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. Filing Form 7004 does not extend the time for payment of tax.

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, and substantial understatements of tax from the due date (including extensions) to the date of payment. The interest charge is figured at a rate determined under section 6621.

Late payment of tax.

A fund that doesn’t pay the tax when due may be penalized ½ 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. This penalty won’t be imposed if the fund can show that the failure to pay on time was due to reasonable cause.

Late filing of return.

A fund that doesn’t file its tax return by the due date, including extensions, may have to pay a penalty of 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 penalty won’t be imposed if the fund can show that the failure to file on time was due to reasonable cause. If the fund receives a notice about penalties after it files its return, send the IRS an explanation and we will determine if the fund meets the reasonable cause criteria. Do not attach an explanation when the return is filed.

Other penalties.

Other penalties can be imposed for negligence, disregard of rules or regulations, substantial understatement of tax, reportable transaction understatements, and fraud. See sections 6662, 6662A, and 6663.

Line 1a.

Include on this line the following types of income.

1. Adjustments that result in the distribution of deficiency dividends under section 860(f) for the year in which the dividends are paid.

2. If a RIC is a partner in a partnership, recognize the fund’s share of partnership ordinary income (loss) and deductions at the same time they are taken into account by the partnership, regardless of the fund’s tax year or the tax year of the partnership in which the fund is a partner. See Rev. Rul. 94-40, 1994-1 C.B. 274.

Also, see Rev. Proc. 94-71, 1994-2 C.B. 810, for the circumstances under which the IRS will not challenge the method used by a fund to account for partnership items when its required distribution is determined under section 4982.

3. Any foreign currency gain or loss attributable to a section 988 transaction that would be properly taken into account for the part of the calendar year after October 31 is taken into account in the following year. If the RIC makes an election under section 4982(e)(4), the last day of the fund’s tax year is substituted for October 31.

4. Ordinary gain or loss from a disposition of stock in a passive foreign investment company is determined as if the fund’s tax year ended on October 31. Gain or loss for the part of the calendar year after October 31 is taken into account in the following year. If the section 4982(e)(4) election is made, the last day of the fund’s tax year is substituted for October 31.

Line 2a.

Include on this line the following items.

1. Capital gain net income from deficiency dividends referred to on line 1a above.

2. The fund’s share of partnership capital gain net income taken into account at the same time as it is taken into account by the partnership, regardless of the fund’s tax year or the tax year of the partnership in which the fund is a partner.

If the RIC does not make the section 4982(e)(4) election, capital gain net income is figured on the basis of a 1-year period ending on October 31 of the calendar year.

If the RIC makes the election under section 4982(e)(4), substitute the fund’s tax year for the 1-year period ending on October 31. A special rule applies, however, to the first year the fund makes the election if that year is not the first year the fund is subject to the tax under section 4982. For that year, capital gain net income is figured for the period beginning on November 1 of the year immediately preceding the election year and ending on the last day of the first tax year for which the election was made.

Line 5.

Enter dividends paid during the calendar year. Include dividends declared in October, November, or December of that calendar year that are payable to shareholders of record on a specified date in one of these months, but only if actually paid by the fund during January of the following calendar year. See section 852(b)(7). Do not include other dividends paid after the close of the calendar year.

Line 6.

Line 6 is the total of the following amounts figured for the tax year of the fund ending in or with the calendar year for which this return is filed.

1. Taxable income from Form 1120-RIC, Part I, line 26; and the amount subject to tax on Form 1120-RIC, Part II, line 3.

2. Undistributed capital gains designated under section 852(b)(3)(D) from Form 2438, line 11.

Line 12. Tax due.

All payments made to the federal government are to be processed electronically. Go to IRS.gov/Payments for more information on using any of the payment options below.

Line 13a. Overpayment.

If the RIC has access to U.S. banking services, it should use direct deposit for any refunds, whenever possible. The benefits of a direct deposit include a faster refund, the added security of a paperless payment, and the savings of tax dollars associated with the reduced processing costs.

If the RIC wants its refund directly deposited into its checking or savings account at any U.S. bank or other financial institution, complete lines 13b through 13d. See the instructions for lines 13b, 13c, and 13d, later.

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

Line 13b. Routing number.

The routing number must be nine digits. The first two digits must be 01 through 12 or 21 through 32. Ask the RIC’s financial institution for the correct routing number to enter on line 13b if:

Line 13c. Type of account.

Check the appropriate box for the type of account. Do not check more than one box. The RIC must check the correct box to ensure the deposit is accepted.

Line 13d. 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. Do not include the check number.

If the direct deposit to the RIC’s account is different from the amount expected, the RIC will receive an explanation in the mail about 2 weeks after the refund is deposited.

Conditions resulting in a refund by check.

If the IRS is unable to process the request for a direct deposit, a refund by check will be generated instead. Reasons for not processing a request include the following.