See Pub. 542, 

Corporations, for a list of other forms and statements a 

corporation may need to file in addition to the forms and 

statements discussed throughout these instructions.

Specific Instructions

Period Covered

Section 843 requires all insurance companies to file on a 

calendar year basis, unless they join in the filing of a 

consolidated return. If a consolidated return is filed, 

indicate the period covered on the parent corporation's 

return.

Name and Address

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

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

EIN on the appropriate lines. Enter the address of the 

corporation's principal office or place of business. Include 

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

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

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

the box number instead.

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

the state in which the corporation is incorporated. For 

example, if a business is incorporated in Delaware or 

Nevada and the corporation's principal office is located in 

Little Rock, Arkansas, the corporation should enter the 

Little Rock address.

If the corporation receives its mail in care of a third 

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

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

name and street address or P.O. box.

If the corporation has a foreign address, include the city 

or town, state or province, country, and foreign postal 

code. Do not abbreviate the country name. Follow the 

country's practice for entering the name of the state or 

province and postal code.

Item A. Identifying Information

Consolidated Return

If an affiliated group of corporations includes one or more 

domestic life insurance companies taxed under section 

801, the common parent may elect to treat those life 

insurance companies as includible corporations. The life 

insurance companies must have been members of the 

Instructions Form 1120-L (2023) 7
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).

Note. The eligibility requirements (the tacking rule) for a 

life insurance company to join in the filing of a 

consolidated return with nonlife companies are covered in 

Regulations section 1.1502-47(b)(12)(v).

Note. If an election under section 1504(c)(2) is in effect 

for an affiliated group for the tax year, all items of 

members of the group that are not life insurance 

companies must not be taken into account in figuring the 

tentative LICTI of members that are life insurance 

companies.

Corporations filing a consolidated return must check 

box 1 of item A and attach Form 851, Affiliations 

Schedule, and other supporting statements to the return. 

Also, for the first year a subsidiary corporation is being 

included in a consolidated return, attach Form 1122, 

Authorization and Consent of Subsidiary Corporation To 

Be Included in a Consolidated Income Tax Return, to the 

parent's consolidated return. Attach a separate Form 1122 

for each new subsidiary being included in the 

consolidated return.

File supporting statements for each corporation 

included in the consolidated return. Do not use Form 

1120-L as a substitute for the supporting statement. On 

the supporting statement, use columns to show the 

following, both before and after adjustments.

1. Items of gross income and deductions.

2. A computation of taxable income.

3. Balance sheets as of the beginning and end of the 

tax year.

4. A reconciliation of income per books with income 

per return.

5. A reconciliation of retained earnings.

Enter on Form 1120-L the totals for each item of 

income, gain, loss, expense, or deduction, net of 

eliminating entries for intercompany transactions between 

corporations within the consolidated group. Attach 

consolidated balance sheets and a reconciliation of 

consolidated retained earnings.

For more information on consolidated returns, see the 

regulations under section 1502.

Life-Nonlife Consolidated Return

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

consolidated group, check boxes 1 and 2 of item A.

Filing requirements. The common parent of a 

life-nonlife consolidated group must satisfy the following 

filing requirements.

• File the applicable consolidated corporate income tax 

return: a Form 1120-L, where the common parent is a life 

insurance company; a Form 1120-PC, where the common 

parent is an insurance company, other than a life 

insurance company; or a Form 1120, where the common 

parent is any other type of corporation.

• Indicate clearly on the face of the return that the 

corporate tax return is a life-nonlife return. This 

requirement is satisfied by checking box 2 of item A on 

page 1.

• Show any setoffs required by paragraphs (e), (h), and 

(j) of Regulations section 1.1502-47.

• Report separately the nonlife consolidated taxable 

income or loss, determined under Regulations section 

1.1502-47(f), on a Form 1120 or 1120-PC (whether filed 

by the common parent or as an attachment to the 

consolidated return), for all nonlife members of the 

consolidated group.

• Report separately the consolidated LICTI (as defined by 

Regulations section 1.1502-47(g)(1)), determined under 

Regulations section 1.1502-11, 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.

Note. If a nonlife insurance company is a member of an 

affiliated group, file Form 1120-PC as an attachment to the 

consolidated return in addition to the supporting 

statements discussed earlier under Consolidated Return. 

Across the top of page 1 of Form 1120-PC, write 

“Supporting Statement to Consolidated Returns.”

Schedule M-3 (Form 1120-L)

A life insurance company with total assets 

(non-consolidated or consolidated for all companies 

included within a tax consolidation group) of $10 million or 

more on the last day of the tax year must file 

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

Reconciliation for U.S. Life Insurance Companies With 

Total Assets of $10 Million or More. A corporation filing 

Form 1120-L that is not required to file Schedule M-3 may 

voluntarily file Schedule M-3.

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

box 3, of item A, “Schedule M-3 (Form 1120-L) attached” 

at the top of page 1 of Form 1120-L. See the Instructions 

for Schedule M-3 (Form 1120-L) for more details.

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

Form 1120-L, see Reconciliation under Statements, 

earlier.

Item B. Employer Identification 

Number (EIN)

Enter the corporation's EIN. If the corporation does not 

have an EIN, it must apply for one. An EIN can be applied 

for in one of the following ways.

• Online—Click on the Employer ID Numbers link at 

IRS.gov/EIN. The EIN is issued immediately once the 

application information is validated.

• By faxing or mailing Form SS-4, Application for 

Employer Identification Number.

Corporations located in the United States or U.S. 

territories can use the online application. Foreign 

corporations should call 1-267-941-1099 (not a 

toll-free number) for more information on obtaining an EIN. 

See the Instructions for Form SS-4.

EIN applied for, but not received. If the corporation has 

not received its EIN by the time the return is due, enter 

“Applied For” and the date the corporation applied in the 

space for the EIN. However, if the corporation is filing its 

CAUTION

!

8 Instructions Form 1120-L (2023)
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 953 Elections

Check the appropriate box if the corporation is a foreign 

corporation and elects under:

1. Section 953(c)(3)(C) to treat its related person 

insurance income as effectively connected with the 

conduct of a trade or business in the United States, or

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

corporation.

Generally, a foreign corporation making either election 

must file its return by sending it to:

Internal Revenue Service Center

P.O. Box 409101

Ogden, UT 84409

See Notice 87-50, 1987-2 C.B. 357; and Rev. Proc. 

2003-47, 2003-28 I.R.B. 55, for the procedural rules, 

election statement formats, and filing addresses for 

making the respective elections under section 953(c)(3)

(C) or section 953(d).

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

year for which it was made and all subsequent tax years 

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

of a foreign corporation electing to be treated as a 

domestic insurance company under section 953(d) will be 

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

to reduce the taxable income of any other member of the 

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

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

additional tax required to be paid on line 11 of 

Schedule K. On the dotted line to the left of line 11 of 

Schedule K, write “Section 953(d)” and the amount. 

Attach a statement showing the computation. See section 

953(d) for more details.

Item E. Final Return, Name Change, 

Address Change, or Amended Return

Indicate if this is a final return, name change, address 

change, or amended return by checking the appropriate 

box.

Note. If a change of address or responsible party occurs 

after the return is filed, use Form 8822-B, Change of 

Address or Responsible Party—Business, to notify the 

IRS of the new address.

Life Insurance Company Taxable 

Income

Income

Except as otherwise provided in the Internal Revenue 

Code, gross income includes all income from whatever 

source derived.

Line 1. Enter gross premiums and other consideration

received on insurance and annuity contracts less return 

premiums and premiums and other consideration paid for 

indemnity reinsurance.

Gross premiums and other consideration includes 

advance premiums, deposits, fees, assessments, 

consideration received for assuming liabilities under 

contracts not issued by the corporation, and any amount 

treated as premiums received under section 808(e).

Return premiums include amounts rebated or refunded 

due to policy cancellations or incorrectly computed 

premiums, but do not include amounts returned to 

policyholders when such amounts are not fixed in the 

contract but instead depend on the corporation's 

experience or the management's discretion.

Line 3a. Decrease in reserves under section 807(f). If 

the amount of any item referred to in section 807(c) 

decreased as a result of a change in the basis used to 

determine that item, then enter the section 807(f) 

prescribed portion of the change that must be included in 

life insurance company gross income (LICGI).

Note. If a corporation no longer qualifies as a life 

insurance company, the balance of any adjustments under 

section 807(f) must be taken into account in the last tax 

year the corporation is qualified to file Form 1120-L. See 

section 807(f)(2).

Line 3b. Income from Reserve Transition Relief. If 

section 807(d) (as amended by P.L. 115-97) decreased 

the amount of the reserve for any contract as of the close 

of the tax year preceding the first tax year beginning after 

2017, enter the portion of the change that must be 

included in LICGI as prescribed by section 13517(c)(3) of 

P.L. 115-97. See Rev. Proc. 2019-34, 2019-35 I.R.B. 669, 

for more information.

Line 4. Investment income. Enter the amount from 

Schedule B, line 6, less 50% of interest income of an 

employee stock ownership plan (ESOP) loan made prior 

to August 20, 1996. Also, see section 1602 of P.L. 

104-188 for binding contracts and refinancing rules.

Line 5. Capital gain net income. Unless specifically 

excluded by section 1221, each asset held by a 

corporation (whether or not connected with its business) is 

a "capital asset."

Under section 1221, capital asset does not include the 

following.

1. Assets that can be inventoried or property held 

mainly for sale to customers.

2. Depreciable or real property used in the trade or 

business.

Instructions Form 1120-L (2023) 9
3. Certain copyrights; or literary, musical, or artistic 

compositions.

4. Accounts or notes receivable acquired in the 

ordinary course of trade or business for services rendered 

or from the sale of property described in (1) above.

5. Certain publications of the U.S. Government.

Section 818(b) modifies the above definition so only 

property used in carrying on an insurance business will be 

considered as “depreciable or real property used in the 

corporation's trade or business.” For life insurance 

companies, gains or losses from the sale or exchange of 

depreciable assets of any business other than an 

insurance business will be treated as gains or losses from 

the sale or exchange of capital assets.

See section 818(c) and the related regulations for how 

to limit the gain from the sale or exchange of any section 

818(c) property.

Note. Form 8949, Sales and Other Dispositions of Capital 

Assets, must be attached to Schedule D (Form 1120), as 

required.

Line 7. Other income. Enter any other taxable income, 

includible in LICGI, not reported on lines 1 through 6. List 

the type and amount of income on an attached statement. 

If the life insurance company has only one item of other 

income, describe it in parentheses on line 7. The following 

are examples of other income to report on line 7.

• Gains and losses (including ordinary gains and losses) 

from sales or exchanges of assets used in a trade or 

business and from involuntary conversions reported on 

Form 4797, Sales of Business Property. Section 818(b)(1) 

provides that, for section 1231(a), “property used in a 

trade or business” includes only the following.

1. Property used in carrying on an insurance business 

that is either real or depreciable property held for more 

than 1 year.

2. Timber, coal, and domestic iron ore to which section 

631 applies.

For (1) above, property used in a trade or business 

does not include property includible in inventory; property 

held primarily for sale to customers; or certain copyrights, 

literary, musical, or artistic compositions, letters, 

memoranda, and similar property.

• Any amount includible in income from Form 6478, 

Biofuel Producer Credit, if applicable.

• Any amount includible in income from Form 8864, 

Biodiesel, Renewable Diesel, or Sustainable Aviation 

Fuels Credit.

• Ordinary income from trade or business activities of a 

partnership from Schedule K-1 (Form 1065), Partner's 

Share of Income, Deductions, Credits, etc. Do not offset 

ordinary losses against ordinary income. Instead, include 

the losses on line 18. Show the partnership's name, 

address, and EIN on a separate statement attached to this 

return. If the amount entered is from more than one 

partnership, identify the amount from each partnership.

• Section 91 Transferred Loss Amount. Enter the 

transferred loss amount and identify the amount as 

“Section 91 Transferred Loss Amount” required to be 

recognized under section 91 resulting from a transfer of 

substantially all the assets of a foreign branch (within the 

meaning of section 367(a)(3)(C), as in effect before its 

repeal) to a foreign corporation with respect to which you 

were a U.S. shareholder immediately after the transfer as 

other income. Under section 91(d), transferred loss 

amounts recognized are treated as derived from sources 

within the United States.

• Part or all of the proceeds received from certain 

corporate-owned life insurance contracts issued after 

August 17, 2006. Corporations that own one or more 

employer-owned life insurance contracts issued after 

August 17, 2006, must file Form 8925, Report of 

Employer-Owned Life Insurance Contracts. See Form 

8925.

• Income from cancellation of debt (COD) for the 

repurchase of a debt instrument for less than its adjusted 

issue price.

• The corporation's share of the following income from 

Form 8621, Information Return by a Shareholder of a 

Passive Foreign Investment Company or Qualified 

Electing Fund.

See Form 8621 and the Instructions for Form 8621 for 

details.

1. Ordinary earnings of a qualified electing fund 

(QEF).

2. Gain or loss from marking passive foreign 

investment company (PFIC) stock to market.

3. Gain or loss from sale or other disposition of section 

1296 stock.

4. Excess distributions from a section 1291 fund 

allocated to the current year and pre-PFIC years, if any.

• Any amount of 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 

Change in accounting method, earlier.

For more information on the uniform capitalization rules, 

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

through 1.263A-3.

10 Instructions Form 1120-L (2023)
Transactions between related taxpayers. Generally, 

an accrual basis taxpayer can only deduct business 

expenses and interest owed to a related party in the year 

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

See sections 163(e)(3) and 267 for limitations on 

deductions for unpaid interest and expenses.

Limitations on business interest expense. Business 

interest expense may be limited. See section 163(j) and 

Form 8990, Limitation on Business Interest Expense 

Under Section 163(j). Also, see the instructions for 

line 15a and Schedule M, Question 17, later.

Section 291 limitations. Corporations may be required 

to adjust certain deductions. See section 291 to determine 

the amount of the adjustment.

Golden parachute payments. A portion of the 

payments made by a corporation to key personnel that 

exceeds their usual compensation may not be deductible. 

This occurs when the corporation has an agreement 

(golden parachute) with these key employees to pay them 

these excess amounts if control of the corporation 

changes. See section 280G and Regulations section 

1.280G-1.

Business start-up and organizational costs. A 

corporation can elect to deduct a limited amount of 

start-up and organizational costs it paid or incurred. Any 

remaining costs must generally be amortized over a 

180-month period. See sections 195 and 248 and the 

related regulations.

Time for making the election. The corporation 

generally elects to deduct start-up or organizational costs 

by claiming the deduction on its income tax return filed by 

the due date (including extensions) for the tax year in 

which the active trade or business begins.

For more details, 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 write “Filed pursuant 

to section 301.9100-2” at the top of the amended return. 

File the amended return at the same address the 

corporation filed its original return. The election applies 

when figuring taxable income for the current tax year and 

all subsequent years.

The corporation can choose to forgo the elections 

above by affirmatively electing to capitalize its start-up or 

organizational costs on its income tax return filed by the 

due date (including extensions) for the tax year in which 

the active trade or business begins.

Note. The election to either amortize or capitalize start-up 

costs is irrevocable and applies to all start-up costs that 

are related to the trade or business.

Report the deductible amount of start-up and 

organizational costs and any amortization on line 18. For 

amortization that begins during the current year, complete 

and attach Form 4562.

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

need to reduce the otherwise allowable deductions for 

expenses used to figure the credit. This applies to credits 

such as the following.

• Employment credits. See Employment credits, later.

• Credit for increasing research activities (Form 6765).

• Orphan drug credit (Form 8820).

• Disabled access credit (Form 8826).

• Employer credit for social security and Medicare taxes 

paid on certain employee tips (Form 8846).

• Credit for small employer pension plan start-up costs 

(Form 8881).

• Credit for employer-provided childcare facilities and 

services (Form 8882).

• Credit for small employer health insurance premiums 

(Form 8941).

If the corporation has any of these credits, figure the 

current year credit before figuring the deduction for 

expenses on which the credit is based. If the corporation 

capitalized any costs on which it figured the credit, it may 

need to reduce the amount capitalized by the credit 

attributable to these costs.

See the instructions for the form used to figure the 

applicable credit for more information.

Limitations on deductions related to property leased 

to tax-exempt entities. If a corporation leases property 

to a governmental or other tax-exempt entity, the 

corporation cannot claim deductions related to the 

property to the extent that they exceed the corporation's 

income from the lease payments. This disallowed 

tax-exempt use loss can be carried over to the next tax 

year and treated as a deduction with respect to the 

property for that tax year. See section 470(d) for more 

details and exceptions.

Line 9. Death benefits, etc. Enter all claims and benefits 

accrued and losses incurred (whether or not ascertained) 

during the year on insurance and annuity contracts.

Losses incurred (whether or not ascertained) include a 

reasonable estimate of both losses incurred but not 

reported and of reported losses, when the amount of the 

losses cannot be determined by the end of the tax year. 

Losses incurred must be adjusted to take into account 

recoveries (for example, for reinsurance) for those losses 

together with estimates of those recoveries that may be 

recovered on those losses in future years.

Under section 807(c), the amount of unpaid 

losses (other than losses on life insurance 

contracts) must be the amount of the discounted 

unpaid losses under section 846. See the instructions for 

Schedule F, line 2, for more information on the discounting 

provisions.

Line 11a. Increase in reserves under section 807(f). 

If the amount of any item referred to in section 807(c) 

increased as a result of a change in the basis used to 

determine that item, then enter the section 807(f) 

prescribed portion of the change that is a deduction in 

computing LICTI.

Note. If a corporation ceases to qualify as a life insurance 

company, the balance of any adjustments under section 

807(f) must be taken into account in the last year that the 

TIP

Instructions Form 1120-L (2023) 11
corporation is qualified to file Form 1120-L. See section 

807(f)(2).

Line 11b. Deduction from Reserve Transition Relief. If 

section 807(d) (as amended by P.L. 115-97) increased the 

amount of the reserve for any contract as of the close of 

the tax year preceding the first tax year beginning after 

2017, enter the portion of the change that is a deduction in 

computing LICTI as prescribed by section 13517(c)(3) of 

P.L. 115-97. See Rev. Proc. 2019-34, 2019-35 I.R.B. 669, 

for more information.

Line 12. Deductible policyholder dividends. A 

policyholder dividend is any dividend or similar distribution 

to policyholders in their capacity as such and includes any 

amount paid or credited (including an increase in benefits) 

where the amount is not fixed in the contract but depends 

on the corporation’s experience or management’s 

discretion. Enter on line 12 the amount of policyholder 

dividends paid or credited during the tax year. Also, under 

section 808(e), any policyholder dividend that (a) 

increases either the cash surrender value of the contract 

or other benefits payable under the contract, or (b) 

reduces the premium otherwise required to be paid, is 

treated as paid to and returned by the policyholder to the 

company as a premium. Include these amounts in income 

on page 1, line 1.

Line 13. Assumption by another person of liabilities 

under insurance, etc., contracts. Enter the total 

consideration paid by the corporation to another person 

(other than for indemnity reinsurance) for the assumption 

by that person of liabilities under insurance and annuity 

contracts (including supplementary contracts).

Line 14. Dividends reimbursable by taxpayer. Enter 

the amount of policyholder dividends:

1. Paid or accrued by another insurance company for 

policies this corporation has reinsured, and

2. That are reimbursable by the corporation under the 

terms of the reinsurance contract.

Line 15a. Interest. Enter all interest paid or accrued 

during the tax year. No deduction is allowed under section 

163 for interest on the items described in section 807(c). 

Also, do not include interest included on Schedule G, 

line 9 (General deductions).

Limitations. The deduction for interest is limited when 

the corporation is a policyholder or beneficiary with 

respect to a life insurance, endowment, or annuity 

contract issued after June 8, 1997. For details, see 

section 264(f). Attach a statement showing the 

computation of the deduction.

Business interest expense is any interest paid or 

accrued on indebtedness properly allocable to a trade or 

business. Under section 163(j), business interest expense 

is generally limited to the sum of business interest income, 

30% of the adjusted taxable income, and floor plan 

financing interest. The amount of any business expense 

that is not allowed as a deduction for the tax year is 

carried forward to the following year. If section 163(j) 

applies, use Form 8990 to figure the amount of business 

expense the corporation can deduct for the current tax 

year and the amount that can be carried forward to the 

next year. See the Instructions for Form 8990. Also see 

Schedule M, Question 17, later.

Consolidated groups. The limitation in section 163(j)

(1) on the amount allowed as a deduction for business 

interest applies at the level of the consolidated group.

Line 15b. Less tax-exempt interest expense. Enter 

interest paid or accrued on indebtedness incurred or 

continued to purchase or carry obligations, the interest on 

which is wholly tax exempt. See section 265(b) for special 

rules and exceptions for financial institutions. Also see 

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

institutions for certain tax-exempt bonds issued in 2009 

and 2010.

Line 18. Other deductions. Attach a statement, listing 

by type and amount, all allowable deductions in 

computing LICTI (including the amortization of premiums 

under section 811(b)) not included on lines 9 through 16.

Examples of other deductions may include the 

following.

• Certain business start-up and organizational costs 

(discuss earlier under Limitations on Deductions).

• Legal and professional fees.

• Supplies used and consumed in the business.

• Travel, meals, and entertainment expenses. Special 

rules apply (discussed later).

• Utilities.

• Ordinary losses from trade or business activities of a 

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

ordinary income against ordinary losses. Instead, include 

the income on line 7. Show the partnership's name, 

address, and EIN on a separate statement attached to this 

return. If the amount is from more than one partnership, 

identify the amount from each partnership.

• Any extraterritorial income exclusion (from Form 8873, 

Extraterritorial Income Exclusion).

• Any applicable deduction under section 179D for the 

cost of energy efficient commercial building property 

placed in service during the tax year. Complete and attach 

Form 7205.

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

However, a deduction can only be taken for the dividends 

above if, according to the plan, the dividends are:

1. Paid in cash directly to the plan participants or 

beneficiaries;

2. Paid to the plan, which distributes them in cash to 

the plan participants or their beneficiaries no later than 90 

days after the end of the plan year in which the dividends 

are paid;

3. At the election of such participants or their 

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

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

employer securities; or

4. Used to make payments on a loan described in 

section 404(a)(9).

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

certain dividends.

• Depreciation or amortization (attach Form 4562, if 

required). Attach Form T (Timber), Forest Activities 

Schedule, if a deduction for depletion of timber is taken. 

Foreign intangible drilling costs and foreign exploration 

12 Instructions Form 1120-L (2023)
and development costs must either be added to the 

corporation's basis for cost depletion purposes or be 

deducted ratably over a 10-year period. See sections 

263(i), 616, and 617.

Do not deduct the following.

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

government or governmental entity for the violation, or 

investigation, or inquiry into the potential violation, of a 

law.

• Lobbying expenses. However, see exceptions 

(discussed later).

Also, include on line 18 the following.

Compensation of officers. Enter deductible officers' 

compensation. See Employment credits, later, for a list of 

employment credits that may reduce your deduction for 

officers' compensation. Do not include compensation 

deductible elsewhere on the return, such as elective 

contributions to a section 401(k) cash or deferred 

arrangement or amounts contributed under a salary 

reduction SEP agreement or a SIMPLE IRA plan.

Include only the deductible part of each officer's 

compensation on line 18. (See Disallowance of deduction 

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

Attach a statement for compensation of all officers using 

the following columns.

1. Name of officer.

2. Social security number.

3. Percentage of time devoted to business.

4. Amount of compensation.

If a consolidated return is filed, each member of an 

affiliated group must furnish this information.

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

cannot deduct compensation to a covered employee to 

the extent that the compensation exceeds $1 million. 

Generally, a covered employee is:

• The principal executive officer of the corporation (or an 

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

year, or

• An employee whose total compensation must be 

reported to shareholders under the Securities Exchange 

Act of 1934 because the employee is among the three 

highest compensated officers for that tax year (other than 

the principal executive officer).

For this purpose, compensation does not include the 

following.

• Income from certain employee trusts, annuity plans, or 

pensions.

• Any benefit paid to an employee that is excluded from 

the employee's income.

The deduction limit does not apply to:

• Commissions based on individual performance;

• Qualified performance-based compensation; and

• Income payable under a written binding contract in 

effect on February 17, 1993.

The $1 million limit is reduced by amounts disallowed 

as excess parachute payments under section 280G.

For details, see section 162(m) and Regulations 

section 1.162-27. Also, see Notice 2007-49, 2007-25 

I.R.B. 1429.

Salaries and wages. Include the total salaries and 

wages paid for the tax year. Do not include salaries and 

wages deductible elsewhere on the return, such as 

amounts included in officers’ compensation, elective 

contributions to a section 401(k) cash or deferred 

arrangement, or amounts contributed under a salary 

reduction SEP agreement or a SIMPLE IRA plan.

If the corporation provided taxable fringe benefits to its 

employees, such as personal use of a car, do not deduct 

as wages the amount allocated for depreciation and other 

expenses claimed under Other Deductions on line 18.

If the corporation claims a credit for any wages 

paid or incurred, it may need to reduce any 

corresponding deduction for officers’ 

compensation and salaries and wages. See Reducing 

certain expenses for which credits are allowable, earlier.

Also, reduce the amounts deducted as 

compensation of officers and salaries and wages 

by the nonrefundable and refundable portions of 

the CARES Act and the ARP employee retention credit 

claimed on the corporation’s employment tax return(s).

Limitation on tax benefits for remuneration under the 

Patient Protection and Affordable Care Act. The $1 

million compensation limit is reduced to $500,000 for 

remuneration for services provided by individuals for or on 

behalf of certain health insurance providers in tax years 

beginning after December 31, 2009. The $500,000 

limitation applies to remuneration that is deductible in the 

tax year during which the services were performed and 

remuneration for services during the year that is 

deductible in a future tax year (called deferred deduction 

remuneration). The $500,000 limitation is reduced by any 

amounts disallowed as excess parachute payments. See 

section 162(m)(6) and Regulations section 1.162-31 for 

definitions and other special rules. Also, see Notice 

2011-2, 2011-2 I.R.B. 260.

Employment credits. If the corporation claims a credit 

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

deduction for salaries and wages. See the applicable 

form(s).

• Form 5884, Work Opportunity Credit.

• Form 8844, Empowerment Zone Employment Credit, if 

applicable.

• Form 8882, Credit for Employer-Provided Childcare 

Facilities and Services.

• Form 8932, Credit for Employer Differential Wage 

Payments.

• Form 8994, Employer Credit for Paid Family and 

Medical Leave.

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

deduction for contributions to qualified pension, 

profit-sharing, or other funded deferred compensation 

plans. Employers who maintain such a plan must 

generally file one of the forms listed below unless exempt 

from filing under regulations or other applicable guidance, 

even if the plan is not a qualified plan under the Internal 

Revenue Code. The filing requirement applies even if the 

corporation does not claim a deduction for the current tax 

CAUTION

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CAUTION

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Instructions Form 1120-L (2023) 13
year. There are penalties for failure to file these forms on 

time and for overstating the pension plan deduction. See 

sections 6652(e) and 6662(f). Also, see the instructions 

for the applicable form.

Form 5500, Annual Return Report of Employee Benefit 

Plan.

Form 5500-SF, Short Form Annual Return/Report of 

Small Employee Benefit Plan, instead of Form 5500, 

generally if under 100 participants at the beginning of the 

plan year.

Note. Form 5500 and Form 5500-SF must be filed 

electronically under the computerized ERISA Filing 

Acceptance System (EFAST2). For more information, see 

the EFAST2 website at www.EFAST.dol.gov.

Form 5500-EZ, Annual Return of A One-Participant 

(Owners/Partners and Their Spouses) Retirement Plan or 

A Foreign Plan. File this form for a plan that only covers 

the owner (or the owner and their spouse) but only if the 

owner (or the owner and their spouse) owns the entire 

business.

Charitable contributions. Enter contributions or gifts 

actually paid within the tax year to or for the use of 

charitable and governmental organizations described in 

section 170(c) and any unused contributions carried over 

from prior years. Special rules and limits apply to 

contributions to organizations conducting lobbying 

activities. See section 170(f)(9).

Life insurance companies reporting LICTI on the 

accrual method can elect to treat as paid during the tax 

year any contributions paid by the due date for filing the 

corporations’s tax return (not including extensions), if the 

contributions were authorized by the board of directors 

during the tax year. Attach a declaration to the return 

stating that the resolution authorizing the contributions 

was adopted by the board of directors during the tax year. 

The declaration must include the date the resolution was 

adopted. See Regulations section 1.170A-11.

Limitation on deduction. The total amount claimed 

cannot be more than 10% of LICTI computed without 

regard to the following.

• Any deduction for contributions.

• The deduction for policyholder dividends.

• The deduction for dividends received.

• Any net operating loss (NOL) carryback to the tax year 

under section 172.

• Any capital loss carryback to the tax year under section 

1212(a)(1).

Carryover. Charitable contributions over the 10% 

limitation (or the 25% limitation, if elected; see below) 

cannot be deducted for the tax year but may be carried 

over to the next 5 tax years.

A contributions carryover is not allowed, however, to the 

extent that it increases an NOL.

Cash contributions. For contributions of cash, check, or 

other monetary gifts (regardless of the amount), the 

corporation must maintain a bank record, or a receipt, 

letter, or other written communication from the donee 

organization indicating the name of the organization, the 

date of the contribution, and the amount of the 

contribution.

Contributions of $250 or more. A corporation can 

deduct a contribution of $250 or more only if it gets a 

written acknowledgment from the donee organization that 

shows the amount of cash contributed, describes any 

property contributed, and either gives a description and a 

good faith estimate of the value of any goods or services 

provided in return for the contribution or states that no 

goods or services were provided in return for the 

contribution. The acknowledgment must be obtained by 

the due date (including extensions) of the corporation's 

return, or, if earlier, the date the return is filed. Do not 

attach the acknowledgment to the tax return, but keep it 

with the corporation's records.

Contributions of property other than cash. If a 

corporation contributes property other than cash and 

claims over a $500 deduction for the property, it must 

generally attach a statement to the return describing the 

kind of property contributed and the method used to 

determine its fair market value (FMV). Attach Form 8283, 

Noncash Charitable Contributions, to the return for 

contributions of property (other than money) if the total 

claimed deduction for all property contributed was more 

than $5,000. Special rules apply to the contribution of 

certain property. See the Instructions for Form 8283.

Qualified conservation contributions. Special rules 

apply to qualified conservation contributions, including 

contributions of certain easements on buildings located in 

a registered historic district. See section 170(h) and Pub. 

526, Charitable Contributions. For special rules applicable 

to certain qualified conservation contributions made by 

Native corporations, see section 170(b)(2)(C).

Other special rules. See section 170 for special rules, 

limitations, and requirements.

Travel, meals, and entertainment. Subject to limitations 

and restrictions discussed below, a corporation can 

deduct ordinary and necessary travel, meal, and 

nonentertainment expenses paid or incurred in its trade or 

business. Generally, entertainment expenses, 

membership dues, and facilities used in connection with 

these activities cannot be deducted. In addition, no 

deduction is generally allowed for qualified transportation 

fringe benefits. Special rules apply to deductions for gifts, 

luxury water travel, and convention expenses. See section 

274 and Pub. 463, Travel, Gift, and Car Expenses.

Travel. The corporation cannot deduct travel expenses 

of any individual accompanying a corporate officer or 

employee, including a spouse or dependent of the officer 

or employee, unless:

• That individual is an employee of the corporation, and

• Their travel is for a bona fide business purpose and 

would otherwise be deductible by that individual.

Meals. Generally, the corporation can deduct only 50% 

of the amount otherwise allowable for 

non-entertainment-related meal expenses paid or incurred 

in its trade 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.

14 Instructions Form 1120-L (2023)
See section 274(n)(3) for a special rule that applies to 

expenses for meals consumed by individuals subject to 

the hours of service limits of the Department of 

Transportation.

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 and Pub. 15-B, Employer’s Tax Guide 

to Fringe Benefits, for details.

Membership dues. The corporation can deduct 

amounts paid or incurred for membership dues in civic or 

public service organizations, professional organizations 

(such as bar and medical associations), business 

leagues, trade associations, chambers of commerce, 

boards of trade, and real estate boards. However, no 

deduction is allowed if a principal purpose of the 

organization is to entertain or provide entertainment 

facilities for members or their guests. In addition, 

corporations cannot deduct membership dues in any club 

organized for business, pleasure, recreation, or other 

social purpose. This includes country clubs, golf and 

athletic clubs, airline and hotel clubs, and clubs operated 

to provide meals under conditions favorable to business 

discussion.

Entertainment facilities. Generally, the corporation 

cannot deduct an expense paid or incurred for a facility 

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

usually considered entertainment, amusement, or 

recreation.

Amounts treated as compensation. Generally, the 

corporation may be able to deduct otherwise 

nondeductible entertainment, amusement, or recreation 

expenses if the amounts are treated as compensation to 

the recipient and reported on Form W-2, Wage and Tax 

Statement, for an employee or on Form 1099-NEC, 

Nonemployee Compensation, for an independent 

contractor.

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

beneficial owner (directly or indirectly), or other “specified 

individual” (as defined in section 274(e)(2)(B) and 

Regulations section 1.274-9(b)), special rules apply.

Fines or similar penalties. Generally, no deduction is 

allowed for fines or similar penalties paid, or incurred to, or 

at the direction of, a government or governmental entity for 

violating any law, or for the investigation or inquiry into the 

potential violation of a law, except:

• Amounts that constitute restitution or remediation of 

property,

• Amounts paid to come into compliance with the law,

• Amounts paid or incurred as the result of certain court 

orders or agreements in which no government or specified 

nongovernmental agency is a party, and

• Amounts paid or incurred for taxes due.

No deduction is allowed unless the amounts are 

specifically identified in the order or agreement and the 

corporation establishes that the amounts were paid for 

that purpose. Also, any amount paid or incurred as 

reimbursement to the government for the costs of any 

investigation or litigation are not eligible for the exceptions 

and are nondeductible. See section 162(f).

Lobbying expenses. Generally, lobbying expenses are 

not deductible. These expenses include:

• Amounts paid or incurred in connection with influencing 

federal, state, or local legislation (but not amounts paid or 

incurred before December 22, 2017, in connection with 

local legislation); or

• Amounts paid or incurred in connection with any 

communication with certain federal executive branch 

officials in an attempt to influence the official actions or 

positions of the officials. See Regulations section 

1.162-29 for the definition of “influencing legislation.”

Dues and other similar amounts paid to certain 

tax-exempt organizations may not be deductible. If certain 

in-house lobbying expenditures do not exceed $2,000, 

they are deductible.

Line 21b. NOL deduction. The NOL deduction is the 

lesser of the aggregate of the NOL carryovers to the tax 

year, plus the NOL carrybacks to the tax year. If this 

deduction is taken, show its computation on an attached 

statement. Generally, a life insurance company can carry 

over an NOL to each tax year following the tax year of the 

loss. After applying the NOL to the first tax year to which it 

may be carried, the portion of the loss the corporation may 

carry to each of the remaining tax years is the excess, if 

any, of the loss over the sum used as an NOL deduction in 

the carryover year. See section 172 for special rules, 

limitations, and definitions pertaining to the NOL 

deduction and carryover.

If an ownership change (described in section 382(g)) 

occurs, the amount of the taxable income of a loss 

corporation that may be offset by the pre-change loss 

carryovers may be limited. (See section 382 and the 

related regulations.) A loss corporation must include the 

information statement as provided in Regulations section 

1.382-11(a), with its income tax return for each tax year 

that it is a loss corporation in which an ownership shift, 

equity structures shift, or other transaction described in 

Temporary Regulations section 1.382-2T(a)(2)(i) occurs. If 

the corporation makes the closing-of-the-books election, 

see Regulations section 1.382-6(b).

The limitations under section 382 do not apply to 

certain ownership changes after February 17, 2009, made 

pursuant to a restructuring plan under the Emergency 

Economic Stabilization Act of 2008. See section 382(n).

For guidance in applying section 382 to loss 

corporations whose instruments were acquired by the 

Department of the Treasury under certain programs under 

the Emergency Economic Stabilization Act of 2008, see 

Notice 2010-2, 2010-2 I.R.B. 251.

For more details on the NOL deduction, see section 

172 and the Instructions for Form 1139, Corporation 

Application for Tentative Refund.

Line 24. Phased inclusion of balance of policyholders surplus account. Section 13514(d) of P.L. 115-97 

requires a one-eighth per year phased inclusion of any 

December 31, 2017, balance of the policyholders surplus 

account starting in 2018. This amount cannot be reduced 

by an NOL.

Instructions Form 1120-L (2023) 15
Line 25. Total taxable income. The total taxable income 

reported on line 25 cannot be less than line 24 of the Form 

1120-L.

Also, line 25 cannot be less than the largest of the 

following amounts.

• The inversion gain of the corporation for the tax year, if 

the corporation is an expatriated entity or a partner in an 

expatriated entity. For details, see section 7874.

• The sum of the corporation's excess inclusions from 

Schedule Q (Form 1066), line 2c, and the corporation's 

taxable income determined solely with respect to its 

ownership and high-yield interests in FASITs. For details, 

see sections 860E(a) and 860J (repealed).

Tax and Payments

Line 27b. Estimated tax payments. Enter any 

estimated tax payments the corporation made for the 

current tax year.

Line 27c. 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 27d. Combine lines 27a through 27c.

Line 27f. Credit for tax paid on undistributed capital 

gains. Enter any credit from Form 2439, Notice to 

Shareholder of Undistributed Long-Term Capital Gains, for 

the corporation's share of the tax paid by a regulated 

investment company (RIC) or a real estate investment 

trust (REIT) on undistributed long-term capital gains 

included in the corporation's income. Attach Form 2439 to 

Form 1120-L.

Line 27g. Credit for federal tax on fuels. Enter the total 

income tax credit claimed on Form 4136, Credit for 

Federal Tax Paid on Fuels. Attach Form 4136 to Form 

1120-L.

Line 27h. U.S. income tax paid or withheld at source. 

Enter the amount of any U.S. income tax paid or withheld 

as reported on Form 1042-S, Foreign Person's U.S. 

Source Income Subject to Withholding.

Line 27i. Elective payment election amount from 

Form 3800. Enter the elective payment election amount 

from Form 3800, General Business Credit, Part III, line 6, 

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

Line 27z. Other credits and payments. Include on 

line 27z any other refundable credit or payment the 

corporation is claiming. Attach a statement listing the type 

of credit and the amount of the credit or payment.

Credit for tax on ozone-depleting chemicals. 

Include on line 27z any credit the corporation is claiming 

under section 4682(g)(2) for tax on ozone-depleting 

chemicals.

Line 28. Total payments and credits. Combine the 

amounts on lines 27d through 27z and enter the total on 

line 28.

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 28. 

Write the amount withheld and the words “Backup 

Withholding” in the blank space above line 28.

Line 29. Estimated tax penalty. Generally, the 

corporation does not have to file Form 2220 with its 

income tax return because the IRS will figure the amount 

of any penalty and notify the corporation of any amount 

due. However, see the Instructions for Form 2220 for 

circumstances where the corporation must file Form 2220 

even if it owes no penalty.

If Form 2220 is attached, check the box on line 29 and 

enter the amount of any penalty on that line. 

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-L, line 29, 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 30. Amount owed. If the corporation cannot pay 

the full amount of tax owed, it can apply for an installment 

agreement online. Go to IRS.gov/OPA for the latest 

information.

Line 32. Refunded electronic deposit of tax refund of 

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

$1 million or more and wants it electronically deposited 

into its checking or savings account at any U.S. bank or 

other financial institution instead of having a check sent to 

the corporation, complete Form 8302, Electronic Deposit 

of Tax Refund of $1 Million or More, and attach it to the 

corporation's tax return.

Schedule A—Dividends, Inclusions, 

Dividends-Received Deduction, and 

Other Special Deductions

For purposes of the 20% ownership test on lines 1 through 

7, the percentage of stock owned by the corporation is 

based on voting power and value of the stock. Preferred 

stock described in section 1504(a)(4) is not taken into 

account.

Consolidated returns. Corporations filing a 

consolidated return should see Regulations sections 

1.1502-13, 1.1502-26, and 1.1502-27 before completing 

Schedule A.

Corporations filing a consolidated return must not 

report as dividends on Schedule A any amounts received 

from corporations within the tax consolidation group. Such 

dividends are eliminated in consolidation rather than offset 

by the dividends-received deduction.

Line 1, column (a). Enter dividends (except those 

received on certain debt-financed stock acquired after 

July 18, 1984 (see section 246A)) that are:

• Received from less-than-20%-owned domestic 

corporations subject to income tax, and

CAUTION

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16 Instructions Form 1120-L (2023)
• Qualified for the 50% deduction under section 243(a)

(1).

Also include on line 1 the following.

• Taxable distributions from an interest charge domestic 

international sales corporation (IC-DISC) or former 

domestic interational sales corporation (DISC) that are 

designated as eligible for the 50% deduction and certain 

dividends of Federal Home Loan Banks. See section 

246(a)(2).

• Dividends (except those received on certain 

debt-financed stock acquired after July 18, 1984) from a 

RIC. The amount of dividends eligible for the 

dividends-received deduction under section 243 is limited 

by section 854(b). The corporation should receive a notice 

from the RIC specifying the amount of dividends that 

qualify for the deduction.

Report so-called dividends or earnings received from 

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

as dividends.

Line 2, column (a). Enter on line 2:

• Dividends (except those received on debt-financed 

stock acquired after July 18, 1984) that are received from 

20%-or-more-owned domestic corporations subject to 

income tax and that are subject to the 65% deduction 

under section 243(c), and

• Taxable distributions from an IC-DISC or former DISC 

that are considered eligible for the 65% deduction.

Line 3, column (a). Enter the following.

• Dividends received on certain debt-financed stock 

acquired after July 18, 1984, from domestic and foreign 

corporations subject to income tax that would otherwise 

be subject to the dividends-received deduction under 

section 243(a)(1), 243(c), or 245(a). Generally, 

debt-financed stock is stock that the corporation acquired 

by incurring a debt (for example, it borrowed money to buy 

the stock).

• Dividends received from a RIC on debt-financed stock. 

The amount of dividends eligible for the 

dividends-received deduction is limited by section 854(b). 

The corporation should receive a notice from the RIC 

specifying the amount of dividends that qualify for the 

deduction.

Line 3, columns (b) and (c). Dividends received on 

certain debt-financed stock acquired after July 18, 1984, 

are not entitled to the full 50% or 65% dividends-received 

deduction under section 243 or 245(a). The 50% or 65% 

deduction is reduced by a percentage that is related to the 

amount of debt incurred to acquire the stock. See section 

246A. Also, see section 245(a) before making this 

computation for an additional limitation that applies to 

certain dividends received from foreign corporations. 

Attach a statement showing how the amount on line 3, 

column (c), was figured.

Line 4, column (a). Enter dividends received on 

preferred stock of a less-than-20%-owned public utility 

that is subject to income tax and is allowed the deduction 

provided in section 247 (as affected by P.L. 113-295, Div. 

A, section 221(a)(41)(A), Dec. 19, 2014, 128 Stat. 4043) 

for dividends paid.

Line 5, column (a). Enter dividends received on 

preferred stock of a 20%-or-more-owned public utility that 

is subject to income tax and is allowed the deduction 

provided in section 247 (as affected by P.L. 113-295, Div. 

A, section 221(a)(41)(A), Dec. 19, 2014, 128 Stat. 4043) 

for dividends paid.

Line 6, column (a). Enter the U.S.-source portion of 

dividends that:

• Are received from less-than-20%-owned foreign 

corporations, and

• Qualify for the 50% deduction under section 245(a). To 

qualify for the 50% deduction, the corporation must own at 

least 10% of the stock of the foreign corporation by vote 

and value.

Also include dividends received from a 

less-than-20%-owned foreign sales corporation (FSC) 

that:

• Are attributable to income treated as effectively 

connected with the conduct of a trade or business within 

the United States (excluding foreign trade income), and

• Qualify for the 50% deduction under section 245(c)(1)

(B).

Line 7, column (a). Enter the U.S.-source portion of 

dividends that:

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

corporations, and

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

and 243 by reference.

Also include dividends received from a 

20%-or-more-owned FSC that:

• Are attributable to income treated as effectively 

connected with the conduct of a trade or business within 

the United States (excluding foreign trade income), and

• Qualify for the 65% deduction under section 245(c)(1)

(B).

Line 8, column (a). Enter dividends received from wholly 

owned foreign subsidiaries that are eligible for the 100% 

deduction under section 245(b) but that do not qualify as 

“100% dividends” under section 805(a)(4)(C).

In general, the deduction under section 245(b) applies 

to dividends paid out of the earnings and profits of a 

foreign corporation for a tax year during which:

• All of its outstanding stock is directly or indirectly owned 

by the domestic corporation receiving the dividends, and

• All of its gross income from all sources is effectively 

connected with the conduct of a trade or business within 

the United States.

Do not include dividends received from a life insurance 

company.

Also, include on line 8, column (a), dividends from 

FSCs that are attributable to foreign trade income and that 

are eligible for the 100% deduction provided in section 

245(c)(1)(A).

Line 9, column (a). Enter only those dividends that 

qualify under section 243(b) for the 100% 

dividends-received deduction described in section 243(a)

(3) but that do not qualify as “100% dividends” under 

section 805(a)(4)(C). Corporations taking this deduction 

are subject to the provisions of section 1561. Do not 

include dividends received from a life insurance company.

Instructions Form 1120-L (2023) 17
The 100% deduction does not apply to affiliated group 

members that are joining in the filing of a consolidated 

return.

Line 10, column (c). Limitation on dividends-received 

deduction. Generally, line 10 of column (c) cannot 

exceed the amount from the Worksheet for Schedule A, 

Line 10. However, in a year in which an NOL occurs, this 

limitation does not apply even if the loss is created by the 

dividends-received deduction. See section 246(b).

Line 13, column (a). In general, enter “100% dividends” 

as defined in section 805(a)(4)(C). That is, in general, 

enter dividends that qualify for the 100% 

dividends-received deduction under sections 243, 244 (as 

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

Dec. 19, 2014, 128 Stat. 4043), and 245(b), and were not 

reported on line 8 or 9 because they were (a) not 

distributed out of tax-exempt interest or out of dividends 

that do not qualify as 100% dividends, or (b) paid by a life 

insurance company.

Note. Certain dividends received by a foreign corporation 

are not subject to proration. Attach a statement showing 

computations.

Line 14, column(a). Enter the foreign-source portion of 

dividends:

• Received from specified 10%-owned foreign 

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

gain from the sale of stock of a foreign corporation that is 

treated as a dividend under sections 1248(a) and (i); and

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

Line 15, column (a). Enter foreign dividends not 

reportable on line 3, 6, 7, 8, or 14 of column (a).

• Include on line 15 any hybrid dividends from a CFC. 

Hybrid dividends are generally dividends received from a 

CFC that would otherwise be reported on line 14 except 

the CFC receives a deduction (or other tax benefit) with 

respect to any income, war profits, or excess profits taxes 

imposed by any foreign country or territory of the United 

States.

• Also, include on line 15 the corporation’s share of 

distributions from a section 1291 fund from Form 8621, to 

the extent that the amounts are taxed as dividends under 

section 301. See Form 8621 and the Instructions for Form 

8621.

Line 16, column (a). Reserved for future use.

Line 16, column (c). Reserved for future use.

Line 17a, column (a). Enter the foreign-source portion of 

any subpart F inclusions attributable to the sale or 

exchange by a CFC of stock in another foreign corporation 

described in section 964(e)(4). This should equal the U.S. 

shareholder's pro rata share of the amount reported on 

Form(s) 5471, Information Return of U.S. Persons With 

Respect to Certain Foreign Corporations, Schedule I, 

line 1a.

Line 17b, column (a). Enter the pro rata share of 

subpart F inclusions attributable to hybrid dividends of 

tiered corporations under section 245A(e)(2). This should 

equal the U.S. shareholder's pro rata share of the amount 

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

Line 17c, column (a). Enter all other amounts included 

in income under section 951, which should equal the U.S. 

shareholder's pro rata share of the sum of the amounts 

reported on Form(s) 5471, Schedule I, lines 1f, 2, 3, and 4.

Line 18, column (a). Enter amounts included in income 

under the section 951A GILTI provision. See Form 8992, 

U.S. Shareholder Calculation of Global Intangible 

Low-Taxed Income (GILTI), Part II, line 5; and the 

Instructions for Form 8992. Also, consider the applicability 

of section 951A with respect to CFCs owned by domestic 

partnerships in which the filer has an interest. If you also 

have a Form 5471 reporting requirement, attach Form 

5471.

Line 19, column (a). Include the following.

1. Include gross-up for taxes deemed paid under 

section 902 (for dividends paid in pre-2022 tax years of 

foreign corporations) and 960.

2. Dividends (other than capital gain distributions 

reported on Schedule D (Form 1120) and exempt-interest 

dividends) that are received from RICs and that are not 

subject to the 50% deduction.

3. Dividends from tax-exempt organizations.

4. Dividends (other than capital gain distributions) 

received from a REIT that, for the tax year of the trust in 

which the dividends are paid, qualifies under sections 856 

through 860.

5. Dividends not eligible for a dividends-received 

deduction, which include the following.

a. Dividends received on any share of stock held for 

less than 46 days during the 91-day period beginning 45 

days before the ex-dividend date. When counting the 

number of days the corporation held the stock, you cannot 

count certain days during which the corporation's risk of 

loss was diminished. See section 246(c)(4) and 

Regulations section 1.246-5 for more details.

b. Dividends attributable to periods totaling more than 

366 days that the corporation received on any share of 

preferred stock held for less than 91 days during the 

181-day period that began 90 days before the ex-dividend 

date. When counting the number of days the corporation 

held the stock, you cannot count certain days during 

which the corporation's risk of loss was diminished. See 

section 246(c)(4) and Regulations section 1.246-5 for 

more details. Preferred dividends attributable to periods 

totaling less than 367 days are subject to the 46-day 

holding period rule above.

c. Dividends on any share of stock to the extent the 

corporation is under an obligation (including a short sale) 

to make related payments with respect to positions in 

substantially similar or related property.

6. Any other taxable dividend income not properly 

reported above.

Line 21, column (c). Enter the section 250 deduction 

claimed for FDII and GILTI. This should equal the sum of 

line 8 and line 9 of Form 8993, Section 250 Deduction for 

Foreign-Derived Intangible Income (FDII) and Global 

Intangible Low-Taxed Income (GILTI), Part IV.

18 Instructions Form 1120-L (2023)
Schedule B—Investment Income

Line 1. Interest. Enter the total taxable interest received 

or accrued during the tax year, less any amortization of 

premium, plus any accrual of discount required by section 

811(b). Generally, the appropriate amortization of 

premium and accrual of discount for the tax year on 

bonds, notes, debentures, or other evidence of 

indebtedness held by a life insurance company should be 

determined:

1. Under the method regularly employed by the 

company, if reasonable; and

2. In all other cases, under the regulations.

For bonds (as defined in section 171(d)) issued after 

September 27, 1985, the appropriate amount of 

amortization of premium must be determined using the 

yield to maturity method described in section 171(b)(3). 

Market discount is not required to be accrued under 

section 811(b). Attach a statement showing the method 

and computation used.

Note. The Small Business Job Protection Act of 1996 

repealed section 133, which provided for the 50% interest 

income exclusion with respect to ESOP loans. The Act 

also repealed section 812(g), which provided for the 

exclusion of interest income from ESOP loans for 

company/policyholder proration. The repeal of these 

exclusions is effective for ESOP loans made after August 

20, 1996. See Act section 1602 for special rules for 

binding contract agreements in effect prior to June 10, 

1996, and certain refinancings made after August 20, 

1996.

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

the tax year. Related expenses, such as repairs, taxes, 

and depreciation, should be reported as “Other 

deductions” on page 1, line 18.

Line 4. Royalties. Enter the royalties received or accrued 

during the tax year. Report the depletion deduction on 

page 1, line 18.

Line 5. Leases, terminations, etc. Enter the income 

received from entering into, altering, or terminating any 

lease, mortgage, or other instrument from which the 

corporation derives interest, rents, or royalties.

Schedule F—Increase (Decrease) in 

Reserves (Section 807)

Note. Attach a statement to the tax return that reconciles 

lines 1 through 6 of Schedule F to the annual statement 

used to prepare the tax return. If the annual statement 

used to prepare the tax return is different from the NAIC 

annual statement filed with the state of domicile, include a 

separate reconciliation of lines 1 through 6 of Schedule F 

to the annual statement filed with the state of domicile.

Schedule F is used to determine if, under section 807, 

certain reserves decreased or increased for the tax year. 

A net decrease will be includible in gross income, while a 

net increase will be a deduction in computing LICTI.

The net increase or net decrease in reserves is figured 

by comparing the opening balance for reserves to the 

closing balance for reserves reduced by the policyholders' 

share of tax-exempt interest (and the increase in policy 

cash value of section 264(f) policies as defined in section 

805(a)(4)(F)).

Reserve adjustments are not treated as interest 

expenses for allocation purposes under section 864(c). 

See section 818(f).

Worksheet for Schedule A, Line 10 Keep for Your Records

1. Refigure Form 1120-L, page 1, line 8, without any adjustment under section 1059, and without any 

capital loss carryback to the tax year under section 1212(a)(1). Add this refigured line 8 amount to 

the amount on page 1, line 25. Subtract from that total the sum of page 1, lines 9 through 18 .....

2. Add lines 9, 13, 14, and 17a, column (c), and the portion of the deduction on line 8, column (c), that 

is attributable to dividends from FSCs that are attributable to foreign trade income ..............

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

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

5. Add lines 2, 5, and 7, column (c); the portion of the deduction on line 8, column (c), that is 

attributable to wholly owned foreign subsidiaries; and the portion of the deduction on line 3, column 

(c), that is attributable to dividends received from 20%-or-more-owned corporations ............

6. Enter the smaller of line 4 or line 5. If line 5 is greater than line 4, stop here and enter the amount 

from line 6 on line 10, column (c), and do not complete the rest of the worksheet ...............

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

2, 3, 5, and 7, column (a), and the portion of the deduction on line 8, column (a), that is attributable 

to wholly owned subsidiaries .......................................................

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

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

10. Subtract line 5 above from line 10, column (c) ..........................................

11. Enter the smaller of line 9 or line 10 ..................................................

12. Dividends-received deduction after limitation (section 246(b)). Add lines 6 and 11. Enter the 

result here and on line 10, column (c) ................................................

Instructions Form 1120-L (2023) 19
There are special rules for computing reserves of 

unearned premiums of certain nonlife contracts. See 

section 807(e)(5)(A).

Note. If the basis for determining the amount of any item 

referred to in section 807(c) (life insurance reserves, etc.) 

at the end of the tax year differs from the basis for the 

determination at the beginning of the tax year, see section 

807(f).

Line 1. Life insurance reserves. For rules on how to 

compute life insurance reserves, see sections 807(d) and 

(e).

Line 2. Unearned premiums and unpaid losses. For 

purposes of sections 807 and 805(a)(1), the amount of the 

unpaid losses (other than losses on life insurance 

contracts) must be the amount of the discounted unpaid 

losses determined under section 846.

Section 846 provides that the amount of the discounted 

unpaid losses must be figured separately by each line of 

business (multiple peril lines must be treated as a single 

line of business) and by each accident year and must be 

equal to the present value of those losses determined by 

using the:

1. Amount of the undiscounted unpaid losses,

2. Applicable interest rate, and

3. Applicable loss payment pattern.

Special rules apply to:

• Unpaid losses related to disability insurance (other than 

credit disability insurance),

• Noncancelable accident and health insurance, and

• Cancelable accident and health insurance.

With regard to the special rules for discounting unpaid 

losses on accident and health insurance (other than 

disability income insurance), unpaid losses are assumed 

to be paid in the middle of the year following the accident 

year.

Generally, the amount of undiscounted unpaid losses 

means the unpaid losses shown in the annual statement. 

The amount of discounted unpaid losses with respect to 

any line of business for an accident year cannot exceed 

the total amount of unpaid losses with respect to any line 

of business for an accident year as reported on the annual 

statement.

The applicable interest rate for each calendar year and 

the applicable loss payment patterns for each accident 

year for each line of business are determined by the IRS. 

The applicable interest rate and loss payment patterns for 

2023 are published in Rev. Proc. 2023-41, 2023-52 I.R.B 

1607, available at IRS.gov/irb/2023-52_IRB#REVPROC-2023-41. Rev. Proc. 2023-41 also provides, for 

convenience, the discount factors for losses incurred in 

earlier accident years for use in tax years beginning in 

2023.

Line 3. Supplementary contracts. Enter the amount 

(discounted at the appropriate rate of interest) necessary 

to satisfy the obligations under insurance and annuity 

contracts, but only if the obligations do not involve (at the 

time the computation is made) life, accident, or health 

contingencies.

For this item, the appropriate rate of interest is the 

highest rate or rates permitted to be used to discount the 

obligations by the NAIC as of the date the reserve is 

determined. In no case shall the amount determined 

under section 807(c)(3) for any contract be less than the 

net surrender value of such contract.

Line 4. Dividend accumulations and other amounts. 

Enter the total dividend accumulations and other amounts 

held as interest in connection with insurance and annuity 

contracts.

Line 5. Advance premiums. Enter the total premiums 

received in advance and liabilities for premium deposit 

funds. See section 807(e)(5)(A) for special rules for 

treatment of certain nonlife reserves.

Line 6. Special contingency reserves. Enter the total 

reasonable special contingency reserves under contracts 

of group-term life insurance or group accident and health 

insurance, which are established and maintained for the 

provision of insurance on retired lives, premium 

stabilization, or for a combination thereof.

Line 8. Increase (decrease) in reserves under section 

807. In figuring the amount on line 8, any decrease in 

reserves must be computed without any reduction of the 

closing balance of section 807 reserves by the 

policyholders' share of tax-exempt interest.

Line 11. Do not include the exempt portion of any of the 

interest income received on an ESOP loan made prior to 

August 21,1996. For binding contract and refinancing 

rules, see section 1602 of P.L. 104-188.

Schedule G—Policy Acquisition 

Expenses

For purposes of section 848(b), all life insurance company 

members of the same controlled group are treated as one 

company. Any deduction determined for the group must 

be allocated among the life insurance companies in the 

group in such a manner as the IRS may prescribe.

Note. Policy acquisition expenses for an annuity or life 

insurance contract that includes a qualified long-term care 

insurance contract as part of, or as a rider on, the annuity 

or life insurance contract, must be capitalized using the 

net premium percentage for contracts that are not 

described in section 848(c)(1)(A) or 848(c)(1)(B). See 

section 848(e)(6) for more information.

Line 1. Gross premiums and other consideration. 

Generally, gross premiums and other consideration is the 

total of:

1. All premiums and other consideration (other than 

amounts on reinsurance agreements), and

2. Net positive consideration for any reinsurance 

agreement (see Regulations section 1.848-2(b)).

Also include on this line:

• Advanced premiums;

• Amounts in a premium deposit fund or similar account, 

as permitted by Regulations section 1.848-2(b)(3);

• Fees;

• Assessments;

20 Instructions Form 1120-L (2023)
• Amounts that the insurance company charges itself 

representing premiums with respect to benefits for its 

employees (including full-time insurance salesmen treated 

as employees under section 7701(a)(20)); and

• The value of a new contract issued in an exchange 

described in Regulations section 1.848-2(c)(2) or (3).

Line 2. Return premiums and premiums and other 

consideration incurred for reinsurance. For purposes 

of section 848(d)(1)(B) and Regulations section 

1.848-2(e), return premiums means amounts (other than 

policyholder dividends or claims and benefit payments) 

returned or credited to the policyholder. See Regulations 

sections 1.848-2(f) and 1.848-3 for how to treat amounts 

returned to another insurance company under a 

reinsurance agreement.

Line 4. Enter the applicable net premium percentage as 

defined in section 848(c)(1).

Line 5. The entries in column 5(a), 5(b), or 5(c) may be 

positive or negative.

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

negative, enter this negative amount on line 6 and 

enter -0- on lines 7 and 8. The result is a negative 

capitalization amount under section 848(f).

Line 9. General deductions. These are deductions 

under sections 161 through 198, relating to itemized 

deductions, and sections 401 through 424, relating to 

pension, profit-sharing, stock bonus plans, etc. Also, 

include on this line ceding commissions incurred for the 

reinsurance of a specified insurance contract. Do not 

include amortization deductions of specified policy 

acquisition expenses under section 848(a) or (b). Skip 

line 9 if the corporation has elected out of the general 

deductions limitation. See Regulations section 1.848-2(g)

(8).

Note. If interest expense is included on line 9, do not also 

include it on page 1, line 15a.

Line 13. Unamortized specified policy acquisition expenses from prior years. Enter the balance of 

unamortized specified policy acquisition expenses from 

prior years as of the beginning of the tax year. See section 

848(f)(1)(B).

Line 16. Phase-out amount. The amount of 

amortization for members of a controlled group and the 

phase-out of the group's specified policy acquisition 

expenses under section 848(b) must be allocated to each 

member in proportion to that member's specified policy 

acquisition expenses for the tax year.

Schedule K—Tax Computation

Line 1. Corporations figure their tax by multiplying 

taxable income by 21% (0.21).

Deferred tax under section 1291. If the corporation 

was a shareholder in a PFIC and received an excess 

distribution or disposed of its investment in the PFIC 

during the year, it must include the total increase in taxes 

due under section 1291(c)(2) (from Form 8621) in the total 

for line 1. On the dotted line to the left of line 1, enter 

“Section 1291” and the amount.

Do not include on line 1 any interest due under section 

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

on Schedule K, line 11.

For more information on reporting the deferred tax and 

interest, see the Instructions for Form 8621.

Increase in tax attributable to partner's audit 

liability under section 6226. If the corporation is filing 

Form 8978 to report adjustments shown on Form 8986, 

Partner’s Share of Adjustment(s) to Partnership-Related 

Item(s), they received from partnerships which have been 

audited and have elected to push out imputed 

underpayments to their partners, include any increase in 

taxes due from Form 8978, line 14, in the total for Form 

1120-L, Schedule K, line 1. On the dotted line next to 

line 1, enter "FROM FORM 8978" and the amount. Attach 

Form 8978. If Form 8978, line 14, shows a decrease in 

tax, see the instructions for Schedule K, line 6.

Additional tax under section 197(f). A corporation 

that elects to recognize gain and pay tax on the sale of a 

section 197 intangible under the related person exception 

to the anti-churning rules should include any additional tax 

due in the total for line 1. On the dotted line next to line 1, 

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

(B)(ii).

Line 2. Base erosion minimum tax amount. If the 

corporation had gross receipts of at least $500 million in 

any 1 of the 3 preceding tax years, see section 59A and 

the Instructions for Form 8991, Tax on Base Erosion 

Payments of Taxpayers With Substantial Gross Receipts, 

for further guidance on the determination of the amount of 

base erosion minimum tax.

Line 3. Corporate alternative minimum tax. Enter on 

Schedule K, line 3, the amount from Form 4626, 

Alternative Minimum Tax—Corporations, Part II, line 13, if 

applicable. See the Instructions for Form 4626.

Line 5a. Foreign tax credit. To find out if a corporation 

can take this credit for payment of income tax to a foreign 

country or U.S. territory, see Form 1118, Foreign Tax 

Credit—Corporations.

Line 5b. Credit from Form 8834. Enter any qualified 

electric vehicle passive activity credits from prior years 

allowed for the current year from Form 8834, Qualified 

Electric Vehicle Credit, line 7. Attach Form 8834.

Line 5c. General business credit. Use Form 3800 to 

claim any general business credits. Enter on line 5c the 

allowable credit from Form 3800, Part II, line 38. See the 

Instructions for Form 3800.

Line 5d. 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 5e. Bond credits from Form 8912. Enter the 

allowable credits from Form 8912, Credit to Holders of Tax 

Credit Bonds, line 12.

Line 6. Total credits. Add lines 5a through 5e and enter 

the total on line 6.

Decrease attributable to partner's audit liability 

under section 6226. If the corporation is filing Form 

8978 to report adjustments shown on Form 8986 they 

Instructions Form 1120-L (2023) 21
received from partnerships which have been audited and 

have elected to push out imputed underpayments to their 

partners, include any decrease in taxes due (negative 

amount) from Form 8978, line 14, in the total for Form 

1120-L, Schedule K, line 6. On the dotted line next to 

line 6, enter "FROM FORM 8978" and the amount. Attach 

Form 8978. If Form 8978, line 14, shows an increase in 

tax, see the instructions for Schedule K, line 1.

Line 8. Foreign corporations. A foreign corporation 

carrying on a life insurance business in the United States 

is taxed as a domestic life insurance company on its 

income effectively connected with the conduct of a trade 

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

897 for definition).

Generally, any other U.S.-source income received by 

the foreign corporation is taxed at 30% (or at a lower treaty 

rate) under section 881. If the corporation has this income, 

attach a statement showing the kind and amount of 

income, the tax rate, and the amount of tax. Enter the tax 

on line 8. However, see Reduction of section 881 tax, 

later.

Note. Interest received from certain portfolio debt 

investments that were issued after July 18, 1984, is not 

subject to the tax. See section 881(c).

See section 842 for more information.

Minimum effectively connected net investment 

income. See section 842(b) and Notice 89-96, 1989-2 

C.B. 417, for the general rules for computing this amount. 

Also, see Rev. Proc. 2021-41, 2021-39 I.R.B. 443, 

available at IRS.gov/2021-39 IRB, for the domestic asset/

liability percentages and domestic yields needed to 

compute this amount.

Any additional income required by section 842(b) must 

be included in LICTI (for example, page 1, line 7).

Reduction of section 881 tax. Additional taxes 

resulting from the net investment income adjustment may 

offset a corporation's section 881 tax on U.S.-source 

income. The tax reduction is determined by multiplying the 

section 881 tax by the ratio of the amount of income 

adjustment to income subject to the section 881 tax, 

computed without the exclusion for interest on state and 

local bonds or income exempted from taxation by treaty. 

See section 842(c)(1). Attach a statement showing how 

the reduction of section 881 tax was figured. Enter the net 

tax imposed by section 881 on line 8.

Line 9. 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 

Instructions for Form 4255.

Line 10. 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 11. Other taxes. Include any of the following taxes 

and interest in the total on line 11. Attach a statement 

showing the computation of each item included in the total 

for line 11 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. For details, 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 (section 453A(c)).

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

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

and the Instructions for Form 8621.

Line 12. Total tax. Include any deferred tax on the 

termination of a section 1294 election applicable to 

shareholders in a QEF in the amount entered on line 12.

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 12. On the dotted line next to line 12, 

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

and (c) the amount of tax.

Schedule L

All filers must complete Parts I and II of Schedule L.

Note. Foreign life insurance companies should report 

assets and insurance liabilities for their U.S. business only.

Part I—Total Assets

For Schedule L, assets mean all assets of the corporation. 

In valuing real property and stocks, use FMV; for other 

assets, use the adjusted basis as determined under 

section 1011 and related sections, without regard to 

section 818(c). An interest in a partnership or trust is not 

itself treated as an asset of the corporation. Instead, the 

corporation is treated as actually owning its proportionate 

share of the assets held by the partnership or trust. The 

value of the corporation's share of these assets should be 

listed on line 3.

Part II—Total Assets and Total Insurance 

Liabilities

The information provided in Part II should conform 

with the “Assets” and “Liabilities, Surplus, and 

Other Funds” sections of the NAIC annual 

statement.

Foreign life insurance companies must maintain a 

minimum surplus of U.S. assets over their U.S. insurance 

liabilities. The minimum required surplus is determined by 

multiplying their U.S. insurance liabilities by a percentage 

CAUTION

!

22 Instructions Form 1120-L (2023)
determined by the IRS. The IRS determines the 

percentage from data supplied by domestic life insurance 

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

For Schedule L, total insurance liabilities means the 

sum of the following amounts as of the end of the tax year.

1. Total reserves as defined in section 816(c); plus

2. The items referred to in paragraphs (3), (4), (5), and 

(6) of section 807(c), to the extent such amounts are not 

included in total reserves.

Foreign life insurance companies, see Notice 89-96 for 

more information on determining total insurance liabilities 

on U.S. business.

Schedule M—Other Information

Complete the items that apply to the corporation.

Question 6. Check the “Yes” box if:

• The corporation is a subsidiary in an affiliated group 

(defined below) but is not filing a consolidated return for 

the tax year with that group, or

• The corporation is a subsidiary in a parent-subsidiary 

controlled group. For a definition of a parent-subsidiary 

controlled group, see the Instructions for Schedule O 

(Form 1120).

Any corporation that meets either of the requirements 

above should check the “Yes” box. This applies even if the 

corporation is a subsidiary member of one group and the 

parent corporation of another.

Note. If the corporation is an “excluded member” of a 

controlled group (see definition in the Instructions for 

Schedule O (Form 1120)), it is still considered a member 

of a controlled group for this purpose.

Affiliated group. An affiliated group is one or more 

chains of includible corporations (section 1504(a)) 

connected through stock ownership with a common 

parent corporation. The common parent must be an 

includible corporation and the following requirements must 

be met.

1. The common parent must own directly stock that 

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

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

the other includible corporations.

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

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

each of the other corporations (except for the common 

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

other includible corporations.

For this purpose, “stock” generally does not include any 

stock that (a) is nonvoting, (b) is nonconvertible, (c) is 

limited and preferred as to dividends and does not 

participate significantly in corporate growth, and (d) has 

redemption and liquidation rights that do not exceed the 

issue price of the stock (except for a reasonable 

redemption or liquidation premium). See section 1504(a)

(4).

Question 8. Check the “Yes” box if one foreign person 

owned at least 25% of the total voting power of all classes 

of stock of the corporation entitled to vote, or at least 25% 

of the total value of all classes of stock of the corporation.

The constructive ownership rules of section 318 apply 

in determining if a corporation is foreign owned. See 

section 6038A(c)(5) and the related regulations.

Enter on line 8a the percentage owned by the foreign 

person specified in question 8. On line 8b, write the name 

of the owner's country.

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

owner, complete lines 8a and 8b for the foreign person 

with the highest percentage of ownership.

Foreign person. The term “foreign person” means:

• An individual who is not a citizen or resident of the 

United States;

• An individual who is a citizen or resident of a U.S. 

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” to question 8, it may have to file Form 5472. 

Generally, a 25% foreign-owned corporation that had a 

reportable transaction with a foreign or domestic related 

party during the tax year must file Form 5472. See the 

Instructions for Form 5472 for filing instructions and 

penalties for failure to file.

Item 11. Enter the amount of the NOL carryover to the tax 

year from prior years, even if some of the loss is used to 

offset income on this return. The amount to enter is the 

total of all NOLs generated in prior years but not used to 

offset income (either as a carryback or carryover) in a tax 

year prior to 2023. Do not reduce the amount by any NOL 

deduction reported on page 1, line 21b.

Item 12. Complete item 12 to identify the state where the 

annual statement used to prepare the tax return was filed.

Question 13. A corporation that files Form 1120-L must 

file Schedule UTP (Form 1120), Uncertain Tax Position 

Statement, with its 2022 income tax return if:

• For 2023, the corporation's total assets equal or exceed 

$10 million;

• The corporation or a related party issued audited 

financial statements reporting all or a portion of a 

corporation's operations for all or a portion of the 

corporation's tax year; and

• The corporation has one or more tax positions that must 

be reported on Schedule UTP.

Attach Schedule UTP to the corporation's income tax 

return. Do not file it separately. A taxpayer that files a 

Instructions Form 1120-L (2023) 23
protective Form 1120-L must also file Schedule UTP if it 

satisfies the requirements set forth above.

For details, see the Instructions for Schedule UTP.

Question 14. If the corporation had gross receipts of at 

least $500 million in any 1 of the 3 preceding tax years, 

complete and attach Form 8991. For this purpose, the 

corporation's gross receipts include the gross receipts of 

all persons aggregated with the corporation as specified in 

section 59A(e)(3). See the Instructions for Form 8991 to 

determine if the corporation is subject to the base erosion 

minimum tax.

Question 15. Section 267A disallows a deduction for 

certain interest and royalty payments or accruals. In 

general, section 267A applies when:

1. The interest or royalty is paid or accrued to a related 

party;

2. Under its tax laws, the related party either:

a. Does not include the full amount in income, or

b. Is allowed a deduction with respect to the amount; 

and

3. The amount is paid or accrued pursuant to a hybrid 

transaction or by, or to, a hybrid entity.

When section 267A applies, the deduction is generally 

disallowed to the extent the related party does not include 

the amount in income or is allowed a deduction with 

respect to the amount. However, the deduction is not 

disallowed to the extent the amount is included in the 

gross income of a U.S. shareholder under section 951(a).

For definitions of terms, see section 267A.

Question 16. The limitation on business interest expense 

applies to every taxpayer with a trade or business, unless 

the taxpayer meets certain specified exceptions. A 

taxpayer may elect out of the limitation for certain 

businesses otherwise subject to the business interest 

expense limitation.

Certain real property trades or businesses and farming 

businesses qualify to make an election not to limit 

business interest expense. This is an irrevocable election. 

If you make this election, you are required to use the 

alternative depreciation system to depreciate any 

nonresidential real property, residential rental property, 

and qualified improvement property for an electing real 

property trade or business, and any property with a 

recovery period of 10 years or more for an electing 

farming business. See section 168(g)(1)(F). Also, you are 

not entitled to the special depreciation allowance for that 

property. For a taxpayer with more than one qualifying 

business, the election is made with respect to each 

business.

Check "Yes" if the corporation has an election in effect 

to exclude a real property trade or business or a farming 

business from section 163(j). For more information, see 

section 163(j) and the Instructions for Form 8990.

Question 17. Generally, a taxpayer with a trade or 

business must file Form 8990 to claim a deduction for 

business interest. In addition, Form 8990 must be filed by 

any taxpayer that owns an interest in a partnership with 

current year, or prior year carryover, excess business 

interest expense allocated from the partnership.

Exclusions from filing. A taxpayer is not required to file 

Form 8990 if the taxpayer is a small business taxpayer 

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. A taxpayer's average annual gross 

receipts for the 3 prior tax years is determined by adding 

the gross receipts for the 3 prior tax years and dividing the 

total by 3. Gross receipts include the aggregate gross 

receipts from all persons treated as a single employer, 

such as a controlled group of corporations, commonly 

controlled partnerships, or proprietorships, and affiliated 

service groups. See section 448(c) and the Instructions 

for Form 8990 for additional information.

Member of controlled group, business under common control, or affiliated group. For purposes of the 

gross receipts test, all members of a controlled group of 

corporations (as defined in section 52(a)) and all 

members of a group of businesses under common control 

(as defined in section 52(b)), are treated as a single 

person, and all employees of the members of an affiliated 

service group (as defined in sections 414(m) and (o)) shall 

be treated as employed by a single person. If required, 

attach Form 8990 to the corporation's income tax return. 

Do not file it separately. See Limitations under Line 15a, 

earlier.

Question 18. 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 (Form 1120) to report the apportionment of 

certain tax benefits between the members of the group. 

See Schedule O (Form 1120) and the Instructions for 

Schedule O (Form 1120) for more information.

Question 19. 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, for the current tax year, Form 

4626 must be completed and attached to the corporation’s 

return. See the Instructions for Form 4626.

24 Instructions Form 1120-L (2023)
Paperwork Reduction Act Notice. We ask for the information on these forms to carry out the Internal Revenue laws of 

the United States. You are required to give us the information. We need it to ensure that you are complying with these 

laws and to allow us to figure and collect the right amount of tax.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act 

unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be 

retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax 

returns and return information are confidential, as required by section 6103.

The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden 

for business taxpayers filing this form is approved under OMB control number 1545-0123 and is included in the estimates 

shown in the instructions for their business income tax return.

If you have comments or suggestions for making this form and related schedules simpler, we would be happy to hear 

from you. You can send us comments from IRS.gov/FormComments. Or you can write to:

Internal Revenue Service

Tax Forms and Publications

1111 Constitution Ave. NW, IR-6526

Washington, DC 20224

Do not send the tax form to this address. Instead, see Where To File, earlier.

Instructions Form 1120-L (2023) 25
Index

A

Accounting methods, change in 6

Accounting period (tax year) 6

Address change 9

Affiliated group 23

Amended return 9

Amortization 11

Annual Statement 4

Assembling the return 4

B

Backup withholding 16

Business start-up expenses 11

C

Charitable contributions 14

Consolidated return 7

Controlled group:

Member of 21

Parent-subsidiary 23

D

Deductions 10

Definitions:

Insurance company 3

Life insurance company 3

Reserves test 3

Depository methods of tax 

payment 5

Disclosure statement 6

E

Electronic deposit of tax refund of $1 

million or more 16

Electronic Federal Tax Payment 

System (EFTPS) 5

Electronic Filing 3

Employer identification number 

(EIN) 8

Estimated tax payments 16

Estimated tax penalty 5, 16

Extension of time to file 3

F

Final return 9

Foreign corporations 22

Foreign person 23

Foreign tax credit 21

Forms and publications, how to get 2

Future Developments 1

G

General business credit 21

Golden parachute payments 11

Gross premiums and other 

consideration 9

I

Interest due on late payment of tax 5

L

Life insurance company taxable 

income 9

Limitation on dividends-received 

deduction 18

Limitations on deductions 10

Losses incurred 11

M

Minimum tax:

Alternative minimum tax 21

Prior year, credit for 21

N

Name change 9

O

Operations loss deduction 15

Other deductions 12

Overpaid 16

Owner's country 23

P

Paid preparer authorization 4

Penalties 5, 6, 16

Pension, profit-sharing, etc. plans 13

Period covered 7

Private delivery services 3

R

Recordkeeping 6

Return premiums 9

S

Schedule:

A 16

B 19

F 19

G 20

K 21

L, Part I 22

L, Part II 22

M 23

Schedule M-3 (Form 1120-L) 8

Section 953 elections 9

T

Tax and payments:

Estimated tax payments 16

Prior year(s) special estimated tax 

payments to be applied 16

Taxpayer Advocate Service 2

Transactions between related 

taxpayers 11

Travel, meals, and entertainment:

Meals and entertainment 14

Membership dues 14

Travel 14

W

What's New 1

When to file 3

Where to file 4

Who must file 2

Foreign Life Insurance Companies 2

Mutual savings banks conducting life 

insurance business 2

Other insurance companies 3

Who must sign 3

Worksheet for Schedule A 17

26