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                                                                                                           Department of the Treasury
                                                                                                           Internal Revenue Service
2023

Instructions for

Form 1120-F

U.S. Income Tax Return of a Foreign Corporation

Section references are to the Internal Revenue    Contents                              Page    liability when calculating the required 
Code unless otherwise noted.                                                                    annual payment on Form 2220. Affected 
                                                  Schedule W . . . . . . . . . . . . . .      33
Contents                                  Page                                                  foreign corporations must also include an 
                                                                                                amount of estimated tax penalty on Form 
Photographs of Missing Children       . . . . 1   Future Developments                           1120-F, page 1, line 6, even if that amount 
The Taxpayer Advocate Service .       . . . . 1                                                 is zero. Failure to follow these instructions 
How To Get Forms and                              For the latest information about 
Publications .  . . . . . . . . . . . . . . 2     developments related to Form 1120-F and       could result in affected foreign 
General Instructions .  . . . . . . . . . . . . 2 its instructions, such as legislation         corporations receiving a penalty notice 
Purpose of Form .       . . . . . . . . . . . 2   enacted after they were published, go to      that will require an abatement request to 
Who Must File     . . . . . . . . . . . . . 2     IRS.gov/Form1120F.                            apply the relief provided by Notice 
                                                                                                2023-42. See Notice 2023-42, 2023-26 
Special Returns for Certain                                                                     I.R.B. 1085, available at IRS.gov/irb/
Organizations .         . . . . . . . . . . . 3   What’s New                                    2023-26_IRB#NOT-2023-42. Also, see the 
Claim for Refund or Credit .        . . . . . 3   Increase in penalty for failure to file.      instructions for Form 1120-F, page 1, 
Paid Preparer Authorization .         . . . . 5   For tax returns required to be filed in 2024, line 6, on page 13 of these instructions.
Other Forms, Schedules,                           the minimum penalty for failure to file a 
and Statements That May                           return that is more than 60 days late has     Photographs of Missing 
Be Required .           . . . . . . . . . . . . 5 increased to the smaller of the tax due or    Children
Assembling the Return .         . . . . . . . 7   $485. See Penalty for late filing of return, 
Accounting Methods .          . . . . . . . . 7   later.                                        The Internal Revenue Service is a proud 
Accounting Period .       . . . . . . . . . . 8                                                 partner with the National Center for 
Rounding Off to Whole                             Electronically filed returns. The             Missing & Exploited Children® (NCMEC). 
Dollars .     . . . . . . . . . . . . . . . 8     electronic-filing threshold for corporate     Photographs of missing children selected 
Recordkeeping .         . . . . . . . . . . . . 8 returns required to be filed on or after      by the Center may appear in instructions 
Payment of Tax Due .         . . . . . . . . . 8  January 1, 2024, has decreased to 10 or       on pages that would otherwise be blank. 
                                                  more returns. See Electronic Filing, later.   You can help bring these children home by 
Estimated Tax Payments .          . . . . . . 9
Interest and Penalties .      . . . . . . . . 9   Elective payment election.  Applicable        looking at the photographs and calling 
Special Rules for Foreign                         entities and electing taxpayers can elect to  1-800-THE-LOST (1-800-843-5678) if you 
Corporations .          . . . . . . . . . .    10 treat certain credits as elective payments.   recognize a child.
Specific Instructions . . . . . . . . . . . .  11 Resulting overpayment may result in 
Period Covered .        . . . . . . . . . . .  11 refunds. See the instructions for Form        The Taxpayer Advocate 
Address     . . . . . . . . . . . . . . . .    11 1120-F, page 1, line 5j, on page 13 of        Service
Employer Identification                           these instructions. Also, see the             The Taxpayer Advocate Service (TAS) is 
Number (EIN) .          . . . . . . . . . .    11 Instructions for Form 3800.                   an independent organization within the 
Computation of Tax Due or                         Expiration of 100% business meal ex-          Internal Revenue Service that helps 
Overpayment .           . . . . . . . . . .    12 pense deduction. The temporary 100%           taxpayers and protects taxpayer rights. 
Section I—Income From                             business meal expenses deduction for          TAS's job is to ensure that every taxpayer 
U.S. Sources Not                                  food and beverages provided by a              is treated fairly and knows and 
Effectively Connected                             restaurant does not apply to amounts paid     understands their rights under the 
With the Conduct of a                                                                           Taxpayer Bill of Rights.
Trade or Business in the                          or incurred after 2022.
United States .         . . . . . . . . . .    16 Corporate alternative minimum tax               As a taxpayer, the corporation has 
Section II—Income                                 (CAMT). For tax years beginning after         rights that the IRS must abide by in its 
Effectively Connected                             2022, certain corporations must determine     dealings with the corporation. TAS can 
With the Conduct of a                             whether they are subject to the new CAMT      help the corporation if:
Trade or Business in the                                                                          A problem is causing financial difficulty 
United States .         . . . . . . . . . .    17 and calculate CAMT if applicable. See the     •
Income .    . . . . . . . . . . . . . . . .    18 instructions for Schedule J, line 3. Also,    for the business;
                                                  see the instructions for new Item JJ.         • The business is facing an immediate 
Deductions .    . . . . . . . . . . . . .      20                                               threat of adverse action; or
Schedule C—Dividends and                          Relief from additions to tax for under-       • The corporation has tried repeatedly to 
Special Deductions .            . . . . . .    26 payments applicable to the new corpo-         contact the IRS but no one has 
Schedule J—Tax                                    rate alternative minimum tax.     For tax     responded, or the IRS hasn't responded 
Computation             . . . . . . . . . . .  27 year 2023, the IRS will waive the penalty     by the date promised.
Section III—Branch Profits                        for failure to make estimated tax payments 
Tax and Tax on Excess                             for taxes attributable to a CAMT liability.     TAS has offices in every state, the 
Interest .    . . . . . . . . . . . . . .      29 Affected corporations must still file the     District of Columbia, and Puerto Rico. 
Schedule L—Balance                                2023 Form 2220, even if they owe no           Local advocates' numbers are in their local 
Sheets per Books .            . . . . . . .    31 estimated tax penalty. However, affected      directories and at 
Schedules M-1 and M-3 .           . . . . .    33 corporations may exclude the CAMT tax         TaxpayerAdvocate.IRS.gov. The 

Feb 1, 2024                                                 Cat. No. 11475L

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corporation can also call TAS at conduct of a U.S. trade or business (see attaching a statement. In the case of a
877-777-4778. Section II, later); or Code exemption under section 883, the
• Was not engaged in a trade or business corporation must attach Schedule S (Form
TAS also works to resolve large-scale in the United States, but had income from 1120-F) in lieu of attaching a statement.
or systemic problems that affect many any U.S. source, if its tax liability has not
taxpayers. If the corporation knows of one been fully satisfied by the withholding of Note. If the corporation does not have any
of these broad issues, please report it to tax at source under Chapter 3 of the Code. gross income for the tax year because it is
TAS through the Systemic Advocacy • Was, or had a branch that was, a claiming a treaty or Code exemption, and
Management System at IRS.gov/SAMS. qualified derivatives dealer (QDD). there was withholding at source, the
corporation must complete the
For more information, go to IRS.gov/ This form is also required to be filed by: Computation of Tax Due or Overpayment
Advocate. • A foreign corporation making a claim for section at the bottom of page 1 of Form
the refund of an overpayment of tax for the 1120-F (in addition to the information
How To Get Forms and tax year. See Simplified Procedure for specified in the previous paragraph) to
Claiming a Refund of U.S. Tax Withheld at claim a refund of the amounts withheld.
Publications Source, later.
Internet. You can access the IRS website • A foreign corporation claiming the Entities electing to be taxed as foreign
24 hours a day, 7 days a week, at IRS.gov benefit of any deductions or credits. See corporations. A foreign eligible entity
to: Other Filing Requirements, later. that elected to be classified as a
• Download forms, instructions, and • A foreign corporation making a claim corporation must file Form 1120-F under
publications; that an income treaty overruled or the same circumstances as a per se
• Order IRS products online; modified any provision of the Internal corporation and an entity that defaults into
• Research your tax questions online; Revenue Code with respect to income corporate status unless it is required to file
• Search publications online by topic or derived by the foreign corporation at any a special return listed under Special
keyword; time during the tax year, and such position Returns for Certain Organizations, later.
• View Internal Revenue Bulletins (IRBs) is required to be disclosed on Form 8833. The entity must also have filed Form 8832,
published in recent years; and See the instructions for Form 8833 for who Entity Classification Election. A foreign
• Sign up to receive local and national tax must file Form 8833, and who is exempt corporation filing Form 1120-F for the year
news by email. from filing by reason of a waiver provided of the election must attach a copy of Form
under section 6114 and the regulations 8832 to its Form 1120-F. See Form 8832,
Tax forms and publications. The thereunder. If Form 8833 is required, later, for additional information.
corporation can view, print, or download all complete item W(1) on page 2 of the form. Protective return. If a foreign corporation
of the forms and publications it may need
conducts limited activities in the United
on IRS.gov/FormsPubs. Otherwise, the Others that must file Form 1120-F States in a tax year that the foreign
corporation can go to IRS.gov/OrderForms include the following. corporation determines does not give rise
to place an order and have forms mailed to • A Mexican or Canadian branch of a to gross income that is effectively
it. U.S. mutual life insurance company. The connected with the conduct of a trade or
branch must file Form 1120-F on the same business within the United States, the
General Instructions basis as a foreign corporation if the U.S. foreign corporation should follow the
company elects to exclude the branch's instructions for filing a protective return to
Purpose of Form income and expenses from its own gross safeguard its right to receive the benefit of
income. the deductions and credits attributable to
gains, losses, deductions, credits, and to •
Use Form 1120-F to report the income, A receiver, assignee, or trustee in that gross income under Regulations
dissolution or bankruptcy, if that person section 1.882-4(a)(3)(vi) in the event that it
figure the U.S. income tax liability of a has or holds title to virtually all of a foreign is subsequently determined that the
foreign corporation. Also, use Form corporation's property or business. Form original determination was incorrect. A
1120-F to claim any refund that is due, to 1120-F is due whether or not the property foreign corporation should also file a
transmit Form 8833, Treaty-Based Return or business is being operated (see protective return if it determines initially
Position Disclosure Under Section 6114 or Who Must Sign, later, for additional that it has no U.S. tax liability under the
7701(b), or to calculate and pay a foreign information). provisions of an applicable income tax
tax on excess interest, if any, under •
corporation's branch profits tax liability and An agent in the United States, if the treaty (for example, because its income is
foreign corporation has no office or place not attributable to a permanent
section 884. of business in the United States when the establishment in the United States). See
return is due. Protective Return Filers, later. A foreign
Who Must File corporation that does not file a return will
Unless one of the exceptions under Treaty or Code exemption. If the
Exceptions From Filing below applies or a corporation does not have any gross lose the right to take deductions and
special return is required (see Special income for the tax year because it is credits against effectively connected
Returns for Certain Organizations, later), a claiming a treaty or Code exemption, it income (ECI). See Other Filing
foreign corporation must file Form 1120-F must still file Form 1120-F to show that the Requirements, later.
if, during the tax year, the corporation: income was exempted by treaty or Code. Qualified derivatives dealer. A foreign
• Was engaged in a trade or business in In this case, the corporation should only corporation that was, or had a branch that
the United States, whether or not it had complete the identifying information was, a qualified derivatives dealer must
U.S. source income from that trade or (including items A through G) at the top of file Form 1120-F even if one of the
business, and whether or not income from page 1 of Form 1120-F and a statement exceptions in Exceptions From Filing
such trade or business is exempt from that indicates the nature and amount of below applies.
U.S. tax under a tax treaty (see also the exclusions claimed. In the case of a
Protective Return Filers, later); treaty exemption, the corporation may Qualified opportunity fund. To certify
• Had income, gains, or losses treated as complete item W(1) on page 2 of Form as a qualified opportunity fund (QOF), a
if they were effectively connected with the 1120-F, which includes completing and foreign corporation organized in a U.S.
attaching Form 8833, if required in lieu of terrritory must file Form 1120-F and attach

2 Instructions for Form 1120-F (2023)

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Form 8996, even if the corporation had no funds withdrawal while e-filing. Form 1099 Claim for Refund or Credit
income or expenses to report. See Item II and other information returns can also be If the corporation is filing Form 1120-F
on page 3 of Form 1120-F. Also, see the electronically filed. The option to e-file only as a claim for refund or credit of tax
Instructions for Form 8996. does not, however, apply to certain paid or withheld at source, the simplified
returns.
Qualified opportunity investment. If procedure described below may be used.
the foreign corporation held a qualified For returns filed on or after January 1, This simplified procedure may not be used
investment in a QOF at any time during the 2024, corporations that file 10 or more by a corporation that was a QDD or had a
year, the corporation must file its return returns are required to e-file Form 1120-F. branch that was a QDD.
with Form 8997 attached. See the See Regulations section 301.6011-5.
instructions for Form 8997. However, these corporations can request Note. You cannot claim a refund based on
a waiver of the electronic filing a reduced rate of, or exemption from, U.S
Note. A foreign corporation that was, or requirements. tax withheld from a substitute dividend
held an investment in, a QOF must meet payment made in connection with a
the filing requirements indicated in the two For more information on e-filing, see securities lending or similar transaction if
preceding paragraphs even if one of the E-file for Business and Self-employed the tax was withheld by a withholding
exceptions in “Exceptions From Filing ” Taxpayers on IRS.gov. agent other than the withholding agent
from which you received the payment
below applies. Exclusions From Electronic
(amounts are reported in box 8 of Form
Exceptions From Filing Filing 1042-S). See Notice 2010-46, 2010-24
A foreign corporation does not have to file Waivers. The IRS may waive the I.R.B. 757, available at IRS.gov/irb/
Form 1120-F if any of the following apply. electronic filing rules if the corporation 2010-24_IRB#NOT-2010-46, for further
• It did not engage directly or indirectly in demonstrates that a hardship would result information on limitations on refunds and
a U.S. trade or business during the year, if it were required to file its return credits permitted in such cases.
and its full U.S. tax was withheld at source. electronically. A corporation interested in Simplified Procedure for
• Its only U.S. source income is exempt requesting a waiver of the mandatory
from U.S. taxation under section 881(c) or electronic filing requirement must file a Claiming a Refund of U.S. Tax
(d). written request, and request one in the Withheld at Source
• It is a beneficiary of an estate or trust manner prescribed by the IRS. All written To make a claim for a refund, complete
engaged in a U.S. trade or business, but requests for waivers should be mailed to: Form 1120-F as follows.
would itself otherwise not need to file.
Internal Revenue Service Page 1. Enter the complete name,
Special Returns for Ogden Submission Processing address, and employer identification
Certain Organizations Center number (EIN) of the corporation. Check
Instead of filing Form 1120-F, certain Attn: Form 1120-F e-file Waiver the applicable box to indicate the type of
foreign organizations must file special Request filing. Provide all the information required
returns. Mail Stop 1057 in items A through G.
• Form 1120-L, U.S. Life Insurance Ogden, UT 84201 Refund amount. Enter on lines 1 and
Company Income Tax Return, as a foreign 4, page 1, the amount from line 11,
life insurance company. If using a delivery service, requests for page 4. Enter on lines 5i and 5z the
• Form 1120-PC, U.S. Property and waivers should be mailed to: amount from line 12, page 4. Enter the
Casualty Insurance Company Income Tax excess of line 5z over line 4 on lines 8a
Return, as a foreign nonlife insurance Internal Revenue Service and 9. This is the amount to be refunded
company. Ogden Submission Processing to you.
• Form 1120-FSC, U.S. Income Tax Center
Return of a Foreign Sales Corporation, if Attn: Form 1120-F e-file Waiver Signature. An authorized officer of the
the corporation elected to be treated as an Request corporation must sign and date the return.
FSC and the election is still in effect. Mail Stop 1057 Pages 2 and 3. Additional information.
1973 N. Rulon White Blvd. Complete all items on pages 2 and 3 of
Consolidated returns. A foreign Ogden, UT 84404 Form 1120-F that apply to the corporation.
corporation, regardless of whether it files a
special return, may not belong to an Waiver requests can also be faxed to Page 4. Section I. Enter in column (b)
affiliated group of corporations that files a 877-477-0575. Contact the e-Help Desk at the gross amount of each type of income
consolidated return. However, a Canadian 866-255-0654 for questions regarding the received that is required to be reported in
or Mexican corporation described in waiver procedures or process. Section I (see Section I, later, for details).
section 1504(d), maintained solely for Include income from foreign sources that
complying with the laws of Canada or Exemptions. The IRS may provide was subject to backup withholding. Do not
Mexico for title and operation of property, exemptions from the requirements to include income from which no U.S. tax
may elect to be treated as a domestic electronically file. If using the technology was withheld. If the corporation is subject
corporation and thereby file as part of an required to electronically file conflicts with to backup withholding on gross proceeds
affiliated group. your religious beliefs, the corporation is from sales of securities or transactions in
exempt from the requirement. Clearly regulated futures contracts, enter the
Electronic Filing indicate the exemption on the gross proceeds on line 10.
Corporations can generally electronically corporation’s return. Write "Religious Enter in columns (c) and (d),
file (e-file) Form 1120-F, related forms, Exemption" at the top of Form 1120-F. File respectively, the correct rate and amount
schedules, and attachments; Form 7004 the foreign corporation's return at the of U.S. income tax liability for each type of
(automatic extension of time to file); and applicable IRS address. See Where To income reported in column (b). If the
Forms 940, 941, and 944 (employment tax File, later. For more information see Notice corporation is claiming a refund of U.S. tax
returns). If there is a balance due, the 2024-18. withheld in excess of the rate provided in a
corporation can authorize an electronic tax treaty with the United States, enter the

Instructions for Form 1120-F (2023) 3

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applicable treaty rate in column (c) and • If you are claiming a refund of U.S. tax When To File
figure the correct U.S. income tax liability withheld under Chapter 4, you must
on the gross income reported in column provide a statement explaining the basis Foreign Corporation With an
(b). for the claim and must provide the other Office or Place of Business in
Enter in column (e) the U.S. tax actually information requested in this section to
withheld at source (and not refunded by establish a reduced rate, or exemption the United States
the payer or the withholding agent) from from, tax under section 881. See A foreign corporation that maintains an
each type of income reported. This should Regulations section 1.1474-5 for the office or place of business in the United
be the amount reported to you in box 10, requirements for claiming a credit or States must generally file Form 1120-F by
Total withholding credit, of Form(s) refund of tax withheld under Chapter 4. the 15th day of the 4th month after the end
1042-S, which includes the total amount of • If claiming a refund of U.S. tax withheld of its tax year. A new corporation filing a
federal tax withheld at source less any from portfolio interest, include a short-period return must generally file by
amount that was repaid to you by the description of the relevant debt obligation, the 15th day of the 4th month after the
withholding agent. If multiple rates of tax including the name of the issuer, CUSIP short period ends. A corporation that has
are applicable to a type of income, attach number (if any), interest rate, scheduled dissolved must generally file by the 15th
a statement showing the gross amounts of maturity date, and the date the debt was day of the 4th month after the date it
income, applicable rate, and amount of issued. Also, include a statement, signed dissolved.
liability and withholding imposed for the under penalties of perjury, that the However, a corporation with a fiscal tax
respective amounts at each tax rate (for corporation is the beneficial owner of the year ending June 30 must file by the 15th
example, if a corporation receives interest income and not a U.S. corporation day of the 3rd month after the end of its tax
subsidiary dividends subject to tax at 5% or other U.S. resident (for example, Form year. A corporation with a short tax year
and portfolio dividends subject to tax at W-8BEN-E). ending anytime in June will be treated as if
15%, a statement must be attached for • If claiming a reduced rate of, or the short year ended on June 30, and
Section I, line 2a, to show the amount of exemption from, tax based on a tax treaty, must file by the 15th day of the 3rd month
dividend and tax liability for each provide a certificate of entitlement to treaty after the end of its tax year.
respective rate). benefits (for example, Form W-8BEN-E). A If the due date falls on a Saturday,
separate statement should be provided Sunday, or legal holiday, the corporation
Enter on line 11 the total U.S. tax that contains any additional can file on the next business day.
liability for the reported income. representations necessary to explain the
Enter on line 12 the total U.S. tax basis for the claim. The corporation may Extension of time to file. The
actually withheld from such income. complete item W(1) on page 2 of the form corporation must file Form 7004,
Check the appropriate box on line 13. A (which includes completing and attaching Application for Automatic Extension of
fiscally transparent entity is one that is not Form 8833, if required) in lieu of attaching Time To File Certain Business Income Tax,
itself generally subject to income tax but a statement. Information, and Other Returns, by the
one whose tax attributes flow through to its return due date specified in the previous
owners. Note. To claim a reduced rate of, or two paragraphs to request an extension of
exemption from, tax based on a tax treaty, time to file. However, there is an exception
the corporation must generally be a that applies under Regulations section
Additional Documentation resident of the particular treaty country 1.6081-5. See the Instructions for Form
Required within the meaning of the treaty and satisfy 7004 for additional information.
the limitation on benefits article, if any, in
The corporation must attach to Form the treaty with that country. Foreign Corporation With No
1120-F the following. • If claiming a refund for overwithholding Office or Place of Business in
1. Proof of the withholding (for on a distribution from a U.S. corporation the United States
example, Form 1042-S). with respect to its stock because the A foreign corporation that does not
2. A statement that describes the corporation has insufficient earnings and maintain an office or place of business in
basis for the claim for refund. profits to support ordinary dividend the United States must generally file Form
treatment, provide a statement that 1120-F by the 15th day of the 6th month
3. Any required tax certifications (for identifies the distributing corporation and after the end of its tax year.
example, Form W-8BEN-E). provides the basis for the claim.
4. Any additional documentation to • If claiming a refund for overwithholding If the due date falls on a Saturday,
support the claim. on a distribution from a mutual fund or a Sunday, or legal holiday, the corporation
real estate investment trust (REIT) with can file on the next business day.
Refund of backup withholding tax. If respect to its stock because the Extension of time to file. File Form 7004
the corporation is claiming a refund of distribution was designated as long-term by the 15th day of the 6th month after the
backup withholding tax based on its status capital gain or a return of capital, provide a end of the tax year to request an extension
as a non-U.S. resident, it must: statement that identifies the mutual fund or of time to file. See the Instructions for
• Provide a copy of the Form 1099 that REIT and provide the basis for the claim. Form 7004 for additional information.
shows the amount of reportable payment • If claiming a refund for overwithholding
and backup withholding, and on a distribution from a U.S. corporation Other Filing Requirements
• Attach a statement signed under with respect to its stock because, in the • If the due date of any filing falls on a
penalties of perjury that the corporation is foreign corporation's particular Saturday, Sunday, or legal holiday, the
exempt from backup withholding because circumstances, the transaction qualifies as corporation may file on the next business
it is not a U.S. corporation or other U.S. a redemption of stock under section 302, day.
resident (for example, Form W-8BEN-E). provide a statement that describes the • Form 1120-F must be filed on a timely
Refunds of U.S. withholding. If any of transaction and presents the facts basis and in a true and accurate manner in
the following apply, attach the information necessary to establish that the payment order for a foreign corporation to take
requested in addition to the additional was (a) a complete redemption, (b) a deductions and credits against its ECI. For
documentation described earlier. disproportionate redemption, or (c) not these purposes, Form 1120-F is generally
essentially equivalent to a dividend. considered to be timely filed if it is filed no

4 Instructions for Form 1120-F (2023)

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later than 18 months after the due date of    copy of the order or instructions of the       Other Forms, Schedules, 
the current year's return. An exception       court authorizing signing of the return or 
may apply to foreign corporations that        form.                                          and Statements That May 
have yet to file Form 1120-F for the                                                         Be Required
preceding tax year. These filing deadlines      Paid Preparer Use Only section. If an 
may be waived in limited situations based     employee of the corporation completes          Forms
on the facts and circumstances, where the     Form 1120-F, the paid preparer section         A foreign corporation may have to file 
foreign corporation establishes to the        should remain blank. Anyone who                some of the following forms and 
satisfaction of the Commissioner that the     prepares Form 1120-F but does not              schedules. See the form or schedule for 
foreign corporation acted reasonably and      charge the corporation should not              more information.
in good faith in failing to file Form 1120-F. complete that section. Generally, anyone       For a list of additional forms the 
See Regulations section 1.882-4(a)(3)(ii)     who is paid to prepare the return must sign    corporation may need to file (most notably, 
for more information about the waiver.        and complete the section.                      forms pertaining to the reporting of various 
                                                                                             types of income, and any related 
  A foreign corporation is allowed the          The paid preparer must complete the          withholding, to U.S. persons, foreign 
following deductions and credits              required preparer information and:             persons, and the IRS), see Pub. 542, 
regardless of whether Form 1120-F is          • Sign the return in the space provided for    Corporations.
timely filed.                                 the preparer's signature,
  1. The charitable contributions             • Include their Preparer Tax Identification    Form 1094-C,  Transmittal of Employer 
deduction (page 5, Section II, line 19).      Number (PTIN), and                             Health Coverage Statements, and Form 
  2. The credit from Form 2439 (page 1,       • Give a copy of the return to the             1095-C, Employer-Provided Health 
                                              taxpayer.                                      Coverage Statement. Employers with 50 
line 5f).                                                                                    or more full-time employees (including 
  3. The credit for federal tax on fuels            A paid preparer may sign original        full-time equivalent employees) use Forms 
(page 1, line 5g).                            TIP   or amended returns by rubber             1094-C and 1095-C to report the 
                                                    stamp, mechanical device, or             information required under sections 6055 
  4. U.S. income tax paid or withheld at      computer software program.                     and 6056 about offers of health coverage 
source (page 1, line 5i).
                                                                                             and enrollment in health coverage for their 
  See Regulations section 1.882-4 for                                                        employees. Form 1094-C must be used to 
                                              Paid Preparer 
details.                                                                                     report to the IRS summary information for 
                                              Authorization                                  each employer and to transmit Forms 
Private Delivery Services                     If the corporation wants to allow the IRS to   1095-C to the IRS. Form 1095-C is used to 
Corporations can use certain private          discuss its 2023 tax return with the paid      report information about each employee. 
delivery services (PDS) designated by the     preparer who signed it, check the “Yes”        In addition, Forms 1094-C and 1095-C are 
IRS to meet the “timely mailing as timely     box in the signature area of the return.       used in determining whether an employer 
filing” rule for tax returns. Go to           This authorization applies only to the         owes payments under the employer 
IRS.gov/PDS.                                  individual whose signature appears in the      shared responsibility provisions under 
                                              “Paid Preparer Use Only” section of the        section 4980H. For more information, see 
  The PDS can tell you how to get written     return. It does not apply to the firm, if any, the Instructions for Forms 1094-C and 
proof of the mailing date.                    shown in that section.                         1095-C. Also, for more information related 
  For the IRS mailing address to use if                                                      to the Affordable Care Act, visit IRS.gov/
you're using a PDS, go to                       If the “Yes” box is checked, the             ACA.
IRS.gov/PDSStreetAddresses.                   corporation is authorizing the IRS to call 
                                              the paid preparer to answer any questions      Form 5472, Information Return of a 25% 
         Private delivery services cannot     that may arise during the processing of its    Foreign-Owned U.S. Corporation or a 
  !      deliver items to P.O. boxes. You     return. The corporation is also authorizing    Foreign Corporation Engaged in a U.S. 
CAUTION  must use the U.S. Postal Service     the paid preparer to:                          Trade or Business. This form is filed by or 
to mail any item to an IRS P.O. box           • Give the IRS any information that is         for a foreign corporation engaged in a U.S. 
address.                                      missing from the return;                       trade or business that had reportable 
                                              • Call the IRS for information about the       transactions with a related party. See the 
                                              processing of the return or the status of      Instructions for Form 5472 for filing 
Where To File                                 any related refund or payment(s); and          instructions and information for failure to 
File Form 1120-F with the Internal            • Respond to certain IRS notices about         file and maintain records.
Revenue Service Center, P.O. Box              math errors, offsets, and return               Form 8275, Disclosure Statement, and 
409101, Ogden, UT 84409.                      preparation.                                   Form 8275-R, Regulation Disclosure 
                                                                                             Statement. Use these forms to disclose 
Who Must Sign                                   The corporation is not authorizing the       items or positions taken on a tax return 
The return must be signed and dated by:       paid preparer to receive any refund check,     that are not otherwise adequately 
• The president, vice president, treasurer,   bind the corporation to anything (including    disclosed on a tax return or that are 
assistant treasurer, chief accounting         any additional tax liability), or otherwise    contrary to Treasury regulations (to avoid 
officer; or                                   represent the corporation before the IRS.      parts of the accuracy-related penalty or 
• Any other corporate officer (such as tax                                                   certain preparer penalties).
officer) authorized to sign.                    The authorization will automatically end 
                                              no later than the due date (excluding          Form 8300, Report of Cash Payments 
  If a return is filed on behalf of a         extensions) for filing the corporation's       Over $10,000 Received in a Trade or 
corporation by a receiver, trustee, or        2024 tax return. If the corporation wants to   Business. Use this form to report the 
assignee, the fiduciary must sign the         expand the paid preparer's authorization       receipt of more than $10,000 in cash or 
return, instead of the corporate officer.     or revoke the authorization before it ends,    foreign currency in one transaction or a 
Returns and forms signed by a receiver or     see Pub. 947, Practice Before the IRS and      series of related transactions.
trustee in bankruptcy on behalf of a          Power of Attorney.
corporation must be accompanied by a 

Instructions for Form 1120-F (2023)                                                                                                      5

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Form 8302, Electronic Deposit of Tax 1. Any listed transaction, which is a Schedule I, Interest Expense Alloca-
Refund of $1 Million or More. The form transaction that is the same as or tion Under Regulations Section
must be filed to request an electronic substantially similar to one of the types of 1.882-5. This schedule is required to be
deposit of a tax refund of $1 million or transactions that the IRS has determined attached to report any interest expense
more. to be a tax avoidance transaction and allocable to ECI under Regulations section
identified by notice, regulation, or other 1.882-5. The schedule must be attached
Form 8832, Entity Classification Election. published guidance as a listed transaction. whether or not such allocable interest is
This form is filed by an eligible entity to
2. Any transaction offered under deductible against ECI in the current year.
elect how it will be classified for federal tax
conditions of confidentiality for which the See the separate Instructions for
purposes. If the corporation filed Form
corporation (or a related party) paid an Schedule I (Form 1120-F) for identification
8832 to make an initial classification
advisor a fee of at least $250,000. of elective allocation methods and
election to be a corporation or to change
its classification to be a corporation 3. Certain transactions for which the computation of the allocable and
effective during the current tax year, the corporation (or a related party) has deductible amounts of interest expense.
corporation must attach a copy of the contractual protection against
Form 8832 to its Form 1120-F. If the disallowance of the tax benefits. Note. Line 25 of Schedule I is reportable
on Form 1120-F, Section II, line 18.
corporation owns a direct or indirect 4. Certain transactions resulting in a
interest in an entity that is not required to loss of at least $10 million in any single Schedule P, List of Foreign Partner In-
file a return, but for which a Form 8832 year or $20 million in any combination of terests in Partnerships. This schedule
was filed to make a change in the years. is required to be attached to report all ECI
included in Schedules K-3 (Form 1065)
classification of the entity that is effective 5. Any transaction identified by the
the foreign corporation receives for each
during the current tax year, the IRS by notice, regulation, or other
of its directly held partnership interests.
corporation must attach a copy of the published guidance as a “transaction of
Schedule P is also required to report the
Form 8832 with respect to that entity interest.”
to its Form 1120-F for the current tax corporation's adjusted outside basis in its
year. Examples of when the corporation For more information, see Regulations directly held partnership interest and the
must attach a copy of the Form 8832 for section 1.6011-4. Also, see the amount of the outside basis of each such
an entity in which it has an interest include Instructions for Form 8886. interest apportioned to ECI under
the corporation's ownership of: Regulations section 1.884-1(d)(3). See
Penalties. The corporation may have the separate Instructions for Schedule P
• An entity that elected to be a to pay a penalty if it is required to disclose (Form 1120-F) for the reconciliation of ECI
disregarded entity, a reportable transaction under section and distributive share of expenses
• A foreign entity that elected to be a 6011 and fails to properly complete and reported on Schedules K-3 (Form 1065).
partnership but does not itself have a Form file Form 8886. Penalties may also apply Finally, Schedule P is required to report
1065 filing requirement, and under section 6707A if the corporation information regarding a foreign corporate
• A foreign corporation that owns a fails to file Form 8886 with its corporate partner's transfer of an interest in a
foreign entity that elected to be a return, fails to provide a copy of Form 8886 partnership and the calculation of gain or
disregarded entity. to the Office of Tax Shelter Analysis loss on the transfer when the partnership
The corporation does not need to (OTSA), or files a form that fails to include directly or indirectly either is engaged in
attach the Form 8832 for an entity in which all the information required (or includes the conduct of a trade or business within
it has an indirect interest if an entity in incorrect information). Other penalties, the United States or holds any U.S. real
which it has an interest is already such as an accuracy-related penalty under property interests. Do not file Schedule P if
attaching a copy of the Form 8832 with its section 6662A, may also apply. See the the corporation has no partnership
return. See Regulations section Instructions for Form 8886 for details on interests that give rise to ECI that is
301.7701-3(c)(1)(ii). these and other penalties. included in the income reported to the
Form 8833, Treaty-Based Return Position Reportable transactions by material corporation on Schedules K-3 (Form
Disclosure Under Section 6114 or advisors. Material advisors to any 1065) and there has not been a transfer of
7701(b). Use this form to make the reportable transaction must disclose an interest in a partnership that directly or
treaty-based return position disclosure certain information about the reportable indirectly either is engaged in the conduct
required by section 6114. transaction by filing Form 8918 with the of a trade or business within the United
IRS. For details, see the Instructions for States or holds any U.S. real property
Form 8848, Consent To Extend the Time interests.
Form 8918.
To Assess the Branch Profits Tax Under
Regulations Sections 1.884-2(a) and (c). Schedules Note. If the corporation has received
Use this form to execute a waiver of period Form 8805, Foreign Partner's Information
of limitations in regard to a termination or Schedule H, Deductions Allocated to
Statement of Section 1446 Withholding
incorporation of a U.S. trade or business Effectively Connected Income Under
Tax, it will have ECI includible in its
or liquidation or reorganization of a foreign Regulations Section 1.861-8. This
Schedule K-3 (Form 1065) that is required
corporation or its domestic subsidiary. See schedule is required to be attached to
to be reported on Schedule P.
the instructions for Section III, Part I, of report certain deductions of the
Form 1120-F. corporation that are allocable to ECI. If the Schedule S, Exclusion of Income From
corporation has any deductions reportable the International Operation of Ships or
Form 8886, Reportable Transaction on Form 1120-F, Section II, lines 12 Aircraft Under Section 883. This
Disclosure Statement. Use this form to through 27, then Schedule H is required to schedule is required to be attached to
disclose information for each reportable be attached. See the separate Instructions claim a Code exemption under section
transaction in which the corporation for Schedule H for details. 883. This schedule incorporates the
participated. Form 8886 must be filed for information required under Regulations
each tax year that the federal income tax Note. Line 20 of Schedule H is reportable sections 1.883-1 through 1.883-4. See the
liability of the corporation is affected by its on Form 1120-F, Section II, line 26. separate Instructions for Schedule S
participation in the transaction. The (Form 1120-F) for details.
following are reportable transactions.

6 Instructions for Form 1120-F (2023)

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Schedule V, List of Vessels or Aircraft, foreign corporation has income excluded totals on the printed forms. Enter the
Operators, and Owners. This schedule from gross income for the tax year, do not corporation's name and EIN on each
is required to be attached if the complete the Form 1120-F schedules. supporting statement or attachment.
corporation is required to report gross Instead, attach a statement to the return
transportation income in Section I, line 9, showing the types and amounts of income Note. If the corporation had tax withheld
column (b). See the separate Instructions excluded from gross income. See Treaty under Chapter 3 or 4 of the Internal
for Schedule V (Form 1120-F) for details. or Code exemption, earlier, for more Revenue Code and received a Form
information. 1042-S, Form 8805, or Form 8288-A
showing the amount of income tax
Statements Election to reduce liabilities under withheld, attach such form(s) to Form
Regulations section 1.884-1(e)(3). If a 1120-F to claim a withholding credit. The
Transfers to a corporation controlled taxpayer has a dividend equivalent corporation should report the tax withheld
by the transferor. Every significant amount that is subject to the branch profits on Form 1120-F, page 1, line 5i. See the
transferor (as defined in Regulations tax under section 884(a), it may elect to instructions for Line 5i.
section 1.351-3(d)(1)) that receives stock reduce its U.S. liabilities under the branch
of a corporation in exchange for property profits tax regulations to treat its effectively
in a nonrecognition event must include the connected earnings and profits as Accounting Methods
statement required by Regulations section reinvested rather than remitted. A taxpayer In general, figure taxable income using the
1.351-3(a) on or with the transferor's tax may elect to reduce the amount of its method of accounting regularly used in
return for the tax year of the exchange. liabilities by an amount that does not keeping the corporation's books and
The transferee corporation must include exceed the lesser of the amount of U.S. records. In all cases, the method used
the statement required by Regulations liabilities or the amount of U.S. liability must clearly show taxable income.
section 1.351-3(b) on or with its return for reduction needed to reduce a dividend Permissible overall methods of accounting
the tax year of the exchange, unless all the equivalent amount to zero. The election is include cash, accrual, or any other method
required information is included in any made by attaching a statement to a timely authorized by the Internal Revenue Code.
statement(s) provided by a significant filed tax return (including the extension
transferor that is attached to the same due date) indicating the amount of U.S. Generally, the following rules apply. For
return for the same section 351 exchange. liabilities reduced for branch profits tax more information, see Pub. 538,
If the transferor or transferee corporation is purposes and the corresponding amount Accounting Periods and Methods.
a controlled foreign corporation (CFC), also reduced from U.S.-connected • A corporation cannot use the cash
each U.S. shareholder (within the meaning liabilities for interest expense allocation method of accounting unless it is a small
of section 951(b)) must include the purposes. See Regulations section business taxpayer (defined later). A tax
required statement on or with its return. 1.884-1(e)(3). shelter (defined in section 448(d)(3)) may
Distributions under section 355. Every never use the cash method. See sections
448(a)(1) through (a)(3). However, see
corporation that makes a distribution of Assembling the Return Nonaccrual experience method for service
stock or securities of a controlled To ensure that the corporation's tax return providers in the instructions for Section II,
corporation, as described in section 355 is correctly processed, attach all line 1a, later.
(or so much of section 356 as relates to schedules and other forms after page 9 of • Unless it is a small business taxpayer
section 355), must include the statement Form 1120-F, in the following order. (defined below), a corporation must use
required by Regulations section
1.355-5(a) on or with its return for the year 1. Form 4626. an accrual method for sales and
of the distribution. A significant distributee 2. Schedule D (Form 1120). purchases of inventory items. See the
instructions for Form 1125-A.
(as defined in Regulations section 3. Form 8949. • A corporation engaged in farming must
1.355-5(c)) that receives stock or
4. Form 8996.
securities of a controlled corporation must use an accrual method. For exceptions,
include the statement required by 5. Form 4136. see section 447 and Pub. 225.
Regulations section 1.355-5(b) on or with 6. Form 8978. • Special rules apply to long-term
contracts. See section 460.
its return for the year of the receipt. If the 7. Form 8941. • Dealers in securities must use the
distributing or distributee corporation is a
CFC, each U.S. shareholder (within the 8. Form 3800. mark-to-market accounting method.
meaning of section 951(b)) must include 9. Form 8997. Dealers in commodities and traders in
securities and commodities may elect to
the statement on or with its return. 10. Additional schedules in use the mark-to-market accounting
Election to reduce basis under section alphabetical order. method. See section 475.
362(e)(2)(C). If property is transferred to 11. Additional forms in numerical order.
Small business taxpayer. For tax years
a corporation subject to section 362(e)(2), 12. Supporting statements and beginning in 2023, a corporation qualifies
the transferor and the transferee attachments. as a small business taxpayer if (a) it has
corporation may elect, under section
362(e)(2)(C), to reduce the transferor's Complete every applicable entry space average annual gross receipts of $29
basis in the stock received instead of on Form 1120-F. Do not enter “See million or less for the 3 prior tax years, and
reducing the transferee corporation's basis Attached” or “Available Upon Request” (b) is not a tax shelter (as defined in
in the property transferred. Once made, instead of completing the entry spaces. If section 448(d)(3)).
the election is irrevocable. For more more space is needed on the forms or A small business taxpayer can account
information, see section 362(e)(2) and schedules, attach separate sheets using for inventory by (a) treating the inventory
Regulations section 1.362-4. If an election the same size and format as the printed as non-incidental materials and supplies,
is made, a statement must be filed in forms. or (b) conforming to its treatment of
accordance with Regulations section inventory in an applicable financial
1.362-4(d)(3). If there are supporting statements and statement (as defined in section 451(b)
attachments, arrange them in the same (3)). If it does not have an applicable
Foreign corporation with income ex- order as the schedules or forms they financial statement, it can use the method
cluded from gross income. If the support and attach them last. Show the of accounting used in its books and

Instructions for Form 1120-F (2023) 7

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records prepared according to its corporation, must get the consent of the property. QDDs should see the Qualified
accounting procedures. IRS before changing its tax year by filing Intermediary Agreement for additional
Form 1128, Application To Adopt, Change, requirements.
Change in accounting method.
or Retain a Tax Year. However, exceptions
Generally, the corporation must get IRS The corporation should keep copies of
may apply. See the Instructions for Form
consent to change either an overall all filed returns. They help in preparing
1128 and Pub. 538 for more information.
method of accounting or the accounting future and amended returns and in the
treatment of any material item for income Specified Foreign Corporations calculation of earnings and profits.
tax purposes. To obtain consent, the The annual accounting period of a
corporation must generally file Form 3115, specified foreign corporation (defined Payment of Tax Due
Application for Change in Accounting below) is generally required to be the tax The requirements for payment of tax
Method, during the tax year for which the year of its majority U.S. shareholder. If depend on whether the foreign corporation
change is requested. See the Instructions there is more than one majority has an office or place of business in the
for Form 3115 and Pub. 538 for more shareholder, the required tax year will be United States.
information and exceptions. Also see the the tax year that results in the least
Instructions for Form 3115 for procedures aggregate deferral of income to all U.S. Foreign corporations that do not
that may apply for obtaining automatic shareholders of the foreign corporation. maintain an office or place of business in
consent to change certain methods of For more information, see section 898; the United States must generally pay any
accounting, non-automatic change Rev. Proc. 2006-45, 2006-2 C.B. 851, tax due (page 1, line 7) in full no later than
procedures, and reduced Form 3115 filing available at IRS.gov/irb/ the 15th day of the 6th month after the end
requirements. 2006-45_IRB#RP-2006-45; and Rev. of the tax year. However, see the
Section 481(a) adjustment. If the Proc. 2002-39, 2002-1 C.B. 1046, instructions for line 7, later. If the foreign
corporation's taxable income for the available at IRS.gov/pub/irs-irbs/irb02-22, corporation files Form 1120-F
current tax year is figured under a method as modified by Notice 2002-72, 2002-2 electronically, it may pay the tax due by
of accounting different from the method C.B. 843, available at initiating an electronic funds withdrawal
used in the preceding tax year, the IRS.gov/pub/irs-irbs/irb02-46. (direct debit). It does so by checking the
box on Part II, line C, of Form 8453-CORP,
corporation may have to make an Specified foreign corporation. A E-file Declaration for Corporations. If the
adjustment under section 481(a) to specified foreign corporation (as defined in foreign corporation does not file Form
prevent amounts of income or expense section 898) is any foreign corporation that 1120-F electronically, or if it files Form
from being duplicated or omitted. The is treated as a controlled foreign 1120-F electronically and does not choose
section 481(a) adjustment period is corporation (CFC) under subpart F the direct debit option, the foreign
generally 1 year for a net negative (sections 951 through 964) and with corporation may use the Electronic
adjustment and 4 years for a net positive respect to which more than 50% of the Federal Tax Payment System (EFTPS) to
adjustment. Also, see the Instructions for total voting power or value of all classes of pay the tax due if it has a U.S. bank
Form 3115. stock of the corporation is treated as account. If the foreign corporation does
Exceptions to the general section owned by a U.S. shareholder. not have a U.S. bank account, it may
481(a) adjustment period may apply. Also, arrange for its financial institution to initiate
in some cases, a corporation can elect to Rounding Off to Whole a same-day payment on its behalf or it can
modify the section 481(a) adjustment arrange for either a qualified intermediary,
period. The corporation may have to Dollars tax professional, payroll service, or other
complete the appropriate lines of Form The corporation may enter decimal points trusted third party to make a deposit on its
3115 to make an election. See the and cents when completing its return. behalf using a master account. In addition,
Instructions for Form 3115 for more However, the corporation should round off the foreign corporation still has the option
information and exceptions. cents to whole dollars on its return, forms, to pay by check or money order, payable
If the net section 481(a) adjustment is and schedules to make completing its to “United States Treasury.” To help ensure
positive, report the ratable portion on Form return easier. The corporation must either proper crediting, write the corporation's
1120-F, Section II, line 10, as other round off all amounts on its return to whole EIN, “Form 1120-F,” and the tax period to
income. If the net section 481(a) dollars or use cents for all amounts. To which the payment applies on the check or
adjustment is negative, report the ratable round, drop amounts under 50 cents and money order. Enclose the payment when
portion on line 27 of Section II as a increase amounts from 50 to 99 cents to the corporation files Form 1120-F.
deduction. the next dollar. For example, $8.40 rounds
to $8 and $8.50 rounds to $9. Foreign corporations that do maintain
an office or place of business in the United
Accounting Period If two or more amounts must be added States must generally pay any tax due
A corporation must figure its taxable to figure the amount to enter on a line, (page 1, line 7) in full no later than the due
income on the basis of a tax year. A tax include cents when adding the amounts date for filing Form 1120-F (not including
year is the annual accounting period a and round off only the total. extensions). See When To File, earlier, for
corporation uses to keep its records and this due date. However, see Regulations
report its income and expenses. Generally, Recordkeeping section 1.6081-5 for an exception. Also,
corporations may use a calendar year or a Keep the corporation's records for as long see the instructions for line 7, later. If the
fiscal year. Personal service corporations, as they may be needed for the foreign corporation files Form 1120-F
however, must use a calendar year unless administration of any provision of the electronically, it may pay the tax due by
they meet one of the exceptions discussed Internal Revenue Code. Usually, records initiating an electronic funds withdrawal
under Personal Service Corporation, later. that support an item of income, deduction, (direct debit). It does so by checking the
Furthermore, special rules apply to or credit on the return must be kept for 3 box on Part II, line C, of Form 8453-CORP.
specified foreign corporations. See years from the date the return is due or If the foreign corporation does not file
Specified Foreign Corporations below. filed, whichever is later. Keep records that Form 1120-F electronically, or if it files
Change of tax year. Generally, a verify the corporation's basis in property Form 1120-F electronically and does not
corporation, including a personal service for as long as they are needed to figure the choose the direct debit option, the tax may
basis of the original or replacement be paid as follows. The foreign corporation

8 Instructions for Form 1120-F (2023)

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may pay the tax using EFTPS or it can • The corporation must make installment penalty, later. Also see Relief from
arrange for its tax professional, financial payments of estimated tax if it expects its additions to tax for underpayments
institution, payroll service, or other trusted total tax for the year (less applicable applicable to the new corporate alternative
third party to make deposits on its behalf. credits) to be $500 or more. minimum tax , earlier.
In addition, the foreign corporation also • The installments are due by the 15th
has the option to arrange for its financial day of the 4th, 6th, 9th, and 12th months Interest and Penalties
institution to initiate a same-day payment. of the tax year. If any date falls on a
Saturday, Sunday, or legal holiday, the Interest. Interest is charged on taxes paid
Note. If the due date falls on a Saturday, installment is due on the next regular late even if an extension of time to file is
Sunday, or legal holiday, the payment is business day. granted. Interest is also charged on
due on the next day that isn't a Saturday, • If the foreign corporation maintains an penalties imposed for failure to file,
Sunday, or legal holiday. office or place of business in the United negligence, fraud, substantial valuation
Electronic deposit requirement. States, it must use electronic funds misstatements, substantial
Foreign corporations with an office or transfer to make installment payments of understatements of tax, and reportable
place of business in the United States estimated tax. transaction understatements from the due
must use electronic funds transfer to make • If the foreign corporation does not date (including extensions) to the date of
all federal tax deposits (such as deposits maintain an office or place of business in payment. The interest charge is figured at
of employment, excise, and corporate the United States, it may pay the a rate determined under section 6621.
income tax). Generally, electronic funds estimated tax by EFTPS, providing it has a Penalty for late filing of return. A
transfers are made using EFTPS. U.S. bank account. The foreign corporation that does not file its tax return
However, if the corporation does not want corporation may also arrange for its by the due date, including extensions, may
to use EFTPS, it can arrange for its tax financial institution to submit a same-day be penalized 5% of the unpaid tax for each
professional, financial institution, payroll payment on its behalf or can arrange for its month or part of a month the return is late,
service, or other trusted third party to qualified intermediary, tax professional, up to a maximum of 25% of the unpaid
make deposits on its behalf. Also, it may payroll service, or other trusted third party tax. The minimum penalty for a tax return
arrange for its financial institution to submit to make a deposit on its behalf using a required to be filed in 2024 that is more
a same-day payment (discussed below) master account. In addition, the foreign than 60 days late is the smaller of the tax
on its behalf. EFTPS is a free service corporation still has the option to pay the due or $485. The penalty will not be
provided by the Department of the estimated tax due by check or money imposed if the corporation can show that
Treasury. Services provided by a tax order. the failure to file on time was due to
professional, financial institution, payroll • If, after the corporation figures and reasonable cause.
service, or other third party may have a deposits estimated tax, it finds that its tax
fee. liability for the year will be more or less If you believe that reasonable
than originally estimated, it may have to cause exists, do not attach an
To get more information about EFTPS refigure its required installments. If earlier CAUTION! explanation when you file Form
or to enroll in EFTPS, visit EFTPS.gov or installments were underpaid, the 1120-F. Instead, if the corporation receives
call 800-555-4477 (TTY/TDD corporation may owe a penalty. See a penalty notice after the return is filed,
800-733-4829). Estimated tax penalty below. send an explanation to the IRS at that time
Depositing on time. For any deposit • If the corporation overpaid estimated and the IRS will determine if the
made by EFTPS to be on time, the tax, it may be able to get a quick refund by corporation meets reasonable-cause
corporation must submit the deposit by 8 filing Form 4466, Corporation Application criteria.
p.m. Eastern time the day before the date for Quick Refund of Overpayment of
the deposit is due. If the corporation uses Estimated Tax. See the instructions for Penalty for late payment of tax. A
a third party to make deposits on its line 5c, later. corporation that does not pay the tax when
due may generally be penalized / of 1% 1 2
behalf, they may have different cutoff
times. See section 6655 and Pub. 542, of the unpaid tax for each month or part of
Corporations, for more information on how a month the tax is not paid, up to a
Same-day wire payment option. If the to figure estimated taxes. maximum of 25% of the unpaid tax. The
corporation fails to submit a deposit penalty will not be imposed if the
transaction on EFTPS by 8 p.m. Eastern Estimated tax penalty. A corporation corporation can show that the failure to
time the day before the date a deposit is that does not make estimated tax pay on time was due to reasonable cause.
due, it can still make the deposit on time payments when due may be subject to an See Caution above.
by using the Federal Tax Collection underpayment penalty for the period of
Service (FTCS). To use the same-day wire underpayment. Generally, a corporation is Trust fund recovery penalty. This
payment method, the corporation will need subject to the penalty if its tax liability is penalty may apply if certain excise,
to make arrangements with its financial $500 or more and it did not timely pay at income, social security, and Medicare
institution ahead of time regarding least the smaller of: taxes that must be collected or withheld
availability, deadlines, and costs. Financial • Its tax liability for the current year, or are not collected or withheld, or these
institutions may charge a fee for payments • Its prior year's tax. taxes are not paid. These taxes are
generally reported on:
made this way. To learn more about the No estimated tax payments are Form 720, Quarterly Federal Excise Tax
information the corporation will need to required with respect to a foreign •
Return;
provide to its financial institution to make a corporation's liability for the branch profits Form 941, Employer's QUARTERLY
same-day wire payment, go to IRS.gov/ tax. See Regulations section 1.884-1(a). •
Federal Tax Return;
SameDayWire. Use Form 2220, Underpayment of • Form 943, Employer's Annual Federal
Estimated Tax by Corporations, to see if Tax Return for Agricultural Employees;
Estimated Tax Payments the corporation owes a penalty and to • Form 944, Employer's ANNUAL Federal
Generally, the following rules apply to a figure the amount of the penalty. If Form Tax Return; or
foreign corporation's payments of 2220 is completed, enter the penalty on • Form 945, Annual Return of Withheld
estimated tax. Form 1120-F, page 1, line 6. See the Federal Income Tax.
instructions for line 6, estimated tax

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The trust fund recovery penalty may be trade or business engaged in by the foreign corporation's gross income during
imposed on all persons who are partnership in the United States and not the testing period was effectively
determined by the IRS to have been allocable to income that is effectively connected with the conduct of a U.S. trade
responsible for collecting, accounting for, connected (or treated as effectively or business.
or paying over these taxes, and who acted connected) with the conduct of a U.S. The testing period is generally the 3
willfully in not doing so. The penalty is trade or business. tax years of the foreign corporation payer
equal to the full amount of the unpaid trust The following types of interest income preceding the tax year during which it
fund tax. See the Instructions for Form are treated as domestic source income declared the dividend. If the foreign
720; Pub. 15 (Circular E), Employer's Tax even though paid by a foreign corporation. corporation existed for fewer than 3 years
Guide; or Pub. 51 (Circular A), Agricultural • For a foreign corporation engaged in a before the tax year of declaration, the
Employer's Tax Guide, for details, U.S. trade or business, interest paid by the testing period is the term of the foreign
including the definition of “responsible U.S. trade or business (branch interest) is corporation's existence before the current
persons.” treated as if paid by a domestic year. If the foreign corporation declared
corporation to the actual recipient of the the dividend in its first tax year, that year is
Note. The trust fund recovery penalty will interest. See section 884(f)(1)(A) and the the testing period. Regardless of source,
not apply to any amount of trust fund taxes regulations thereunder. Interest paid from however, there is no tax imposed on any
an employer holds back in anticipation of a U.S. trade or business is only treated as dividends paid by a foreign corporation out
the credit for qualified sick and family branch interest to the extent the interest is of earnings and profits for a tax year in
leave wages or the employee retention allocable to ECI under the interest which the foreign corporation was subject
credit that they are entitled to. See Pub. 15 expense allocation rules in Regulations to the branch profits tax (determined after
or Pub. 51 for more information. section 1.882-5. Amounts paid but not application of any income tax treaty). See
Other penalties. Other penalties may be allocable to ECI are not branch interest. Regulations section 1.1441-1(b)(4)(vii).
imposed for negligence, substantial See Regulations section 1.884-4(b)(6).
understatement of tax, reportable • If the foreign corporation has allocable Dividend Equivalents
transaction understatements, and fraud. interest in excess of branch interest
See sections 6662, 6662A, and 6663. (excess interest), the foreign corporation
must treat that interest as if paid by a A dividend equivalent is generally treated
Special Rules for Foreign wholly owned domestic corporation to the as a dividend from sources within the
foreign corporation. See section 884(f)(1) United States.
Corporations (B) and the instructions for Section III, Part
Source of Income Rules II, later. Rent and Royalty Income
The source of income is important in
determining the extent to which income is Dividend Income The source of rent and royalty income for
taxable to foreign corporations. Each type the use of property is determined based
on where the property is located.
of income has its own sourcing rules. The source of dividend income is usually
determined by the residence of the payer.
Interest Income For example, dividends paid by a Income From the Sale or Exchange
corporation that was incorporated in the of Real Estate
United States are generally U.S. source
The source of interest income is usually income and dividends paid by a Gain from the disposition of a U.S. real
determined by the residence of the corporation that was incorporated in a property interest (a USRPI) is U.S. source.
obligor. foreign country are generally foreign A USRPI includes, but is not limited to, real
source income.
For example, interest paid by an obligor property situated in the United States, an
who is a resident of the United States is Exceptions: interest in real property other than solely
U.S. source income, and interest paid by • Dividends paid by a U.S. corporation as a creditor (such as a contingent interest
an obligor who is a resident of a country are foreign source income: in real property), and an interest in a
other than the United States is foreign 1. If the U.S. corporation has made a United States real property holding
source income. Interest paid by a foreign valid election under section 936 (or corporation (USRPHC). See section 897
partnership that is predominantly engaged section 30A), relating to certain U.S. and the regulations thereunder.
in the active conduct of a trade or corporations operating in a U.S. territory;
business outside the United States is or Income From the Sale or Exchange
treated as U.S.-source income only if the 2. To the extent the dividends are from of Personal Property
interest is paid by a U.S. trade or business qualified export receipts described in
conducted by the partnership or is section 993(a)(1) (other than interest and Income from the sale of personal property
allocable to income that is treated as gains described in section 995(b)(1)). by a foreign corporation is generally
effectively connected with the conduct of a
U.S. trade or business. See section 861(a) • Dividends paid by a foreign corporation treated as foreign source under section
(1)(B). are U.S. source income: 865(a). However, special rules may apply
1. If the dividend is treated under to source such income as follows.
Exceptions. The following types of section 243(e) as a distribution from the • Income from the purchase and sale of
interest income are treated as foreign accumulated profits of a predecessor U.S. inventory property is generally sourced
source income. corporation; or under section 861(a)(6) as U.S. source if
• Interest income received from foreign the property is purchased without the
branches of U.S. banks and savings and 2. To the extent the foreign United States and sold within the United
loan associations. corporation's effectively connected gross States and under section 862(a)(6) as
• In the case of a foreign partnership that income for the testing period (defined foreign source if the property is purchased
is predominantly engaged in the active below) bears to all of the foreign within the United States and sold without
conduct of a trade or business outside the corporation's gross income for the testing the United States. See also U.S. source
United States, any interest not paid by a period, but only if 25% or more of the treatment of inventory sales attributable to

10 Instructions for Form 1120-F (2023)

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a U.S. office or fixed place of business basis or inventory cost to the importer may province, country, and foreign postal code.
under section 865(e)(2). not exceed the customs value. See Do not abbreviate the country name.
• Income from the production and sale of section 1059A. Follow the country's practice for entering
inventory property is generally sourced the name of the state or province and
solely on place-of-production activities Income of Foreign Governments postal code.
under section 863(b).
• Income from the sale of depreciable and International Organizations
Employer Identification
property is generally sourced as mixed
U.S. and foreign source under section Income of foreign governments and Number (EIN)
865(c). international organizations from the Enter the corporation's EIN. If the
• Income from certain sales of intangibles following sources is generally not subject corporation does not have an EIN, it must
is generally subject to the source rules to tax or withholding under Chapter 3 or 4 apply for one. An EIN may be applied for:
applicable to royalties, found in section of the Code. • Online—Go to IRS.gov/EIN. The EIN is
861(a)(4). See section 865(d). • Investments in the United States in issued immediately once the application
stocks, bonds, or other domestic information is validated.
Foreign corporations with an office or securities owned by such foreign • By faxing or mailing Form SS-4,
fixed place of business in the United government or international organization. Application for Employer Identification
States. Income from the sale of personal • Interest on deposits in banks in the Number.
property attributable to an office or fixed United States of money belonging to such
place of business is U.S. source income foreign government or international While a corporation that was a QDD or
regardless of any of the above rules organization. had a branch that was a QDD is generally
relating to the source of income from the • Investments in the United States in required to use an EIN, if the only reason
sale or exchange of personal property, financial instruments held (by a foreign the corporation is filing a Form 1120-F is
except that this source rule is not government) in executing governmental because it or its branch was a QDD, it may
applicable for purposes of defining an financial or monetary policy. use its QI-EIN instead.
export trade corporation (see sections Corporations located in the United
865(e)(2)(A) and 971). Exception. The income described in
section 892(a)(2) that is received directly States or U.S. territories can use
Exception. Income from the sale of or indirectly from commercial activities is CAUTION! the online application. Foreign
inventory property is foreign source subject to both tax and withholding under corporations should call 267-941-1099
income if the goods were sold for use, Chapter 3 or 4 of the Code. (not a toll-free number) for more
disposition, or consumption outside the information on obtaining an EIN. See the
United States and a foreign office of the Instructions for Form SS-4.
corporation materially participated in the Specific Instructions
sale. EIN applied for, but not received. If the
Period Covered corporation has not received its EIN by the
Income on Guarantees File the 2023 return for calendar year 2023 time the return is due, enter “Applied For”
and fiscal years that begin in 2023 and and the date the corporation applied in the
With respect to guarantees issued after end in 2024. For a fiscal or short tax year space for the EIN. However, if the
September 27, 2010: return, fill in the tax year space at the top corporation is filing its return electronically,
• The following income is U.S. source: of the form. an EIN is required at the time the return is
filed.
Amounts received directly or indirectly The 2023 Form 1120-F may also be For more information, see the
from (1) a noncorporate resident or used if: Instructions for Form SS-4.
domestic corporation for the provision of a • The corporation has a tax year of less
guarantee of any indebtedness of such than 12 months that begins and ends in
resident or corporation, or (2) any foreign 2024, and Initial Return, Name or
person for the provision of a guarantee of • The 2024 Form 1120-F is not available Address Change, Final
any indebtedness of such person, if such at the time the corporation is required to Return, First Post-Merger
amount is connected with income that is file its return.
effectively connected (or treated as Return, Amended Return,
effectively connected) with the conduct of The corporation must show its 2024 tax
a trade or business in the United States. year on the 2023 Form 1120-F and take Schedule M-3 Attached,
See section 861(a)(9). into account any tax law changes that are Protective Return
• The following income is foreign source: effective for tax years beginning after Check all of the applicable box(es).
Amounts received, directly or indirectly, December 31, 2023.
Name or address change. If the
from a foreign person for the provision of a corporation has changed its name or
guarantee of indebtedness of such person Address
address since it last filed Form 1120-F
other than amounts that are derived from Include the room, suite, or other unit (including a change to an “in care of”
sources within the United States as number after the street address. If the post address), check the box for “Name or
provided in section 861(a)(9). See section office does not deliver mail to the street address change.”
862(a)(9). address and the corporation has a P.O.
box, show the box number instead.
Other Special Rules Note. If a change in address or
If the corporation receives its mail in responsible party occurs after the return is
Basis of Property and Inventory care of a third party (such as an filed, use Form 8822-B, Change of
Costs for Property Imported by a accountant or an attorney), enter “C/O” on Address or Responsible Party —
Related Person the street address line followed by the Business, to notify the IRS. See the
third party's name and street address or instructions for Form 8822-B for details.
If property is imported into the United P.O. box. First post-merger return. Check the
States by a related person in a transaction If the corporation has a foreign “First post-merger return” box if, due to a
and the property has a customs value, the address, include the city or town, state or corporate merger, the foreign corporation

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has acquired a new EIN. Check the “First     to ECI by also checking the “Protective       Computation of Tax Due or 
post-merger return” box if the foreign       return” box at the top of page 1.
corporation has merged with a foreign or                                                   Overpayment
domestic corporation with U.S. operations.   Refund amount.    Enter on lines 1 and 
Do not check the “First post-merger          4, page 1, the amount from line 11,           Line 5b. Estimated Tax 
return” box if the foreign corporation has   page 4. Enter on lines 5i and 5z the          Payments
merged with another foreign corporation      amount from line 12, page 4. Enter the        Enter any estimated tax payments the 
and the merger has no effect on the filer's  excess of line 5z over line 4 on lines 8a     corporation made for the tax year.
U.S. operations.                             and 9. This is the amount to be refunded 
                                             to you.                                       Beneficiaries of trusts. If the 
Schedule M-3 attached.     A corporation                                                   corporation is the beneficiary of a trust, 
with total assets reportable on Form         Signature.     An authorized officer of the   and the trust makes a section 643(g) 
1120-F, Schedule L, of $10 million or more   corporation must sign and date the return.    election to credit its estimated tax 
on the last day of the tax year must file    If the protective return is being filed       payments to its beneficiaries, include the 
Schedule M-3 (Form 1120-F), Net Income       pursuant to an income tax treaty              corporation's share of the payment in the 
(Loss) Reconcilation for Foreign             exemption, attach a completed Form 8833       total for line 5b. Enter “T” and the amount 
Corporations With Reportable Assets of       to the return.                                on the dotted line next to the entry space.
$10 Million or More, instead of              Page 2.   Provide all the information         Line 5c. 2023 Refund Applied 
Schedule M-1. A foreign corporation filing   required in items N, O, Q, T, V, W(1), W(2), 
Form 1120-F that is not required to file     X, Y, AA, BB, and any other applicable        for on Form 4466
Schedule M-3 (Form 1120-F) may               questions. With respect to item Y, it is not  If the corporation overpaid estimated tax, it 
voluntarily file Schedule M-3 (Form          necessary for the corporation to file         may be able to get a quick refund by filing 
1120-F) instead of Schedule M-1.             Schedule P, even if the answer to item Y(1)   Form 4466. The overpayment must be at 
Corporations that (a) are required to file   is “Yes.” However, a corporation that files a least 10% of the corporation's expected 
Schedule M-3 (Form 1120-F) and have          protective tax return may voluntarily file    income tax liability and at least $500. File 
less than $50 million total assets at the    Schedules I and P to preserve certain         Form 4466 after the end of the 
end of the tax year, or (b) are not required timely elections.                             corporation's tax year, and no later than 
to file Schedule M-3 (Form 1120-F) and                                                     the due date for filing the corporation's tax 
voluntarily file Schedule M-3 (Form          Page 3.   Complete all applicable             return (not including extensions). Form 
1120-F), must either (i) complete            portions of Section I, Income From U.S.       4466 must be filed before the corporation 
Schedule M-3 (Form 1120-F) entirely, or      Sources Not Effectively Connected With        files its tax return. See the instructions for 
(ii) complete Schedule M-3 (Form 1120-F)     the Conduct of a Trade or Business in the     Form 4466.
through Part I, and complete                 United States.
                                                                                           Line 5f. Credit for Tax Paid on 
Schedule M-1, instead of completing Parts 
II and III of Schedule M-3 (Form 1120-F). If Identifying Information                       Undistributed Capital Gains
the corporation chooses to complete          Requested at Top of Page                      Enter any credit from Form 2439, Notice to 
Schedule M-1 instead of completing Parts                                                   Shareholder of Undistributed Long-Term 
II and III of Schedule M-3 (Form 1120-F),    1 of Form                                     Capital Gains, for the corporation's share 
the amount on Schedule M-1, line 1, must     Complete items A though G.                    of the tax paid by a regulated investment 
equal the amount on Schedule M-3 (Form       Item A. Enter the foreign corporation’s       company (RIC) or a real estate investment 
1120-F), Part I, line 11. See the            country of incorporation or organization. If  trust (REIT) on undistributed long-term 
instructions for Schedule M-1 (Form          the corporation is incorporated or            capital gains included in the corporation's 
1120-F) and the Instructions for             organized in more than one country, list all  income. Attach Form 2439.
Schedule M-3 (Form 1120-F) for more          countries.
details.                                                                                   Line 5g. Credit for Federal Tax 
                                             Item B.  Enter the foreign country or         on Fuels
If you are filing Schedule M-3, check        countries under whose laws the income 
the “Schedule M-3 attached” box at the       reported on Form 1120-F is also subject to    Enter the total income tax credit claimed 
top of page 1 of Form 1120-F.                tax. This may include the country where       on Form 4136, Credit for Federal Tax Paid 
Protective return filers.  Check the         the corporation is managed and                on Fuels. Attach Form 4136.
"Protective return" box if the foreign       controlled, as well as the country or         Credit for tax on ozone-depleting 
corporation is filing a protective return.   countries in which the corporation is         chemicals. Include on line 5g any credit 
See Protective return, earlier, for          incorporated or organized.                    the corporation is claiming under section 
information concerning who should file a     Item F. See the list of Principal Business    4682(g)(2) for tax on ozone-depleting 
protective return.                           Activity Codes at the end of these            chemicals. Enter “ODC” on the dotted line 
If the corporation is filing a protective    instructions. Using the list of codes and     to the left of the entry space.
return, complete Form 1120-F as follows.     activities, determine from which activity     Line 5h. Reserved for Future 
                                             the corporation derives the highest 
                                                                                           Use
Page 1.    Enter the complete name,          percentage of its total receipts. Enter on 
address, and EIN of the corporation.         lines F(1), F(2), and F(3) the principal      This line is reserved for future use.
Check the “Protective return” box. Provide   business activity code number, the            Line 5i. U.S. Income Tax Paid or 
all the information required in items A      corporation's principal business activity, 
through G.                                   and a description of the principal product    Withheld at Source
Note. If the corporation is filing Form      or service of the corporation. For nonstore   Enter on line 5i U.S. income tax amounts 
1120-F to claim a refund for                 retailers, select the PBA code by the         paid or withheld at source and reported 
overwithholding reported in Section I on     primary product that your establishment       on:
page 4, the return may also assert           sells. For example, establishments            • Form 1042-S pertaining to amounts 
protective return status for the right to    primarily selling prescription and            reported on page 4, line 12 (income from 
claim deductions and credits attributable    non-prescription drugs, select PBA code       U.S. sources not effectively connected 
                                             456110 Pharmacies & Drug Retailers.           with the conduct of a trade or business in 

12                                                                                            Instructions for Form 1120-F (2023)

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the United States). The amount included If Form 2220 is attached, check the box Note. Refunds of certain overpayments
on line 5i should be the total amount of on line 6, and enter any penalty on this (for example, those which pertain to tax
federal tax withheld reported to you on the line. withheld and reported on Forms 1042-S,
applicable Form(s) 1042-S less any 8805, and 8288-A) may require additional
If the corporation's tax liability
amount that was repaid to you by the time to be processed. Therefore, please
includes a CAMT liability, the
withholding agent. See the instructions CAUTION! allow up to 6 months for these refunds to
corporation must complete and
below the title of Section I on page 4 of the be issued.
attach Form 2220. The affected
form for information pertaining to when
corporation must also include an amount Electronic deposit of refund. If the
amounts should be reported on line 12.
of estimated tax penalty on Form 1120-F, corporation has a refund of $1 million or
• Form 8805 pertaining to amounts
page 1, line 6, even if that amount is zero. more and wants it electronically deposited
reported on Form 1120-F, page 5,
Failure to follow these instructions could into its checking or savings account at any
Section II, that relate to ECI from a
result in the corporation receiving a U.S. bank or other financial institution
partnership under section 1446.
penalty notice that will require an instead of having a check sent to the
• Form 1042-S pertaining to amounts
abatement request to apply any penalty corporation, complete Form 8302 and
reported on Form 1120-F, page 5,
relief. See Notice 2023-42. attach it to Form 1120-F.
Section II, that relate to ECI from a publicly
traded partnership under section 1446.
• Form 8288-A pertaining to amounts Line 7. Amount Owed Additional Information
reported on Form 1120-F, page 5, If the corporation cannot pay the full Requested on Pages 2 and
Section II, that relate to income from amount of tax owed, it can apply for an
dispositions of U.S. real property interests installment agreement online. The 3 of Form
under section 1445 and income from corporation can apply for an installment Complete items H through JJ.
dispositions of interests in partnerships agreement online if: Item K(1)
that are engaged in the conduct of a trade • It cannot pay the full amount shown on
or business in the United States under line 7, If the foreign corporation was not engaged
section 1446(f). • The total amount owed is $25,000 or in a U.S. trade or business at any time
less, and during the tax year, or was engaged in a
You must attach any Forms 8288-A, • The corporation can pay the liability in U.S. trade or business but did not derive
8805, and 1042-S to substantiate amounts full in 24 months. any gross income effectively connected to
withheld or paid that are reported on To apply using the Online Payment such trade or business, answer “No” to
line 5i. Agreement Application, go to IRS.gov/ item K(1).
Include on line 5i only amounts OPA. If the foreign corporation had gross
! withheld under Chapter 3 or 4 of Under an installment agreement, the income effectively connected with or
CAUTION the Code. Do not include other corporation can pay what it owes in treated as effectively connected with the
amounts, such as backup withholding, on monthly installments. There are certain conduct of a trade or business in the
line 5i. Enter backup withholding on line 5z conditions that must be met to enter into United States, answer “Yes” to item K(1).
(see below). and maintain an installment agreement,
such as paying the liability within 24 Item L
Line 5j. Elective Payment months and making all required deposits Skip item L (leave blank) if the foreign
Election Amount from Form and timely filing tax returns during the corporation is a resident of a country that
length of the agreement. does not have an income tax treaty with
3800 the United States. If the foreign
Enter the total elective payment election If the installment agreement is corporation is a resident of a country that
amount from Form 3800, Part III, line 6, accepted, the corporation will be charged has an income tax treaty with the United
column (i). See the Instructions for Form a fee and it will be subject to penalties and States:
3800. interest on the amount of tax not paid by Answer “Yes” if the corporation had a
the due date of the return. •
permanent establishment in the United
Line 5z. Total Payments States at any time during the tax year or in
Line 8b
Backup withholding. If the corporation Enter on line 8b the amount of any prior tax year to which income was
had income tax withheld from any overpayment on line 8a resulting from tax attributable, and enter the name of the
payments it received due to backup deducted and withheld under Chapters 3 country of residence of the foreign
withholding, include the amount withheld and 4. This amount is computed by corporation.
in the total for line 5z. Enter the amount completing Schedule W on page 9 of • Answer “No” if the corporation does not
withheld and the words “Backup Form 1120-F. have a permanent establishment in the
Withholding” in the blank space in the United States.
right-hand column between lines 4 and 5z. Line 9
If the answer to item L is “No” and the
Enter the portion of line 8a you want answer to item K(1) is “Yes,” complete item
Line 6. Estimated Tax Penalty credited to your 2024 estimated tax and W(1) on page 2 of the form and attach a
Generally, the corporation does not have the portion of line 8a you want refunded. completed Form 8833 to the return,
to file Form 2220 because the IRS can including a statement indicating the nature
figure the penalty amount, if any, and bill Note. The election to apply some or all of and amount (or reasonable estimate
the corporation. However, even if the the overpayment amount to the thereof) of gross receipts of the foreign
corporation does not owe the penalty, it corporation's 2024 estimated tax cannot corporation exempt by reason of not
must complete and attach Form 2220 if: be changed at a later date. having a permanent establishment in the
• The annualized income or adjusted United States.
method is used, or Note. You can credit any or all of the
• The corporation is a large corporation line 8a overpayment to your 2024 Item M
(as defined in the Instructions for Form estimated tax, even those amounts on See Form 5472, earlier.
2220) computing its first required line 8b resulting from tax deducted and
installment based on the prior year's tax. withheld under Chapters 3 and 4.

Instructions for Form 1120-F (2023) 13

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Item O—Personal Service item R and file Form 1120-F by its due • A waiver of insurance excise tax under
date, including extensions. Do not attach section 4371 (if the foreign corporation
Corporation
the statement described in Temporary has not entered into a closing agreement
A personal service corporation is a Regulations section 301.9100-12T. with the IRS and has not filed an annual
corporation whose principal activity for the Generally, once made, the election is Form 720).
testing period is the performance of irrevocable. • The interest, dividends, or royalty
personal services. The services must be article, if a refund of withholding tax is due.
substantially performed by If the corporation timely filed its return
employee-owners. for the loss year without making the Item W(2)
election, it can make the election on an Check the "Yes" box if the foreign
Testing period. The testing period for a amended return filed within 6 months of corporation is claiming tax treaty benefits
tax year is generally the prior tax year the due date of the loss year return pursuant to a Competent Authority
unless the corporation has just been (excluding extensions). Attach the election determination or Advance Pricing
formed. to the amended return and write "Filed Agreement that it qualifies for the treaty
Performance of personal services. The pursuant to section 301.9100-2" on the benefits being claimed. You must attach a
term “performance of personal services” election statement. See the Instructions copy of the Competent Authority
includes any activity involving the for Form 1139. determination letter or Advance Pricing
performance of personal services in the Item S Agreement to the return.
fields of health, law, engineering,
architecture, accounting, actuarial Enter the amount of the NOL carryover to Item Y(1)
science, performing arts, or consulting. the tax year from prior years, even if some For more information regarding a
of the loss is used to offset income on this corporation's distributive share of income
Accounting period. A personal service return. The amount to enter is the total of from a directly owned partnership interest
corporation must use a calendar tax year all NOLs generated in prior years but not that is ECI or treated as ECI by the
unless: used to offset income (either as a partnership or the corporation (partner),
• It elects to use a 52-53-week tax year carryback or carryover) to a tax year prior see Who Must Complete Schedule P in
that ends with reference to the calendar to 2023. Do not reduce the amount by any the separate Instructions for Schedule P
year or tax year elected under section 444; NOL deduction reported on Section II, (Form 1120-F).
• It can establish a business purpose for line 30a.
a different tax year and obtains the Item Y(2)
approval of the IRS (see the Instructions Item T
In general, if a foreign corporation owns,
for Form 1128 and Pub. 538); or Check the “Yes” box for item T if the directly or indirectly, an interest in a
• It elects under section 444 to have a tax corporation is a subsidiary in a partnership that is engaged in a U.S. trade
year other than a calendar year. To make parent-subsidiary controlled group. This or business, gain or loss on the transfer of
the election, use Form 8716, Election To applies even if the corporation is a all (or any portion of) such interest is
Have a Tax Year Other Than a Required subsidiary member of one group and the treated as effectively connected with the
Tax Year. parent corporation of another. For a conduct of such trade or business to the
If a corporation makes the section 444 definition of a parent-subsidiary controlled extent effectively connected gain or loss
election, its deduction for certain amounts group, see the Instructions for Schedule O would have flowed through the partnership
paid to employee-owners may be limited. (Form 1120). to the foreign corporation had the
See Schedule H (Form 1120), Section partnership sold all of its assets at fair
280H Limitations for a Personal Service Note. If the corporation is an “excluded
Corporation (PSC), to figure the maximum member” of a controlled group (see market value (FMV) as of the date of the
deduction. definition in the Instructions for sale or exchange. See section 864(c)(8)
Schedule O (Form 1120)), it is still for more details. Also, see Regulations
If a section 444 election is terminated considered a member of a controlled sections 1.864(c)(8)-1 and 1.864(c)(8)-2
and the termination results in a short tax group for this purpose. for additional guidance concerning gain or
year, type or print at the top of the first loss of foreign persons from the transfer of
page of Form 1120-F for the short tax year Item W(1) certain partnership interests and the
“SECTION 444 ELECTION If a foreign corporation claims that a treaty notification required to be provided to
TERMINATED.” overrules or modifies any provision of the certain partnerships on the transfer.
Other rules. For other rules that apply to Internal Revenue Code and thereby Item Y(3)
personal service corporations, see effects a reduction of any tax with respect
Passive activity limitations, later. to an item reported on this Form 1120-F, If the corporation owned at least a 10%
check the “Yes” box. Check the “Yes” box, interest, directly or indirectly, in any foreign
Item P for example, if a treaty benefit has been partnership, attach a statement listing the
Enter any tax-exempt interest received or claimed based on: following information for each foreign
accrued. Include any exempt-interest • The nondiscrimination provision of a partnership. For this purpose, a foreign
dividends received as a shareholder in a treaty. partnership includes an entity treated as a
mutual fund or other RIC. Also, if required, • The business profits article of a treaty, if foreign partnership under Regulations
include the same amount on expenses are claimed in determining the section 301.7701-2 or 301.7701-3.
Schedule M-1, line 7a, or Schedule M-3, business profits of the foreign corporation, • Name and EIN (if any) of the foreign
Part II, line 4a. notwithstanding an inconsistent provision partnership.
of the Code. • Identify which, if any, of the following
Item R • The gains article, if a treaty benefit is forms the foreign partnership filed for its
If the corporation has a net operating loss claimed relating to gain or loss on the tax year ending with or within the
(NOL) for tax year 2023, it can elect to disposition of a U.S. real property interest. corporation's tax year: Form 1042, 1065,
waive the entire carryback period for the • The branch profits tax article (or portion or 8804.
NOL and instead carry the NOL forward to of the dividends article relating to the • Name of partnership representative (if
future tax years. To do so, check the box in branch profits tax) and tax on excess any).
interest.

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• Beginning and ending dates of the types of payments are subject to reporting arrangements subject to section 267A,
foreign partnership's tax year. on Forms 1042 and 1042-S. see Regulations sections 1.267A-2 and
1.267A-4. Also, see the anti-avoidance
In addition, report any ECI included on Item CC rule under Regulations section
Schedule K-3 (Form 1065) reported by the If the corporation or any branch of the 1.267A-5(b)(6).
foreign partnership to the corporation, and corporation was a QDD, check the “Yes”
the ECI apportionment of the corporation's box, enter the QI-EIN, and attach a Extent to which deduction is disal-
outside basis in the foreign partnership, as Schedule Q (Form 1120-F) for each QDD. lowed. When section 267A applies to
required in Schedule P. You must complete and attach Schedule Q interest or royalties paid or accrued
Item Z(2) (Form 1120-F) even if the QDD has zero pursuant to a hybrid arrangement, it
If the answer to item Z(2) is “Yes,” attach a tax liability. generally disallows a deduction for the
amount to the extent that, under the
statement explaining whether the Item DD foreign tax law, there is not a
interbranch transactions are recognized If the corporation had gross receipts of at corresponding income inclusion (including
under Proposed Regulations section least $500 million in any 1 of the 3 long-term deferral). However, the
1.863-3(h) (Global Dealing Regulations) or preceding tax years, complete and attach deduction is not disallowed to the extent
some other proposed regulation. If Form 8991. For this purpose, the the amount is directly or indirectly included
interbranch transactions are recognized corporation's gross receipts include the in income in the United States, such as if
pursuant to a U.S. income tax treaty other gross receipts of all persons aggregated the amount is taken into account with
than one that, in its text or accompanying with the corporation, as specified in respect to a U.S. shareholder under
documents (including an exchange of section 59A(e)(3). See the Instructions for section 951(a) or section 951A. For
notes), allows for such recognition by Form 8991 to determine if the corporation additional information, see Regulations
explicitly incorporating an arm's-length is subject to the base erosion minimum sections 1.267A-2 through 1.267A-4. For
method applying the OECD Transfer tax. examples illustrating the application of
Pricing Guidelines, then such treaty-based section 267A, see Regulations section
position should be disclosed on Form Item EE 1.267A-6.
8275-R, in addition to the treaty disclosure Section 267A disallows a deduction for Item FF
required on Form 8833. certain interest or royalty paid or accrued
Item AA pursuant to a hybrid arrangement, to the The limitation on business interest
extent that, under the foreign tax law, there expense applies to every taxpayer with a
A corporation filing Form 1120-F must file is not a corresponding income inclusion trade or business, unless the taxpayer
Schedule UTP (Form 1120), Uncertain Tax (including long-term deferral). Report in meets certain specified exceptions. A
Position Statement, with its 2023 income Item EE the total amount of interest and taxpayer may elect out of the limitation for
tax return if: royalty paid or accrued by a U.S. taxable certain businesses otherwise subject to
• For 2023, the corporation's total assets branch (which includes a U.S. permanent the business interest expense limitation.
equal or exceed $10 million. The assets of establishment) of the foreign corporation See Item GG. Also, see the Instructions for
a corporation filing a Form 1120-F equal or for which a deduction is disallowed under Form 8990.
exceed $10 million if the higher of the section 267A. Certain real property trades or
beginning or end of year total worldwide
assets of the corporation reported on Payments to which section 267A ap- businesses and farming businesses
Form 1120-F, Schedule L, line 17, would plies. Interest or royalty considered paid qualify to make an election not to limit
be at least $10 million if the corporation or accrued by a U.S. taxable branch of the business interest expense. This is an
were to prepare a Schedule L on a foreign corporation is subject to section irrevocable election. If you make this
worldwide basis; 267A. See Regulations section election, you are required to use the
• The corporation or a related party 1.267A-5(b)(3) for rules regarding U.S. alternative depreciation system to
issued audited financial statements taxable branch payments, including depreciate any nonresidential real
reporting all or a portion of the interest or royalties considered paid or property, residential rental property, and
corporation's operations for all or a portion accrued by a U.S. taxable branch. Section qualified improvement property for an
of the corporation's tax year; and 267A generally applies to interest or electing real property trade or business,
• The corporation has one or more tax royalties paid or accrued pursuant to a and any property with a recovery period of
positions that must be reported on hybrid arrangement (such as, for example, 10 years or more for an electing farming
Schedule UTP. a payment pursuant to a hybrid business. See section 168(g)(1)(F). Also,
instrument, or a payment to a reverse you are not entitled to the special
Attach Schedule UTP to the depreciation allowance for that property.
hybrid), provided that the payment or
corporation's income tax return. Do not file For a taxpayer with more than one
accrual is to a related party (or pursuant to
it separately. A taxpayer that files a qualifying business, the election is made
a structured arrangement). In addition,
protective Form 1120-F must also file with respect to each business.
pursuant to an imported mismatch rule,
Schedule UTP if it satisfies the Check "Yes" if the corporation has an
section 267A generally applies to interest
requirements set forth above. election in effect to exclude a real property
or royalties paid or accrued pursuant to a
For details, see the Instructions for non-hybrid arrangement where the income trade or business or a farming business
Schedule UTP. attributable to that payment or accrual is from section 163(j). For more information,
directly or indirectly offset by certain see section 163(j) and the Instructions for
Item BB deductions involving hybridity incurred by Form 8990. Also, see the Instructions for
If the foreign corporation made any a related party or pursuant to a structured Schedule I (Form 1120-F).
payment(s) in 2023 that would require the arrangement. However, section 267A does
foreign corporation to file any Forms 1042 not apply if a de minimis exception is Item GG
and 1042-S, check the “Yes” box. See the satisfied. See Regulations section Generally, a taxpayer with a trade or
Instructions for Form 1042 and the 1.267A-1(c). For purposes of section business must file Form 8990 to claim a
Instructions for Form 1042-S for 267A, interest and royalties are defined deduction for business interest. In
information regarding who is required to broadly. For additional information about addition, Form 8990 must be filed by any
file Forms 1042 and 1042-S and what taxpayer that owns an interest in a

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partnership with current-year, or prior-year The penalty reported on this line from income (for example, interest income
carryover, excess business interest Form 8996, line 15, is not due with the received on state and local bonds that is
expense allocated from the partnership. filing of this form. The IRS will separately excluded under section 103) would not be
send to you a notice setting forth the due included as income in Section I.
Exclusions from filing. A taxpayer is date for the penalty payment and where • The amount received is from U.S.
not required to file Form 8990 if the that payment should be sent. sources (see Source of Income Rules,
taxpayer is a small business taxpayer earlier).
(defined below) and does not have excess Item II • The amount received is not effectively
business interest expense from a If the corporation is a member of a connected with the conduct of a U.S. trade
partnership. A taxpayer is also not controlled group, check the "Yes" box. or business (see Section II, later).
required to file Form 8990 if the taxpayer Complete and attach Schedule O (Form • The amount received is not exempt (by
only has business interest expense from 1120), Consent Plan and Apportionment Code) from taxation. For example, interest
these excepted trades or businesses: Schedule for a Controlled Group. on deposits that are exempted by section
• An electing real property trade or Component members of a controlled 881(d) would not be included as income in
business, group must use Schedule O to report the Section I. In addition, certain portfolio
• An electing farming business, or apportionment of certain tax benefits interest is not taxable for obligations
• Certain utility businesses. between the members of the group. See issued after July 18, 1984. See section
Small business taxpayer. A small Schedule O and the Instructions for 881(c) for more details.
business taxpayer is not subject to the Schedule O for more information. • If you are a QDD, report all QDD tax
business interest expense limitation and is liabilities (see Qualified Intermediary
Item JJ
not required to file Form 8990. A small Agreement), whether or not the amounts
business taxpayer is a taxpayer that (a) is Check the appropriate boxes to indicate if are subject to withholding or correctly
not a tax shelter (as defined in section the corporation is required to file Form withheld.
448(d)(3), and (b) meets the gross 4626. If the corporation does not meet the
receipts test of section 448(c) discussed requirements of the safe harbor method, Such income (except as indicated
next. as provided under section 59(k)(3)(A) and below) will generally be subject to tax at a
Notice 2023-7 for the current year, Form 30% rate. See section 881(a).
Gross receipts test. For 2023, a 4626 must be completed and attached to Amounts fixed or determinable,
taxpayer meets the gross receipts test if the corporation's return. See the annual or periodic include the following.
the taxpayer has average annual gross Instructions for Form 4626. 1. Interest (other than original issue
receipts of $29 million or less for the 3 discount (OID) as defined in section
prior tax years. A taxpayer’s average 1273), dividends, rents, royalties, salaries,
annual gross receipts for the 3 prior tax Section I—Income From
years is determined by adding the gross U.S. Sources Not wages, premiums, annuities,
compensation, and other FDAP gains,
receipts for the 3 prior tax years and Effectively Connected With profits, and income.
dividing the total by 3. Gross receipts
include the aggregate gross receipts from the Conduct of a Trade or Note. Item 1 above includes dividend
all persons treated as a single employer, Business in the United equivalents described in section 871(m);
however, dividends and dividend
such as a controlled group of corporations, States equivalents received in calendar years
commonly controlled partnerships, or Note. Complete Section I only if you 2019 through 2024 by a QDD in its equity
proprietorships, and affiliated service derived U.S. source income not effectively derivatives dealer capacity are excluded.
groups. See section 448(c) and the connected with the conduct of a trade or
Instructions for Form 8990 for additional business in the United States and either 2. Gains described in section 631(b)
information. your withholding tax liability was not or (c), relating to disposal of timber, coal,
correctly withheld at source or not or domestic iron ore with a retained
Note. A foreign corporation is required to correctly reported on Form 1042-S, you economic interest.
complete Schedule I (Form 1120-F) to have a QDD tax liability (see section 3.09 3. On a sale or exchange of an OID
compute its interest expense deduction of the Qualified Intermediary Agreement), obligation, the amount of the OID accruing
under Regulations section 1.882-5. If the or you are claiming a credit or refund of an while the obligation was held by the
foreign corporation is required to complete amount withheld at source. You must foreign corporation, unless this amount
and file Form 8990, attach Form 8990 to attach any Forms 1042-S (and any was taken into account on a payment.
Schedule I (Form 1120-F), which is supporting documentation) related to 4. On a payment received on an OID
attached to Form 1120-F.
amounts for which you are claiming a obligation, the amount of the OID accruing
Item HH credit or refund for overwithholding (see while the obligation was held by the
If a foreign corporation is organized in a the instructions for line 5i). The amount foreign corporation, if such OID was not
U.S. territory, it may be a Qualified reported in column (e) is the amount that previously taken into account and if the tax
Opportunity Fund (QOF) only if it is was actually withheld at source (and not imposed on the OID does not exceed the
organized for the purpose of investing in repaid to you by the withholding agent), as payment received less the tax imposed on
qualified opportunity zone property that reported to you in box 10 of the Form(s) any interest included in the payment
relates to a trade or business operated in 1042-S issued by the withholding received. This rule applies to payments
the U.S. territory in which the corporation agent(s). See Claim for Refund or Credit, received for OID obligations issued after
is organized. To certify as a QOF, the earlier, for additional documentation March 31, 1972.
corporation must file Form 1120-F and requirements.
Certain OID is not taxable for OID
attach Form 8996, even if the corporation Only report amounts on these lines if: obligations issued after July 18, 1984. See
had no income or expenses to report. If • The amount received is fixed or section 881(c) for more details.
the corporation is attaching Form 8996, determinable, annual or periodic (FDAP)
check the “Yes” box for Item HH. On the (see definition below). For rules that apply to other OID
line following the dollar sign, enter the • The amount received is includible in the obligations, see Pub. 515.
amount from Form 8996, line 15. gross income of the foreign corporation. 5. Gains from the sale or exchange of
Therefore, receipts that are excluded from patents, copyrights, and other intangible

16 Instructions for Form 1120-F (2023)

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property if the gains are from payments attributable to a fixed place of business in Line 13
that are contingent on the productivity, the United States). Check the “Yes” box if you received an
use, or disposition of the property or item of income during the tax year with
interest sold or exchanged. For more information, see section 887.
respect to which you are treated as fiscally
For more information, see section Enter the foreign corporation's U.S. transparent under the laws where you are
881(a) and Regulations section 1.881-2. source gross transportation income on organized. In such a case, you may not
line 9, column (b). Also, attach Schedule V claim a reduced rate of tax under a treaty
Note. For purposes of determining (Form 1120-F). with respect to that item. See Regulations
whether its income is taxable under See Exclusion from gross income for section 1.894-1(d)(1).
section 881(a), a corporation created or certain income from ships and aircraft,
organized in Guam, American Samoa, the later. If the item of income has been withheld
Northern Mariana Islands, or the U.S. upon, your interest holders may, however,
Virgin Islands will not be treated as a Line 10. Other Items of Income be able to claim treaty benefits, but only if
foreign corporation if it meets the rules of Include on line 10 all other income not the tax jurisdiction in which your interest
section 881(b). For dividends paid after reportable on lines 1 through 9. For any holders qualify for treaty benefits treats
October 22, 2004, a corporation created amounts received by a QDD in its equity you as fiscally transparent and the interest
or organized in Puerto Rico will be taxed derivatives dealer capacity, include a holders are not fiscally transparent with
under section 881(a) at a rate of 10% with statement detailing each type of income. respect to that item of income. An interest
respect to such dividends received during In addition, if the foreign corporation holder claiming a benefit should file a
the tax year in the circumstances outlined received a specified federal procurement separate Form 1120-F, if appropriate. See
in section 881(b)(2). payment (as defined in section 5000C(b)) Regulations section 1.894-1(d)(3) for the
Line 9. Gross Transportation that was not fully withheld upon at source, definition of “fiscally transparent” and
enter the payment in Section I, line 10, Regulations section 1.894-1(d)(5) for
Income column (b); enter a 2% rate of tax in examples.
A 4% tax is imposed on a foreign column (c); enter the tax liability in column
corporation's U.S. source gross (d); and enter any withholding in column Section II—Income
transportation income for the tax year. U.S. (e). Effectively Connected With
source gross transportation income is
Increase or decrease in tax attributa-
generally any gross income that is the Conduct of a Trade or
ble to partner's additional reporting
transportation income if such income is Business in the United
year tax. If the taxpayer is a foreign
treated as from U.S. sources. States
corporate partner and received a Form
Transportation income is any income 8986 from a partnership that has elected
from or connected with: to have each reviewed partner take into Foreign Corporations Engaged
• The use (or hiring or leasing for use) of account the partner's share of the in a U.S. Trade or Business
a vessel or aircraft, or adjustments, as finally determined, These corporations are taxed on their ECI
• The performance of services directly instead of paying the imputed at the same 21% tax rate that applies to
related to the use of a vessel or aircraft. underpayment, the foreign corporate domestic corporations. ECI can be U.S.
For this purpose, the term “vessel or partner (taxpayer) will have to complete source or foreign source income as
aircraft” includes any container used in Form 8978 to report adjustments shown explained below.
connection with a vessel or aircraft. on the Form 8986 they received from the
partnership. The foreign corporate partner U.S. Source Effectively Connected
Generally, 50% of all transportation (taxpayer) must complete a separate Form
income that is attributable to 8978 to report adjustments pertaining to Income
transportation that either begins or ends in income that is effectively connected with
the United States is treated as from U.S. the conduct of a trade or business in the U.S. source income derived by a foreign
sources. See section 863(c)(2)(B) for a United States under section 882 (an “ECI corporation engaged in a U.S. trade or
special rule for personal service income. Form 8978”) and a separate Form 8978 to business other than FDAP and capital
Exceptions. U.S. source gross report adjustments pertaining to income gains is ECI. See Regulations section
transportation income does not include from U.S. sources not effectively 1.864-4(b).
income that is: connected with the conduct of a trade or
• Effectively connected with the conduct business in the United States under Note. For purposes of the preceding
of a U.S. trade or business, or section 881 (an “FDAP Form 8978”). paragraph, U.S. source income includes
• Taxable in a territory of the United Include any increase or decrease in taxes income with respect to activities related to
States under the provisions of the Internal due from the FDAP Form 8978, line 14, the exploration and exploitation of natural
Revenue Code as applied to that territory. that was not fully withheld upon at source, resources in continental shelf areas (see
on a separate line on Form 1120-F, section 638).
Transportation income of the Section I, line 10. Enter “From Form 8978”
corporation will not be treated as ECI in column (a) and skip (leave blank) FDAP items are generally ECI (and are
unless: columns (b) and (c). Enter in column (d) therefore includible in Section II) if the
• The corporation has a fixed place of the amount of the increase or decrease asset-use test, the business-activities test,
business in the United States involved in from the FDAP Form 8978, line 14. Enter or both tests (explained below) are met.
the earning of transportation income, and any withholding in column (e). Attach the
• Substantially all of the corporation's FDAP Form 8978 to Form 1120-F. If neither test is met, FDAP items are
U.S. source gross transportation income generally not ECI (and are therefore
(determined without regard to the rule that Note. The taxpayer will generally skip includible in Section I instead of
such income does not include ECI) is lines 3a, 3b, 4, 7, 9a, 9b, and 10 of the Section II). For more information, see
attributable to regularly scheduled FDAP Form 8978. section 864(c)(2) and Regulations section
transportation (or, in the case of income 1.864-4(c).
from the leasing of a vessel or aircraft, is

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Finance business. See Regulations definition of “office” or other fixed place of Election To Treat Real Property
section 1.864-4(c)(5) for special rules business in the United States. See
Income as Effectively
relating to banking, financing, or similar sections 864(c)(5)(B) and (C) and
business activities. Such rules apply to Regulations section 1.864-6 for special Connected Income
certain stocks and securities of a banking, rules for determining when foreign source A foreign corporation that derives, during
financing, or similar business in lieu of the income received by a foreign corporation the tax year, any income from real property
asset-use and business-activities tests. is from an office or other fixed place of located in the United States, or from any
business in the United States. interest in such real property, may elect,
Asset-use test. The FDAP items are for the tax year, to treat all such income as
from assets used in, or held for use in, the Foreign insurance companies. Foreign
conduct of U.S. trade or business. For source income of a foreign insurance ECI. See section 871(d). Income to which
example, the following items are ECI. company that is attributable to its U.S. this election applies includes:
• Income earned on a trade or note trade or business is ECI. See section • Gains from the sale or exchange of real
receivable acquired in the conduct of the 864(c)(4)(C) and Regulations section property or an interest therein;
U.S. trade or business. 1.864-5(c). • Rents or royalties from mines, wells, or
other natural deposits; and
• Interest income earned from the Excluded foreign source income. • Gains described in section 631(b) or
temporary investment of funds needed in Foreign source income that would (c).
the foreign corporation's U.S. trade or otherwise be ECI under any of the above
business. rules for foreign source income is The election may be made whether or
Business-activities test. The activities excluded if: not the corporation is engaged in a U.S.
of the U.S. trade or business were a • It is foreign source dividends, interest, trade or business during the tax year for
material factor in the realization of the or royalties paid by a foreign corporation in which the election is made or whether or
FDAP items. which the taxpayer owns or is considered not the corporation has income from real
to own (within the meaning of section 958) property that, for the tax year, is effectively
more than 50% of the total combined connected with the conduct of a U.S. trade
Foreign Source Effectively voting power of all classes of stock entitled or business.
Connected Income to vote; or To make the election, attach a
• The taxpayer is a CFC (as defined in statement that includes the information
Foreign source income is generally not section 957) and the foreign source required in Regulations section
ECI. However, if the foreign corporation income is subpart F income (as defined in 1.871-10(d)(1)(ii) to Form 1120-F for the
has an office or other fixed place of section 952). first tax year for which the election is to
business in the United States, the For more information, see section apply. Use Section II to figure the tax on
following types of foreign source income it 864(c)(4)(D) and Regulations section this income.
receives from that U.S. office are ECI. 1.864-5(d).
• Rents or royalties received for the use Disposition of U.S. Real
outside the United States of intangible Foreign Corporations Not Property Interest by a Foreign
personal property described in section Engaged in a U.S. Trade or Corporation
862(a)(4) if derived from the active Business A foreign corporation that disposes of a
conduct of a U.S. trade or business.
• Gains or losses on the sale or If a foreign corporation is not engaged in a U.S. real property interest (as defined in
exchange of intangible personal property U.S. trade or business during the tax year, section 897(c)) must treat the gain or loss
located outside the United States or from it will complete Section II only if such from the disposition as ECI, even if the
any interest in such property, if such gains corporation: corporation is not engaged in a U.S. trade
or losses are derived in the active conduct • Had current year income or gain from a or business. Figure this gain or loss on
of the trade or business in the United sale or exchange of property or from Schedule D (Form 1120), Capital Gains
States. performing services (or any other and Losses. Carry the result to Section II,
• Dividends, interest, amounts received transaction) in any other tax year that line 8, on page 5 of Form 1120-F.
for the provision of a guarantee of would have been ECI in that other tax year A foreign corporation may elect to be
indebtedness, issued after September 27, (see section 864(c)(6)); treated as a domestic corporation for
2010, if derived from the active conduct of • Had current year income or gain from a purposes of sections 897 and 1445. See
a U.S. banking, financing, or similar disposition of property that is no longer section 897(i).
business or if the principal business of the used or held for use in conducting a U.S.
foreign corporation is trading in stocks or trade or business within the 10-year period See Temporary Regulations section
securities for its own account. before the disposition that would have 1.897-5T for the applicability of section
• Income from the sale or exchange of been ECI immediately before such 897 to reorganizations and liquidations.
inventory outside the United States cessation (see section 864(c)(7));
If the corporation had income tax
through the U.S. office, unless the • Elected to treat real property income as
withheld on Form 8288-A, include the
property is sold or exchanged for use, ECI (see below);
amount withheld on line 5i, page 1.
consumption, or disposition outside the • Was created or organized and was
United States and an office of the foreign conducting a banking business in a U.S. Income
corporation in a foreign country materially territory, and received interest on U.S.
participated in the sale. obligations that is not portfolio interest Line 1. Gross Receipts or Sales
• Any income or gain that is equivalent to (see section 882(e)); or Line 1a. Enter gross income effectively
any item of income or gain listed above • Had gain or loss from disposing of a connected with the conduct of a U.S. trade
must be treated in the same manner as U.S. real property interest (see Disposition or business (except for those income
such item for purposes of determining of U.S. Real Property Interest by a Foreign items that must be reported on lines 4
whether that income is foreign source ECI. Corporation, later). through 10). Include on line 1a effectively
connected gross receipts or sales. If an
See section 864(c)(5)(A) and accrual method corporation has an
Regulations section 1.864-7 for the applicable financial statement (as defined

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in section 451(b)(3)), then the revenue for sale to customers in the ordinary receipts, the amount not accrued because
recognition rules in Regulations section course of the taxpayer's trade or business. of the application of section 448(d)(5), and
1.451-3 may apply. The restrictions on using the the net amount accrued. Enter the net
Special rules apply to certain income, installment method do not apply to the amount on line 1a.
as discussed below. following. Line 1b. Returns and Allowances.
Advance payments. In general, • Dispositions of property used or Enter cash and credit refunds the
advance payments must be included in produced in the trade or business of corporation made to customers for
income in the year of receipt. For farming. returned merchandise, rebates, and other
exceptions to this general rule for • Certain dispositions of timeshares and allowances made on gross receipts or
corporations that use the accrual method residential lots reported under the sales.
of accounting, see the following. installment method for which the
• To report income from long-term corporation elects to pay interest under Line 2. Cost of Goods Sold
contracts, see section 460. section 453(l)(3).
• For rules that allow a limited deferral of Enter on line 1a (and carry to line 3) the Complete and attach Form 1125-A, Cost
advance payments beyond the current tax gross profit on collections from these of Goods Sold, if applicable. Enter on
year, see section 451(c). Also, see installment sales. Attach a statement Form 1120-F, line 2, the amount from Form
Regulations sections 1.451-8(c), (d), and showing the following information for the 1125-A, line 8. See Form 1125-A and its
(e). For applicability dates, see current and the 3 preceding years: (a) instructions.
Regulations section 1.451-8(h). gross sales, (b) cost of goods sold, (c)
• For information on adopting or changing gross profits, (d) percentage of gross Line 4. Dividends
to a permissible method for reporting profits to gross sales, (e) amount
advance payments for services and collected, and (f) gross profit on the
certain goods by an accrual method amount collected. See the instructions for Schedule C, later.
Complete Schedule C and enter on line 4
corporation, see the Instructions for Form For sales of timeshares and residential the amount from Schedule C, line 13,
3115. lots reported under the installment column (a).
Exclusion from gross income for method, if the corporation elects to pay
certain income from ships and aircraft. interest under section 453(I)(3), the
A foreign corporation engaged in the corporation's income tax is increased by Line 5. Interest
international operation of ships or aircraft the interest payable under section 453(l)
and organized in a qualified foreign (3). Report this addition to the tax on Enter taxable interest on U.S. obligations
country may exclude qualified income Schedule J, line 8, and be sure to check and on loans, notes, mortgages, bonds,
from its gross income, provided that the the “Other” box. bank deposits, corporate bonds, tax
refunds, etc. Do not offset interest
corporation can satisfy certain ownership Nonaccrual experience method for expense against interest income. Special
requirements. See Schedule S (Form service providers. Accrual method rules apply to interest income from certain
1120-F) and its separate instructions for corporations are not required to accrue below-market-rate loans. See section
additional information. certain amounts to be received from the 7872 for details.
Income from qualifying shipping performance of services that, based on
activities (tonnage tax). The their experience, will not be collected, if: Note. Report tax-exempt interest on Form
corporation's gross income does not • The services are in the fields of health, 1120-F, page 2, item P. Also, if required,
include income from qualifying shipping law, engineering, architecture, accounting, include the same amount on
activities (as defined in section 1356) if the actuarial science, performing arts or Schedule M-1, line 7a, or Schedule M-3,
corporation makes an election under consulting; or Part II, line 4a.
section 1354 to be taxed on its notional • The corporation meets the section
shipping income (as defined in section 448(c) gross receipts test for all prior Line 6. Gross Rents
1353) at the highest corporate tax rate. If years.
the election is made, the corporation may This provision does not apply to any Enter the gross amount received for the
generally not claim any loss, deduction, or amount if interest is required to be paid on rental of property. Deduct expenses such
credit with respect to qualifying shipping the amount or if there is any penalty for as repairs, interest, taxes, and
activities. A corporation making this failure to timely pay the amount. See depreciation on the proper lines for
election may also elect to defer gain on Regulations section 1.448-3 for more deductions. A rental activity held by a
certain dispositions of qualifying vessels information on the nonaccrual experience closely held corporation or a personal
under section 1359. method, including information on safe service corporation may be subject to the
Use Form 8902, Alternative Tax on harbor methods. passive activity loss rules. See Passive
Qualifying Shipping Activities, to figure the For information on a book safe harbor activity limitations, later.
tax. Include the alternative tax from Form method of accounting for corporations that
8902, line 30, on Schedule J, line 8, and use the nonaccrual experience method of Line 8. Capital Gain Net Income
be sure to check the “Form 8902” box on accounting, see Rev. Proc. 2011-46,
that line. 2011-42 I.R.B. 518, available at Every effectively connected sale or
IRS.gov/irb/2011-42_IRB#RP-2011-46, or exchange of a capital asset must be
Installment sales. Generally, the any successor. Also, see the Instructions reported in detail on Schedule D (Form
installment method may not be used for for Form 3115 for procedures to obtain 1120), even if there is no gain or loss.
dealer dispositions of property. A “dealer automatic consent to change to this
disposition” is any disposition of (a) method or make certain changes within
personal property by a person who this method. Line 10. Other Income
regularly sells or otherwise disposes of
personal property of the same type on the Corporations that qualify to use the Enter any other taxable income not
installment plan, or (b) real property held nonaccrual experience method should reported on lines 1 through 9. List the type
attach a statement showing total gross and amount of income on an attached

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statement. If the corporation has only one Deductions 263A. A small business taxpayer that
item of other income, describe it in Important. In computing the taxable wants to discontinue capitalizing costs
parentheses on line 10. income of a foreign corporation engaged under section 263A must change its
in a U.S. trade or business, deductions are method of accounting. See section
Examples of other income to report on allowed only if they are connected with 263A(i) and Regulations section
line 10 include the following. income effectively connected with the 1.263A-1(j). Also, see the Instructions for
• Recoveries of bad debts deducted in conduct of a trade or business in the Form 3115.
prior years under the specific charge-off United States. Charitable contributions, For more information on the uniform
method. however, may be deducted whether or not capitalization rules, see Pub. 538. Also,
• Any amount includable in income from they are so connected. See section 882(c) see Regulations sections 1.263A-1
Form 6478, Biofuel Producer Credit. and Regulations section 1.882-4(b) for through 1.263A-3. See section 263A(d),
• Any amount includable in income from more information. Regulations section 1.263A-4, and Pub.
Form 8864, Biodiesel, Renewable Diesel, 225 for rules for property produced in a
or Sustainable Aviation Fuels Credit. Apportionment of Expenses farming business.
• Refunds of taxes deducted in prior
years to the extent they reduced the Transactions between related taxpay-
amount of tax imposed. See section 111 In general, expenses that are definitely ers. Generally, an accrual basis taxpayer
and the related regulations. Do not offset related to a class of gross income may only deduct business expenses and
current-year taxes against tax refunds. (including tax-exempt income) must be interest owed to a related party in the year
• Ordinary income from trade or business allocated to that class of gross income. the payment is included in the income of
activities of a partnership (from Expenses not definitely related to a class the related party. See sections 163(e)(3)
Schedule K-3 (Form 1065)). Do not offset of gross income should be allocated to all and 267(a)(2) for limitations on deductions
ordinary losses against ordinary income. classes of income based on the ratio of for unpaid interest and expenses. See the
Instead, include the losses on Section II, gross income in each class of income to instructions for Schedule I (Form 1120-F),
line 27. Show the partnership's name, total gross income, or some other ratio lines 24b and 24e, for limitations under
address, and EIN on Schedule P (Form that clearly relates to the classes of these sections of the interest expense
1120-F). If the amount entered is from income. See Regulations section 1.861-8 allocable under Regulations section
more than one partnership, identify the and Temporary Regulations section 1.882-5.
amount from each partnership on 1.861-8T for more information. Limitations on business interest ex-
Schedule P. pense. Business interest expense may
• The ratable portion of any net positive Attach Schedule H (Form 1120-F) to be limited. See section 163(j) and Form
section 481(a) adjustment. See Section show the definitely related and indirect 8990. Also, see the instructions for
481(a) adjustment, earlier. allocation and apportionment of expenses Schedule I (Form 1120-F), and the
• Part or all of the proceeds received from to ECI. The amount on Schedule H, Part II, instructions for item FF and item GG,
certain corporate-owned life insurance line 20, is reportable on Form 1120-F, earlier.
contracts issued after August 17, 2006. Section II, line 26.
Corporations that own one or more Section 291 limitations. Corporations
employer-owned life insurance contracts Note. The allocation and apportionment may be required to adjust deductions for
issued after this date must file Form 8925, of bad debt deductions is not included on depletion of iron ore and coal, intangible
Report of Employer-Owned Life Insurance Schedule H but is reported only on Form drilling and exploration and development
Contracts. See Form 8925. 1120-F, Section II, line 15. costs, certain deductions for financial
• Net income from notional principal institutions, and the amortizable basis of
pollution control facilities. See section 291
contracts. Limitations on Deductions to determine the amount of the
• Interest and dividend equivalents (for
example, confirmation and acceptance Uniform capitalization rules. The adjustment.
letter of credit fees and other guarantee uniform capitalization rules of section Election to deduct business start-up
fees). 263A require corporations to capitalize and organizational costs. A corporation
• Income from cancellation of debt (COD) certain costs to inventory or other can elect to deduct a limited amount of
from the repurchase of a debt instrument property. start-up and organizational costs it paid or
for less than its adjusted issue price. Corporations subject to the section incurred. Any remaining costs must
• Any payroll tax credit taken by an 263A uniform capitalization rules are generally be amortized over a 180-month
employer on its 2023 employment tax required to capitalize: period. See sections 195 and 248 and the
returns (Forms 941, 943, and 944) for 1. Direct costs of assets produced or related regulations.
qualified paid sick and qualified paid acquired for resale, and Time for making an election. The
family leave under FFCRA and ARP (both
the nonrefundable and refundable 2. Certain indirect costs (including corporation generally elects to deduct
portions). The corporation must include taxes) that are properly allocable to start-up or organizational costs by
the full amount of the credit for qualified property produced or property acquired for claiming the deduction on its income tax
sick and family leave wages in gross resale. return filed by the due date (including
extensions) for the tax year in which the
income for the tax year that includes the The corporation cannot deduct the active trade or business begins. For more
last day of any calendar quarter in which costs required to be capitalized under details, see the Instructions for Form 4562.
the credit is allowed. section 263A until it sells, uses, or
otherwise disposes of the property (to If the corporation timely filed its return
Note. A credit is available only if the which the costs relate). The corporation for the year without making an election, it
leave was taken after March 31, 2020, and recovers these costs through depreciation, can still make an election by filing an
before October 1, 2021, and only after the amortization, or costs of goods sold. amended return within 6 months of the
qualified leave wages were paid, which due date of the return (excluding
might, under certain circumstances, not A small business taxpayer (defined in extensions). Clearly indicate the election
occur until a quarter after September 30, Accounting Methods, earlier) is not on the amended return and enter “Filed
2021, including quarters in 2022. required to capitalize costs under section

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pursuant to section 301.9100-2” at the top Certain organizations are treated as as amounts included in cost of goods sold,
of the amended return. File the amended individuals for purposes of this test. See elective contributions to a section 401(k)
return at the same address the corporation section 542(a)(2). For rules for cash or deferred arrangement, or amounts
filed its original return. The election determining stock ownership, see section contributed under a salary reduction SEP
applies when figuring taxable income for 544 (as modified by section 465(a)(3)). agreement or a SIMPLE IRA plan.
the current tax year and all subsequent
Reducing certain expenses for which
years. If the corporation's total receipts
credits are allowable. If the corporation
The corporation can choose to forgo claims certain credits, it may need to (line 1a, plus lines 4 through 10) are
the elections above by affirmatively reduce the otherwise allowable $500,000 or more, complete Form 1125-E,
electing to capitalize its start-up or deductions for expenses used to figure the Compensation of Officers. Enter on Form
organizational costs on its income tax credit. This applies to credits such as the 1120-F, line 12, the amount from Form
return filed by the due date (including following. 1125-E, line 4.
extensions) for the tax year in which the • Work opportunity credit (Form 5884).
active trade or business begins. • Credit for increasing research activities Line 13. Salaries and Wages
(Form 6765).
Note. The election to either amortize or • Orphan drug credit (Form 8820). Enter the total salaries and wages paid for
capitalize start-up costs is irrevocable and • Disabled access credit (Form 8826). the tax year. Do not include salaries and
applies to all start-up costs that are related • Empowerment zone employment credit wages deductible elsewhere on the return,
to the trade or business. (Form 8844). such as amounts included in officers'
Report the deductible amount of • Credit for employer social security and compensation, cost of goods sold, elective
start-up and organizational costs and any Medicare taxes paid on certain employee contributions to a section 401(k) cash or
amortization on line 27. For amortization tips (Form 8846). deferred arrangement, or amounts
that begins during the current tax year, • Credit for small employer pension plan contributed under a salary reduction SEP
complete and attach Form 4562, start-up costs (Form 8881). agreement or a SIMPLE IRA plan.
Depreciation and Amortization. • Credit for employer-provided childcare
Passive activity limitations. Limitations facilities and services (Form 8882).
If the corporation provided taxable
on passive activity losses and credits • Low sulfur diesel fuel production credit
fringe benefits to its employees, such as
under section 469 apply to personal (Form 8896). personal use of a car, do not deduct as
service corporations (for definition, see • Credit for employer differential wage wages the amount allocated for
Item O—Personal Service Corporation, payments (Form 8932). depreciation and other expenses claimed
earlier) and closely held corporations (see • Credit for small employer health
on lines 20 and 27.
definition below). insurance premiums (Form 8941).
• Employer credit for paid family and If the corporation claims a credit
Generally, the two kinds of passive medical leave (Form 8994). ! for any wages paid or incurred, it
activities are: CAUTION may need to reduce any
• Trade or business activities in which the If the corporation has any of the credits
corporation did not materially participate listed above, figure the current-year credit corresponding deduction for officers'
for the tax year; and before figuring the deduction for expenses compensation and salaries and wages.
• Rental activities, regardless of its on which the credit is based. If the See Reducing certain expenses for which
participation. corporation capitalized any costs on which credits are allowable, earlier.
it figured the credit, it may need to reduce
For exceptions, see Form 8810, the amount capitalized by the credit Line 14. Repairs and Maintenance
Corporate Passive Activity Loss and Credit attributable to these costs.
Limitations.
See the instructions for the form used Enter the cost of repairs and maintenance
Corporations subject to the passive to figure the applicable credit for more not claimed elsewhere on the return, such
activity limitations must complete Form details. as labor and supplies, that are not
8810 to compute their allowable passive
activity loss and credit. Before completing Limitations on deductions related to payments to produce or improve real or
Form 8810, see Temporary Regulations property leased to tax-exempt entities. tangible personal property. See
section 1.163-8T, which provides rules for If a corporation leases property to a Regulations section 1.263(a)-1. For
allocating interest expense among governmental or other tax-exempt entity, example, amounts are paid for
activities. If a passive activity is also the corporation cannot claim deductions improvements if they are for betterments
subject to the at-risk rules of section 465 related to the property to the extent that to the property, restorations of the property
or the tax-exempt use loss rules of section they exceed the corporation's income from (such as the replacements of major
470, those rules apply before the passive the lease payments. This disallowed components or substantial structural
loss rules. tax-exempt use loss may be carried over parts), or if they adapt the property to a
to the next tax year and treated as a new or different use. Amounts paid to
For more information, see section 469, deduction with respect to the property for produce or improve property must be
the related regulations, and Pub. 925, that tax year. See section 470(d) for capitalized. See Regulations sections
Passive Activity and At-Risk Rules. exceptions. 1.263(a)-2 and -3.
Closely held corporations. A Contributions. See the instructions for
corporation is a closely held corporation if: line 19, later, for limitations that apply to The corporation can deduct repair and
• At any time during the last half of the tax contributions. maintenance expenses only to the extent
year, more than 50% in value of its they relate to a trade or business activity.
outstanding stock is directly or indirectly See Regulations section 1.162-4. The
owned by or for not more than five Line 12. Compensation of Officers corporation may elect to capitalize certain
individuals; and repair and maintenance costs consistent
• The corporation is not a personal Enter deductible officers' compensation with its books and records. See
service corporation. on line 12. Do not include compensation Regulations section 1.263(a)-3(n) for
deductible elsewhere on the return, such information on how to make the election.

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Line 15. Bad Debts in the Internal Revenue Bulletin in early Protective elections under section
2024. 1.882-5. A taxpayer that files a protective
Enter the total debts that became tax return under Regulations section
worthless in whole or in part during the tax Line 17. Taxes and Licenses 1.882-4(a)(3)(vi) may voluntarily file
year. A small bank or thrift institution using Schedule I with the protective return to
preserve timely elections under
the reserve method of section 585 should Enter taxes paid or accrued during the tax Regulations section 1.882-5(a)(7). If a
attach a statement showing how it figured year, but do not include the following. taxpayer uses the provisions of an
the current year's provision. A corporation • Federal income taxes. applicable treaty to allocate interest
that uses the cash method of accounting • Foreign or U.S. territory income taxes if expense rather than Regulations section
cannot claim a bad debt deduction unless a foreign tax credit is claimed. 1.882-5, it remains subject to the time,
the amount was previously included in • Taxes not imposed on the corporation. place, and manner provisions of
income. • Taxes, including state or local sales Regulations section 1.882-5(a)(7) for
Specific charge-off method. Attach to taxes, that are paid or incurred in making its interest expense allocation
the return a list of each debtor and the connection with an acquisition or elections for any subsequent year that it
amount of the bad debt deduction where disposition of property (these taxes must chooses to use the three-step allocation
the amount of the loans charged off (or be treated as a part of the cost of the formula of the regulations instead of the
treated as charged off under Regulations acquired property or, in the case of a treaty. Protective interest expense
section 1.166-2) for that debtor total in disposition, as a reduction in the amount allocation elections under Regulations
excess of $500,000 in the tax year. realized on the disposition). section 1.882-5(a)(7) may be made for a
• Taxes assessed against local benefits year in which a treaty method is used in
that increase the value of the property lieu of the rules of Regulations section
Line 16. Rents assessed (such as for paving, etc.). 1.882-5 by completing and filing
• Taxes deducted elsewhere on the Schedule I on a timely filed income tax
If the corporation rented or leased a return, such as those reflected in cost of return for any year that the election would
vehicle, enter the total annual rent or lease goods sold. be required to be made under the rules of
expense paid or incurred during the year. Regulations section 1.882-5. If a
Also, complete Part V of Form 4562. If the See section 164(d) for information on corporation uses an applicable treaty,
corporation leased a vehicle for a term of apportionment of taxes on real property rather than the rules of Regulations
30 days or more, the deduction for vehicle between seller and purchaser. section 1.882-5, to allocate interest
lease expense may have to be reduced by expense and does not file Schedule I, then
an amount includible in income called the Do not reduce the corporation's
the taxpayer has forfeited its right to make
have an inclusion amount if: CAUTION Medicare taxes by the
“inclusion amount.” The corporation may ! deduction for social security and the Regulations section 1.882-5 method
nonrefundable and refundable portions of elections for such applicable year or years.
And the vehicle's FMV any FFCRA and ARP credits for qualified In this case, under certain circumstances,
The lease term on the first day of the sick and family leave wages claimed on its the Director of Field Operations may make
began: lease exceeded: employment tax returns. Instead, report any or all of the binding elections provided
this amount as income on Section II, under Regulations section 1.882-5 in
Cars (excluding line 10. accordance with Regulations section
trucks and vans) 1.882-5(a)(7)(ii) (and may make the
binding partnership basis apportionments
After 12/31/22 but $60,000 See section 906(b)(1) for rules election under Regulations section
before 1/1/24 concerning certain foreign taxes imposed 1.884-1(d)(3)(v)) on behalf of the
After 12/31/21 but $56,000 on income from U.S. sources that may not corporation.
before 1/1/23 be deducted or credited.
After 12/31/20 but before 1/1/22 $51,000 Line 19. Charitable Contributions
Line 18. Interest Expense From
After 12/31/17 but before 1/1/21 $50,000
Schedule I, Line 25 Note. This deduction is allowed for all
After 12/31/12 but before 1/1/18 $19,000 contributions, whether or not connected
Trucks and vans Enter the interest expense from Schedule I with income that is effectively connected
After 12/31/22 but $60,000 (Form 1120-F), line 25. Attach Schedule I with the conduct of a trade or business in
before 1/1/24 to the Form 1120-F. See Schedule I and its the United States. See section 882(c)(1)
separate instructions for additional (B).
After 12/31/21 but $56,000 information relating to the allocation of
before 1/1/23 interest expense to ECI and the amount Enter contributions or gifts actually paid
After 12/31/20 but before 1/1/22 $51,000 that may be claimed as a deduction on within the tax year to or for the use of
After 12/31/17 but before 1/1/21 $50,000 Form 1120-F, Section II, line 18. charitable and governmental organizations
described in section 170(c) and any
After 12/31/13 but before 1/1/18 $19,500 Treaty-based interest expense alloca- unused contributions carried over from
tion methods. The three-step formula prior years. Special rules and limits apply
After 12/31/09 but before 1/1/14 $19,000 under Regulations section 1.882-5 to contributions to organizations
provides the exclusive rules for conducting lobbying activities. See section
determining the interest expense 170(f)(9).
attributable to the business profits of a
See Pub. 463, Travel, Gift, and Car permanent establishment under a U.S. Corporations reporting taxable income
Expenses, for instructions on figuring the income tax treaty, other than treaties that on the accrual method may elect to treat
inclusion amount. expressly permit attribution of business as paid during the tax year any
profits to a U.S. permanent establishment contributions paid by the due date for filing
Note. The inclusion amount for lease under application of the OECD Transfer Form 1120-F (not including extensions), if
terms beginning in 2024 will be published Pricing Guidelines, by analogy. the contributions were authorized by the

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board of directors during the tax year. Contributions of $250 or more. A For more information on charitable
Attach a declaration to the return stating corporation can deduct a contribution of contributions, including substantiation and
that the resolution authorizing the $250 or more only if it gets a written recordkeeping requirements, see section
contributions was adopted by the board of acknowledgment from the donee 170 and the related regulations, and Pub.
directors during the tax year. The organization that shows the amount of 526. For other special rules that apply to
declaration must include the date the cash contributed, describes any property corporations, see Pub. 542.
resolution was adopted. See section contributed (but not its value), and either
170(a)(2)(B). gives a description and a good faith Line 20. Depreciation
Limitation on deduction. Generally, the estimate of the value of any goods or
total amount claimed may not exceed 10% services provided in return for the Include on line 20 depreciation and the
of taxable income (line 31) computed contribution or states that no goods or cost of certain property that the
without regard to the following. services were provided in return for the corporation elected to expense under
• Any deduction for contributions. contribution. The acknowledgment must section 179. Enter the amount from Form
• The special deductions on line 30b. be obtained by the due date (including 4562, but include on line 20 only amounts
• The limitation under section 249 on the extensions) of the corporation's return, or, not claimed on Form 1125-A or elsewhere
deduction for bond premium. if earlier, the date the return is filed. Do not on the return. See Form 4562 and the
• Any NOL carryback to the tax year attach the acknowledgment to the tax Instructions for Form 4562.
under section 172. return, but keep it with the corporation's
• Any capital loss carryback to the tax records.
Line 21. Depletion
year under section 1212(a)(1). Contributions of property other than
Carryover. Charitable contributions over cash. If a corporation (other than a If the corporation has an economic interest
the 10% limitation cannot be deducted for closely held or personal service in mineral property or standing timber, it
the tax year but can be carried over to the corporation) contributes property other can take a deduction for depletion. More
next 5 tax years. See the exception below than cash and claims a deduction of more than one person can have an economic
for farmers and ranchers. than $500 for the property, it must attach a interest in the same mineral deposit or
statement to the return describing the kind
Special rules apply if the corporation timber. In the case of leased property, the
of property contributed and the method
has an NOL carryover to the tax year. In depletion deduction is divided between
used to determine its FMV. Closely held
figuring the charitable contributions the lessor and the lessee.
corporations and personal service
deduction for the current tax year, the 10%
corporations must complete Form 8283,
limit is applied using the corporation’s See sections 613 and 613A for
Noncash Charitable Contributions, and
taxable income after taking into account percentage depletion rates applicable to
attach it to their returns. All other
any deduction for the NOL. natural deposits. Also, see section 291 for
corporations must generally complete and
To figure the amount of any remaining attach Form 8283 to their returns for the limitation on the depletion deduction
NOL carryover to later years, taxable contributions of property (other than for iron ore and coal (including lignite).
income must be modified (see section money) if the total claimed deduction for
172(b)). To the extent that contributions all property contributed was more than Attach Form T (Timber), Forest
are used to reduce taxable income for this $5,000. Special rules apply to the Activities Schedule, if a deduction for
purpose and increase an NOL carryover, a contribution of certain property. See the depletion of timber is claimed.
contributions carryover is not allowed. See Instructions for Form 8283.
section 170(d)(2)(B). Foreign intangible drilling costs and
Qualified conservation foreign exploration and development costs
Suspension of 10% limitation for farm- contributions. Special rules apply to must either be added to the corporation's
ers and ranchers. A qualified farmer or qualified conservation contributions, basis for cost depletion purposes or be
rancher (as defined in section 170(b)(1)(E) including contributions of certain deducted ratably over a 10-year period.
(v)) that does not have publicly traded easements on buildings located in a See sections 263(i), 616, and 617 for
stock may deduct contributions of registered historic district. See section details.
qualified conservation property without 170(h) and Pub. 526, Charitable
regard to the general 10% limit. Contributions.
The total amount of the contribution Line 23. Pension, Profit-Sharing,
claimed for the qualified conservation Other special rules. The corporation etc., Plans
property cannot exceed 100% of the must reduce its deduction for contributions
excess of the corporation's taxable income of certain ordinary income and capital gain
(as computed above, substituting "100%" property. See section 170(e). Enter the deduction for contributions to
qualified pension, profit-sharing, or other
for "10%") over all other allowable A larger deduction is allowed for certain funded deferred compensation plans.
charitable contributions. Any excess contributions including: Employers who maintain such a plan must
qualified conservation contributions can • Inventory and other property to certain generally file one of the forms listed below
be carried over to the next 15 years, organizations for use in the care of the ill, unless exempt from filing under
subject to the 100% limitation. See needy, or infants (see section 170(e)(3)), regulations or other applicable guidance,
sections 170(b)(2)(B) and (C). including qualified contributions of even if the plan is not a qualified plan
“apparently wholesome food”; and under the Internal Revenue Code. The
•
Cash contributions. For contributions of Scientific equipment used for research filing requirement applies even if the
cash, check, or other monetary gifts to institutions of higher learning or to corporation does not claim a deduction for
(regardless of the amount), the certain scientific research organizations the current tax year. There are penalties
corporation must maintain a bank record, (other than by personal holding for failure to file these forms on time and
or a receipt, letter, or other written companies and service organizations). for overstating the pension plan deduction.
communication from the donee See section 170(e)(4). See sections 6652(e) and 6662(f). Also,
organization indicating the name of the
organization, the date of the contribution, see the instructions for the applicable
and the amount of the contribution. form.

Instructions for Form 1120-F (2023) 23

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Form 5500, Annual Return/Report of 12 through 14, lines 16 and 17, lines 19 • Dividends paid in cash on stock held by
Employee Benefit Plan. through 24, and line 27 are also reconciled an employee stock ownership plan.
to ECI on Schedule H (Form 1120-F), Part However, a deduction may be taken for
Form 5500-SF, Short Form Annual IV, lines 38 through 41. these dividends only if, according to the
Return/Report of Small Employee Benefit plan, the dividends are:
Plan. File this form instead of Form 5500
generally if there were under 100 Line 27. Other Deductions 1. Paid in cash directly to the plan
participants or beneficiaries;
participants at the beginning of the plan
year. Attach a statement, listing by type and 2. Paid to the plan, which distributes
amount, all allowable deductions that are them in cash to the plan participants or
Note. Form 5500 and Form 5500-SF not deductible elsewhere on Form 1120-F. their beneficiaries no later than 90 days
must be filed electronically under the Enter the total on line 27. after the end of the plan year in which the
computerized ERISA Filing Acceptance dividends are paid;
System (EFAST2). For more information, Examples of other deductions include
see the EFAST2 website at the following. 3. At the election of such participants
EFAST.dol.gov. • Amortization. See Part VI of Form 4562. or their beneficiaries (a) payable as
• Certain costs of a qualified film, provided under (1) or (2) above, or (b) paid
Form 5500-EZ, Annual Return of A television, or live theatrical production to the plan and reinvested in qualifying
One-Participant (Owners/Partners and commencing before January 1, 2026 (after employer securities; or
Their Spouses) Retirement Plan or A December 31, 2015, and before January 4. Used to make payments on a loan
Foreign Plan. File this form for a plan that 1, 2026, for a live theatrical production). described in section 404(a)(9).
only covers the owner (or the owner and This deduction does not apply to any
spouse) or a foreign plan that is required portion of the aggregate cost of the See section 404(k) for more details and
to file an annual return and does not file production above $15 million. There is a the limitation on certain dividends.
the annual return electronically on Form higher allowance for production in certain
5500-SF. See the Instructions for Form areas. See section 181 and the related Do not deduct expenses such as the
5500-EZ. regulations. following.
Note. Certain film, television, or live • Amounts paid or incurred to, or at the
Line 24. Employee Benefit theatrical productions acquired and direction of, a government or
placed in service after September 27, governmental entity for the violation, or
Programs 2017 (for which a deduction would have investigation or inquiry into the potential
been allowable under section 181 without violation, of a law. However, see Fines or
Enter contributions to employee benefit regard to the dollar limitation), are similar penalties, later.
programs not claimed elsewhere on the qualified property eligible for the special • Any amount that is allocable to a class
return (for example, insurance or health depreciation allowance under section of exempt income. See section 265(b) for
and welfare programs) that are not an 168(k). See the Instructions for Form exceptions.
incidental part of a pension, profit-sharing, 4562. • Lobbying expenses. However, see
etc., plan included on line 23. • Certain business start-up and exceptions (discussed later).
organizational costs (discussed earlier • Amounts paid or incurred for any
Line 26. Deductions Allocated and under Limitations on Deductions). settlement, payout, or attorney fees
Apportioned to ECI From • Reforestation costs. The corporation related to sexual harassment or sexual
may elect to deduct up to $10,000 of abuse, if such payments are subject to a
Schedule H, Line 20 qualifying reforestation expenses for each nondisclosure agreement. See section
qualified timber property. The corporation 162(q).
Enter the total home office deductions may elect to amortize over 84 months any Travel, meals, and entertainment.
allocated and apportioned to ECI from amount not deducted. See the Instructions Subject to limitations and restrictions
Schedule H (Form 1120-F), line 20. See for Form T (Timber), Forest Activities discussed below, a corporation may
Schedule H and its separate instructions Schedule. deduct ordinary and necessary travel,
for additional information. Attach Insurance premiums. meal, and non-entertainment expenses
•
Schedule H to the Form 1120-F. Legal and professional fees. paid or incurred in its trade or business.
•
• Supplies used and consumed in the Generally, entertainment expenses,
Deductions definitely related and business. membership dues, and facilities used in
indirectly allocated and apportioned to ECI • Travel, meals, and entertainment connection with these activities cannot be
that are not includible on Form 1120-F, expenses. Special rules apply (discussed deducted. In addition, no deduction is
Section II, lines 12 through 14, 16 and 17, later). generally allowed for qualified
19 through 25, and 27 are reported on • Utilities. transportation fringe benefits. Special
Schedule H, line 20, and on Form 1120-F, • Ordinary losses from trade or business rules apply to deductions for gifts, luxury
line 26. Deductions that are includible on activities of a partnership (from water travel, and convention expenses.
Form 1120-F, Section II, lines 12 through Schedule K-3 (Form 1065)). Do not offset See section 274 and Pub. 463 for details.
14, 16 and 17, 19 through 24, and 27 are ordinary income against ordinary losses.
those derived from set(s) of books and Instead, include the income on line 10. Travel. The corporation cannot deduct
records required to be reported on Form Show the partnership's name, address, travel expenses of any individual
1120-F, Schedule L. and EIN on Schedule P (Form 1120-F). If accompanying a corporate officer or
the amount is from more than one employee, including a spouse or
Note. The books and records of a U.S. partnership, identify the amount from each dependent of the officer or employee,
office where a trade or business is carried partnership on Schedule P. unless:
on do not necessarily constitute all of the Any net negative section 481(a) • That individual is an employee of the
•
books and records required to be reported adjustment. See Section 481(a) corporation, and
on Schedule L. See the instructions for adjustment, earlier. • That individual’s travel is for a bona fide
Schedule L, later. Deductions that are business purpose and would otherwise be
reported on Form 1120-F, Section II, lines deductible by that individual.

24 Instructions for Form 1120-F (2023)

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Meals. Generally, the corporation can on Form 1099-NEC for an independent The at-risk rules do not apply to:
deduct only 50% of the amount otherwise contractor. • Holding real property placed in service
allowable for non-entertainment related However, if the recipient is an officer, by the taxpayer before 1987;
meal expenses paid or incurred in its trade director, beneficial owner (directly or • Equipment leasing under sections
or business. indirectly), or other “specified individual” 465(c)(4), (5), and (6); or
Meals not separately stated from (as defined in section 274(e)(2)(B) and • Any qualifying business of a qualified
entertainment are generally not Regulations section 1.274-9(b)), special corporation under section 465(c)(7).
deductible. In addition (subject to rules apply. However, the at-risk rules do apply to
exceptions under section 274(k)(2)): the holding of mineral property.
• Meals must not be lavish or Fines or similar penalties. Generally,
extravagant, and no deduction is allowed for fines or similar If the at-risk rules apply, adjust the
• An employee of the corporation must be penalties paid or incurred to, or at the amount on this line for any section 465(d)
present at the meal. direction of, a government or losses. These losses are limited to the
governmental entity for violating any law, amount for which the corporation is at risk
See section 274(n)(3) for a special rule or for the investigation or inquiry into the for each separate activity at the close of
that applies to expenses for meals potential violation of a law, except: the tax year. If the corporation is involved
consumed by individuals subject to the • Amounts that constitute restitution or in one or more activities, any of which
hours of service limits of the Department remediation of property, incurs a loss for the year, report the losses
of Transportation. • Amounts paid to come into compliance for each activity separately. Attach Form
Qualified transportation fringes with the law, 6198, At-Risk Limitations, showing the
(QTFs). Generally, no deduction is • Amounts paid or incurred as the result amount at risk and gross income and
allowed under section 274(a)(4) for QTFs of orders or agreements in which no deductions for the activities with the
provided by employers to their employees. government or governmental entity is a losses.
QTFs are defined in section 132(f)(1) and party, and If the corporation sells or otherwise
include: • Amounts paid or incurred for taxes due. disposes of an asset or its interest (either
• Transportation in a commuter highway No deduction is allowed unless the total or partial) in an activity to which the
vehicle between the employee’s residence amounts are specifically identified in the at-risk rules apply, determine the net profit
and place of employment, order or agreement and the corporation or loss from the activity by combining the
• Any transit pass, and establishes that the amounts were paid for gain or loss on the sale or disposition with
• Qualified parking. that purpose. Also, any amount paid or the profit or loss from the activity. If the
See section 274 and Pub. 15-B, incurred as reimbursement to the corporation has a net loss, it may be
Employers Tax Guide to Fringe Benefits, government for the costs of any limited because of the at-risk rules.
for details. investigation or litigation are not eligible for Treat any loss from an activity not
the exceptions and are nondeductible. allowed for the tax year as a deduction
Membership dues. The corporation See section 162(f). allocable to the activity in the next tax year.
can deduct amounts paid or incurred for
membership dues in civic or public service Lobbying expenses. Generally, lobbying
organizations, professional organizations expenses are not deductible. These Line 30a. Net Operating Loss
(such as bar and medical associations), expenses include: Deduction
business leagues, trade associations, • Amounts paid or incurred in connection
chambers of commerce, boards of trade, with influencing federal, state, or local A corporation may use the NOL incurred in
and real estate boards. However, no legislation; or one tax year to reduce its taxable income
deduction is allowed if a principal purpose • Amounts paid or incurred in connection in another tax year. Enter on line 30a the
of the organization is to entertain or with any communication with certain total NOL carryovers from other tax years,
provide entertainment facilities for federal executive branch officials in an but do not enter more than the
members or their guests. In addition, attempt to influence the official actions or corporation's taxable income (after special
corporations cannot deduct membership positions of the officials. See Regulations deductions). Attach a statement showing
dues in any club organized for business, section 1.162-29 for the definition of the computation of the NOL deduction.
pleasure, recreation, or other social “influencing legislation.” Also, complete item S on page 2 of the
purpose. This includes country clubs, golf Dues and other similar amounts paid to form.
and athletic clubs, airline and hotel clubs, certain tax-exempt organizations may not
and clubs operated to provide meals be deductible. The following special rules apply.
• If an ownership change (described in
under conditions favorable to business If certain in-house lobbying section 382(g)) occurs, the amount of the
discussion. expenditures do not exceed $2,000, they taxable income of a loss corporation that
Entertainment facilities. Generally, are deductible. may be offset by the pre-change NOL
the corporation cannot deduct an expense carryovers may be limited. See section
paid or incurred for a facility (such as a Line 29. Taxable Income Before 382 and the related regulations. A loss
yacht or hunting lodge) used for an activity NOL Deduction and Special corporation must include the information
usually considered entertainment, statement as provided in Regulations
amusement, or recreation. Deductions
section 1.382-11(a) with its income tax
Amounts treated as compensation. At-risk rules. Generally, special at-risk return for each tax year that it is a loss
Generally, the corporation may be able to rules under section 465 apply to closely corporation in which an ownership shift,
deduct otherwise nondeductible held corporations (see Passive activity equity structure shift, or other transaction
entertainment, amusement, or recreation limitations, earlier) engaged in any activity described in Temporary Regulations
expenses if the amounts are treated as as a trade or business or for the section 1.382-2T(a)(2)(i) occurs. If the
compensation to the recipient and production of income. These corporations corporation makes the
reported on Form W-2 for an employee or may have to adjust the amount on line 29 closing-of-the-books election, see
(see below). Regulations section 1.382-6(b).

Instructions for Form 1120-F (2023) 25

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The limitations under section 382 do any NOL carryover to the tax year from tax would otherwise be subject to the
not apply to certain ownership changes years beginning before January 1, 2018. dividends-received deduction under
after February 17, 2009, made pursuant to section 243(a)(1), 243(c), or 245(a).
a restructuring plan under the Emergency An exception applies for NOLs of Generally, debt-financed stock is stock
Economic Stabilization Act of 2008. See insurance companies other than life that the corporation acquired by incurring
section 382(n). insurance companies. The 80% taxable a debt (for example, it borrowed money to
income limit does not apply to these buy the stock).
For guidance in applying section 382 to entities. See sections 172(b) and (f). Dividends received from a RIC on
loss corporations whose instruments were •
acquired by Treasury under certain Schedule C—Dividends and debt-financed stock. The amount of
dividends eligible for the
programs under the Emergency Economic Special Deductions dividends-received deduction is limited by
Stabilization Act of 2008, see Notice For purposes of the 20% ownership test section 854(b). The corporation should
2010-2, 2010-2 I.R.B. 251, available at on lines 1 through 7, the percentage of receive a notice from the RIC specifying
IRS.gov/irb/2010-02_IRB#NOT-2010-2. stock owned by the corporation is based the amount of dividends that qualify for the
• If a corporation acquires control of on voting power and value of the stock. deduction.
another corporation (or acquires its assets
in a reorganization), the amount of
pre-acquisition losses that may offset Line 1, Column (a) Line 3, Columns (b) and (c)
recognized built-in gain may be limited
(see section 384). Enter dividends (except those received on Dividends received on certain
• If a corporation elects the alternative tax certain debt-financed stock acquired after debt-financed stock acquired after July 18,
on qualifying shipping activities under July 18, 1984—see section 246A) that: 1984, are not entitled to the full 50% or
section 1354, no deduction is allowed for • Are received from 65% dividends-received deduction under
an NOL attributable to the qualifying less-than-20%-owned domestic section 243 or 245(a). The 50% or 65%
shipping activities to the extent that the corporations subject to income tax, and deduction is reduced by a percentage that
loss is carried forward from a tax year • Qualify for the 50% deduction under is related to the amount of debt incurred to
preceding the first tax year for which the section 243(a)(1). acquire the stock. See section 246A. Also,
alternative tax election was made. See see section 245(a) before making this
section 1358(b)(2). Also, include on line 1 the following. computation for an additional limitation
• Taxable distributions from an IC-DISC that applies to certain dividends received
For more details on the NOL deduction, or former DISC that are designated as from foreign corporations. Attach a
see section 172 and the Instructions for eligible for the 50% deduction and certain statement to Form 1120-F showing how
Form 1139. dividends of Federal Home Loan Banks. the amount on line 3, column (c), was
See section 246(a)(2). computed.
Line 30b. Special Deductions • Dividends (except those received on
certain debt-financed stock acquired after
See the instructions for Schedule C, later. July 18, 1984) from a RIC. The amount of Line 4, Column (a)
dividends eligible for the
dividends-received deduction under Enter dividends received on preferred
Line 31. Taxable Income or (Loss) section 243 is limited by section 854(b). stock of a less-than-20%-owned public
Net operating loss (NOL). If line 31 is The corporation should receive a notice utility that is subject to income tax and is
zero or less, the corporation may have an from the RIC specifying the amount of allowed the 23.3% deduction provided in
NOL that may be carried back or forward dividends that qualify for the deduction. sections 244 and 247 (as affected by
P.L.113-295, Div. A, section 221(a)(41)(A),
as a deduction to other tax years. Dec. 19, 2014, 128 Stat. 4043) for
Report so-called dividends or earnings
Only farming losses and losses of an received from mutual savings banks, etc., dividends paid.
insurance company (other than a life as interest. Do not treat them as
insurance company) can be carried back. dividends. Line 5, Column (a)
The carryback period for these losses is 2
years. For NOLs that can be carried back,
the corporation can elect to waive the Line 2, Column (a) Enter dividends received on preferred
carryback period and instead carry the stock of a 20%-or-more-owned public
NOL forward to future tax years. Enter on line 2: utility that is subject to income tax and is
See the instructions for Item R, earlier, • Dividends (except those received on allowed the 26.7% deduction provided in
certain debt-financed stock acquired after sections 244 and 247 (as affected by
for information on making the election to July 18, 1984) that are received from P.L.113-295, Div. A, section 221(a)(41)(A),
waive the carryback period. See the 20%-or-more-owned domestic Dec. 19, 2014, 128 Stat. 4043) for
Instructions for Form 1139 for other corporations subject to income tax and dividends paid.
special rules and elections. that are subject to the 65% deduction
The NOL deduction for tax year 2023 under section 243(c), and Line 6, Column (a)
cannot exceed the aggregate amount of • Taxable distributions from an IC-DISC
NOLs arising in tax years beginning before or former DISC that are considered eligible Enter the U.S.-source portion of dividends
January 1, 2018, carried to such year plus for the 65% deduction. that:
the lesser of:
• Are received from
1. The aggregate amount of NOLs Line 3, Column (a) less-than-20%-owned foreign
arising in tax years beginning after corporations, and
December 31, 2017, carried to such tax Enter the following. • Qualify for the 50% deduction under
year; or • Dividends received on certain section 245(a). To qualify for the 50%
2. 80% of the excess, if any, of taxable debt-financed stock acquired after July 18, deduction, the corporation must own at
income determined without any NOL 1984, from domestic and foreign least 10% of the stock of the foreign
deduction or section 199A deduction, over corporations subject to income tax that corporation by vote and value.

26 Instructions for Form 1120-F (2023)

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                           Worksheet for Schedule C, Line 8                                                                                              Keep for Your Records
  1.     Refigure Section II, line 29, without any adjustment under section 1059, and without any capital loss carryback to 
         the tax year under section 1212(a)(1) .     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1.  
  2.     Multiply line 1 by 65% (0.65) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2.  
  3.     Add lines 2, 5, and 7, column (c), and the part of the deduction on line 3, column (c), that is attributable to 
         dividends from 20%-or-more-owned corporations .             . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3.  
  4.     Enter the smaller of line 2 or line 3. If line 3 is greater than line 2, stop here; enter the amount from line 4 on line 8, 
         column (c), and do not complete the rest of this worksheet .            . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4.  
  5.     Enter the total amount of dividends from 20%-or-more-owned corporations that are included on lines 2, 3, 5, and 
         7, column (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.  
  6.     Subtract line 5 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.  
  7.     Multiply line 6 by 50% (0.50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7.  
  8.     Subtract line 3 above from line 8, column (c)       . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   8.  
  9.     Enter the smaller of line 7 or line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   9.  
  10. Dividends-received deduction after limitation (section 246(b)). Add lines 4 and 9. Enter the result here and 
         on line 8, column (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.  

Line 7, Column (a)                                           •   Is a deemed distribution under section                                  46-day holding period rule discussed 
                                                           995(b)(1).                                                                    above.
Enter the U.S.-source portion of dividends                                                                                                   3. Dividends on any share of stock to 
that are received from                                     Line 11, Column (a)                                                           the extent the corporation is under an 
20%-or-more-owned foreign corporations                                                                                                   obligation (including a short sale) to make 
and that qualify for the 65% deduction                     Include the following.                                                        related payments with respect to positions 
under sections 243 and 245(a).                               •   Dividends (other than capital gain                                      in substantially similar or related property.
                                                           distributions reported on Schedule D                                          •   Any other taxable dividend income not 
Line 8, Column (c)                                         (Form 1120), Capital Gains and Losses,                                        properly reported elsewhere on 
                                                           and exempt-interest dividends) that are                                       Schedule C.
Limitation on dividends-received de-                       received from RICs and that are not 
duction. Generally, line 8, column (c),                    subject to the 50% deduction.                                                     If patronage dividends or per-unit retain 
cannot exceed the amount from the                            •   Dividends from tax-exempt                                               allocations are included on line 11, identify 
Worksheet for Schedule C, Line 8.                          organizations.                                                                the total of these amounts in a statement 
However, in a year in which an NOL                           •   Dividends (other than capital gain                                      and attach it to Form 1120-F.
occurs, this limitation does not apply, even               distributions) received from a REIT that 
if the loss is created by the                              qualifies, for the tax year of the trust in                                   Line 12, Column (c)
dividends-received deduction. See                          which the dividends are paid, under 
sections 172(d) and 246(b).                                sections 856 through 860.                                                     Section 247 (as affected by P.L.113-295, 
                                                             •   Dividends not eligible for a dividends-                                 Div. A, section 221(a)(41)(A), Dec. 19, 
Line 9, Column (a)                                         received deduction, which include the                                         2014, 128 Stat. 4043) allows public utilities 
                                                           following.                                                                    a deduction of 40% of the smaller of:
Enter the foreign dividends not reportable                       1. Dividends received on any share of                                   •   Dividends paid on their preferred stock 
on line 3, 6, or 7 of column (a).                          stock held for less than 46 days during the                                   during the tax year, or
                                                           91-day period beginning 45 days before                                        •   Taxable income computed without 
  Attach a statement identifying the                       the ex-dividend date. When counting the                                       regard to this deduction.
amount of each dividend reported on                        number of days the corporation held the 
line 9 and the provision pursuant to which                 stock, you cannot count certain days                                              In a year in which an NOL occurs, 
a deduction is not allowed with respect to                 during which the corporation's risk of loss                                   compute the deduction without regard to 
such dividend.                                             was diminished. See section 246(c)(4)                                         section 247(a)(1)(B).
                                                           and Regulations section 1.246-5 for more 
                                                           details.
Line 10, Column (a)                                                                                                                      Schedule J—Tax Computation
                                                                 2. Dividends received on any share of 
                                                           preferred stock that are attributable to                                      Line 1. Income Tax
Enter taxable distributions from an                        periods totaling more than 366 days if 
IC-DISC or former DISC that are                            such stock was held for less than 91 days                                     Multiply taxable income (Form 1120-F, 
designated as not eligible for a                           during the 181-day period that began 90                                       page 5, Section II, line 31) by 21% (0.21). 
dividends-received deduction.                              days before the ex-dividend date. When                                        Enter this amount on line 1.
                                                           counting the number of days the                                               Increase in tax attributable to partner’s 
  No deduction is allowed under section                    corporation held the stock, you cannot                                        additional reporting year tax. If the 
243 for a dividend from an IC-DISC or                      count certain days during which the                                           taxpayer is a foreign corporate partner and 
former DISC (as defined in section 992(a))                 corporation's risk of loss was diminished.                                    received a Form 8986 from a partnership 
to the extent the dividend:                                See section 246(c)(4) and Regulations                                         that has elected to have each reviewed 
• Is paid out of the corporation's                         section 1.246-5 for more details. Preferred                                   year partner take into account the 
accumulated IC-DISC income or                              dividends attributable to periods totaling                                    partner's share of the adjustments, as 
previously taxed income, or                                less than 367 days are subject to the                                         finally determined, instead of paying the 

Instructions for Form 1120-F (2023)                                                                                                                                              27

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imputed underpayment, the foreign Line 5b. General Business Credit Line 8. Other Taxes
corporate partner (taxpayer) will have to
complete Form 8978 to report adjustments Use Form 3800 to claim any of the general Include any of the following taxes and
shown on the Form 8986 they received business credits. Include on line 5b the interest.
from the partnership. The foreign allowable credit from Form 3800, Part II, Line 8a. Recapture of investment cred-
corporate partner (taxpayer) must line 38. See the Instructions for Form it. If the corporation disposed of
complete a separate Form 8978 to report 3800. investment credit property or changed its
adjustments pertaining to income that is
effectively connected with the conduct of a Also include on line 5b the amount of use before the end of the 5-year recapture
trade or business in the United States any qualified electric vehicle passive period under section 50(a), enter the
under section 882 (an “ECI Form 8978”) activity credits from prior years allowed for increase in tax from Form 4255, Recapture
and a separate Form 8978 to report the current tax year from Form 8834, of Investment Credit. See the Instructions
adjustments pertaining to income from Qualified Electric Vehicle Credit, line 7. for Form 4255.
U.S. sources not effectively connected Attach Form 8834. Line 8b. Recapture of low-income
with the conduct of a trade or business in housing credit. If the corporation
the United States under section 881 (an Line 5c. Credit for Prior Year disposed of property (or there was a
“FDAP Form 8978”). Include any increase reduction in the qualified basis of the
in taxes due from the ECI Form 8978, Minimum Tax property) for which it took the low-income
line 14, in the total for Form 1120-F, housing credit, and the corporation did not
Section II, Schedule J, line 1. On the Enter any allowable credit from Form follow the procedures that would have
dotted line next to line 1, enter “FROM 8827, Credit for Prior Year Minimum prevented recapture of the credit, it may
FORM 8978” and the amount. Attach the Tax—Corporations. Complete and attach owe a tax. See Form 8611, Recapture of
ECI Form 8978 to Form 1120-F. If the ECI Form 8827. Low-Income Housing Credit.
Form 8978, line 14, shows a decrease in
tax, see the instructions for Schedule J, Line 5d. Bond Credits From Form Line 8c. Interest due under the
look-back method for completed
line 6. 8912 long-term contracts. If the corporation
Additional tax under section 197(f). A used the percentage-of-completion
corporation that elects to recognize gain Enter the allowable credits from Form method under section 460(b) for certain
and pay tax on the sale of a section 197 8912, Credit to Holders of Tax Credit long-term contracts, figure any interest
intangible under the related person Bonds, line 12. due or to be refunded using the look-back
exception to the anti-churning rules should method described in section 460(b)(2).
include any additional tax due in the total Line 6. Total Credits Use Form 8697, Interest Computation
for line 1. On the dotted line next to line 1, Under the Look-Back Method for
enter “Section 197” and the amount. See Add lines 5a through 5d. Enter the total on Completed Long-Term Contracts, to figure
section 197(f)(9)(B)(ii). line 6. any interest due or to be refunded. See the
Decrease attributable to partner’s ad- Instructions for Form 8697. Include any
Line 2. Base Erosion Minimum Tax ditional reporting year tax. If the interest on line 8c.
Amount taxpayer is a foreign corporate partner and Line 8d. Interest due under the
received a Form 8986 from a partnership look-back method—income forecast
If the corporation had gross receipts of at that has elected to have each reviewed method. If the corporation used the
least $500 million in any 1 of the 3 tax year partner take into account the income forecast method to depreciate
years preceding the current tax year, partner's share of the adjustments, as property, it must figure any interest due or
complete and attach Form 8991. Enter on finally determined, instead of paying the to be refunded using the look-back
line 2 the base erosion minimum tax imputed underpayment, the foreign method described in section 167(g)(2).
amount from Form 8991, Part IV, line 5e. corporate partner (taxpayer) will have to Use Form 8866 to figure any interest due
See section 59A and the Instructions for complete Form 8978 to report adjustments or to be refunded. See the Instructions for
Form 8991. Also, see the instructions for shown on the Form 8986 they received Form 8866. Include any interest due on
Item DD, earlier. from the partnership. The foreign line 8d.
corporate partner (taxpayer) must
Line 8e. Alternative tax on qualifying
Line 3. Corporate Alternative complete a separate Form 8978 to report
shipping activities. Enter any alternative
adjustments pertaining to income that is
tax on qualifying shipping activities from
Minimum Tax effectively connected with the conduct of a
Form 8902.
trade or business in the United States
Enter on line 3 the amount from Form under section 882 (an “ECI Form 8978”) Line 8f. Other. Include on line 8f
4626, Part II, line 13, if applicable. See the and a separate Form 8978 to report additional taxes and interest such as the
Instructions for Form 4626. adjustments pertaining to income from following. Attach a statement showing the
U.S. sources not effectively connected computation of each item included in the
Line 5a. Foreign Tax Credit with the conduct of a trade or business in total for line 8f and identify the applicable
the United States under section 881 (an Code section and the type of tax or
A foreign corporation engaged in a U.S. “FDAP Form 8978”). Include any decrease interest.
trade or business during the tax year may in taxes due (negative amount) from the • Recapture of Indian employment credit.
take a credit for income, war profits, and ECI Form 8978, line 14, in the total for Generally, if an employer terminates the
excess profits taxes paid, accrued, or Form 1120-F, Section II, Schedule J, employment of a qualified employee less
deemed paid to any foreign country or line 6. On the dotted line next to line 6, than 1 year after the date of initial
U.S. territory for income effectively enter “FROM FORM 8978” and the employment, any Indian employment
connected with the conduct of a trade or amount. Attach the ECI Form 8978 to credit allowed for a prior tax year because
business in the United States. See section Form 1120-F. If the ECI Form 8978, of wages paid or incurred to that employee
906 and Form 1118, Foreign Tax line 14, shows an increase in tax, see the must be recaptured. For details, see Form
Credit—Corporations. instructions for Schedule J, line 1. 8845 and section 45A.

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• Recapture of new markets credit (see (ECTI) (before the NOL deduction and Lines 4a and 4b. U.S. Net Equity
Form 8874, New Markets Credit, and special deductions) to get ECEP.
Form 8874-B, Notice of Recapture Event • Positive adjustments for certain ECI U.S. net equity is U.S. assets reduced by
for New Markets Credit). items that are excluded from ECTI but that U.S. liabilities. U.S. net equity may be less
• Recapture of employer-provided must be included in computing ECEP than zero. See Temporary Regulations
childcare facilities and services credit (see (such as tax-exempt interest income). section 1.884-2T for specific rules
Form 8882). • Positive adjustments for certain items regarding the computation of the foreign
• Interest on deferred tax attributable to deducted in computing ECTI but that may corporation's U.S. net equity due to a
certain nondealer installment obligations not be deducted in computing ECEP. reorganization, liquidation, or
(section 453A(c)) and dealer installment Include adjustments for certain deductions incorporation.
obligations (section 453(l)). claimed in computing ECTI, such as:
U.S. assets. In general, property is a U.S.
• Interest due on deferred gain (section 1. Excess of percentage depletion
asset if all income from its use and all gain
1260(b)). over cost depletion,
• Recapture of section 45Q carbon oxide from its disposition (if used or sold on the
sequestration credit (see Form 8933, Part 2. Excess of accelerated depreciation last day of the tax year) are or would be
Ill, line 22). over straight line depreciation (but only if ECI. The amount of property taken into
20% or more of the foreign corporation's account as a U.S. asset is the adjusted
gross income from all sources is U.S. basis (for purposes of computing earnings
Section III—Branch Profits source), and and profits) of the property. Special rules
Tax and Tax on Excess 3. Capital loss carrybacks and exist for specific types of property, such as
Interest carryovers. depreciable property, inventory, and
• Negative adjustments for certain installment obligations. Special rules also
Part I—Branch Profits Tax deductible items (that are allocable to ECI) exist to determine the amount of a
Section 884(a) imposes a 30% branch that may not be deducted in computing partnership interest that is treated as a
profits tax on the after-tax earnings of a ECTI but that must be deducted in U.S. asset. See Regulations section
foreign corporation's U.S. trade or computing ECEP (for example, federal 1.884-1(d).
business (that is, effectively connected income taxes, capital losses in excess of U.S. liabilities. In general, U.S. liabilities
earnings and profits (ECEP)) that are not capital gains, and interest and expenses are U.S.-connected liabilities of a foreign
reinvested in a U.S. trade or business by that are not deductible under section 265). corporation (determined under
the close of the tax year, or are disinvested Regulations section 1.882-5), computed
in a later tax year. Changes in the value of Note. Do not reduce ECEP by any
the equity of the foreign corporation's U.S. dividends or other distributions made by as of the end of the tax year, rather than as
trade or business (that is, U.S. net equity) the foreign corporation to its shareholders an average, as required under Regulations
are used as a measure of whether during the year. section 1.882-5. Special rules may apply
to foreign insurance companies. For more
earnings have been reinvested in, or See Temporary Regulations section details, see Regulations section
disinvested from, a U.S. trade or business. 1.884-2T for any adjustments to ECEP 1.884-1(e).
An increase in U.S. net equity during the due to a reorganization, liquidation, or
tax year is generally treated as a incorporation. If the corporation is electing to reduce
reinvestment of earnings for the current liabilities under Regulations section
tax year. A decrease in U.S. net equity is Exceptions. Do not include the following 1.884-1(e)(3), attach a statement that it is
generally treated as a disinvestment of types of income when computing ECEP. making the election and indicate the
prior year's earnings that have not • Income from the operation of ships or amount of the reduction of U.S. liabilities
previously been subject to the branch aircraft exempt from taxation under section and the corresponding reduction in
profits tax. 883(a)(1) or (2). interest expense. The aggregate amount
• FSC income and distributions treated of the corporation's liability reduction
The amount subject to the branch as ECI under section 921(d) or 926(b), as elections is also required to be reported on
profits tax for the tax year is the dividend in effect before their repeal, that are not Schedule I (Form 1120-F), line 7b.
equivalent amount. See Regulations otherwise ECI.
section 1.884-1(b). • Gain on the disposition of an interest in Reporting requirements. In the
Other entities subject to the branch a domestic corporation that is a U.S. real statements required for lines 4a and 4b,
profits tax. property interest under section 897(c)(1) report U.S. assets according to the
• A foreign corporate partner of a (A)(ii) if the gain is not otherwise ECI. categories of U.S. assets in Regulations
partnership engaged in a U.S. trade or • Related person insurance company section 1.884-1(d). For U.S. liabilities,
business is subject to the branch profits income that a taxpayer elects to treat as show the formula used to calculate the
tax on its ECEP attributable to its ECI under section 953(c)(3)(C) if the U.S. liabilities figure.
distributive share of ECI. income is not otherwise ECI.
• A foreign government is subject to both • Income that is exempt from tax under Line 6. Branch Profits Tax
the branch profits tax and the branch-level section 892.
interest tax. However, no branch profits tax • Interest income derived by a Qualification for treaty benefits. In
or branch-level interest tax will be imposed possession bank from U.S. obligations if general, a foreign corporation must be a
on ECEP and interest accrued prior to the interest is treated as ECI under section qualified resident (see definition later) in
September 11, 1992. See Regulations 882(e) and is not otherwise ECI. the tax year in which it has a dividend
equivalent amount to obtain treaty benefits
section 1.884-0. for the branch profits tax. It must also meet
Note. Deductions and other adjustments
attributable (under the principles of the requirements of any limitation on
Line 2 Regulations section 1.861-8) to the types benefits article in the treaty. However, a
of income not includible in ECEP listed foreign corporation is not required to be a
Attach a statement showing the following above do not reduce ECEP. qualified resident if it meets the
adjustments (based on the principles of requirements of a limitation on benefits
section 312) to the corporation's line 1 article of an income tax treaty that entered
effectively connected taxable income into force after December 31, 1986.

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Treaties other than income tax treaties do Regulations section 1.884-2T(a)) during U.S. trade or business of the foreign
not exempt a foreign corporation from the the tax year, enter zero on line 6, and corporation (including capitalized and
branch profits tax. complete line 11 at the bottom of page 6 of other nondeductible interest).
Form 1120-F.
Foreign corporations that meet the re- Important. See the instructions for
quirements of the limitation on bene- In general, a foreign corporation has
fits article of an income tax treaty that terminated its U.S. trade or business if it Line 10. Tax on Excess Interest, later, to
entered into force after December 31, no longer has any U.S. assets, except determine if the foreign corporation is
1986. Most limitation on benefits articles those retained to pay off liabilities. The exempt from the tax on excess interest. If it
of treaties that entered into force after foreign corporation (or a related is exempt from the tax, and not simply
December 31, 1986, include a series of corporation) may not use assets from the subject to a reduced rate of tax, do not
objective tests including ownership tests terminated U.S. trade or business or the complete Part II of Section III. However, be
(generally describing the circumstances proceeds from their sale in a U.S. trade or sure to complete item W(1) on page 2 of
under which individuals, publicly traded business within 3 years after the complete Form 1120-F.
corporations, subsidiaries of publicly termination. The foreign corporation must Line 7a
traded corporations, etc., will be treated as also attach Form 8848 extending the
Enter the amount of interest expense
qualified residents under a treaty), a base period for assessment for the year of
deduction allocable to ECI under
erosion test, and a trade or business test. complete termination to a date not earlier
Regulations section 1.882-5, from
These tests are self-executing. A person than the close of the sixth year following
Section II, line 18.
that does not meet these objective tests the close of that tax year.
may still be granted benefits under the Effect of complete liquidation or reor- Lines 7b and 7c
treaty (and may be treated as a qualified ganization. If a foreign corporation Lines 7b and 7c reconcile the deduction
resident for branch profits tax purposes) at transfers its U.S. assets in a liquidation or claimed in Section II, line 18, with the
the discretion of the Competent Authority. reorganization described in section amount of interest expense allocable to
See Rev. Proc. 2015-40, 2015-35 I.R.B. 381(a), see Temporary Regulations ECI under Regulations section 1.882-5.
236, available at IRS.gov/irb/ section 1.884-2T(c). If the transferee is a Amounts that increase or decrease the
2015-35_IRB#RP-2015-40, or its domestic corporation, the foreign amount allocable to ECI are reported on
successor. corporation must also file Form 8848. See line 7b from Schedule I (Form 1120-F),
Foreign corporations that do not meet Temporary Regulations section line 24g. Line 7c reconciles to the amount
the requirements of a limitation on 1.884-2T(c) and Regulations section of interest expense reported on Schedule I
benefits article of an income tax treaty 1.884-2(c)(2)(iii). (Form 1120-F), line 23. Lines 7b and 7c
are completed as follows.
that entered into force after December Effect of incorporation under section
31, 1986. A foreign corporation that does 351. If a foreign corporation transfers all Line 7b. Enter the inverse of the
not meet the requirements of a limitation or a part of its U.S. assets to a domestic amount reported on Schedule I (Form
on benefits article of an income tax treaty corporation in a transaction that qualifies 1120-F), line 24g. For example, if line 24g
that entered into force after December 31, under section 351, see Temporary is negative, enter as a positive number. If
1986, is a qualified resident of a country Regulations section 1.884-2T(d) for the line 24g is positive, enter as a negative
if it meets one of the three tests explained rules for determining the foreign number. This is the total amount of interest
in the regulations under section 1.884-5. corporation's branch profits tax liability in expense included in the amount allocable
See these regulations for details on these the year of the transfer, and other rules under Regulations section 1.882-5 that is
tests and certain circumstances in which a applicable to the domestic transferee deferred, capitalized, and disallowed
foreign corporation that does not meet corporation. If a foreign corporation under other sections after application of
these tests may request a ruling to be transfers its U.S. assets to another foreign the interest expense allocation rules.
treated as a qualified resident. corporation, the foreign corporation must
Rate of tax. If treaty benefits apply, the compute its branch profits tax liability Line 7c. Combine lines 7a and 7b.
rate of tax is the rate on branch profits under Regulations section 1.884-1. The combined amount is the amount of
interest expense allocable to ECI for the
specified in the treaty. If the treaty does Coordination with withholding tax. If a year under Regulations section 1.882-5.
not specify a rate for branch profits, the foreign corporation is subject to the branch The amount on line 7c must equal the
rate of tax is the rate specified in the treaty profits tax in a tax year, it will not be amount on Schedule I (Form 1120-F),
for dividends paid by a wholly owned subject to withholding at source (section line 23.
domestic corporation to the foreign 871(a), 881(a), 1441, or 1442) on
corporation. See Regulations section dividends paid out of earnings and profits Line 8. Branch Interest
1.884-1(g) for applicable rates of tax. for the tax year. Foreign banks. Enter from Schedule I
Benefits other than a rate reduction may
be available under certain treaties, such (Form 1120-F) the sum of line 9, column
as the Canadian income tax treaty. Part II—Tax on Excess (c), and line 22, which is the amount of
Interest interest expense included on books that
Note. Many treaties listed in Regulations If a foreign corporation is engaged in a give rise to U.S. booked liabilities and that
section 1.884-1(g)(3) and (g)(4) are no U.S. trade or business, has effectively is directly allocable to ECI under
longer in force and have been replaced by connected gross income, or has U.S. Regulations section 1.882-5(a)(1)(ii). The
more recently ratified treaty agreements. assets for purposes of Regulations section sum of these two amounts is the amount
The corporation should use the applicable 1.882-5, it is subject to the tax on excess of book interest expense paid or accrued
rate of tax specified in the treaty interest. on U.S. booked liabilities defined in
agreement currently in force with the Regulations section 1.882-5(d)(2).
United States. Excess interest is the interest Definition of branch interest. The term
apportioned to ECI of the foreign “branch interest” means interest that is:
Effect of complete termination. If the corporation (including capitalized and
foreign corporation has completely nondeductible interest) under Regulations 1. Paid by a foreign corporation with
terminated its U.S. trade or business section 1.882-5, less branch interest. respect to a liability that is (a) a U.S.
(within the meaning of Temporary Branch interest is the interest paid by the booked liability within the meaning of

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Regulations section 1.882-5(d)(2) (other in 3 above. See Regulations section Schedule L are either the worldwide
than a U.S. booked liability of a partner 1.884-4. assets, liabilities, and equity of the
within the meaning of Regulations section corporation, or, at the taxpayer's election,
Interbranch interest. Any interest paid
1.882-5(d)(2)(vii)), or (b) described in the set(s) of books that contains assets
for interbranch liabilities is disregarded in
Regulations section 1.884-1(e)(2) (relating located in the United States and other
computing branch interest of any
to insurance liabilities on U.S. business assets used in the trade or business
corporation.
and liabilities giving rise to interest conducted in the United States. See
expense that is directly allocated to 80% rule. If 80% or more of a foreign Regulations section 1.6012-2(g)(1)(iii). If a
income from a U.S. asset); or corporation's assets are U.S. assets, the corporation (including a foreign bank)
2. In the case of a foreign corporation foreign corporation's branch interest will chooses worldwide reporting on
other than a bank (as defined in section generally equal the interest reported on Schedule L, the profit and loss results from
585(a)(2)(B) without regard to the second line 7c. However, any interest included on the same set(s) of books must be used to
sentence thereof), a liability specifically line 7c that has accrued but has not been report the adjusted worldwide net income
identified as a liability of a U.S. trade or paid will not be treated as branch interest (loss) results in Part I, line 11, of
business of the foreign corporation on or on line 8 unless an election is made under Schedule M-3 (Form 1120-F).
before the earlier of the date on which the Regulations section 1.884-4(c)(1) to treat
Set(s) of books based on Regulations
first payment of interest is made with such interest as paid in that year for all
section 1.882-5(d)(2). If the corporation
respect to the liability or the due date purposes of the Code.
chooses to limit the Schedule L reporting
(including extensions) of the foreign If this 80% rule applies, check the box to the books that give rise to ECI from
corporation's income tax return for the tax on line 8. assets located in the United States and
year provided that (a) the amount of such other assets used in the trade or business
interest does not exceed 85% of the Note. Branch interest of a foreign conducted in the United States, the total
amount of interest of the foreign corporation is treated as if paid by a assets, liabilities, and equity on the set(s)
corporation that would be excess interest domestic corporation. A foreign of books that contain these characteristics
before taking into account interest treated corporation is thus required to withhold on must be reported on Schedule L. These
as branch interest; (b) certain recipient interest paid by its U.S. trade or business are the total assets, liabilities, and equity
notification requirements are satisfied; and to foreign persons (unless the interest is amounts reflected on the same set(s) of
(c) the liability was not incurred in the exempt from withholding under a treaty or books that gives rise to U.S. ECI and U.S.
ordinary course of a foreign business or the Code) and is required to file Forms booked liabilities (as defined in
secured by foreign assets, or is not a U.S. 1042 and 1042-S for the payments. Regulations sections 1.882-5(d)(2)(ii)(A)
booked liability, or is not an insurance Special treaty shopping rules apply if (foreign corporations other than banks)
liability on a U.S. business, or is not a the recipient of the interest paid by the and 1.882-5(d)(2)(iii) (foreign banking
liability giving rise to interest expense that U.S. trade or business is a foreign corporations)).
is directly allocated to income from a U.S. corporation. The set(s) of books required to be
asset. See Regulations section
1.884-4(b). Line 9b reported on Schedule L by a foreign bank
are the same set(s) of books the foreign
A foreign bank may treat a percentage of bank must use to derive the net book
All other foreign corporations. In its excess interest as if it were interest on income on Schedule M-3 (Form 1120-F),
general, branch interest of foreign deposits and thus exempt from tax. Part I, line 11. The total assets and
corporations (other than banks) includes: Multiply the amount on line 9a by the liabilities required to be reported include
1. Interest on liabilities shown on the greater of 85% (0.85) or the ratio of the the interbranch assets and liabilities and
books and records of the U.S. trade or foreign bank's worldwide interest-bearing the noneffectively connected assets
business for purposes of Regulations deposits to its worldwide interest-bearing reflected on such books. The set(s) of
section 1.882-5(d)(2), liabilities as of the close of the tax year. books that gives rise to U.S. booked
2. Interest on liabilities that are Line 10. Tax on Excess Interest liabilities under Regulations section
secured predominantly by U.S. assets or 1.882-5(d)(2) will generally be the set(s) of
The rate of tax on excess interest is the
that cause certain nondeductible interest books maintained within the United States
same rate that would apply to interest paid
(such as capitalized interest) related to by the corporation's U.S. trade or
to the foreign corporation by a wholly
U.S. assets, and business. However, one or more sets of
owned domestic corporation. The tax on
3. Interest on liabilities identified as excess interest is not prohibited by any books required to be reported on
Schedule L do not have to be maintained
liabilities of the U.S. trade or business on provision in any treaty to which the United
or before the earlier of the date on which States is a party. The corporation may within the United States so long as the
totality of the books reflects a substantial
the first interest payment is made or the qualify for treaty benefits if it meets certain
due date (including extensions) of the requirements. See Line 6. Branch Profits ECI activity that gives rise to inclusion of
the books' third-party liabilities as U.S.
foreign corporation's income tax return for Tax, earlier. The corporation is exempt
booked liabilities under Regulations
the tax year. from the tax on excess interest if the rate
section 1.882-5(d)(2). This determination
However, a liability may not be of tax that would apply to interest paid to
is made under the facts and
identified under 3 above if the liability is the foreign corporation by a wholly owned
circumstances pertaining to materiality of
incurred in the ordinary course of the domestic corporation is zero and the
the ECI activities reflected on the set(s) of
foreign corporation's trade or business, or foreign corporation qualifies for treaty
books in accordance with the
if the liability is secured predominantly by benefits.
requirements of the interest expense
assets that are not U.S. assets. The allocation regulations. See Regulations
interest on liabilities identified in 3 above Schedule L—Balance section 1.882-5(d)(6), example 5. This
that will be treated as interest paid by the Sheets per Books standard is used to determine U.S.
U.S. trade or business is capped at 85% of booked liability qualification regardless of
the interest of the foreign corporation that Balance Sheet per Books whether the foreign corporation uses the
would be excess interest before The balance sheet assets, liabilities, and Adjusted U.S. Booked Liabilities Method
considering interest on liabilities identified equity amounts required to be reported on or the Separate Currency Pools Method to

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allocate interest expense under gives rise to U.S. booked liabilities under parties). Non-U.S. assets in this category
Regulations section 1.882-5. Regulations section 1.882-5(d)(2), then are loans and investments that give rise to
such set of books must be included in the noneffectively connected income. If a
A Schedule L set of books does not consolidation of books reported on taxpayer has investments that give rise to
include a book whose only assets are Schedule L. Combined books reported on ECI in part and non-ECI in part, enter the
those that give rise to ECI under section Schedule L must be adjusted to eliminate proportionate amount of the investment
864(c)(6) or (c)(7). A set of books that has transactions recorded between the asset that gives rise to non-ECI on line 9a.
only ECI assets under section 864(c)(6) reportable books. However, amounts Do not include interbranch amounts on
and (c)(7) is not a set of books that gives recorded between the set(s) of books and line 9a. On line 9b, report the U.S. asset
rise to U.S. booked liabilities under the other divisions of the foreign corporation loans and investments to third parties
applicable test for a bank or a corporation or disregarded entities whose books do (whether related or unrelated parties). U.S.
other than a bank in Regulations section not give rise to U.S. booked liabilities are asset loans and investments are assets
1.882-5(d)(2). Books and records of this not eliminated unless the taxpayer that give rise to ECI. If an investment asset
type are generally books maintained in a chooses worldwide reporting under the gives rise to ECI in part and non-ECI in
foreign location that include assets either general rule in Regulations section part, enter the proportionate amount of the
originated through the material activities of 1.6012-2(g)(1)(iii). investment asset that gives rise to ECI on
the U.S. trade or business or assets line 9b. See Regulations section
formerly held in connection with a U.S. Line 1. Cash. Corporations other than
1.884-1(d)(2)(vii). Attach a statement
trade or business that are no longer held banks include certificates of deposit as
indicating the amount for each category of
or used for that purpose. Transferred cash on line 1. Foreign banks include
loans and investment assets held by the
assets from a set of books of the U.S. certificates of deposit as current or
corporation that give rise to non-ECI
trade or business will generally reflect non-current assets, as the case may be, in
(line 9a) and ECI (line 9b) (for example,
assets described in section 864(c)(6) or their appropriate interbranch, U.S. asset,
loans to customers, securities described in
(c)(7). See Regulations section 1.884-1(d) or non-U.S. asset categories.
Regulations section 1.864-4(c)(5)(ii)(b)
(2)(xi), example 5. Securities that are Line 5. Tax-exempt securities. Include: (3)).
attributable to a U.S. office of a banking, State and local government obligations,
financing, or similar business that are • Line 15. Other non-current interbranch
the interest on which is excludable from
assets. Include on line 15 non-current
transferred to a foreign location of a gross income under section 103(a); and
continuing U.S. banking office remain Stock in a mutual fund or other RIC that interbranch amounts on the Schedule L
attributable to such U.S. office under • books recorded with other non-Schedule L
distributed exempt-interest dividends
books of the corporation (including
Regulations section 1.864-4(c)(5)(iii) and during the tax year of the corporation.
do not constitute assets described in disregarded entities whose books are not
section 864(c)(6) or (c)(7). However, a Line 6. Current assets. On line 6a, enter reportable on Schedule L). Non-current
foreign set of books and records that all current interbranch assets (in assets are determined in accordance with
reflects securities of a banking, financing, accordance with the corporation's the accounting practices of the corporation
or similar business that gives rise to ECI accounting practices) reflected on the on its books and records.
may or may not constitute books that give combined sets of books that are
Line 16. Other non-current, third-party
rise to U.S. booked liabilities under the transacted with other books of the
assets. Report on line 16a, other
facts and circumstances. Generally, a corporation that are not reportable on
non-current, non-U.S. assets on the
relatively small number of securities Schedule L (including books of
Schedule L books with third parties
reflected on the books and records of the disregarded entities, if applicable). On
(whether related or unrelated parties).
home office of a foreign bank that reflects line 6b, enter the current non-U.S. assets
Non-U.S. assets are those that give rise to
predominantly noneffectively connected on the sets of books reportable on
noneffectively connected income. Attach a
assets of the same type will not cause the Schedule L. Non-U.S. assets are
statement to indicate the amount for each
foreign book to give rise to U.S. booked third-party assets (whether with related or
category of non-U.S. assets (for example,
liabilities under Regulations section unrelated parties) that give rise only to
foreign-related party assets that give rise
1.882-5(d)(2)(iii). noneffectively connected income. On
line 6c, enter the current U.S. assets on to non-ECI under section 864(c)(4)(D)).
Report on line 16b other non-current U.S.
If the foreign corporation has more than the Schedule L reportable books. U.S.
assets on the Schedule L books with third
one set of books and records that give rise assets are assets that give rise to ECI and
parties (whether related or unrelated
to U.S. booked liabilities under constitute U.S. assets in whole or in part
parties). U.S. assets are those that give
Regulations section 1.882-5(d)(2), it must under Regulations section 1.884-1(d).
rise to ECI in accordance with Regulations
report the combined amounts shown on all Enter assets held for trading or dealing to
section 1.884-1(d). Attach a statement
such books and records on Schedule L. customers in the applicable category on
indicating the amount for each category of
For example, the books and records of a line 6. Attach a statement to indicate the
assets that give rise to ECI.
foreign insurance company required to file amount for each category of current
Form 1120-F include, but are not limited assets included in line 6, such as money Line 19. Mortgages, notes, bonds pay-
to, amounts reported on statements (for market deposits of banks, trading assets able in less than 1 year. Enter on
example, NAIC statements) filed with a held for the taxpayer's own account, and line 19a interbranch liabilities on the
domestic state insurance authority. If a dealing assets held for customers Schedule L books that are payable in less
foreign bank maintains a consolidation of including amounts recorded on the books than one year to books of the corporation
two or more sets of books that collectively of a global dealing operation that are that are not reportable on Schedule L
give rise to U.S. booked liabilities, the allocated between ECI and non-ECI under (including books of disregarded entities
corporation may report the financial Proposed Regulations section 1.863-3(h) that are not reportable on Schedule L).
consolidation of such set of books on and Proposed Regulations section Report only interbranch liabilities that
Schedule L. See Regulations section 1.864-4(c)(2)(iv). accrue or pay interest on the Schedule L
1.882-5(d)(6), example 5. However, if the books and records to other books of the
foreign corporation has a set of books Line 9. Other loans and investments.
corporation in accordance with the
from a disregarded entity that is not On line 9a, enter the amount of other
corporation's internal accounting
included in a U.S. trade or business non-U.S. asset loans and investments to
practices. Attach a statement indicating
consolidation and such other set of books third parties (whether related or unrelated

32 Instructions for Form 1120-F (2023)

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the amount for each category of • Compensation related to employee • Corporations that (a) are required to file
interbranch liabilities (for example, money stock award plans. Schedule M-3 (Form 1120-F) and have
market deposit liabilities, other short-term If the total adjustment to be entered on less than $50 million total assets at the
liabilities, etc.). On line 19b, enter liabilities line 29 is a negative amount, enter the end of the tax year, or (b) are not required
on the Schedule L books that are payable amount in parentheses. to file Schedule M-3 (Form 1120-F) and
in less than one year to third parties voluntarily file Schedule M-3 (Form
(whether related or unrelated). Attach a Adaptation of Schedule L for 1120-F), must either (i) complete
statement indicating the amount for each treaty-based reporting. The set(s) of Schedule M-3 (Form 1120-F) entirely, or
category of liability owed to third parties books reported on Schedule L for (ii) complete Schedule M-3 (Form 1120-F)
(for example, money market deposit treaty-based reporting purposes will through Part I, and complete
liabilities, other short-term borrowings, generally be the same set(s) of books Schedule M-1 instead of completing Parts
Vostro accounts, etc.). reported on Schedule L, as described II and III of Schedule M-3 (Form 1120-F). If
below. However, certain books that give the corporation chooses to complete
Line 22. Mortgages, notes, bonds pay- rise to ECI might not necessarily give rise Schedule M-1 instead of completing Parts
able in 1 year or more. Enter on line 22a to treaty-based reporting. For example, the II and III of Schedule M-3, the amount on
interbranch liabilities on the Schedule L assets on a set of books could still be Schedule M-1, line 1, must equal the
books that are payable in one year or more attributed to a U.S. office for ECI reporting amount on Schedule M-3, Part I, line 11.
to books of the corporation that are not purposes even when transferred away See the Instructions for Schedule M-3
reportable on Schedule L (including books from the U.S. permanent establishment for (Form 1120-F) for more information.
of disregarded entities that are not treaty reporting purposes (see, for • If Schedule M-3 is not required, the
reportable on Schedule L). Report only example, Regulations section 1.864-4(c) foreign corporation must report on line 1 of
interbranch liabilities that accrue or pay (5)(iii)) if under the facts and Schedule M-1 the net income (loss) per
interest on the Schedule L books and circumstances, such assets also the set of books taken into account on
records to other books of the corporation constitute a set of books that give rise to Schedule L.
in accordance with the corporation's U.S. booked liabilities under Regulations • The foreign corporation must report on
internal accounting practices. Attach a section 1.882-5(d)(2). Under such line 1 of Schedule M-2 the balance of
statement indicating the amounts for each circumstances, the set of books would unappropriated retained earnings per the
category of liability (for example, long-term remain reportable on Schedule L for set(s) of books taken into account on
interbranch borrowings). Enter on line 22b Code-based reporting purposes, but for Schedule L.
liabilities on the Schedule L books that are treaty-based reporting purposes, such
payable in one year or more to third parties transfer may effect attribution to another Note. If Schedule M-3 is filed in lieu of
(whether related or unrelated parties). part of the corporate enterprise under a Schedule M-1, the corporation is still
Attach a statement indicating the amounts functional and factual analysis and no required to file Schedule M-2.
for each category of liability (for example, longer be reportable on Schedule L as
long-term certificates of deposit, other part of the U.S. permanent establishment Do not file Schedules M-1 and M-2
long-term borrowings, etc.). after the transfer is made. Additionally, a (Form 1120-F) if total assets at the end of
Line 24. Other liabilities. Enter on set of books having no ECI or U.S. booked the tax year (line 17, column (d), of
line 24a other interbranch liability amounts liabilities under Regulations section Schedule L) are less than $25,000.
on the Schedule L books owed to other 1.882-5(d)(2) might still constitute a set of
books of the corporation (including to books of the U.S. permanent Schedule W
books of disregarded entities) not establishment because the items recorded Complete Schedule W to determine the
reportable on Schedule L, including thereon are primarily attributable to the portion of the foreign corporation's
amounts that do not give rise to interest U.S. permanent establishment under the overpayment (on Form 1120-F, page 1,
accruals or payments in accordance with application by analogy of the OECD line 8a) resulting from tax deducted and
the corporation's internal accounting Transfer Pricing Guidelines as authorized withheld under Chapter 3 or 4.
practices. Attach a statement indicating by the relevant treaty (for example, see Line 3. The amount to be entered on
the amount for each category of Article 7 (Business Profits) and the Schedule W, line 3, may be computed
interbranch liability reported on line 24a. accompanying Exchange of Notes). In using the general guidelines set forth in
Enter on line 24b other liability amounts on such cases, the set(s) of books that must the following table.
the Schedule L books owed to third parties be reported on Schedule L are those of
(whether related or unrelated parties) the U.S. permanent establishment as
including amounts that do not give rise to determined under the OECD Transfer
interest accruals or payments in Pricing Guidelines.
accordance with the corporation's
accounting practices. Attach a statement Schedules M-1 and M-3
indicating the amount for each category of In completing Schedules M-1 and M-3, the
third-party liability reported on line 24b. following apply.
Line 29. Adjustments to shareholders' • A corporation with total assets of $10
equity. Some examples of adjustments to million or more on the last day of the tax
report on this line include: year that are reportable on Schedule L
• Unrealized gains and losses on must file Schedule M-3 (Form 1120-F)
securities held “available for sale.” instead of Schedule M-1.
• Foreign currency translation • A corporation filing Form 1120-F that is
adjustments. not required to file Schedule M-3 may
• The excess of additional pension voluntarily file Schedule M-3 instead of
liability over unrecognized prior service Schedule M-1. See the Instructions for
cost. Schedule M-3 (Form 1120-F) for more
• Guarantees of employee stock (ESOP) information.
debt.

Instructions for Form 1120-F (2023) 33

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a. Tax on ECI per the tax return.
Enter the amount from Form
1120-F, page 1, line 2 . . . . . a.
b. To properly reflect the
overpayment described in section
6611(e)(4), refigure the taxable
income on Form 1120-F, Section
II, line 31, by excluding from
Section II, lines 8 through 10, any
amount from the disposition of a
U.S. real property interest, any
partnership ECTI allocable to the
corporation under the rules of
Regulations section 1.1446-2,
and for transactions occurring
after December 31, 2018, any
amount from the disposition of an
interest (that is not publicly
traded) in a partnership that is
engaged in the conduct of a trade
or business in the United States
(attach explanation of amounts
excluded) . . . . . . . . . . . . b.
c. Refigured tax on ECI. Using the
refigured taxable income from line
b, refigure the tax for Schedule II
of Form 1120-F on Schedule J
and enter the refigured tax from
Schedule J, line 9, here . . . . c.
d. Subtract line c from line a. Enter
the result here and on
Schedule W, line 3 . . . . . . . d.

34 Instructions for Form 1120-F (2023)

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Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United
States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to
figure and collect the right amount of tax.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form
displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents
may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential,
as required by Internal Revenue Code section 6103.
The estimated burden for taxpayers filing this form is approved under OMB control number 1545-0123.
If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be
happy to hear from you. You can send us comments through IRS.gov/FormsComments. Or you can write to the Internal Revenue
Service, Tax Forms and Publications Division, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send the tax
form to this address. Instead, see Where To File, earlier, near the beginning of the instructions.

Instructions for Form 1120-F (2023) 35

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Form 1120-F                                                             Using the list of activities and codes below,          considered a manufacturer and must use one of the 
                                                                 determine from which activity the company derives the         manufacturing codes (311110-339900).
Principal Business Activity Codes                                largest percentage of its “total receipts.” Total receipts is       Once the principal business activity is determined, 
This list of principal business activities and their             defined as the sum of gross receipts or sales (page 5,        entries must be made on page 1, items F(1), F(2), and 
associated codes is designed to classify an enterprise           line 1a) plus all other income (page 5, lines 4 through       F(3). For item F(1), enter the six-digit code selected 
by the type of activity in which it is engaged to facilitate     10). If the company purchases raw materials and               from the list below. For item F(2), enter the company's 
the administration of the Internal Revenue Code. These           supplies them to a subcontractor to produce the finished      business activity. For item F(3), enter a brief description 
principal business activity codes are based on the North         product, but retains title to the product, the company is     of the principal product or service of the company.
American Industry Classification System.
Agriculture, Forestry, Fishing,           238300             Building Finishing Contractors     326200 Rubber Product Mfg                Miscellaneous Manufacturing
                                                             (including drywall, insulation, 
and Hunting                                                  painting, wallcovering, flooring,  Nonmetallic Mineral Product              339110   Medical Equipment & Supplies 
Crop Production                                              tile, & finished carpentry)        Manufacturing                                     Mfg
111100 Oilseed & Grain Farming            238900             Other Specialty Trade              327100 Clay Product & Refractory Mfg     339900   Other Miscellaneous 
111210 Vegetable & Melon Farming                             Contractors (including site        327210 Glass & Glass Product Mfg                  Manufacturing
       (including potatoes & yams)                           preparation)                       327300 Cement & Concrete Product Mfg     Wholesale Trade
111300 Fruit & Tree Nut Farming           Manufacturing                                         327400 Lime & Gypsum Product Mfg         Merchant Wholesalers, Durable Goods
111400 Greenhouse, Nursery, &             Food Manufacturing                                    327900 Other Nonmetallic Mineral         423100   Motor Vehicle & Motor Vehicle 
                                                                                                       Product Mfg                                Parts & Supplies
       Floriculture Production            311110             Animal Food Mfg                    Primary Metal Manufacturing              423200   Furniture & Home Furnishings
111900 Other Crop Farming (including      311200             Grain & Oilseed Milling            331110 Iron & Steel Mills & Ferroalloy   423300   Lumber & Other Construction 
       tobacco, cotton, sugarcane, hay,   311300             Sugar & Confectionery Product             Mfg                                        Materials
       crop farming)
       peanut, sugar beet & all other                        Mfg                                331200 Steel Product Mfg from            423400   Professional & Commercial 
Animal Production                         311400             Fruit & Vegetable Preserving &            Purchased Steel                            Equipment & Supplies
112111 Beef Cattle Ranching & Farming                        Specialty Food Mfg                 331310 Alumina & Aluminum Production     423500   Metal & Mineral (except 
112112 Cattle Feedlots                    311500             Dairy Product Mfg                         & Processing                               Petroleum)
112120 Dairy Cattle & Milk Production     311610             Animal Slaughtering &              331400 Nonferrous Metal (except          423600   Household Appliances & 
                                                             Processing                                Aluminum) Production & 
112210 Hog & Pig Farming                  311710             Seafood Product Preparation &             Processing                                 Electrical & Electronic Goods
112300 Poultry & Egg Production                              Packaging                          331500 Foundries                         423700   Hardware, & Plumbing & Heating 
                                                                                                                                                  Equipment & Supplies
112400 Sheep & Goat Farming               311800             Bakeries, Tortilla & Dry Pasta Mfg Fabricated Metal Product                 423800   Machinery, Equipment, & 
112510 Aquaculture (including shellfish & 311900             Other Food Mfg (including          Manufacturing                                     Supplies
       finfish farms & hatcheries)                           coffee, tea, flavorings &          332110 Forging & Stamping                423910   Sporting & Recreational Goods & 
112900 Other Animal Production                               seasonings)                        332210 Cutlery & Handtool Mfg                     Supplies
Forestry and Logging                      Beverage and Tobacco Product                          332300 Architectural & Structural Metals 423920   Toy & Hobby Goods & Supplies
113110 Timber Tract Operations            Manufacturing                                                Mfg                               423930   Recyclable Materials
113210 Forest Nurseries & Gathering of    312110             Soft Drink & Ice Mfg               332400 Boiler, Tank, & Shipping          423940   Jewelry, Watch, Precious Stone, 
       Forest Products                    312120             Breweries                                 Container Mfg                              & Precious Metals
113310 Logging                            312130             Wineries                           332510 Hardware Mfg                      423990   Other Miscellaneous Durable 
Fishing, Hunting and Trapping             312140             Distilleries                       332610 Spring & Wire Product Mfg                  Goods
114110 Fishing                            312200             Tobacco Manufacturing              332700 Machine Shops; Turned Product;    Merchant Wholesalers, Nondurable 
114210 Hunting & Trapping                 Textile Mills and Textile Product Mills                      & Screw, Nut, & Bolt Mfg          Goods
Support Activities for Agriculture and    313000             Textile Mills                      332810 Coating, Engraving, Heat          424100   Paper & Paper Products
Forestry                                  314000             Textile Product Mills                     Treating, & Allied Activities     424210   Drugs & Druggists' Sundries
115110 Support Activities for Crop        Apparel Manufacturing                                 332900 Other Fabricated Metal Product    424300   Apparel, Piece Goods, & Notions
                                                                                                       Mfg
       Production (including cotton       315100             Apparel Knitting Mills             Machinery Manufacturing                  424400   Grocery & Related Products
       ginning, soil preparation,         315210             Cut & Sew Apparel Contractors      333100 Agriculture, Construction, &      424500   Farm Product Raw Materials
       planting, & cultivating)                                                                                                          424600   Chemical & Allied Products
115210 Support Activities for Animal      315250             Cut & Sew Apparel Mfg (except             Mining Machinery Mfg
       Production (including farriers)                       Contractors)                       333200 Industrial Machinery Mfg          424700   Petroleum & Petroleum Products
115310 Support Activities For Forestry    315990             Apparel Accessories & Other        333310 Commercial & Service Industry     424800   Beer, Wine, & Distilled Alcoholic 
                                                             Apparel Mfg                               Machinery Mfg                              Beverages
Mining                                    Leather and Allied Product                            333410 Ventilation, Heating,             424910   Farm Supplies
211120 Crude Petroleum Extraction         Manufacturing                                                Air-Conditioning, & Commercial    424920   Book, Periodical, & Newspapers
211130 Natural Gas Extraction             316110             Leather & Hide Tanning &                  Refrigeration Equipment Mfg       424930   Flower, Nursery Stock, & Florists' 
212110 Coal Mining                                           Finishing                          333510 Metalworking Machinery Mfg                 Supplies
212200 Metal Ore Mining                   316210             Footwear Mfg (including rubber &   333610 Engine, Turbine & Power           424940   Tobacco Products & Electronic 
                                                             plastics)                                 Transmission Equipment Mfg                 Cigarettes
212310 Stone Mining & Quarrying           316990             Other Leather & Allied Product     333900 Other General Purpose             424950   Paint, Varnish, & Supplies
212320 Sand, Gravel, Clay, & Ceramic &                       Mfg                                       Machinery Mfg                     424990   Other Miscellaneous Nondurable 
       Refractory Minerals Mining &       Wood Product Manufacturing                            Computer and Electronic Product                   Goods
       Quarrying                          321110             Sawmills & Wood Preservation       Manufacturing                            Wholesale Electronic Markets and 
212390 Other Nonmetallic Mineral          321210             Veneer, Plywood, & Engineered      334110 Computer & Peripheral             Agents and Brokers
       Mining & Quarrying                                    Wood Product Mfg                          Equipment Mfg                     425120   Wholesale Trade Agents & 
213110 Support Activities for Mining      321900             Other Wood Product Mfg             334200 Communications Equipment Mfg               Brokers
Utilities                                 Paper Manufacturing                                   334310 Audio & Video Equipment Mfg       Retail Trade
221100 Electric Power Generation,         322100             Pulp, Paper, & Paperboard Mills    334410 Semiconductor & Other             Motor Vehicle and Parts Dealers
       Transmission & Distribution        322200             Converted Paper Product Mfg               Electronic Component Mfg
221210 Natural Gas Distribution           Printing and Related Support Activities               334500 Navigational, Measuring,          441110   New Car Dealers
221300 Water, Sewage & Other Systems      323100             Printing & Related Support                Electromedical, & Control         441120   Used Car Dealers
221500 Combination Gas & Electric                            Activities                                Instruments Mfg                   441210   Recreational Vehicle Dealers
Construction                              Petroleum and Coal Products                           334610 Manufacturing & Reproducing       441222   Boat Dealers
                                          Manufacturing                                                Magnetic & Optical Media          441227   Motorcycle, ATV, & All Other 
Construction of Buildings                 324110             Petroleum Refineries (including    Electrical Equipment, Appliance, and              Motor Vehicle Dealers
236110 Residential Building Construction                     integrated)                        Component Manufacturing                  441300   Automotive Parts, Accessories, & 
236200 Nonresidential Building            324120             Asphalt Paving, Roofing, &         335100 Electric Lighting Equipment Mfg            Tire Retailers
       Construction                                          Saturated Materials Mfg            335200 Major Household Appliance Mfg     Furniture and Home Furnishings 
Heavy and Civil Engineering               324190             Other Petroleum & Coal Products    335310 Electrical Equipment Mfg          Retailers
Construction                                                 Mfg                                335900 Other Electrical Equipment &      449110   Furniture Retailers
237100 Utility System Construction        Chemical Manufacturing                                       Component Mfg                     449121   Floor Covering Retailers
237210 Land Subdivision                   325100             Basic Chemical Mfg                 Transportation Equipment                 449122   Window Treatment Retailers
237310 Highway, Street, & Bridge          325200             Resin, Synthetic Rubber, &         Manufacturing                            449129   All Other Home Furnishings 
       Construction                                          Artificial & Synthetic Fibers &    336100 Motor Vehicle Mfg                          Retailers
237990 Other Heavy & Civil Engineering                       Filaments Mfg                      336210 Motor Vehicle Body & Trailer Mfg  Electronics and Appliance Retailers
       Construction                       325300             Pesticide, Fertilizer, & Other     336300 Motor Vehicle Parts Mfg           449210   Electronics & Appliance Retailers 
Specialty Trade Contractors                                  Agricultural Chemical Mfg          336410 Aerospace Product & Parts Mfg              (including computers)
238100 Foundation, Structure, & Building  325410             Pharmaceutical & Medicine Mfg      336510 Railroad Rolling Stock Mfg        Building Material and Garden 
       Exterior Contractors (including    325500             Paint, Coating, & Adhesive Mfg     336610 Ship & Boat Building              Equipment and Supplies Dealers
       framing carpentry, masonry,        325600             Soap, Cleaning Compound, &         336990 Other Transportation Equipment    444110   Home Centers
       glass, roofing, & siding)                             Toilet Preparation Mfg                    Mfg                               444120   Paint & Wallpaper Retailers
238210 Electrical Contractors             325900             Other Chemical Product &           Furniture and Related Product            444140   Hardware Retailers
238220 Plumbing, Heating, &                                  Preparation Mfg                    Manufacturing                            444190   Other Building Material Dealers
       Air-Conditioning Contractors       Plastics and Rubber Products                          337000 Furniture & Related Product       444200   Lawn & Garden Equipment & 
238290 Other Building Equipment           Manufacturing                                                Manufacturing                              Supplies Retailers
       Contractors                        326100             Plastics Product Mfg

             36

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Form 1120-F (Continued)
Food and Beverage Retailers                 485990 Other Transit & Ground                   management & investment           Computer Systems Design and Related 
445110 Supermarkets & Other Grocery                Passenger Transportation                 advice)                           Services
       Retailers (except Convenience)       Pipeline Transportation                  Insurance Carriers and Related           541511  Custom Computer Programming 
445131 Convenience Retailers                486000 Pipeline Transportation           Activities                                       Services
445132 Vending Machine Operators            Scenic & Sightseeing Transportation      524110 Direct Life, Health, and Medical  541512  Computer Systems Design 
                                                                                            Insurance Carriers                        Services
445230 Fruit & Vegetable Retailers          487000 Scenic & Sightseeing              524120 Direct Insurance (except Life,    541513  Computer Facilities Management 
445240 Meat Retailers                              Transportation                           Health, and Medical) Carriers             Services
445250 Fish & Seafood Retailers             Support Activities for Transportation    524210 Insurance Agencies &              541519  Other Computer Related 
445291 Baked Goods Retailers                488100 Support Activities for Air               Brokerages                                Services
445292 Confectionery & Nut Retailers               Transportation                    524290 Other Insurance Related           Other Professional, Scientific, and 
445298 All Other Specialty Food             488210 Support Activities for Rail              Activities (including third-party Technical Services
       Retailers                                   Transportation                           administration of insurance &     541600  Management, Scientific, & 
445320 Beer, Wine, & Liquor Retailers       488300 Support Activities for Water             pension funds)                            Technical Consulting Services
                                                   Transportation                    Funds, Trusts, and Other Financial 
Health and Personal Care Retailers          488410 Motor Vehicle Towing              Vehicles                                 541700  Scientific Research & 
456110 Pharmacies & Drug Retailers          488490 Other Support Activities for Road 525100 Insurance & Employee Benefit              Development Services
456120 Cosmetics, Beauty Supplies, &               Transportation                           Funds                             541800  Advertising, Public Relations, & 
       Perfume Retailers                    488510 Freight Transportation            525910 Open-End Investment Funds                 Related Services
456130 Optical Goods Retailers                     Arrangement                              (Form 1120-RIC)                   541910  Marketing Research & Public 
456190 Other Health & Personal Care         488990 Other Support Activities for      525920 Trusts, Estates, & Agency                 Opinion Polling
       Retailers                                   Transportation                           Accounts                          541920  Photographic Services
Gasoline Stations & Fuel Dealers            Couriers and Messengers                  525990 Other Financial Vehicles          541930  Translation & Interpretation 
457100 Gasoline Stations (including         492110 Couriers                                 (including mortgage REITs &               Services
                                                                                            closed-end investment funds)      541940  Veterinary Services
       convenience stores with gas)         492210 Local Messengers & Local                                                   541990  All Other Professional, Scientific, 
457210 Fuel Dealers (including Heating             Delivery                          Real Estate and Rental and                       & Technical Services
       Oil & Liquefied Petroleum)           Warehousing and Storage                  Leasing                                  Management of Companies 
Clothing and Accessories Retailers          493100 Warehousing & Storage (except     Real Estate
458110 Clothing & Clothing Accessories             lessors of miniwarehouses &       531110 Lessors of Residential Buildings  (Holding Companies)
       Retailers                                   self-storage units)                      & Dwellings (including equity     551111  Offices of Bank Holding 
458210 Shoe Retailers                       Information                                     REITs)                                    Companies
458310 Jewelry Retailers                    Motion Picture and Sound Recording       531120 Lessors of Nonresidential         551112  Offices of Other Holding 
458320 Luggage & Leather Goods              Industries                                      Buildings (except                         Companies
       Retailers                            512100 Motion Picture & Video Industries        Miniwarehouses) (including        Administrative and Support and 
Sporting Goods, Hobby, Book, Musical               (except video rental)                    equity REITs)
Instrument and Miscellaneous Retailers      512200 Sound Recording Industries        531130 Lessors of Miniwarehouses &       Waste Management and 
                                                                                            Self-Storage Units (including 
459110 Sporting Goods Retailers             Publishing Industries                           equity REITs)                     Remediation Services
459120 Hobby, Toy, & Game Retailers         513110 Newspaper Publishers              531190 Lessors of Other Real Estate      Administrative and Support Services
459130 Sewing, Needlework, & Piece          513120 Periodical Publishers                    Property (including equity REITs) 561110  Office Administrative Services
       Goods Retailers                                                               531210 Offices of Real Estate Agents &   561210  Facilities Support Services
459140 Musical Instrument & Supplies        513130 Book Publishers                          Brokers                           561300  Employment Services
       Retailers                            513140 Directory & Mailing List          531310 Real Estate Property Managers     561410  Document Preparation Services
459210 Book Retailers & News Dealers               Publishers
       (including newsstands)               513190 Other Publishers                  531320 Offices of Real Estate Appraisers 561420  Telephone Call Centers
459310 Florists                             513210 Software Publishers               531390 Other Activities Related to Real  561430  Business Service Centers 
459410 Office Supplies & Stationery         Broadcasting, Content Providers, and            Estate                                    (including private mail centers & 
       Retailers                            Telecommunications                       Rental and Leasing Services                      copy shops)
459420 Gift, Novelty, & Souvenir            516100 Radio & Television Broadcasting   532100 Automotive Equipment Rental &     561440  Collection Agencies
       Retailers                                   Stations                                 Leasing                           561450  Credit Bureaus
459510 Used Merchandise Retailers           516210 Media Streaming, Social           532210 Consumer Electronics &            561490  Other Business Support 
459910 Pet & Pet Supplies Retailers                Networks, & Other Content                Appliances Rental                         Services (including repossession 
459920 Art Dealers                                 Providers                         532281 Formal Wear & Costume Rental              services, court reporting, & 
459930 Manufactured (Mobile) Home           517000 Telecommunications (including     532282 Video Tape & Disc Rental                  stenotype services)
       Dealers                                     Wired, Wireless, Satellite, Cable 532283 Home Health Equipment Rental      561500  Travel Arrangement & 
459990 All Other Miscellaneous Retailers           Resellers, Agents, Other          532284 Recreational Goods Rental                 Reservation Services
                                                   & Other Program Distribution, 
       (including tobacco, candle, &               Telecommunications, & Internet    532289 All Other Consumer Goods          561600  Investigation & Security Services
       trophy retailers)                           Service Providers)                       Rental                            561710  Exterminating & Pest Control 
General Merchandise Retailers               Data Processing, Web Search Portals, &   532310 General Rental Centers                    Services
455110 Department Stores                    Other Information Services               532400 Commercial & Industrial           561720  Janitorial Services
455210 Warehouse Clubs, Supercenters,       518210 Computing Infrastructure                 Machinery & Equipment Rental &    561730  Landscaping Services
       & Other General Merch. Retailers            Providers, Data Processing, Web          Leasing                           561740  Carpet & Upholstery Cleaning 
Nonstore Retailers                                 Hosting, & Related Services       Lessors of Nonfinancial Intangible               Services
       Nonstore retailers sell all types of 519200 Web Search, Rentals, Libraries,   Assets (except copyrighted works)        561790  Other Services to Buildings & 
       merchandise using such                      Archives, & Other Info. Services  533110 Lessors of Nonfinancial                   Dwellings
       methods as Internet, mail-order      Finance and Insurance                           Intangible Assets (except         561900  Other Support Services 
                                                                                            copyrighted works)                        (including packaging & labeling 
       direct sales. These types of                                                                                                   services, & convention & trade 
       catalogs, interactive television, or Depository Credit Intermediation         Professional, Scientific, and                    show organizers)
       Retailers should select the PBA      522110 Commercial Banking
       associated with their primary line   522130 Credit Unions                     Technical Services                       Waste Management and Remediation 
       of products sold. For example,       522180 Savings Institutions & Other      Legal Services                           Services
       establishments primarily selling            Depository Credit Intermediation  541110 Offices of Lawyers                562000  Waste Management & 
       prescription and non-prescription                                                                                              Remediation Services
       drugs, select PBA code 456110        Nondepository Credit Intermediation      541190 Other Legal Services
       Pharmacies & Drug Retailers          522210 Credit Card Issuing               Accounting, Tax Preparation,             Educational Services
Transportation and                          522220 Sales Financing                   Bookkeeping, and Payroll Services        611000  Educational Services (including 
Warehousing                                 522291 Consumer Lending                  541211 Offices of Certified Public               schools, colleges, & universities)
Air, Rail, and Water Transportation         522292 Real Estate Credit (including            Accountants                       Health Care and Social 
                                                   mortgage bankers & originators)   541213 Tax Preparation Services
481000 Air Transportation                   522299 Intl. Secondary Market, & Other   541214 Payroll Services                  Assistance
482110 Rail Transportation                         Nondepos. Credit Intermediation   541219 Other Accounting Services         Offices of Physicians and Dentists
483000 Water Transportation                 Activities Related to Credit             Architectural, Engineering, and Related  621111  Offices of Physicians (except 
Truck Transportation                        Intermediation                           Services                                         mental health specialists)
484110 General Freight Trucking, Local      522300 Activities Related to Credit      541310 Architectural Services            621112  Offices of Physicians, Mental 
484120 General Freight Trucking,                   Intermediation (including loan    541320 Landscape Architecture Services           Health Specialists
       Long-distance                               brokers, check clearing, & money  541330 Engineering Services              621210  Offices of Dentists
                                                   transmitting)
484200 Specialized Freight Trucking         Securities, Commodity Contracts, and     541340 Drafting Services                 Offices of Other Health Practitioners
Transit and Ground Passenger                Other Financial Investments and          541350 Building Inspection Services      621310  Offices of Chiropractors
Transportation                              Related Activities                       541360 Geophysical Surveying &           621320  Offices of Optometrists
485110 Urban Transit Systems                523150 Investment Banking & Securities          Mapping Services                  621330  Offices of Mental Health 
485210 Interurban & Rural Bus                      Intermediation                    541370 Surveying & Mapping (except               Practitioners (except Physicians)
       Transportation                       523160 Commodity Contracts                      Geophysical) Services             621340  Offices of Physical, Occupational 
485310 Taxi & Ridesharing Services                 Intermediation                    541380 Testing Laboratories                      & Speech Therapists, & 
                                                                                                                                      Audiologists
485320 Limousine Service                    523210 Securities & Commodity            Specialized Design Services              621391  Offices of Podiatrists
485410 School & Employee Bus                       Exchanges                         541400 Specialized Design Services       621399  Offices of All Other 
       Transportation                       523900 Other Financial Investment               (including interior, industrial,          Miscellaneous Health 
485510 Charter Bus Industry                        Activities (including portfolio          graphic, & fashion design)                Practitioners

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Form 1120-F (Continued)
Outpatient Care Centers                 711210 Spectator Sports (including     Food Services and Drinking Places         812190 Other Personal Care Services 
621410 Family Planning Centers                 sports clubs & racetracks)      722300 Special Food Services (including          (including diet & weight reducing 
621420 Outpatient Mental Health &       711300 Promoters of Performing Arts,          food service contractors &                centers)
       Substance Abuse Centers                 Sports, & Similar Events               caterers)                          812210 Funeral Homes & Funeral 
621491 HMO Medical Centers              711410 Agents & Managers for Artists,  722410 Drinking Places (Alcoholic                Services
621492 Kidney Dialysis Centers                 Athletes, Entertainers, & Other        Beverages)                         812220 Cemeteries & Crematories
                                               Public Figures                  722511 Full-Service Restaurants           812310 Coin-Operated Laundries & 
621493 Freestanding Ambulatory          711510 Independent Artists, Writers, & 722513 Limited-Service Restaurants               Drycleaners
       Surgical & Emergency Centers            Performers                      722514 Cafeterias Grill Buffets & Buffets 812320 Drycleaning & Laundry Services 
621498 All Other Outpatient Care        Museums, Historical Sites, and Similar 722515 Snack & Non-alcoholic Beverage            (except Coin-Operated)
       Centers                          Institutions                                  Bars                               812330 Linen & Uniform Supply
Medical and Diagnostic Laboratories     712100 Museums, Historical Sites, &                                              812910 Pet Care (except Veterinary) 
621510 Medical & Diagnostic                    Similar Institutions            Other Services                                   Services
       Laboratories                     Amusement, Gambling, and Recreation    Repair and Maintenance                    812920 Photofinishing
Home Health Care Services               Industries                             811110 Automotive Mechanical &            812930 Parking Lots & Garages
621610 Home Health Care Services        713100 Amusement Parks & Arcades              Electrical Repair & Maintenance    812990 All Other Personal Services
Other Ambulatory Health Care Services   713200 Gambling Industries             811120 Automotive Body, Paint, Interior,  Religious, Grantmaking, Civic, 
621900 Other Ambulatory Health Care     713900 Other Amusement & Recreation           & Glass Repair                     Professional, and Similar Organizations
       Services (including ambulance           Industries (including golf      811190 Other Automotive Repair &          813000 Religious, Grantmaking, Civic, 
       services & blood & organ banks)         courses, skiing facilities,            Maintenance (including oil                Professional, & Similar 
Hospitals                                      marinas, fitness centers, &            change & lubrication shops & car          Organizations (including 
622000 Hospitals                               bowling centers)                       washes)                                   condominium & homeowners 
Nursing and Residential Care Facilities Accommodation and Food                 811210 Electronic & Precision Equipment          associations)
623000 Nursing & Residential Care       Services                                      Repair & Maintenance               Other
                                                                               811310 Commercial & Industrial 
       Facilities                       Accommodation                                 Machinery & Equipment (except      999000 Unclassified Establishments 
Social Assistance                       721110 Hotels (except Casino Hotels) &        Automotive & Electronic) Repair           (unable to classify)
624100 Individual & Family Services            Motels                                 & Maintenance
624200 Community Food & Housing, &      721120 Casino Hotels                   811410 Home & Garden Equipment & 
       Emergency & Other Relief         721191 Bed & Breakfast Inns                   Appliance Repair & Maintenance
       Services                                                                811420 Reupholstery & Furniture Repair
624310 Vocational Rehabilitation        721199 All Other Traveler 
       Services                                Accommodation                   811430 Footwear & Leather Goods 
624410 Children Services                721210 RV (Recreational Vehicle) Parks        Repair
                                               & Recreational Camps            811490 Other Personal & Household 
Arts, Entertainment, and                721310 Rooming & Boarding Houses,             Goods Repair & Maintenance
Recreation                                     Dormitories, & Workers’ Camps   Personal and Laundry Services
Performing Arts, Spectator Sports, and                                         812111 Barber Shops
Related Industries                                                             812112 Beauty Salons
711100 Performing Arts Companies                                               812113 Nail Salons

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