# Instructions for Form 1120-L

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## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

2025

Instructions for Form 1120-L
U.S. Life Insurance Company Income Tax Return
Section references are to the Internal Revenue Code
unless otherwise noted.

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

What’s New
Direct deposit for Form 1120-L refund is now available. If the corporation 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 32c and 32e. If there is an
overpayment on line 31, enter the amount the corporation
wants refunded on line 32b and complete the direct
deposit information on lines 32c and 32e. Instead of a
direct deposit of the corporation’s refund, it can still
choose to have all or part of the overpayment credited to
next year’s estimated tax by completing line 32a.
Making a payment. If there is a balance due on
line 30, go to IRS.gov/Payments for information on how to
make a payment. See Tax Payments and the instructions
for line 30, later, for more details.
Extension of relief from additions to tax underpayments applicable to the corporate alternative minimum tax (CAMT). For tax year 2025, the IRS will waive
the penalty imposed under section 6655 for failure to
make estimated tax payments attributable to a CAMT
liability. See Notice 2025-27, 2025-26 I.R.B. 1611,
available at IRS.gov/irb/2025-26_IRB#NOT-2025-27. Also,
see the instructions for line 29, later.
Interim simplified method to determine applicable
corporation status. Proposed Regulations section
1.59-2(g)(2) provides that a corporation may choose to
apply the safe harbor method (simplified method) for
purposes of determining whether it is an applicable
corporation under section 59(k). Notice 2025-27, section
3.03, provides an optional interim simplified method for
determining applicable corporation status.
Domestic research and experimental expenditures.
P.L. 119-21 adds new section 174A to the Internal
Revenue Code. Section 174A(a) allows corporations to
deduct amounts paid or incurred for domestic research
and experimental expenditures in tax years beginning
after December 31, 2024. Alternatively, under section
174A(c), a corporation may elect to charge such
expenditures to a capital account and amortize such
expenditures ratably over a period of not less than 60
Jan 28, 2026

months, beginning with the month in which the corporation
first realizes benefits from such expenditures. In addition,
section 70302(f) of P.L. 119-21 provides corporations with
various transition options that may be applied to recover
unamortized amounts paid or incurred in tax years
beginning after December 31, 2021, and before January
1, 2025, that were capitalized and amortized for such tax
years. See Rev. Proc. 2025-28, available at IRS.gov/irb/
2025-38_IRB#REV-PROC-2025-28, for information
regarding the transition options contained in section
70302(f) of P.L. 119-21, as well as the procedures to
follow to begin applying either section 174A(a) or (c) for
the corporation’s first tax year beginning after December
31, 2024.
Gain from the sale or exchange of qualified farmland
property to qualified farmers. P.L. 119-21 created new
section 1062 regarding the gain from the sale or exchange
of qualified farmland property to qualified farmers. Section
1062 allows taxpayers to elect to pay the net income tax
attributable to the gain from the sale or exchange of
qualified farmland property to qualified farmers in four
equal annual installments. This election is available for
sales and exchanges of qualified farmland property to a
qualified farmer in tax years beginning after July 4, 2025.
For more information, see section 1062 and new Form
1062 Deferral of Tax on Gain From the Sale or exchange
of Qualified Farmland Property to Qualified Farmers, when
it is available.
Report the first installment due in tax year 2025 on
Form 1120-L, line 26b. For more information, see the
instructions for line 26b and line 27i, later.
Relief from additions to tax for underpayment of estimated income tax by taxpayers making an election
under section 1062. The IRS will waive a portion of the
penalty imposed under section 6655 for failure to make
estimated tax payments attributable to a qualified sale or
exchange of qualified farmland property to qualified
farmers for which an election under section 1062(a) is
properly made. Taxpayers that elect under section 1062 to
defer payment of tax may calculate required estimated tax
payments using the guidance in Notice 2026-3. See
Notice 2026-3, 2026-02 I.R.B. 307, available at
IRS.gov/irb/2026-02_IRB#NOT-2026-3.
Interest on loans secured by rural or agricultural real
property. P.L. 119-21 enacted new section 139L. For tax
years ending after July 4, 2025, section 139L allows a
partial exclusion from the gross income of interest
received by qualified lenders on loans secured by rural or
agricultural real property. See section 139L. Also, see
Notice 2025-71, 2025-50 I.R.B. 779, available at
IRS.gov/irb/2025-50_IRB#NOT-2025-71.

Instructions for Form 1120-L (2025) Catalog Number 11485H
Department of the Treasury Internal Revenue Service www.irs.gov

Photographs of Missing Children

The IRS is a proud partner with the National Center for
Missing & Exploited Children® (NCMEC). Photographs of
missing children selected by the Center may appear in
instructions on pages that would otherwise be blank. You
can help bring these children home by looking at the
photographs and calling 1-800-THE-LOST
(1-800-843-5678) if you recognize a child.

The Taxpayer Advocate Service

The Taxpayer Advocate Service (TAS) is an independent
organization within the IRS that helps taxpayers and
protects taxpayer rights. TAS’s job is to ensure that every
taxpayer is treated fairly and knows and understands their
rights under the Taxpayer Bill of Rights.
As a taxpayer, the corporation has rights that the IRS
must abide by in its dealings with the corporation. TAS can
help the corporation if:

• A problem is causing financial difficulty for the business;
• The business is facing an immediate threat of adverse

action; and
• The corporation has tried repeatedly to contact the IRS
but no one has responded, or the IRS hasn’t responded
by the date promised.

The TAS toolkit at TaxpayerAdvocate.IRS.gov can help
the corporation understand these rights.
TAS has offices in every state, the District of Columbia,
and Puerto Rico. Local advocates’ numbers are in their
local directories and at TaxpayerAdvocate.IRS.gov/
Contact-Us. The corporation can also call TAS at
877-777-4778.
TAS also works to resolve large-scale or systemic
problems that affect many taxpayers. If the corporation
knows of one of these broad issues, 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 corporation can view,
download, or print all of the forms and publications it may
need at IRS.gov/FormsPubs. Or, the corporation can go to
IRS.gov/OrderForms to place an order and have forms
mailed to it.
Getting tax forms and publications. Go to IRS.gov/
Forms to view, download, or print all the forms,
instructions, and publications you may need. Or you can
go to IRS.gov/OrderForms to place an order.
Mobile-friendly forms. You’ll need an IRS Online
account (OLA) to complete mobile-friendly forms that
2

require signatures. You’ll have the option to submit your
form(s) online or download a copy for mailing. You’ll need
scans of your documents to support your submission. Go
to IRS.gov/MobileFriendlyForms to place an order.

General Instructions
Purpose of Form

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

Who Must File

Every domestic life insurance company and certain
foreign corporations that would qualify as life insurance
companies if they were U.S. corporations must file Form
1120-L. This includes organizations described in section
501(m)(1) that provide commercial-type life insurance.

Mutual Savings Banks Conducting Life
Insurance Business

Mutual savings banks conducting life insurance business
and meeting the requirements of section 594 are subject
to an alternative tax consisting of:
• A partial tax computed on Form 1120, U.S. Corporation
Income Tax Return, on the taxable income of the bank,
excluding the life insurance department; and
• A partial tax on the taxable income computed on Form
1120-L of the life insurance department.
Enter the combined tax on Form 1120, Schedule J,
line 1b. File Form 1120 and attach Form 1120-L as a
statement (and identify it as such) or attach a statement
showing the computation of the taxable income of the life
insurance department (including all relevant information
that would be reported on Form 1120-L).

Foreign Life Insurance Companies

A foreign life insurance company that sells a U.S. real
property interest must file Form 1120-L and Schedule D
(Form 1120) to report the sale. Gain or loss from the sale
of a U.S. real property interest is considered effectively
connected with the conduct of a U.S. business, even
though the foreign life insurance company does not carry
on any insurance business in the United States and is not
otherwise required to file a U.S. income tax return. See
sections 842 and 897 and the instruction for Schedule K,
Line 8a, later.

Foreign-owned domestic disregarded entities (DEs).
If a foreign person, including a foreign corporation, wholly
owns a domestic DE, the domestic DE is treated as a
domestic corporation separate from its owner (the foreign
corporation) for purposes of the reporting requirements
under section 6038A that apply to 25% foreign-owned
domestic corporations. These rules apply to a domestic
DE owned by a foreign insurance company that makes an
election under section 953(c)(3)(C) but do not apply to a
domestic DE owned by a foreign insurance company that
makes an election under section 953(d) (for information
on these elections, see the instructions for item D). If a
foreign insurance company electing under section 953(c)
(3)(C) wholly owns a domestic DE, the DE may be
required to file Form 5472, Information Return of a 25%
Instructions Form 1120-L (2025)

Foreign-Owned U.S. Corporation or a Foreign Corporation
Engaged in a U.S. Trade or Business. For additional
information and coordination with Form 5472 filing by the
domestic DE, see the Instructions for Form 5472.
A domestic DE is generally a transparent entity. Any
insurance company that must file Form 1120-L will include
on Form 1120-L any tax items of a wholly owned domestic
DE that are subject to reporting.
Qualified opportunity investment. If the corporation
held a qualified investment in a qualified opportunity fund
(QOF) at any time during the year, the corporation must
file its return with Form 8997, Initial and Annual Statement
of QOF Investments, attached. See the instructions for
Form 8997.

Other Insurance Companies

Insurance companies other than life insurance companies
should file Form 1120-PC, U.S. Property and Casualty
Insurance Company Income Tax Return. A burial or
funeral benefit insurance company that directly
manufactures funeral supplies or performs funeral
services is taxable under section 831 and should file Form
1120-PC.

Definitions
Insurance company. An “insurance company” means
any corporation if more than half of its business during the
tax year is from the issuance of insurance or annuity
contracts or the reinsuring of risks underwritten by
insurance companies.
Life insurance company. A “life insurance company” is
an insurance company in the business of issuing life
insurance and annuity contracts either separately or
combined with health and accident insurance or
noncancelable contracts of health and accident insurance
that meet the reserves test in section 816(a). Guaranteed
renewable life, health, and accident insurance that the
corporation cannot cancel but reserves the right to adjust
premium rates by classes, according to experience under
the kind of policy involved, are treated as noncancelable.
The reserves test. The “reserves test” requires that life
insurance reserves, as defined in section 816(b), plus
unearned premiums and unpaid losses (whether or not
ascertained) on noncancelable life, health, or accident
policies not included in life insurance reserves must make
up more than 50% of total reserves as defined in section
816(c). When determining whether the reserves test has
been met:
1. Life insurance reserves and total reserves must
each be reduced by an amount equal to the mean of the
aggregates, at the beginning and end of the tax year, of
the policy loans outstanding with respect to contracts for
which life insurance reserves are maintained;
2. Amounts set aside and held at interest to satisfy
obligations under contracts that do not contain permanent
guarantees with respect to life, accident, or health
contingencies must not be included in either life insurance
reserves (section 816(c)(1)) or other reserves required by
law (section 816(c)(3)); and
Instructions Form 1120-L (2025)

3. Deficiency reserves must not be included in either
life insurance reserves or total reserves.

Electronic Filing

Corporations can generally electronically file (efile) Form
7004 (automatic extension of time to file) and Forms 940,
941, and 944 (employment tax returns). If there is a
balance due, the corporation can authorize an electronic
funds withdrawal while efiling. Form 1099 and other
information returns can also be electronically filed. The
option to efile does not, however, apply to certain returns.
For more information, go to IRS.gov/Filing. Click on the
links for “Businesses & Self-Employed” and
“Corporations.”

When To File

Generally, a corporation must file its income tax return by
the 15th day of the 4th month after the end of its tax year.
A new corporation filing a short-period return must
generally file by the 15th day of the 4th month after the
short period ends. A corporation that has dissolved must
generally file by the 15th day of the 4th month after the
date it dissolved.

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

Private Delivery Services (PDSs)

Corporations can use certain PDSs designated by the IRS
to meet the “timely mailing as timely filing” rule for tax
returns. Go to IRS.gov/PDS for the current list of
designated services.
The PDS can tell you how to get written proof of the
mailing date.
For the IRS mailing address to use if you’re using a
PDS, go to IRS.gov/PDSStreetAddresses.
Note: PDSs cannot deliver items to P.O. boxes. You must
use the U.S. Postal Service to mail any item to an IRS P.O.
box address.

Extension of Time To File

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

Who Must Sign

The return must be signed and dated by:
• The president, vice president, treasurer, assistant
treasurer, or chief accounting officer; and
• Any other corporate officer (such as tax officer)
authorized to sign.
If a return is filed on behalf of a corporation by a
receiver, trustee, or assignee, the fiduciary must sign the
3

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

Use the following address:

The United States

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

A foreign country or U.S. territory

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

return, instead of the corporate officer. Returns and forms
signed by a receiver or trustee in bankruptcy on behalf of
a corporation must be accompanied by a copy of the order
or instructions of the court authorizing signing of the return
or form.
Paid Preparer Use Only section. If an employee of the
corporation completes Form 1120-L, the paid preparer
section should remain blank. Anyone who prepares Form
1120-L but does not charge the corporation should not
complete that section. Generally, anyone who is paid to
prepare the return must sign it and complete the section.
The paid preparer must complete the required preparer
information and:
• Sign the return in the space provided for the preparer’s
signature,
• Include their Preparer Tax Identification Number (PTIN),
and
• Give a copy of the return to the taxpayer.
A paid preparer may sign original or amended returns
by rubber stamp, mechanical device, or computer
software program.

Paid Preparer Authorization

If the corporation wants to allow the IRS to discuss its
2025 tax return with the paid preparer who signed it,
check the “Yes” box in the signature area of the return.
This authorization applies only to the individual whose
signature appears in the “Paid Preparer Use Only” section
of the return. It doesn’t apply to the firm, if any, shown in
that section.
If the “Yes” box is checked, the corporation is
authorizing the IRS to call the paid preparer to answer any
questions that may arise during the processing of its
return. The corporation is also authorizing the paid
preparer to:
• Give the IRS any information that is missing from the
return;
• Call the IRS for information about the processing of the
return or the status of any related refund or payment(s);
and
• Respond to certain IRS notices about math errors,
offsets, and return preparation.
The corporation is not authorizing the paid preparer to
receive any refund check, bind the corporation to anything
(including any additional tax liability), or otherwise
represent the corporation before the IRS.
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The authorization will automatically end no later than
the due date (excluding extensions) for filing the
corporation’s 2026 tax return. If the corporation wants to
expand the paid preparer’s authorization or revoke the
authorization before it ends, see Pub. 947, Practice Before
the IRS and Power of Attorney.

Statements
Annual statement. In general, every domestic or foreign
life insurance company must attach a copy of the National
Association of Insurance Commissioners (NAIC) annual
statement filed with the state of domicile and used as the
basis for computing taxable income. If a different annual
statement was used as the basis for computing taxable
income, attach that annual statement to Form 1120-L.
However, see Electronic filing next.
Electronic filing. If a domestic or foreign life insurance
company files Form 1120-L electronically, don’t attach the
annual statement or pro forma annual statement to the
electronically filed return. However, if the full annual
statement is not attached, you must provide a copy of the
annual statement or pro forma annual statement to the
IRS if requested and retain it with your other tax records
for the period required by the regulations.
Reconciliation. Corporations that do not file
Schedule M-3 (Form 1120-L) with Form 1120-L must
attach a statement that reconciles Form 1120-L with the
annual statement used as the basis for computing taxable
income reported on Form 1120-L. Also, see the
instructions for Schedule F, later, for additional required
reconciliations.

Assembling the Return

To ensure that the corporation’s tax return is correctly
processed, attach all schedules and other forms after
page 6 of Form 1120-L in the following order.
1. Schedule N (Form 1120).
2. Form 4626.
3. Form 4136.
4. Form 8978.
5. Form 965-B.
6. Form 8941.
7. Form 3800.
8. Form 8283 (New).
9. Form 4255.
Instructions Form 1120-L (2025)

10. Additional schedules in alphabetical order.
11. Additional forms in numerical order.
12. Supporting statements and attachments.
Complete every applicable entry space on Form
1120-L. Do not enter “See Attached” or “Available Upon
Request” instead of completing the entry spaces. If more
space is needed on the forms or schedules, attach
separate sheets using the same size and format as on the
printed forms. If there are supporting statements and
attachments, arrange them in the same order as the
schedules or forms they support and attach them last.
Show the totals on the printed forms. Enter the
corporation’s name and employer identification number
(EIN) on each supporting statement or attachment.

Tax Payments

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

Electronic Deposit Requirement

Corporations must use electronic funds transfers (EFT) to
make all federal tax deposits (such as deposits of
employment, excise, and corporate income taxes). An
EFT can be made using the Electronic Federal Tax
Payment System (EFTPS), IRS Direct Pay, or the
corporation’s IRS business tax account.

If the corporation does not want to use one of these
methods, it can arrange for its tax professional, financial
institution, payroll service, or other trusted third party to
make deposits on its behalf. Also, it can arrange for its
financial institution to submit a same-day wire payment
(discussed later) on its behalf. EFTPS is a free service
provided by the Department of the Treasury. Payments
made using the corporation’s IRS business tax account
are also free. 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.
Additional information about EFTPS is available in Pub.
966, Electronic Federal Tax Payment System: A Guide to
Getting Started.
For more information about making an EFT through the
corporation’s IRS business tax account, go to IRS.gov/
BusinessAccount.
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
corporation’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
corporation uses a third party to make deposits on its
behalf, they may have different cutoff times.
Instructions Form 1120-L (2025)

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

Estimated Tax Payments
Generally, the following rules apply to the corporation’s
payments of estimated tax.
• The corporation must make installment payments of
estimated tax if it expects its total tax for the year (less
applicable credits) to be $500 or more.
• The installments are due by the 15th day of the 4th, 6th,
9th, and 12th months of the tax year. If any date falls on a
Saturday, Sunday, or legal holiday, the installment is due
on the next regular business day.
• The corporation must use electronic funds transfers to
make installment payments of estimated tax.
• If, after the corporation figures and deposits estimated
tax, it finds that its tax liability for the year will be more or
less than originally estimated, it may have to refigure its
required installments. If earlier installments were
underpaid, the corporation may owe a penalty. See
Estimated tax penalty later.
• If the corporation overpaid estimated tax, it may be able
to get a quick refund by filing Form 4466, Corporation
Application for Quick Refund of Overpayment of
Estimated Tax. See the instructions for line 27c, later.
See section 6655 and Pub. 542, Corporations, for more
information on how to figure estimated taxes.
Estimated tax penalty. A corporation that does not
make estimated tax payments when due may be subject
to an underpayment penalty for the period of
underpayment. Generally, a corporation is subject to the
penalty if its tax liability is $500 or more and it did not
timely pay at least the smaller of:
• Its tax liability for the current year, and
• Its prior year’s tax.
See section 6655 for details and exceptions, including
special rules for large corporations.
Use Form 2220, Underpayment of Estimated Tax by
Corporations, to see if the corporation owes a penalty and
to figure the amount of the penalty. If Form 2220 is
completed, enter the penalty on line 29. See the
instructions for line 29, later. Also, see Extension of relief
from additions to tax underpayments applicable to the
corporate alternative minimum tax (CAMT), earlier.

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

5

Interest. Interest is charged on taxes paid late even if an
extension of time to file is granted. Interest is also charged
on penalties imposed for failure to file, negligence, fraud,
substantial valuation misstatements, substantial
understatements of tax, and reportable transaction
understatements from the due date (including extensions)
to the date of payment. The interest charge is figured at a
rate determined under section 6621.
Late filing of return. A corporation that does not file its
tax return by the due date, including extensions, may be
penalized 5% of the unpaid tax for each month or part of a
month the return is late, up to a maximum of 25% of the
unpaid tax. The minimum penalty for a tax return required
to be filed in 2026 that is over 60 days late is the smaller of
the tax due or $525 (adjusted for inflation). The penalty
will not be imposed if the corporation can show that the
failure to file on time was due to reasonable-cause. See
Note, earlier.
Relief from additions to tax for underpayments applicable to the corporate alternative minimum tax
(CAMT). For tax year 2025, the IRS will waive the penalty
imposed under section 6655 for failure to make estimated
tax payments attributable to a CAMT liability. See Notice
2025-27, 2025-26 I.R.B. 1611, available at IRS.gov/irb/
2025-26_IRB#NOT-2025-27. Also, see the instructions for
Line 29.
Late payment of tax. A corporation that does not pay
the tax when due may generally be penalized 1/2 of 1% of
the unpaid tax for each month or part of a month the tax is
not paid, up to a maximum of 25% of the unpaid tax. See
Note, earlier.
Trust fund recovery penalty. This penalty may apply if
certain excise, income, social security, and Medicare
taxes that must be collected or withheld are not collected
or withheld, or these taxes are not paid. These taxes are
generally reported on:
• Form 720, Quarterly Federal Excise Tax Return;
• Form 941, Employer’s QUARTERLY Federal Tax
Return;
• Form 944, Employer’s ANNUAL Federal Tax Return;
and
• 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. For
details, including the definition of responsible persons,
see the Instructions for Form 720 or Pub. 15 (Circular E),
Employer’s Tax Guide.
Other penalties. Other penalties can be imposed for
negligence, substantial understatement of tax, reportable
transaction understatements, and fraud. See sections
6662, 6662A, and 6663.

Accounting Methods

The return of a life insurance company must be filed using
the accrual method of accounting or, to the extent
permitted under regulations, a combination of the accrual
method with any other method, except the cash receipts
6

and disbursements method. In all cases, the method used
must clearly reflect life insurance company income
(LICTI).
Change in accounting method. Generally, the
corporation must get IRS consent to change either an
overall method of accounting or the accounting treatment
of any material item for income tax purposes. To obtain
consent, the corporation must generally file Form 3115,
Application for Change in Accounting Method, during the
tax year for which the change is requested. See the
Instructions for Form 3115 and Pub. 538 for more
information and exceptions. Also, see the Instructions for
Form 3115 for procedures that may apply for obtaining
automatic consent to change certain methods of
accounting, non-automatic change procedures, and
reduced Form 3115 filing requirements.

Accounting Period

An insurance company must figure its taxable income on
the basis of a tax year. A tax year is the annual accounting
period an insurance company uses to keep its records
and report its income and expenses.

As a general rule under section 843, the tax year for
every insurance company is the calendar year. However, if
an insurance company joins in the filing of a consolidated
return, it may adopt the tax year of the common parent
corporation even if that year is not a calendar year.

Rounding Off to Whole Dollars

The corporation may enter decimal points and cents when
completing its return. However, the corporation should
round off cents to whole dollars on its return, forms, and
schedules to make completing its return easier. The
corporation must either round off all amounts on its return
to whole dollars or use cents for all amounts. To round,
drop amounts under 50 cents and increase amounts from
50 to 99 cents to the next dollar. For example, $8.40
rounds to $8 and $8.50 rounds to $9.
If two or more amounts must be added to figure the
amount to enter on a line, include cents when adding the
amounts and round off only the total.

Recordkeeping

Keep the corporation’s records for as long as they may be
needed for the administration of any provision of the
Internal Revenue Code. Usually, records that support an
item of income, deduction, or credit on the return must be
kept for 3 years from the date the return is due or filed,
whichever is later. Keep records that verify the
corporation’s basis in property for as long as they are
needed to figure the basis of the original or replacement
property.
The corporation should keep copies of all filed returns.
They help in preparing future and amended returns and in
the calculation of earnings and profits.

Other Forms and Statements That
May Be Required
Reportable transaction disclosure statement.
Disclose information for each reportable transaction in
which the corporation participated. Form 8886,
Instructions Form 1120-L (2025)

Reportable Transaction Disclosure Statement, must be
filed for each tax year that the federal income tax liability
of the corporation is affected by its participation in the
transaction. The following are reportable transactions.
1. Any listed transaction, that is a transaction that is
the same as or substantially similar to one of the types of
transactions that the IRS has determined to be a tax
avoidance transaction and identified by notice, regulation,
or other published guidance as a listed transaction.
2. Any transaction offered under conditions of
confidentiality for which the corporation (or a related party)
paid an advisor a fee of at least $250,000.
3. Certain transactions for which the corporation (or a
related party) has contractual protection against
disallowance of the tax benefits.
4. Certain transactions resulting in a loss of at least
$10 million in any single year or $20 million in any
combination of years.
5. Any transaction identified by the IRS by notice,
regulation, or other published guidance as a “transaction
of interest.”
For more information, see Regulations section
1.6011-4. Also see the Instructions for Form 8886.
Penalties. The corporation may have to pay a penalty if
it is required to disclose a reportable transaction under
section 6011 and fails to properly complete and file Form
8886. Penalties also apply under section 6707A if the
corporation fails to file Form 8886 with its corporate return,
fails to provide a copy of Form 8886 to the Office of Tax
Shelter Analysis (OTSA), or files a form that fails to include
all the information required (or includes incorrect
information). Other penalties, such as an accuracy-related
penalty under section 6662A, also apply. See the
Instructions for Form 8886 for details on these and other
penalties.
Reportable transactions by material advisors.
Material advisors to any reportable transaction must
disclose certain information about the reportable
transaction by filing Form 8918, Material Advisor
Disclosure Statement, with the IRS. See the Instructions
for Form 8918.
Transfers to a corporation controlled by the transferor. Every significant transferor (as defined in Regulations
section 1.351-3(d)(1)) that receives stock of a corporation
in exchange for property in a nonrecognition event must
include the statement required by Regulations section
1.351-3(a) on or with the transferor’s tax return for the tax
year of the exchange. The transferee corporation must
include the statement required by Regulations section
1.351-3(b) on or with its return for the tax year of the
exchange, unless all the required information is included
in any statement(s) provided by a significant transferor
that is attached to the same return for the same section
351 exchange. If the transferor or transferee corporation is
a controlled foreign corporation (CFC), each U.S.
shareholder (within the meaning of section 951(b)) must
include the required statement on or with its return.
Distributions under section 355. Every corporation that
makes a distribution of stock or securities of a controlled
corporation, as described in section 355 (or so much of
Instructions Form 1120-L (2025)

section 356 as it relates to section 355), must include the
statement required by Regulations section 1.355-5(a) on
or with its return for the year of the distribution. A
significant distributee (as defined in Regulations section
1.355-5(c)) that receives stock or securities of a controlled
corporation must include the statement required by
Regulations section 1.355-5(b) on or with its return for the
year of receipt. If the distributing or distributee corporation
is a CFC, each U.S. shareholder (within the meaning of
section 951(b)) must include the statement on or with its
return.
Dual consolidated losses. If a domestic corporation
incurs a dual consolidated loss (as defined in Regulations
section 1.1503(d)–1(b)(5)), the corporation (or
consolidated group) may need to attach an elective relief
agreement and/or an annual certification as provided in
Regulations section 1.1503-2(g)(2).
Election to reduce basis under section 362(e)(2)(C).
If property is transferred to a corporation subject to section
362(e)(2), the transferor and the transferee corporation
may elect, under section 362(e)(2)(C), to reduce the
transferor’s basis in the stock received instead of reducing
the transferee corporation’s basis in the property
transferred. Once made, the election is irrevocable. For
more information, see section 362(e)(2) and Regulations
section 1.362-4. If an election is made, a statement must
be filed in accordance with Regulations section 1.362-4(d)
(3).
Form 8975, Country-by-Country Report. Certain U.S.
persons that are the ultimate parent entity of a U.S.
multinational enterprise group with annual revenue for the
preceding reporting period of $850 million or more are
required to file Form 8975. Form 8975 and Schedule A
(Form 8975) must be filed with the income tax return of the
ultimate parent entity of a U.S. multinational enterprise
group for the tax year in or within which the reporting
period covered by Form 8975 ends. For more information,
see Form 8975, Schedule A (Form 8975) and the
Instructions for Form 8975 and Schedule A (Form 8975).
Additional forms and statements. See Pub. 542 for a
list of other forms and statements a corporation may need
to file in addition to the forms and statements discussed
throughout these instructions.

Specific Instructions
Period Covered

Section 843 requires all insurance companies to file on a
calendar year basis, unless they join in the filing of a
consolidated return. If a consolidated return is filed,
indicate the period covered on the parent corporation’s
return.

Name and Address

Enter the corporation’s true name (as set forth in the
charter or other legal document creating it), address, and
EIN on the appropriate lines. Enter the address of the
corporation’s principal office or place of business. Include
the suite, room, or other unit number after the street
address. If the post office does not deliver mail to the
7

street address and the corporation 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 corporation is incorporated. For
example, if a business is incorporated in Delaware or
Nevada and the corporation’s principal office is located in
Little Rock, Arkansas, the corporation should enter the
Little Rock address.
If the corporation receives its mail in care of a third
party (such as an accountant or an attorney), enter on the
street address line “C/O” followed by the third party’s
name and street address or P.O. box.
If the corporation has a foreign address, include the city
or town, state or province, country, and foreign postal
code. Do not abbreviate the country name. Follow the
country’s practice for entering the name of the state or
province and postal code.

Item A. Identifying Information
Consolidated Return

If an affiliated group of corporations includes one or more
domestic life insurance companies taxed under section
801, the common parent may elect to treat those life
insurance companies as includible corporations. The life
insurance companies must have been members of the
group for the 5 tax years immediately preceding the tax
year for which the election is made. See section 1504(c)
(2) and Regulations section 1.1502-47(b)(12).
The eligibility requirements (the tacking rule) for a life
insurance company to join in the filing of a consolidated
return with nonlife companies are covered in Regulations
section 1.1502-47(b)(12)(v).
If an election under section 1504(c)(2) is in effect for an
affiliated group for the tax year, all items of members of
the group that are not life insurance companies must not
be taken into account in figuring the tentative LICTI of
members that are life insurance companies.
Corporations filing a consolidated return must check
box 1 of item A and attach Form 851, Affiliations
Schedule, and other supporting statements to the return.
Also, for the first year a subsidiary corporation is being
included in a consolidated return, attach Form 1122,
Authorization and Consent of Subsidiary Corporation To
Be Included in a Consolidated Income Tax Return, to the
parent’s consolidated return. Attach a separate Form 1122
for each new subsidiary being included in the
consolidated return.
File supporting statements for each corporation
included in the consolidated return. Do not use Form
1120-L as a substitute for the supporting statement. On
the supporting statement, use columns to show the
following, both before and after adjustments.
1. Items of gross income and deductions.
2. A computation of taxable income.
3. Balance sheets as of the beginning and end of the
tax year.
4. A reconciliation of income per books with income
per return.
8

5. A reconciliation of retained earnings.
Enter on Form 1120-L the totals for each item of
income, gain, loss, expense, or deduction, net of
eliminating entries for intercompany transactions between
corporations within the consolidated group. Attach
consolidated balance sheets and a reconciliation of
consolidated retained earnings.
For more information on consolidated returns, see the
regulations under section 1502.

Life-Nonlife Consolidated Return

If the corporation is the common parent of a life-nonlife
consolidated group, check boxes 1 and 2 of item A.
Filing requirements. The common parent of a
life-nonlife consolidated group must satisfy the following
filing requirements.
• File the applicable consolidated corporate income tax
return: a Form 1120-L, where the common parent is a life
insurance company; a Form 1120-PC, where the common
parent is an insurance company, other than a life
insurance company; or a Form 1120, where the common
parent is any other type of corporation.
• Indicate clearly on the face of the return that the
corporate tax return is a life-nonlife return. This
requirement is satisfied by checking box 2 of item A on
page 1.
• Show any setoffs required by paragraphs (e), (h), and
(j) of Regulations section 1.1502-47.
• Report separately the nonlife consolidated taxable
income or loss, determined under Regulations section
1.1502-47(f), on a Form 1120 or 1120-PC (whether filed
by the common parent or as an attachment to the
consolidated return), for all nonlife members of the
consolidated group.
• Report separately the consolidated LICTI (as defined by
Regulations section 1.1502-47(g)(1)), determined under
Regulations section 1.1502-11, on a Form 1120-L
(whether filed by the common parent or as an attachment
to the consolidated return), for all life members of the
consolidated group.
If a nonlife insurance company is a member of an
affiliated group, file Form 1120-PC as an attachment to the
consolidated return in addition to the supporting
statements discussed earlier under Consolidated Return.
Across the top of page 1 of Form 1120-PC, write
“Supporting Statement to Consolidated Returns.”

Schedule M-3 (Form 1120-L)

A life insurance company with total assets
(nonconsolidated or consolidated for all companies
included within a tax consolidation group) of $10 million or
more on the last day of the tax year must file
Schedule M-3 (Form 1120-L), Net Income (Loss)
Reconciliation for U.S. Life Insurance Companies With
Total Assets of $10 Million or More. A corporation filing
Form 1120-L that is not required to file Schedule M-3 may
voluntarily file Schedule M-3.
If you are filing Schedule M-3 (Form 1120-L), check
box 3, “Schedule M-3 (Form 1120-L) attached,” in item A
at the top of page 1 of Form 1120-L. See the Instructions
for Schedule M-3 (Form 1120-L) for more details.
Instructions Form 1120-L (2025)

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

Item B. Employer Identification
Number (EIN)

Enter the corporation’s EIN. If the corporation does not
have an EIN, it must apply for one. An EIN can be applied
for in one of the following ways.
• Online—Click on the Employer ID Numbers link at
IRS.gov/EIN. The EIN is issued immediately once the
application information is validated.
• By faxing or mailing Form SS-4, Application for
Employer Identification Number.
Note: Corporations located in the United States or U.S.
territories can use the online application. Foreign
corporations should call 1-267-941-1099 (not a toll-free
number) for more information on obtaining an EIN. See
the Instructions for Form SS-4.
EIN applied for but not received. If the corporation has
not received its EIN by the time the return is due, enter
“Applied For” and the date the corporation applied in the
space for the EIN. However, if the corporation is filing its
return electronically, an EIN is required at the time the
return is filed. An exception applies to subsidiaries of
corporations whose returns are filed with the parent’s
electronically filed consolidated Form 1120. These
subsidiaries should enter “Applied For” in the space for the
EIN on their returns. The subsidiaries’ returns are
identified under the parent corporation’s EIN.
For more information, see the Instructions for Form
SS-4.

Item D. Section 953 Elections

Check the appropriate box if the corporation is a foreign
corporation and elects under:
1. Section 953(c)(3)(C) to treat its related person
insurance income as effectively connected with the
conduct of a trade or business in the United States, and
2. Section 953(d) to be treated as a domestic
corporation.
Generally, a foreign corporation making either election
must file its return by sending it to:
Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409
See Notice 87-50, 1987-2 C.B. 357 and Revenue
Procedure 2003-47, 2003-28 I.R.B. 55, for the procedural
rules, election statement formats, and filing addresses for
making the respective elections under section 953(c)(3)
(C) or section 953(d).
Once either election is made, it will apply to the tax year
for which it was made and all subsequent tax years unless
revoked with the consent of the IRS. Also, any loss of a
foreign corporation electing to be treated as a domestic
insurance company under section 953(d) will be treated
as a dual-consolidated loss and may not be used to
reduce the taxable income of any other member of the
affiliated group for the tax year or any other tax year.
Instructions Form 1120-L (2025)

If a section 953(d) election is made, include the
additional tax required to be paid on line 8z of Schedule K.
On the dotted line to the left of line 8z of Schedule K, write
“Section 953(d)” and the amount. Attach a statement
showing the computation. See section 953(d) for more
details.

Item E. Final Return, Name Change,
Address Change, or Amended Return
Indicate if this is a final return, name change, address
change, or amended return by checking the appropriate
box.

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

Life Insurance Company Taxable
Income
Income

Except as otherwise provided in the Internal Revenue
Code, gross income includes all income from whatever
source derived.
Line 1. Enter gross premiums and other consideration
received on insurance and annuity contracts less return
premiums and premiums and other consideration paid for
indemnity reinsurance.
Gross premiums and other consideration include
advance premiums, deposits, fees, assessments,
consideration received for assuming liabilities under
contracts not issued by the corporation, and any amount
treated as premiums received under section 808(e).
Return premiums include amounts rebated or refunded
due to policy cancellations or incorrectly computed
premiums but do not include amounts returned to
policyholders when such amounts are not fixed in the
contract but instead depend on the corporation’s
experience or the management’s discretion.
Line 3a. Decrease in reserves under section 807(f). If
the amount of any item referred to in section 807(c)
decreased as a result of a change in the basis used to
determine that item, then enter the section 807(f)
prescribed portion of the change that must be included in
life insurance company gross income (LICGI).
If a corporation no longer qualifies as a life insurance
company, the balance of any adjustments under section
807(f) must be taken into account in the last tax year the
corporation is qualified to file Form 1120-L. See section
807(f)(2).
Line 3b. Income from Reserve Transition Relief. If
section 807(d) (as amended by P.L. 115-97) decreased
the amount of the reserve for any contract as of the close
of the tax year preceding the first tax year beginning after
2017, enter the portion of the change that must be
included in LICGI as prescribed by section 13517(c)(3) of
P.L. 115-97. See Revenue Procedure 2019-34, 2019-35
I.R.B. 669, for more information.
9

Line 4. Investment income. Enter the amount from
Schedule B, line 6, less 50% of interest income of an
employee stock ownership plan (ESOP) loan made prior
to August 20, 1996. Also, see section 1602 of P.L.
104-188 for binding contracts and refinancing rules.
Line 5. Capital gain net income. Unless specifically
excluded by section 1221, each asset held by a
corporation (whether or not connected with its business) is
a “capital asset.”
Under section 1221, capital asset does not include the
following.
1. Assets that can be inventoried or property held
mainly for sale to customers.
2. Depreciable or real property used in the trade or
business.
3. Certain copyrights or literary, musical, or artistic
compositions.
4. Accounts or notes receivable acquired in the
ordinary course of trade or business for services rendered
or from the sale of property described in (1) above.
5. Certain publications of the U.S. Government.
Section 818(b) modifies the above definition so only
property used in carrying on an insurance business will be
considered as “depreciable or real property used in the
corporation’s trade or business.” For life insurance
companies, gains or losses from the sale or exchange of
depreciable assets of any business other than an
insurance business will be treated as gains or losses from
the sale or exchange of capital assets.
See section 818(c) and the related regulations for how
to limit the gain from the sale or exchange of any section
818(c) property.
Form 8949, Sales and Other Dispositions of Capital
Assets, must be attached to Schedule D (Form 1120), as
required.
Line 7. Other income. Enter any other taxable income,
includible in LICGI, not reported on lines 1 through 6. List
the type and amount of income on an attached statement.
If the life insurance company has only one item of other
income, describe it in parentheses on line 7. The following
are examples of other income to report on line 7.
• Gains and losses (including ordinary gains and losses)
from sales or exchanges of assets used in a trade or
business and from involuntary conversions reported on
Form 4797, Sales of Business Property. Section 818(b)(1)
provides that for section 1231(a), “property used in a trade
or business” includes only the following.
1. Property used in carrying on an insurance business
that is either real or depreciable property held for more
than 1 year.
2. Timber, coal, and domestic iron ore to which section
631 applies.
For (1) above, property used in a trade or business
does not include property includible in inventory; property
held primarily for sale to customers; or certain copyrights,
literary, musical, or artistic compositions, letters,
memoranda, and similar property.

10

• Any amount includible in income from Form 6478,
Biofuel Producer Credit, if applicable.
• Any amount includible in income from Form 8864,
Biodiesel, Renewable Diesel, or Sustainable Aviation
Fuels Credit.
• Ordinary income from trade or business activities of a
partnership from Schedule K-1 (Form 1065), Partner’s
Share of Income, Deductions, Credits, etc. Do not offset
ordinary losses against ordinary income. Instead, include
the losses on line 18. Show the partnership’s name,
address, and EIN on a separate statement attached to this
return. If the amount entered is from more than one
partnership, identify the amount from each partnership.
• Section 91 Transferred Loss Amount. Enter the
transferred loss amount and identify the amount as
“Section 91 Transferred Loss Amount” required to be
recognized under section 91 resulting from a transfer of
substantially all the assets of a foreign branch (within the
meaning of section 367(a)(3)(C), as in effect before its
repeal) to a foreign corporation with respect to which you
were a U.S. shareholder immediately after the transfer as
other income. Under section 91(d), transferred loss
amounts recognized are treated as derived from sources
within the United States.
• Part or all of the proceeds received from certain
corporate-owned life insurance contracts issued after
August 17, 2006. Corporations that own one or more
employer-owned life insurance contracts issued after
August 17, 2006, must file Form 8925, Report of
Employer-Owned Life Insurance Contracts. See Form
8925.
• Income from cancellation of debt (COD) for the
repurchase of a debt instrument for less than its adjusted
issue price.
• The corporation’s share of the following income from
Form 8621, Information Return by a Shareholder of a
Passive Foreign Investment Company or Qualified
Electing Fund.
See Form 8621 and the Instructions for Form 8621 for
details.
1. Ordinary earnings of a qualified electing fund
(QEF).
2. Gain or loss from marking passive foreign
investment company (PFIC) stock to market.
3. Gain or loss from sale or other disposition of section
1296 stock.
4. Excess distributions from a section 1291 fund
allocated to the current year and pre-PFIC years, if any.
Deductions
Limitations on Deductions
Section 263A uniform capitalization rules. The
uniform capitalization rules of section 263A require
corporations to capitalize certain costs.
A small business taxpayer is not required to capitalize
costs under section 263A. A small business taxpayer that
wants to discontinue capitalizing costs under section
263A must change its method of accounting. See section
263A(i) and Regulations section 1.263A-1(j). Also, see
Change in accounting method, earlier.
Instructions Form 1120-L (2025)

For more information on the uniform capitalization rules,
see Pub. 538. Also, see Regulations sections 1.263A-1
through 1.263A-3.
Transactions between related taxpayers. Generally,
an accrual basis taxpayer can only deduct business
expenses and interest owed to a related party in the year
the payment is included in the income of the related party.
See sections 163(e)(3) and 267 for limitations on
deductions for unpaid interest and expenses.
Limitations on business interest expense. Business
interest expense may be limited. See section 163(j) and
Form 8990, Limitation on Business Interest Expense
Under Section 163(j). Also, see the instructions for
line 15a and Schedule M, Question 17, later.
Section 291 limitations. Corporations may be required
to adjust certain deductions. See section 291 to determine
the amount of the adjustment.
Golden parachute payments. A portion of the
payments made by a corporation to key personnel that
exceeds their usual compensation may not be deductible.
This occurs when the corporation has an agreement
(golden parachute) with these key employees to pay them
these excess amounts if control of the corporation
changes. See section 280G and Regulations section
1.280G-1.
Business startup and organizational costs. A
corporation can elect to deduct a limited amount of startup
and organizational costs it paid or incurred. Any remaining
costs must generally be amortized over a 180-month
period. See sections 195 and 248 and the related
regulations.
Time for making the election. The corporation
generally elects to deduct startup or organizational costs
by claiming the deduction on its income tax return filed by
the due date (including extensions) for the tax year in
which the active trade or business begins.
For more details, see the Instructions for Form 4562,
Depreciation and Amortization.
If the corporation timely filed its return for the year
without making an election, it can still make an election by
filing an amended return within 6 months of the due date
of the return (excluding extensions). Clearly indicate the
election on the amended return and write “Filed pursuant
to section 301.9100-2” at the top of the amended return.
File the amended return at the same address the
corporation filed its original return. The election applies
when figuring taxable income for the current tax year and
all subsequent years.
The corporation can choose to forgo the elections
above by affirmatively electing to capitalize its startup or
organizational costs on its income tax return filed by the
due date (including extensions) for the tax year in which
the active trade or business begins.
The election to either amortize or capitalize startup
costs is irrevocable and applies to all startup costs that are
related to the trade or business.
Report the deductible amount of startup and
organizational costs and any amortization on line 18. For
Instructions Form 1120-L (2025)

amortization that begins during the current year, complete
and attach Form 4562.
Reducing certain expenses for which credits are allowable. If the corporation claims certain credits, it may
need to reduce the otherwise allowable deductions for
expenses used to figure the credit. This applies to credits
such as the following.
• Employment credits. See Employment credits, later.
• Credit for increasing research activities (Form 6765).
• Orphan drug credit (Form 8820).
• Disabled access credit (Form 8826).
• Employer credit for social security and Medicare taxes
paid on certain employee tips (Form 8846).
• Credit for small employer pension plan startup costs
(Form 8881).
• Credit for employer-provided childcare facilities and
services (Form 8882).
• Credit for small employer health insurance premiums
(Form 8941).
If the corporation has any of these credits, figure the
current year credit before figuring the deduction for
expenses on which the credit is based. If the corporation
capitalized any costs on which it figured the credit, it may
need to reduce the amount capitalized by the credit
attributable to these costs.
See the instructions for the form used to figure the
applicable credit for more information.
Limitations on deductions related to property leased
to tax-exempt entities. If a corporation leases property
to a governmental or other tax-exempt entity, the
corporation cannot claim deductions related to the
property to the extent that they exceed the corporation’s
income from the lease payments. This disallowed
tax-exempt use loss can be carried over to the next tax
year and treated as a deduction with respect to the
property for that tax year. See section 470(d) for more
details and exceptions.
Line 9. Death benefits, etc. Enter all claims and benefits
accrued and losses incurred (whether or not ascertained)
during the year on insurance and annuity contracts.
Losses incurred (whether or not ascertained) include a
reasonable estimate of both losses incurred but not
reported and of reported losses, when the amount of the
losses cannot be determined by the end of the tax year.
Losses incurred must be adjusted to take into account
recoveries (for example, for reinsurance) for those losses
together with estimates of those recoveries that may be
recovered on those losses in future years.
Under section 807(c), the amount of unpaid

TIP losses (other than losses on life insurance

contracts) must be the amount of the discounted
unpaid losses under section 846. See the instructions for
Schedule F, line 2, for more information on the discounting
provisions.
Line 11a. Increase in reserves under section 807(f).
If the amount of any item referred to in section 807(c)
increased as a result of a change in the basis used to
determine that item, then enter the section 807(f)
prescribed portion of the change that is a deduction in
computing LICTI.
11

If a corporation ceases to qualify as a life insurance
company, the balance of any adjustments under section
807(f) must be taken into account in the last year that the
corporation is qualified to file Form 1120-L. See section
807(f)(2).
Line 11b. Deduction from Reserve Transition Relief. If
section 807(d) increased the amount of the reserve for
any contract as of the close of the tax year preceding the
first tax year beginning after 2017, enter the portion of the
change that is a deduction in computing LICTI as
prescribed by the code section. See Revenue Procedure
2019-34, 2019-35 I.R.B. 669, for more information.
Line 12. Deductible policyholder dividends. A
policyholder dividend is any dividend or similar distribution
to policyholders in their capacity as such and includes any
amount paid or credited (including an increase in benefits)
where the amount is not fixed in the contract but depends
on the corporation’s experience or management’s
discretion. Enter on line 12 the amount of policyholder
dividends paid or credited during the tax year. Also, under
section 808(e), any policyholder dividend that (a)
increases either the cash surrender value of the contract
or other benefits payable under the contract or (b) reduces
the premium otherwise required to be paid is treated as
paid to and returned by the policyholder to the company
as a premium. Include these amounts in income on
page 1, line 1.
Line 13. Assumption by another person of liabilities
under insurance, etc., contracts. Enter the total
consideration paid by the corporation to another person
(other than for indemnity reinsurance) for the assumption
by that person of liabilities under insurance and annuity
contracts (including supplementary contracts).
Line 14. Dividends reimbursable by taxpayer. Enter
the amount of policyholder dividends:
1. Paid or accrued by another insurance company for
policies this corporation has reinsured, and
2. That are reimbursable by the corporation under the
terms of the reinsurance contract.
Line 15a. Interest. Enter all interest paid or accrued
during the tax year. No deduction is allowed under section
163 for interest on the items described in section 807(c).
Also, do not include interest included on Schedule G,
line 9 (General deductions).
Limitations. The deduction for interest is limited when
the corporation is a policyholder or beneficiary with
respect to a life insurance, endowment, or annuity
contract issued after June 8, 1997. For details, see
section 264(f). Attach a statement showing the
computation of the deduction.
Business interest expense is any interest paid or
accrued on indebtedness properly allocable to a trade or
business. Under section 163(j), business interest expense
is generally limited to the sum of business interest income,
30% of the adjusted taxable income, and floor plan
financing interest. The amount of any business expense
that is not allowed as a deduction for the tax year is
carried forward to the following year. If section 163(j)
applies, use Form 8990 to figure the amount of business
expense the corporation can deduct for the current tax
12

year and the amount that can be carried forward to the
next year. See the Instructions for Form 8990. Also see
Schedule M, Question 17, later.
Consolidated groups. The limitation in section 163(j)
(1) on the amount allowed as a deduction for business
interest applies at the level of the consolidated group.
Line 15b. Less tax-exempt interest expense. Enter
interest paid or accrued on indebtedness incurred or
continued to purchase or carry obligations, the interest on
which is wholly tax exempt. See section 265(b) for special
rules and exceptions for financial institutions. Also, see
section 265(b)(7) for a de minimis exception for financial
institutions for certain tax-exempt bonds issued in 2009
and 2010, and section 139L(d), which coordinates with
section 265 regarding interest on qualified real estate
loans.
Line 18. Other deductions. Attach a statement listing by
type and amount all allowable deductions in computing
LICTI (including the amortization of premiums under
section 811(b)) not included on lines 9 through 16.
Examples of other deductions may include the
following.
• Certain business startup and organizational costs
(discussed earlier under Limitations on Deductions).
• Legal and professional fees.
• Supplies used and consumed in the business.
• Travel, meals, and entertainment expenses. Special
rules apply (discussed later).
• Utilities.
• Ordinary losses from trade or business activities of a
partnership from Schedule K-1 (Form 1065). Do not offset
ordinary income against ordinary losses. Instead, include
the income on line 7. Show the partnership’s name,
address, and EIN on a separate statement attached to this
return. If the amount is from more than one partnership,
identify the amount from each partnership.
• Any extraterritorial income exclusion (from Form 8873,
Extraterritorial Income Exclusion).
• Any applicable deduction under section 179D for the
cost of energy efficient commercial building property
placed in service during the tax year. Complete and attach
Form 7205.
• Dividends paid in cash on stock held by an ESOP.
However, a deduction can only be taken for the dividends
above if, according to the plan, the dividends are:
1. Paid in cash directly to the plan participants or
beneficiaries;
2. Paid to the plan, which distributes them in cash to
the plan participants or their beneficiaries no later than 90
days after the end of the plan year in which the dividends
are paid;
3. At the election of such participants or their
beneficiaries (a) payable as provided under (1) or (2)
above, or (b) paid to the plan and reinvested in qualifying
employer securities;
4. Used to make payments on a loan described in
section 404(a)(9);
See section 404(k) for more details and the limitation on
certain dividends.

Instructions Form 1120-L (2025)

• Depreciation or amortization (attach Form 4562, if
required). Attach Form T (Timber), Forest Activities
Schedule, if a deduction for depletion of timber is taken.
Foreign intangible drilling costs and foreign exploration
and development costs must either be added to the
corporation’s basis for cost depletion purposes or be
deducted ratably over a 10-year period. See sections
263(i), 616, and 617.
Do not deduct the following.
Amounts
paid or incurred to or at the direction of a
•
government or governmental entity for the violation or
investigation or inquiry into the potential violation of a law.
• Lobbying expenses. However, see exceptions
(discussed later).
Also, include on line 18 the following.
Compensation of officers. Enter deductible officers’
compensation. See Employment credits, later, for a list of
employment credits that may reduce your deduction for
officers’ compensation. Do not include compensation
deductible elsewhere on the return, such as elective
contributions to a section 401(k) cash or deferred
arrangement or amounts contributed under a salary
reduction SEP agreement or a SIMPLE IRA plan.
Include only the deductible part of each officer’s
compensation on line 18. (See Disallowance of deduction
for employee compensation in excess of $1 million, later.)
Attach a statement for compensation of all officers using
the following columns.
1. Name of officer.
2. Social security number.
3. Percentage of time devoted to business.
4. Amount of compensation.
If a consolidated return is filed, each member of an
affiliated group must furnish this information.
Disallowance of deduction for employee compensation in excess of $1 million. Publicly held corporations
cannot deduct compensation to a covered employee to
the extent that the compensation exceeds $1 million.
Generally, a covered employee is:
• The principal executive officer of the corporation (or an
individual acting in that capacity) as of the end of the tax
year, and
• An employee whose total compensation must be
reported to shareholders under the Securities Exchange
Act of 1934 because the employee is among the three
most highly compensated officers for that tax year (other
than the principal executive officer).
For this purpose, compensation does not include the
following.
• Income from certain employee trusts, annuity plans, or
pensions.
• Any benefit paid to an employee that is excluded from
the employee’s income.
The deduction limit does not apply to:
• Commissions based on individual performance;
• Qualified performance-based compensation; and
• Income payable under a written binding contract in
effect on February 17, 1993.
The $1 million limit is reduced by amounts disallowed
as excess parachute payments under section 280G.
Instructions Form 1120-L (2025)

For details, see section 162(m) and Regulations
section 1.162-27. Also, see Notice 2007-49, 2007-25
I.R.B. 1429.
Salaries and wages. Include the total salaries and
wages paid for the tax year. Do not include salaries and
wages deductible elsewhere on the return, such as
amounts included in officers’ compensation, elective
contributions to a section 401(k) cash or deferred
arrangement, or amounts contributed under a salary
reduction SEP agreement or a SIMPLE IRA plan.
If the corporation provided taxable fringe benefits to its
employees, such as personal use of a car, do not deduct
as wages the amount allocated for depreciation and other
expenses claimed under Other deductions on line 18.
Note: If the corporation claims a credit for any wages paid
or incurred, it may need to reduce any corresponding
deduction for officers’ compensation, salaries, or wages.
See Reducing certain expenses for which credits are
allowable, earlier.
Limitation on tax benefits for remuneration under the
Patient Protection and Affordable Care Act. The $1
million compensation limit is reduced to $500,000 for
remuneration for services provided by individuals for or on
behalf of certain health insurance providers in tax years
beginning after December 31, 2009. The $500,000
limitation applies to remuneration that is deductible in the
tax year during which the services were performed and
remuneration for services during the year that is
deductible in a future tax year (called deferred deduction
remuneration). The $500,000 limitation is reduced by any
amounts disallowed as excess parachute payments. See
section 162(m)(6) and Regulations section 1.162-31 for
definitions and other special rules. Also, see Notice
2011-2, 2011-2 I.R.B. 260.
Employment credits. If the corporation claims a credit
on any of the forms listed, it may need to reduce its
deduction for salaries and wages. See the applicable
form(s).
• Form 5884, Work Opportunity Credit.
• Form 8844, Empowerment Zone Employment Credit, if
applicable.
• Form 8882, Credit for Employer-Provided Childcare
Facilities and Services.
• Form 8932, Credit for Employer Differential Wage
Payments.
• Form 8994, Employer Credit for Paid Family and
Medical Leave.
Pension, profit-sharing, etc., plans. Enter the
deduction for contributions to qualified pension,
profit-sharing, or other funded deferred compensation
plans. Employers who maintain such a plan must
generally file one of the forms listed, unless exempt from
filing under regulations or other applicable guidance, even
if the plan is not a qualified plan under the Internal
Revenue Code. The filing requirement applies even if the
corporation does not claim a deduction for the current tax
year. There are penalties for failure to file these forms on
time and for overstating the pension plan deduction. See
sections 6652(e) and 6662(f). Also, see the instructions
for the applicable form.

13

Form 5500, Annual Return/Report of Employee Benefit
Plan.
Form 5500-SF, Short Form Annual Return/Report of
Small Employee Benefit Plan, instead of Form 5500,
generally if under 100 participants at the beginning of the
plan year.
Form 5500 and Form 5500-SF must be filed
electronically under the computerized ERISA Filing
Acceptance System (EFAST2). For more information, see
the EFAST2 website at EFAST.dol.gov.
Form 5500-EZ, Annual Return of A One-Participant
(Owners/Partners and Their Spouses) Retirement Plan or
A Foreign Plan. File this form for a plan that only covers
the owner (or the owner and their spouse) but only if the
owner (or the owner and their spouse) owns the entire
business.
Charitable contributions. Enter contributions or gifts
actually paid within the tax year to or for the use of
charitable and governmental organizations described in
section 170(c) and any unused contributions carried over
from prior years. Special rules and limits apply to
contributions to organizations conducting lobbying
activities. See section 170(f)(9).
Life insurance companies reporting LICTI on the
accrual method can elect to treat as paid during the tax
year any contributions paid by the due date for filing the
corporations’ tax return (not including extensions) if the
contributions were authorized by the board of directors
during the tax year. Attach a declaration to the return
stating that the resolution authorizing the contributions
was adopted by the board of directors during the tax year.
The declaration must include the date the resolution was
adopted. See Regulations section 1.170A-11.
Limitation on deduction. The total amount claimed
cannot be more than 10% of LICTI computed without
regard to the following.
• Any deduction for contributions.
• The deduction for policyholder dividends.
• The deduction for dividends received.
• Any net operating loss (NOL) carryback to the tax year
under section 172.
• Any capital loss carryback to the tax year under section
1212(a)(1).
Carryover. Charitable contributions over the 10%
limitation (or the 25% limitation, if elected) cannot be
deducted for the tax year but may be carried over to the
next 5 tax years.
A contributions carryover is not allowed, however, to the
extent that it increases an NOL.
Cash contributions. For contributions of cash, check, or
other monetary gifts (regardless of the amount), the
corporation must maintain a bank record, or a receipt,
letter, or other written communication from the donee
organization indicating the name of the organization, the
date of the contribution, and the amount of the
contribution.
Contributions of $250 or more. A corporation can
deduct a contribution of $250 or more only if it gets a
written acknowledgment from the donee organization that
shows the amount of cash contributed, describes any
14

property contributed, and either gives a description and a
good faith estimate of the value of any goods or services
provided in return for the contribution or states that no
goods or services were provided in return for the
contribution. The acknowledgment must be obtained by
the due date (including extensions) of the corporation’s
return, or, if earlier, the date the return is filed. Do not
attach the acknowledgment to the tax return but keep it
with the corporation’s records.
Contributions of property other than cash. If a
corporation contributes property other than cash and
claims over a $500 deduction for the property, it must
generally attach a statement to the return describing the
kind of property contributed and the method used to
determine its fair market value (FMV). Attach Form 8283,
Noncash Charitable Contributions, to the return for
contributions of property (other than money) if the total
claimed deduction for all property contributed was more
than $5,000. Special rules apply to the contribution of
certain property. See the Instructions for Form 8283.
Qualified conservation contributions. Special rules
apply to qualified conservation contributions, including
contributions of certain easements on buildings located in
a registered historic district. See section 170(h) and Pub.
526, Charitable Contributions. For special rules applicable
to certain qualified conservation contributions made by
Native corporations, see section 170(b)(2)(C).
Other special rules. See section 170 for special rules,
limitations, and requirements.
Travel, meals, and entertainment. Subject to limitations
and restrictions discussed later, a corporation can deduct
ordinary and necessary travel, meal, and
nonentertainment expenses paid or incurred in its trade or
business. Generally, entertainment expenses,
membership dues, and facilities used in connection with
these activities cannot be deducted. In addition, no
deduction is generally allowed for qualified transportation
fringe benefits. Special rules apply to deductions for gifts,
luxury water travel, and convention expenses. See section
274 and Pub. 463, Travel, Gift, and Car Expenses.
Travel. The corporation cannot deduct travel expenses
of any individual accompanying a corporate officer or
employee, including a spouse or dependent of the officer
or employee, unless:
• That individual is an employee of the corporation, and
• Their travel is for a bona fide business purpose and
would otherwise be deductible by that individual.
Meals. Generally, the corporation can deduct only 50%
of the amount otherwise allowable for
non-entertainment-related meal expenses paid or incurred
in its trade or business.
Meals not separately stated from entertainment are
generally not deductible. In addition (subject to exceptions
under section 274(k)(2)):
• Meals must not be lavish or extravagant, and
• An employee of the corporation must be present at the
meal.
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.
Instructions Form 1120-L (2025)

Qualified transportation fringes (QTFs). Generally,
no deduction is allowed under section 274(a)(4) for QTFs
provided by employers to their employees. QTFs are
defined in section 132(f)(1) and include:
• Transportation in a commuter highway vehicle between
the employee’s residence and place of employment,
• Any transit pass, and
• Qualified parking.
See section 274 and Pub. 15-B, Employer’s Tax Guide
to Fringe Benefits, for details.
Membership dues. The corporation can deduct
amounts paid or incurred for membership dues in civic or
public service organizations, professional organizations
(such as bar and medical associations), business
leagues, trade associations, chambers of commerce,
boards of trade, and real estate boards. However, no
deduction is allowed if a principal purpose of the
organization is to entertain or provide entertainment
facilities for members or their guests. In addition,
corporations cannot deduct membership dues in any club
organized for business, pleasure, recreation, or other
social purpose. This includes country clubs, golf and
athletic clubs, airline and hotel clubs, and clubs operated
to provide meals under conditions favorable to business
discussion.
Entertainment facilities. Generally, the corporation
cannot deduct an expense paid or incurred for a facility
(such as a yacht or hunting lodge) used for an activity
usually considered entertainment, amusement, or
recreation.
Amounts treated as compensation. Generally, the
corporation may be able to deduct otherwise
nondeductible entertainment, amusement, or recreation
expenses if the amounts are treated as compensation to
the recipient and reported on Form W-2, Wage and Tax
Statement, for an employee or on Form 1099-NEC,
Nonemployee Compensation, for an independent
contractor.
However, if the recipient is an officer, a director, a
beneficial owner (directly or indirectly), or other “specified
individual” (as defined in section 274(e)(2)(B) and
Regulations section 1.274-9(b)), special rules apply.
Fines or similar penalties. Generally, no deduction is
allowed for fines or similar penalties paid or incurred to or
at the direction of a government or governmental entity for
violating any law or for the investigation or inquiry into the
potential violation of a law, except:
• Amounts that constitute restitution or remediation of
property,
• Amounts paid to come into compliance with the law,
• Amounts paid or incurred as the result of certain court
orders or agreements in which no government or specified
nongovernmental agency is a party, and
• Amounts paid or incurred for taxes due.
No deduction is allowed unless the amounts are
specifically identified in the order or agreement and the
corporation establishes that the amounts were paid for
that purpose. Also, any amount paid or incurred as
reimbursement to the government for the costs of any
investigation or litigation are not eligible for the exceptions
and are nondeductible. See section 162(f).
Instructions Form 1120-L (2025)

Lobbying expenses. Generally, lobbying expenses are
not deductible. These 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. If certain
in-house lobbying expenditures do not exceed $2,000,
they are deductible.
Line 21b. NOL deduction. The NOL deduction is the
lesser of the aggregate of the NOL carryovers to the tax
year, plus the NOL carrybacks to the tax year. If this
deduction is taken, show its computation on an attached
statement. Generally, a life insurance company can carry
over an NOL to each tax year following the tax year of the
loss. After applying the NOL to the first tax year to which it
may be carried, the portion of the loss the corporation may
carry to each of the remaining tax years is the excess, if
any, of the loss over the sum used as an NOL deduction in
the carryover year. See section 172 for special rules,
limitations, and definitions pertaining to the NOL
deduction and carryover.
If an ownership change (described in section 382(g))
occurs, the amount of the taxable income of a loss
corporation that may be offset by the pre-change loss
carryovers may be limited. (See section 382 and the
related regulations.) A loss corporation must include the
information statement as provided in Regulations section
1.382-11(a) with its income tax return for each tax year
that it is a loss corporation in which an ownership shift,
equity structures shift, or other transaction described in
Temporary Regulations section 1.382-2T(a)(2)(i) occurs. If
the corporation makes the closing-of-the-books election,
see Regulations section 1.382-6(b).
The limitations under section 382 do not apply to
certain ownership changes after February 17, 2009, made
pursuant to a restructuring plan under the Emergency
Economic Stabilization Act of 2008. See section 382(n).
For guidance in applying section 382 to loss
corporations whose instruments were acquired by the
Department of the Treasury under certain programs under
the Emergency Economic Stabilization Act of 2008, see
Notice 2010-2, 2010-2 I.R.B. 251.
For more details on the NOL deduction, see section
172 and the Instructions for Form 1139, Corporation
Application for Tentative Refund.
Line 24. Phased inclusion of balance of policyholder’s surplus account. Section 13514(d) of P.L. 115-97
requires a one-eighth per year phased inclusion of any
December 31, 2017, balance of the policyholder’s surplus
account starting in 2018. This amount cannot be reduced
by an NOL.
Line 25. Total taxable income. The total taxable income
reported on line 25 cannot be less than line 24 of the Form
1120-L.

15

Also, line 25 cannot be less than the largest of the
following amounts.
• The inversion gain of the corporation for the tax year, if
the corporation is an expatriated entity or a partner in an
expatriated entity. For details, see section 7874.
• The sum of the corporation’s excess inclusions from
Schedule Q (Form 1066), line 2c, and the corporation’s
taxable income determined solely with respect to its
ownership and high-yield interests in FASITs. For details,
see sections 860E(a) and 860J (repealed).
Line 26b. First Installment of Section 1062 Applicable
Net tax liability. Complete and attach Form 1062,
Schedule(s) A (Form 1062), and a copy of the covenant if
electing to defer the payment of net income tax
attributable to the gain from the sale or exchange of
qualified farmland property during this tax year under
section 1062. Enter the amount from Form 1062, Part III,
line 15. See the Instructions for Form 1062 for more
information. Also, see section 1062.

Tax and Payments
Line 27b. Estimated tax payments. Enter any
estimated tax payments the corporation made for the
current tax year.
Line 27c. Current year’s refund applied for on Form
4466. If the corporation overpaid estimated tax, it may be
able to get a quick refund by filing Form 4466. The
overpayment must be at least 10% of the corporation’s
expected income tax liability and at least $500. File Form
4466 after the end of the corporation’s tax year, and no
later than the due date for filing the corporation’s tax
return. Form 4466 must be filed before the corporation
files its tax return. See the instructions for Form 4466.
Line 27e. Credit for tax paid on undistributed capital
gains. Enter any credit from Form 2439, Notice to
Shareholder of Undistributed Long-Term Capital Gains, for
the corporation’s share of the tax paid by a regulated
investment company (RIC) or a real estate investment
trust (REIT) on undistributed long-term capital gains
included in the corporation’s income. Attach Form 2439 to
Form 1120-L.
Line 27f. Credit for federal tax on fuels. Enter the total
income tax credit claimed on Form 4136, Credit for
Federal Tax Paid on Fuels. Attach Form 4136 to Form
1120-L.
Line 27g. U.S. income tax paid or withheld at source.
Enter the amount of any U.S. income tax paid or withheld
as reported on Form 1042-S, Foreign Person’s U.S.
Source Income Subject to Withholding.
Line 27h. Elective payment election amount from
Form 3800. Enter the elective payment election amount
from Form 3800, General Business Credit, Part III, line 6,
column (j). See the Instructions for Form 3800.
Line 27i. Section 1062 Applicable Net Tax Liability
From Form 1062. If the corporation is electing to defer
the payment of net income tax attributable to the gain from
the sale or exchange of qualified farmland property,
complete and attach Form 1062 and Schedule(s) A (Form
1062). Enter the amount from Form 1062, Part III, line 14.
16

See the Instructions for Form 1062 for more information.
Also, see section 1062.
Line 27z. Other credits and payments. Include on
line 27z any other refundable credit or payment the
corporation is claiming, including the following. Attach a
statement listing the type of credit and the amount of the
credit or payment.
• Credit for tax on ozone-depleting chemicals. See
section 4682(g)(2).
• Backup withholding. If the corporation had federal
income tax withheld from any payments it received
because, for example, it failed to give the payer its correct
EIN, include the amount withheld in the total for line 27z.
• Credit under section 1341 for repayments of amounts
included in income from earlier years.
Line 28. Total payments, refundable credits and section 1062 applicable net tax liability credits. Combine
the amounts on lines 27a through 27z and enter the total
on line 28.
Line 29. Estimated tax penalty. Generally, the
corporation does not have to file Form 2220 with its
income tax return because the IRS will figure the amount
of any penalty and notify the corporation of any amount
due. However, see the Instructions for Form 2220 for
circumstances where the corporation must file Form 2220
even if it owes no penalty.
If Form 2220 is attached, check the box on line 29 and
enter the amount of any penalty on that line.
Note: If the corporation’s tax liability includes a CAMT
liability, the corporation must complete and attach Form
2220. The affected corporation must also include an
amount of estimated tax penalty on Form 1120-L, line 29,
even if that amount is zero. Failure to follow these
instructions could result in the corporation receiving a
penalty notice that will require an abatement request to
apply any penalty relief. See Notice 2025-27.
Line 30. Amount owed. Generally, the corporation 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. Go to IRS.gov/Payments
for more detailed information.
If the corporation cannot pay the full amount of tax
owed, it can apply for an installment agreement online. Go
to IRS.gov/OPA for the latest information.
Line 31. Overpayment. If there is an overpayment on
line 31, enter the amount the corporation wants refunded
on line 32b. See the instructions for line 32b, later. The
corporation can also choose to have all or part of the
overpayment credited to next year’s estimated tax by
completing line 32a. See the instructions for line 32a, next.
Line 32a. Credited to Estimated Tax. The corporation
can elect to apply all or part of the corporation’s
overpayment to next year’s estimated taxes.
Enter the amount of any overpayment from line 31 that
should be applied to next year’s estimated tax.
This election to apply some or all of the overpayment
amount to the corporation’s 2026 estimated tax cannot be
changed at a later date.

Instructions Form 1120-L (2025)

Line 32b. Refunded. Enter the amount to be refunded to
the corporation on line 32b. If the corporation 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 corporation wants its
refund directly deposited into its checking or savings
account at any U.S. bank or other financial institution,
complete lines 32c through 32e. See the instructions for
lines 32c, 32d, and 32e, later.
The corporation 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 corporation has applied for an EIN but is filing its
tax return before receiving one.
Line 32c. Routing number. The routing number must be
nine digits. The first two digits must be between 01 and 12
or 21 through 32. Enter the financial institution’s routing
number and verify that the institution will accept a direct
deposit. Ask the corporation’s financial institution for the
correct routing number to enter on line 32c if:
• The routing number on a deposit slip is different from
the routing number on the corporation’s checks,
• The deposit is to a savings account that does not allow
the corporation to write checks, or
• The corporation’s checks state they are payable through
a financial institution different from the one at which the
corporation has its checking account.
Line 32d. Type of account. Check the appropriate box
for the type of account. Don’t check more than one box.
The corporation must check the correct box to ensure the
deposit is accepted.
Line 32e. 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 corporation’s account is
different from the amount it expected, the corporation 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 corporation 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, or
• The corporation 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
corporation enters the wrong account information. Check
with the corporation’s financial institution to get the correct
routing and account numbers and to make sure the direct
deposit will be accepted.
Instructions Form 1120-L (2025)

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

For purposes of the 20% ownership test on lines 1 through
7, the percentage of stock owned by the corporation is
based on voting power and value of the stock. Preferred
stock described in section 1504(a)(4) is not taken into
account.
Consolidated returns. Corporations filing a
consolidated return should see Regulations sections
1.1502-13 and 1.1502-26 before completing Schedule A.
Corporations filing a consolidated return must not
report as dividends on Schedule A any amounts received
from corporations within the tax consolidation group. Such
dividends are eliminated in consolidation rather than offset
by the dividends-received deduction.
Line 1, column (a). Enter dividends (except those
received on certain debt-financed stock acquired after
July 18, 1984 (see section 246A)) that are:
• Received from less-than-20%-owned domestic
corporations subject to income tax, and
• Qualified for the 50% deduction under section 243(a)
(1).
Also include on line 1 the following.
• Taxable distributions from an interest charge domestic
international sales corporation (IC-DISC) or former
domestic international sales corporation (DISC) that are
designated as eligible for the 50% deduction and certain
dividends of Federal Home Loan Banks. See section
246(a)(2).
• Dividends (except those received on certain
debt-financed stock acquired after July 18, 1984) from a
RIC. The amount of dividends eligible for the
dividends-received deduction under section 243 is limited
by section 854(b). The corporation should receive a notice
from the RIC specifying the amount of dividends that
qualify for the deduction.
Report so-called dividends or earnings received from
mutual savings banks, etc., as interest. Do not treat them
as dividends.
Line 2, column (a). Enter on line 2:
• Dividends (except those received on debt-financed
stock acquired after July 18, 1984) that are received from
20%-or-more-owned domestic corporations subject to
income tax and that are subject to the 65% deduction
under section 243(c), and
• Taxable distributions from an IC-DISC or former DISC
that are considered eligible for the 65% deduction.
Line 3, column (a). Enter the following.
• Dividends received on certain debt-financed stock
acquired after July 18, 1984, from domestic and foreign
corporations subject to income tax that would otherwise
be subject to the dividends-received deduction under
section 243(a)(1), 243(c), or 245(a). Generally,
debt-financed stock is stock that the corporation acquired
by incurring a debt (for example, it borrowed money to buy
the stock).

17

• Dividends received from a RIC on debt-financed stock.
The amount of dividends eligible for the
dividends-received deduction is limited by section 854(b).
The corporation should receive a notice from the RIC
specifying the amount of dividends that qualify for the
deduction.
Line 3, columns (b) and (c). Dividends received on
certain debt-financed stock acquired after July 18, 1984,
are not entitled to the full 50% or 65% dividends-received
deduction under section 243 or 245(a). The 50% or 65%
deduction is reduced by a percentage that is related to the
amount of debt incurred to acquire the stock. See section
246A. Also, see section 245(a) before making this
computation for an additional limitation that applies to
certain dividends received from foreign corporations.
Attach a statement showing how the amount on line 3,
column (c), was figured.
Line 4, column (a). Enter dividends received on
preferred stock of a less-than-20%-owned public utility
that is subject to income tax and is allowed the deduction
provided in section 247 (as affected by P.L. 113-295, Div.
A, section 221(a)(41)(A), December 19, 2014, 128 Stat.
4043) for dividends paid.
Line 5, column (a). Enter dividends received on
preferred stock of a 20%-or-more-owned public utility that
is subject to income tax and is allowed the deduction
provided in section 247 (as affected by P.L. 113-295, Div.
A, section 221(a)(41)(A), December 19, 2014, 128 Stat.
4043) for dividends paid.
Line 6, column (a). Enter the U.S.-source portion of
dividends that:
• Are received from less-than-20%-owned foreign
corporations, and
• Qualify for the 50% deduction under section 245(a). To
qualify for the 50% deduction, the corporation must own at
least 10% of the stock of the foreign corporation by vote
and value.
Also include dividends received from a
less-than-20%-owned foreign sales corporation (FSC)
that:
• Are attributable to income treated as effectively
connected with the conduct of a trade or business within
the United States (excluding foreign trade income), and
• Qualify for the 50% deduction under section 245(c)(1)
(B).
Line 7, column (a). Enter the U.S.-source portion of
dividends that:
• Are received from 20%-or-more-owned foreign
corporations, and
• Qualify for the 65% deduction under sections 245(a)
and 243 by reference.
Also include dividends received from a
20%-or-more-owned FSC that:
• Are attributable to income treated as effectively
connected with the conduct of a trade or business within
the United States (excluding foreign trade income), and
• Qualify for the 65% deduction under section 245(c)(1)
(B).
Line 8, column (a). Enter dividends received from wholly
owned foreign subsidiaries that are eligible for the 100%
18

deduction under section 245(b) but that do not qualify as
“100% dividends” under section 805(a)(4)(C).
In general, the deduction under section 245(b) applies
to dividends paid out of the earnings and profits of a
foreign corporation for a tax year during which:
• All of its outstanding stock is directly or indirectly owned
by the domestic corporation receiving the dividends, and
• All of its gross income from all sources is effectively
connected with the conduct of a trade or business within
the United States.
Do not include dividends received from a life insurance
company.
Also, include on line 8, column (a), dividends from
FSCs that are attributable to foreign trade income and that
are eligible for the 100% deduction provided in section
245(c)(1)(A).
Line 9, column (a). Enter only those dividends that
qualify under section 243(b) for the 100%
dividends-received deduction described in section 243(a)
(3) but that do not qualify as “100% dividends” under
section 805(a)(4)(C). Corporations taking this deduction
are subject to the provisions of section 1561. Do not
include dividends received from a life insurance company.
The 100% deduction does not apply to affiliated group
members that are joining in the filing of a consolidated
return.
Line 10, column (c). Limitation on dividends-received
deduction. Generally, line 10, column (c), cannot exceed
the amount on line 29 of the Worksheet for Schedule A,
Lines 10 and 21. However, in a year in which an NOL
occurs, this limitation does not apply even if the loss is
created by the dividends-received deduction. See section
246(b).
Line 13, column (a). In general, enter “100% dividends”
as defined in section 805(a)(4)(C). That is, in general,
enter dividends that qualify for the 100%
dividends-received deduction under sections 243, 244 (as
affected by P.L. 113-295, Div. A, section 221(a)(41)(A),
December 19, 2014, 128 Stat. 4043), and 245(b) and
were not reported on line 8 or 9 because they were (a) not
distributed out of tax-exempt interest or out of dividends
that do not qualify as 100% dividends, or (b) paid by a life
insurance company.
Certain dividends received by a foreign corporation are
not subject to proration. Attach a statement showing
computations.
Line 14, column(a). Enter the foreign-source portion of
dividends:
• Received from specified 10%-owned foreign
corporations (as defined in section 245A(b)), including
gain from the sale of stock of a foreign corporation that is
treated as a dividend under sections 1248(a) and (i); and
• Qualify for the 100% deduction under section 245A(a).
Line 15, column (a). Enter foreign dividends not
reportable on line 3, 6, 7, 8, or 14 of column (a).
• Include on line 15 any hybrid dividends from a CFC.
Hybrid dividends are generally dividends received from a
CFC that would otherwise be reported on line 14 except
the CFC receives a deduction (or other tax benefit) with
respect to any income, war profits, or excess profits taxes
Instructions Form 1120-L (2025)

imposed by any foreign country or territory of the United
States.
• Also, include on line 15 the corporation’s share of
distributions from a section 1291 fund from Form 8621, to
the extent that the amounts are taxed as dividends under
section 301. See Form 8621 and its instructions.
Line 16, column (a). Reserved for future use.
Line 16, column (c). Reserved for future use.
Line 17a, column (a). Enter the foreign-source portion of
any subpart F inclusions attributable to the sale or
exchange by a CFC of stock in another foreign corporation
described in section 964(e)(4). This should equal the U.S.
shareholder’s pro rata share of the amount reported on
Form(s) 5471, Information Return of U.S. Persons With
Respect to Certain Foreign Corporations, Schedule I,
line 1a.
Line 17b, column (a). Enter the pro rata share of
subpart F inclusions attributable to hybrid dividends of
tiered corporations under section 245A(e)(2). This should
equal the U.S. shareholder’s pro rata share of the amount
reported on Form(s) 5471, Schedule I, line 1b.
Line 17c, column (a). Enter all other amounts included
in income under section 951, which should equal the U.S.
shareholder’s pro rata share of the sum of the amounts
reported on Form(s) 5471, Schedule I, lines 1f, 2, 3, and 4.
Line 18, column (a). Enter amounts included in income
under the section 951A GILTI provision. See Form 8992,
U.S. Shareholder Calculation of Global Intangible
Low-Taxed Income (GILTI), Part II, line 5 and the
Instructions for Form 8992. Also, consider the applicability
of section 951A with respect to CFCs owned by domestic
partnerships in which the filer has an interest. If you also
have a Form 5471 reporting requirement, attach Form
5471.
Line 19, column (a). Include the following.
1. Gross-up for taxes deemed paid under sections 902
(for dividends paid in pre-2024 tax years of foreign
corporations) and 960.
2. Dividends (other than capital gain distributions
reported on Schedule D (Form 1120) and exempt-interest
dividends) that are received from RICs and that are not
subject to the 50% deduction.
3. Dividends from tax-exempt organizations.
4. Dividends (other than capital gain distributions)
received from a REIT that, for the tax year of the trust in
which the dividends are paid, qualifies under sections 856
through 860.
5. Dividends not eligible for a dividends-received
deduction, which include the following.
a. Dividends received on any share of stock held for
less than 46 days during the 91-day period beginning 45
days before the ex-dividend date. When counting the
number of days the corporation held the stock, you cannot
count certain days during which the corporation’s risk of
loss was diminished. See section 246(c)(4) and
Regulations section 1.246-5 for more details.
b. Dividends attributable to periods totaling more than
366 days that the corporation received on any share of
Instructions Form 1120-L (2025)

preferred stock held for less than 91 days during the
181-day period that began 90 days before the ex-dividend
date. When counting the number of days the corporation
held the stock, you cannot count certain days during
which the corporation’s risk of loss was diminished. See
section 246(c)(4) and Regulations section 1.246-5 for
more details. Preferred dividends attributable to periods
totaling less than 367 days are subject to the 46-day
holding period rule above.
c. Dividends on any share of stock to the extent the
corporation is under an obligation (including a short sale)
to make related payments with respect to positions in
substantially similar or related property.
6. Any other taxable dividend income not properly
reported above.
Line 21, column (c). Enter the section 250 deduction
claimed for foreign-derived intangible income (FDII) and
global intangible low-taxed income (GILTI). Generally, this
amount cannot exceed the amount on line 30 of the
Worksheet for Schedule A, Lines 10 and 21. However, in a
year in which an NOL occurs, the limitation in section
246(b)(1) does not apply. See sections 172(c), 172(d)(5),
and 246(b).

Schedule B—Investment Income
Line 1. Interest. Enter the total taxable interest received
or accrued during the tax year, less any amortization of
premium, plus any accrual of discount required by section
811(b). Generally, the appropriate amortization of
premium and accrual of discount for the tax year on
bonds, notes, debentures, or other evidence of
indebtedness held by a life insurance company should be
determined:
1. Under the method regularly employed by the
company, if reasonable; and
2. In all other cases, under the regulations.
For bonds (as defined in section 171(d)) issued after
September 27, 1985, the appropriate amount of
amortization of premium must be determined using the
yield to maturity method described in section 171(b)(3).
Market discount is not required to be accrued under
section 811(b). Attach a statement showing the method
and computation used.
The Small Business Job Protection Act of 1996
repealed section 133, which provided for the 50% interest
income exclusion with respect to ESOP loans. The Act
also repealed section 812(g), which provided for the
exclusion of interest income from ESOP loans for
company/policyholder proration. The repeal of these
exclusions is effective for ESOP loans made after August
20, 1996. See Act section 1602 for special rules for
binding contract agreements in effect prior to June 10,
1996, and certain refinancings made after August 20,
1996.
Line 3. Rents. Enter the rents received or accrued during
the tax year. Related expenses, such as repairs, taxes,
and depreciation, should be reported as “Other
deductions” on page 1, line 18.

19

Worksheet for Schedule A, Lines 10 and 21

Keep for Your Records

Use this worksheet to figure the dividends-received deduction after the section 246(b) limitation, including the section
250 deduction. Also use this worksheet to figure the section 250 deduction after the section 246(b) limitation. Before
completing this worksheet, complete Form 1120-L, page 1, line 20, and Schedule A, lines 1 through 9 and lines 13 and
14. Also, complete Form 8993, Part III, lines 28 and 29.
1. Refigure Form 1120-L, page 1, line 20, without any adjustment under section 1059 and without any
capital loss carryback to the tax year under section 1212(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Add lines 9, 13, 14, and 17a, column (c), and the portion of the deduction on line 8, column (c), that
is attributable to dividends from FSCs that are attributable to foreign trade income . . . . . . . . . . . . . .
3. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Multiply line 3 by 65% (0.65) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Add lines 2, 5, and 7, column (c); the portion of the deduction on line 8, column (c), that is
attributable to wholly owned foreign subsidiaries; and the portion of the deduction on line 3, column
(c), that is attributable to dividends received from 20%-or-more-owned corporations . . . . . . . . . . . .
6. Enter the sum of the amounts on Form 8993, Part III, lines 28 and 29 . . . . . . . . . . . . . . . . . . . . . . . .
7. Add lines 5 and 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8. Subtract line 7 from line 4. If zero or more, enter the amount from line 5, skip line 9 through 15, and
go to line 16. If less than zero, leave line 8 blank and go to line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9. Divide line 5 by line 7. Enter the result as a decimal (rounded to at least three places) . . . . . . . . . . .
10. Subtract line 4 from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Multiply line 10 by line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12. Subtract line 11 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13. Subtract line 9 from 1.000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14. Multiply line 13 by line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15. Subtract line 14 from line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16. Add the total amount of dividends from 20%-or-more-owned corporations that are included on
Schedule A, lines 2, 3, 5, 7, 8, and 9, column (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17. Subtract line 16 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18. Multiply line 17 by 50% (0.50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19. Add Schedule A, lines 1, 4, and 6, column (c), and the part of the deduction on line 3, column (c)
that is not attributable to dividends from 20%-or-more-owned corporations . . . . . . . . . . . . . . . . . . .
20. Add line 15 (or, if line 15 is blank, line 6) and line 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21. Subtract line 20 from line 18. If zero or more, enter the amount from line 19, skip lines 22 through 28,
and go to line 29. If less than zero, leave line 21 blank and go to line 22 . . . . . . . . . . . . . . . . . . . . . .
22. Divide line 19 by line 20. Enter the result as a decimal (rounded to at least three places) . . . . . . . . .
23. Subtract line 18 from line 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24. Multiply line 23 by line 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25. Subtract line 24 from line 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26. Subtract line 22 from 1.000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27. Multiply line 23 by line 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28. Subtract line 27 from line 15 (or, if line 15 is blank, line 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29. Dividends-received deduction after limitation (section 246(b)). Add line 12 (or, if line 12 is
blank, line 8) and line 25 (or, if line 25 is blank, line 19). Enter the result here and on Schedule A,
line 10, column (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30. Section 250 deduction after limitation (section 246(b)). Enter the amount on line 28 (or, if line 28 is
blank, line 15, or if lines 28 and 15 are blank, line 6) here and on Schedule A, line 21, column
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Line 4. Royalties. Enter the royalties received or accrued
during the tax year. Report the depletion deduction on
page 1, line 18.
Line 5. Leases, terminations, etc. Enter the income
received from entering into, altering, or terminating any
lease, mortgage, or other instrument from which the
corporation derives interest, rents, or royalties.

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

Attach a statement to the tax return that reconciles lines 1
through 6 of Schedule F to the annual statement used to
prepare the tax return. If the annual statement used to
prepare the tax return is different from the NAIC annual
statement filed with the state of domicile, include a
20

separate reconciliation of lines 1 through 6 of Schedule F
to the annual statement filed with the state of domicile.
Schedule F is used to determine if, under section 807,
certain reserves decreased or increased for the tax year.
A net decrease will be includible in gross income, while a
net increase will be a deduction in computing LICTI.
The net increase or net decrease in reserves is figured
by comparing the opening balance for reserves to the
closing balance for reserves reduced by the policyholders’
share of tax-exempt interest (and the increase in policy
cash value of section 264(f) policies as defined in section
805(a)(4)(F)).
Reserve adjustments are not treated as interest
expenses for allocation purposes under section 864(c).
See section 818(f).
Instructions Form 1120-L (2025)

There are special rules for computing reserves of
unearned premiums of certain nonlife contracts. See
section 807(e)(5)(A).
If the basis for determining the amount of any item
referred to in section 807(c) (life insurance reserves, etc.)
at the end of the tax year differs from the basis for the
determination at the beginning of the tax year, see section
807(f).
Line 1. Life insurance reserves. For rules on how to
compute life insurance reserves, see sections 807(d) and
(e).
Line 2. Unearned premiums and unpaid losses. For
purposes of sections 807 and 805(a)(1), the amount of the
unpaid losses (other than losses on life insurance
contracts) must be the amount of the discounted unpaid
losses determined under section 846.
Section 846 provides that the amount of the discounted
unpaid losses must be figured separately by each line of
business (multiple peril lines must be treated as a single
line of business) and by each accident year and must be
equal to the present value of those losses determined by
using the:
1. Amount of the undiscounted unpaid losses,
2. Applicable interest rate, and
3. Applicable loss payment pattern.
Special rules apply to:

• Unpaid losses related to disability insurance (other than

credit disability insurance),
• Noncancelable accident and health insurance, and
• Cancelable accident and health insurance.
With regard to the special rules for discounting unpaid
losses on accident and health insurance (other than
disability income insurance), unpaid losses are assumed
to be paid in the middle of the year following the accident
year.
Generally, the amount of undiscounted unpaid losses
means the unpaid losses shown in the annual statement.
The amount of discounted unpaid losses with respect to
any line of business for an accident year cannot exceed
the total amount of unpaid losses with respect to any line
of business for an accident year as reported on the annual
statement.
The applicable interest rate for each calendar year and
the applicable loss payment patterns for each accident
year for each line of business are determined by the IRS.
At the time these instructions were released to IRS.gov,
the applicable interest rate and loss payment patterns for
2025 were not published. Once guidance is issued, we
will post an update on IRS.gov/Form1120L.
Line 3. Supplementary contracts. Enter the amount
(discounted at the appropriate rate of interest) necessary
to satisfy the obligations under insurance and annuity
contracts, but only if the obligations do not involve (at the
time the computation is made) life, accident, or health
contingencies.
For this item, the appropriate rate of interest is the
highest rate or rates permitted to be used to discount the
obligations by the NAIC as of the date the reserve is
determined. In no case shall the amount determined
Instructions Form 1120-L (2025)

under section 807(c)(3) for any contract be less than the
net surrender value of such contract.
Line 4. Dividend accumulations and other amounts.
Enter the total dividend accumulations and other amounts
held as interest in connection with insurance and annuity
contracts.
Line 5. Advance premiums. Enter the total premiums
received in advance and liabilities for premium deposit
funds. See section 807(e)(5)(A) for special rules for
treatment of certain nonlife reserves.
Line 6. Special contingency reserves. Enter the total
reasonable special contingency reserves under contracts
of group-term life insurance or group accident and health
insurance, which are established and maintained for the
provision of insurance on retired lives, premium
stabilization, or for a combination thereof.
Line 8. Increase (decrease) in reserves under section
807. In figuring the amount on line 8, any decrease in
reserves must be computed without any reduction of the
closing balance of section 807 reserves by the
policyholders’ share of tax-exempt interest.
Line 11. Do not include the exempt portion of any of the
interest income received on an ESOP loan made prior to
August 21,1996. For binding contract and refinancing
rules, see section 1602 of P.L. 104-188.

Schedule G—Policy Acquisition
Expenses

For purposes of section 848(b), all life insurance company
members of the same controlled group are treated as one
company. Any deduction determined for the group must
be allocated among the life insurance companies in the
group in such a manner as the IRS may prescribe.
Policy acquisition expenses for an annuity or life
insurance contract that includes a qualified long-term care
insurance contract as part of or as a rider on the annuity or
life insurance contract must be capitalized using the net
premium percentage for contracts that are not described
in section 848(c)(1)(A) or 848(c)(1)(B). See section 848(e)
(6) for more information.
Line 1. Gross premiums and other consideration.
Generally, gross premiums and other consideration are
the total of:
1. All premiums and other consideration (other than
amounts on reinsurance agreements), and
2. Net positive consideration for any reinsurance
agreement (see Regulations section 1.848-2(b)).
Also include on this line:

• Advanced premiums,
• Amounts in a premium deposit fund or similar account,

as permitted by Regulations section 1.848-2(b)(3),
• Fees,
• Assessments,
• Amounts that the insurance company charges itself
representing premiums with respect to benefits for its
employees (including full-time insurance salesmen treated
as employees under section 7701(a)(20)), and
21

• The value of a new contract issued in an exchange
described in Regulations section 1.848-2(c)(2) or (3).
Line 2. Return premiums and premiums and other
consideration incurred for reinsuran

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3Acce683f6df2f90ff. Public record. Not legal advice.