Instructions for Form

2025

Instructions for Form

1120-RIC

U.S. Income Tax Return for Regulated Investment Companies

Section references are to the Internal Revenue Code

unless otherwise noted.

taxpayer is treated fairly and knows and understands their

rights under the Taxpayer Bill of Rights.

Future Developments

As a taxpayer, the RIC has rights that the IRS must

abide by in its dealings with the RIC. TAS can help the RIC

if:

• A problem is causing financial difficulty for the business;

• The business is facing an immediate threat of adverse

action; or

• The RIC has tried repeatedly to contact the IRS but no

one has responded, or the IRS hasn’t responded by the

date promised.

For the latest information about developments related to

Form 1120-RIC and its instructions, such as legislation

enacted after this form and instructions were published,

go to IRS.gov/Form1120RIC.

What’s New

Electronic filing. Beginning in mid-February 2026,

regulated investment companies (RICs) will be able to file

Form 1120-RIC electronically. See Electronic Filing, later.

Increase in penalty for failure to file. For tax returns

required to be filed in 2026, the minimum penalty for

failure to file a return that is over 60 days late has

increased to the smaller of the tax due or $525. See Late

filing of return, later.

Electronic payments. If the RIC has access to U.S.

banking services or electronic payment systems, it should

use direct deposit for any refunds and pay electronically

for any payments, whenever possible.

Direct deposit. Direct deposit fields have been added

to the form on lines 33c, 33d, and 33e. If there is an

overpayment on line 32, enter the amount the RIC wants

refunded on line 33b and complete the direct deposit

information on lines 33c, 33d, and 33e. Instead of a direct

deposit of the RIC’s refund, it can still choose to have all or

part of the overpayment credited to next year’s estimated

tax by completing line 33a. See Line 32, later, for more

information.

Making a payment. If there is a balance due on

line 31, go to IRS.gov/Payments for information on how to

make a payment. See Tax Payments and the instructions

for Line 31, later, for more details.

Photographs of Missing Children

The Internal Revenue Service is a proud partner with the

National Center for Missing & Exploited Children®

(NCMEC). Photographs of missing children selected by

the Center may appear in instructions on pages that would

otherwise be blank. You can help bring these children

home by looking at the photographs and calling

1-800-THE-LOST (1-800-843-5678) if you recognize a

child.

The Taxpayer Advocate Service

The Taxpayer Advocate Service (TAS) is an independent

organization within the IRS that helps taxpayers and

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

Jan 29, 2026

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. The

RIC can also call TAS at 877-777-4778.

TAS also works to resolve large-scale or systemic

problems that affect many taxpayers. If the RIC 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. Access IRS.gov 24 hours a day, 7 days a week

to:

• Download free 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 RIC can view,

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

need at IRS.gov/Forms. Or, the RIC can go to IRS.gov/

OrderForms to place an order and have forms mailed to it.

General Instructions

Purpose of Form

Use Form 1120-RIC, U.S. Income Tax Return for

Regulated Investment Companies, to report the income,

gains, losses, deductions, credits, and to figure the

income tax liability of a regulated investment company

(RIC) as defined in section 851.

Who Must File

A domestic corporation that meets certain conditions

(discussed below) must file Form 1120-RIC if it elects to

Instructions for Form 1120-RIC (2025) Catalog Number 64251J

Department of the Treasury Internal Revenue Service www.irs.gov

be treated as a RIC for the tax year (or has made an

election for a prior tax year and the election has not been

terminated or revoked). The election is made by

computing taxable income as a RIC on Form 1120-RIC.

Qualified opportunity funds. If a RIC intends to

self-certify as a qualified opportunity fund (QOF), the RIC

must file Form 1120-RIC and attach Form 8996, even if

the RIC had no income or expenses to report. See

Schedule K, Question 15. Also, see the Instructions for

Form 8996.

General Requirements To Qualify as a

RIC

The term “regulated investment company” applies to any

domestic corporation that:

• Is registered throughout the tax year as a management

company or unit investment trust under the Investment

Company Act of 1940 (ICA),

• Has an election in effect under the ICA to be treated as

a business development company, or

• Is a common trust fund or similar fund that is neither an

investment company under section 3(c)(3) of the ICA nor

a common trust fund as defined under section 584(a).

Other Requirements

In addition, the RIC must meet the (1) income test, (2)

asset test, (3) distribution requirements, and (4) earnings

and profits explained below.

The income test. At least 90% of its gross income must

be derived from the following items:

• Dividends;

• Interest (including tax-exempt interest income);

• Payments with respect to securities loans (as defined in

section 512(a)(5));

• Gains from the sale or other disposition of stock or

securities (as defined in ICA section 2(a)(36)) or foreign

currencies;

• Other income (including gains from options, futures, or

forward contracts) derived from the RIC’s business of

investing in such stock, securities, or currencies; and

• Net income derived from an interest in a qualified

publicly traded partnership (as defined in section 851(h)).

Income from a partnership (other than a qualified

publicly traded partnership) or trust qualifies under the

90% test to the extent the RIC’s distributive share of such

income is from items described above as realized by the

partnership or trust.

Income that a RIC receives in the normal course of

business as a reimbursement from its investment advisor

is qualifying income for purposes of the 90% test if the

reimbursement is includible in the RIC’s gross income.

A RIC that fails to meet the requirements of section

851(b)(2) may still be considered to have satisfied the

requirements of this test if:

• Following the RIC’s identification of the failure, a

description of each item of its gross income described in

section 851(b)(2) is set forth in a statement for the tax

year; and

• Failure to meet the requirements of this test is due to

reasonable cause and not due to willful neglect.

The asset test.

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1. At the end of each quarter of the RIC’s tax year, at

least 50% of the value of its assets must be invested in the

following items:

• Cash and cash items (including receivables);

• Government securities;

• Securities of other RICs; and

• Securities of other issuers, except that the investment in

a single issuer of securities may not exceed 5% of the

value of the RIC’s assets or 10% of the outstanding voting

securities of the issuer (except as provided in section

851(e)).

2. At the end of each quarter of the RIC’s tax year, no

more than 25% of the value of the RIC’s assets may be

invested in the securities of:

• A single issuer (excluding government securities or

securities of other RICs);

• Two or more issuers controlled by the RIC and engaged

in the same or related trades or businesses; or

• One or more qualified publicly traded partnerships as

defined in section 851(h).

See sections 851(b)(3) and 851(c) for further details.

3. A RIC that fails to meet the requirements of section

851(b)(3) for a quarter may be considered to have

satisfied the requirements of this test if:

• After the RIC identifies the failure, the RIC provides a

statement with a description of each asset that causes the

RIC to fail to satisfy the requirements at the close of the

quarter;

• The failure is due to reasonable cause and not due to

willful neglect; and

• The RIC disposes of the assets set forth on the

statement (or the requirements of section 851(b)(3) are

otherwise met) within 6 months after the last day of the

quarter in which the RIC identified the failure.

4. De minimis failures. A RIC that fails to meet the

requirements of section 851(b)(3) for a quarter may be

considered to have satisfied the requirements of this test

if:

• Such failure is due to ownership of assets, the total

value of which does not exceed the lesser of:

a. 1% of the total value of the RIC’s assets at the end

of the quarter for which the measurement is done, or

b. $10 million; and

• The RIC disposes of the assets following the

identification of the failure (or the requirements of section

851(b)(3) are otherwise met) within 6 months after the last

day of the quarter in which the RIC identified the failure.

Note: For special rules regarding failure to meet the

requirements of the income and asset tests, see sections

851(d)(2) and 851(i).

Distribution requirements. The RIC’s deduction for

dividends paid for the tax year (as defined in section 561,

but without regard to capital gain dividends) must equal or

exceed the sum of:

• 90% of its investment company taxable income

determined without regard to section 852(b)(2)(D); and

• 90% of the excess of the RIC’s interest income

excludable from gross income under section 103(a) over

its deductions disallowed under sections 265 and 171(a)

(2).

Instructions for Form 1120-RIC (2025)

A RIC that does not satisfy the distribution

requirements will be subject to taxation as a C

corporation.

Earnings and profits. The RIC must either have been a

RIC for all tax years ending after November 7, 1983, or, at

the end of the current tax year, have had no accumulated

earnings and profits from any non-RIC tax year.

For this purpose, current year distributions are treated

as made from the earliest earnings and profits

accumulated in any non-RIC tax year. See section 852(c)

(3). Also, see section 852(e) for procedures that may allow

the RIC to avoid disqualification in certain circumstances if

the RIC did not meet this requirement.

Electronic Filing

RICs can generally electronically file (e-file) Form

1120-RIC, related forms, schedules, and attachments;

Form 7004 (automatic extension of time to file); and Forms

940, 941, and 944 (employment tax returns). If there is a

balance due, the RIC 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.

RICs are required to e-file Form 1120-RIC if the RIC

files 10 or more returns of any type during the calendar

year (including income tax, employment tax, excise tax,

and information returns). See Regulations section

301.6011-5. However, these RICs can request a waiver of

the electronic filing requirements.

For more information on e-filing, see E-file for business

and self-employed taxpayers on IRS.gov.

When To File

Generally, a RIC must file its income tax return by the 15th

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

RIC filing a short period return must generally file by the

15th day of the 4th month after the short period ends. A

RIC that has dissolved must generally file by the 15th day

of the 4th month after the date of dissolution.

However, a RIC 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 RIC with a short tax year ending anytime 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 RIC may file its return on the next business

day.

Private Delivery Services

RICs can use certain private delivery services (PDS)

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 PDS,

go to IRS.gov/PDSStreetAddresses.

Note: Private delivery services can’t 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.

Instructions for Form 1120-RIC (2025)

Extension of Time To File

File Form 7004, Application for Automatic Extension of

Time To File Certain Business Income Tax, Information,

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

Generally, the RIC must file Form 7004 by the regular due

date of the return.

Who Must Sign

The return must be signed and dated by:

• The president, vice president, treasurer, assistant

treasurer, chief accounting officer; or

• Any other corporate officer (such as a tax officer)

authorized to sign.

If a return is filed on behalf of a RIC 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 RIC

must be accompanied by a copy of the order or

instructions of the court authorizing signing of the return or

form.

Note: If this return is being filed for a series fund (as

described in section 851(g)), the return may be signed by

any officer authorized to sign for the corporation in which

the fund is a series.

Paid Preparer Use Only section. If an employee of the

RIC completes Form 1120-RIC, the paid preparer’s

section should remain blank. Anyone who prepares Form

1120-RIC but does not charge the RIC should not

complete that section. Generally, anyone who is paid to

prepare the return must sign it and complete the section.

The paid preparer must complete the required preparer

information and:

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

signature,

• Include their Preparer Tax Identification Number (PTIN),

and

• Give a copy of the return to the RIC.

A paid preparer may sign original or amended returns

by rubber stamp, mechanical device, or computer

software program.

Paid Preparer Authorization

If the RIC wants to allow the IRS to discuss its 2025 tax

return with the paid preparer who signed the return, 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 RIC‘s return. It does not apply to the firm, if any,

shown in that section.

If the “Yes” box is checked, the RIC is authorizing the

IRS to call the paid preparer to answer any questions that

may arise during the processing of its return. The RIC 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.

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Where To File

File the RIC’s return at the applicable IRS address listed below.

If the RIC’s principal business, office, or

agency is located in:

Connecticut, Delaware, District of Columbia,

Georgia, Illinois, Indiana, Kentucky, Maine,

Maryland, Massachusetts, Michigan, New

Hampshire, New Jersey, New York, North

Carolina, Ohio, Pennsylvania, Rhode Island,

South Carolina, Tennessee, Vermont, Virginia,

West Virginia, Wisconsin

Alabama, Alaska, Arizona, Arkansas, California,

Colorado, Florida, Hawaii, Idaho, Iowa, Kansas,

Louisiana, Minnesota, Mississippi, Missouri,

Montana, Nebraska, Nevada, New Mexico,

North Dakota, Oklahoma, Oregon, South

Dakota, Texas, Utah, Washington, Wyoming

And the total assets at the end of the

tax year are:

Use the following address:

Less than $10 million and Schedule M-3

is not filed

Department of the Treasury

Internal Revenue Service

Kansas City, MO

64999-0012

$10 million or more or Schedule M-3 is

filed

Department of the Treasury

Internal Revenue Service

Ogden, UT

84201-0012

Any amount

Department of the Treasury

Internal Revenue Service

Ogden, UT

84201-0012

A group of corporations with members located in more than one service center area will 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.

The RIC is not authorizing the paid preparer to receive

any refund check, bind the RIC to anything (including any

additional tax liability), or otherwise represent the RIC

before the IRS.

The authorization will automatically end no later than

the due date (excluding extensions) for filing the RIC’s

2026 tax return. If the RIC 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.

Assembling the Return

To ensure that the RIC’s tax return is correctly processed,

attach all schedules, statements, and other forms after

page 4, Form 1120-RIC, in the following order.

1. Schedule N (Form 1120).

2. Schedule D (Form 1120).

3. Form 8949.

4. Form 8996.

5. Schedule O (Form 1120).

6. Form 4136.

7. Form 8978.

8. Form 965-B.

9. Form 8941.

10. Form 3800.

11. Form 8997.

12. Form 4255.

13. Additional schedules in alphabetical order.

14. Additional forms in numerical order.

15. Supporting statements and attachments.

Complete every applicable entry space on Form

1120-RIC. Do not enter “See attached” instead of

completing the entry spaces. If more space is needed on

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the forms or schedules, attach separate sheets using the

same size and format as the printed forms.

If there are supporting statements and attachments,

arrange them in the same order as the schedules or forms

they support and attach them last. Show the totals on the

printed forms. Enter the RIC’s name and EIN on each

supporting statement or attachment.

Tax Payments

Generally, the RIC must pay the tax due in full no later

than the due date for filing its tax return (not including

extensions). See the instructions for line 31. 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

RICs must use electronic funds transfer (EFT) to make all

federal tax deposits (such as deposits of employment,

excise, and corporate income tax). An EFT can be made

using the Electronic Federal Tax Payment System

(EFTPS). However, if the RIC 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 may arrange for its

financial institution to submit a same-day tax wire payment

(discussed below) on its behalf. EFTPS is a free service

provided by the Department of the Treasury. Services

provided by a tax professional, financial institution, payroll

service, or other third party may have a fee.

To get more information about EFTPS or to enroll in

EFTPS, go to EFTPS.gov, or call 800-555-4477. To

contact EFTPS using Telecommunications Relay Services

(TRS) for people who are deaf, hard of hearing, or have a

speech disability, dial 711 and provide the TRS assistant

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

Instructions for Form 1120-RIC (2025)

Depositing on time. EFTPS accepts same day

payments of $1 million or less if the payment is submitted

before 3:00 p.m. Eastern time on a business day. If the

RIC’s payment is more than $1 million, the corporation

must submit the deposit by 8:00 p.m. Eastern time the day

before the date the deposit is due. If the RIC uses a third

party to make deposits on its behalf, they may have

different cutoff times.

RIC can show that the failure to file on time was due to

reasonable cause.

Same-day wire payment option. If the RIC fails to

submit a timely deposit transaction on EFTPS, it can still

make its deposit on time by using the Federal Tax

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

payment method, the RIC 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 the information the RIC will need to provide its

financial institution to make a same-day wire payment, go

to IRS.gov/SameDayWire.

Reasonable cause determinations. If the RIC receives

a notice about a penalty after it files its return, send the

IRS an explanation and we will determine if the RIC meets

the reasonable cause criteria. Do not attach an

explanation when the RIC’s return is filed.

Estimated Tax Payments

Generally, the following rules apply to the RIC’s payments

of estimated tax.

• The RIC 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 RIC must use electronic funds transfer to make

installment payments of estimated tax.

• If, after the RIC 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 RIC may owe a penalty. See the

instructions for line 30, later.

• If the RIC overpaid its 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. The overpayment must be at least 10% of

the RIC’s expected income tax liability and at least $500.

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

information on how to figure estimated taxes.

Interest and Penalties

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 RIC 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 2026 that is over 60 days late is the smaller of

the tax due or $525. The penalty will not be imposed if the

Instructions for Form 1120-RIC (2025)

Late payment of tax. A RIC 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. The

penalty will not be imposed if the RIC can show that the

failure to pay on time was due to reasonable cause.

Trust fund recovery penalty. This penalty may apply if

certain excise, income, social security, and Medicare

taxes that must be collected or withheld are not collected

or withheld, or these taxes are not paid. These taxes are

generally reported on:

• Form 720, Quarterly Federal Excise Tax Return;

• Form 941, Employer’s QUARTERLY Federal Tax

Return;

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

• Form 945, Annual Return of Withheld Federal Income

Tax.

The trust fund recovery penalty may be imposed on all

persons who are determined by the IRS to be responsible

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

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

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

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

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

of responsible persons.

Other penalties. Other penalties can be imposed for

negligence, substantial understatement of tax, reportable

transaction understatements, and fraud. See sections

6662, 6662A, and 6663.

Accounting Methods

Figure taxable income using the method of accounting

regularly used in keeping the RIC’s books and records. In

all cases, the method used must clearly reflect taxable

income.

Generally, permissible methods include:

• Cash,

• Accrual, or

• Any other method authorized by the Internal Revenue

Code.

For more information, see Pub. 538, Accounting

Periods and Methods.

Accrual method. Generally, a RIC must use the accrual

method of accounting if its average annual gross receipts

for the prior 3 years exceed $31 million. See section

448(c).

Mark-to-market accounting method. Generally,

dealers in securities must use the mark-to-market

accounting method described in section 475. Under this

method, any security that is inventory to the dealer must

be held at its fair market value (FMV).

Any security held by a dealer that is not inventory and

held at the close of the tax year is treated as sold at its

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FMV on the last business day of the tax year. Any resulting

gain or loss must be taken into account that year in

determining gross income. The gain or loss taken into

account is generally treated as ordinary gain or loss.

For details, including exceptions, see section 475, the

related regulations, and Rev. Rul. 97-39, 1997-39 I.R.B. 4.

Dealers in commodities and traders in securities and

commodities may elect, with some exceptions, to use the

mark-to-market accounting method. To make the election,

the RIC must file a statement describing the election, the

first tax year the election is to be effective, and in the case

of an election for traders in securities or commodities, the

trade or business for which the election is made. Except

for new taxpayers, the statement must be filed by the due

date (not including extensions) of the income tax return for

the tax year immediately preceding the election year and

attached to that return, or if applicable, to a request for an

extension of time to file that return. For more details, see

Rev. Proc. 99-17, 1999-7 I.R.B. 52, and sections 475(e)

and (f).

Change in accounting method. Generally, the RIC

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 RIC

must 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 Periods

A RIC must figure its taxable income on the basis of a tax

year. A tax year is the annual accounting period a RIC

uses to keep its records and report its income and

expenses. RICs can use a calendar year or a fiscal year.

For more information about accounting periods, see

Regulations sections 1.441-1 and 1.441-2.

Change of tax year. Generally, a RIC must receive

consent from the IRS before changing its tax year. To

obtain the consent, file Form 1128, Application To Adopt,

Change, or Retain a Tax Year. However, under certain

conditions, a RIC may change its tax year without

obtaining the consent.

See the Instructions for Form 1128 and Pub. 538 for

more information on accounting periods and tax years.

Rounding Off to Whole Dollars

The RIC may enter decimal points and cents when

completing its return. However, the RIC should round off

cents to whole dollars on its return, forms, and schedules

to make completing its return easier. The RIC 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.

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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 RIC’s records for as long as they may be needed

for 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 RIC’s basis in property for as

long as they are needed to figure the basis of the original

or replacement property.

The RIC 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 That May Be Required

In addition to Form 1120-RIC, the RIC may have to file

some of the following forms.

Form 976, Claim for Deficiency Dividends Deductions by

a Personal Holding Company, Regulated Investment

Company, or Real Estate Investment Trust. Use this form

to claim a deficiency dividend deduction under section

860.

Form 1096, Annual Summary and Transmittal of U.S.

Information Returns. Use Form 1096 to transmit Forms

1099 and 5498 to the Internal Revenue Service.

Form 1099-DIV, Dividends and Distributions. Report

certain dividends and distributions.

Form 1099-INT, Interest Income. Report interest income.

Form 2438, Undistributed Capital Gains Tax Return,

must be filed by the RIC if it designates undistributed net

long-term capital gains under section 852(b)(3)(D).

Form 2439, Notice to Shareholder of Undistributed

Long-Term Capital Gains, must be completed and a copy

given to each shareholder for whom the RIC paid tax on

undistributed net long-term capital gains under section

852(b)(3)(D).

Form 3520, Annual Return To Report Transactions With

Foreign Trusts and Receipt of Certain Foreign Gifts, may

be required if the RIC received a distribution from, was a

grantor of, or transferor to a foreign trust during the tax

year. See Question 5 of Schedule N (Form 1120).

Form 5471, Information Return of U.S. Persons With

Respect To Certain Foreign Corporations. Use Form 5471

if the RIC is a U.S. shareholder of a controlled foreign

corporation, a specified foreign corporation, or otherwise

subject to the reporting requirements of section 6038 or

6046, and the related regulations.

Form 7205, Energy Efficient Commercial Buildings

Deduction. Use Form 7205 to calculate and claim the

deduction under section 179D for qualifying energy

efficient commercial buildings placed in service during the

tax year.

Form 8613, Return of Excise Tax on Undistributed

Income of Regulated Investment Companies. If the RIC is

liable for the 4% excise tax on undistributed income under

Instructions for Form 1120-RIC (2025)

section 4982 or makes an election under section 4982(e)

(4), it must file this return for the calendar year.

Form 8621, Information Return by a Shareholder of a

Passive Foreign Investment Company or Qualified

Electing Fund. Use Form 8621 if the RIC is a direct or

indirect shareholder of a passive foreign investment

company, as defined in section 1297(a).

Form 8927, Determination Under Section 860(e)(4) by a

Qualified Investment Entity. Use Form 8927 to make a

determination under section 860(e)(4) for purposes of

paying deficiency dividends.

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).

Form 8990, Limitation on Business Interest Expense

Under Section 163(j). Use Form 8990 to calculate the

amount of business interest expense the RIC can deduct

and the amount to carry forward to the next year.

Form 8992, U.S. Shareholder Calculation of Global

Intangible Low-Taxed Income (GILTI). Use Form 8992 to

figure the domestic corporation’s GILTI under section

951A and attach it to Form 1120-RIC.

Form 8996, Qualified Opportunity Fund. Use Form 8996

to certify that the RIC is organized as a qualified

opportunity fund (QOF) to invest in qualified opportunity

zone property. In addition, a QOF RIC files Form 8996

annually to report that it meets the 90% investment

standard of section 1400Z-2 or to compute the penalty if it

fails to meet the investment standard.

Form 8997, Initial and Annual Statement of Qualified

Opportunity Fund (QOF) Investments. Use Form 8997 to

report investments in one or more QOFs. Report the

amount of deferred gains invested in QOFs at the

beginning of the current tax year, transactions related to

investments in QOFs for the current tax year, which

include capital gains deferred and invested in QOFs and

dispositions of investments in QOFs, and the amount of

deferred gains invested in QOFs at the end of the current

tax year.

Statements

Reportable transaction disclosure statement.

Disclose information for each reportable transaction in

which the RIC participated. Form 8886, Reportable

Transaction Disclosure Statement, must be filed for each

tax year that the federal income tax liability of the RIC 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

Instructions for Form 1120-RIC (2025)

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 RIC (or a related party) paid

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

3. Certain transactions for which the RIC (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.” See Notice 2009-55, 2009-31 I.R.B. 170.

For more information, see Regulations section

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

Penalties. The RIC may have to pay a penalty if it is

required to disclose a reportable transaction under section

6011 and fails to properly complete and file Form 8886.

Penalties may also apply under section 6707A if the RIC

fails to file Form 8886 with its Form 1120-RIC, 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, may 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. For details, see the

Instructions for Form 8918.

Safe harbor under Temporary Regulations section

1.67-2T(j)(2). Generally, shareholders in a nonpublicly

offered RIC that are individuals or pass-through entities

are treated as having received a dividend in an amount

equal to the shareholder’s allocable share of affected RIC

expenses for the calendar year. They are also treated as

having paid or incurred an expense described in section

212 in the same amount for the calendar year.

Election. A nonpublicly offered RIC may elect to treat

its affected RIC expenses for a calendar year as equal to

40% of the amount determined under Temporary

Regulations section 1.67-2T(j)(1)(i) for that calendar year.

To make this election, attach to Form 1120-RIC for the

tax year that includes the last day of the calendar year for

which the RIC makes the election a statement that it is

making an election under Temporary Regulations section

1.67-2T(j)(2). Once made, the election remains in effect

for all subsequent calendar years and may not be revoked

without IRS consent. See Temporary Regulations section

1.67-2T for definitions and other details.

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

7

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 RIC 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 attach the

statement required by Regulations section 1.355-5(a) to

its return for the year of the distribution. A significant

distributee (as defined in Regulations section 1.355-5(c)

(1)) 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).

Certain dividends. A dividend received from a RIC is

taken into account in computing (a) the deduction under

section 243, or (b) qualified dividend income, only to the

extent reported by the RIC as eligible for such deduction

or such treatment in written statements furnished to its

shareholders. A RIC must determine the reportable

amounts under section 854(b). For purposes of the

dividends-received deduction, a capital gain dividend

received from a RIC is not treated as a dividend. The

capital gain dividend is treated as a long-term capital gain

by the shareholder.

Consent to partnership election to close its books

monthly. Certain money market funds that obtain an

interest in an eligible partnership that invests in assets

exempt from taxation under section 103 may be qualified

to pay exempt-interest dividends to their shareholders. To

qualify for payment of exempt-interest dividends, a RIC

must meet the quarterly net asset value (NAV)

requirements under section 852(b)(5). To maintain the

required NAV at the end of each quarter, the RIC may take

into account on a monthly basis its distributive share of

partnership items if the eligible partnership makes a

proper election to close its books at the end of each

month. See Rev. Proc. 2003-84, 2003-48 I.R.B. 1159, as

modified by Notice 2008-80, for details.

Eligibility. A RIC is entitled to take into account its

distributive share of partnership items on a monthly basis

if:

• The RIC is entitled to hold itself out as a money market

fund, or an equivalent of a money market fund;

• The RIC provides a statement to the partnership that it

consents to the partnership’s election to close its books

8

monthly and that the RIC will include in its taxable income

its distributive share of partnership items in a manner

consistent with the election. See Rev. Proc. 2003-84 for

the required contents of the statement of consent;

• The RIC provides the statement of consent to the

custodian or manager of the partnership by the last day of

the second month after the month in which the RIC

acquires the partnership interest; and

• The partnership is eligible under Rev. Proc. 2003-84 to

make the monthly closing election and the election is

effective by the second month after the month in which the

RIC acquires the partnership interest.

Statement of consent. The consent to a partnership’s

monthly closing election is effective for the month in which

the RIC acquires the partnership interest, unless the RIC

requests that the consent be effective for either of the two

immediately following calendar months. In addition to

timely providing the partnership with the statement of

consent, the statement should be filed with Form

1120-RIC for the first tax year in which the consent is

effective. The monthly closing consent (and the

partnership’s election) may be revoked only with the

consent of the Commissioner. However, the RIC’s consent

becomes ineffective on any day when the RIC ceases to

be an eligible partner and the partnership’s monthly

closing election is terminated as of the first day of any

month the partnership is no longer eligible for the election

under Rev. Proc. 2003-84. For more details, see the

revenue procedure.

Other forms and statements. See Pub. 542, for a list of

other forms and statements a RIC may need to file in

addition to the forms and statements discussed

throughout these instructions.

Specific Instructions

Period Covered

File the 2025 return for calendar year 2025 and fiscal

years that begin in 2025 and end in 2026. For a fiscal year

return, fill in the tax year in the space at the top of the

form.

The 2025 Form 1120-RIC may also be used if:

• The RIC has a tax year of less than 12 months that

begins and ends in 2026; and

• The 2026 Form 1120-RIC is not available at the time the

RIC is required to file its return.

The RIC must show its 2026 tax year information on the

2025 Form 1120-RIC and take into account any tax law

changes that are effective for tax years beginning after

December 31, 2025.

Name and Address

Enter the RIC’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 RIC’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

RIC has a P.O. box, show the box number instead.

Do not use the address of the registered agent for the

state in which the RIC is incorporated. For example, if a

Instructions for Form 1120-RIC (2025)

business is incorporated in Delaware or Nevada and the

RIC’s principal office is located in Little Rock, AR, the RIC

should enter the Little Rock address.

If the RIC receives its mail in care of a third party (such

as an accountant or an attorney), enter on the street

address line “C/O” followed by the third party’s name and

street address or P.O. box.

Item B. Date RIC Was Established

If this return is being filed for a series fund (as described in

section 851(g)), enter the date the fund was created.

Otherwise, enter the date the RIC was incorporated or

organized.

Item C. Employer Identification

Number (EIN)

Enter the RIC’s EIN. If the RIC does not have an EIN, it

must apply for one. An EIN can be applied for in the

following ways.

• Online—Go to IRS.gov/EIN. The EIN is issued

immediately once the application information is validated.

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

Employer Identification Number. See the Instructions for

Form SS-4.

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

received its EIN by the time the return is due, enter

“Applied for” and the date you applied in the space for the

EIN. See the Instructions for Form SS-4 for details.

Item D. Total Assets

Enter the RIC’s total assets (as determined by the

accounting method regularly used in keeping the RIC’s

books and records) at the end of the tax year. If there are

no assets at the end of the tax year, enter -0-.

Item E. Final Return, Name Change,

Address Change, or Amended Return

• If this is the RIC’s final return and it will no longer exist,

check the “Final return” box.

• If the RIC has changed its name since it last filed a

return, check the “Name change” box. Generally, a RIC

must also have amended its articles of incorporation and

filed the amendment with the state in which it was

incorporated.

• If the RIC has changed its address since it last filed a

return (including a change to an “in care of” address),

check the “Address change” box.

Note: If a change in address or responsible party occurs

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

Address or Responsible Party—Business, to notify the

IRS of the new address. See the instructions for Form

8822-B for details.

Amended return. If the RIC is amending its return, check

the box for “Amended return,” complete the entire return,

correct the appropriate lines with the new information, and

refigure the RIC’s tax liability. Attach a statement that

explains the reason for the amendments and identifies the

lines being changed on the amended return.

Instructions for Form 1120-RIC (2025)

Part I—Investment Company Taxable

Income

Income

Line 1. Dividends. A RIC that is the holder of record of

any share of stock on the record date for a dividend

payable on that stock must include the dividend in gross

income by the later of the date the share became

ex-dividend, or the date the RIC acquired the share.

Line 2. Interest. Enter taxable interest on U.S.

obligations and on loans, notes, mortgages, bonds, bank

deposits, corporate bonds, tax refunds, etc.

Do not offset interest expense against interest income.

Special rules apply to interest income from certain

below-market-rate loans. See section 7872 for more

information on the tax treatment of loans on which

inadequate or no interest is charged.

Report tax-exempt interest income on Schedule K, item

8. Do not include tax-exempt interest on line 2. Also, if

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

line 7.

Include interest income from tax credit bonds on line 2.

If the RIC elects to pass through the credits to

shareholders, see the instructions for Part II, Schedule A,

line 7.

Line 3. Net foreign currency gain or (loss) from section 988 transactions. Enter the net foreign currency

gain (loss) from section 988 transactions treated as

ordinary income or loss under section 988(a)(1)(A). Attach

a statement detailing each separate transaction.

Line 4. Payments with respect to securities loans.

Enter the amount received or accrued from a broker as

compensation for securities loaned by the RIC to the

broker for use in completing market transactions. The

payments must meet the requirements of section 512(a)

(5).

Line 5. Excess of net short-term capital gain over net

long-term capital loss. Enter the amount from

Schedule D (Form 1120), line 16. Every sale or exchange

of a capital asset must be reported even if no gain or loss

is indicated.

If a RIC has a net capital loss for any tax year, the

excess of the net short-term capital loss over the net

long-term capital gain shall be a short-term capital loss

arising on the first day of the next tax year. The excess of

the net long-term capital loss over the net short-term

capital gain shall be a long-term capital loss arising on the

first day of the next tax year. Also, there is no limit on the

number of tax years that a RIC is allowed to carry over a

net capital loss. See section 1212(a)(3) for more

information.

Line 7. Other income. Enter any other taxable income

(loss) not reported on lines 1 through 6, except net capital

gain reported in Part II.

If the RIC owns any controlled foreign corporations or

qualified electing funds, enter the amount included in

gross income under section 951(a)(1)(A), plus the amount

of global intangible low-taxed income determined under

9

section 951A (which is treated as an amount included

under section 951(a)(1)(A)), and any amount included in

gross income under section 1293(a). See Regulations

section 1.851-2(b)(2)(iii). Do not include in this line any

amounts that are treated as dividends and reported on

line 1. See Regulations section 1.851-2(b)(2)(i). Refer to

Form 5471, Form 8621, and Form 8992, and their

instructions, to determine the amount included in gross

income under section 951(a)(1)(A) (including the amount

of global intangible low-taxed income) and section

1293(a). Also, consider the applicability of section 951A

with respect to controlled foreign corporations owned by

domestic partnerships in which the RIC has an interest.

List the type and amount of income on an attached

statement. If the RIC has only one item of other income,

describe it in parentheses on line 7. Examples of other

income to report on line 7 include:

• Gross rents;

• Recoveries of fees or expenses in settlement or

litigation;

• Amounts received or accrued as consideration for

entering into agreements to make real property loans or to

purchase or lease real property;

• Recoveries of bad debts deducted in prior years under

the specific charge-off method;

• Refunds of taxes deducted in prior years to the extent

they reduced income subject to tax in the year deducted

(see section 111). Do not offset current year taxes against

prior year tax refunds;

• The recapture amount under section 280F if the

business use of listed property drops to 50% or less. To

figure the recapture amount, complete Part IV of Form

4797;

• Ordinary income from trade or business activities of a

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

offset ordinary losses against ordinary income. Instead,

include the losses on line 22. Show the partnership’s

name, address, and EIN on a separate statement

attached to this return. If the amount entered is from more

than one partnership, identify the amount from each

partnership;

• Any net positive section 481 income adjustment due to

a change in method of accounting. See Form 3115 and its

instructions for more information;

• 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 this

date must file Form 8925, Report of Employer-Owned Life

Insurance Contracts. See section 101(j) for details;

• Income from cancellation of debt (COD) from the

repurchase of a debt instrument for less than its adjusted

issue price;

• The RIC’s share of the following income from Form

8621, Information Return by a Shareholder of a Passive

Foreign Investment Company or Qualified Electing Fund.

1. Ordinary earnings of a qualified electing fund

(QEF).

2. Gain or loss from marking passive foreign

investment company income (PFIC) stock to market.

3. Gain or loss from sale or other disposition of

Section 1296 stock.

10

4. The amount of excess distributions from a Section

1291 fund that is treated as ordinary income.

See Form 8621 and the Instructions for Form 8621 for

details.

Deductions

Limitations on Deductions

Transactions between related taxpayers. Generally,

an accrual basis taxpayer may only deduct business

expenses and interest owed to a related party in the year

the payment is includible in the income of the related

party. See section 267 for limitations on deductions for

interest and expenses paid to a related party.

Limitations on business interest expense. Business

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

8990, and the related instructions. Also, see Limitation on

deduction in the instructions for line 13 and Schedule K,

Question 14, later.

Golden parachute payments. A portion of the

payments made by a RIC to key personnel that exceeds

their usual compensation may not be deductible. This

occurs when the RIC has an agreement (golden

parachute) with key employees to pay them an amount

substantially in excess of their base amount if control of

the RIC changes. See section 280G and Regulations

section 1.280G-1 for more information. Also, see the

instructions for line 9.

Business start-up and organizational costs. A RIC

can elect to deduct a limited amount of start-up and

organizational costs it paid or incurred. Any remaining

costs must generally be amortized over a 180-month

period. See sections 195 and 248 and the related

regulations.

Time for making an election. The RIC generally

elects to deduct start-up or organizational costs by

claiming the deduction on its income tax return filed by the

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

the active trade or business begins. However, for start-up

or organizational costs paid or incurred before September

9, 2008, the RIC may be required to attach a statement to

its return to elect to deduct such costs. See Regulations

sections 1.195-1 and 1.248-1 for details.

For more details, including special rules for costs paid

or incurred before September 9, 2008, see the

Instructions for Form 4562.

If the RIC 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 RIC filed its

original return. The election applies when figuring taxable

income for the current tax year and all subsequent years.

The RIC can choose to forgo the elections above by

clearly electing to capitalize its start-up or organizational

costs on an income tax return filed by the due date

(including extensions) for the tax year in which the active

trade or business begins.

Instructions for Form 1120-RIC (2025)

The election to either amortize or capitalize start-up

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

are related to the trade or business.

Report the deductible amount of such costs and any

amortization on line 22. For amortization that begins

during the current tax year, complete and attach Form

4562.

officer’s 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 RIC provided taxable fringe benefits to its

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

as wages any amounts deducted elsewhere.

Section 265(a)(3) limitation. If the RIC paid

exempt-interest dividends during the tax year (including

those dividends deemed paid under section 855), no

deduction is allowed for that portion of otherwise

deductible expenses allocable to tax-exempt income. The

excluded amount is determined by the amount tax-exempt

income bears to total gross income (including tax-exempt

income but excluding capital gain net income).

If the RIC 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 the instructions for the form used to figure the

applicable credit for more details.

Net operating loss deduction. The net operating loss

deduction is not allowed.

Passive activity limitations. Limitations on passive

activity losses and credits under section 469 apply to

RICs that are closely held (as defined in section 469(j)(1)).

RICs subject to the passive activity limitations must

complete Form 8810, Corporate Passive Activity Loss and

Credit Limitations, to compute their allowable passive

activity loss and credit. Before completing Form 8810, see

Temporary Regulations section 1.163-8T for rules on

allocating interest expense among activities.

Closely held corporation. A RIC is closely held if at

any time during the last half of the tax year more than 50%

in value of its outstanding stock is directly or indirectly

owned by, or for, not more than five individuals and it is not

a personal service corporation.

Line 9. Compensation of officers. Enter the deductible

officer’s compensation on line 9. The RIC determines who

is an officer under the laws of the state where

incorporated. 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.

If the RIC’s total receipts are $500,000 or more,

complete and attach Form 1125-E. Total receipts are

figured by adding:

1. Line 8, Part I;

2. Net capital gain from line 1, Part II; and

3. Line 9a, Form 2438.

Enter on line 9 the amount from Form 1125-E, line 4.

Line 10. Salaries and wages. Enter the salaries and

wages paid for the tax year reduced by the amount

claimed on:

• Form 5884, Work Opportunity Credit;

• Form 8844, Empowerment Zone Employment Credit;

• Form 8932, Credit for Employer Differential Wage

Payments; and

• Form 8994, Employer Credit for Paid Family and

Medical Leave.

See the instructions for these forms for more

information.

Do not include salaries and wages deductible

elsewhere on the return, such as amounts included in

Instructions for Form 1120-RIC (2025)

Line 11. Rents. If the RIC rented or leased a vehicle,

enter the total annual rent or lease expense paid or

incurred during the year. Also, complete Part V of Form

4562, Depreciation and Amortization. If the RIC leased a

vehicle for a term of 30 days or more, the deduction for the

vehicle lease expense may have to be reduced by an

amount called the inclusion amount.

The RIC may have an inclusion amount if:

The lease term began:

And the vehicle’s FMV on

the first day of the lease

exceeded:

Cars (excluding trucks and vans)

After 12/31/23 but before 1/1/26 . . . . . . . . . .

After 12/31/22 but before 1/1/24 . . . . . . . . . .

After 12/31/21 but before 1/1/23 . . . . . . . . . .

After 12/31/20 but before 1/1/22 . . . . . . . . . .

After 12/31/17 but before 1/1/21 . . . . . . . . . .

After 12/31/12 but before 1/1/18 . . . . . . . . . .

$62,000

$60,000

$56,000

$51,000

$50,000

$19,000

Trucks and Vans

After 12/31/23 but before 1/1/26

. . . . . . . . . .

$62,000

After 12/31/22 but before 1/1/24

. . . . . . . . . .

$60,000

After 12/31/21 but before 1/1/23

. . . . . . . . . .

$56,000

After 12/31/20 but before 1/1/22

. . . . . . . . . .

$51,000

After 12/31/17 but before 1/1/21

. . . . . . . . . .

$50,000

After 12/31/13 but before 1/1/18

. . . . . . . . . .

$19,500

After 12/31/09 but before 1/1/14

. . . . . . . . . .

$19,000

See Pub. 463, Travel, Gift, and Car Expenses, for instructions on figuring the inclusion amount.

The inclusion amount for lease terms beginning in 2026 will be published in the Internal

Revenue Bulletin in early 2026.

Line 12. Taxes and licenses. Enter taxes paid or

accrued during the tax year, but do not include the

following.

• Federal income taxes (except for the tax imposed on

net recognized built-in gain allocable to ordinary income).

• Foreign or U.S. territory income taxes if a foreign tax

credit is claimed, or if the RIC made an election under

section 853.

• Excise taxes imposed under section 4982 on

undistributed RIC income.

• Taxes not imposed on the RIC.

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

or incurred in connection with an acquisition or disposition

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

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

disposition, as a reduction in the amount realized on the

disposition).

• Taxes assessed against local benefits that increase the

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

• Taxes deducted elsewhere on the return.

See section 164(d) for information on apportionment of

taxes on real property between seller and purchaser.

11

Line 13. Interest. Do not offset interest income against

interest expense.

The RIC must make an interest allocation if the

proceeds of a loan were used for more than one purpose

(for example, to purchase a portfolio investment and to

acquire an interest in a passive activity). See Temporary

Regulations section 1.163-8T for the interest allocation

rules.

The following interest is not deductible.

• Interest on indebtedness incurred or continued to

purchase or carry obligations if the interest is wholly

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

rules and exceptions for financial institutions. Also, see

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

financial institutions for certain tax-exempt bonds issued in

2009 and 2010.

• For cash basis taxpayers, prepaid interest allocable to

years following the current tax year. For example, a cash

basis calendar year taxpayer who in 2025 prepaid interest

allocable to any period after 2025 can deduct only the

amount allocable to 2025.

• Interest and carrying charges on straddles. Generally,

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

Special rules apply to:

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

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

the amount of the deduction for OID that is deferred and

the amount that is disallowed on a high-yield discount

obligation.

• The deduction for interest when the RIC 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.

Limitation on deduction. Under section 163(j),

business interest expense is generally limited to the sum

of business interest income, 30% of the adjusted taxable

income, and floor plan financing interest. Business

interest expense includes any interest paid or accrued

properly allocable to a trade or business (other than

certain excepted trades or businesses). A small business

taxpayer that is not a tax shelter (as defined in section

448(d)(3)), and that meets the gross receipts test, is not

required to limit business interest expense under section

163(j). A taxpayer meets the gross receipts test if the

taxpayer has average annual gross receipts of not more

than $31 million for the 3 prior tax years under the gross

receipts test of section 448(c). 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. If the

corporation fails to meet the gross receipts test, Form

8990 is generally required. See the Instructions for Form

8990. Also, see Schedule K, Question 13 and Question 14

for conditions for filing Form 8990.

Line 14. Depreciation. Include on line 14 depreciation

and the cost of certain property that the RIC elected to

expense under section 179. See Form 4562 and the

related instructions to figure the amount of depreciation to

enter on this line.

12

Line 22. Other deductions. Attach a statement listing by

type and amount all allowable deductions that are not

specifically deductible elsewhere on Form 1120-RIC.

Generally, a deduction may not be taken for any amount

that is allocable to tax-exempt income. See section 265(b)

for exceptions.

Examples of other deductions include:

• Amortization. See Form 4562;

• Any applicable deduction under section 179D for costs

of energy efficient commercial building property placed in

service during the tax year. Complete and attach Form

7205;

• Certain business start-up and organizational costs the

RIC elects to amortize or deduct;

• Supplies used and consumed in the business;

• 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 separately the amount from each

partnership;

• Any extraterritorial income exclusion (from Form 8873,

line 52); and

• Any net negative section 481(a) adjustment.

Do not deduct expenses such as the following.

• Fines or penalties paid to a government for violating any

law. However, other limitations apply for certain amounts

paid or incurred after December 21, 2017. See section

162(f), and Fines and penalties, later.

• Lobbying expenses. However, see Lobbying expenses,

later.

• Amounts paid or incurred after December 22, 2017, for

any settlement or payment related to sexual harassment

or sexual abuse, if such settlement or payment is subject

to a nondisclosure agreement or for related attorney’s

fees. See new section 162(q).

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 contribution carryovers.

RICs reporting taxable income on the accrual method

may elect to treat as paid during the tax year any

contributions paid by the due date of the RIC’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

section 170(a)(2)(B).

Limitation on deduction. Generally, the total amount

claimed cannot be more than 10% of taxable income (the

sum of Part I, line 26; Part ll, line 3; and Form 2438,

line 11) computed without regard to the following:

• Any deduction for contributions; or

• The deduction allowed under section 249, related to

any premium paid or incurred upon the repurchase of a

convertible bond.

Instructions for Form 1120-RIC (2025)

Carryover. Charitable contributions over the 10%

limitation cannot be deducted for the tax year but may be

carried over to the next 5 tax years subject to certain

limitations.

For more information on charitable contributions,

including substantiation and recordkeeping requirements,

see the regulations under section 170 and Pub. 526,

Charitable Contributions.

Contributions to organizations conducting

lobbying activities. Contributions made to an

organization that conducts lobbying activities are not

deductible if:

• The lobbying activities relate to matters of direct

financial interest to the donor’s trade or business, and

• The principal purpose of the contribution was to avoid

federal income tax by obtaining a deduction for activities

that would have been nondeductible under the lobbying

expense rules if conducted directly by the donor.

For information on contributions to charitable

organizations that conduct lobbying activities, see section

170(f)(9).

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

to qualified pension, profit-sharing, or other

funded-deferred compensation plans. Employers who

maintain such a plan must generally file Form 5500,

Annual Return/Report of Employee Benefit Plan, even if

the plan is not a qualified plan under the Internal Revenue

Code. The filing requirement applies even if the RIC does

not claim a deduction for the current tax year. There are

penalties for failure to file these forms on time and for

overstating the pension plan deduction. See sections

6652(e) and 6662(f).

Note: Form 5500 must be filed electronically under the

computerized ERISA Filing Acceptance System

(EFAST2). For more information, see the EFAST2 website

at www.EFAST.dol.gov.

Travel, meals, and entertainment. Subject to certain

limitations and restrictions, the RIC can deduct ordinary

and necessary travel, meal, and non-entertainment

expenses paid or incurred in its trade or business.

Generally, entertainment expenses, membership dues,

and facilities used in connection with these activities

cannot be deducted. In addition, no deduction is generally

allowed for qualified transportation fringe benefits. Also,

special rules apply to deductions for gifts, luxury water

travel, and convention expenses. See section 274 and

Pub. 463 for more details.

Travel. The RIC cannot deduct travel expenses of any

individual accompanying a corporate officer or employee

unless:

• That individual is an employee of the RIC, and

• That individual’s travel is for a bona fide business

purpose that would otherwise be deductible by that

individual.

Meals. Generally, the RIC 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)):

Instructions for Form 1120-RIC (2025)

• Meals must not be lavish or extravagant, and

• An employee of the RIC must be present at the meal.

See section 274(n)(3) for a special rule that applies to

expenses for meals consumed by individuals subject to

the hours of service limits of the Department of

Transportation.

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 RIC can deduct amounts paid

or incurred for membership dues in civic or public service

organizations, professional organizations (such as bar or

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 to members or their

guests. In addition, RICs 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.

Entertainment facilities. Generally, the RIC 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

RIC may be able to deduct otherwise nondeductible

entertainment, amusement, or recreation expenses if the

amounts are treated as compensation to the recipient and

reported on Form W-2 for an employee, or on Form

1099-NEC for an independent contractor.

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

owner (directly or indirectly), or other “specified individual”

(as defined in section 274(e)(2)(B) and Regulations

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

See section 274 and Pub. 463 for a more extensive

discussion of these topics.

Fines and penalties. Generally, no deduction is allowed

for fines or similar penalties paid or incurred to, or at the

direction of, a government or governmental entity for

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

potential violation of a law, except:

• Amounts that constitute restitution,

• Amounts paid to come into compliance with the law,

• Amounts paid or incurred as the result of certain court

orders or agreements in which no government or

governmental entity is a party, and

• Amounts paid or incurred for taxes due.

No deduction is allowed unless the amounts are

specifically identified in the order or agreement and the

RIC 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

13

investigation or litigation are not eligible for the exceptions

and are nondeductible.

See section 162(f).

Lobbying expenses. Generally, lobbying expenses are

not deductible. Examples of nondeductible expenses

include:

• Amounts paid or incurred in connection with influencing

federal, state, or 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. Certain

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

are deductible.

Line 25a. Deduction for dividends paid. Enter the

amount from Schedule A, line 8a.

Line 25b. Section 851(d)(2) and section 851(i) deductions. Enter the amount from Schedule J, lines 1c and

1d.

Tax and Payments

Line 28b. Current year’s estimated tax payments.

Enter any estimated tax payments the RIC made for the

current tax year.

Line 28e. Credit from Form 2439. Enter the credit from

Form 2439 for the RIC’s share of the tax paid by another

RIC or a Real Estate Investment Trust (REIT) on

undistributed long-term capital gains included in the RIC’s

income. Attach Form 2439 to Form 1120-RIC.

Line 28f. Credit for federal tax on fuels. Complete and

attach Form 4136, Credit for Federal Tax Paid on Fuels, if

the RIC qualifies to take this credit.

Line 28g. Elective payment election amount from

Form 3800. Enter on line 28g the total net elective

payment election amount from Form 3800, General

Business Credit, Part III, line 6, column (j). See the

Instructions for Form 3800.

Line 28z. Other credits and payments—attach statement. Include on line 28z any other refundable credit the

RIC is claiming, including the following. Attach a

statement listing the type of credit or payment and the

amount of the credit or payment.

• Credit under section 1341 for repayments of amounts

included in income from earlier years.

• Backup withholding. If the cooperative 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 28z.

Line 29. Total payments and credits. Combine lines

28a through 28z and enter the total on line 29.

Line 30. Estimated tax penalty. A RIC that does not

make estimated tax payments when due may be subject

to an underpayment penalty for the period of

underpayment. Generally, a RIC is subject to the penalty if

14

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.

Use Form 2220, Underpayment of Estimated Tax by

Corporations, to see if the RIC owes a penalty and to

figure the amount of the penalty. See the Instructions for

Form 2220 for more information.

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

enter the amount of any penalty.

Line 31. Amount owed. Generally, the RIC must pay any

tax due in full no later than the due date for filing its tax

return (excluding extensions). Payment of the tax due

must be made electronically. See Electronic Deposit

Requirement, earlier, for the payment options for the RIC.

Also, go to IRS.gov/Payments for more detailed

information.

If the RIC cannot pay the full amount of tax owed, it can

apply for an installment agreement online. The RIC can

apply for an installment agreement online if:

• It cannot pay the full amount shown on line 31,

• The total amount owed is $25,000 or less, and

• The RIC can pay the liability in full in 24 months.

To apply using the Online Payment Agreement

Application, go to IRS.gov/OPA.

Under an installment agreement, the RIC can pay what

it owes in monthly installments. There are certain

conditions that must be met to enter into and maintain an

installment agreement, such as paying the liability within

24 months and making all required deposits and timely

filing tax returns during the length of the agreement.

If the installment agreement is accepted, the RIC will be

charged a fee and it will be subject to penalties and

interest on the amount of tax not paid by the due date of

the return.

Line 32. Overpayment. If there is an overpayment on

line 32, enter the amount the RIC wants refunded on

line 33b. See the instructions for line 33b, later. The RIC

can also choose to have all or part of the overpayment

credited to next year’s estimated tax by completing

line 33a. See the instructions for line 33a, next.

Line 33a. Credited to estimated tax. The RIC can elect

to apply all or part of the RIC’s overpayment to next year’s

estimated taxes.

Enter the amount of any overpayment from line 32 that

should be applied to next year’s estimated tax.

This election to apply some or all of the overpayment

amount to the RIC’s 2026 estimated tax cannot be

changed at a later date.

Line 33b. Refunded. Enter the amount to be refunded to

the RIC on line 33b. If the RIC has access to U.S. banking

services, it should use direct deposit for any refunds,

whenever possible. The benefits of a direct deposit

include a faster refund, the added security of a paperless

payment, and the savings of tax dollars associated with

the reduced processing costs.

Direct deposit of refund. If the RIC wants its refund

directly deposited into its checking or savings account at

any U.S. bank or other financial institution, complete lines

Instructions for Form 1120-RIC (2025)

33c through 33e. See the instructions for lines 33c, 33d,

and 33e, later.

The RIC is not eligible to request a direct deposit if:

• The receiving financial institution is a foreign bank or a

foreign branch of a U.S. bank, or

• The RIC has applied for an EIN but is filing its tax return

before receiving one.

Line 33c. Routing number. The routing number must be

nine digits. The first two digits must be between 01 and 12

or 21 through 32. Ask the RIC’s financial institution for the

correct routing number to enter on line 33c if:

• The routing number on a deposit slip is different from

the routing number on the RIC’s checks,

• The deposit is to a savings account that does not allow

the RIC to write checks, or

• The RIC’s checks state they are payable through a

financial institution different from the one at which the RIC

has its checking account.

Line 33d. Type of account. Check the appropriate box

for the type of account. Don’t check more than one box.

The RIC must check the correct box to ensure the deposit

is accepted.

Line 33e. Account number. The account number can

be up to 17 characters (both numbers and letters). Include

hyphens but omit spaces and special symbols. Enter the

number from left to right and leave any unused boxes

blank. Don’t include the check number.

If the direct deposit to the RIC’s account is different

from the amount it expected, the RIC will receive an

explanation in the mail about 2 weeks after the refund is

deposited.

Conditions resulting in a refund by check. If the IRS is

unable to process the request for a direct deposit, a refund

by check will be generated instead. Reasons for not

processing a request include.

• The name of the RIC on the tax return does not match

the name on the account.

• The financial institution rejects the direct deposit

because of an incorrect routing or account number.

• The RIC fails to indicate the type of account the deposit

is to be made to (that is, checking or savings).

Note: The IRS isn’t responsible for a lost refund if the RIC

enters the wrong account information. Check with the

RIC’s financial institution to get the correct routing and

account numbers and to make sure the direct deposit will

be accepted.

Part II—Tax on Undistributed Net

Capital Gain Not Designated Under

Section 852(b)(3)(D)

Line 1. Enter the net capital gain from line 17 of

Schedule D (Form 1120).

Line 2. Enter the capital gain dividends from Schedule A,

line 8b.

Line 4. Capital gains tax. Multiply the amount on line 3

by 21% (0.21). Enter the result here and on Schedule J,

line 1b.

Instructions for Form 1120-RIC (2025)

Schedule A—Deduction for Dividends

Paid

Column (a) is used to determine the deduction for

dividends paid resulting from income derived from

ordinary dividends.

Column (b) is used to determine the deduction for

dividends paid resulting from income derived from capital

gain dividends.

Section 561 (taking into account sections 852(b)(7),

852(c)(3)(B), and 855(a)) determines the deduction for

dividends paid. Do not take into account exempt-interest

dividends defined in section 852(b)(5) or any amount

reported for the tax year on Form 2438, line 9b. See

section 852(b)(8) for information on post-October capital

losses and late year ordinary losses.

Line 3. Dividends, both ordinary and capital gain,

declared and payable to shareholders of record in

October, November, or December are treated as paid by

the RIC and received by each shareholder on December

31 of that calendar year provided that they are actually

paid in January of the following calendar year. Enter on

line 3 all such dividends not already included on line 1 or

2.

Line 6. Enter the foreign tax paid deduction allowed as

an addition to the dividends paid deduction under section

853(b)(1)(B). See the instructions for item 10 of

Schedule K for information on the election available under

section 853(a).

Line 7. If the RIC elects under section 853A to pass

through credits from qualified tax credit bonds to

shareholders, increase the dividends paid deduction by

the amount of the credits distributed to shareholders. To

make the election, see the instructions for item 11 under

Schedule K—Other Information.

Schedule B—Income From

Tax-Exempt Obligations

If, at the close of each quarter of the tax year, at least 50%

of the value of the RIC’s assets consisted of tax-exempt

obligations under section 103(a), the RIC qualifies under

section 852(b)(5) to pay exempt-interest dividends for the

tax year. See section 852(b)(5)(A) for the definition of

exempt-interest dividends and other details.

In the case of a qualified “fund of funds” structure, a

RIC may pay exempt-interest dividends without regard to

the requirement that at least 50% of the value of the fund’s

assets consist of tax-exempt obligations. See section

852(g) for more information.

If this applies, check the “Yes” box on line 1 and

complete lines 2 through 5.

Schedule J—Tax Computation

Line 1a—Tax on Investment Company Taxable

Income

RICs figure their tax by multiplying investment company

taxable income by 21%. Enter this amount on line 1a.

15

Line 1z— Other Chapter 1 Tax

For a RIC that is a personal holding company (PHC).

A RIC that is not in compliance with Regulations section

1.852-6 is a PHC and is taxed at a flat rate of 21% on its

investment company taxable income.

Enter on line 1z the other chapter 1 tax that can be offset

or reduced by nonrefundable credits such as the foreign

tax credit or general business credit.

Line 1b—Capital Gains Tax

Line 3a—Foreign Tax Credit

Enter the capital gains tax from line 4, Part II.

Line 1c—Tax Imposed Under Section 851(d)(2)

Enter the tax imposed under section 851(d)(2) relating to

failures to meet certain requirements of the asset test of

section 851(b)(3). See the instructions on page 2 for

details on the requirements of the asset test. Also, see

section 851(d)(2).

Attach a statement showing the computation of the tax

and an explanation of why the RIC failed to meet the

requirements of the asset test, and a description of why

such failure is due to reasonable cause and not to willful

neglect.

Line 1d—Tax Imposed Under Section 851(i)

Enter the tax imposed under section 851(i) relating to

failures to meet certain requirements of the gross income

test.

See the instructions on page 2 for details on the

requirements of the gross income test. Also, see section

851(i).

Attach a statement showing the computation of the tax

and an explanation of why the RIC failed to meet the

requirements of the gross income test, and a description

of why such failure is due to reasonable cause and not to

willful neglect.

Line 1e—Section 1291 Tax from Form 8621

If the RIC was a shareholder in a passive foreign

investment company (PFIC), and received an excess

distribution or disposed of its investment in the PFIC

during the year, enter the increase in taxes due under

section 1291(c)(2) from Form 8621 on line 1e.

Do not include on line 1e any interest due under section

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

Schedule J, line 6z, Other.

For more information on reporting the deferred tax and

interest, see the Instructions for Form 8621.

Line 1f—Additional Tax Under Section 197(f)

A RIC 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 1f.

Line 1g—Amount From Form 4255, Part I, Line 3,

Column (q)

Enter on line 1g the tax that can be reduced by

nonrefundable credits from Form 4255, Certain Credit

Recapture, Excessive Payments, and Penalties, if

applicable. See the Instructions for Form 4255.

16

To find out when a RIC can claim the credit for payment of

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

1118, Foreign Tax Credit—Corporations. The RIC may not

claim this credit if an election under section 853 was made

for the tax year. See Election under section 853(a) under

Schedule K, item 10.

Line 3b—Credit from Form 8834

Enter any qualified electric vehicle passive activity credits

from prior years allowed for the current tax year from Form

8834, Qualified Electric Vehicle Credit, line 7, and attach

Form 8834 to this return.

Line 3c—General Business Credit

Use Form 3800 to claim any general business credits.

Enter on line 3c the allowable credit from Form 3800, Part

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

Line 3d—Other Credits

Minimum tax credit. Enter any allowable credit from

Form 8827, Credit for Prior Year Minimum

Tax—Corporations. Complete and attach Form 8827.

Bond credits from Form 8912. Enter the allowable

credits from Form 8912, Credit to Holders of Tax Credit

Bonds, line 12. However, if the RIC elects to pass through

credits from tax credit bonds to its shareholders, it cannot

take the credit. See Item 11 under question 5, later, for

more information.

Line 6a—Personal Holding Company Tax

A RIC is taxed as a personal holding company under

section 542 if:

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

the tax year is personal holding company income, and

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

50% in value of its outstanding stock is owned, directly or

indirectly, by five or fewer individuals.

See the Instructions for Schedule PH (Form 1120), U.S.

Personal Holding Company (PHC) Tax, for definitions and

details on how to figure the tax. Enter on line 6a the tax

from Schedule PH (Form 1120), Part III, line 26.

Line 6b—Interest on Deferred Tax Liability for

Installment Obligations Under Section 453A(c)

Enter any interest on deferred tax attributable to certain

nondealer installment obligations (section 453A(c)).

Line 6c—Interest on Deferred Tax Liability for

Installment Obligations Under Section 453(l)(3)

Enter any interest on deferred tax attributable to certain

dealer installment obligations under section 453(I).

Instructions for Form 1120-RIC (2025)

Line 6d—Amount from Form 4255, Part I, Line 3,

Column (r)

Enter on line 6d the tax that cannot be reduced by

nonrefundable credits from Form 4255, Part I, line 3,

column (r), if applicable. See the Instructions for Form

4255.

Line 6z—Other

Include on line 6z additional taxes and interest such as the

following. Attach a statement showing the computation of

each item included in the total for line 6z 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 and

Form 8874-B).

• Recapture of employer-provided childcare facilities and

services credit (see Form 8882).

• Interest due on deferred gain recognition (section

1260(b)).

• Interest due under section 1291(c)(3).

Recapture of low-income housing credit. If the RIC

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 RIC 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, and section 42(j)(1) for more

information.

Built-in Gains Tax

If, on or after January 2, 2002, property of a C corporation

becomes property of a RIC by either (a) the qualification

of the C corporation as a RIC; or (b) the transfer of such

property to a RIC, then the RIC will be subject to the

built-in gains tax under section 1374 unless the C

corporation elects deemed sale treatment on the

transferred property. Generally, if the C corporation does

not make this election for tax years beginning in 2020, the

RIC must pay tax on the net recognized built-in gain

during the 5-year period beginning on its first day as a RIC

or the day it acquired the property. Special rules apply to

conversion transactions on or after June 7, 2019, as well

as conversion transactions with a related section 355

distribution. See Regulations section 1.337(d)-7 for

details.

A RIC’s recognition period for conversion transactions

that occur on or after August 8, 2016, and on or before

February 17, 2017, is the 10-year period beginning on its

first day as a RIC or the day the RIC acquired the property,

as described in Temporary Regulations section

1.337(d)-7T(b)(2)(iii), as in effect on August 8, 2016.

However, under the provisions of final Regulations section

1.337(d)-7(g)(2)(iii), a RIC may choose to apply a 5-year

recognition period to conversion transactions that occur

on or after August 8, 2016, and on or before February 17,

Instructions for Form 1120-RIC (2025)

2017. See final Regulations section 1.337(d)-7 and

Temporary Regulations section 1.337(d)-7T for details.

Recognized built-in gains and losses generally retain

their character (for example, ordinary income or capital

gain) and are treated the same as other gains or losses of

the RIC. The RIC’s tax on net recognized built-in gain is

treated as a loss sustained by the RIC after October 31 of

the same tax year (see the instructions for line i of the

Built-in Gains Tax Worksheet, later). See Regulations

section 1.337(d)-7 for details.

Different rules apply to elections to be a RIC and to

transfers of property in a carryover basis transaction that

occurred prior to January 2, 2002. For RIC elections and

property transfers before this date, the C corporation is

subject to deemed sale treatment on the transferred

property unless the RIC elects section 1374 treatment.

See Regulations section 1.337(d)-6 for information on how

to make the election and figure the tax for RIC elections

and property transfers before this date. The RIC may also

generally rely on Regulations section 1.337(d)-5 for RIC

elections and property transfers that occurred before

January 2, 2002.

Built-in Gains Tax Worksheet Instructions

Complete the worksheet to figure the built-in gains tax

under Regulations section 1.337(d)-6 or 1.337(d)-7.

Line a. Enter the amount that would be the taxable

income of the RIC for the tax year if only recognized

built-in gain, recognized built-in loss, and recognized

built-in gain carryover were taken into account.

Line b. Add the amounts shown on:

• Form 1120-RIC, page 1, line 24;

• Form 1120-RIC, Part II, line 1; and

• Form 2438, line 11.

For this purpose, refigure line 24 on page 1 without regard

to any election under section 852(b)(2)(F). Enter the result

on line b of the Built-in Gains Tax Worksheet.

Line c. The RIC’s net unrealized built-in gain is the

amount, if any, by which the FMV of the assets of the RIC

at the beginning of its first RIC year (or as of the date the

assets were acquired, for any asset with a basis

determined by reference to its basis (or the basis of any

other property) in the hands of a C corporation) exceeds

the aggregate adjusted basis of such assets at that time.

Enter on line c the RIC’s net unrealized built-in gain

reduced by the net recognized built-in gain for prior years.

See sections 1374(c)(2) and (d)(1).

Line d. If the amount on line b exceeds the amount on

line a, the excess is treated as a recognized built-in gain in

the succeeding tax year.

Line e. Enter the section 1374(b)(2) deduction.

Generally, this is any net operating loss or capital loss

carryforward (to the extent of net capital gain included in

recognized built-in gain for the tax year) arising in tax

years for which the RIC was a C corporation. A net loss

carryforward must be used to reduce recognized built-in

gain for the tax year to the greatest extent possible before

it can be used to reduce the RIC’s taxable income.

17

Built-in Gains Tax Worksheet (keep for your records)

a.

Excess of recognized built-in gains over recognized built-in losses . . . . . . . . . . . . . . . . . . . . . .

b.

Taxable income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c.

d.

Enter the net unrealized built-in gain reduced by any net recognized built-in gain for all prior

years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net recognized built-in gain (enter the smallest of line a, b, or c) . . . . . . . . . . . . . . . . . . . . . . .

e.

Section 1374(b)(2) deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

f.

Subtract line e from line d. If zero, enter -0- here and on line i . . . . . . . . . . . . . . . . . . . . . . . . . .

g.

Enter 21% of line f

h.

i.

a.

b.

c.

d.

e.

f.

g.

Business credit and minimum tax credit carryforwards under section 1374(b)(3) from C corporation

(see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . h.

Tax. Subtract line h from line g (if zero or less, enter -0-). Enter here and include on line 6z of

Schedule J (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Line h. Credit carryforwards arising in tax years for which

the RIC was a C corporation must be used to reduce the

tax on net built-in gain for the tax year to the greatest

extent possible before the credit carryforwards can be

used to reduce the tax on the RIC’s taxable income.

the RIC entitled to vote, or (b) the total value of all classes

of stock of the RIC.

Line i. The RIC’s tax on the net recognized built-in gain is

treated as a loss sustained by the RIC after October 31 of

the same tax year. Deduct the tax attributable to:

• Ordinary gain as a deduction for taxes on Form

1120-RIC, line 12;

• Short-term capital gain as a short-term capital loss in

Part I of Form 8949; and

• Long-term capital gain as a long-term capital loss in

Part II of Form 8949.

Enter on line 5b(1) the percentage owned by the

foreign person specified in question 5. For line 5b(2),

enter the name of the owner’s country.

Line 8a—Total before Deferred Tax

Add lines 5 and 7. Enter the total on line 8a. Include any

deferred tax on the termination of a section 1294 election

applicable to shareholders in a qualified electing fund in

the amount entered on line 8a. See the Instructions for

Form 8621, Part VI.

Line 8b—Deferred Tax on Undistributed

Earnings of a QEF

Enter on line 8b the deferred tax on the RIC’s share of the

undistributed earnings of a qualified electing fund. See the

Instructions for Form 8621, Part III.

Schedule K—Other Information

The following instructions apply to questions 1 through 15.

Complete all items that apply.

Question 3

Check the “Yes” box if the RIC is a subsidiary in a

parent-subsidiary controlled group. This applies even if

the RIC is a subsidiary member of one group and the

parent corporation of another.

If the RIC is an “excluded member” of a controlled

group (see section 1563(b)(2)), it is still considered a

member of a controlled group for this purpose.

Question 5

Check the “Yes” box if one foreign person owned at least

25% of (a) the total voting power of all classes of stock of

18

The constructive ownership rules of section 318 apply

in determining if a RIC is foreign owned. See section

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

If there is more than one 25%-or-more foreign owner,

complete lines 5b(1) and 5b(2) for the foreign person with

the highest percentage of ownership.

Foreign person. The term “foreign person” includes:

• A foreign citizen or nonresident alien,

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

territory (but who is not a U.S. citizen or resident),

• A foreign partnership,

• A foreign corporation,

• Any foreign estate or trust within the meaning of section

7701(a)(31), and

• 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.

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 RIC checked

“Yes,” it may have 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.

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 Form

5472 for filing instructions.

Item 8

Tax-exempt interest. Show any tax-exempt interest

received or accrued. Include any exempt-interest

dividends received as a shareholder in a mutual fund or

other RIC.

Instructions for Form 1120-RIC (2025)

Item 10

Election under section 853(a). A RIC may make an

irrevocable election under section 853(a) to allow its

shareholders to apply their share of the foreign taxes paid

by the RIC either as a credit or a deduction. If the RIC

makes this election, the amount of foreign taxes it paid

during the tax year may not be taken as a credit or a

deduction on Form 1120-RIC, but may be claimed on

Form 1120-RIC, Schedule A, line 5, as an addition to the

dividends-paid deduction.

Eligibility. To qualify to make the election, the RIC must

meet the following requirements.

• More than 50% of the value of the RIC’s total assets at

the end of the tax year must consist of stock or securities

in foreign corporations.

• The RIC must meet the holding period requirements of

section 901(k) with respect to its common and preferred

stock. If the RIC fails to meet these holding period

requirements, the election that allows a RIC to pass

through to its shareholders the foreign tax credits for

foreign taxes paid by the RIC is disallowed. Although the

foreign taxes paid may not be taken as a credit by either

the RIC or the shareholder, they may still be deductible by

the RIC.

Election under section 852(g). In the case of a

qualified “fund of funds” structure, a RIC may elect to allow

shareholders the foreign tax credit without regard to the

requirement that more than 50% of the value of its assets

consist of stock or securities in foreign corporations. See

section 852(g) for more information.

Reporting requirements. To make a valid election under

section 853 or 852(g), in addition to timely filing Form

1120-RIC and checking the box for Schedule K, item 10a

or b, the RIC must file a statement of election, which

includes the information listed under Regulations section

1.853-4(c). The information must be provided on or with a

Form 1118, Foreign Tax Credit, attached to the RIC’s

timely filed tax return.

For more information, see Regulations section 1.853-4.

Notification to shareholders. If the RIC makes the

election, it must furnish to its shareholders a written

statement reporting the shareholder’s portion of (1) foreign

taxes paid by the RIC to foreign countries and territories of

the United States, and (2) the dividend that represents

income derived from:

• Sources within countries described in section 901(j),

and

• Other foreign-source income.

Item 11

Election under section 853A. A RIC can elect to pass

through credits from tax credit bonds to its shareholders. If

the RIC makes the election, include the interest income

from the tax credit bonds on Part I, line 2. Also, increase

the dividends paid deduction by the amount of the credits

distributed to shareholders. If the RIC makes the election,

it is not allowed to take any credits related to the qualified

tax credit bonds.

For more information, see section 853A.

Notification to shareholders. If the RIC makes the

election to apply section 853A, it must furnish to its

Instructions for Form 1120-RIC (2025)

shareholders a written statement reporting the

shareholder’s proportionate share of (1) credits from tax

credit bonds, and (2) gross income in respect of such

credits.

Question 13, Business Interest Expense

Election

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 property

with a recovery period of 10 years or more. 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 taxpayer 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 14, Conditions for Filing Form 8990

Generally, a RIC must file Form 8990 to claim a deduction

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

by any RIC that owns an interest in a partnership with

current year, or prior year carryover, excess business

interest expense allocated from the partnership. A RIC

must also file a Form 8990 if the RIC paid section 163(j)

interest dividends for the tax year.

Exclusions from filing. A RIC is not required to file Form

8990 if the RIC is a small business taxpayer that does not

have excess business interest expense from a partnership

and did not pay section 163(j) interest dividends for the

tax year. A RIC is also not required to file Form 8990 if the

RIC only has business interest expense from these

excepted trades or businesses:

• An electing real property trade or business,

• An electing farming business, or

• 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 2025, a taxpayer meets the

gross receipts test if the taxpayer has average annual

gross receipts of $31 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

19

partnerships, or proprietorships, and affiliated service

groups. See section 448(c) and the Instructions for Form

8990 for additional information.

Question 15

If a RIC intends to self-certify as a QOF, the RIC must file

Form 1120-RIC and attach Form 8996, even if the RIC

had no income or expenses to report. If the RIC is

attaching Form 8996, check the “Yes” box for question 15.

On the line following the dollar sign, enter the amount from

Form 8996, line 15.

The penalty reported on this line from Form 8996,

line 15, is not due with the filing of this form. The IRS will

separately send to you a notice setting forth the due date

for the penalty payment and where that payment should

be sent.

Question 16

If the RIC 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. See Schedule O (Form 1120) and its

instructions for more information.

Schedule L—Balance Sheets per

Books

The balance sheets should agree with the RIC’s books

and records.

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

line 1.

Line 4. Tax-exempt securities. Include on this line:

1. State and local government obligations, the interest

on which is excludible from gross income under section

103(a); and

2. Stock in another mutual fund or RIC that distributed

exempt-interest dividends during the tax year of the RIC.

• Unrealized gains and losses on securities held

“available for sale”;

• Foreign currency translation adjustments;

• The excess of additional pension liability over

unrecognized prior service cost;

• Guarantees of employee stock (ESOP) debt; and

• Compensation related to employee stock award plans.

If the total adjustment to be entered on line 24 is a

negative amount, enter the amount in parentheses.

Schedule M-1

Reconciliation of Income (Loss) per Books With

Income per Return

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

any of the following:

• Entertainment expenses not deductible under section

274(a);

• Entertainment related meal expenses;

• Non-entertainment related meals not deductible under

section 274(n);

• Expenses for the use of an entertainment facility;

• The part of business gifts over $25;

• Expenses of an individual over $2,000 that are allocable

to conventions on cruise ships;

• Employee achievement awards of nontangible property

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

plan);

• The cost of skyboxes;

• The part of luxury water travel not deductible under

section 274(m);

• Expenses for travel as a form of education; and

• Other nondeductible travel and entertainment

expenses.

Line 7. Tax-exempt interest. Include as interest on

line 7 any exempt-interest dividends received by the RIC

as a shareholder in a mutual fund or other RIC.

Line 24. Adjustments to shareholders’ equity.

Examples of adjustments to report on this line include:

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the

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

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

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

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

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

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

Estimates of taxpayer burden. The following tables show burden estimates based on current statutory requirements

as of December 2025 for taxpayers filing 2025 Forms 1065, 1066, 1120, 1120-C, 1120-F, 1120-H, 1120-ND, 1120-S,

1120-SF, 1120-FSC, 1120-L, 1120-PC, 1120-REIT, 1120-RIC, 1120-POL, and related attachments. Time spent and

out-of-pocket costs are presented separately. Time burden is broken out by taxpayer activity, with reporting representing

the largest component. Out-of-pocket costs include any expenses incurred by taxpayers to prepare and submit their tax

returns. Examples include tax return preparation and submission fees, postage and photocopying costs, and tax

preparation software costs. While these estimates don’t include burden associated with post-filing activities, IRS

operational data indicate that electronically prepared and filed returns have fewer arithmetic errors, implying lower

post-filing burden.

Reported time and cost burdens are national averages and don’t necessarily reflect a “typical” case. Most taxpayers

experience lower than average burden, with taxpayer burden varying considerably by taxpayer type.

20

Instructions for Form 1120-RIC (2025)

The average burden for partnerships filing Forms 1065 and related attachments is about 60 hours and $5,300; the

average burden for corporations filing Form 1120 and associated forms is about 90 hours and $8,600; and the average

burden for Forms 1066, 1120-REIT, 1120-RIC, 1120-S, and all related attachments is 60 hours and $4,800. Within each

of these estimates there is significant variation in taxpayer activity. Tax preparation fees and other out-of-pocket costs

vary extensively depending on the tax situation of the taxpayer, the type of software or professional preparer used, and

the geographic location. Third-party burden hours are not included in these estimates.

Table 1 – Taxpayer Burden for Entities Taxed as Partnerships

Forms 1065, 1066, and all attachments

Primary form filed or type of

Total number of returns

taxpayer

(millions)

All Partnerships

Small

Large*

5.5

5.1

0.4

Average time (hours)

Average cost ($)

Average monetized

burden ($)

60

50

180

5,300

3,300

29,400

8,700

5,200

50,700

*A large business is defined as one having end-of-year assets greater than $10 million. A large business is defined the same way for partnerships, taxable

corporations, and pass-through corporations. A small business is any business that doesn’t meet the definition of a large business.

Table 2 – Taxpayer Burden for Entities Taxed as Taxable Corporations

Forms 1120, 1120-C, 1120-F, 1120-H, 1120-ND, 1120-SF, 1120-FSC, 1120-L, 1120-PC, 1120-POL, and all

attachments

Primary form filed or type of

Total number of returns

Average time (hours)

Average cost ($)

taxpayer

(millions)

All Taxable Corporations

Small

Large*

2.3

2.1

0.2

90

40

610

8,600

3,900

69,400

Average monetized

burden ($)

15,700

6,000

141,500

*A large business is defined as one having end-of-year assets greater than $10 million. A large business is defined the same way for partnerships, taxable

corporations, and pass-through corporations. A small business is any business that doesn’t meet the definition of a large business.

Table 3 – Taxpayer Burden for Entities Taxed as Pass-Through Corporations

Forms 1120-REIT, 1120-RIC, 1120-S, and all attachments

Primary form filed or type of

Total number of returns

taxpayer

(millions)

All Pass-Through Corporations

Small

Large*

6.2

6.1

0.1

Average time (hours)

Average cost ($)

Average monetized

burden ($)

60

50

290

4,800

4,200

42,600

7,700

6,500

76,600

*A large business is defined as one having end-of-year assets greater than $10 million. A large business is defined the same way for partnerships, taxable

corporations, and pass-through corporations. A small business is any business that doesn’t meet the definition of a large business.

Comments. If you have comments concerning the accuracy of these time estimates or suggestions for making these

forms simpler, we would be happy to hear from you. You can send us comments through IRS.gov/FormComments. Or

you can write to the Internal Revenue Service, Tax Forms and Publications Division, 1111 Constitution Ave. NW, IR-6526,

Washington, DC 20224. Do not send the tax form to this office. Instead, see Where To File, earlier, near the beginning of

the instructions.

Instructions for Form 1120-RIC (2025)

21

Index

A

Accounting methods 5

Accounting period (Tax Year) 6

Address change 9

Amended return 9

Amortization 10

Assembling the return 4

B

Backup withholding 14

Balance sheets 20

Business start-up expenses 10

C

Closely held corporations 11

Compensation of officers 11

Contributions, charitable 12

Credits against tax 16

D

Deductions 10

Depository methods of tax payment 4

Depreciation 12

Direct deposit of refund 14

Disclosure statement 7

Dividend income 9

Dividends paid- deductions 15

Dues, membership and other 13

E

Electronic deposit requirement 4

Employer identification number (EIN) 9

Establish date 9

Estimated tax payments 5, 14

Estimated tax penalty 14

Extension of time to file 3

F

Final return 9

Foreign person (defined) 18

22

Foreign tax credit 16

Forms and publications, how to get 1

Future developments 1

R

General business credit 16

General instructions 1

Recapture taxes 17

Reconciliation of income 20

Recordkeeping 6

Related party transactions 10

Rents 11

I

S

Interest due:

Late payment of tax 5

Interest expense 12

Interest income:

Tax-exempt 18, 20

Taxable 9

Salaries and wages 11

Schedule:

A 15

B 15

J 15

K 18

L 20

M-1 20

Shareholders’ equity adjustments 20

Signature 3

Small business taxpayer 19

Specific Instructions 8

G

L

Limitations on deductions 10, 12

Lobbying activities, nondeductibility 13

Lobbying expenses, nondeductibility 14

N

Name change 9

Net operating loss (NOL) 11

O

Other deductions 12

Other income 9

Other taxes 17

Overpaid estimated tax 5

P

Passive activity limitations 11

Penalties 5

Pension, profit-sharing, etc. plans 13

Personal holding company tax 16

Preparer, tax return 3

Private delivery services 3

Q

Qualified opportunity funds 2

T

Tax and payments 14

Tax issues, unresolved 1

Tax-exempt securities 20

Taxable income 9

Taxes and licenses 11

Total assets 9

Travel, meals, and entertainment 13

W

What’s new 1

When to file 3

Where to file 4

Who must file 1

Who must sign 3

Worksheet:

Built-in gains 18