Instructions for IRS Form 1120-RIC "U.S. Income Tax Return for Regulated Investment Companies"

This document contains official instructions for IRS Form 1120-RIC, U.S. Income Tax Return for Regulated Investment Companies - a tax form released and collected by the Internal Revenue Service (IRS), a subdivision of the U.S. Department of the Treasury. An up-to-date fillable IRS Form 1120-RIC is available for download through this link.

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Download Instructions for IRS Form 1120-RIC "U.S. Income Tax Return for Regulated Investment Companies"

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2017
Department of the Treasury
Internal Revenue Service
Instructions for Form
1120-RIC
U.S. Income Tax Return for Regulated Investment Companies
Future Developments
Section references are to the Internal Revenue
Disaster tax relief. Disaster tax relief
Code unless otherwise noted.
enacted for those impacted by Hurricane
For the latest information about
Contents
Page
Harvey, Irma, or Maria includes a
developments related to Form 1120-RIC
provision modifying the limit on the
Photographs of Missing Children . . . .
1
and its instructions, such as legislation
deduction for charitable contributions
enacted after this form and instructions
The Taxpayer Advocate Service . . . . .
2
made after August 22, 2017, and before
were published, go to
How To Get Forms and
January 1, 2018 (after October 7, 2017,
IRS.gov/Form1120RIC.
Publications . . . . . . . . . . . . . . .
2
and before January 1, 2019, for relief
General Instructions . . . . . . . . . . . . .
2
What's New
efforts in the California wildfire disaster
Purpose of Form . . . . . . . . . . . . . . .
2
area). See
Temporary suspension of the
Who Must File . . . . . . . . . . . . . . . .
2
Tax rates for fiscal year filers. P.L.
10% limitation for certain disaster-related
General Requirements To Qualify
115-97 replaced the graduated corporate
contributions
in the instructions for line 22,
as a RIC . . . . . . . . . . . . . . . . .
2
tax structure with a flat 21% corporate tax
later. In addition, an employer who
Other Requirements
. . . . . . . . . . . .
2
rate, and repealed the corporate
continued to pay or incur wages after the
Definition of a Fund . . . . . . . . . . . . .
3
alternative minimum tax (AMT), effective
employer’s business income became
When To File . . . . . . . . . . . . . . . . .
3
for tax years beginning after December
inoperable because of damage from
Where To File . . . . . . . . . . . . . . . . .
3
31, 2017. However, under section 15,
Hurricane Harvey, Irma, or Maria, or the
Who Must Sign . . . . . . . . . . . . . . . .
3
corporations with fiscal tax years
California wildfires, may be eligible for an
Paid Preparer Authorization . . . . . . . .
4
beginning before January 1, 2018, and
employee retention credit. See Form
ending after December 31, 2017, figure
Assembling the Return . . . . . . . . . . .
4
5884-A, Credits for Affected Disaster Area
and apportion their tax by blending the
Employers, and its instructions.
Tax Payments . . . . . . . . . . . . . . . .
4
rates in effect before January 1, 2018, with
Estimated Tax Payments . . . . . . . . .
4
For more information on these and
the rate in effect after December 31, 2017.
Interest and Penalties . . . . . . . . . . . .
4
other disaster tax relief provisions, see
See
Blended tax rate for fiscal year filers
Accounting Methods . . . . . . . . . . . .
5
Pub. 976.
and
AMT for fiscal year filers
in the
Accounting Periods . . . . . . . . . . . . .
5
Entertainment expenses, membership
instructions for Schedule J, later.
Rounding Off to Whole Dollars . . . . . .
5
dues, and facilities. No deduction is
Address change for filing returns. The
Recordkeeping . . . . . . . . . . . . . . . .
5
allowed for certain entertainment
filing address for RICs located in Georgia,
Other Forms That May Be
expenses, membership dues, and
Illinois, Kentucky, Tennessee, and
Required . . . . . . . . . . . . . . . . .
5
facilities used in connection with these
Wisconsin has changed. See
Where To
Statements . . . . . . . . . . . . . . . . . .
6
activities for amounts incurred or paid after
File, later.
Specific Instructions . . . . . . . . . . . . .
7
December 31, 2017. See
Travel, meals,
Period Covered
. . . . . . . . . . . . . . .
7
and
entertainment, later.
Increase in penalty for failure to file.
Name and Address . . . . . . . . . . . . .
7
For returns required to be filed after
Alternative tax for RICs with qualified
Item B. Date RIC Was
December 31, 2016, the minimum penalty
timber gains. The alternative tax rate on
Established . . . . . . . . . . . . . . .
7
for failure to file a return that is over 60
qualified timber gains has been extended
Item C. Employer Identification
days late has increased to the smaller of
for tax years beginning in 2017. This
Number (EIN) . . . . . . . . . . . . . .
7
the tax due or $210. See
Late filing of
alternative tax may apply if a RIC has both
Item D. Total Assets . . . . . . . . . . . . .
8
return, later.
net capital gain and qualified timber gain
Item E. Final Return, Name
(as defined in section 1201(b)(2)). See the
Treatment of deferred foreign income
Change, Address Change, or
instructions for
Part II—Tax on
upon transition to participation ex-
Amended Return . . . . . . . . . . . .
8
Undistributed Net Capital Gain Not
emption system of taxation. U.S.
Part I—Investment Company
Designated Under Section
852(b)(3)(D),
shareholders of specified foreign
Taxable Income . . . . . . . . . . . .
8
later.
corporations (as defined under section
Part II—Tax on Undistributed Net
965(e), as amended by P.L. 115-97) may
Capital Gain Not Designated
Photographs of Missing
Under Section 852(b)(3)(D) . . . .
12
have an inclusion under section 965
Children
based on the post-1986 deferred foreign
Schedule A—Deduction for
Dividends Paid . . . . . . . . . . . .
12
income of the specified foreign
The Internal Revenue Service is a proud
corporations determined as of November
Schedule B—Income From
partner with the
National Center for
Tax-Exempt Obligations . . . . . .
12
2, 2017, or December 31, 2017. The U.S.
Missing & Exploited Children ®
shareholders may elect to pay the liability
Schedule J—Tax Computation . . . . .
12
(NCMEC). Photographs of missing
under section 965 on the post-1996
Schedule K—Other Information . . . .
15
children selected by the Center may
deferred foreign income in eight
Schedule L—Balance Sheets per
appear in instructions on pages that would
installments. See section 965, as
Books . . . . . . . . . . . . . . . . . .
16
otherwise be blank. You can help bring
amended. Also, see
Section 965
Schedule M-1 . . . . . . . . . . . . . . . .
16
these children home by looking at the
Frequently asked Questions
for further
photographs and calling 1-800-THE-LOST
guidance.
(1-800-843-5678) if you recognize a child.
Apr 12, 2018
Cat. No. 64251J
2017
Department of the Treasury
Internal Revenue Service
Instructions for Form
1120-RIC
U.S. Income Tax Return for Regulated Investment Companies
Future Developments
Section references are to the Internal Revenue
Disaster tax relief. Disaster tax relief
Code unless otherwise noted.
enacted for those impacted by Hurricane
For the latest information about
Contents
Page
Harvey, Irma, or Maria includes a
developments related to Form 1120-RIC
provision modifying the limit on the
Photographs of Missing Children . . . .
1
and its instructions, such as legislation
deduction for charitable contributions
enacted after this form and instructions
The Taxpayer Advocate Service . . . . .
2
made after August 22, 2017, and before
were published, go to
How To Get Forms and
January 1, 2018 (after October 7, 2017,
IRS.gov/Form1120RIC.
Publications . . . . . . . . . . . . . . .
2
and before January 1, 2019, for relief
General Instructions . . . . . . . . . . . . .
2
What's New
efforts in the California wildfire disaster
Purpose of Form . . . . . . . . . . . . . . .
2
area). See
Temporary suspension of the
Who Must File . . . . . . . . . . . . . . . .
2
Tax rates for fiscal year filers. P.L.
10% limitation for certain disaster-related
General Requirements To Qualify
115-97 replaced the graduated corporate
contributions
in the instructions for line 22,
as a RIC . . . . . . . . . . . . . . . . .
2
tax structure with a flat 21% corporate tax
later. In addition, an employer who
Other Requirements
. . . . . . . . . . . .
2
rate, and repealed the corporate
continued to pay or incur wages after the
Definition of a Fund . . . . . . . . . . . . .
3
alternative minimum tax (AMT), effective
employer’s business income became
When To File . . . . . . . . . . . . . . . . .
3
for tax years beginning after December
inoperable because of damage from
Where To File . . . . . . . . . . . . . . . . .
3
31, 2017. However, under section 15,
Hurricane Harvey, Irma, or Maria, or the
Who Must Sign . . . . . . . . . . . . . . . .
3
corporations with fiscal tax years
California wildfires, may be eligible for an
Paid Preparer Authorization . . . . . . . .
4
beginning before January 1, 2018, and
employee retention credit. See Form
ending after December 31, 2017, figure
Assembling the Return . . . . . . . . . . .
4
5884-A, Credits for Affected Disaster Area
and apportion their tax by blending the
Employers, and its instructions.
Tax Payments . . . . . . . . . . . . . . . .
4
rates in effect before January 1, 2018, with
Estimated Tax Payments . . . . . . . . .
4
For more information on these and
the rate in effect after December 31, 2017.
Interest and Penalties . . . . . . . . . . . .
4
other disaster tax relief provisions, see
See
Blended tax rate for fiscal year filers
Accounting Methods . . . . . . . . . . . .
5
Pub. 976.
and
AMT for fiscal year filers
in the
Accounting Periods . . . . . . . . . . . . .
5
Entertainment expenses, membership
instructions for Schedule J, later.
Rounding Off to Whole Dollars . . . . . .
5
dues, and facilities. No deduction is
Address change for filing returns. The
Recordkeeping . . . . . . . . . . . . . . . .
5
allowed for certain entertainment
filing address for RICs located in Georgia,
Other Forms That May Be
expenses, membership dues, and
Illinois, Kentucky, Tennessee, and
Required . . . . . . . . . . . . . . . . .
5
facilities used in connection with these
Wisconsin has changed. See
Where To
Statements . . . . . . . . . . . . . . . . . .
6
activities for amounts incurred or paid after
File, later.
Specific Instructions . . . . . . . . . . . . .
7
December 31, 2017. See
Travel, meals,
Period Covered
. . . . . . . . . . . . . . .
7
and
entertainment, later.
Increase in penalty for failure to file.
Name and Address . . . . . . . . . . . . .
7
For returns required to be filed after
Alternative tax for RICs with qualified
Item B. Date RIC Was
December 31, 2016, the minimum penalty
timber gains. The alternative tax rate on
Established . . . . . . . . . . . . . . .
7
for failure to file a return that is over 60
qualified timber gains has been extended
Item C. Employer Identification
days late has increased to the smaller of
for tax years beginning in 2017. This
Number (EIN) . . . . . . . . . . . . . .
7
the tax due or $210. See
Late filing of
alternative tax may apply if a RIC has both
Item D. Total Assets . . . . . . . . . . . . .
8
return, later.
net capital gain and qualified timber gain
Item E. Final Return, Name
(as defined in section 1201(b)(2)). See the
Treatment of deferred foreign income
Change, Address Change, or
instructions for
Part II—Tax on
upon transition to participation ex-
Amended Return . . . . . . . . . . . .
8
Undistributed Net Capital Gain Not
emption system of taxation. U.S.
Part I—Investment Company
Designated Under Section
852(b)(3)(D),
shareholders of specified foreign
Taxable Income . . . . . . . . . . . .
8
later.
corporations (as defined under section
Part II—Tax on Undistributed Net
965(e), as amended by P.L. 115-97) may
Capital Gain Not Designated
Photographs of Missing
Under Section 852(b)(3)(D) . . . .
12
have an inclusion under section 965
Children
based on the post-1986 deferred foreign
Schedule A—Deduction for
Dividends Paid . . . . . . . . . . . .
12
income of the specified foreign
The Internal Revenue Service is a proud
corporations determined as of November
Schedule B—Income From
partner with the
National Center for
Tax-Exempt Obligations . . . . . .
12
2, 2017, or December 31, 2017. The U.S.
Missing & Exploited Children ®
shareholders may elect to pay the liability
Schedule J—Tax Computation . . . . .
12
(NCMEC). Photographs of missing
under section 965 on the post-1996
Schedule K—Other Information . . . .
15
children selected by the Center may
deferred foreign income in eight
Schedule L—Balance Sheets per
appear in instructions on pages that would
installments. See section 965, as
Books . . . . . . . . . . . . . . . . . .
16
otherwise be blank. You can help bring
amended. Also, see
Section 965
Schedule M-1 . . . . . . . . . . . . . . . .
16
these children home by looking at the
Frequently asked Questions
for further
photographs and calling 1-800-THE-LOST
guidance.
(1-800-843-5678) if you recognize a child.
Apr 12, 2018
Cat. No. 64251J
The Taxpayer Advocate
income is from items described above as
General Instructions
realized by the partnership or trust.
Service
Income that a RIC receives in the
Purpose of Form
The Taxpayer Advocate Service (TAS) is
normal course of business as a
an independent organization within the
reimbursement from its investment advisor
Use Form 1120-RIC, U.S. Income Tax
IRS that helps taxpayers and protects
is qualifying income for purposes of the
Return for Regulated Investment
taxpayer rights. TAS's job is to ensure that
90% test if the reimbursement is includible
Companies, to report the income, gains,
every taxpayer is treated fairly and knows
in the RIC's gross income.
losses, deductions, credits, and to figure
and understands their rights under the
the income tax liability of a regulated
A RIC that fails to meet the
Taxpayer Bill of
Rights.
investment company (RIC) as defined in
requirements of section 851(b)(2) may still
section 851.
be considered to have satisfied the
As a taxpayer, the RIC has rights that
requirements of this test if:
the IRS must abide by in its dealings with
Who Must File
Following the RIC's identification of the
the RIC. TAS can help the RIC if:
failure, a description of each item of its
A problem is causing financial difficulty
A domestic corporation that meets certain
gross income described in section 851(b)
for the business.
conditions (discussed below) must file
(2) is set forth in a statement for the tax
The business is facing an immediate
Form 1120-RIC if it elects to be treated as
year.
threat of adverse action.
a RIC for the tax year (or has made an
Failure to meet the requirements of this
The RIC has tried repeatedly to contact
election for a prior tax year and the
test is due to reasonable cause and not
the IRS but no one has responded, or the
election has not been terminated or
due to willful neglect.
IRS hasn't responded by the date
revoked). The election is made by
promised.
computing taxable income as a RIC on
The asset test:
Form 1120-RIC.
1. At the end of each quarter of the
The TAS toolkit at
RIC's tax year, at least 50% of the value of
General Requirements To
www.taxpayeradvocate.irs.gov
can help
its assets must be invested in the following
the RIC understand these rights.
Qualify as a RIC
items:
Cash and cash items (including
TAS has offices in every state, the
The term “regulated investment company”
receivables);
District of Columbia, and Puerto Rico.
applies to any domestic corporation that:
Government securities;
Local advocates' numbers are in their
Is registered throughout the tax year as
Securities of other RICs; and
local directories and at
a management company or unit
Securities of other issuers, except that
www.taxpayeradvocate.irs.gov. The RIC
investment trust under the Investment
the investment in a single issuer of
can also call TAS at 1-877-777-4778.
Company Act of 1940 (ICA),
securities may not exceed 5% of the value
Has an election in effect under the ICA
TAS also works to resolve large-scale
of the RIC's assets or 10% of the
to be treated as a business development
or systemic problems that affect many
outstanding voting securities of the issuer
company, or
taxpayers. If the RIC knows of one of
(except as provided in section 851(e)).
Is a common trust fund or similar fund
these broad issues, please report it to TAS
that is neither an investment company
2. At the end of each quarter of the
through the Systemic Advocacy
under section 3(c)(3) of the ICA nor a
RIC's tax year, no more than 25% of the
Management System at
common trust fund as defined under
value of the RIC's assets may be invested
www.irs.gov/sams.
section 584(a).
in the securities of:
A single issuer (excluding government
Other Requirements
For more information, go to
securities or securities of other RICs);
www.irs.gov/advocate.
Two or more issuers controlled by the
In addition, the RIC must meet the (1)
RIC and engaged in the same or related
income test, (2) asset test, and (3)
How To Get Forms
trades or businesses; or
distribution requirements explained below.
and Publications
One or more qualified publicly traded
The income test: At least 90% of its
partnerships as defined in section 851(h).
Internet. You can access the IRS website
gross income must be derived from the
See sections 851(b)(3) and 851(c) for
24 hours a day, 7 days a week, at
IRS.gov
following items:
further details.
Dividends;
to:
3. A RIC that fails to meet the
Interest (including tax-exempt interest
Download forms, instructions, and
requirements of section 851(b)(3) for a
income);
publications;
quarter may be considered to have
Order IRS products online;
Payments with respect to securities
satisfied the requirements of this test if:
Research your tax questions online;
loans (as defined in section 512(a)(5));
After the RIC identifies the failure, the
Gains from the sale or other disposition
Search publications online by topic or
RIC provides a statement with a
of stock or securities (as defined in ICA
keyword;
description of each asset that causes the
section 2(a)(36)) or foreign currencies;
View Internal Revenue Bulletins (IRBs)
RIC to fail to satisfy the requirements at
published in recent years; and
Other income (including gains from
the close of the quarter.
options, futures, or forward contracts)
Sign up to receive local and national tax
The failure is due to reasonable cause
derived from the RIC's business of
news by email.
and not due to willful neglect.
investing in such stock, securities, or
Tax forms and publications. The RIC
The RIC disposes of the assets set
currencies; and
can download or print all of the forms and
forth on the statement (or the
Net income derived from an interest in a
publications it may need at
IRS.gov/
requirements of section 851(b)(3) are
qualified publicly traded partnership (as
FormsPubs.
otherwise met) within 6 months after the
defined in section 851(h)).
Otherwise, the RIC can go to
IRS.gov/
last day of the quarter that the RIC
Income from a partnership (other than
OrderForms
to place an order and have
identified the failure.
a qualified publicly traded partnership) or
forms mailed to it. The RIC should receive
4. De minimis failures. A RIC that fails
trust qualifies under the 90% test to the
its order within 10 business days.
to meet the requirements of section 851(b)
extent the RIC's distributive share of such
-2-
(3) for a quarter may be considered to
Where To File
have satisfied the requirements of this test
if:
File the RIC's return at the applicable IRS address listed below.
Such failure is due to ownership of
assets that the total value does not
And the total assets at
exceed the lesser of:
If the RIC's principal
the end of the tax year
a. One percent of the total value of the
business, office, or agency
(Form 1120-RIC, page 1,
RIC's assets at the end of the quarter for
is located in:
item D) are:
Use the following address:
which the measurement is done, or
Connecticut, Delaware, District
Department of the Treasury
b. $10,000,000.
of Columbia, Florida, Indiana,
Less than $10 million
Internal Revenue Service Center
The RIC disposes of the asset following
Maine, Maryland,
Cincinnati, OH 45999-0012
the identification of the failure (or the
Massachusetts, New
requirements of section 851(b)(3) are
Hampshire, New Jersey, New
otherwise met) within 6 months after the
Department of the Treasury
York, North Carolina, Ohio,
last day of the quarter in which the RIC
$10 million or more
Internal Revenue Service Center
Pennsylvania, Rhode Island,
identified the failure.
Ogden, UT 84201-0012
South Carolina, Vermont,
Virginia, West Virginia,
Note. For special rules regarding failure
to meet the requirements of the income
Georgia, Illinois, Kentucky,
Department of the Treasury
and asset tests, see sections 851(d)(2)
Michigan, Tennessee,
Less than $10 million
Internal Revenue Service Center
and 851(i).
Wisconsin
Kansas City, MO 64999-0012
Department of the Treasury
Distribution requirements. The RIC's
$10 million or more
Internal Revenue Service Center
deduction for dividends paid for the tax
Ogden, UT 84201-0012
year (as defined in section 561, but
without regard to capital gain dividends)
Alabama, Alaska, Arizona,
equal or exceed the sum of:
Arkansas, California,
90% of its investment company taxable
Colorado, Hawaii, Idaho, Iowa,
income determined without regard to
Kansas, Louisiana, Minnesota,
Department of the Treasury
section 852(b)(2)(D); and
Mississippi, Missouri,
Any amount
Internal Revenue Service Center
90% of the excess of the RIC's interest
Montana, Nebraska, Nevada,
Ogden, UT 84201-0012
income excludable from gross income
New Mexico, North Dakota,
under section 103(a) over its deductions
Oklahoma, Oregon, South
disallowed under sections 265 and 171(a)
Dakota, Texas, Utah,
(2).
Washington, Wyoming
A RIC that does not satisfy the
distribution requirements will be
!
subject to taxation as a C
A group of corporations with members located in more than one service center area will
CAUTION
corporation.
often keep all the books and records at the principal office of the managing corporation.
In this case, file the tax returns with the service center for the area in which the principal
office of the managing corporation is located.
Earnings and profits. The RIC must
either have been a RIC for all tax years
file by the 15th day of the 4th month after
For the IRS mailing address to use if
ending after November 7, 1983, or, at the
the short period ends. A RIC that has
you're using PDS, go to
IRS.gov/
end of the current tax year, had no
dissolved must generally file by the 15th
PDSstreetAddresses.
accumulated earnings and profits from
day of the 4th month after the date of
Private delivery services can't
any non-RIC tax year.
dissolution.
deliver items to P.O. boxes. You
!
Note. For this purpose, current year
must use the U.S. Postal Service
However, a RIC with a fiscal tax year
CAUTION
distributions are treated as made from the
to mail any item to an IRS P.O. box
ending June 30 must file by the 15th day
earliest earnings and profits accumulated
address.
of the 3rd month after the end of its tax
in any non-RIC tax year. See section
year. A RIC with a short tax year ending
Extension of Time To File
852(c)(3). Also see section 852(e) for
anytime in June will be treated as if the
procedures that may allow the RIC to
File Form 7004, Application for Automatic
short year ended on June 30, and must file
avoid disqualification for the initial year if
Extension of Time To File Certain
by the 15th day of the 3rd month after the
the RIC did not meet this requirement.
end of its tax year.
Business Income Tax, Information, and
Other Returns, to request an extension of
Definition of a Fund
If the due date falls on a Saturday,
time to file. Generally, the corporation
The term “fund” refers to a separate
Sunday, or legal holiday, the RIC may file
must file Form 7004 by the regular due
portfolio of assets, whose beneficial
its return on the next business day.
date of the return.
interests are owned by the holders of a
Private Delivery Services
Who Must Sign
class or series of stock of the RIC that is
RICs can use certain private delivery
preferred over all other classes or series
The return must be signed and dated by:
services (PDS) designated by the IRS to
for that portfolio of assets.
The president, vice president, treasurer,
meet the “timely mailing as timely filing”
assistant treasurer, chief accounting
When To File
rule for tax returns. Go to
IRS.gov/PDS
for
officer, or
the current list of designated services.
Generally, a RIC must file its income tax
Any other corporate officer (such as a
return by the 15th day of the 4th month
tax officer) authorized to sign.
The PDS can tell you how to get written
after the end of its tax year. A new RIC
proof of the mailing date.
filing a short period return must generally
-3-
If a return is filed on behalf of a RIC by
extensions) for filing the RIC's 2018 tax
provided by a tax professional, financial
a receiver, trustee, or assignee, the
return. If the RIC wants to expand the paid
institution, payroll service, or other third
fiduciary must sign the return, instead of
preparer's authorization or revoke the
party may have a fee.
the corporate officer. Returns and forms
authorization before it ends, see Pub. 947,
To get more information about EFTPS
signed by a receiver or trustee in
Practice Before the IRS and Power of
or to enroll in EFTPS, visit EFTPS.gov, or
bankruptcy on behalf of a RIC must be
Attorney.
call 1-800-555-4477 (TTY/TDD
accompanied by a copy of the order or
Assembling the Return
1-800-733-4829).
instructions of the court authorizing
signing of the return or form.
To ensure that the RIC's tax return is
Depositing on time. For any deposit
correctly processed, attach all schedules,
made by EFTPS to be on time, the RIC
Note. If this return is being filed for a
statements, and other forms after page 4,
must submit the deposit by 8 p.m. Eastern
series fund (as defined in section 851(g)
Form 1120-RIC, in the following order.
time the day before the date the deposit is
(2)), the return may be signed by any
due. If the RIC uses a third party to make
1. Schedule N (Form 1120).
officer authorized to sign for the RIC in
deposits on its behalf, they may have
which the fund is a series.
2. Schedule D (Form 1120).
different cutoff times.
3. Schedule O (Form 1120).
If an employee of the RIC completes
Same-day wire payment option. If the
Form 1120-RIC, the paid preparer's space
4. Form 4626.
RIC fails to submit a deposit transaction
should remain blank. A preparer who does
5. Form 4136.
on EFTPS by 8 p.m. Eastern time on the
not charge the RIC to prepare Form
day before the date a deposit is due, it can
6. Additional schedules in
1120-RIC should not complete that
still make its deposit on time by using the
alphabetical order.
section. Generally, anyone who is paid to
Federal Tax Collection Service (FTCS).
prepare the return must sign it and fill in
7. Additional forms in numerical order.
To learn more about the information the
the “Paid Preparer Use Only” section.
8. Supporting statements and
RIC will need to provide its financial
attachments.
The paid preparer must complete the
institution to make a same-day wire
payment, go to IRS.gov/SameDayWire.
required preparer information and:
Complete every applicable entry space
Sign the return in the space provided
on Form 1120-RIC. Do not enter “See
Estimated Tax Payments
for the preparer's signature; and
attached” instead of completing the entry
Give a copy of the return to the
Generally, the following rules apply to the
spaces. If more space is needed on the
corporation.
RIC's payments of estimated tax.
forms or schedules, attach separate
The RIC must make installment
sheets using the same size and format as
A paid preparer may sign original
payments of estimated tax if it expects its
the printed forms.
or amended returns by rubber
TIP
total tax for the year (less applicable
stamp, mechanical device, or
If there are supporting statements and
credits) to be $500 or more.
computer software program.
attachments, arrange them in the same
The installments are due by the 15th
order as the schedules or forms they
day of the 4th, 6th, 9th, and 12th months
Paid Preparer
support and attach them last. Show the
of the tax year. If any date falls on a
Authorization
totals on the printed forms. Enter the RIC's
Saturday, Sunday, or legal holiday, the
name and EIN on each supporting
installment is due on the next regular
If the RIC wants to allow the IRS to
statement or attachment.
business day.
discuss its 2017 tax return with the paid
The RIC must use electronic funds
preparer who signed the return, check the
Tax Payments
transfer to make installment payments of
“Yes” box in the signature area of the
estimated tax.
Generally, the RIC must pay the tax due in
return. This authorization applies only to
full no later than the due date for filing its
Use Form 1120-W, Estimated Tax for
the individual whose signature appears in
tax return (not including extensions). See
Corporations, as a worksheet to compute
the “Paid Preparer Use Only” section of
the instructions for line 30. If the due date
estimated tax. See the Instructions for
the RIC's return. It does not apply to the
Form 1120-W.
falls on a Saturday, Sunday, or legal
firm, if any, shown in that section.
holiday, the payment is due on the next
If the RIC overpaid its estimated tax, it
If the “Yes” box is checked, the RIC is
day that isn't a Saturday, Sunday, or legal
may be able to get a quick refund by filing
authorizing the IRS to call the paid
holiday.
Form 4466, Corporation Application for
preparer to answer any questions that
Quick Refund of Overpayment of
Electronic Deposit
may arise during the processing of its
Estimated Tax. The overpayment must be
Requirement
return. The RIC is also authorizing the
at least 10% of the RIC's expected income
paid preparer to:
tax liability and at least $500.
RICs must use electronic funds transfer to
Give the IRS any information that is
make all federal tax deposits (such as
missing from the return,
For more information, including
deposits of employment, excise, and
Call the IRS for information about the
penalties, see the instructions for line 29,
corporate income tax). Generally,
processing of the return or the status of
Estimated tax
penalty, later.
electronic funds transfers are made using
any related refund or payment(s), and
the Electronic Federal Tax Payment
Interest and Penalties
Respond to certain IRS notices about
System (EFTPS). However, if the RIC
math errors, offsets, and return
does not want to use EFTPS, it can
Interest. Interest is charged on taxes
preparation.
arrange for its tax professional, financial
paid late even if an extension of time to file
institution, payroll service, or other trusted
The RIC is not authorizing the paid
is granted. Interest is also charged on
third party to make deposits on its behalf.
preparer to receive any refund check, bind
penalties imposed for failure to file,
Also, it may arrange for its financial
the RIC to anything (including any
negligence, fraud, substantial valuation
institution to submit a same-day tax wire
additional tax liability), or otherwise
misstatements, substantial
payment (discussed below) on its behalf.
represent the RIC before the IRS.
understatements of tax, and reportable
EFTPS is a free service provided by the
transaction understatements from the due
The authorization will automatically end
Department of the Treasury. Services
date (including extensions) to the date of
no later than the due date (excluding
-4-
payment. The interest charge is figured at
Generally, permissible methods
to change either an overall method of
a rate determined under section 6621.
include:
accounting or the accounting treatment of
Cash,
any material item. To do so, the RIC must
Late filing of return. A RIC that does not
Accrual, or
file Form 3115, Application for Change in
file its tax return by the due date, including
Any other method authorized by the
Accounting Method. See the Instructions
extensions, may be penalized 5% of the
Internal Revenue Code.
for Form 3115 for more information and
unpaid tax for each month or part of a
exceptions. Also, see Rev. Proc. 2017-30,
month the return is late, up to a maximum
Accrual method. Generally, a RIC must
2017-18 I.R.B.1131; or any successor.
of 25% of the unpaid tax. The minimum
use the accrual method of accounting if its
penalty for a return that is over 60 days
average annual gross receipts exceed $5
Accounting Periods
late is the smaller of the tax due or $210.
million. See section 448(c).
A RIC must figure its taxable income on
The penalty will not be imposed if the RIC
Under the accrual method, an amount
the basis of a tax year. A tax year is the
can show that the failure to file on time
is includible in income when:
annual accounting period a RIC uses to
was due to reasonable cause.
1. All the events have occurred that fix
keep its records and report its income and
Late payment of tax. A RIC that does
the right to receive the income, which is
expenses. RICs can use a calendar year
not pay the tax when due generally may
the earliest of the date:
or a fiscal year. For more information
be penalized
of 1% of the unpaid tax for
1 2
about accounting periods, see
a. the required performance takes
each month or part of a month the tax is
place,
Regulations sections 1.441-1 and 1.441-2.
not paid, up to a maximum of 25% of the
b. payment is due, or
Change of tax year. Generally, a RIC
unpaid tax. The penalty will not be
must receive consent from the IRS before
c. payment is received, and
imposed if the RIC can show that the
changing its tax year. To obtain the
failure to pay on time was due to
2. The amount can be determined
consent, file Form 1128, Application To
reasonable cause.
with reasonable accuracy.
Adopt, Change, or Retain a Tax Year.
Reasonable cause determinations. If
See Regulations section 1.451-1(a)
However, under certain conditions, a RIC
the RIC receives a notice about a penalty
and Pub. 538, Accounting Periods and
may change its tax year without obtaining
after it files its return, send the IRS an
Methods, for details.
the consent.
explanation and we will determine if the
See the Instructions for Form 1128 and
Mark-to-market accounting method.
RIC meets the reasonable cause criteria.
Pub. 538 for more information on
Generally, dealers in securities must use
Do not attach an explanation when the
accounting periods and tax years.
the mark-to-market accounting method
RIC's return is filed.
described in section 475. Under this
Rounding Off to
Trust fund recovery penalty. This
method, any security that is inventory to
penalty may apply if certain excise,
Whole Dollars
the dealer must be held at its fair market
income, social security, and Medicare
value (FMV).
A RIC can round off cents to whole dollars
taxes that must be collected or withheld
Any security held by a dealer that is not
on its return and schedules. If the RIC
are not collected or withheld, or these
inventory and held at the close of the tax
does round to whole dollars, it must round
taxes are not paid. These taxes are
year is treated as sold at its FMV on the
all amounts. To round, drop amounts
generally reported on:
last business day of the tax year. Any
under 50 cents and increase amounts
Form 720, Quarterly Federal Excise
resulting gain or loss must be taken into
from 50 cents to 99 cents to the next dollar
Tax Return;
account that year in determining gross
(for example, $1.39 becomes $1 and
Form 941, Employer's QUARTERLY
income. The gain or loss taken into
$2.50 becomes $3).
Federal Tax Return;
account is generally treated as ordinary
Form 944, Employer's ANNUAL
If two or more amounts must be added
gain or loss.
Federal Tax Return; or
to figure the amount to enter on a line,
For details, including exceptions, see
Form 945, Annual Return of Withheld
include cents when adding the amounts
section 475, the related regulations, and
Federal Income Tax.
and round off only the total.
Rev. Rul. 97-39, 1997-39 I.R.B. 4.
The trust fund recovery penalty may be
Recordkeeping
Dealers in commodities and traders in
imposed on all persons who are
securities and commodities may elect,
determined by the IRS to be responsible
Keep the RIC's records for as long as they
with some exceptions, to use the
for collecting, accounting for, or paying
may be needed for administration of any
mark-to-market accounting method. To
over these taxes, and who acted willfully in
provision of the Internal Revenue Code.
make the election, the RIC must file a
not doing so. The penalty is equal to the
Usually, records that support an item of
statement describing the election, the first
full amount of the unpaid trust fund tax.
income, deduction, or credit on the return
tax year the election is to be effective, and
See the Instructions for Form 720 or Pub.
must be kept for 3 years from the date the
in the case of an election for traders in
15 (Circular E), for details, including the
return is due or filed, whichever is later.
securities or commodities, the trade or
definition of responsible persons.
Keep records that verify the RIC's basis in
business for which the election is made.
Other penalties. Other penalties can be
property for as long as they are needed to
Except for new taxpayers, the statement
imposed for negligence, substantial
figure the basis of the original or
must be filed by the due date (not
understatement of tax, reportable
replacement property.
including extensions) of the income tax
transaction understatements, and fraud.
return for the tax year immediately
The RIC should keep copies of all filed
See sections 6662, 6662A, and 6663.
preceding the election year and attached
returns. They help in preparing future and
to that return, or if applicable, to a request
amended returns and in the calculation of
Accounting Methods
for an extension of time to file that return.
earnings and profits.
Figure taxable income using the method of
For more details, see Rev. Proc. 99-17,
Other Forms That May Be
accounting regularly used in keeping the
1999-7 I.R.B. 52, and sections 475(e) and
RIC's books and records. In all cases, the
(f).
Required
method used must clearly reflect taxable
Change in accounting method.
In addition to Form 1120-RIC, the RIC
income.
Generally, the RIC must get IRS consent
may have to file some of the following
-5-