Specific Instructions

Period Covered

File the 2002 return for calendar year 2002. 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.

Address

Include the suite, room, or other unit number after the street address.

If the post office does not deliver mail to the street address and the corporation has a P.O. box, show the box number instead.

Employer Identification Number (EIN)

Enter the corporation's EIN. If the corporation does not have an EIN, it must apply for one on Form SS-4, Application for Employer Identification Number. If the corporation has not received its EIN by the time the return is due, write Applied for in the space for the EIN. See Pub. 583 for details.

Item A(2)

If box A(1) is checked and nonlife insurance companies are included in the consolidated return , also check box A(2). See Regulations section 1.1502-47(s) for the filing requirements of a life-nonlife company consolidated return.

Item D. Section 953 Election

Check the appropriate box if the corporation is a foreign corporation and elects under:

1. Section 953(c)(3)(C) to treat its related person insurance income as effectively connected with the conduct of a trade or business in the United States or
2. Section 953(d) to be treated as a domestic corporation.

Generally, a foreign corporation making either election should file its return with the Internal Revenue Service Center, Philadelphia, PA 19255. See Notice 87-50, 1987-2 C.B. 357, and Notice 89-79, 1989-2 C.B. 392, for the procedural rules, election statement formats, and filing addresses for making the respective elections under section 953(c)(3)(C) or section 953(d).

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

Item E. Final Return, Name Change, Address Change, or Amended Return

Indicate a final return, name change, address change, or amended return by checking the appropriate box.

Note.   If a change of address occurs after the return is filed, use Form 8822, Change of Address, 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. Gross income, however, does not include extraterritorial income that is qualifying foreign trade income. Use Form 8873, Extraterritorial Income Exclusion, to figure the exclusion. Include the exclusion in the total for Other deductions on line 18.

Line 1.   Enter gross premiums and other consideration received on insurance and annuity contracts less return premiums and premiums and other consideration paid for indemnity reinsurance.

Gross premiums and other consideration includes advance premiums, deposits, fees, assessments, consideration received for assuming liabilities under contracts not issued by the corporation, and any amount treated as premiums received under section 808(e) (see Schedule E instructions).

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 2. Net decrease in reserves.   If there is a decrease in reserves, complete line 2 by doing the following:

1. Pencil in the amount from line 8, Schedule F, on line 2, to tentatively compute life insurance company gross income (LICGI);
2. Use this tentative LICGI figure to complete Schedule F.

After completing steps 1 and 2 above, erase the numbers penciled in for step 1 and then enter on line 2 the net decrease in reserves shown on line 35, Schedule F.

Line 3. 10% of certain decreases in reserves under section 807(f)(1)(B)(ii).   If the amount of any item referred to in section 807(c) decreases as a result of a change in the basis used to determine that item, 10% of the decrease must be included in LICGI for each of the 10 succeeding tax years. See section 807(f)(1).

Note.   If a corporation no longer qualifies as a life insurance company, the balance of any adjustments under section 807(f) must be taken into account in the last tax year the corporation is qualified to file Form 1120-L. See section 807(f)(2).

Line 4. Investment income.   Enter the amount from Schedule B, line 8, less 50% of interest income of an ESOP loan made prior to August 20, 1996. Also, see Act section 1602 of the Small Business Job Protection Act of 1996 (1996 Act) for binding contracts and refinancing rules.

Line 5. Net capital gain.   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:

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; 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.

Line 6. Income from a special loss discount account.   Enter the total from Form 8816, Part II, line 6. See section 847(5) and the Instructions for Form 8816 for more information.

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 schedule. 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.

• All income from noninsurance business (defined in section 806(b)(3)), but list it separately from all other income.
• 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:
  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 paragraph 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.

• Ordinary income from trade or business activities of a partnership (from Schedule K-1 (Form 1065 or 1065-B)). 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.

Deductions

Limitations on Deductions

Section 263A uniform capitalization rules.   The uniform capitalization rules of section 263A require corporations to capitalize, or include in inventory, certain costs incurred in connection with the production of real property and tangible personal property held in inventory or held for sale in the ordinary course of business.

Interest expense paid or incurred during the production period of designated property must be capitalized and is governed by special rules. For more details, see Regulations sections 1.263A-8 through 1.263A-15.

For more details on the uniform capitalization rules, see Regulations sections 1.263A-1 through 1.263A-3.

Transactions between related taxpayers.   Generally, an accrual basis taxpayer may only deduct business expenses and interest owed to a related party in the year the payment is included in the income of the related party. See sections 163(e)(3), 163(j), and 267 for limitations on deductions for unpaid interest and expenses.

Section 291 limitations.   Corporations may be required to adjust deductions for depletion of iron ore and coal, intangible drilling and exploration and development costs, certain deductions for financial institutions, and the amortizable basis of pollution control facilities. See section 291 to determine the amount of the adjustment. Also, see section 43.

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.

Business startup expenses.   Business startup expenses must be capitalized unless an election is made to amortize them over a period of 60 months. See section 195 and Regulations section 1.195-1.

Reducing certain expenses for which credits are allowable.   For each credit listed below, the corporation must reduce the otherwise allowable deductions for expenses used to figure the credit by the amount of the current year credit.

• Work opportunity credit.
• Research credit.
• Enhanced oil recovery credit.
• Disabled access credit.
• Empowerment zone and renewal community employment credit.
• Indian employment credit.
• Employer credit for social security and Medicare taxes paid on certain employee tips.
• Orphan drug credit.
• Welfare-to-work credit.
• New York Liberty Zone business employee credit.

If the corporation has any of these credits, be sure to figure each current year credit before figuring the deduction for expenses on which the credit is based.

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) includes a reasonable estimate both of 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 (e.g., for reinsurance) for those losses together with estimates of those recoveries that may be recovered on those losses in future years.

Note.   Under section 807(c), the amount of unpaid losses (other than losses on life insurance contracts) must be the amount of the discounted unpaid losses under section 846. See the Instructions for Schedule F, line 2, for more information on the discounting provisions.

Line 11. 10% of certain increases in reserves under section 807(f)(1)(B)(i).   If the amount of any item referred to in section 807(c) increases as a result of a change in the basis used to determine that item, 10% of the increase will be allowed as a deduction in computing life insurance company taxable income (LICTI) for each of the 10 succeeding tax years. See section 807(f)(1).

Note.   If a corporation ceases to qualify as a life insurance company, the balance of any adjustments under section 807(f) must be taken into account in the last year that the corporation is qualified to file Form 1120-L. See section 807(f)(2).

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).

Note.   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.

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.

Line 17. Additional deduction.   Enter the total from Form 8816, Part II, line 5.

Any insurance company taking the additional deduction must:

• Make special estimated tax payments equal to the tax benefit from the deduction and
• Establish and maintain a Special Loss Discount Account. See section 847 and Form 8816 for more information.

Line 18. Other deductions.   Attach a schedule, 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 17. Examples of other deductions include:

• Legal and professional fees.
• Supplies used and consumed in the business.
• Utilities.
• Ordinary losses from trade or business activities of a partnership (from Schedule K-1 (Form 1065 or 1065-B)). 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.
• Extraterritorial income exclusion (from Form 8873, line 55).
• Dividends paid in cash on stock held by an employee stock ownership plan. However, a deduction may only be taken 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 the participants or their beneficiaries:
     1. Payable as provided under 1 or 2 above or
     2. Paid to the plan and reinvested in qualifying employer securities; or
  4. Used to make payments on a loan described in section 404(a)(9).

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

• Enter the amount of salaries and wages paid for the tax year reduced by any work opportunity credit from Form 5884, empowerment zone and renewal community employment credit from Form 8844, Indian employment credit from Form 8845, welfare-to-work credit from Form 8861, and New York Liberty Zone business employee credit from Form 8884. See the instructions for these forms for more information. Do not include salaries and wages 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 all deductions from any noninsurance business (defined in section 806(b)(3)). Deductions from any noninsurance business should be listed separately from all other deductions.
• Depreciation or amortization (attach Form 4562, Depreciation and Amortization, 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 for details.
• Do not deduct fines or penalties paid to a government for violating any law.
• Enter deductible 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 below.) Attach a schedule 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 may not deduct compensation to a covered employee to the extent that the compensation exceeds $1 million. Generally, a covered employee is:

• The chief executive officer of the corporation (or an individual acting in that capacity) as of the end of the tax year or
• An employee whose total compensation must be reported to shareholders under the Securities Exchange Act of 1934 because the employee is among the four highest compensated officers for that tax year (other than the chief executive officer).

For this purpose, compensation does not include the following:

• Income from certain employee trusts, annuity plans, or pensions and
• Any benefit paid to an employee that is excluded from the employee's income.

The deduction limit does not apply to:

• Commissions based on individual performance,
• Qualified performance-based compensation, and
• Income payable under a written binding contract in effect on February 17, 1993.

The $1 million limit is reduced by amounts disallowed as excess parachute payments under section 280G.

For details, see section 162(m) and Regulations section 1.162-27.

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 generally must file one of the forms listed below, 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).

Form 5500, Annual Return/Report of Employee Benefit Plan. File this form for a plan that is not a one-participant plan (see below).

Form 5500-EZ, Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan. File this form for a plan that only covers the owner (or the owner and his or her spouse) but only if the owner (or the owner and his or her spouse) owns the entire business.

Charitable contributions.   Enter contributions or gifts actually paid in 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.

Corporations reporting taxable income on the accrual method may elect to treat as paid during the tax year any contributions paid by the 15th day of the 3rd month after the end of the tax year if the contributions were authorized by the board of directors during the tax year. Attach a declaration to the return, signed by an officer, stating that the resolution authorizing the contributions was adopted by the board of directors during the tax year. Also, attach a copy of the resolution.

Limitation on deduction.   The total amount claimed may not be more than 10% of LICTI computed without regard to:

• Any deduction for contributions,
• The deduction for policyholder dividends,
• The deduction for dividends received,
• The small life insurance company deduction,
• Any operations loss carryback to the tax year under section 810, and
• Any capital loss carryback to the tax year under section 1212(a)(1).

Carryover.   Charitable contributions over the 10% limitation may not be deducted in 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 operating loss. See section 170(d)(2)(B).

Substantiation requirements.   Generally, no deduction is allowed for any contribution of $250 or more unless the corporation obtains a written acknowledgment from the donee organization that shows the amount of cash contributed, describes any property contributed, and either gives a description and a good faith estimate of the value of any goods or services provided in return for the contribution or states that no goods or services were provided in return for the contribution. The acknowledgment must be obtained by the due date (including extensions) of the corporation's return, or if earlier, the date the return is filed. Do not attach the acknowledgment to the tax return, but keep it with the corporation's records. These rules apply in addition to the filing requirements for Form 8283, Noncash Charitable Contributions, described below.

For more information on substantiation and recordkeeping requirements, see the regulations under section 170 and Pub. 526, Charitable Contributions.

Contributions to organizations conducting lobbying activities.   Contributions made to an organization that conducts lobbying activities are not deductible if:

• The lobbying activities relate to matters of direct financial interest to the donor's trade or business and
• The principal purpose of the contribution was to avoid Federal income tax by obtaining a deduction for activities that would have been nondeductible under the lobbying expense rules if conducted directly by the donor.

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 attach a schedule to the return describing the kind of property contributed and the method used to determine its fair market value (FMV). Generally, corporations must complete and attach Form 8283 to their returns for contributions of property (other than money) if the total claimed deduction for all property contributed was more than $5,000.

If the corporation made a qualified conservation contribution under section 170(h), also include the FMV of the underlying property before and after the donation, as well as the type of legal interest contributed, and describe the conservation purpose benefited by the donation. If a contribution carryover is included, show the amount and how it was determined.

Reduced deduction for contributions of certain property.   For a charitable contribution of property, the corporation must reduce the contribution by the sum of:

• The ordinary income and short-term capital gain that would have resulted if the property had been sold at its FMV and
• For certain contributions, the long-term capital gain that would have resulted if the property had been sold at its FMV.

The reduction for long-term capital gain applies to:

• Contributions of tangible personal property for use by an exempt organization for a purpose or function unrelated to the basis for its exemption and
• Contributions of any property to or for the use of certain private foundations except for stock for which market quotations are readily available (section 170(e)(5)).

Larger deduction.   A larger deduction is allowed for certain contributions of:

• Inventory and other property to certain organizations for use in the care of the ill, needy, or infants (see section 170(e)(3) and Regulations section 1.170A-4A);
• Scientific equipment used for research to institutions of higher learning or to certain scientific research organizations (see section 170(e)(4)); and
• Computer technology and equipment for educational purposes.

Contributions of computer technology and equipment for educational purposes.   A corporation may take an increased deduction under section 170(e)(6) for qualified contributions of computer technology or equipment for educational purposes. Computer technology or equipment means computer software, computer or peripheral equipment, and fiber optic cable related to computer use. A contribution is a qualified contribution if:

• It is made to an eligible donee (see below);
• Substantially all of the donee property's use is:
  1. Related to the purpose or function of the donee,
  2. For use within the United States, and
  3. For educational purposes.
• The contribution is made not later than 3 years after the date the taxpayer acquired or substantially completed the construction of the property;
• The original use of the property is by the donor or the donee;
• The property is not transferred by the donee for money, services, or other property, except for shipping, transfer, and installation costs;
• The property fits productively into the donee's education plan; and
• The property meets standards, if any, that may be prescribed by future regulations, to assure it meets minimum functionality and suitability for educational purposes.

Eligible donee.   The term eligible donee means:

• An educational organization that normally maintains a regular faculty and curriculum and has a regularly enrolled body of pupils in attendance at the place where its educational activities are regularly conducted,
• A section 501(c)(3) entity organized primarily for purposes of supporting elementary and secondary education, or
• A public library (as described in section 170(e)(6)(B)(i)(III).

Exceptions.   The following exceptions apply to the above rules for computer technology and equipment:

• Contributions to private foundations may qualify if the foundation contributes the property to an eligible donee within 30 days after the contribution and notifies the donor of the contribution. For more details, see section 170(e)(6)(C).
• For contributions of property reacquired by the manufacturer of the property, the 3 year period begins on the date that the original construction of the property was substantially completed. Also, the original use of the property may be by someone other than the donor or the donee.

Travel, meals, and entertainment.   Subject to limitations and restrictions discussed below, a corporation can deduct ordinary and necessary travel, meals, and entertainment expenses paid or incurred in its trade or business. Also, special rules apply to deductions for gifts, skybox rentals, luxury water travel, convention expenses, and entertainment tickets. See section 274 and Pub. 463, Travel, Entertainment, 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
• His or her travel is for a bona fide business purpose and would otherwise be deductible by that individual.

Meals and entertainment.   Generally, the corporation can deduct only 50% of the amount otherwise allowable for meals and entertainment expenses paid or incurred in its trade or business. In addition (subject to exceptions under section 274(k)(2)):

• Meals must not be lavish or extravagant;
• A bona fide business discussion must occur during, immediately before, or immediately after the meal; 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.

Membership dues.   The corporation may 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 may not 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.   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.

Note.   The corporation may be able to deduct otherwise nondeductible meals, travel, and entertainment expenses if the amounts are treated as compensation and reported on Form W-2 for an employee or on Form 1099-MISC for an independent contractor.

Deduction for clean-fuel vehicles and certain refueling property.   Section 179A allows a deduction for part of the cost of qualified clean-fuel vehicle property and qualified clean-fuel vehicle refueling property placed in service during the tax year. For more information, see Pub. 535.

Lobbying expenses.   Generally, lobbying expenses are not deductible. These expenses include:

• Amounts paid or incurred in connection with influencing Federal or state legislation (but not 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. See section 162(e)(3). If certain in-house lobbying expenditures do not exceed $2,000, they are deductible. For information on contributions to charitable organizations that conduct lobbying activities, see the instructions on page 10. For more information on lobbying expenses, see section 162(e).

Line 20. Operations loss deduction.   The operations loss deduction (OLD) is the total of the operations loss carryovers from prior tax years. However, the OLD cannot exceed the corporation's LICTI (after the dividends-received deduction). See section 810(c). If this deduction is taken, show its computation on an attached schedule.

Generally, a life insurance company may carry an operating loss back to each of the 3 years preceding the year of the loss and carry it over to each of the 15 years following the year of the loss.

There is also an irrevocable election to waive the carryback period and instead carry an operating loss forward to years following the year of the loss. To make this election, check the box in line 12, Schedule M. To be valid, the election must be made by the due date (including extensions) for filing Form 1120-L. If the life insurance company is a new company for the loss year, the loss may be carried over to each of the 18 years following the year of the loss.

After applying the operating loss 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 of the offsets for each of the prior tax years to which the corporation may carry the loss. See section 810(b)(2).

See section 810 for special rules, limitations, and definitions pertaining to operating loss carrybacks and carryovers.

If an ownership change occurs, the amount of the taxable income of a loss corporation that can be offset by pre-change operations loss carryovers is limited (see section 382 and the related regulations). A loss corporation must file an information statement with its income tax return for each tax year that certain ownership shifts occur (see Temporary Regulations section 1.382-2T(a)(2)(ii) for details.) See Regulations section 1.382-6(b) for details on how to make the closing-of-the-books election.

See section 844 for special loss carryover rules for an insurance company that has changed its form of organization or has had a change in the nature of its insurance business.

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