Connecticut Information Return for Passive Investment Companies

Information Return for Passive Investment Companies
Form CT-1120 PIC
Form CT-1120 PIC

Department of Revenue Services
State of Connecticut
PO Box 2974
Hartford CT 06104-2974
(Rev. 12/18)

Information Return
for Passive Investment Companies
Complete this form in blue or black ink only. See instructions on reverse.

Enter Income Year Beginning ____________________________, ________, and Ending __________________________, ________
Taxpayer
Please
type
or print.

Passive investment company (PIC) name

CT Tax Registration Number

Number and street	 					PO Box	 		

										
Federal Employer ID Number (FEIN)
									

City or town

State

ZIP code

Check and Complete All Applicable Boxes
1.	 Date PIC began commercial operations:___________________
	

Date PIC began commercial operations in CT: ______________

5. 	 	 Indicate the method used to determine the number of full-time
_
	 equivalent employees. See Instructions.
	 	
	Actual time or business records

2.	 Parent company’s name:_______________________________

	 	
	Safe harbor method elected:

		
___________________________________________________

			

____ First 30 days of taxable year

	

____  Average of first three months of taxable year

	

CT Tax Registration Number: ___________________________

3.	 Is a common paymaster used:	

	Yes 	

	No

6. 	Indicate the method used to allocate expenses and employee _
	 costs to the PIC. See instructions.

	If Yes, indicate the common paymaster’s:
	Name:______________________________________________
		
___________________________________________________
		CT Tax Registration Number:____________________________
4.	 Did the PIC have at least five full-time equivalent employees in
Connecticut for the period covered by this return:

	Yes	 	 No
	If Yes, indicate the number of PIC employees:
	

Full-time:________________ Part-time: __________________

	

Dual: _________	See instructions.
If No, the company does not qualify as a PIC. Do not file this
return.

		

		
	IRC § 482 type method
	

	
	Safe harbor method elected:

			

____ Percentage of time

			

____ Percentage of loans

	

The PIC hereby affirms that the applicable period selected under  
the safe harbor methods in either Line 5 or Line 6 is representative
of, or generally no less than, its level of employment for the entire
year.

7.	 Amount of expenses and employee costs to be allocated to the
PIC: ______________________________________________
	
Attach detailed schedule. See instructions.
8.		 Amount of the PIC’s total gross receipts: _________________
		 Attach detailed schedule.
9.		 Amount of total dividends issued by the PIC: ______________
		 Attach detailed schedule.
10.	 PIC apportionment fraction: ____________________________
	
Carry to six places. Complete and attach Form CT-1120A-FS,
Corporation Business Tax Return Apportionment Computation
of Income From Financial Service Company Activities.

Declaration: I declare under penalty of law that I have examined this return (including any accompanying schedules and statements) and, to the
best of my knowledge and belief, it is true, complete, and correct. I understand the penalty for willfully delivering a false return or document to the
Department of Revenue Services (DRS) is a fine of not more than $5,000, or imprisonment for not more than five years, or both. The declaration of
a paid preparer other than the taxpayer is based on all information of which the preparer has any knowledge.
Corporate officer’s name (print)	

Corporate officer’s signature	

Sign Here Corporate officer’s email address (print)		
Keep a
copy
of this
return for
your
records.

Paid preparer’s signature	

Title	
Date	

Firm’s name and address		
		

Date
Telephone number

(

)

Preparer’s SSN or PTIN	
FEIN
Telephone number

(

)

Department of Revenue Services
State of Connecticut
(Rev. 12/18)

Form CT-1120 PIC
Information Return for Passive Investment Companies
Instructions

Complete this form in blue or black ink only. Use Form
CT-1120 PIC, Information Return for Passive Investment
Companies, to establish that the corporation meets the
requirements of a passive investment company (PIC) as
defined in Conn. Gen. Stat. § 12-213(a)(27).

Filing Instructions

If the PIC parent company (taxpayer) is subject to the Connecticut
corporation business tax, Form CT-1120 PIC must be attached
to Form CT-1120, Corporation Business Tax Return. If the PIC
parent company is not subject to such tax, Form CT-1120 PIC
must be filed on or before the fifteenth day of the month following
the due date of the corporation’s corresponding federal income tax
return for the income year (May 15 for calendar year taxpayers).
Mail to:	Department of Revenue Services
	
PO Box 2974
	
Hartford CT 06104-2974

Definitions

Passive investment company (PIC) means any corporation
which is a related person to a financial service company or to an
insurance company, as defined in Conn. Gen. Stat. § 12-218b,
and:
•	 Employs not less than five full-time equivalent employees
in the state;
•	 Maintains an office in the state; and
•	 Confines its activities to the purchase, receipt, maintenance,
management, and sale of its intangible investments, and
the collection and distribution of the income from such
investments, including but not limited to interest and gains
from the sale, transfer, or assignment of such investments
or from the foreclosure upon or sale, transfer, or assignment
of the collateral securing such investments.
Related person means:
•	 A corporation, limited liability company, partnership,
association, or trust controlled by the taxpayer;
•	 An individual, corporation, limited liability company,
partnership, association, or trust in control of the taxpayer;
•	 A corporation, limited liability company, partnership,
association, or trust controlled by an individual, corporation,
limited liability company, partnership, association, or trust in
control of the taxpayer; or
•	 A member of the same controlled group as the taxpayer.
Control, with respect to a corporation, means ownership,
directly or indirectly, of stock possessing 50% or more of
the total combined voting power of all classes of the stock
of such corporation entitled to vote. Control, with respect to a
trust, means ownership, directly or indirectly, of 50% or more of
the beneficial interest in the principal or income of such trust.  
The ownership of stock in a corporation, of a capital or profits
interest in a partnership or association, or of a beneficial interest
in a trust shall be determined in accordance with the rules for

constructive ownership of stock provided in IRC § 267(c) other
than paragraph (3) of said section.
Intangible investments of a PIC are limited to:
•	 Loans secured by real property, as defined in Conn. Gen.
Stat. § 12-218b(a)(11); or
•	 Short-term investments of cash.

Line Instructions

Line 1 - Enter the date the PIC began commercial operations
and the date the PIC began commercial operations in
Connecticut.
Line 2 - Enter the PIC’s parent company name and its
Connecticut Tax Registration Number.
Line 3 - Check the appropriate box to indicate whether a common
paymaster is used. If Yes, indicate the common paymaster’s
name and Connecticut Tax Registration Number.
Line 4 - Check the appropriate box to indicate whether the PIC
had at least five full-time equivalent employees in Connecticut.  
Enter the number of employees on the appropriate line(s).
If the company did not have at least five full-time equivalent
employees in Connecticut, the company does not qualify as a
PIC, and its income will be subject to tax. Do not complete this
informational return.
A full-time employee must work 35 hours or more per week.
See Conn. Gen. Stat. § 12-217u(d); Conn. Agencies Regs.
§ 31-236-58(c)(2). A dual employee works for both the PIC and
the parent company. Part-time or dual employees may be used
in calculating the number of full-time equivalent employees. The
PIC must employ the number of full-time, part-time, and/or dual
employees that will add up to at least five full-time equivalent
employees, when calculating the amount of time such employees
work on PIC-related matters. However, the maximum number of
employees whose time may be allocated to attain the requisite
five full-time equivalent employees is 25.
Line 5 - Check the appropriate box to identify the method used
to determine the number of  full-time equivalent employees. The
five full-time equivalent employees may be established from the
employees’ time records. In lieu of relying on actual time records
maintained throughout the year, taxpayers may use an annual
safe-harbor test based on the employees’ time records for either
the first 30 days of the taxable year or an average of the first
three months in such taxable year (“the applicable period”).
Line 6 - Check the appropriate box to identify the method used
to allocate expenses and employee costs to the PIC.
PIC-related expenses and costs may be allocated to a PIC
on any reasonable basis provided in IRC § 482. Use of such
method will require the taxpayer to maintain adequate books and
records. In lieu of this method, the taxpayer is allowed to make
one of two alternative safe harbor elections on its return each
year in determining the reasonable allocation of the aggregate
pool of expenses and employee costs to the PIC.
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Percentage of Time Method

Under this safe harbor method, PIC-related expenses and
employee costs are allocated on the basis of the ratio of the
number of PIC employees to the total number of employees in
the PIC and the related financial service company. The number
of PIC employees may be determined either from the employees’
time records used in calculating the five full-time equivalent
employees under the safe harbor test, or from actual time records
for those taxpayers that do not rely on the safe harbor test. No
employee that expends less than 20% of his or her time on PIC
business shall be included in the calculation of the number of
PIC employees for purposes of determining the ratio.

Percentage of Loans Method

Under this method, PIC-related expenses and employee costs
may be allocated on the basis of the ratio of the number of PIC
loans to all loans serviced by the PIC and its related financial
service company. Such ratio shall be based upon the average
number of loans held during the first month of a PIC’s taxable
year or first 30 days after it begins commercial operations in
Connecticut for its first taxable year, and the average number
of loans held during the last month of a PIC’s taxable year. This
method may be used by any entity that employs five or more
full-time employees on PIC business without the need to allocate
employees’ time in order to qualify for PIC status.

Line 7 - Enter the amount of expenses and employee costs to
be allocated to the PIC. A detailed schedule must be attached
showing all expenses and employee costs (including wages)
of the financial service company to be allocated to the PIC, the
computation of the percentage used in allocating expenses
and employee costs to the PIC, and the resulting amount of
PIC expenses and employee costs for the taxable year. Do
not include interest expenses on borrowings, deposits, and
escrows. Do not include expenses related to FDIC insurance
premiums and investment and banking fees relating to mergers,
acquisitions, and other extraordinary transactions.
Line 8 - Enter the PIC’s total gross receipts.  A detailed schedule
must be attached to this return.
Line 9 - Enter the total amount of dividends issued by the PIC.  
A detailed schedule must be attached to this return.
Line 10 - Enter the apportionment fraction for the PIC. Carry
to six places. Complete and attach Form CT-1120A-FS,
Corporation Business Tax Return Apportionment Computation
of Income From Financial Service Company Activities. Complete
the form using the PIC’s receipts and apportioning such receipts
as if the PIC were a financial service company.

The method selected in a particular year must be consistently
applied to all expenses and employee costs on an all or nothing
basis.
On the basis of the method identified, detailed schedules must
be attached to this return.

Form CT-1120 PIC (Rev. 12/18)

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