Statements

Reportable transaction disclosure statement. Disclose information for each reportable transaction in which the RIC participated. Form 8886, Reportable Transaction Disclosure Statement, must be filed for each tax year that the federal income tax liability of the RIC is affected by its participation in the transaction. The following are reportable transactions.

1. Any listed transaction, which is a transaction that is the same as or substantially similar to one of the types of transactions that the IRS has determined to be a tax

avoidance transaction and identified by notice, regulation, or other published guidance as a listed transaction.

For more information, see Regulations section 1.6011-4. Also, see the Instructions for Form 8886. Penalties. The RIC may have to pay a penalty if it is required to disclose a reportable transaction under section 6011 and fails to properly complete and file Form 8886. Penalties may also apply under section 6707A if the RIC fails to file Form 8886 with its Form 1120-RIC, fails to provide a copy of Form 8886 to the Office of Tax Shelter Analysis (OTSA), or files a form that fails to include all the information required (or includes incorrect information). Other penalties, such as an accuracy-related penalty under section 6662A, may also apply. See the Instructions for Form 8886 for details on these and other penalties.

Reportable transactions by material advisors. Material advisors to any reportable transaction must disclose certain information about the reportable transaction by filing Form 8918, Material Advisor Disclosure Statement, with the IRS. For details, see the Instructions for Form 8918.

Safe harbor under Temporary Regulations section 1.67-2T(j)(2). Generally, shareholders in a nonpublicly offered RIC that are individuals or pass-through entities are treated as having received a dividend in an amount equal to the shareholder’s allocable share of affected RIC expenses for the calendar year. They are also treated as having paid or incurred an expense described in section 212 in the same amount for the calendar year. Election. A nonpublicly offered RIC may elect to treat its affected RIC expenses for a calendar year as equal to 40% of the amount determined under Temporary Regulations section 1.67-2T(j)(1)(i) for that calendar year.

To make this election, attach to Form 1120-RIC for the tax year that includes the last day of the calendar year for which the RIC makes the election a statement that it is making an election under Temporary Regulations section 1.67-2T(j)(2). Once made, the election remains in effect for all subsequent calendar years and may not be revoked without IRS consent. See Temporary Regulations section 1.67-2T for definitions and other details.

Transfers to a corporation controlled by the transfer- or. 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

2. Any transaction offered under conditions of confidentiality for which the RIC (or a related party) paid an advisor a fee of at least $250,000.

3. Certain transactions for which the RIC (or a related party) has contractual protection against disallowance of the tax benefits.

4. Certain transactions resulting in a loss of at least $10 million in any single year or $20 million in any combination of years.

5. Any transaction identified by the IRS by notice, regulation, or other published guidance as a “transaction of interest.” See Notice 2009-55, 2009-31 I.R.B. 170.

Instructions for Form 1120-RIC (2025) 7

include the statement required by Regulations section 1.351-3(b) on or with its return for the tax year of the exchange, unless all the required information is included in any statement(s) provided by a significant transferor that is attached to the same return for the same section 351 exchange. If the transferor or transferee corporation is a controlled foreign corporation (CFC), each U.S. shareholder (within the meaning of section 951(b)) must include the required statement on or with its return.

Distributions under section 355. Every RIC that makes a distribution of stock or securities of a controlled corporation, as described in section 355 (or so much of section 356 as it relates to section 355), must attach the statement required by Regulations section 1.355-5(a) to its return for the year of the distribution. A significant distributee (as defined in Regulations section 1.355-5(c) (1)) that receives stock or securities of a controlled corporation must include the statement required by Regulations section 1.355-5(b) on or with its return for the year of receipt. If the distributing or distributee corporation is a CFC, each U.S. shareholder (within the meaning of section 951(b)) must include the statement on or with its return.

Dual consolidated losses. If a domestic corporation incurs a dual consolidated loss (as defined in Regulations section 1.1503-2(c)(5)), the corporation (or consolidated group) may need to attach an elective relief agreement and/or an annual certification, as provided in Regulations section 1.1503-2(g)(2).

Certain dividends. A dividend received from a RIC is taken into account in computing (a) the deduction under section 243, or (b) qualified dividend income, only to the extent reported by the RIC as eligible for such deduction or such treatment in written statements furnished to its shareholders. A RIC must determine the reportable amounts under section 854(b). For purposes of the dividends-received deduction, a capital gain dividend received from a RIC is not treated as a dividend. The capital gain dividend is treated as a long-term capital gain by the shareholder.

Consent to partnership election to close its books monthly. Certain money market funds that obtain an interest in an eligible partnership that invests in assets exempt from taxation under section 103 may be qualified to pay exempt-interest dividends to their shareholders. To qualify for payment of exempt-interest dividends, a RIC must meet the quarterly net asset value (NAV) requirements under section 852(b)(5). To maintain the required NAV at the end of each quarter, the RIC may take into account on a monthly basis its distributive share of partnership items if the eligible partnership makes a proper election to close its books at the end of each month. See Rev. Proc. 2003-84, 2003-48 I.R.B. 1159, as modified by Notice 2008-80, for details.

Eligibility. A RIC is entitled to take into account its distributive share of partnership items on a monthly basis if:

• The RIC is entitled to hold itself out as a money market fund, or an equivalent of a money market fund;

• The RIC provides a statement to the partnership that it consents to the partnership’s election to close its books

monthly and that the RIC will include in its taxable income its distributive share of partnership items in a manner consistent with the election. See Rev. Proc. 2003-84 for the required contents of the statement of consent;

• The RIC provides the statement of consent to the custodian or manager of the partnership by the last day of the second month after the month in which the RIC acquires the partnership interest; and

• The partnership is eligible under Rev. Proc. 2003-84 to make the monthly closing election and the election is effective by the second month after the month in which the RIC acquires the partnership interest.

Statement of consent. The consent to a partnership’s monthly closing election is effective for the month in which the RIC acquires the partnership interest, unless the RIC requests that the consent be effective for either of the two immediately following calendar months. In addition to timely providing the partnership with the statement of consent, the statement should be filed with Form 1120-RIC for the first tax year in which the consent is effective. The monthly closing consent (and the partnership’s election) may be revoked only with the consent of the Commissioner. However, the RIC’s consent becomes ineffective on any day when the RIC ceases to be an eligible partner and the partnership’s monthly closing election is terminated as of the first day of any month the partnership is no longer eligible for the election under Rev. Proc. 2003-84. For more details, see the revenue procedure.

Other forms and statements. See Pub. 542, for a list of other forms and statements a RIC may need to file in addition to the forms and statements discussed throughout these instructions.