What IRS Form 1120-PC (2015) Is For

IRS Form 1120-PC (2015) is the tax return for U.S. corporations used by property and casualty insurance companies to report taxable income, deductions, and credits. It applies to domestic and foreign corporations engaged in the insurance business. The return records gross income, investment income, unearned premiums, and taxable interest for the tax year. Nonlife insurance companies use it to determine total tax liability, report capital assets sold, and calculate the correct amount of federal income tax owed.

When You’d Use IRS Form 1120-PC (2015)

Insurance companies file Form 1120-PC for their 2015 fiscal tax year when reporting prior-year minimum tax, abnormal insurance losses, or capital gain net income. This return is required if the company paid dividends, reported wages paid to employees, or held capital assets. Companies filing late or amended returns must include the annual statement and all schedules required for the preceding tax year.

Key Rules or Details for 2015

• Affordable Care Act Reporting: Large insurance companies were required to report coverage information for employees and policyholders under federal income tax rules for the 2015 tax year.
  
  
• Section 831(b) Election: Certain small insurers could limit taxable income to investment income, reducing exposure to corporate income tax for that period.
  
  
• Estimated Tax Penalty: Corporations filing late or underpaying estimated taxes faced penalties unless they qualified for reasonable cause exceptions.
  
  
• Alternative Minimum Tax: Life insurance companies and nonlife insurance company filers had to calculate any additional alternative minimum tax due based on their gross receipts.
  
  
• Capital Assets and Gains: Companies reporting capital gains or losses must complete Schedule D and accurately report all capital asset transactions.
  
  
• Dividends Received Deduction: Filers claiming the dividends received deduction must include details in Schedule C and ensure that the deduction accounts match those from the prior year statement.
  
  
• Controlled Group Filing: Corporations filing as part of a controlled group were required to check the applicable box and include a list of related entities on Schedule B.
  
  
• Foreign Tax Credit: Any foreign or domestic corporation claiming a foreign tax credit for tax paid abroad must include Form 1118.
  
  

Step-by-Step (High Level)

Step 1: Gather Company Income Tax Return Records

Collect tax transcripts, prior year annual statements, and balance sheets to verify taxable interest, capital gains, and unearned premiums before completing the form.

Step 2: Complete IRS Form 1120-PC U.S. Return

Use the correct 2015 version available on IRS.gov. Enter the employer identification number, the corporation’s fiscal tax year, and gross income figures accurately.

Step 3: Attach Required Schedules and Supporting Statements

Include Schedule B, Schedule C, Schedule D, Schedule PH, and any additional schedules covering deduction accounts, capital assets, and retained earnings.

Step 4: Verify the Corporation Income Tax Return Calculations

Check all tax computation lines for net income, special income adjustments, and life and non-life consolidated return details. Ensure total assets and gross receipts match your annual statement.

Step 5: Mail the Completed Company Income Tax Return

Send the signed return and all attachments to the IRS, Ogden, Utah, address listed for your entity type. Maintain copies for at least three years as proof of filing.

Common Mistakes and How to Avoid Them

• Missing Annual Statement Attachments: Every insurance company must include its NAIC annual statement or risk IRS penalties for incomplete submission.
  
  
• Incorrect Employer Identification Number: Companies using the wrong identification number may face processing delays or rejection of their return. Therefore, confirm the EIN against IRS records before filing to avoid delays or rejection.
  
  
• Omitting Dividends Received Deduction Details: Failure to complete Schedule C properly can result in an incorrect deduction amount and higher taxable income. Therefore, complete Schedule C fully and reconcile the deduction to avoid higher taxable income.
  
  
• Capital Loss Reporting Errors: Report each capital loss on Schedule D accurately. Incorrect totals affect taxable income and may distort net capital loss carryovers.
  
  
• Incomplete Controlled Group Information: Controlled group members must disclose all related corporations on Schedule B with proper foreign person or domestic corporation details.
  
  
• Unsigned Form 1120-PC: Ensure a corporate officer or attorney signs the return to validate submission and prevent IRS rejection.
  
  

What Happens After You File

After filing Form 1120-PC, the IRS typically takes 12–16 weeks to process returns. If additional tax is owed, the IRS will calculate interest income and penalties on the unpaid balance. Domestic corporations and foreign corporations can request payment plans using Form 9465. If the company overpaid, refunds are credited against future estimated taxes. Always retain documentation for gross income, deduction accounts, and subscriber accounts in case of audit.

FAQs

What is casualty insurance company income under Form 1120-PC?

Casualty insurance company income includes gross receipts from underwriting, investment income, taxable interest, and unearned premiums from property or casualty insurance operations.

How does the dividends received deduction apply to Form 1120 filers?

Corporations can claim a dividends received deduction on Form 1120 or 1120-PC for qualifying dividends, reducing overall taxable income and lowering federal income tax liability.

What is the role of the employer identification number on Form 1120-PC U.S.?

The employer identification number uniquely identifies each corporation. It tracks estimated taxes, taxes paid, and correspondence with the IRS.

How does a controlled group affect the 1120-PC filing?

Controlled group members must file combined data under the proper Internal Revenue Code section, listing all corporations filing jointly for accurate tax computation.

What should be reported on balance sheets in Form 1120-PC?

Balance sheets must include total assets, unpaid losses, retained earnings, life insurance reserves, and capital assets consistent with the annual statement.

How should capital gains and losses be reported on the company's income tax return?

All capital gains and losses should appear on Schedule D. Each capital asset transaction must show both acquisition and disposition amounts.

Who must file a corporation income tax return using Form 1120-PC?

Every nonlife insurance company, mutual fire insurer, or foreign corporation engaged in the insurance business must file this corporation income tax return annually.