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Schedule I (Form 1118) (Rev. 12-2020) 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 14, “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 Column 4. With respect to dividends from foreign corporations with
tax years beginning on or before December 31, 2017, enter
Section references are to the Internal Revenue Code unless dividends (including section 78 gross-up)from a foreign corporation
otherwise noted. on which taxes are deemed paid under section 902 only if the
Who Must File dividends are paid out of foreign oil and gas extraction income or
foreign oil related income of the distributing corporation and are not
If the corporation claims a credit for any income taxes paid, accrued, passive income. Dividends from foreign corporations for which the
or deemed paid during the tax year on combined foreign oil and gas corporation is not entitled to compute a deemed paid credit are
income, the amount of such taxes eligible for credit may be reduced. passive income and are not included in Part I. With respect to
See section 907(a) and Regulations section 1.907(a)-1 for details. dividends from foreign corporations with tax years beginning after
Method of Reporting December 31, 2017, column 4 is not applicable.
Report all amounts in U.S. dollars. If it is necessary to convert from Column 5. Enter amounts taxable under section 951(a) or 951A
foreign currency, attach a statement explaining how the rate was (including section 78 gross-up) that are attributable tothe controlled
determined. foreign corporation’s combined foreign oil andgas income.
Column 6. Include the corporation’s distributive share of partnership
Specific Instructions combined foreign oil and gas income. With respect to foreign
corporations with tax years beginning on or before December 31,
Codes at top of page 1. On line a, enter the same separate category 2017, also include in column 6 interest income paid by a foreign
code as that shown on the Form 1118 to which this Schedule I is corporation during such year on which taxes are deemed paid under
attached. If applicable, on line b or c, enter the same country code as section 902, to the extent it is paid out of foreign oil related income.
that shown on the Form 1118 to which this Schedule I is attached. With respect to foreign corporations with tax years beginning after
Part I December 31, 2017, include in column 6 interest income paid by a
foreign corporation to the extent the category of income of such
See section 907(c) and underlying regulations for rules on the interest is determined under section 904(d)(3). Do not include
income to include in Part I. interest income paid by a foreign subsidiary out of foreign oil and
Note: Do not include any dividend or interest income that ispassive gas extraction income of the payor, even if it is not passive income.
income. See the Instructions for Form 1118 for thedefinition of See section 907(c)(3).
passive income.
Columns 8 and 9. Enter the deductions allocated and apportioned
Column 1(a). For information pertaining to the entry of EINs and to foreign oil and gas income in the separate category. See the
reference ID numbers, see Identifying Numbers in the separate regulations under section 861.
instructions for Form 1118. For section 863(b) income, leave column
1(a) blank. Column 11. For each country, subtract column 10 fromcolumn 7
and enter the result in column 11. When totalingthe column 11
Column 1(b). Enter the two-letter codes (from the list at amounts, note that a taxable loss from aforeign country offsets
www.irs.gov/CountryCodes) of all foreign countries and U.S. taxable income from other countries.
possessions within which income is sourced and/or to which taxes
were paid, accrued, or deemed paid. For section 863(b) income, Columns 12 and 13. Attach a schedule to show how theforeign
enter “863(b)” instead of a two-letter code. taxes paid, accrued, or deemed paid with respect tocombined
foreign oil and gas income were figured.
Column 2. Enter gross income from sources outside theUnited
States and its possessions from the following. Part II
• The extraction (by the corporation or any other person) of minerals Line 1.Enter the total from Part I, column 11, minus anyrecapture
from oil or gas wells located outside the United States and its described in section 907(c)(4).
possessions. Line 2.At the time this schedule went to print, the highestrate of
• The sale or exchange of assets used in the trade or business of tax specified under section 11(b) was 21%.
extracting minerals from oil or gas wells located outside the United
States and its possessions. Part III
See section 907(c)(1). Line 2. Enter the sum of any carryover of foreign oil and gas tax to the
Column 3. Enter gross income from sources outside theUnited current year. Attach a schedule showing the computation in detail.
States and its possessions from the following. Corporations are encouraged to attach a schedule that is similar to
Schedule K (Form 1118), which is used to report a running balance of
• The processing of minerals extracted (by the corporation or any the corporation’s section 904(c) carryovers. If this approach is taken,
other person) from oil or gas wells into their primary products. the amount to be entered on line 2 is the amount that corresponds to
• The transportation of such minerals or primary products. Schedule K (Form 1118), line 3, column (xiv). Please note that special
• The distribution or sale of such minerals or primary products. rules apply to the carryback and carryover of foreign taxes paid or
accrued on combined foreign oil and gas income and related taxes.
• The disposition of assets used in the trade or business described For example, in applying foreign tax carryovers from prior tax years, in
in the three previous bulleted items. the case of any tax year that is an unused credit year (as defined in
• The performance of any other related service. section 907(f)) under each of sections 907(f) and 904(c), the provisions
See section 907(c)(2). of section 907(f) are to be applied before section 904(c). See section
907(f) and Regulations section 1.907(f)-1 for additional information.
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