Deferred acquisition costs for insurance returns
Deferred Acquisition Costs (DAC) are amortized under Section 848 and entered mostly on 1120-L returns, and occasionally on 1120-PC returns. These expenses are incurred when gathering new premiums that then need to be amortized on the 1120-L tax return.
The Deferred Acquisition Costs are located on Form 1120-L, Page 4, Schedule G.
- In Tax Forms, selectFederal, then1120-L - US Corporation Inc Tax Return, then1120-L - US Corporation Inc Tax Return, thenPage 3.
- In Organizer, selectDeferred Acquisition Costs, thenDirect Business, thenDirect Business Premiums Worksheet. The window opens on theTotalstab.
Annual Statement Users
The tax application automatically transfers in Premiums, Advance Premiums, and Deferred and Uncollected Premiums from the Annual Statement.
Adjustments to DAC
To make adjustments in each premium type, select 1 of the pages in the
Direct Business Premiums Worksheet
such as Annuity, Group Life, or Other Life. In the Other Adjustments to Premiums column in the last row, enter an adjustment in the field titled Other Adjustments. The Totals page sums all 3 pages for review purposes.
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