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Department of the Treasury
Internal Revenue Service
Instructions for Schedule L

(Form 1118)

(Rev. December 2023)

Section references are to the Internal Revenue decrease in the amount of foreign taxes year in which the foreign tax
Code unless otherwise noted. paid or accrued by the taxpayer or by a redetermination occurs.
foreign corporation with respect to which
Future Developments the taxpayer computed an amount of Definitions
foreign income taxes deemed paid.
For the latest information about Foreign tax redetermination. A foreign
developments related to Schedule L (Form Use Part III to report foreign tax tax redetermination means a change in
1118) and its instructions, such as redeterminations that resulted in a change the liability for foreign income taxes
legislation enacted after they were to the taxpayer’s income inclusions, a including if:
published, go to IRS.gov/Form1118. change in the amount of foreign income • Accrued foreign taxes when paid or
taxes paid, accrued, or deemed paid, or a later adjusted differ from the amounts
What’s New change in the amount of foreign tax credits claimed as credits (including corrections
Schedule L will be electronically enabled claimed in any relation back year. to accrued amounts to reflect final foreign
for tax year 2023. See tax liability and additional payments of tax
Computer-Generated Schedule L on Use Part IV to report foreign tax that accrue after the close of the taxable
page 2 for additional information. redeterminations that resulted in a change year to which the tax relates);
in the U.S. tax liability for any relation back • Accrued foreign taxes are not paid
The entry spaces for the following year or other affected tax year(s) (for within 24 months after the close of the tax
columns have been modified to allow for example, by reason of a change in year to which they relate; or
the entry of a maximum of 12 characters. allowable foreign tax credit carryovers). • Any foreign tax paid is fully or partially
• Page 1, Part I, column 13. refunded.
• Page 4, Part V, column 3. Use Part V beginning with the 2023 tax
year, to satisfy the annual reporting Relation back year. Relation back year
The above columns request the reference requirement under Regulations section means the U.S. tax year in which the
ID number for contested foreign income 1.905-1(d)(4)(iv) for contested foreign foreign taxes being redetermined were
tax. The instructions for those columns tell income taxes for which the taxpayer originally taken into account.
filers to enter the reference ID number for claimed a provisional foreign tax credit. Example. In U.S. taxable year 1, a
the contested foreign income tax that was taxpayer took into account $2 million of
reported on the applicable Form 7204. Country X foreign income taxes accrued
Because the reference ID number for Who Must File
contested foreign income tax reported on Any taxpayer that has a foreign tax with respect to the foreign tax year that
Form 7204 is limited to 12 characters, the redetermination under section 905(c) must ended within U.S. taxable year 1. In year 3,
entry spaces for the above columns can complete this schedule and attach it to the Country X assessed an additional $1
be limited to 12 characters. income tax return for the taxable year in million of foreign income taxes with
which the foreign tax redetermination respect to the foreign taxable year that
On page 4 of the Schedule L, the occurs. This schedule must be submitted ended within U.S. taxable year 1. The
sentence “Do not complete Part V for the irrespective of whether the foreign tax relation back year is U.S. taxable year 1.
tax year 2022” has been deleted in the redetermination changed the taxpayer’s Affected tax year. Affected tax year
Part V heading. U.S. tax liability. means any tax year for which the U.S. tax
liability is changed as a result of a foreign
Note. If the U.S. tax liability for any year tax redetermination. This includes tax
General Instructions changes by reason of the foreign tax years in which the U.S. tax liability is
redetermination, the taxpayer must file an changed as a result of a change in a
Purpose of Schedule amended return for the taxable year with carryover of a tax attribute, such as a
Schedule L (Form 1118) is used to identify respect to which the U.S. tax liability is foreign tax credit carryover or a net
foreign tax redeterminations that occur in adjusted, in addition to filing Schedule L operating loss carryover, from a relation
the current tax year in each applicable for the year in which the foreign tax back year.
separate category, the years to which they redetermination occurs. See Foreign Tax
relate, and other information that satisfies Redeterminations in the Instructions for Functional currency. Functional
the taxpayer’s obligation to notify the IRS Form 1118 for additional information currency means the dollar, or in the case
of foreign tax redeterminations related to regarding foreign tax redeterminations that of a qualified business unit (QBU), the
prior years. result in a change in U.S. tax liability and currency of the economic environment in
for the related reporting requirements. which a significant part of such unit’s
Use Part I to report foreign income tax activities are conducted and which is used
If a foreign tax redetermination does
redeterminations that resulted in an by such unit in keeping its books and
not change the amount of U.S. tax due for
increase in the amount of foreign taxes records. See section 985(b).
any taxable year, the taxpayer does not
accrued and paid by the taxpayer or by a Reference ID number for contested
need to file an amended return. The
foreign corporation with respect to which tax. See the Instructions for Form 7204
taxpayer satisfies its reporting
the taxpayer computed an amount of for the definition of and requirements for
requirements under Regulations section
foreign income taxes deemed paid. the reference ID number for contested
1.905-4(b)(1)(v) with respect to such
Use Part II to report foreign income tax foreign tax redetermination by filing a foreign income tax.
redeterminations that resulted in a Schedule L with the return for the taxable

Dec 27, 2023 Cat. No. 38267T

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Reporting Exchange Rates on U.S. dollars, unless otherwise specified on Column 3. Enter the code for the country
Schedule L.
Schedule L or U.S. territory to which tax is paid using
All exchange rates must be reported using Line a. On line a, enter the same the country codes provided at IRS.gov/
a “divide-by convention” rounded to at separate category code as that shown on CountryCodes.
least four places. That is, the exchange the Form 1118 to which this Schedule L Columns 4 and 5. Enter in column 4 the
rate must be reported in terms of the relates. date(s) the additional foreign taxes were
amount by which the functional currency Line b. If code 901j is entered on line a, paid and enter in column 5 the ending
amount must be divided in order to reflect enter on line b the same country code as date of the foreign tax year to which such
an equivalent amount of U.S. dollars. As that shown on the Form 1118 to which this taxes relate.
such, the exchange rate must be reported Schedule L relates. Column 6. Enter the payor entity’s
as the units of foreign currency that equal
one U.S. dollar, rounded to at least four Line c. If one of the RBT codes is entered income subject to tax in the foreign
places. Do not report the exchange rate on line a, enter on line c the same country jurisdiction, as reported on the foreign tax
as the number of U.S. dollars that equal code as that shown on the Form 1118 to return.
one unit of foreign currency. which this Schedule L relates. Column 7. Enter the amounts of
Line d. Check the box on line d if an additional tax accrued in the local
Note. You must round the result to more election has been made under currency in which the tax is payable.
than four places if failure to do so would Regulations section 1.905-5(e) to account Column 8. Enter the amounts of the
materially distort the exchange rate or the for foreign tax redeterminations with additional tax denominated in the
equivalent amount of U.S. dollars. respect to pre-2018 tax years in the functional currency of the taxpayer's QBU
Computer-Generated foreign corporation's last pooling year. (as defined under Regulations section
Schedule L Election to account for foreign tax 1.904-4(f)(3)(vii)) or foreign corporation
Schedule L (Form 1118) will be redeterminations with respect to that accrued the additional tax.
electronically enabled for tax year 2023. pre-2018 taxable years in the foreign Column 9. Enter the exchange rate
Complete and file a separate Schedule L corporation’s last pooling year. Under originally used to convert the local
using code "TOTAL" that aggregates all Regulations section 1.905-5(e), an currency (in which the redetermined
amounts listed for each line and column of irrevocable election may be made by a foreign tax was paid) to U.S. dollars. See
all other separate category of income foreign corporation’s controlling domestic Reporting Exchange Rates on Schedule L,
Schedules L for Parts I, II, III, and V. shareholders to account for all foreign tax earlier, for additional information.
Complete this “TOTAL” Schedule L even if redeterminations that occur in taxable
you only have one separate category of years ending on or after November 2, Column 11. Enter the U.S. dollar amount
income. Because Part IV is based on 2020, with respect to pre-2018 taxable of foreign tax of each payor entity that was
overall U.S. tax liability, complete Part IV years of foreign corporations as if they reported by the taxpayer on its original or
only once in the “TOTAL” version. Such occurred in the foreign corporation’s last amended return (not taking into account
“TOTAL” Schedule L should be filed with taxable year beginning before January 1, the foreign tax redetermination).
the same category of income that 2018 (last pooling year). Check the box on Column 13. Enter the reference ID
completes Schedule B, Part III (see Form line d if an election under Regulations number for contested foreign income tax,
1118, Schedule B, Part III instructions). If section 1.905-5(e) has been made or is if applicable, using the reference ID
Schedule L reports a foreign tax being made in the current tax year. number reported on the Form 7204 filed
redetermination in a category of income with respect to the contested foreign
for which a Form 1118 is not filed in the Part I income tax.
current tax year, file such Schedule L with Column 1. Enter the ending date of the Column 14. Check the box if the foreign
the category of income that completes relation back year. See definition of tax redetermination changes the
Schedule B, Part III. In addition, complete Relation back year, earlier. If an election determination as to whether a grouping of
and file a separate Schedule L for each under Regulations section 1.905-5(e) has income and related taxes of a foreign
category of income for Parts I, II, III, and V. been made, report all foreign tax corporation qualifies for the High Tax
In some cases, Schedule L must be redeterminations with respect to pre-2018 Exception or Exclusion described in
expanded to properly report foreign tax taxable years under the last pooling year. section 954(b)(4).
redeterminations. This applies in cases
such as the following: Columns 2a through 2d. Enter in
• In cases where reporting is required for columns 2a and 2b the name and the EIN Part II
more than three payor entities for a or reference ID number of the payor entity. Columns 1, 2a, 2b, 2c, and 2d. Use the
relation back year, expand Schedule L for If the payor entity is not a corporation, instructions for Part I, columns 1, 2a, 2b,
those payor entities following the format of enter in columns 2c and 2d the name and 2c, and 2d to complete the corresponding
Schedule L. the EIN or reference ID number of the columns in Part II.
• In cases where reporting is required for domestic or foreign corporation that owns
more than two relation back years, or there the payor entity. In columns 2b and 2d, do Column 3. Enter the code for the country
are other affected years in addition to the not enter “FOREIGNUS” or “APPLIED or U.S. territory from which tax was
relation back years (Part IV), expand FOR.” Instead, if an entity does not have refunded using the country codes
Schedule L for those years following the an EIN, the taxpayer must enter a provided at IRS.gov/CountryCodes.
format of Schedule L. reference ID number that uniquely Columns 4 and 5. Enter in column 4 the
identifies the payor entity or owner for date(s) the foreign taxes were refunded or
which such number is requested. See deemed refunded and enter in column 5
Specific Instructions Reference ID numbers in the Instructions the ending date of the foreign tax year to
Important. All information reported on for Form 1118 for requirements and which such taxes relate. If the foreign
Schedule L (Form 1118) must be in additional details. taxes are deemed refunded by reason of
English. All amounts must be stated in the section 905(c)(2) two-year rule
described in the Note in the instructions

2 Instructions for Schedule L (Form 1118) (Rev. Dec. 2023)

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for Column 13, enter in column 4 the date section 951(a)(1) inclusion on the Columns 2 through 4. Enter in column 2
that is 24 months after the close of the taxpayer’s original or previously amended the total redetermined U.S. tax liability and
taxable year to which the foreign taxes return. enter in column 3 the total U.S. tax liability
relate. reported on the taxpayer’s original or
Columns 6 and 7. Enter in column 6 the
Column 6. Use the instructions for Part I, redetermined amount of foreign income previously amended return. In column 4,
column 6 to complete Part II, column 6. taxes deemed paid under section 960(a) enter the difference by subtracting column
and enter in column 7 the amount of 3 from column 2 for each affected tax year.
Column 7. Enter the amount of the tax
foreign income taxes deemed paid under
refunded or deemed refunded in the local
section 960(a) as reported on the
currency in which the tax is payable. Part V
taxpayer’s original or previously amended Beginning with tax year 2023, enter the
Column 8. Enter the amount refunded or return. information requested on Schedule L, Part
deemed refunded denominated in the V, using the instructions provided below.
Columns 8 and 9. Enter in column 8 the
functional currency of the taxpayer's QBU
redetermined amount of the taxpayer’s
(as defined under Regulations section Column 1. For taxpayers that claim
section 951A inclusion and enter in
1.904-4(f)(3)(vii)) or foreign corporation credits on the accrual basis, enter the
column 9 the amount of section 951A
that paid or accrued the refunded amount. relation back year. For taxpayers that
inclusion reported on the taxpayer’s claim credits on the cash basis, enter the
Columns 9 and 11. Use the instructions original or previously amended return. year in which the contested foreign
for Part I, columns 9 and 11 to complete income tax was remitted to the foreign
Columns 10 and 11. Enter in column 10
the corresponding columns in Part II. country. The tax year entered in column 1
the redetermined amount of foreign
Column 13. Check the box if the foreign income taxes deemed paid under section should correspond with the tax year
tax redetermination is a result of the 960(d) and enter in column 11 the amount entered on line 1 on the Form 7204 that
application of the section 905(c)(2) of foreign income taxes deemed paid was filed in order to claim a provisional
two-year rule. under section 960(d) on the taxpayer’s credit for the contested foreign income tax.
original or previously amended return. Columns 2 and 3. Enter in column 2 the
Note. Under section 905(c)(2), if accrued name of the payor entity and enter in
foreign income taxes are not paid on or Columns 12 and 13. Enter in column 12
before the date that is 24 months after the the redetermined taxes deemed paid column 3 the reference ID number for the
close of the taxable year to which they under section 960(b)(1) and enter in contested foreign income tax that was
relate (two-year rule), there is a resulting column 13 the section 960(b)(1) deemed reported on the Form 7204.
foreign tax redetermination that is paid taxes per original or previously Columns 4 and 5. Enter in column 4 the
accounted for as if the unpaid portion of amended return. code of the country or U.S. territory to
the foreign income taxes were refunded on Columns 14 and 15. Enter in column 14 which the tax was paid using the country
that date. Credit may be claimed for those the redetermined taxes deemed paid codes provided at IRS.gov/CountryCodes
taxes if and when they are ultimately paid. under section 902 and enter in column 15 and enter in column 5 the amount of
Foreign income taxes that first accrue after the section 902 deemed paid taxes per the contested foreign income tax that was
the date 24 months after the close of the taxpayer’s original or previously amended provisionally claimed as a credit.
taxable year to which such taxes relate return. Columns 6 and 7. Check the box in
may not be claimed as a credit or added to column 6 if the contest is still ongoing and
PTEP group taxes until paid. Columns 16 and 17. Enter in column 16
the total amount of foreign tax credit check the box in column 7 if the contest
Column 14. Use the instructions for Part claimed in the separate category on the was resolved.
I, column 14 to complete Part II, column taxpayer’s original or previously amended Columns 8 and 9. Enter in column 8 the
14. return and enter in column 17 the total date the contest was resolved and enter in
amount of foreign tax credit claimed after column 9 the amount of tax refunded or
Part III the foreign tax redetermination. Include additional tax paid, if any. Any portion of a
changes attributable to foreign tax contested foreign income tax for which a
Column 1. Use the instructions for Part I, redeterminations that affect the amount of provisional credit is claimed that is
column 1 to complete Part III, column 1. foreign taxes deemed paid under section subsequently refunded results in a foreign
Columns 2 and 3. Enter in column 2 the 902 prior to its repeal and under section tax redetermination that must be reported
redetermined direct section(s) 901 and/or 960(b) in these totals. on Schedule L and, if applicable, an
903 taxes paid or accrued and enter in amended return for the taxable year(s)
column 3 the direct section(s) 901 and/or Part IV with respect to the U.S. tax liability
903 taxes paid or accrued per the changes as a result of such foreign tax
taxpayer’s original or previously amended Column 1. Enter the ending date of the redetermination.
return. relation back year or affected year. See
definitions of Relation back year and
Columns 4 and 5. Enter in column 4 the Affected tax year, earlier. If an election Additional Information
redetermined amount of the taxpayer’s under Regulations section 1.905-5(e) has For more information, see section 905(c)
section 951(a)(1) inclusion (including been made, report all foreign tax and Regulations sections 1.905-1,
inclusions under sections 956 and 965) redeterminations with respect to pre-2018 1.905-3, 1.905-4, and 1.905-5.
and enter in column 5 the amount of taxable years under the last pooling year.

Instructions for Schedule L (Form 1118) (Rev. Dec. 2023) 3

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