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Schedule I (Form 1118) (Rev. 12-2021) Page 2
Part II Reduction Under Section 907(a)
1 Combined foreign oil and gas income. (See the instructions for Part II, line 1, below.) . . . . .
2 Multiply line 1 by the highest rate of tax under section 11(b). (See the instructions for Part II, line 2, below.)
3 Total taxes (from Part I, column 13, “Totals” line) . . . . . . . . . . . . . . . . .
4 Reduction (subtract line 2 from line 3; if zero or less, enter -0-). Enter here and on Schedule G,
line B, of the corresponding Form 1118 . . . . . . . . . . . . . . . . . . . .
Part III Foreign Oil and Gas Taxes Available for Use in the Current Tax Year
1 Excess section 907(a) limitation. Subtract Schedule I, Part II, line 3, from line 2. If zero or less,
enter -0- and do not complete the remainder of Part III . . . . . . . . . . . . . . .
2 Enter the sum of any carryover of foreign oil and gas tax to the current year. Attach a schedule
showing the computation in detail . . . . . . . . . . . . . . . . . . . . . .
3 Enter the smaller of lines 1 and 2 here and include on Schedule B, Part II, line 5 . . . . . . .
General Instructions • The disposition of assets used in the trade or business described
in the three previous bulleted items.
Section references are to the Internal Revenue Code unless
otherwise noted. • The performance of any other related service.
See section 907(c)(2).
Who Must File
Column 4. Enter amounts taxable under section 951(a) or 951A
If the corporation claims a credit for any income taxes paid, (including section 78 gross-up) that are attributable to the controlled
accrued, or deemed paid during the tax year on combined foreign foreign corporation’s combined foreign oil and gas income.
oil and gas income, the amount of such taxes eligible for credit may Column 5. Include the corporation’s distributive share of partnership
be reduced. See section 907(a) and Regulations section 1.907(a)-1 combined foreign oil and gas income. Include in column 5 interest
for details. income paid by a foreign corporation to the extent the category of
Method of Reporting income of such interest is determined under section 904(d)(3). Do
not include interest income paid by a foreign subsidiary out of
Report all amounts in U.S. dollars. If it is necessary to convert from foreign oil and gas extraction income of the payor, even if it is not
foreign currency, attach a statement explaining how the rate was passive income.
determined.
See section 907(c)(3).
Specific Instructions Columns 7 and 8. Enter the deductions allocated and apportioned
Codes at top of page 1. On line a, enter the same separate to foreign oil and gas income in the separate category. See the
category code as that shown on the Form 1118 to which this regulations under section 861.
Schedule I is attached. If applicable, on line b or c, enter the same Column 10. For each country, subtract column 9 from column 6
country code as that shown on the Form 1118 to which this and enter the result in column 10. When totaling the column 10
Schedule I is attached. amounts, note that a taxable loss from a foreign country offsets
taxable income from other countries.
Part I
Columns 11 and 12. Attach a schedule to show how the foreign
See section 907(c) and underlying regulations for rules on the taxes paid, accrued, or deemed paid with respect to combined
income to include in Part I. foreign oil and gas income were figured.
Note: Do not include any dividend or interest income that is passive
income. See the Instructions for Form 1118 for the definition of Part II
passive income. Line 1.Enter the total from Part I, column 10, minus any recapture
Column 1(a). For information pertaining to the entry of EINs and described in section 907(c)(4).
reference ID numbers, see Identifying Numbers in the separate Line 2.At the time this schedule went to print, the highest rate of
instructions for Form 1118. For section 863(b) income, leave column tax specified under section 11(b) was 21%.
1(a) blank.
Part III
Column 1(b). Enter the two-letter codes (from the list at
www.irs.gov/CountryCodes) of all foreign countries and U.S. Line 2. Enter the sum of any carryover of foreign oil and gas tax to
possessions within which income is sourced and/or to which taxes the current year. Attach a schedule showing the computation in
were paid, accrued, or deemed paid. For section 863(b) income, detail. Corporations are encouraged to attach a schedule that is
enter “863(b)” instead of a two-letter code. similar to Schedule K (Form 1118), which is used to report a running
balance of the corporation’s section 904(c) carryovers. If this
Column 2. Enter gross income from sources outside the United approach is taken, the amount to be entered on line 2 is the amount
States and its possessions from the following. that corresponds to Schedule K (Form 1118), line 3, column (xiv).
• The extraction (by the corporation or any other person) of minerals Please note that special rules apply to the carryback and carryover
from oil or gas wells located outside the United States and its of foreign taxes paid or accrued on combined foreign oil and gas
possessions. income and related taxes. For example, in applying foreign tax
• The sale or exchange of assets used in the trade or business of carryovers from prior tax years, in the case of any tax year that is an
extracting minerals from oil or gas wells located outside the United unused credit year (as defined in section 907(f)) under each of
States and its possessions. sections 907(f) and 904(c), the provisions of section 907(f) are to be
See section 907(c)(1). applied before section 904(c). See section 907(f) and Regulations
section 1.907(f)-1 for additional information.
Column 3. Enter gross income from sources outside the United
States and its possessions from the following.
• The processing of minerals extracted (by the corporation or any
other person) from oil or gas wells into their primary products.
• The transportation of such minerals or primary products.
• The distribution or sale of such minerals or primary products.
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