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                                                                                                            Department of the Treasury
                                                                                                            Internal Revenue Service
2022

Instructions for

Form 1120-F

U.S. Income Tax Return of a Foreign Corporation

Section references are to the Internal Revenue    Contents                                  Page the meaning of section 59(k)) may be 
Code unless otherwise noted.                                                                     required to pay this AMT. Short-period 
                                                  Schedule W . . . . . . . . . . . . . .       33
Contents                                  Page                                                   filers with a tax year beginning after 
                                                                                                 December 31, 2022, and ending before 
Photographs of Missing Children       . . . . 1   Future Developments                            December 31, 2023, see section 55 and 
The Taxpayer Advocate Service .       . . . . 1                                                  the instructions for Section II, Schedule J, 
How To Get Forms and                              For the latest information about 
Publications .   . . . . . . . . . . . . . . 2    developments related to Form 1120-F and        line 8, later.
General Instructions .  . . . . . . . . . . . . 2 its instructions, such as legislation          Advanced manufacturing investment 
Purpose of Form .       . . . . . . . . . . . 2   enacted after they were published, go to       credit.    A corporation that held a qualified 
Who Must File      . . . . . . . . . . . . . 2    IRS.gov/Form1120F.                             investment in an advanced manufacturing 
Special Returns for Certain                                                                      facility that is placed in service after 
Organizations .         . . . . . . . . . . . 3   What’s New                                     December 31, 2022, can elect to treat the 
                                                                                                 credit for the advanced manufacturing 
Claim for Refund or Credit .        . . . . . 3   Changes to Schedule P (Form 1120-F).           investment as a deemed payment. If the 
Paid Preparer Authorization .         . . . . 5   New Parts IV and V of Schedule P (Form         election is made, the corporation is treated 
Other Forms, Schedules,                           1120-F) report information regarding a         as making a payment against tax by the 
and Statements That May                           foreign corporate partner's transfer of an     amount of the credit. See section 48D. 
Be Required .           . . . . . . . . . . . . 5 interest in a partnership and the              See the Instructions for Form 3468 for 
Assembling the Return .         . . . . . . . 7   calculation of gain or loss on the transfer    information on how to report the deemed 
Accounting Methods .          . . . . . . . . 7   when the partnership directly or indirectly    credit on the corporation's return.
Accounting Period .       . . . . . . . . . . 8   either is engaged in the conduct of a trade 
Rounding Off to Whole                             or business within the United States or        Note.      This credit cannot be claimed by a 
Dollars .      . . . . . . . . . . . . . . . 8    holds any U.S. real property interests.        “foreign entity of concern” (see section 
Recordkeeping .         . . . . . . . . . . . . 8                                                48D(c)(1)).
Payment of Tax Due           . . . . . . . . . 8  Increase in penalty for failure to file. 
                                                  For returns due in 2023, the minimum           Principal business activity codes.       The 
Estimated Tax Payments            . . . . . . 9   penalty for failure to file a return that is   list of principal business activity (PBA) 
Interest and Penalties .      . . . . . . . . 9   more than 60 days late has increased to        codes has been updated. See Principal 
Special Rules for Foreign                         the smaller of the tax due or $450. See        Business Activity Codes at the very end of 
Corporations .          . . . . . . . . . . . 9   Penalty for late filing of return, later.      these instructions.
Specific Instructions . . . . . . . . . . . . 11
Period Covered          . . . . . . . . . . . 11  Payroll credit for COVID-related paid 
Address .    . . . . . . . . . . . . . . .    11  sick leave and family leave.     Generally,    Photographs of Missing 
Employer Identification                           the credit for qualified sick and family       Children
Number (EIN) .          . . . . . . . . . .   11  leave wages, as enacted under the              The Internal Revenue Service is a proud 
Computation of Tax Due or                         Families First Coronavirus Response Act        partner with the National Center for 
Overpayment .           . . . . . . . . . .   12  (FFCRA) and amended and extended by            Missing & Exploited Children® (NCMEC). 
Section I—Income From                             the COVID-related Tax Relief Act of 2020,      Photographs of missing children selected 
U.S. Sources Not                                  and the credit for qualified sick and family   by the Center may appear in instructions 
Effectively Connected                             leave wages, as enacted under the              on pages that would otherwise be blank. 
With the Conduct of a                             American Rescue Plan Act of 2021 (ARP),        You can help bring these children home 
Trade or Business in the                          have expired. However, employers that          by looking at the photographs and calling 
United States .         . . . . . . . . . .   16  paid qualified sick and family leave wages     1-800-THE-LOST (1-800-843-5678) if you 
Section II—Income                                 in 2022 for leave taken after March 31,        recognize a child.
Effectively Connected                             2020, and before October 1, 2021, may be 
With the Conduct of a                             eligible to claim a credit for qualified sick 
Trade or Business in the                                                                         The Taxpayer Advocate 
United States .         . . . . . . . . . .   17  and family leave wages in 2022. See the 
Income .     . . . . . . . . . . . . . . . .  18  March 2022 revision of the Instructions for    Service
                                                  Form 941 and the 2022 Instructions for 
Deductions .     . . . . . . . . . . . . .    20                                                 The Taxpayer Advocate Service (TAS) is 
                                                  Form 944 for more information. There is        an independent organization within the 
Schedule C—Dividends and                          no double tax benefit allowed and the          Internal Revenue Service that helps 
Special Deductions .            . . . . . .   26
                                                  amounts claimed are reportable as              taxpayers and protects taxpayer rights. 
Schedule J—Tax                                    income. See the instructions for Section II,   TAS's job is to ensure that every taxpayer 
Computation             . . . . . . . . . . . 27
                                                  line 10 (other income), later.
Section III—Branch Profits                                                                       is treated fairly and knows and 
Tax and Tax on Excess                             Alternative minimum tax.      For tax years    understands their rights under the 
Interest .     . . . . . . . . . . . . . .    29  beginning after December 31, 2022, the         Taxpayer Bill of Rights.
Schedule L—Balance                                Inflation Reduction Act of 2022 (IRA22)        As a taxpayer, the corporation has 
Sheets per Books .            . . . . . . .   31  imposes a corporate alternative minimum        rights that the IRS must abide by in its 
Schedules M-1 and M-3 .           . . . . .   33  tax (AMT). Applicable corporations (within 

Mar 23, 2023                                               Cat. No. 11475L

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

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Protective Return Filers, later. A foreign schedules, and attachments; Form 7004 Pages 2 and 3. Additional information.
corporation that does not file a return will (automatic extension of time to file); and Complete all items on pages 2 and 3 of
lose the right to take deductions and Forms 940, 941, and 944 (employment tax Form 1120-F that apply to the corporation.
credits against effectively connected returns). If there is a balance due, the
income (ECI). See Other Filing corporation can authorize an electronic Page 3. Section I. Enter in column (b)
Requirements, later. funds withdrawal while e-filing. Form 1099 the gross amount of each type of income
and other information returns can also be received that is required to be reported in
Qualified opportunity fund. To certify Section I (see Section I, later, for details).
electronically filed. The option to e-file
as a qualified opportunity fund (QOF), a Include income from foreign sources that
does not, however, apply to certain
foreign corporation organized in a U.S. was subject to backup withholding. Do not
returns.
possession must file Form 1120-F and include income from which no U.S. tax
attach Form 8996, even if the corporation Certain corporations with total assets of was withheld. If the corporation is subject
had no income or expenses to report. See $10 million or more that file at least 250 to backup withholding on gross proceeds
Item II on page 3 of Form 1120-F. Also, returns a year are required to e-file Form from sales of securities or transactions in
see the Instructions for Form 8996. 1120-F. See Regulations section regulated futures contracts, enter the
Qualified opportunity investment. If 301.6011-5. However, these corporations gross proceeds on line 10.
the foreign corporation held a qualified can request a waiver of the electronic filing
Enter in columns (c) and (d),
investment in a QOF at any time during requirements. See Guidance on Waivers
respectively, the correct rate and amount
the year, the corporation must file its for Corporations Unable to Meet e-file
of U.S. income tax liability for each type of
return with Form 8997 attached. See the Requirements on IRS.gov. income reported in column (b). If the
instructions for Form 8997. corporation is claiming a refund of U.S. tax
Claim for Refund or Credit withheld in excess of the rate provided in a
Exceptions From Filing If the corporation is filing Form 1120-F tax treaty with the United States, enter the
A foreign corporation does not have to file only as a claim for refund or credit of tax applicable treaty rate in column (c) and
Form 1120-F if neither the foreign paid or withheld at source, the simplified figure the correct U.S. income tax liability
corporation nor any of its branches was a procedure described below may be used. on the gross income reported in column
QDD and any of the following apply. This simplified procedure may not be used (b).
• It did not engage in a U.S. trade or by a corporation that was a QDD or had a Enter in column (e) the U.S. tax actually
business during the year, and its full U.S. branch that was a QDD. withheld at source (and not refunded by
tax was withheld at source. the payer or the withholding agent) from
• Its only U.S. source income is exempt Note. You cannot claim a refund based
from U.S. taxation under section 881(c) or on a reduced rate of, or exemption from, each type of income reported. This should
(d). U.S tax withheld from a substitute be the amount reported to you in box 10,
• It is a beneficiary of an estate or trust dividend payment made in connection Total withholding credit, of Form(s)
engaged in a U.S. trade or business, but with a securities lending or similar 1042-S, which includes the total amount of
would itself otherwise not need to file. transaction if the tax was withheld by a federal tax withheld at source less any
withholding agent other than the amount that was repaid to you by the
Special Returns for withholding agent from which you received withholding agent. If multiple rates of tax
the payment (amounts are reported in are applicable to a type of income, attach
Certain Organizations box 8 of Form 1042-S). See Notice a statement showing the gross amounts of
Instead of filing Form 1120-F, certain 2010-46, 2010-24 I.R.B. 757, available at income, applicable rate, and amount of
foreign organizations must file special IRS.gov/irb/2010-24_IRB#NOT-2010-46, liability and withholding imposed for the
returns. for further information on limitations on respective amounts at each tax rate (for
• Form 1120-L, U.S. Life Insurance refunds and credits permitted in such example, if a corporation receives
Company Income Tax Return, as a foreign cases. subsidiary dividends subject to tax at 5%
life insurance company. and portfolio dividends subject to tax at
• Form 1120-PC, U.S. Property and Simplified Procedure for 15%, a statement must be attached for
Casualty Insurance Company Income Tax Claiming a Refund of U.S. Tax Section I, line 2a, to show the amount of
dividend and tax liability for each
Return, as a foreign nonlife insurance Withheld at Source respective rate).
company.
• Form 1120-FSC, U.S. Income Tax To make a claim for a refund, complete Enter on line 11 the total U.S. tax
Return of a Foreign Sales Corporation, if Form 1120-F as follows. liability for the reported income.
the corporation elected to be treated as an Page 1. Enter the complete name, Enter on line 12 the total U.S. tax
FSC and the election is still in effect. address, and employer identification actually withheld from such income.
Consolidated returns. A foreign number (EIN) of the corporation. Check Check the appropriate box on line 13. A
corporation, regardless of whether it files a the applicable box to indicate the type of fiscally transparent entity is one that is not
special return, may not belong to an filing. Provide all the information required itself generally subject to income tax but
affiliated group of corporations that files a in items A through G. one whose tax attributes flow through to
consolidated return. However, a Canadian Refund amount. Enter on lines 1 and its owners.
or Mexican corporation described in 4, page 1, the amount from line 11,
section 1504(d), maintained solely for page 3. Enter on lines 5i and 5j the Additional Documentation
complying with the laws of Canada or amount from line 12, page 3. Enter the
Mexico for title and operation of property, excess of line 5j over line 4 on lines 8a Required
may elect to be treated as a domestic and 9. This is the amount to be refunded
The corporation must attach to Form
corporation and thereby file as part of an to you.
affiliated group. 1120-F the following.
Signature. An authorized officer of the 1. Proof of the withholding (for
Electronic Filing corporation must sign and date the return. example, Form 1042-S).
Corporations can generally electronically
file (e-file) Form 1120-F, related forms,

Instructions for Form 1120-F (2022) -3-

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2. A statement that describes the corporation has insufficient earnings and the United States must generally file Form
basis for the claim for refund. profits to support ordinary dividend 1120-F by the 15th day of the 6th month
3. Any required tax certifications (for treatment, provide a statement that after the end of its tax year.
example, Form W-8BEN-E). identifies the distributing corporation and
Extension of time to file. File Form
provides the basis for the claim.
7004 by the 15th day of the 6th month
4. Any additional documentation to If claiming a refund for overwithholding
• after the end of the tax year to request an
support the claim. on a distribution from a mutual fund or a
extension of time to file. See the
Refund of backup withholding tax. If real estate investment trust (REIT) with
Instructions for Form 7004 for additional
the corporation is claiming a refund of respect to its stock because the
information.
backup withholding tax based on its status distribution was designated as long-term
as a non-U.S. resident, it must: capital gain or a return of capital, provide a Other Filing Requirements
• Provide a copy of the Form 1099 that statement that identifies the mutual fund or • If the due date of any filing falls on a
shows the amount of reportable payment REIT and provide the basis for the claim. Saturday, Sunday, or legal holiday, the
and backup withholding, and • If claiming a refund for overwithholding corporation may file on the next business
• Attach a statement signed under on a distribution from a U.S. corporation day.
penalties of perjury that the corporation is with respect to its stock because, in the • Form 1120-F must be filed on a timely
exempt from backup withholding because foreign corporation's particular basis and in a true and accurate manner in
it is not a U.S. corporation or other U.S. circumstances, the transaction qualifies as order for a foreign corporation to take
resident (for example, Form W-8BEN-E). a redemption of stock under section 302, deductions and credits against its ECI. For
provide a statement that describes the these purposes, Form 1120-F is generally
Refunds of U.S. withholding. If any of transaction and presents the facts considered to be timely filed if it is filed no
the following apply, attach the information necessary to establish that the payment later than 18 months after the due date of
requested in addition to the additional was (a) a complete redemption, (b) a the current year's return. An exception
documentation described earlier. disproportionate redemption, or (c) not may apply to foreign corporations that
• If you are claiming a refund of U.S. tax essentially equivalent to a dividend. have yet to file Form 1120-F for the
withheld under Chapter 4, you must preceding tax year. These filing deadlines
provide a statement explaining the basis When To File may be waived in limited situations based
for the claim and must provide the other on the facts and circumstances, where the
information requested in this section to Foreign Corporation With an foreign corporation establishes to the
establish a reduced rate, or exemption Office or Place of Business in satisfaction of the Commissioner that the
from, tax under section 881. See the United States foreign corporation acted reasonably and
Regulations section 1.1474-5 for the A foreign corporation that maintains an in good faith in failing to file Form 1120-F.
requirements for claiming a credit or office or place of business in the United See Regulations section 1.882-4(a)(3)(ii)
refund of tax withheld under Chapter 4. States must generally file Form 1120-F by for more information about the waiver.
• If claiming a refund of U.S. tax withheld the 15th day of the 4th month after the end A foreign corporation is allowed the
from portfolio interest, include a of its tax year. A new corporation filing a following deductions and credits
description of the relevant debt obligation, short-period return must generally file by regardless of whether Form 1120-F is
including the name of the issuer, CUSIP the 15th day of the 4th month after the timely filed.
number (if any), interest rate, scheduled short period ends. A corporation that has
maturity date, and the date the debt was dissolved must generally file by the 15th 1. The charitable contributions
issued. Also, include a statement, signed day of the 4th month after the date it deduction (page 4, Section II, line 19).
under penalties of perjury, that the dissolved. 2. The credit from Form 2439 (page 1,
corporation is the beneficial owner of the line 5f).
interest income and not a U.S. corporation However, a corporation with a fiscal tax
or other U.S. resident (for example, Form year ending June 30 must file by the 15th 3. The credit for federal tax on fuels
W-8BEN-E). day of the 3rd month after the end of its (page 1, line 5g).
• If claiming a reduced rate of, or tax year. A corporation with a short tax 4. U.S. income tax paid or withheld at
exemption from, tax based on a tax treaty, year ending anytime in June will be source (page 1, line 5i).
provide a certificate of entitlement to treaty treated as if the short year ended on June
benefits (for example, Form W-8BEN-E). 30, and must file by the 15th day of the 3rd See Regulations section 1.882-4 for
A separate statement should be provided month after the end of its tax year. details.
that contains any additional Extension of time to file. The Private Delivery Services
representations necessary to explain the corporation must file Form 7004, Corporations can use certain private
basis for the claim. The corporation may Application for Automatic Extension of delivery services (PDS) designated by the
complete item W(1) on page 2 of the form Time To File Certain Business Income IRS to meet the “timely mailing as timely
(which includes completing and attaching Tax, Information, and Other Returns, by filing” rule for tax returns. Go to
Form 8833, if required) in lieu of attaching the return due date specified in the IRS.gov/PDS.
a statement. previous two paragraphs to request an
extension of time to file. However, there is The PDS can tell you how to get written
Note. To claim a reduced rate of, or proof of the mailing date.
an exception that applies under
exemption from, tax based on a tax treaty,
Regulations section 1.6081-5. See the
the corporation must generally be a For the IRS mailing address to use if
Instructions for Form 7004 for additional
resident of the particular treaty country you're using a PDS, go to
information.
within the meaning of the treaty and satisfy IRS.gov/PDSStreetAddresses.
the limitation on benefits article, if any, in Foreign Corporation With No Private delivery services cannot
the treaty with that country. Office or Place of Business in ! deliver items to P.O. boxes. You
• If claiming a refund for overwithholding CAUTION
on a distribution from a U.S. corporation the United States must use the U.S. Postal Service
with respect to its stock because the A foreign corporation that does not to mail any item to an IRS P.O. box
maintain an office or place of business in address.

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Where To File                                  • Respond to certain IRS notices about       Form 8275, Disclosure Statement, and 
File Form 1120-F with the Internal             math errors, offsets, and return             Form 8275-R, Regulation Disclosure 
Revenue Service Center, P.O. Box               preparation.                                 Statement. Use these forms to disclose 
409101, Ogden, UT 84409.                         The corporation is not authorizing the     items or positions taken on a tax return 
                                               paid preparer to receive any refund check,   that are not otherwise adequately 
Who Must Sign                                  bind the corporation to anything (including  disclosed on a tax return or that are 
The return must be signed and dated by:        any additional tax liability), or otherwise  contrary to Treasury regulations (to avoid 
• The president, vice president, treasurer,    represent the corporation before the IRS.    parts of the accuracy-related penalty or 
                                                                                            certain preparer penalties).
assistant treasurer, chief accounting            The authorization will automatically end 
officer; or                                    no later than the due date (excluding        Form 8300, Report of Cash Payments 
• Any other corporate officer (such as tax     extensions) for filing the corporation's     Over $10,000 Received in a Trade or 
officer) authorized to sign.                   2022 tax return. If the corporation wants to Business. Use this form to report the 
  If a return is filed on behalf of a          expand the paid preparer's authorization     receipt of more than $10,000 in cash or 
corporation by a receiver, trustee, or         or revoke the authorization before it ends,  foreign currency in one transaction or a 
assignee, the fiduciary must sign the          see Pub. 947, Practice Before the IRS and    series of related transactions.
return, instead of the corporate officer.      Power of Attorney.                           Form 8302, Electronic Deposit of Tax 
Returns and forms signed by a receiver or                                                   Refund of $1 Million or More. The form 
trustee in bankruptcy on behalf of a           Other Forms, Schedules,                      must be filed to request an electronic 
corporation must be accompanied by a                                                        deposit of a tax refund of $1 million or 
copy of the order or instructions of the       and Statements That May 
                                                                                            more.
court authorizing signing of the return or     Be Required
form.                                                                                       Form 8832, Entity Classification Election. 
                                               Forms                                        This form is filed by an eligible entity to 
  Paid Preparer Use Only section. If           A foreign corporation may have to file       elect how it will be classified for federal tax 
an employee of the corporation completes       some of the following forms and              purposes. If the corporation filed Form 
Form 1120-F, the paid preparer section         schedules. See the form or schedule for      8832 to make an initial classification 
should remain blank. Anyone who                more information.                            election to be a corporation or to change 
prepares Form 1120-F but does not                For a list of additional forms the         its classification to be a corporation 
charge the corporation should not              corporation may need to file (most           effective during the current tax year, the 
complete that section. Generally, anyone       notably, forms pertaining to the reporting   corporation must attach a copy of the 
who is paid to prepare the return must sign    of various types of income, and any          Form 8832 to its Form 1120-F. If the 
and complete the section.                      related withholding, to U.S. persons,        corporation owns a direct or indirect 
  The paid preparer must complete the          foreign persons, and the IRS), see Pub.      interest in an entity that is not required to 
required preparer information and:             542, Corporations.                           file a return, but for which a Form 8832 
• Sign the return in the space provided                                                     was filed to make a change in the 
for the preparer's signature,                  Form 1094-C,  Transmittal of Employer        classification of the entity that is effective 
• Include their Preparer Tax Identification    Health Coverage Statements, and Form         during the current tax year, the 
Number (PTIN), and                             1095-C, Employer-Provided Health             corporation must attach a copy of the 
• Give a copy of the return to the             Coverage Statement. Employers with 50        Form 8832 with respect to that entity 
taxpayer.                                      or more full-time employees (including       to its Form 1120-F for the current tax 
                                               full-time equivalent employees) use Forms    year. Examples of when the corporation 
      A paid preparer may sign original        1094-C and 1095-C to report the              must attach a copy of the Form 8832 for 
TIP   or amended returns by rubber             information required under sections 6055     an entity in which it has an interest include 
      stamp, mechanical device, or             and 6056 about offers of health coverage     the corporation's ownership of:
computer software program.                     and enrollment in health coverage for their    An entity that elected to be a 
                                               employees. Form 1094-C must be used to       •
                                                                                            disregarded entity,
                                               report to the IRS summary information for 
Paid Preparer                                  each employer and to transmit Forms          • A foreign entity that elected to be a 
                                                                                            partnership but does not itself have a 
Authorization                                  1095-C to the IRS. Form 1095-C is used       Form 1065 filing requirement, and
If the corporation wants to allow the IRS to   to report information about each               A foreign corporation that owns a 
discuss its 2022 tax return with the paid      employee. In addition, Forms 1094-C and      •
                                                                                            foreign entity that elected to be a 
preparer who signed it, check the “Yes”        1095-C are used in determining whether       disregarded entity.
box in the signature area of the return.       an employer owes payments under the 
This authorization applies only to the         employer shared responsibility provisions      The corporation does not need to 
individual whose signature appears in the      under section 4980H. For more                attach the Form 8832 for an entity in which 
“Paid Preparer Use Only” section of the        information, see the Instructions for Forms  it has an indirect interest if an entity in 
return. It does not apply to the firm, if any, 1094-C and 1095-C. Also, for more            which it has an interest is already 
shown in that section.                         information related to the Affordable Care   attaching a copy of the Form 8832 with its 
                                               Act, visit IRS.gov/ACA.                      return. See Regulations section 
  If the “Yes” box is checked, the                                                          301.7701-3(c)(1)(ii).
corporation is authorizing the IRS to call     Form 5472,   Information Return of a 25% 
the paid preparer to answer any questions      Foreign-Owned U.S. Corporation or a          Form 8833, Treaty-Based Return 
that may arise during the processing of its    Foreign Corporation Engaged in a U.S.        Position Disclosure Under Section 6114 or 
return. The corporation is also authorizing    Trade or Business. This form is filed by or  7701(b). Use this form to make the 
the paid preparer to:                          for a foreign corporation engaged in a U.S.  treaty-based return position disclosure 
• Give the IRS any information that is         trade or business that had certain           required by section 6114.
missing from the return;                       reportable transactions with a related       Form 8848, Consent To Extend the Time 
• Call the IRS for information about the       party. See the Instructions for Form 5472    To Assess the Branch Profits Tax Under 
processing of the return or the status of      for filing instructions and information for  Regulations Sections 1.884-2(a) and (c). 
any related refund or payment(s); and          failure to file and maintain records.

Instructions for Form 1120-F (2022)                               -5-

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Use this form to execute a waiver of period Schedules Note. If the corporation has received
of limitations in regard to a termination or Form 8805, Foreign Partner's Information
incorporation of a U.S. trade or business Schedule H, Deductions Allocated to Statement of Section 1446 Withholding
or liquidation or reorganization of a foreign Effectively Connected Income Under Tax, it will have ECI includible in its
corporation or its domestic subsidiary. Regulations Section 1.861-8. This Schedule K-3 (Form 1065) that is required
See the instructions for Section III, Part I, schedule is required to be attached to to be reported on Schedule P.
of Form 1120-F. report certain deductions of the
corporation that are allocable to ECI. If the Schedule S, Exclusion of Income From
Form 8886, Reportable Transaction corporation has any deductions reportable the International Operation of Ships or
Disclosure Statement. Use this form to on Form 1120-F, Section II, lines 12 Aircraft Under Section 883. This
disclose information for each reportable through 27, then Schedule H is required to schedule is required to be attached to
transaction in which the corporation be attached. See the separate Instructions claim a Code exemption under section
participated. Form 8886 must be filed for for Schedule H for details. 883. This schedule incorporates the
each tax year that the federal income tax information required under Regulations
liability of the corporation is affected by its Note. Line 20 of Schedule H is reportable sections 1.883-1 through 1.883-4. See the
participation in the transaction. The on Form 1120-F, Section II, line 26. separate Instructions for Schedule S
following are reportable transactions. (Form 1120-F) for details.
Schedule I, Interest Expense Alloca-
1. Any listed transaction, which is a tion Under Regulations Section Schedule V, List of Vessels or Aircraft,
transaction that is the same as or 1.882-5. This schedule is required to be Operators, and Owners. This schedule
substantially similar to one of the types of attached to report any interest expense is required to be attached if the
transactions that the IRS has determined allocable to ECI under Regulations section corporation is required to report gross
to be a tax avoidance transaction and 1.882-5. The schedule must be attached transportation income in Section I, line 9,
identified by notice, regulation, or other whether or not such allocable interest is column (b). See the separate Instructions
published guidance as a listed deductible against ECI in the current year. for Schedule V (Form 1120-F) for details.
transaction. See the separate Instructions for
2. Any transaction offered under Schedule I (Form 1120-F) for identification Statements
conditions of confidentiality for which the of elective allocation methods and
corporation (or a related party) paid an computation of the allocable and Transfers to a corporation controlled
advisor a fee of at least $250,000. deductible amounts of interest expense. by the transferor. Every significant
transferor (as defined in Regulations
3. Certain transactions for which the section 1.351-3(d)(1)) that receives stock
corporation (or a related party) has Note. Line 25 of Schedule I is reportable
contractual protection against on Form 1120-F, Section II, line 18. of a corporation in exchange for property
in a nonrecognition event must include the
disallowance of the tax benefits. Schedule P, List of Foreign Partner In- statement required by Regulations section
4. Certain transactions resulting in a terests in Partnerships. This schedule 1.351-3(a) on or with the transferor's tax
loss of at least $10 million in any single is required to be attached to report all ECI return for the tax year of the exchange.
year or $20 million in any combination of included in Schedules K-3 (Form 1065) The transferee corporation must include
years. the foreign corporation receives for each the statement required by Regulations
5. Any transaction identified by the of its directly held partnership interests. section 1.351-3(b) on or with its return for
IRS by notice, regulation, or other Schedule P is also required to report the the tax year of the exchange, unless all the
published guidance as a “transaction of corporation's adjusted outside basis in its required information is included in any
interest.” directly held partnership interest and the statement(s) provided by a significant
amount of the outside basis of each such transferor that is attached to the same
For more information, see Regulations interest apportioned to ECI under return for the same section 351 exchange.
section 1.6011-4. Also, see the Regulations section 1.884-1(d)(3). See If the transferor or transferee corporation
Instructions for Form 8886. the separate Instructions for Schedule P is a controlled foreign corporation (CFC),
(Form 1120-F) for the reconciliation of ECI each U.S. shareholder (within the meaning
Penalties. The corporation may have and distributive share of expenses of section 951(b)) must include the
to pay a penalty if it is required to disclose reported on Schedules K-3 (Form 1065). required statement on or with its return.
a reportable transaction under section Finally, Schedule P is required to report
6011 and fails to properly complete and information regarding a foreign corporate Distributions under section 355. Every
file Form 8886. Penalties may also apply partner's transfer of an interest in a corporation that makes a distribution of
under section 6707A if the corporation partnership and the calculation of gain or stock or securities of a controlled
fails to file Form 8886 with its corporate loss on the transfer when the partnership corporation, as described in section 355
return, fails to provide a copy of Form directly or indirectly either is engaged in (or so much of section 356 as relates to
8886 to the Office of Tax Shelter Analysis the conduct of a trade or business within section 355), must include the statement
(OTSA), or files a form that fails to include the United States or holds any U.S. real required by Regulations section
all the information required (or includes property interests. Do not file Schedule P 1.355-5(a) on or with its return for the year
incorrect information). Other penalties, if the corporation has no partnership of the distribution. A significant distributee
such as an accuracy-related penalty under interests that give rise to ECI that is (as defined in Regulations section
section 6662A, may also apply. See the included in the income reported to the 1.355-5(c)) that receives stock or
Instructions for Form 8886 for details on corporation on Schedules K-3 (Form securities of a controlled corporation must
these and other penalties. 1065) and there has not been a transfer of include the statement required by
Reportable transactions by material an interest in a partnership that directly or Regulations section 1.355-5(b) on or with
advisors. Material advisors to any indirectly either is engaged in the conduct its return for the year of the receipt. If the
reportable transaction must disclose of a trade or business within the United distributing or distributee corporation is a
certain information about the reportable States or holds any U.S. real property CFC, each U.S. shareholder (within the
transaction by filing Form 8918 with the interests. meaning of section 951(b)) must include
IRS. For details, see the Instructions for the statement on or with its return.
Form 8918.

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Election to reduce basis under section 10. Additional forms in numerical order. Small business taxpayer. For tax years
362(e)(2)(C). If property is transferred to 11. Supporting statements and beginning in 2022, a corporation qualifies
a corporation subject to section 362(e)(2), attachments. as a small business taxpayer if (a) it has
the transferor and the transferee average annual gross receipts of $27
corporation may elect, under section Complete every applicable entry space million or less for the 3 prior tax years, and
362(e)(2)(C), to reduce the transferor's on Form 1120-F. Do not enter “See (b) is not a tax shelter (as defined in
basis in the stock received instead of Attached” or “Available Upon Request” section 448(d)(3)).
reducing the transferee corporation's instead of completing the entry spaces. If
basis in the property transferred. Once more space is needed on the forms or A small business taxpayer can account
made, the election is irrevocable. For schedules, attach separate sheets using for inventory by (a) treating the inventory
more information, see section 362(e)(2) the same size and format as the printed as non-incidental materials and supplies,
and Regulations section 1.362-4. If an forms. or (b) conforming to its treatment of
inventory in an applicable financial
election is made, a statement must be If there are supporting statements and statement (as defined in section 451(b)
filed in accordance with Regulations attachments, arrange them in the same (3)). If it does not have an applicable
section 1.362-4(d)(3). order as the schedules or forms they financial statement, it can use the method
Foreign corporation with income ex- support and attach them last. Show the of accounting used in its books and
cluded from gross income. If the totals on the printed forms. Enter the records prepared according to its
foreign corporation has income excluded corporation's name and EIN on each accounting procedures.
from gross income for the tax year, do not supporting statement or attachment. Change in accounting method.
complete the Form 1120-F schedules. Generally, the corporation must get IRS
Instead, attach a statement to the return Note. If the corporation had tax withheld consent to change either an overall
showing the types and amounts of income under Chapter 3 or 4 of the Internal method of accounting or the accounting
excluded from gross income. See Treaty Revenue Code and received a Form treatment of any material item for income
or Code exemption, earlier, for more 1042-S, Form 8805, or Form 8288-A tax purposes. To obtain consent, the
information. showing the amount of income tax corporation must generally file Form 3115,
withheld, attach such form(s) to Form Application for Change in Accounting
Election to reduce liabilities under 1120-F to claim a withholding credit. The Method, during the tax year for which the
Regulations section 1.884-1(e)(3). If a corporation should report the tax withheld change is requested. See the Instructions
taxpayer has a dividend equivalent on Form 1120-F, page 1, line 5i. See the for Form 3115 and Pub. 538 for more
amount that is subject to the branch profits instructions for Line 5i. information and exceptions. Also see the
tax under section 884(a), it may elect to
reduce its U.S. liabilities under the branch Instructions for Form 3115 for procedures
profits tax regulations to treat its effectively Accounting Methods that may apply for obtaining automatic
connected earnings and profits as In general, figure taxable income using the consent to change certain methods of
reinvested rather than remitted. A method of accounting regularly used in accounting, non-automatic change
taxpayer may elect to reduce the amount keeping the corporation's books and procedures, and reduced Form 3115 filing
of its liabilities by an amount that does not records. In all cases, the method used requirements.
exceed the lesser of the amount of U.S. must clearly show taxable income.
liabilities or the amount of U.S. liability Permissible overall methods of accounting Section 481(a) adjustment. If the
reduction needed to reduce a dividend include cash, accrual, or any other method corporation's taxable income for the
equivalent amount to zero. The election is authorized by the Internal Revenue Code. current tax year is figured under a method
of accounting different from the method
made by attaching a statement to a timely used in the preceding tax year, the
filed tax return (including the extension Generally, the following rules apply. For
due date) indicating the amount of U.S. more information, see Pub. 538, corporation may have to make an
liabilities reduced for branch profits tax Accounting Periods and Methods. adjustment under section 481(a) to
purposes and the corresponding amount • A corporation cannot use the cash prevent amounts of income or expense
also reduced from U.S.-connected method of accounting unless it is a small from being duplicated or omitted. The
liabilities for interest expense allocation business taxpayer (defined later). A tax section 481(a) adjustment period is
purposes. See Regulations section shelter (defined in section 448(d)(3)) may generally 1 year for a net negative
1.884-1(e)(3). never use the cash method. See sections adjustment and 4 years for a net positive
448(a)(1) through (a)(3). However, see adjustment. Also, see the Instructions for
Nonaccrual experience method for service Form 3115.
Assembling the Return providers in the instructions for Section II, Exceptions to the general section
To ensure that the corporation's tax return line 1a, later. 481(a) adjustment period may apply. Also,
is correctly processed, attach all • Unless it is a small business taxpayer in some cases, a corporation can elect to
schedules and other forms after page 8 of (defined below), a corporation must use modify the section 481(a) adjustment
Form 1120-F, in the following order. an accrual method for sales and period. The corporation may have to
1. Schedule D (Form 1120). purchases of inventory items. See the complete the appropriate lines of Form
2. Form 8949. instructions for Form 1125-A. 3115 to make an election. See the
• A corporation engaged in farming must Instructions for Form 3115 for more
3. Form 8996. use an accrual method. For exceptions, information and exceptions.
4. Form 4136. see section 447 and Pub. 225. If the net section 481(a) adjustment is
5. Form 8978. • Special rules apply to long-term positive, report the ratable portion on Form
contracts. See section 460. 1120-F, Section II, line 10, as other
•
6. Form 8941. Dealers in securities must use the income. If the net section 481(a)
7. Form 3800. mark-to-market accounting method. adjustment is negative, report the ratable
8. Form 8997. Dealers in commodities and traders in portion on line 27 of Section II as a
9. Additional schedules in securities and commodities may elect to deduction.
alphabetical order. use the mark-to-market accounting
method. See section 475.

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Accounting Period the next dollar. For example, $8.40 rounds payment when the corporation files Form
A corporation must figure its taxable to $8 and $8.50 rounds to $9. 1120-F.
income on the basis of a tax year. A tax If two or more amounts must be added Foreign corporations that do maintain
year is the annual accounting period a to figure the amount to enter on a line, an office or place of business in the United
corporation uses to keep its records and include cents when adding the amounts States must generally pay any tax due
report its income and expenses. and round off only the total. (page 1, line 7) in full no later than the due
Generally, corporations may use a date for filing Form 1120-F (not including
calendar year or a fiscal year. Personal extensions). See When To File, earlier, for
service corporations, however, must use a Recordkeeping
this due date. However, see Regulations
calendar year unless they meet one of the Keep the corporation's records for as long section 1.6081-5 for an exception. Also,
exceptions discussed under Personal as they may be needed for the see the instructions for line 7, later. If the
Service Corporation, later. Furthermore, administration of any provision of the foreign corporation files Form 1120-F
special rules apply to specified foreign Internal Revenue Code. Usually, records electronically, it may pay the tax due by
corporations. See Specified Foreign that support an item of income, deduction, initiating an electronic funds withdrawal
Corporations below. or credit on the return must be kept for 3 (direct debit). It does so by checking the
years from the date the return is due or box on Part II, line C, of Form
Change of tax year. Generally, a filed, whichever is later. Keep records that 8453-CORP. If the foreign corporation
corporation, including a personal service verify the corporation's basis in property does not file Form 1120-F electronically,
corporation, must get the consent of the for as long as they are needed to figure or if it files Form 1120-F electronically and
IRS before changing its tax year by filing the basis of the original or replacement does not choose the direct debit option,
Form 1128, Application To Adopt, property. QDDs should see the Qualified the tax may be paid as follows. The
Change, or Retain a Tax Year. However, Intermediary Agreement for additional foreign corporation may pay the tax using
exceptions may apply. See the requirements. EFTPS or it can arrange for its tax
Instructions for Form 1128 and Pub. 538
for more information. The corporation should keep copies of professional, financial institution, payroll
all filed returns. They help in preparing service, or other trusted third party to
Specified Foreign Corporations future and amended returns and in the make deposits on its behalf. In addition,
The annual accounting period of a calculation of earnings and profits. the foreign corporation also has the option
specified foreign corporation (defined to arrange for its financial institution to
initiate a same-day payment.
below) is generally required to be the tax Payment of Tax Due
year of its majority U.S. shareholder. If The requirements for payment of tax Note. If the due date falls on a Saturday,
there is more than one majority depend on whether the foreign Sunday, or legal holiday, the payment is
shareholder, the required tax year will be corporation has an office or place of due on the next day that isn't a Saturday,
the tax year that results in the least business in the United States. Sunday, or legal holiday.
aggregate deferral of income to all U.S.
shareholders of the foreign corporation. Foreign corporations that do not Electronic deposit requirement.
For more information, see section 898; maintain an office or place of business in Foreign corporations with an office or
Rev. Proc. 2006-45, 2006-2 C.B. 851, the United States must generally pay any place of business in the United States
available at IRS.gov/irb/ tax due (page 1, line 7) in full no later than must use electronic funds transfer to make
2006-45_IRB#RP-2006-45; and Rev. the 15th day of the 6th month after the end all federal tax deposits (such as deposits
Proc. 2002-39, 2002-1 C.B. 1046, of the tax year. However, see the of employment, excise, and corporate
available at IRS.gov/pub/irs-irbs/irb02-22, instructions for line 7, later. If the foreign income tax). Generally, electronic funds
as modified by Notice 2002-72, 2002-2 corporation files Form 1120-F transfers are made using EFTPS.
C.B. 843, available at electronically, it may pay the tax due by However, if the corporation does not want
IRS.gov/pub/irs-irbs/irb02-46. initiating an electronic funds withdrawal to use EFTPS, it can arrange for its tax
Specified foreign corporation. A (direct debit). It does so by checking the professional, financial institution, payroll
specified foreign corporation (as defined box on Part II, line C, of Form service, or other trusted third party to
in section 898) is any foreign corporation 8453-CORP, E-file Declaration for make deposits on its behalf. Also, it may
that is treated as a controlled foreign Corporations. If the foreign corporation arrange for its financial institution to
corporation (CFC) under subpart F does not file Form 1120-F electronically, submit a same-day payment (discussed
(sections 951 through 964) and with or if it files Form 1120-F electronically and below) on its behalf. EFTPS is a free
respect to which more than 50% of the does not choose the direct debit option, service provided by the Department of the
total voting power or value of all classes of the foreign corporation may use the Treasury. Services provided by a tax
stock of the corporation is treated as Electronic Federal Tax Payment System professional, financial institution, payroll
owned by a U.S. shareholder. (EFTPS) to pay the tax due if it has a U.S. service, or other third party may have a
bank account. If the foreign corporation fee.
does not have a U.S. bank account, it may To get more information about EFTPS
Rounding Off to Whole arrange for its financial institution to initiate or to enroll in EFTPS, visit EFTPS.gov or
Dollars a same-day payment on its behalf or it can call 800-555-4477 (TTY/TDD
The corporation may enter decimal points arrange for either a qualified intermediary, 800-733-4829).
and cents when completing its return. tax professional, payroll service, or other
However, the corporation should round off trusted third party to make a deposit on its Depositing on time. For any deposit
cents to whole dollars on its return, forms, behalf using a master account. In addition, made by EFTPS to be on time, the
and schedules to make completing its the foreign corporation still has the option corporation must submit the deposit by 8
return easier. The corporation must either to pay by check or money order, payable p.m. Eastern time the day before the date
round off all amounts on its return to whole to “United States Treasury.” To help the deposit is due. If the corporation uses
dollars or use cents for all amounts. To ensure proper crediting, write the a third party to make deposits on its
round, drop amounts under 50 cents and corporation's EIN, “Form 1120-F,” and the behalf, they may have different cutoff
increase amounts from 50 to 99 cents to tax period to which the payment applies times.
on the check or money order. Enclose the

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Same-day wire payment option. If the underpayment penalty for the period of taxes that must be collected or withheld
corporation fails to submit a deposit underpayment. Generally, a corporation is are not collected or withheld, or these
transaction on EFTPS by 8 p.m. Eastern subject to the penalty if its tax liability is taxes are not paid. These taxes are
time the day before the date a deposit is $500 or more and it did not timely pay at generally reported on:
due, it can still make the deposit on time least the smaller of: • Form 720, Quarterly Federal Excise
by using the Federal Tax Collection • Its tax liability for the current year, or Tax Return;
Service (FTCS). To use the same-day • Its prior year's tax. • Form 941, Employer's QUARTERLY
wire payment method, the corporation will No estimated tax payments are Federal Tax Return;
need to make arrangements with its required with respect to a foreign • Form 943, Employer's Annual Federal
financial institution ahead of time corporation's liability for the branch profits Tax Return for Agricultural Employees;
regarding availability, deadlines, and tax. See Regulations section 1.884-1(a). • Form 944, Employer's ANNUAL
Federal Tax Return; or
costs. Financial institutions may charge a Use Form 2220, Underpayment of Form 945, Annual Return of Withheld
•
fee for payments made this way. To learn Estimated Tax by Corporations, to see if Federal Income Tax.
more about the information the the corporation owes a penalty and to
corporation will need to provide to its figure the amount of the penalty. If Form The trust fund recovery penalty may be
financial institution to make a same-day 2220 is completed, enter the penalty on imposed on all persons who are
wire payment, go to IRS.gov/ Form 1120-F, page 1, line 6. See the determined by the IRS to have been
SameDayWire. instructions for line 6, estimated tax responsible for collecting, accounting for,
penalty, later. or paying over these taxes, and who acted
Estimated Tax Payments willfully in not doing so. The penalty is
equal to the full amount of the unpaid trust
Generally, the following rules apply to a Interest and Penalties fund tax. See the Instructions for Form
foreign corporation's payments of
estimated tax. Interest. Interest is charged on taxes 720; Pub. 15 (Circular E), Employer's Tax
• The corporation must make installment paid late even if an extension of time to file Guide; or Pub. 51 (Circular A), Agricultural
payments of estimated tax if it expects its is granted. Interest is also charged on Employer's Tax Guide, for details,
total tax for the year (less applicable penalties imposed for failure to file, including the definition of “responsible
credits) to be $500 or more. negligence, fraud, substantial valuation persons.”
• The installments are due by the 15th misstatements, substantial
day of the 4th, 6th, 9th, and 12th months understatements of tax, and reportable Note. The trust fund recovery penalty will
of the tax year. If any date falls on a transaction understatements from the due not apply to any amount of trust fund taxes
Saturday, Sunday, or legal holiday, the date (including extensions) to the date of an employer holds back in anticipation of
installment is due on the next regular payment. The interest charge is figured at the credit for qualified sick and family
business day. a rate determined under section 6621. leave wages or the employee retention
credit that they are entitled to. See Pub. 15
• If the foreign corporation maintains an Penalty for late filing of return. A or Pub. 51 for more information.
office or place of business in the United corporation that does not file its tax return
States, it must use electronic funds by the due date, including extensions, Other penalties. Other penalties may be
transfer to make installment payments of may be penalized 5% of the unpaid tax for imposed for negligence, substantial
estimated tax. each month or part of a month the return is understatement of tax, reportable
• If the foreign corporation does not late, up to a maximum of 25% of the transaction understatements, and fraud.
maintain an office or place of business in unpaid tax. The minimum penalty for a See sections 6662, 6662A, and 6663.
the United States, it may pay the return that is more than 60 days late is the
estimated tax by EFTPS, providing it has a smaller of the tax due or $450. The Special Rules for Foreign
U.S. bank account. The foreign penalty will not be imposed if the Corporations
corporation may also arrange for its corporation can show that the failure to file
financial institution to submit a same-day on time was due to reasonable cause. Source of Income Rules
payment on its behalf or can arrange for
its qualified intermediary, tax professional, If you believe that reasonable The source of income is important in
determining the extent to which income is
to make a deposit on its behalf using a CAUTION explanation when you file Form
payroll service, or other trusted third party ! cause exists, do not attach an taxable to foreign corporations. Each type
master account. In addition, the foreign 1120-F. Instead, if the corporation of income has its own sourcing rules.
corporation still has the option to pay the receives a penalty notice after the return is
estimated tax due by check or money filed, send an explanation to the IRS at Interest Income
order. that time and the IRS will determine if the
• Penalties may apply if the corporation corporation meets reasonable-cause
does not make required estimated tax criteria. The source of interest income is usually
determined by the residence of the
payment deposits. See Estimated tax obligor.
penalty below. Penalty for late payment of tax. A
• If the corporation overpaid estimated corporation that does not pay the tax when
tax, it may be able to get a quick refund by due may generally be penalized / of 1% 1 2 For example, interest paid by an obligor
filing Form 4466, Corporation Application of the unpaid tax for each month or part of who is a resident of the United States is
for Quick Refund of Overpayment of a month the tax is not paid, up to a U.S. source income, and interest paid by
Estimated Tax. See the instructions for maximum of 25% of the unpaid tax. The an obligor who is a resident of a country
line 5c, later. penalty will not be imposed if the other than the United States is foreign
corporation can show that the failure to source income. Interest paid by a foreign
See section 6655 for more information pay on time was due to reasonable cause. partnership that is predominantly engaged
on how to figure estimated taxes. See Caution above. in the active conduct of a trade or
business outside the United States is
Estimated tax penalty. A corporation Trust fund recovery penalty. This treated as U.S.-source income only if the
that does not make estimated tax penalty may apply if certain excise, interest is paid by a U.S. trade or business
payments when due may be subject to an income, social security, and Medicare conducted by the partnership or is

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allocable to income that is treated as section 993(a)(1) (other than interest and Income From the Sale or Exchange
effectively connected with the conduct of a gains described in section 995(b)(1)). of Personal Property
U.S. trade or business. See section 861(a) • Dividends paid by a foreign corporation
(1)(B). are U.S. source income: Income from the sale of personal property
Exceptions. The following types of 1. If the dividend is treated under by a foreign corporation is generally
interest income are treated as foreign section 243(e) as a distribution from the treated as foreign source under section
source income. accumulated profits of a predecessor U.S. 865(a). However, special rules may apply
• Interest income received from foreign corporation; or to source such income as follows.
branches of U.S. banks and savings and 2. To the extent the foreign • Income from the purchase and sale of
loan associations. corporation's effectively connected gross inventory property is generally sourced
• In the case of a foreign partnership that income for the testing period (defined under section 861(a)(6) as U.S. source if
is predominantly engaged in the active below) bears to all of the foreign the property is purchased without the
conduct of a trade or business outside the corporation's gross income for the testing United States and sold within the United
United States, any interest not paid by a period, but only if 25% or more of the States and under section 862(a)(6) as
trade or business engaged in by the foreign corporation's gross income during foreign source if the property is purchased
partnership in the United States and not the testing period was effectively within the United States and sold without
allocable to income that is effectively connected with the conduct of a U.S. trade the United States. See also U.S. source
connected (or treated as effectively or business. treatment of inventory sales attributable to
connected) with the conduct of a U.S. a U.S. office or fixed place of business
trade or business. The testing period is generally the 3 under section 865(e)(2).
tax years of the foreign corporation payer • Income from the production and sale of
The following types of interest income preceding the tax year during which it inventory property is generally sourced
are treated as domestic source income declared the dividend. If the foreign solely on place-of-production activities
even though paid by a foreign corporation. corporation existed for fewer than 3 years under section 863(b).
• For a foreign corporation engaged in a before the tax year of declaration, the • Income from the sale of depreciable
U.S. trade or business, interest paid by the testing period is the term of the foreign property is generally sourced as mixed
U.S. trade or business (branch interest) is corporation's existence before the current U.S. and foreign source under section
treated as if paid by a domestic year. If the foreign corporation declared 865(c).
corporation to the actual recipient of the the dividend in its first tax year, that year is • Income from certain sales of intangibles
interest. See section 884(f)(1)(A) and the the testing period. Regardless of source, is generally subject to the source rules
regulations thereunder. Interest paid from however, there is no tax imposed on any applicable to royalties, found in section
a U.S. trade or business is only treated as dividends paid by a foreign corporation out 861(a)(4). See section 865(d).
branch interest to the extent the interest is of earnings and profits for a tax year in
allocable to ECI under the interest which the foreign corporation was subject Foreign corporations with an office or
expense allocation rules in Regulations to the branch profits tax (determined after fixed place of business in the United
section 1.882-5. Amounts paid but not application of any income tax treaty). See States. Income from the sale of personal
allocable to ECI are not branch interest. Regulations section 1.1441-1(b)(4)(vii). property attributable to an office or fixed
See Regulations section 1.884-4(b)(6). place of business is U.S. source income
• If the foreign corporation has allocable regardless of any of the above rules
interest in excess of branch interest Dividend Equivalents relating to the source of income from the
(excess interest), the foreign corporation sale or exchange of personal property,
must treat that interest as if paid by a A dividend equivalent is generally treated except that this source rule is not
wholly owned domestic corporation to the as a dividend from sources within the applicable for purposes of defining an
foreign corporation. See section 884(f)(1) United States. export trade corporation (see sections
(B) and the instructions for Section III, Part 865(e)(2)(A) and 971).
II, later. Rent and Royalty Income
Exception. Income from the sale of
Dividend Income The source of rent and royalty income for inventory property is foreign source
the use of property is determined based income if the goods were sold for use,
The source of dividend income is usually on where the property is located. disposition, or consumption outside the
United States and a foreign office of the
determined by the residence of the payer. corporation materially participated in the
For example, dividends paid by a Income From the Sale or Exchange sale.
corporation that was incorporated in the of Real Estate
United States are generally U.S. source
Income on Guarantees
income and dividends paid by a Gain from the disposition of a U.S. real
corporation that was incorporated in a property interest (a USRPI) is U.S. source. With respect to guarantees issued after
foreign country are generally foreign A USRPI includes, but is not limited to, September 27, 2010:
source income. real property situated in the United States, • The following income is U.S. source:
Exceptions: an interest in real property other than Amounts received directly or indirectly
• Dividends paid by a U.S. corporation solely as a creditor (such as a contingent from (1) a noncorporate resident or
are foreign source income: interest in real property), and an interest in domestic corporation for the provision of a
1. If the U.S. corporation has made a a United States real property holding guarantee of any indebtedness of such
valid election under section 936 (or corporation (USRPHC). See section 897 resident or corporation, or (2) any foreign
section 30A), relating to certain U.S. and the regulations thereunder. person for the provision of a guarantee of
corporations operating in a U.S. any indebtedness of such person, if such
possession; or amount is connected with income that is
2. To the extent the dividends are effectively connected (or treated as
from qualified export receipts described in effectively connected) with the conduct of

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a trade or business in the United States. The corporation must show its 2023 tax Initial Return, Name or
See section 861(a)(9). year on the 2022 Form 1120-F and take
• The following income is foreign source: into account any tax law changes that are Address Change, Final
Amounts received, directly or indirectly, effective for tax years beginning after Return, First Post-Merger
from a foreign person for the provision of a December 31, 2022.
Return, Amended Return,
guarantee of indebtedness of such person
other than amounts that are derived from Address Schedule M-3 Attached,
sources within the United States as Include the room, suite, or other unit Protective Return
provided in section 861(a)(9). See section number after the street address. If the post Check all of the applicable box(es).
862(a)(9). office does not deliver mail to the street Name or address change. If the
Other Special Rules address and the corporation has a P.O. corporation has changed its name or
box, show the box number instead.
Basis of Property and Inventory address since it last filed Form 1120-F
If the corporation receives its mail in (including a change to an “in care of”
Costs for Property Imported by a care of a third party (such as an address), check the box for “Name or
Related Person accountant or an attorney), enter “C/O” on address change.”
the street address line followed by the
If property is imported into the United third party's name and street address or Note. If a change in address or
States by a related person in a transaction P.O. box. responsible party occurs after the return is
and the property has a customs value, the filed, use Form 8822-B, Change of
basis or inventory cost to the importer may If the corporation has a foreign Address or Responsible Party —
not exceed the customs value. See address, include the city or town, state or Business, to notify the IRS. See the
section 1059A. province, country, and foreign postal instructions for Form 8822-B for details.
code. Do not abbreviate the country
name. Follow the country's practice for First post-merger return. Check the
Income of Foreign Governments entering the name of the state or province “First post-merger return” box if, due to a
and International Organizations and postal code. corporate merger, the foreign corporation
has acquired a new EIN. Check the “First
post-merger return” box if the foreign
Income of foreign governments and Employer Identification corporation has merged with a foreign or
international organizations from the Number (EIN) domestic corporation with U.S. operations.
following sources is generally not subject Enter the corporation's EIN. If the Do not check the “First post-merger
to tax or withholding under Chapter 3 or 4 corporation does not have an EIN, it must return” box if the foreign corporation has
of the Code. apply for one. An EIN may be applied for: merged with another foreign corporation
• Investments in the United States in • Online—Go to IRS.gov/EIN. The EIN is and the merger has no effect on the filer's
stocks, bonds, or other domestic issued immediately once the application U.S. operations.
securities owned by such foreign information is validated. Schedule M-3 attached. A corporation
government or international organization. • By faxing or mailing Form SS-4, with total assets reportable on Form
• Interest on deposits in banks in the Application for Employer Identification 1120-F, Schedule L, of $10 million or more
United States of money belonging to such Number. on the last day of the tax year must file
foreign government or international
organization. While a corporation that was a QDD or Schedule M-3 (Form 1120-F), Net Income
• Investments in the United States in had a branch that was a QDD is generally (Loss) Reconcilation for Foreign
financial instruments held (by a foreign required to use an EIN, if the only reason Corporations With Reportable Assets of
government) in executing governmental the corporation is filing a Form 1120-F is $10 Million or More, instead of
financial or monetary policy. because it or its branch was a QDD, it may Schedule M-1. A foreign corporation filing
use its QI-EIN instead. Form 1120-F that is not required to file
Exception. The income described in Schedule M-3 (Form 1120-F) may
section 892(a)(2) that is received directly Corporations located in the United voluntarily file Schedule M-3 (Form
or indirectly from commercial activities is ! States or U.S. possessions can 1120-F) instead of Schedule M-1.
subject to both tax and withholding under CAUTION use the online application. Foreign
Chapter 3 or 4 of the Code. corporations should call 267-941-1099 Corporations that (a) are required to file
(not a toll-free number) for more Schedule M-3 (Form 1120-F) and have
information on obtaining an EIN. See the less than $50 million total assets at the
Specific Instructions Instructions for Form SS-4. end of the tax year, or (b) are not required
to file Schedule M-3 (Form 1120-F) and
Period Covered EIN applied for, but not received. If the voluntarily file Schedule M-3 (Form
File the 2022 return for calendar year 2022 corporation has not received its EIN by the 1120-F), must either (i) complete
and fiscal years that begin in 2022 and time the return is due, enter “Applied For” Schedule M-3 (Form 1120-F) entirely, or
end in 2023. For a fiscal or short tax year and the date the corporation applied in the (ii) complete Schedule M-3 (Form 1120-F)
return, fill in the tax year space at the top space for the EIN. However, if the through Part I, and complete
of the form. corporation is filing its return electronically, Schedule M-1, instead of completing Parts
an EIN is required at the time the return is II and III of Schedule M-3 (Form 1120-F). If
The 2022 Form 1120-F may also be filed. the corporation chooses to complete
Schedule M-1 instead of completing Parts
used if: For more information, see the II and III of Schedule M-3 (Form 1120-F),
• The corporation has a tax year of less Instructions for Form SS-4. the amount on Schedule M-1, line 1, must
than 12 months that begins and ends in
2023, and equal the amount on Schedule M-3 (Form
• The 2023 Form 1120-F is not available 1120-F), Part I, line 11. See the
at the time the corporation is required to instructions for Schedule M-1 (Form
file its return. 1120-F) and the Instructions for

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Schedule M-3 (Form 1120-F) for more organized in more than one country, list all capital gains included in the corporation's
details. countries. income. Attach Form 2439.
If you are filing Schedule M-3, check Item B. Enter the foreign country or Line 5g. Credit for Federal Tax
the “Schedule M-3 attached” box at the countries under whose laws the income on Fuels
top of page 1 of Form 1120-F. reported on Form 1120-F is also subject to
Protective return filers. Check the tax. This may include the country where Enter the total income tax credit claimed
"Protective return" box if the foreign the corporation is managed and on Form 4136, Credit for Federal Tax Paid
corporation is filing a protective return. controlled, as well as the country or on Fuels. Attach Form 4136.
See Protective return, earlier, for countries in which the corporation is Credit for tax on ozone-depleting
information concerning who should file a incorporated or organized. chemicals. Include on line 5g any credit
protective return. Item F. See the list of Principal Business the corporation is claiming under section
If the corporation is filing a protective Activity Codes at the end of these 4682(g)(2) for tax on ozone-depleting
return, complete Form 1120-F as follows. instructions. Using the list of codes and chemicals. Enter “ODC” on the dotted line
activities, determine from which activity to the left of the entry space.
Page 1. Enter the complete name, the corporation derives the highest Line 5h. Refundable Credit
address, and EIN of the corporation. percentage of its total receipts. Enter on
Check the “Protective return” box. Provide lines F(1), F(2), and F(3) the principal From Form 8827
all the information required in items A business activity code number, the Enter on line 5h the amounts from Form
through G. corporation's principal business activity, 8827, line 5c.
and a description of the principal product
Note. If the corporation is filing Form or service of the corporation. For nonstore Line 5i. U.S. Income Tax Paid or
1120-F to claim a refund for retailers, select the PBA code by the Withheld at Source
overwithholding reported in Section I on primary product that your establishment Enter on line 5i U.S. income tax amounts
page 3, the return may also assert sells. For example, establishments paid or withheld at source and reported
protective return status for the right to primarily selling prescription and on:
claim deductions and credits attributable non-prescription drugs, select PBA code • Form 1042-S pertaining to amounts
to ECI by also checking the “Protective 456110 Pharmacies & Drug Retailers. reported on page 3, line 12 (income from
return” box at the top of page 1.
U.S. sources not effectively connected
Refund amount. Enter on lines 1 and Computation of Tax Due or with the conduct of a trade or business in
the United States). The amount included
4, page 1, the amount from line 11, Overpayment on line 5i should be the total amount of
page 3. Enter on lines 5i and 5j the
amount from line 12, page 3. Enter the Line 5b. Estimated Tax federal tax withheld reported to you on the
applicable Form(s) 1042-S less any
excess of line 5j over line 4 on lines 8a Payments
and 9. This is the amount to be refunded amount that was repaid to you by the
to you. Enter any estimated tax payments the withholding agent. See the instructions
corporation made for the tax year. below the title of Section I on page 3 of the
Signature. An authorized officer of the form for information pertaining to when
corporation must sign and date the return. Beneficiaries of trusts. If the
If the protective return is being filed corporation is the beneficiary of a trust, amounts should be reported on line 12.
pursuant to an income tax treaty and the trust makes a section 643(g) • Form 8805 pertaining to amounts
exemption, attach a completed Form 8833 election to credit its estimated tax reported on Form 1120-F, page 4,
to the return. payments to its beneficiaries, include the Section II, that relate to ECI from a
corporation's share of the payment in the partnership under section 1446.
Page 2. Provide all the information total for line 5b. Enter “T” and the amount • Form 1042-S pertaining to amounts
required in items N, O, Q, T, V, W(1), on the dotted line next to the entry space. reported on Form 1120-F, page 4,
W(2), X, Y, AA, BB, and any other Section II, that relate to ECI from a publicly
applicable questions. With respect to item Line 5c. 2022 Refund Applied traded partnership under section 1446.
Y, it is not necessary for the corporation to for on Form 4466 • Form 8288-A pertaining to amounts
file Schedule P, even if the answer to item If the corporation overpaid estimated tax, it reported on Form 1120-F, page 4,
Y(1) is “Yes.” However, a corporation that may be able to get a quick refund by filing Section II, that relate to income from
files a protective tax return may voluntarily Form 4466. The overpayment must be at dispositions of U.S. real property interests
file Schedules I and P to preserve certain least 10% of the corporation's expected under section 1445 and income from
timely elections. income tax liability and at least $500. File dispositions of interests in partnerships
Page 3. Complete all applicable Form 4466 after the end of the that are engaged in the conduct of a trade
portions of Section I, Income From U.S. corporation's tax year, and no later than or business in the United States under
Sources Not Effectively Connected With the due date for filing the corporation's tax section 1446(f).
the Conduct of a Trade or Business in the return (not including extensions). Form You must attach any Forms 8288-A,
United States. 4466 must be filed before the corporation 8805, and 1042-S to substantiate amounts
files its tax return. See the instructions for withheld or paid that are reported on
Form 4466. line 5i.
Identifying Information
Requested at Top of Page Line 5f. Credit for Tax Paid on Include on line 5i only amounts
1 of Form Undistributed Capital Gains ! withheld under Chapter 3 or 4 of
CAUTION the Code. Do not include other
Complete items A though G. Enter any credit from Form 2439, Notice to amounts, such as backup withholding, on
Shareholder of Undistributed Long-Term line 5i. Enter backup withholding on line 5j
Item A. Enter the foreign corporation’s Capital Gains, for the corporation's share (see below).
country of incorporation or organization. If of the tax paid by a regulated investment
the corporation is incorporated or company (RIC) or a real estate investment
trust (REIT) on undistributed long-term

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Line 5j. Total Payments Line 9 • Answer “No” if the corporation does not
Backup withholding. If the corporation Enter the portion of line 8a you want have a permanent establishment in the
had income tax withheld from any credited to your 2022 estimated tax and United States.
payments it received due to backup the portion of line 8a you want refunded. If the answer to item L is “No” and the
withholding, include the amount withheld answer to item K(1) is “Yes,” complete
in the total for line 5j. Enter the amount Note. The election to apply some or all of item W(1) on page 2 of the form and
withheld and the words “Backup the overpayment amount to the attach a completed Form 8833 to the
Withholding” in the blank space in the corporation's 2022 estimated tax cannot return, including a statement indicating the
right-hand column between lines 4 and 5j. be changed at a later date. nature and amount (or reasonable
Line 6. Estimated Tax Penalty Note. You can credit any or all of the estimate thereof) of gross receipts of the
Generally, the corporation does not have line 8a overpayment to your 2022 foreign corporation exempt by reason of
to file Form 2220 because the IRS can estimated tax, even those amounts on not having a permanent establishment in
figure the penalty amount, if any, and bill line 8b resulting from tax deducted and the United States.
the corporation. However, even if the withheld under Chapters 3 and 4. Item M
corporation does not owe the penalty, it Note. Refunds of certain overpayments See Form 5472, earlier.
must complete and attach Form 2220 if: (for example, those which pertain to tax Item O—Personal Service
• The annualized income or adjusted withheld and reported on Forms 1042-S, Corporation
method is used, or 8805, and 8288-A) may require additional
• The corporation is a large corporation time to be processed. Therefore, please A personal service corporation is a
(as defined in the Instructions for Form allow up to 6 months for these refunds to corporation whose principal activity
2220) computing its first required be issued. (defined below) for the testing period for
installment based on the prior year's tax. the tax year is the performance of
Electronic deposit of refund. If the personal services. The services must be
If Form 2220 is attached, check the box corporation has a refund of $1 million or substantially performed by
on line 6, and enter any penalty on this more and wants it electronically deposited employee-owners.
line. into its checking or savings account at any
Line 7. Amount Owed U.S. bank or other financial institution Testing period. Generally, the testing
instead of having a check sent to the period for a tax year is the prior tax year.
If the corporation cannot pay the full corporation, complete Form 8302 and However, the testing period for a new
amount of tax owed, it can apply for an attach it to Form 1120-F. corporation starts with the first day of its
installment agreement online. The first tax year and ends on the earlier of:
corporation can apply for an installment • The last day of its first tax year, or
agreement online if: Additional Information The last day of the calendar year in
•
• It cannot pay the full amount shown on Requested on Pages 2 and which the first tax year began.
line 7, 3 of Form Principal activity. The principal activity
• The total amount owed is $25,000 or
less, and Complete items H through II. of a corporation is considered to be the
performance of personal services if,
• The corporation can pay the liability in Item K(1) during the testing period, the corporation's
full in 24 months. If the foreign corporation was not engaged compensation costs for the performance
To apply using the Online Payment in a U.S. trade or business at any time of personal services (defined below) are
Agreement Application, go to IRS.gov/ during the tax year, or was engaged in a more than 50% of its total compensation
OPA. U.S. trade or business but did not derive costs.
Under an installment agreement, the any gross income effectively connected to
corporation can pay what it owes in such trade or business, answer “No” to Performance of personal services.
monthly installments. There are certain item K(1). The term “performance of personal
services” includes any activity involving
conditions that must be met to enter into If the foreign corporation had gross the performance of personal services in
and maintain an installment agreement, income effectively connected with or the fields of health, law, engineering,
such as paying the liability within 24 treated as effectively connected with the architecture, accounting, actuarial
months and making all required deposits conduct of a trade or business in the science, performing arts, or consulting.
and timely filing tax returns during the United States, answer “Yes” to item K(1).
length of the agreement. Accounting period. A personal service
If the installment agreement is Item L corporation must use a calendar tax year
accepted, the corporation will be charged Skip item L (leave blank) if the foreign unless:
a fee and it will be subject to penalties and corporation is a resident of a country that • It elects to use a 52-53-week tax year
interest on the amount of tax not paid by does not have an income tax treaty with that ends with reference to the calendar
the due date of the return. the United States. If the foreign year or tax year elected under section
corporation is a resident of a country that 444;
Line 8b has an income tax treaty with the United • It can establish a business purpose for
Enter on line 8b the amount of States: a different tax year and obtains the
overpayment on line 8a resulting from tax • Answer “Yes” if the corporation had a approval of the IRS (see the Instructions
deducted and withheld under Chapters 3 permanent establishment in the United for Form 1128 and Pub. 538); or
and 4. This amount is computed by States at any time during the tax year or in • It elects under section 444 to have a tax
completing Schedule W on page 8 of any prior tax year to which income was year other than a calendar year. To make
Form 1120-F. attributable, and enter the name of the the election, use Form 8716, Election To
country of residence of the foreign Have a Tax Year Other Than a Required
corporation. Tax Year.
If a corporation makes the section 444
election, its deduction for certain amounts

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paid to employee-owners may be limited. Note. If the corporation is an “excluded • Name and EIN (if any) of the foreign
See Schedule H (Form 1120), Section member” of a controlled group (see partnership.
280H Limitations for a Personal Service definition in the Instructions for • Identify which, if any, of the following
Corporation (PSC), to figure the maximum Schedule O (Form 1120)), it is still forms the foreign partnership filed for its
deduction. considered a member of a controlled tax year ending with or within the
If a section 444 election is terminated group for this purpose. corporation's tax year: Form 1042, 1065,
or 8804.
and the termination results in a short tax Item W(1) • Name of partnership representative (if
year, type or print at the top of the first
page of Form 1120-F for the short tax year If a foreign corporation claims that a treaty any).
“SECTION 444 ELECTION overrules or modifies any provision of the • Beginning and ending dates of the
TERMINATED.” Internal Revenue Code and thereby foreign partnership's tax year.
effects a reduction of any tax with respect
Other rules. For other rules that apply to to an item reported on this Form 1120-F, In addition, report any ECI included on
personal service corporations, see check the “Yes” box. Check the “Yes” box, Schedule K-3 (Form 1065) reported by the
Passive activity limitations, later. for example, if a treaty benefit has been foreign partnership to the corporation, and
claimed based on: the ECI apportionment of the corporation's
Item P The nondiscrimination provision of a outside basis in the foreign partnership, as
•
Enter any tax-exempt interest received or treaty. required in Schedule P.
accrued. Include any exempt-interest • The business profits article of a treaty, if
dividends received as a shareholder in a expenses are claimed in determining the Item Z(2)
mutual fund or other RIC. Also, if required, business profits of the foreign corporation, If the answer to item Z(2) is “Yes,” attach a
include the same amount on notwithstanding an inconsistent provision statement explaining whether the
Schedule M-1, line 7a, or Schedule M-3, of the Code. interbranch transactions are recognized
Part II, line 4a. • The gains article, if a treaty benefit is under Proposed Regulations section
Item R claimed relating to gain or loss on the 1.863-3(h) (Global Dealing Regulations) or
disposition of a U.S. real property interest. some other proposed regulation. If
If the corporation has a net operating loss • The branch profits tax article (or portion interbranch transactions are recognized
(NOL) for 2022, it can elect to waive the of the dividends article relating to the pursuant to a U.S. income tax treaty other
entire carryback period for the NOL and branch profits tax) and tax on excess than one that, in its text or accompanying
instead carry the NOL forward to future tax interest. documents (including an exchange of
years. To do so, check the box in item R • A waiver of insurance excise tax under notes), allows for such recognition by
and file Form 1120-F by its due date, section 4371 (if the foreign corporation explicitly incorporating an arm's-length
including extensions. Do not attach the has not entered into a closing agreement method applying the OECD Transfer
statement described in Temporary with the IRS and has not filed an annual Pricing Guidelines, then such treaty-based
Regulations section 301.9100-12T. Form 720). position should be disclosed on Form
Generally, once made, the election is • The interest, dividends, or royalty 8275-R, in addition to the treaty disclosure
irrevocable. article, if a refund of withholding tax is due. required on Form 8833.
If the corporation timely filed its return Item W(2) Item AA
for the loss year without making the A corporation filing Form 1120-F must file
election, it can make the election on an Check the "Yes" box if the foreign
amended return filed within 6 months of corporation is claiming tax treaty benefits Schedule UTP (Form 1120), Uncertain
the due date of the loss year return pursuant to a Competent Authority Tax Position Statement, with its 2022
(excluding extensions). Attach the election determination or Advance Pricing income tax return if:
to the amended return and write "Filed Agreement that it qualifies for the treaty • For 2022, the corporation's total assets
pursuant to section 301.9100-2" on the benefits being claimed. You must attach a equal or exceed $10 million. The assets of
election statement. See the Instructions copy of the Competent Authority a corporation filing a Form 1120-F equal or
for Form 1139. determination letter or Advance Pricing exceed $10 million if the higher of the
Agreement to the return. beginning or end of year total worldwide
Item S assets of the corporation reported on
Item Y(1) Form 1120-F, Schedule L, line 17, would
Enter the amount of the NOL carryover to be at least $10 million if the corporation
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 were to prepare a Schedule L on a
return. The amount to enter is the total of from a directly owned partnership interest worldwide basis;
all NOLs generated in prior years but not that is ECI or treated as ECI by the • The corporation or a related party
used to offset income (either as a partnership or the corporation (partner), issued audited financial statements
carryback or carryover) to a tax year prior see Who Must Complete Schedule P in reporting all or a portion of the
to 2022. Do not reduce the amount by any the separate Instructions for Schedule P corporation's operations for all or a portion
NOL deduction reported on Section II, (Form 1120-F). of the corporation's tax year; and
• The corporation has one or more tax
line 30a. Item Y(2) positions that must be reported on
Item T If the corporation owned at least a 10% Schedule UTP.
Check the “Yes” box for item T if the interest, directly or indirectly, in any
corporation is a subsidiary in a foreign partnership, attach a statement Attach Schedule UTP to the
parent-subsidiary controlled group. This listing the following information for each corporation's income tax return. Do not file
applies even if the corporation is a foreign partnership. For this purpose, a it separately. A taxpayer that files a
subsidiary member of one group and the foreign partnership includes an entity protective Form 1120-F must also file
parent corporation of another. For a treated as a foreign partnership under Schedule UTP if it satisfies the
definition of a parent-subsidiary controlled Regulations section 301.7701-2 or requirements set forth above.
group, see the Instructions for Schedule O 301.7701-3. For details, see the Instructions for
(Form 1120). Schedule UTP.

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Item BB directly or indirectly offset by certain Form 8990. Also, see the Instructions for
If the foreign corporation made any deductions involving hybridity incurred by Schedule I (Form 1120-F).
payment(s) in 2022, that would require the a related party or pursuant to a structured
foreign corporation to file any Forms 1042 arrangement. However, section 267A Item GG
does not apply if a de minimis exception is Generally, a taxpayer with a trade or
and 1042 S, check the “Yes” box. See the ‐ business must file Form 8990 to claim a
Instructions for Form 1042 and the satisfied. See Regulations section
1.267A-1(c). For purposes of section deduction for business interest. In
Instructions for Form 1042 S for ‐ addition, Form 8990 must be filed by any
information regarding who is required to 267A, interest and royalties are defined
broadly. For additional information about taxpayer that owns an interest in a
file Forms 1042 and 1042 S and what ‐ partnership with current year, or prior-year
types of payments are subject to reporting arrangements subject to section 267A,
see Regulations sections 1.267A-2 and carryover, excess business interest
on Forms 1042 and 1042 S.‐ expense allocated from the partnership.
1.267A-4. Also, see the anti-avoidance
Item CC rule under Regulations section
Exclusions from filing. A taxpayer is
If the corporation or any branch of the 1.267A-5(b)(6).
not required to file Form 8990 if the
corporation was a QDD, check the “Yes” Extent to which deduction is disal- taxpayer is a small business taxpayer
box, enter the QI-EIN, and attach a lowed. When section 267A applies to (defined below) and does not have excess
Schedule Q (Form 1120-F) for each QDD. interest or royalties paid or accrued business interest expense from a
You must complete and attach pursuant to a hybrid arrangement, it partnership. A taxpayer is also not
Schedule Q (Form 1120-F) even if the generally disallows a deduction for the required to file Form 8990 if the taxpayer
QDD has zero tax liability. amount to the extent that, under the only has business interest expense from
foreign tax law, there is not a these excepted trades or businesses:
Item DD corresponding income inclusion (including • An electing real property trade or
If the corporation had gross receipts of at long-term deferral). However, the business,
least $500 million in any 1 of the 3 deduction is not disallowed to the extent • An electing farming business, or
preceding tax years, complete and attach the amount is directly or indirectly included • Certain utility businesses.
Form 8991. For this purpose, the in income in the United States, such as if
Small business taxpayer. A small
corporation's gross receipts include the the amount is taken into account with
business taxpayer is not subject to the
gross receipts of all persons aggregated respect to a U.S. shareholder under
business interest expense limitation and is
with the corporation, as specified in section 951(a) or section 951A. For
not required to file Form 8990. A small
section 59A(e)(3). See the Instructions for additional information, see Regulations
business taxpayer is a taxpayer that (a) is
Form 8991 to determine if the corporation sections 1.267A-2 through 1.267A-4. For
not a tax shelter (as defined in section
is subject to the base erosion minimum examples illustrating the application of
448(d)(3), and (b) meets the gross
tax. section 267A, see Regulations section
receipts test of section 448(c) discussed
Item EE 1.267A-6.
next.
Section 267A disallows a deduction for Item FF Gross receipts test. For 2022, a
certain interest or royalty paid or accrued The limitation on business interest taxpayer meets the gross receipts test if
pursuant to a hybrid arrangement, to the expense applies to every taxpayer with a the taxpayer has average annual gross
extent that, under the foreign tax law, trade or business, unless the taxpayer receipts of $27 million or less for the 3
there is not a corresponding income meets certain specified exceptions. A prior tax years. A taxpayer’s average
inclusion (including long-term deferral). taxpayer may elect out of the limitation for annual gross receipts for the 3 prior tax
Report in Item EE the total amount of certain businesses otherwise subject to years is determined by adding the gross
interest and royalty paid or accrued by a the business interest expense limitation. receipts for the 3 prior tax years and
U.S. taxable branch (which includes a See Item GG. Also, see the Instructions dividing the total by 3. Gross receipts
U.S. permanent establishment) of the for Form 8990. include the aggregate gross receipts from
foreign corporation for which a deduction all persons treated as a single employer,
is disallowed under section 267A. Certain real property trades or
businesses and farming businesses such as a controlled group of
Payments to which section 267A ap- qualify to make an election not to limit corporations, commonly controlled
plies. Interest or royalty considered paid business interest expense. This is an partnerships, or proprietorships, and
or accrued by a U.S. taxable branch of the irrevocable election. If you make this affiliated service groups. See section
foreign corporation is subject to section election, you are required to use the 448(c) and the Instructions for Form 8990
267A. See Regulations section alternative depreciation system to for additional information.
1.267A-5(b)(3) for rules regarding U.S. depreciate any nonresidential real
taxable branch payments, including property, residential rental property, and Note. A foreign corporation is required to
interest or royalties considered paid or qualified improvement property for an complete Schedule I (Form 1120-F) to
accrued by a U.S. taxable branch. Section electing real property trade or business, compute its interest expense deduction
267A generally applies to interest or and any property with a recovery period of under Regulations section 1.882-5. If the
royalties paid or accrued pursuant to a 10 years or more for an electing farming foreign corporation is required to complete
hybrid arrangement (such as, for example, business. See section 168(g)(1)(F). Also, and file Form 8990, attach Form 8990 to
a payment pursuant to a hybrid you are not entitled to the special Schedule I (Form 1120-F), which is
instrument, or a payment to a reverse depreciation allowance for that property. attached to Form 1120-F.
hybrid), provided that the payment or For a taxpayer with more than one Item HH
accrual is to a related party (or pursuant to qualifying business, the election is made
a structured arrangement). In addition, with respect to each business. In general, if a foreign corporation owns,
directly or indirectly, an interest in a
pursuant to an imported mismatch rule, Check "Yes" if the corporation has an partnership that is engaged in a U.S. trade
section 267A generally applies to interest election in effect to exclude a real property or business, gain or loss on the transfer of
or royalties paid or accrued pursuant to a trade or business or a farming business all (or any portion of) such interest is
non-hybrid arrangement where the income from section 163(j). For more information, treated as effectively connected with the
attributable to that payment or accrual is see section 163(j) and the Instructions for

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conduct of such trade or business to the earlier, for additional documentation received for OID obligations issued after
extent effectively connected gain or loss requirements. March 31, 1972.
would have flowed through the partnership Only report amounts on these lines if: Certain OID is not taxable for OID
to the foreign corporation had the • The amount received is fixed or obligations issued after July 18, 1984. See
partnership sold all of its assets at fair determinable, annual or periodic (FDAP) section 881(c) for more details.
market value (FMV) as of the date of the (see definition below).
For rules that apply to other OID
sale or exchange. See section 864(c)(8) • The amount received is includible in the
obligations, see Pub. 515.
for more details. Also, see Regulations gross income of the foreign corporation.
sections 1.864(c)(8)-1 and 1.864(c)(8)-2 Therefore, receipts that are excluded from 5. Gains from the sale or exchange of
for additional guidance concerning gain or income (for example, interest income patents, copyrights, and other intangible
loss of foreign persons from the transfer of received on state and local bonds that is property if the gains are from payments
certain partnership interests and the excluded under section 103) would not be that are contingent on the productivity,
notification required to be provided to included as income in Section I. use, or disposition of the property or
certain partnerships on the transfer. • The amount received is from U.S. interest sold or exchanged.
sources (see Source of Income Rules, For more information, see section
Item II earlier). 881(a) and Regulations section 1.881-2.
If a foreign corporation is organized in a • The amount received is not effectively
U.S. possession, it may be a Qualified connected with the conduct of a U.S. trade Note. For purposes of determining
Opportunity Fund (QOF) only if it is or business (see Section II, later). whether its income is taxable under
organized for the purpose of investing in • The amount received is not exempt (by section 881(a), a corporation created or
qualified opportunity zone property that Code) from taxation. For example, interest organized in Guam, American Samoa, the
relates to a trade or business operated in on deposits that are exempted by section Northern Mariana Islands, or the U.S.
the U.S. possession in which the 881(d) would not be included as income in Virgin Islands will not be treated as a
corporation is organized. To certify as a Section I. In addition, certain portfolio foreign corporation if it meets the rules of
QOF, the corporation must file Form interest is not taxable for obligations section 881(b). For dividends paid after
1120-F and attach Form 8996, even if the issued after July 18, 1984. See section October 22, 2004, a corporation created
corporation had no income or expenses to 881(c) for more details. or organized in Puerto Rico will be taxed
report. If the corporation is attaching Form • If you are a QDD, report all QDD tax under section 881(a) at a rate of 10% with
8996, check the “Yes” box for Item II. On liabilities (see Qualified Intermediary respect to such dividends received during
the line following the dollar sign, enter the Agreement), whether or not the amounts the tax year in the circumstances outlined
amount from Form 8996, line 15. are subject to withholding or correctly in section 881(b)(2).
The penalty reported on this line from withheld.
Line 9. Gross Transportation
Form 8996, line 15, is not due with the Such income (except as indicated Income
filing of this form. The IRS will separately below) will generally be subject to tax at a
send to you a notice setting forth the due 30% rate. See section 881(a). A 4% tax is imposed on a foreign
date for the penalty payment and where corporation's U.S. source gross
that payment should be sent. Amounts fixed or determinable, transportation income for the tax year.
annual or periodic include the following. U.S. source gross transportation income is
Section I—Income From 1. Interest (other than original issue generally any gross income that is
U.S. Sources Not discount (OID) as defined in section transportation income if such income is
1273), dividends, rents, royalties, salaries, treated as from U.S. sources.
Effectively Connected wages, premiums, annuities, Transportation income is any income
With the Conduct of a compensation, and other FDAP gains, from or connected with:
Trade or Business in the profits, and income. • The use (or hiring or leasing for use) of
United States Note. Item 1 above includes dividend a vessel or aircraft, or
Note. Complete Section I only if you equivalents described in section 871(m); • The performance of services directly
derived U.S. source income not effectively however, dividends and dividend related to the use of a vessel or aircraft.
connected with the conduct of a trade or equivalents received in calendar years For this purpose, the term “vessel or
business in the United States and either 2019 through 2024 by a QDD in its equity aircraft” includes any container used in
your withholding tax liability was not derivatives dealer capacity are excluded. connection with a vessel or aircraft.
correctly withheld at source or not 2. Gains described in section 631(b) Generally, 50% of all transportation
correctly reported on Form 1042-S, you or (c), relating to disposal of timber, coal, income that is attributable to
have a QDD tax liability (see section 3.09 or domestic iron ore with a retained transportation that either begins or ends in
of the Qualified Intermediary Agreement), economic interest. the United States is treated as from U.S.
sources. See section 863(c)(2)(B) for a
or you are claiming a credit or refund of an 3. On a sale or exchange of an OID special rule for personal service income.
amount withheld at source. You must obligation, the amount of the OID accruing
attach any Forms 1042-S (and any while the obligation was held by the Exceptions. U.S. source gross
supporting documentation) related to foreign corporation, unless this amount transportation income does not include
amounts for which you are claiming a was taken into account on a payment. income that is:
credit or refund for overwithholding (see 4. On a payment received on an OID • Effectively connected with the conduct
the instructions for line 5i). The amount obligation, the amount of the OID accruing of a U.S. trade or business, or
reported in column (e) is the amount that while the obligation was held by the • Taxable in a possession of the United
was actually withheld at source (and not foreign corporation, if such OID was not States under the provisions of the Internal
repaid to you by the withholding agent), as previously taken into account and if the tax Revenue Code as applied to that
reported to you in box 10 of the Form(s) imposed on the OID does not exceed the possession.
1042-S issued by the withholding payment received less the tax imposed on Transportation income of the
agent(s). See Claim for Refund or Credit, any interest included in the payment corporation will not be treated as ECI
received. This rule applies to payments unless:

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• The corporation has a fixed place of the amount of the increase or decrease If neither test is met, FDAP items are
business in the United States involved in from the FDAP Form 8978, line 14. Enter generally not ECI (and are therefore
the earning of transportation income, and any withholding in column (e). Attach the includible in Section I instead of
• Substantially all of the corporation's FDAP Form 8978 to Form 1120-F. Section II). For more information, see
U.S. source gross transportation income section 864(c)(2) and Regulations section
(determined without regard to the rule that Note. The taxpayer will generally skip 1.864-4(c).
such income does not include ECI) is lines 3a, 3b, 4, 7, 9a, 9b, and 10 of the
attributable to regularly scheduled FDAP Form 8978. Finance business. See Regulations
section 1.864-4(c)(5) for special rules
transportation (or, in the case of income
from the leasing of a vessel or aircraft, is Line 13 relating to banking, financing, or similar
attributable to a fixed place of business in Check the “Yes” box if you received an business activities. Such rules apply to
the United States). item of income during the tax year with certain stocks and securities of a banking,
respect to which you are treated as fiscally financing, or similar business in lieu of the
For more information, see section 887. transparent under the laws where you are asset-use and business-activities tests.
Enter the foreign corporation's U.S. organized. In such a case, you may not Asset-use test. The FDAP items are
source gross transportation income on claim a reduced rate of tax under a treaty from assets used in, or held for use in, the
line 9, column (b). Also, attach Schedule V with respect to that item. See Regulations conduct of U.S. trade or business. For
(Form 1120-F). section 1.894-1(d)(1). example, the following items are ECI.
See Exclusion from gross income for If the item of income has been withheld • Income earned on a trade or note
receivable acquired in the conduct of the
certain income from ships and aircraft, upon, your interest holders may, however, U.S. trade or business.
later. be able to claim treaty benefits, but only if Interest income earned from the
the tax jurisdiction in which your interest •
temporary investment of funds needed in
Line 10. Other Items of Income holders qualify for treaty benefits treats the foreign corporation's U.S. trade or
Include on line 10 all other income not you as fiscally transparent and the interest business.
reportable on lines 1 through 9. For any holders are not fiscally transparent with
amounts received by a QDD in its equity respect to that item of income. An interest Business-activities test. The activities
derivatives dealer capacity, include a holder claiming a benefit should file a of the U.S. trade or business were a
statement detailing each type of income. separate Form 1120-F, if appropriate. See material factor in the realization of the
In addition, if the foreign corporation Regulations section 1.894-1(d)(3) for the FDAP items.
received a specified federal procurement definition of “fiscally transparent” and
payment (as defined in section 5000C(b)) Regulations section 1.894-1(d)(5) for Foreign Source Effectively
that was not fully withheld upon at source, examples.
Connected Income
enter the payment in Section I, line 10,
column (b); enter a 2% rate of tax in Section II—Income Foreign source income is generally not
column (c); enter the tax liability in column ECI. However, if the foreign corporation
(d); and enter any withholding in column Effectively Connected
(e). With the Conduct of a has an office or other fixed place of
business in the United States, the
Increase or decrease in tax attributa- Trade or Business in the following types of foreign source income it
ble to partner's additional reporting United States receives from that U.S. office are ECI.
year tax. If the taxpayer is a foreign • Rents or royalties received for the use
corporate partner and received a Form Foreign Corporations Engaged outside the United States of intangible
8986 from a partnership that has elected in a U.S. Trade or Business personal property described in section
to have each reviewed partner take into These corporations are taxed on their ECI 862(a)(4) if derived from the active
account the partner's share of the at the same 21% tax rate that applies to conduct of a U.S. trade or business.
adjustments, as finally determined, domestic corporations. ECI can be U.S. • Gains or losses on the sale or
instead of paying the imputed source or foreign source income as exchange of intangible personal property
underpayment, the foreign corporate explained below. located outside the United States or from
partner (taxpayer) will have to complete any interest in such property, if such gains
Form 8978 to report adjustments shown or losses are derived in the active conduct
on the Form 8986 they received from the U.S. Source Effectively Connected of the trade or business in the United
partnership. The foreign corporate partner Income States.
(taxpayer) must complete a separate Form • Dividends, interest, amounts received
8978 to report adjustments pertaining to U.S. source income derived by a foreign for the provision of a guarantee of
income that is effectively connected with corporation engaged in a U.S. trade or indebtedness, issued after September 27,
the conduct of a trade or business in the business other than FDAP and capital 2010, if derived from the active conduct of
United States under section 882 (an “ECI gains is ECI. See Regulations section a U.S. banking, financing, or similar
Form 8978”) and a separate Form 8978 to 1.864-4(b). business or if the principal business of the
report adjustments pertaining to income foreign corporation is trading in stocks or
from U.S. sources not effectively Note. For purposes of the preceding securities for its own account.
connected with the conduct of a trade or paragraph, U.S. source income includes • Income from the sale or exchange of
business in the United States under income with respect to activities related to inventory outside the United States
section 881 (an “FDAP Form 8978”). the exploration and exploitation of natural through the U.S. office, unless the
Include any increase or decrease in taxes resources in continental shelf areas (see property is sold or exchanged for use,
due from the FDAP Form 8978, line 14, section 638). consumption, or disposition outside the
that was not fully withheld upon at source, United States and an office of the foreign
on a separate line on Form 1120-F, FDAP items are generally ECI (and are corporation in a foreign country materially
Section I, line 10. Enter “From Form 8978” therefore includible in Section II) if the participated in the sale.
in column (a) and skip (leave blank) asset-use test, the business-activities test, • Any income or gain that is equivalent to
columns (b) and (c). Enter in column (d) or both tests (explained below) are met. any item of income or gain listed above

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must be treated in the same manner as • Had gain or loss from disposing of a or business (except for those income
such item for purposes of determining U.S. real property interest (see Disposition items that must be reported on lines 4
whether that income is foreign source ECI. of U.S. Real Property Interest by a Foreign through 10). Include on line 1a effectively
Corporation, later). 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 Election To Treat Real Property applicable financial statement (as defined
definition of “office” or other fixed place of Income as Effectively in section 451(b)(3)), then the revenue
business in the United States. See Connected Income recognition rules in Regulations section
sections 864(c)(5)(B) and (C) and 1.451-3 may apply.
Regulations section 1.864-6 for special A foreign corporation that derives, during
rules for determining when foreign source the tax year, any income from real Special rules apply to certain income,
income received by a foreign corporation property located in the United States, or as discussed below.
is from an office or other fixed place of from any interest in such real property, Advance payments. In general,
business in the United States. may elect, for the tax year, to treat all such advance payments are reported in the
income as ECI. See section 871(d). year of receipt. For exceptions to this
Foreign insurance companies. Foreign Income to which this election applies general rule for corporations that use the
source income of a foreign insurance includes: accrual method of accounting, see the
company that is attributable to its U.S. • Gains from the sale or exchange of real following.
trade or business is ECI. See section property or an interest therein; To report income from long-term
•
864(c)(4)(C) and Regulations section • Rents or royalties from mines, wells, or contracts, see section 460.
1.864-5(c). other natural deposits; and For rules that allow a limited deferral of
•
Excluded foreign source income. • Gains described in section 631(b) or advance payments beyond the current tax
Foreign source income that would (c). year, see section 451(c). Also, see
otherwise be ECI under any of the above The election may be made whether or Regulations sections 1.451-8(c), (d), and
rules for foreign source income is not the corporation is engaged in a U.S. (e).
excluded if: trade or business during the tax year for • For information on adopting or
• It is foreign source dividends, interest, which the election is made or whether or changing to a permissible method for
or royalties paid by a foreign corporation in not the corporation has income from real reporting advance payments for services
which the taxpayer owns or is considered property that, for the tax year, is effectively and certain goods by an accrual method
to own (within the meaning of section 958) connected with the conduct of a U.S. trade corporation, see the Instructions for Form
more than 50% of the total combined or business. 3115.
voting power of all classes of stock
entitled to vote; or To make the election, attach a Exclusion from gross income for
• The taxpayer is a CFC (as defined in statement that includes the information certain income from ships and aircraft.
section 957) and the foreign source required in Regulations section A foreign corporation engaged in the
income is subpart F income (as defined in 1.871-10(d)(1)(ii) to Form 1120-F for the international operation of ships or aircraft
section 952). first tax year for which the election is to and organized in a qualified foreign
For more information, see section apply. Use Section II to figure the tax on country may exclude qualified income
864(c)(4)(D) and Regulations section this income. from its gross income, provided that the
corporation can satisfy certain ownership
1.864-5(d). Disposition of U.S. Real requirements. See Schedule S (Form
Foreign Corporations Not Property Interest by a Foreign 1120-F) and its separate instructions for
additional information.
Engaged in a U.S. Trade or Corporation
Business A foreign corporation that disposes of a Income from qualifying shipping
If a foreign corporation is not engaged in a U.S. real property interest (as defined in activities (tonnage tax). The
U.S. trade or business during the tax year, section 897(c)) must treat the gain or loss corporation's gross income does not
it will complete Section II only if such from the disposition as ECI, even if the include income from qualifying shipping
corporation: corporation is not engaged in a U.S. trade activities (as defined in section 1356) if the
• Had current year income or gain from a or business. Figure this gain or loss on corporation makes an election under
sale or exchange of property or from Schedule D (Form 1120), Capital Gains section 1354 to be taxed on its notional
performing services (or any other and Losses. Carry the result to Section II, shipping income (as defined in section
transaction) in any other tax year that line 8, on page 4 of Form 1120-F. 1353) at the highest corporate tax rate. If
the election is made, the corporation may
would have been ECI in that other tax year A foreign corporation may elect to be generally not claim any loss, deduction, or
(see section 864(c)(6)); treated as a domestic corporation for credit with respect to qualifying shipping
• Had current year income or gain from a purposes of sections 897 and 1445. See activities. A corporation making this
disposition of property that is no longer section 897(i). election may also elect to defer gain on
used or held for use in conducting a U.S. certain dispositions of qualifying vessels
trade or business within the 10-year period See Temporary Regulations section
under section 1359.
before the disposition that would have 1.897-5T for the applicability of section
been ECI immediately before such 897 to reorganizations and liquidations. Use Form 8902, Alternative Tax on
cessation (see section 864(c)(7)); Qualifying Shipping Activities, to figure the
• Elected to treat real property income as If the corporation had income tax tax. Include the alternative tax from Form
ECI (see below); withheld on Form 8288-A, include the 8902, line 30, on Schedule J, line 8, and
• Was created or organized and was amount withheld on line 5i, page 1. be sure to check the “Form 8902” box on
that line.
conducting a banking business in a U.S. Income
possession, and received interest on U.S. Installment sales. Generally, the
obligations that is not portfolio interest Line 1. Gross Receipts or Sales
installment method may not be used for
(see section 882(e)); or Line 1a. Enter gross income effectively dealer dispositions of property. A “dealer
connected with the conduct of a U.S. trade disposition” is any disposition of (a)

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personal property by a person who method or make certain changes within Line 10. Other Income
regularly sells or otherwise disposes of this method.
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
for sale to customers in the ordinary attach a statement showing total gross and amount of income on an attached
course of the taxpayer's trade or business. receipts, the amount not accrued because statement. If the corporation has only one
The restrictions on using the of the application of section 448(d)(5), and item of other income, describe it in
installment method do not apply to the the net amount accrued. Enter the net parentheses on line 10.
following. amount on line 1a.
Examples of other income to report on
• Dispositions of property used or Line 1b. Returns and Allowances. line 10 include the following.
produced in the trade or business of Enter cash and credit refunds the • Recoveries of bad debts deducted in
farming. corporation made to customers for prior years under the specific charge-off
• Certain dispositions of timeshares and returned merchandise, rebates, and other method.
residential lots reported under the allowances made on gross receipts or • The amount included in income from
installment method for which the sales. Form 6478, Biofuel Producer Credit.
corporation elects to pay interest under
section 453(l)(3). • The amount included in income from
Line 2. Cost of Goods Sold Form 8864, Biodiesel, Renewable Diesel,
Enter on line 1a (and carry to line 3) the or Sustainable Aviation Fuels Credit.
gross profit on collections from these • Refunds of taxes deducted in prior
installment sales. Attach a statement Complete and attach Form 1125-A, Cost
showing the following information for the of Goods Sold, if applicable. Enter on years to the extent they reduced the
current and the 3 preceding years: (a) Form 1120-F, line 2, the amount from amount of tax imposed. See section 111
gross sales, (b) cost of goods sold, (c) Form 1125-A, line 8. See Form 1125-A and the related regulations. Do not offset
gross profits, (d) percentage of gross and its instructions. current year taxes against tax refunds.
• Ordinary income from trade or business
profits to gross sales, (e) amount activities of a partnership (from
collected, and (f) gross profit on the Line 4. Dividends Schedule K-3 (Form 1065)). Do not offset
amount collected. ordinary losses against ordinary income.
For sales of timeshares and residential See the instructions for Schedule C, later. Instead, include the losses on Section II,
lots reported under the installment Complete Schedule C and enter on line 4 line 27. Show the partnership's name,
method, if the corporation elects to pay the amount from Schedule C, line 13. address, and EIN on Schedule P (Form
interest under section 453(I)(3), the 1120-F). If the amount entered is from
corporation's income tax is increased by Line 5. Interest more than one partnership, identify the
the interest payable under section 453(l) amount from each partnership on
Schedule P.
(3). Report this addition to the tax on Enter taxable interest on U.S. obligations The ratable portion of any net positive
Schedule J, line 8, and be sure to check and on loans, notes, mortgages, bonds, •
section 481(a) adjustment. See Section
the “Other” box. bank deposits, corporate bonds, tax 481(a) adjustment, earlier.
Nonaccrual experience method for refunds, etc. Do not offset interest Part or all of the proceeds received
service providers. Accrual method expense against interest income. Special •
from certain corporate-owned life
corporations are not required to accrue rules apply to interest income from certain insurance contracts issued after August
certain amounts to be received from the below-market-rate loans. See section 17, 2006. Corporations that own one or
performance of services that, based on 7872 for details. more employer-owned life insurance
their experience, will not be collected, if: contracts issued after this date must file
• The services are in the fields of health, Note. Report tax-exempt interest on Form
law, engineering, architecture, accounting, 1120-F, page 2, item P. Also, if required, Form 8925, Report of Employer-Owned
actuarial science, performing arts or include the same amount on Life Insurance Contracts. See Form 8925.
consulting; or Schedule M-1, line 7a, or Schedule M-3, • Income from cancellation of debt (COD)
• The corporation meets the section Part II, line 4a. from the repurchase of a debt instrument
for less than its adjusted issue price.
448(c) gross receipts test for all prior • Net income from notional principal
years. Line 6. Gross Rents contracts.
This provision does not apply to any • Interest and dividend equivalents (for
amount if interest is required to be paid on Enter the gross amount received for the example, confirmation and acceptance
the amount or if there is any penalty for rental of property. Deduct expenses such letter of credit fees and other guarantee
failure to timely pay the amount. See as repairs, interest, taxes, and fees).
Regulations section 1.448-3 for more depreciation on the proper lines for • Income from cancellation of debt (COD)
information on the nonaccrual experience deductions. A rental activity held by a from the repurchase of a debt instrument
method, including information on safe closely held corporation or a personal for less than its adjusted issue price.
harbor methods. service corporation may be subject to the • The amount of payroll tax credit taken
For information on a book safe harbor passive activity loss rules. See Passive by an employer on its 2022 employment
method of accounting for corporations that activity limitations, later. tax returns (Forms 941, 943, and 944) for
use the nonaccrual experience method of qualified paid sick and qualified paid
accounting, see Rev. Proc. 2011-46, Line 8. Capital Gain Net Income family leave under FFCRA and ARP (both
2011-42 I.R.B. 518, available at the nonrefundable and refundable
portions). The corporation must include
IRS.gov/irb/2011-42_IRB#RP-2011-46, or Every effectively connected sale or the full amount of the credit for qualified
any successor. Also, see the Instructions exchange of a capital asset must be sick and family leave wages in gross
for Form 3115 for procedures to obtain reported in detail on Schedule D (Form income for the tax year that includes the
automatic consent to change to this 1120), even if there is no gain or loss. last day of any calendar quarter in which
the credit is allowed.

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Note.  A credit is available only if the    otherwise disposes of the property (to        details, including special rules for costs 
leave was taken after March 31, 2020, and   which the costs relate). The corporation      paid or incurred before September 9, 
before October 1, 2021, and only after the  recovers these costs through                  2008, see the Instructions for Form 4562. 
qualified leave wages were paid, which      depreciation, amortization, or costs of       Also, see Pub. 535, Business Expenses.
might, under certain circumstances, not     goods sold.                                     If the corporation timely filed its return 
occur until a quarter after September 30,   A small business taxpayer (defined in         for the year without making an election, it 
2021, including quarters in 2022.           Accounting Methods, earlier) is not           can still make an election by filing an 
Deductions                                  required to capitalize costs under section    amended return within 6 months of the 
Important. In computing the taxable         263A. A small business taxpayer that          due date of the return (excluding 
income of a foreign corporation engaged     wants to discontinue capitalizing costs       extensions). Clearly indicate the election 
in a U.S. trade or business, deductions are under section 263A must change its            on the amended return and write “Filed 
allowed only if they are connected with     method of accounting. See section             pursuant to section 301.9100-2” at the top 
income effectively connected with the       263A(i) and Regulations section               of the amended return. File the amended 
conduct of a trade or business in the       1.263A-1(j). Also, see the Instructions for   return at the same address the corporation 
United States. Charitable contributions,    Form 3115.                                    filed its original return. The election 
however, may be deducted whether or not     For more information on the uniform           applies when figuring taxable income for 
they are so connected. See section 882(c)   capitalization rules, see Pub. 538. Also,     the current tax year and all subsequent 
and Regulations section 1.882-4(b) for      see Regulations sections 1.263A-1             years.
more information.                           through 1.263A-3. See section 263A(d),          The corporation can choose to forgo 
                                            Regulations section 1.263A-4, and Pub.        the elections above by affirmatively 
Apportionment of Expenses                   225 for rules for property produced in a      electing to capitalize its start-up or 
                                            farming business.                             organizational costs on its income tax 
                                                                                          return filed by the due date (including 
In general, expenses that are definitely    Transactions between related taxpay-
                                                                                          extensions) for the tax year in which the 
related to a class of gross income          ers. Generally, an accrual basis taxpayer 
                                                                                          active trade or business begins.
(including tax-exempt income) must be       may only deduct business expenses and 
allocated to that class of gross income.    interest owed to a related party in the year  Note.  The election to either amortize or 
Expenses not definitely related to a class  the payment is included in the income of      capitalize start-up costs is irrevocable and 
of gross income should be allocated to all  the related party. See sections 163(e)(3)     applies to all start-up costs that are related 
classes of income based on the ratio of     and 267(a)(2) for limitations on deductions   to the trade or business.
gross income in each class of income to     for unpaid interest and expenses. See the 
total gross income, or some other ratio     instructions for Schedule I (Form 1120-F),      Report the deductible amount of 
that clearly relates to the classes of      lines 24b and 24e, for limitations under      start-up and organizational costs and any 
income. See Regulations section 1.861-8     these sections of the interest expense        amortization on line 27. For amortization 
and Temporary Regulations section           allocable under Regulations section           that begins during the current tax year, 
1.861-8T for more information.              1.882-5.                                      complete and attach Form 4562, 
                                                                                          Depreciation and Amortization.
                                            Limitations on business interest ex-
Attach Schedule H (Form 1120-F) to          pense.   Business interest expense may        Passive activity limitations. Limitations 
show the definitely related and indirect    be limited. See section 163(j) and Form       on passive activity losses and credits 
allocation and apportionment of expenses    8990. Also, see Limitation on Deduction in    under section 469 apply to personal 
to ECI. The amount on Schedule H, Part II,  the instructions for line 19 and the          service corporations (for definition, see 
line 20, is reportable on Form 1120-F,      instructions for item FF and item GG,         Item O—Personal Service Corporation, 
Section II, line 26.                        earlier.                                      earlier) and closely held corporations (see 
                                                                                          definition below).
Note. The allocation and apportionment      Section 291 limitations. Corporations 
                                                                                            Generally, the two kinds of passive 
of bad debt deductions is not included on   may be required to adjust deductions for 
                                                                                          activities are:
Schedule H but is reported only on Form     depletion of iron ore and coal, intangible 
1120-F, Section II, line 15.                drilling and exploration and development      • Trade or business activities in which the 
                                                                                          corporation did not materially participate 
                                            costs, certain deductions for financial 
                                                                                          for the tax year; and
                                            institutions, and the amortizable basis of 
Limitations on Deductions                   pollution control facilities. See section 291 • Rental activities, regardless of its 
                                                                                          participation.
Uniform capitalization rules.  The          to determine the amount of the 
uniform capitalization rules of section     adjustment.                                     For exceptions, see Form 8810, 
                                                                                          Corporate Passive Activity Loss and 
263A require corporations to capitalize     Election to deduct business start-up          Credit Limitations.
certain costs to inventory or other         and organizational costs. A corporation 
property.                                   can elect to deduct a limited amount of         Corporations subject to the passive 
Corporations subject to the section         start-up and organizational costs it paid or  activity limitations must complete Form 
263A uniform capitalization rules are       incurred. Any remaining costs must            8810 to compute their allowable passive 
required to capitalize:                     generally be amortized over a 180-month       activity loss and credit. Before completing 
1. Direct costs of assets produced or       period. See sections 195 and 248 and the      Form 8810, see Temporary Regulations 
acquired for resale, and                    related regulations.                          section 1.163-8T, which provides rules for 
                                                                                          allocating interest expense among 
2. Certain indirect costs (including        Time for making an election.         The      activities. If a passive activity is also 
taxes) that are properly allocable to       corporation generally elects to deduct        subject to the at-risk rules of section 465 
property produced or property acquired for  start-up or organizational costs by           or the tax-exempt use loss rules of section 
resale.                                     claiming the deduction on its income tax      470, those rules apply before the passive 
                                            return filed by the due date (including       loss rules.
The corporation cannot deduct the           extensions) for the tax year in which the 
costs required to be capitalized under      active trade or business begins. For more 
section 263A until it sells, uses, or 

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For more information, see section 469, the lease payments. This disallowed property to a new or different use.
the related regulations, and Pub. 925, tax-exempt use loss may be carried over Amounts paid to produce or improve
Passive Activity and At-Risk Rules. to the next tax year and treated as a property must be capitalized. See
deduction with respect to the property for Regulations sections 1.263(a)-2 and -3.
Closely held corporations. A that tax year. See section 470(d) for
corporation is a closely held corporation if: exceptions. The corporation can deduct repair and
• At any time during the last half of the tax maintenance expenses only to the extent
year, more than 50% in value of its Contributions. See the instructions for they relate to a trade or business activity.
outstanding stock is directly or indirectly line 19, later, for limitations that apply to See Regulations section 1.162-4. The
owned by or for not more than five contributions. corporation may elect to capitalize certain
individuals; and repair and maintenance costs consistent
• The corporation is not a personal Line 12. Compensation of Officers with its books and records. See
service corporation. Regulations section 1.263(a)-3(n) for
Certain organizations are treated as Enter deductible officers' compensation information on how to make the election.
individuals for purposes of this test. See on line 12. Do not include compensation
section 542(a)(2). For rules for deductible elsewhere on the return, such Line 15. Bad Debts
determining stock ownership, see section as amounts included in cost of goods sold,
544 (as modified by section 465(a)(3)). elective contributions to a section 401(k) Enter the total debts that became
Reducing certain expenses for which cash or deferred arrangement, or amounts worthless in whole or in part during the tax
credits are allowable. If the corporation contributed under a salary reduction SEP year. A small bank or thrift institution using
claims certain credits, it may need to agreement or a SIMPLE IRA plan. the reserve method of section 585 should
reduce the otherwise allowable attach a statement showing how it figured
deductions for expenses used to figure the If the corporation's total receipts the current year's provision. A corporation
credit. This applies to credits such as the (line 1a, plus lines 4 through 10) are that uses the cash method of accounting
following. $500,000 or more, complete Form cannot claim a bad debt deduction unless
• Work opportunity credit (Form 5884). 1125-E, Compensation of Officers. Enter the amount was previously included in
• Credit for increasing research activities on Form 1120-F, line 12, the amount from income.
(Form 6765). Form 1125-E, line 4.
Specific charge-off method. Attach to
• Orphan drug credit (Form 8820). the return a list of each debtor and the
• Disabled access credit (Form 8826). Line 13. Salaries and Wages amount of the bad debt deduction where
• Empowerment zone employment credit the amount of the loans charged off (or
(Form 8844). Enter the total salaries and wages paid for treated as charged off under Regulations
• Indian employment credit (Form 8845). the tax year. Do not include salaries and section 1.166-2) for that debtor total in
• Credit for employer social security and wages deductible elsewhere on the return, excess of $500,000 in the tax year.
Medicare taxes paid on certain employee such as amounts included in officers'
tips (Form 8846). compensation, cost of goods sold, Line 16. Rents
• Credit for small employer pension plan elective contributions to a section 401(k)
start-up costs (Form 8881). cash or deferred arrangement, or amounts If the corporation rented or leased a
• Credit for employer-provided childcare contributed under a salary reduction SEP vehicle, enter the total annual rent or lease
facilities and services (Form 8882). agreement or a SIMPLE IRA plan. expense paid or incurred during the year.
• Low sulfur diesel fuel production credit
Also, complete Part V of Form 4562. If the
(Form 8896). If the corporation provided taxable corporation leased a vehicle for a term of
• Mine rescue team training credit (Form fringe benefits to its employees, such as 30 days or more, the deduction for vehicle
8923). personal use of a car, do not deduct as lease expense may have to be reduced by
• Credit for employer differential wage wages the amount allocated for an amount includible in income called the
payments (Form 8932). depreciation and other expenses claimed “inclusion amount.” The corporation may
• Credit for small employer health on lines 20 and 27. have an inclusion amount if:
insurance premiums (Form 8941).
• Employer credit for paid family and If the corporation claims a credit
medical leave (Form 8994). ! for any wages paid or incurred, it
CAUTION may need to reduce any
If the corporation has any of the credits corresponding deduction for officers'
listed above, figure the current-year credit compensation and salaries and wages.
before figuring the deduction for expenses See Reducing certain expenses for which
on which the credit is based. If the credits are allowable, earlier.
corporation capitalized any costs on which
it figured the credit, it may need to reduce
the amount capitalized by the credit Line 14. Repairs and Maintenance
attributable to these costs.
See the instructions for the form used Enter the cost of repairs and maintenance
to figure the applicable credit for more not claimed elsewhere on the return, such
details. as labor and supplies, that are not
Limitations on deductions related to payments to produce or improve tangible
property leased to tax-exempt entities. or real property. See Regulations section
If a corporation leases property to a 1.263(a)-1. For example, amounts are
governmental or other tax-exempt entity, paid for improvements if they are for
the corporation cannot claim deductions betterments to the property, restorations
related to the property to the extent that of the property (such as the replacements
they exceed the corporation's income from of major components or substantial
structural parts), or if they adapt the

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sick and family leave wages claimed on its years. In this case, under certain
And the vehicle's FMV
The lease term on the first day of the employment tax returns. Instead, report circumstances, the Director of Field
began: lease exceeded: this amount as income on Section II, Operations may make any or all of the
line 10. binding elections provided under
Cars (excluding Regulations section 1.882-5 in
trucks and vans) accordance with Regulations section
See section 906(b)(1) for rules
After 12/31/21 but $56,000 concerning certain foreign taxes imposed 1.882-5(a)(7)(ii) (and may make the
before 1/1/23 on income from U.S. sources that may not binding partnership basis apportionments
After 12/31/20 but before 1/1/22 $51,000 be deducted or credited. election under Regulations section
1.884-1(d)(3)(v)) on behalf of the
corporation.
After 12/31/17 but before 1/1/21 $50,000 Line 18. Interest Expense From
After 12/31/12 but before 1/1/18 $19,000 Schedule I, Line 25 Line 19. Charitable Contributions
After 12/31/07 but before 1/1/13 $18,500
Enter the interest expense from Note. This deduction is allowed for all
Trucks and vans Schedule I (Form 1120-F), line 25. Attach contributions, whether or not connected
After 12/31/21 but $56,000 Schedule I to the Form 1120-F. See with income that is effectively connected
before 1/1/23 Schedule I and its separate instructions for with the conduct of a trade or business in
After 12/31/20 but before 1/1/22 $51,000 additional information relating to the the United States. See section 882(c)(1)
allocation of interest expense to ECI and (B).
After 12/31/17 but before 1/1/21 $50,000 the amount that may be claimed as a
After 12/31/13 but before 1/1/18 $19,500 deduction on Form 1120-F, Section II, Enter contributions or gifts actually paid
line 18.
After 12/31/09 but before 1/1/14 $19,000 within the tax year to or for the use of
After 12/31/08 but before 1/1/10 $18,500 Treaty-based interest expense alloca- charitable and governmental
tion methods. The three-step formula organizations described in section 170(c)
After 12/31/07 but before 1/1/09 $19,000 under Regulations section 1.882-5 and any unused contributions carried over
provides the exclusive rules for from prior years. Special rules and limits
determining the interest expense apply to contributions to organizations
attributable to the business profits of a conducting lobbying activities. See section
See Pub. 463, Travel, Gift, and Car permanent establishment under a U.S. 170(f)(9).
Expenses, for instructions on figuring the income tax treaty, other than treaties that
inclusion amount. expressly permit attribution of business Corporations reporting taxable income
Note. The inclusion amount for lease profits to a U.S. permanent establishment on the accrual method may elect to treat
terms beginning in 2023 will be published under application of the OECD Transfer as paid during the tax year any
in the Internal Revenue Bulletin in early Pricing Guidelines, by analogy. contributions paid by the due date for filing
Form 1120-F (not including extensions), if
2023. Protective elections under section the contributions were authorized by the
1.882-5. A taxpayer that files a protective board of directors during the tax year.
Line 17. Taxes and Licenses tax return under Regulations section Attach a declaration to the return stating
1.882-4(a)(3)(vi) may voluntarily file that the resolution authorizing the
Enter taxes paid or accrued during the tax Schedule I with the protective return to contributions was adopted by the board of
year, but do not include the following. preserve timely elections under directors during the tax year. The
• Federal income taxes. Regulations section 1.882-5(a)(7). If a declaration must include the date the
• Foreign or U.S. possession income taxpayer uses the provisions of an resolution was adopted. See section
taxes if a foreign tax credit is claimed. applicable treaty to allocate interest 170(a)(2)(B).
• Taxes not imposed on the corporation. expense rather than Regulations section Limitation on deduction. Generally, the
• Taxes, including state or local sales 1.882-5, it remains subject to the time, total amount claimed may not exceed 10%
taxes, that are paid or incurred in place, and manner provisions of of taxable income (line 31) computed
connection with an acquisition or Regulations section 1.882-5(a)(7) for without regard to the following.
disposition of property (these taxes must making its interest expense allocation Any deduction for contributions.
be treated as a part of the cost of the elections for any subsequent year that it •
acquired property or, in the case of a chooses to use the three-step allocation • The special deductions on line 30b.
disposition, as a reduction in the amount formula of the regulations instead of the • The limitation under section 249 on the
deduction for bond premium.
realized on the disposition). treaty. Protective interest expense Any NOL carryback to the tax year
• Taxes assessed against local benefits allocation elections under Regulations •
under section 172.
that increase the value of the property section 1.882-5(a)(7) may be made for a Any capital loss carryback to the tax
assessed (such as for paving, etc.). year in which a treaty method is used in •
year under section 1212(a)(1).
• Taxes deducted elsewhere on the lieu of the rules of Regulations section
return, such as those reflected in cost of 1.882-5 by completing and filing Carryover. Charitable contributions over
goods sold. Schedule I on a timely filed income tax the 10% limitation cannot be deducted for
return for any year that the election would the tax year but can be carried over to the
be required to be made under the rules of next 5 tax years. See the exception below
See section 164(d) for information on for farmers and ranchers.
Regulations section 1.882-5. If a
apportionment of taxes on real property
corporation uses an applicable treaty,
between seller and purchaser. Special rules apply if the corporation
rather than the rules of Regulations has an NOL carryover to the tax year. In
Do not reduce the corporation's section 1.882-5, to allocate interest figuring the charitable contributions
! deduction for social security and expense and does not file Schedule I, then deduction for the current tax year, the 10%
CAUTION Medicare taxes by the the taxpayer has forfeited its right to make limit is applied using the corporation’s
nonrefundable and refundable portions of the Regulations section 1.882-5 method
the FFCRA and ARP credits for qualified elections for such applicable year or

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taxable income after taking into account Noncash Charitable Contributions, and must either be added to the corporation's
any deduction for the NOL. attach it to their returns. All other basis for cost depletion purposes or be
To figure the amount of any remaining corporations must generally complete and deducted ratably over a 10-year period.
NOL carryover to later years, taxable attach Form 8283 to their returns for See sections 263(i), 616, and 617 for
income must be modified (see section contributions of property (other than details.
172(b)). To the extent that contributions money) if the total claimed deduction for
are used to reduce taxable income for this all property contributed was more than See Pub. 535 for more information on
purpose and increase an NOL carryover, a $5,000. Special rules apply to the depletion.
contributions carryover is not allowed. See contribution of certain property. See the
section 170(d)(2)(B). Instructions for Form 8283. Line 23. Pension, Profit-Sharing,
Suspension of 10% limitation for farm- Qualified conservation etc., Plans
ers and ranchers. A qualified farmer or contributions. Special rules apply to
rancher (as defined in section 170(b)(1)(E) qualified conservation contributions, Enter the deduction for contributions to
(v)) that does not have publicly traded including contributions of certain qualified pension, profit-sharing, or other
stock may deduct contributions of easements on buildings located in a funded deferred compensation plans.
qualified conservation property without registered historic district. See section Employers who maintain such a plan must
regard to the general 10% limit. 170(h) and Pub. 526, Charitable generally file one of the forms listed below
Contributions. unless exempt from filing under
The total amount of the contribution regulations or other applicable guidance,
claimed for the qualified conservation Other special rules. The corporation even if the plan is not a qualified plan
property cannot exceed 100% of the must reduce its deduction for contributions under the Internal Revenue Code. The
excess of the corporation's taxable of certain capital gain property. See filing requirement applies even if the
income (as computed above, substituting sections 170(e)(1) and 170(e)(5). corporation does not claim a deduction for
"100%" for "10%") over all other allowable A larger deduction is allowed for certain the current tax year. There are penalties
charitable contributions. Any excess contributions including: for failure to file these forms on time and
qualified conservation contributions can • Inventory and other property to certain for overstating the pension plan deduction.
be carried over to the next 15 years, organizations for use in the care of the ill, See sections 6652(e) and 6662(f). Also,
subject to the 100% limitation. See needy, or infants (see section 170(e)(3)), see the instructions for the applicable
sections 170(b)(2)(B) and (C). including qualified contributions of form.
Cash contributions. For contributions of “apparently wholesome food”; and
Form 5500, Annual Return/Report of
cash, check, or other monetary gifts • Scientific equipment used for research
Employee Benefit Plan.
(regardless of the amount), the to institutions of higher learning or to
corporation must maintain a bank record, certain scientific research organizations Form 5500-SF, Short Form Annual
or a receipt, letter, or other written (other than by personal holding Return/Report of Small Employee Benefit
communication from the donee companies and service organizations). Plan. File this form instead of Form 5500
organization indicating the name of the See section 170(e)(4). generally if there were under 100
organization, the date of the contribution, participants at the beginning of the plan
and the amount of the contribution. For more information on charitable year.
contributions, including substantiation and
Contributions of $250 or more. A recordkeeping requirements, see section Note. Form 5500 and Form 5500-SF
corporation can deduct a contribution of 170 and the related regulations, and Pub. must be filed electronically under the
$250 or more only if it gets a written 526. For other special rules that apply to computerized ERISA Filing Acceptance
acknowledgment from the donee corporations, see Pub. 542. System (EFAST2). For more information,
organization that shows the amount of see the EFAST2 website at
cash contributed, describes any property EFAST.dol.gov.
contributed (but not its value), and either Line 20. Depreciation
gives a description and a good faith Form 5500-EZ, Annual Return of A
estimate of the value of any goods or Include on line 20 depreciation and the One-Participant (Owners/Partners and
services provided in return for the cost of certain property that the Their Spouses) Retirement Plan or A
contribution or states that no goods or corporation elected to expense under Foreign Plan. File this form for a plan that
services were provided in return for the section 179. Enter the amount from Form only covers the owner (or the owner and
contribution. The acknowledgment must 4562, but include on line 20 only amounts spouse) or a foreign plan that is required
be obtained by the due date (including not claimed on Form 1125-A or elsewhere to file an annual return and does not file
extensions) of the corporation's return, or, on the return. See Form 4562 and the the annual return electronically on Form
if earlier, the date the return is filed. Do not Instructions for Form 4562. 5500-SF. See the Instructions for Form
attach the acknowledgment to the tax 5500-EZ.
return, but keep it with the corporation's Line 21. Depletion
records. Line 24. Employee Benefit
Contributions of property other than See sections 613 and 613A for Programs
cash. If a corporation (other than a percentage depletion rates applicable to
closely held or personal service natural deposits. Also, see section 291 for Enter contributions to employee benefit
corporation) contributes property other the limitation on the depletion deduction programs not claimed elsewhere on the
than cash and claims a deduction of more for iron ore and coal (including lignite). return (for example, insurance or health
than $500 for the property, it must attach a and welfare programs) that are not an
statement to the return describing the kind Attach Form T (Timber), Forest incidental part of a pension, profit-sharing,
of property contributed and the method Activities Schedule, if a deduction for etc., plan included on line 23.
used to determine its FMV. Closely held depletion of timber is claimed.
corporations and personal service
corporations must complete Form 8283, Foreign intangible drilling costs and
foreign exploration and development costs

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Line 26. Deductions Allocated and regard to the dollar limitation), are • Any amount that is allocable to a class
Apportioned to ECI From qualified property eligible for the special of exempt income. See section 265(b) for
depreciation allowance under section exceptions.
Schedule H, Line 20 168(k). See the Instructions for Form • Lobbying expenses. However, see
4562. exceptions (discussed later).
Enter the total home office deductions • Certain business start-up and • Amounts paid or incurred for any
allocated and apportioned to ECI from organizational costs (discussed earlier settlement, payout, or attorney fees
Schedule H (Form 1120-F), line 20. See under Limitations on Deductions). related to sexual harassment or sexual
Schedule H and its separate instructions • Reforestation costs. The corporation abuse, if such payments are subject to a
for additional information. Attach may elect to deduct up to $10,000 of nondisclosure agreement. See section
Schedule H to the Form 1120-F. qualifying reforestation expenses for each 162(q).
qualified timber property. The corporation
Travel, meals, and entertainment.
Deductions definitely related and may elect to amortize over 84 months any
Subject to limitations and restrictions
indirectly allocated and apportioned to ECI amount not deducted. See Pub. 535.
that are not includible on Form 1120-F, discussed below, a corporation may
Section II, lines 12 through 14, 16 and 17, • Insurance premiums. deduct ordinary and necessary travel,
19 through 25, and 27 are reported on • Legal and professional fees. meal, and non-entertainment expenses
Schedule H, line 20, and on Form 1120-F, • Supplies used and consumed in the paid or incurred in its trade or business.
business.
line 26. Deductions that are includible on Generally, entertainment expenses,
Form 1120-F, Section II, lines 12 through • Travel, meals, and entertainment membership dues, and facilities used in
expenses. Special rules apply (discussed
14, 16 and 17, 19 through 24, and 27 are connection with these activities cannot be
later).
those derived from set(s) of books and deducted. In addition, no deduction is
records required to be reported on Form • Utilities. generally allowed for qualified
1120-F, Schedule L. • Ordinary losses from trade or business transportation fringe benefits. Special
activities of a partnership (from rules apply to deductions for gifts, luxury
Note. The books and records of a U.S. Schedule K-3 (Form 1065)). Do not offset water travel, and convention expenses.
office where a trade or business is carried ordinary income against ordinary losses. See section 274, Pub. 463, and Pub. 535
on do not necessarily constitute all of the Instead, include the income on line 10. for details.
books and records required to be reported Show the partnership's name, address,
on Schedule L. See the instructions for and EIN on Schedule P (Form 1120-F). If Travel. The corporation cannot deduct
Schedule L, later. Deductions that are the amount is from more than one travel expenses of any individual
reported on Form 1120-F, Section II, lines partnership, identify the amount from each accompanying a corporate officer or
12 through 14, lines 16 and 17, lines 19 partnership on Schedule P. employee, including a spouse or
through 24, and line 27 are also reconciled • Any net negative section 481(a) dependent of the officer or employee,
to ECI on Schedule H (Form 1120-F), Part adjustment. See Section 481(a) unless:
IV, lines 38 through 41. adjustment, earlier. • That individual is an employee of the
• Dividends paid in cash on stock held by corporation, and
an employee stock ownership plan. • That individual’s travel is for a bona fide
Line 27. Other Deductions However, a deduction may be taken for business purpose and would otherwise be
these dividends only if, according to the deductible by that individual.
Attach a statement, listing by type and plan, the dividends are: Meals. Generally, the corporation can
amount, all allowable deductions that are 1. Paid in cash directly to the plan deduct only 50% of the amount otherwise
not deductible elsewhere on Form 1120-F. participants or beneficiaries; allowable for non-entertainment related
Enter the total on line 27.
2. Paid to the plan, which distributes meal expenses paid or incurred in its trade
Examples of other deductions include them in cash to the plan participants or or business. However, the corporation can
the following. See Pub. 535 for details on their beneficiaries no later than 90 days deduct 100% of business meal expenses
other deductions that may apply to after the end of the plan year in which the if the meals are food and beverages
corporations. dividends are paid; provided by a restaurant. This applies only
to amounts paid or incurred after
• Amortization. See Part VI of Form 4562. 3. At the election of such participants
December 31, 2020, and before January
• Any applicable deduction under section or their beneficiaries (a) payable as
1, 2023.
179D for costs of energy efficient provided under (1) or (2) above, or (b)
commercial buildings property placed in paid to the plan and reinvested in Meals not separately stated from
service during the tax year. Complete and qualifying employer securities; or entertainment are generally not
deductible. In addition (subject to
attach new Form 7205. 4. Used to make payments on a loan
exceptions under section 274(k)(2)):
• Certain costs of a qualified film, described in section 404(a)(9).
television, or live theatrical production • Meals must not be lavish or
commencing before January 1, 2026 (after See section 404(k) for more details and extravagant, and
December 31, 2015, and before January the limitation on certain dividends. • An employee of the corporation must
1, 2026, for a live theatrical production). be present at the meal.
This deduction does not apply to any Do not deduct expenses such as the See section 274(n)(3) for a special rule
portion of the aggregate cost of the following. that applies to expenses for meals
production above $15 million. There is a • Amounts paid or incurred to, or at the consumed by individuals subject to the
higher allowance for production in certain direction of, a government or hours of service limits of the Department
areas. See section 181 and the related governmental entity for the violation, or of Transportation.
regulations. investigation or inquiry into the potential
Note. Certain film, television, or live violation, of a law. However, see Fines or Qualified transportation fringes
theatrical productions acquired and similar penalties, later. (QTFs). Generally, no deduction is
placed in service after September 27, allowed under section 274(a)(4) for QTFs
2017 (for which a deduction would have provided by employers to their employees.
been allowable under section 181 without

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QTFs are defined in section 132(f)(1) and No deduction is allowed unless the at-risk rules apply, determine the net profit
include: amounts are specifically identified in the or loss from the activity by combining the
• Transportation in a commuter highway order or agreement and the corporation gain or loss on the sale or disposition with
vehicle between the employee’s residence establishes that the amounts were paid for the profit or loss from the activity. If the
and place of employment, that purpose. Also, any amount paid or corporation has a net loss, it may be
• Any transit pass, and incurred as reimbursement to the limited because of the at-risk rules.
• Qualified parking. government for the costs of any Treat any loss from an activity not
See section 274, Pub. 15-B, and Pub. investigation or litigation are not eligible for allowed for the tax year as a deduction
535 for details. the exceptions and are nondeductible. allocable to the activity in the next tax
See section 162(f). year.
Membership dues. The corporation
can deduct amounts paid or incurred for Lobbying expenses. Generally,
membership dues in civic or public service lobbying expenses are not deductible. Line 30a. Net Operating Loss
organizations, professional organizations These expenses include: Deduction
(such as bar and medical associations), • Amounts paid or incurred in connection
business leagues, trade associations, with influencing federal, state, or local
chambers of commerce, boards of trade, legislation; or A corporation may use the NOL incurred
and real estate boards. However, no • Amounts paid or incurred in connection in one tax year to reduce its taxable
deduction is allowed if a principal purpose with any communication with certain income in another tax year. Enter on
of the organization is to entertain or federal executive branch officials in an line 30a the total NOL carryovers from
provide entertainment facilities for attempt to influence the official actions or other tax years, but do not enter more than
members or their guests. In addition, positions of the officials. See Regulations the corporation's taxable income (after
corporations cannot deduct membership section 1.162-29 for the definition of special deductions). Attach a statement
dues in any club organized for business, “influencing legislation.” showing the computation of the NOL
deduction. Also, complete item S on
pleasure, recreation, or other social Dues and other similar amounts paid to page 2 of the form.
purpose. This includes country clubs, golf certain tax-exempt organizations may not
and athletic clubs, airline and hotel clubs, be deductible.
The following special rules apply.
and clubs operated to provide meals If certain in-house lobbying • If an ownership change (described in
under conditions favorable to business expenditures do not exceed $2,000, they section 382(g)) occurs, the amount of the
discussion. are deductible. taxable income of a loss corporation that
Entertainment facilities. Generally, may be offset by the pre-change NOL
the corporation cannot deduct an expense Line 29. Taxable Income Before carryovers may be limited. See section
paid or incurred for a facility (such as a NOL Deduction and Special 382 and the related regulations. A loss
yacht or hunting lodge) used for an activity corporation must include the information
usually considered entertainment, Deductions statement as provided in Regulations
amusement, or recreation. At-risk rules. Generally, special at-risk section 1.382-11(a) with its income tax
Amounts treated as compensation. rules under section 465 apply to closely return for each tax year that it is a loss
Generally, the corporation may be able to held corporations (see Passive activity corporation in which an ownership shift,
deduct otherwise nondeductible limitations, earlier) engaged in any activity equity structure shift, or other transaction
entertainment, amusement, or recreation as a trade or business or for the described in Temporary Regulations
expenses if the amounts are treated as production of income. These corporations section 1.382-2T(a)(2)(i) occurs. If the
compensation to the recipient and may have to adjust the amount on line 29 corporation makes the
reported on Form W-2 for an employee or (see below). closing-of-the-books election, see
Regulations section 1.382-6(b).
on Form 1099-NEC for an independent The at-risk rules do not apply to:
contractor. • Holding real property placed in service The limitations under section 382 do
However, if the recipient is an officer, by the taxpayer before 1987; not apply to certain ownership changes
director, beneficial owner (directly or • Equipment leasing under sections after February 17, 2009, made pursuant to
indirectly), or other “specified individual” 465(c)(4), (5), and (6); or a restructuring plan under the Emergency
(as defined in section 274(e)(2)(B) and • Any qualifying business of a qualified Economic Stabilization Act of 2008. See
Regulations section 1.274-9(b)), special corporation under section 465(c)(7). section 382(n).
rules apply. However, the at-risk rules do apply to For guidance in applying section 382 to
the holding of mineral property. loss corporations whose instruments were
Fines or similar penalties. acquired by Treasury under certain
Generally, no deduction is allowed for If the at-risk rules apply, adjust the programs under the Emergency Economic
fines or similar penalties paid or incurred amount on this line for any section 465(d) Stabilization Act of 2008, see Notice
to, or at the direction of, a government or losses. These losses are limited to the 2010-2, 2010-2 I.R.B. 251, available at
governmental entity for violating any law, amount for which the corporation is at risk IRS.gov/irb/2010-02_IRB#NOT-2010-2.
or for the investigation or inquiry into the for each separate activity at the close of If a corporation acquires control of
•
potential violation of a law, except: the tax year. If the corporation is involved another corporation (or acquires its assets
• Amounts that constitute restitution or in one or more activities, any of which in a reorganization), the amount of
remediation of property, incurs a loss for the year, report the losses pre-acquisition losses that may offset
• Amounts paid to come into compliance for each activity separately. Attach Form recognized built-in gain may be limited
with the law, 6198, At-Risk Limitations, showing the (see section 384).
• Amounts paid or incurred as the result amount at risk and gross income and If a corporation elects the alternative tax
•
of orders or agreements in which no deductions for the activities with the on qualifying shipping activities under
government or governmental entity is a losses. section 1354, no deduction is allowed for
party, and If the corporation sells or otherwise an NOL attributable to the qualifying
• Amounts paid or incurred for taxes due. disposes of an asset or its interest (either shipping activities to the extent that the
total or partial) in an activity to which the loss is carried forward from a tax year

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preceding the first tax year for which the • Qualify for the 50% deduction under is related to the amount of debt incurred to
alternative tax election was made. See section 243(a)(1). acquire the stock. See section 246A. Also,
section 1358(b)(2). see section 245(a) before making this
Also, include on line 1 the following. computation for an additional limitation
For more details on the NOL deduction, • Taxable distributions from an IC-DISC that applies to certain dividends received
see section 172 and the Instructions for or former DISC that are designated as from foreign corporations. Attach a
Form 1139. eligible for the 50% deduction and certain statement to Form 1120-F showing how
dividends of Federal Home Loan Banks. the amount on line 3, column (c), was
Line 30b. Special Deductions See section 246(a)(2). computed.
• Dividends (except those received on
See the instructions for Schedule C, later. certain debt-financed stock acquired after Line 4, Column (a)
July 18, 1984) from a RIC. The amount of
dividends eligible for the Enter dividends received on preferred
Line 31. Taxable Income or (Loss) dividends-received deduction under stock of a less-than-20%-owned public
Net operating loss (NOL). If line 31 is section 243 is limited by section 854(b). utility that is subject to income tax and is
zero or less, the corporation may have an The corporation should receive a notice allowed the 23.3% deduction provided in
NOL that may be carried back or forward from the RIC specifying the amount of sections 244 and 247 (as affected by
as a deduction to other tax years. dividends that qualify for the deduction. P.L.113-295, Div. A, section 221(a)(41)
(A), Dec. 19, 2014, 128 Stat. 4043) for
Only farming losses and losses of an Report so-called dividends or earnings dividends paid.
insurance company (other than a life received from mutual savings banks, etc.,
insurance company) can be carried back. as interest. Do not treat them as
The carryback period for these losses is 2 dividends. Line 5, Column (a)
years. For NOLs that can be carried back,
the corporation can elect to waive the Enter dividends received on preferred
carryback period and instead carry the Line 2, Column (a) stock of a 20%-or-more-owned public
NOL forward to future tax years. utility that is subject to income tax and is
Enter on line 2: allowed the 26.7% deduction provided in
See the instructions for Item R, earlier, • Dividends (except those received on sections 244 and 247 (as affected by
for information on making the election to certain debt-financed stock acquired after P.L.113-295, Div. A, section 221(a)(41)
waive the carryback period. See the July 18, 1984) that are received from (A), Dec. 19, 2014, 128 Stat. 4043) for
Instructions for Form 1139 for other 20%-or-more-owned domestic dividends paid.
special rules and elections. corporations subject to income tax and
The NOL deduction for tax year 2022 that are subject to the 65% deduction
cannot exceed the aggregate amount of under section 243(c), and Line 6, Column (a)
NOLs arising in tax years beginning before • Taxable distributions from an IC-DISC
January 1, 2018, carried to such year plus or former DISC that are considered Enter the U.S.-source portion of dividends
the lesser of: eligible for the 65% deduction. that:
• Are received from
1. The aggregate amount of NOLs less-than-20%-owned foreign
arising in tax years beginning after Line 3, Column (a) corporations, and
December 31, 2017, carried to such tax • Qualify for the 50% deduction under
year; or Enter the following. section 245(a). To qualify for the 50%
2. 80% of the excess, if any, of • Dividends received on certain deduction, the corporation must own at
taxable income determined without any debt-financed stock acquired after July 18, least 10% of the stock of the foreign
NOL deduction or section 199A 1984, from domestic and foreign corporation by vote and value.
deduction, over any NOL carryover to the corporations subject to income tax that
tax year from tax years beginning before would otherwise be subject to the
January 1, 2018. dividends-received deduction under Line 7, Column (a)
section 243(a)(1), 243(c), or 245(a).
An exception applies for NOLs of Generally, debt-financed stock is stock Enter the U.S.-source portion of dividends
insurance companies other than life that the corporation acquired by incurring that are received from
insurance companies. The 80% taxable a debt (for example, it borrowed money to 20%-or-more-owned foreign corporations
income limit does not apply to these buy the stock). and that qualify for the 65% deduction
entities. See sections 172(b) and (f). • Dividends received from a RIC on under sections 243 and 245(a).
Schedule C—Dividends and debt-financed stock. The amount of
dividends eligible for the Line 8, Column (c)
Special Deductions dividends-received deduction is limited by
For purposes of the 20% ownership test section 854(b). The corporation should Limitation on dividends-received de-
on lines 1 through 7, the percentage of receive a notice from the RIC specifying duction. Generally, line 8, column (c),
stock owned by the corporation is based the amount of dividends that qualify for the cannot exceed the amount from the
on voting power and value of the stock. deduction. Worksheet for Schedule C, Line 8.
However, in a year in which an NOL
occurs, this limitation does not apply, even
Line 1, Column (a) Line 3, Columns (b) and (c) if the loss is created by the
dividends-received deduction. See
Enter dividends (except those received on Dividends received on certain sections 172(d) and 246(b).
certain debt-financed stock acquired after debt-financed stock acquired after July 18,
July 18, 1984—see section 246A) that: 1984, are not entitled to the full 50% or
• Are received from 65% dividends-received deduction under
less-than-20%-owned domestic section 243 or 245(a). The 50% or 65%
corporations subject to income tax, and deduction is reduced by a percentage that

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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 9, Column (a)                                         received deduction, which include the                                         2014, 128 Stat. 4043) allows public 
                                                           following.                                                                    utilities a deduction of 40% of the smaller 
Enter the foreign dividends not reportable                       1. Dividends received on any share of                                   of:
on line 3, 6, or 7 of column (a).                          stock held for less than 46 days during the                                   •   Dividends paid on their preferred stock 
                                                           91-day period beginning 45 days before                                        during the tax year, or
  Attach a statement identifying the                       the ex-dividend date. When counting the                                       •   Taxable income computed without 
amount of each dividend reported on                        number of days the corporation held the                                       regard to this deduction.
line 9 and the provision pursuant to which                 stock, you cannot count certain days 
a deduction is not allowed with respect to                 during which the corporation's risk of loss                                       In a year in which an NOL occurs, 
such dividend.                                             was diminished. See section 246(c)(4)                                         compute the deduction without regard to 
                                                           and Regulations section 1.246-5 for more                                      section 247(a)(1)(B).
                                                           details.
Line 10, Column (a)                                                                                                                      Schedule J—Tax Computation
                                                                 2. Dividends received on any share of 
                                                           preferred stock that are attributable to                                      Line 1
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                                     If the corporation is a member of a 
designated as not eligible for a                           during the 181-day period that began 90                                       controlled group, check the box on line 1 
dividends-received deduction.                              days before the ex-dividend date. When                                        and complete and attach Schedule O 
                                                           counting the number of days the                                               (Form 1120), Consent Plan and 
  No deduction is allowed under section                    corporation held the stock, you cannot                                        Apportionment Schedule for a Controlled 
243 for a dividend from an IC-DISC or                      count certain days during which the                                           Group. Component members of a 
former DISC (as defined in section 992(a))                 corporation's risk of loss was diminished.                                    controlled group must use Schedule O to 
to the extent the dividend:                                See section 246(c)(4) and Regulations                                         report the apportionment of certain tax 
• Is paid out of the corporation's                         section 1.246-5 for more details. Preferred                                   benefits between the members of the 
accumulated IC-DISC income or                              dividends attributable to periods totaling                                    group. See Schedule O and the 
previously taxed income, or                                less than 367 days are subject to the                                         Instructions for Schedule O for more 
• Is a deemed distribution under section                   46-day holding period rule discussed                                          information.
995(b)(1).                                                 above.
                                                                 3. Dividends on any share of stock to                                   Line 2. Income Tax
Line 11, Column (a)                                        the extent the corporation is under an 
                                                           obligation (including a short sale) to make                                   Multiply taxable income (Form 1120-F, 
Include the following.                                     related payments with respect to positions                                    page 4, Section II, line 31) by 21%. Enter 
• Dividends (other than capital gain                       in substantially similar or related property.                                 this amount on line 2.
distributions reported on Schedule D                         •   Any other taxable dividend income not 
(Form 1120) and exempt-interest                            properly reported elsewhere on                                                Increase in tax attributable to partner’s 
dividends) that are received from RICs                     Schedule C.                                                                   additional reporting year tax. If the 
                                                                                                                                         taxpayer is a foreign corporate partner and 
and that are not subject to the 50%                                                                                                      received a Form 8986 from a partnership 
deduction.                                                       If patronage dividends or per-unit retain 
                                                                                                                                         that has elected to have each reviewed 
• Dividends from tax-exempt                                allocations are included on line 11, identify 
                                                                                                                                         year partner take into account the 
organizations.                                             the total of these amounts in a statement 
                                                                                                                                         partner's share of the adjustments, as 
• Dividends (other than capital gain                       and attach it to Form 1120-F.
                                                                                                                                         finally determined, instead of paying the 
distributions) received from a REIT that                                                                                                 imputed underpayment, the foreign 
qualifies, for the tax year of the trust in                Line 12, Column (c)                                                           corporate partner (taxpayer) will have to 
which the dividends are paid, under                                                                                                      complete Form 8978 to report adjustments 
sections 856 through 860.                                  Section 247 (as affected by P.L.113-295,                                      shown on the Form 8986 they received 
• Dividends not eligible for a dividends-                  Div. A, section 221(a)(41)(A), Dec. 19,                                       from the partnership. The foreign 

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

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employment of a qualified employee less • A foreign corporate partner of a property interest under section 897(c)(1)
than 1 year after the date of initial partnership engaged in a U.S. trade or (A)(ii) if the gain is not otherwise ECI.
employment, any Indian employment business is subject to the branch profits • Related person insurance company
credit allowed for a prior tax year because tax on its ECEP attributable to its income that a taxpayer elects to treat as
of wages paid or incurred to that employee distributive share of ECI. ECI under section 953(c)(3)(C) if the
must be recaptured. For details, see Form • A foreign government is subject to both income is not otherwise ECI.
8845 and section 45A. the branch profits tax and the branch-level • Income that is exempt from tax under
• Recapture of new markets credit (see interest tax. However, no branch profits section 892.
Form 8874, New Markets Credit, and tax or branch-level interest tax will be • Interest income derived by a
Form 8874-B, Notice of Recapture Event imposed on ECEP and interest accrued possession bank from U.S. obligations if
for New Markets Credit). prior to September 11, 1992. See the interest is treated as ECI under section
• Recapture of employer-provided Regulations section 1.884-0. 882(e) and is not otherwise ECI.
childcare facilities and services credit (see
Form 8882). Line 2 Note. Deductions and other adjustments
• Interest on deferred tax attributable to attributable (under the principles of
certain nondealer installment obligations Attach a statement showing the following Regulations section 1.861-8) to the types
(section 453A(c)) and dealer installment adjustments (based on the principles of of income not includible in ECEP listed
obligations (section 453(l)). section 312) to the corporation's line 1 above do not reduce ECEP.
• Interest due on deferred gain (section effectively connected taxable income
1260(b)). (ECTI) (before the NOL deduction and Lines 4a and 4b. U.S. Net Equity
Alternative minimum tax (AMT). special deductions) to get ECEP.
Applicable corporations subject to AMT • Positive adjustments for certain ECI U.S. net equity is U.S. assets reduced by
under section 59(k), if filing a return for a items that are excluded from ECTI but that U.S. liabilities. U.S. net equity may be less
short tax year that begins in 2023 and must be included in computing ECEP than zero. See Temporary Regulations
ends in 2023, include on line 8 any (such as tax-exempt interest income). section 1.884-2T for specific rules
corporate AMT imposed under section 55, • Positive adjustments for certain items regarding the computation of the foreign
as amended by the Inflation Reduction Act deducted in computing ECTI but that may corporation's U.S. net equity due to a
of 2022. On the dotted line next to line 8, not be deducted in computing ECEP. reorganization, liquidation, or
enter “CAMT” and the AMT amount. Include adjustments for certain deductions incorporation.
Attach a detailed statement showing the claimed in computing ECTI, such as:
U.S. assets. In general, property is a U.S.
computation of the AMT. Include a 1. Excess of percentage depletion asset if all income from its use and all gain
computation of adjusted financial over cost depletion, from its disposition (if used or sold on the
statement income. Label the statement 2. Excess of accelerated depreciation last day of the tax year) are or would be
“CAMT.” 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
Section III—Branch Profits gross income from all sources is U.S. basis (for purposes of computing earnings
Tax and Tax on Excess source), and and profits) of the property. Special rules
Interest 3. Capital loss carrybacks and exist for specific types of property, such as
carryovers. depreciable property, inventory, and
Part I—Branch Profits Tax • Negative adjustments for certain installment obligations. Special rules also
Section 884(a) imposes a 30% branch deductible items (that are allocable to ECI) exist to determine the amount of a
profits tax on the after-tax earnings of a that may not be deducted in computing partnership interest that is treated as a
foreign corporation's U.S. trade or ECTI but that must be deducted in U.S. asset. See Regulations section
business (that is, effectively connected computing ECEP (for example, federal 1.884-1(d).
earnings and profits (ECEP)) that are not income taxes, capital losses in excess of U.S. liabilities. In general, U.S. liabilities
reinvested in a U.S. trade or business by capital gains, and interest and expenses are U.S.-connected liabilities of a foreign
the close of the tax year, or are that are not deductible under section 265). corporation (determined under
disinvested in a later tax year. Changes in Regulations section 1.882-5), computed
the value of the equity of the foreign Note. Do not reduce ECEP by any as of the end of the tax year, rather than
corporation's U.S. trade or business (that dividends or other distributions made by as an average, as required under
is, U.S. net equity) are used as a measure the foreign corporation to its shareholders Regulations section 1.882-5. Special rules
of whether earnings have been reinvested during the year. may apply to foreign insurance
in, or disinvested from, a U.S. trade or See Temporary Regulations section companies. For more details, see
business. An increase in U.S. net equity 1.884-2T for any adjustments to ECEP Regulations section 1.884-1(e).
during the tax year is generally treated as due to a reorganization, liquidation, or If the corporation is electing to reduce
a reinvestment of earnings for the current incorporation. 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 and the corresponding reduction in
profits tax. section 883(a)(1) or (2). interest expense. The aggregate amount
The amount subject to the branch • FSC income and distributions treated of the corporation's liability reduction
profits tax for the tax year is the dividend as ECI under section 921(d) or 926(b), as elections is also required to be reported on
equivalent amount. See Regulations in effect before their repeal, that are not Schedule I (Form 1120-F), line 7b.
section 1.884-1(b). otherwise ECI. Reporting requirements. In the
• Gain on the disposition of an interest in statements required for lines 4a and 4b,
Other entities subject to the branch a domestic corporation that is a U.S. real report U.S. assets according to the
profits tax.
categories of U.S. assets in Regulations

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

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amount on Schedule I (Form 1120-F), (such as capitalized interest) related to Line 10. Tax on Excess Interest
line 23. U.S. assets, and The rate of tax on excess interest is the
Line 8. Branch Interest 3. Interest on liabilities identified as same rate that would apply to interest paid
liabilities of the U.S. trade or business on to the foreign corporation by a wholly
Foreign banks. Enter from Schedule I or before the earlier of the date on which owned domestic corporation. The tax on
(Form 1120-F), the sum of line 9, column the first interest payment is made or the excess interest is not prohibited by any
(c), and line 22, which is the amount of due date (including extensions) of the provision in any treaty to which the United
interest expense included on books that foreign corporation's income tax return for States is a party. The corporation may
give rise to U.S. booked liabilities and that the tax year. qualify for treaty benefits if it meets certain
is directly allocable to ECI under requirements. See Line 6. Branch Profits
Regulations section 1.882-5(a)(1)(ii). The However, a liability may not be
sum of these two amounts is the amount identified under 3 above if the liability is Tax, earlier. The corporation is exempt
of book interest expense paid or accrued incurred in the ordinary course of the from the tax on excess interest if the rate
on U.S. booked liabilities defined in foreign corporation's trade or business, or of tax that would apply to interest paid to
Regulations section 1.882-5(d)(2). if the liability is secured predominantly by the foreign corporation by a wholly owned
assets that are not U.S. assets. The domestic corporation is zero and the
Definition of branch interest. The term interest on liabilities identified in 3 above foreign corporation qualifies for treaty
“branch interest” means interest that is: that will be treated as interest paid by the benefits.
1. Paid by a foreign corporation with U.S. trade or business is capped at 85%
respect to a liability that is (a) a U.S. of the interest of the foreign corporation Schedule L—Balance
booked liability within the meaning of that would be excess interest before Sheets per Books
Regulations section 1.882-5(d)(2) (other considering interest on liabilities identified
than a U.S. booked liability of a partner in 3 above. See Regulations section Balance Sheet per Books
within the meaning of Regulations section 1.884-4. The balance sheet assets, liabilities, and
1.882-5(d)(2)(vii)), or (b) described in Interbranch interest. Any interest paid equity amounts required to be reported on
Regulations section 1.884-1(e)(2) (relating for interbranch liabilities is disregarded in Schedule L are either the worldwide
to insurance liabilities on U.S. business computing branch interest of any assets, liabilities, and equity of the
and liabilities giving rise to interest corporation. corporation, or, at the taxpayer's election,
expense that is directly allocated to the set(s) of books that contains assets
income from a U.S. asset); or 80% rule. If 80% or more of a foreign located in the United States and other
2. In the case of a foreign corporation corporation's assets are U.S. assets, the assets used in the trade or business
other than a bank (as defined in section foreign corporation's branch interest will conducted in the United States. See
585(a)(2)(B) without regard to the second generally equal the interest reported on Regulations section 1.6012-2(g)(1)(iii). If a
sentence thereof), a liability specifically line 7c. However, any interest included on corporation (including a foreign bank)
identified as a liability of a U.S. trade or line 7c that has accrued but has not been chooses worldwide reporting on
business of the foreign corporation on or paid will not be treated as branch interest Schedule L, the profit and loss results
before the earlier of the date on which the on line 8 unless an election is made under from the same set(s) of books must be
first payment of interest is made with Regulations section 1.884-4(c)(1) to treat used to report the adjusted worldwide net
respect to the liability or the due date such interest as paid in that year for all income (loss) results in Part I, line 11, of
(including extensions) of the foreign purposes of the Code. Schedule M-3 (Form 1120-F).
corporation's income tax return for the tax If this 80% rule applies, check the box Set(s) of books based on Regulations
year provided that (a) the amount of such on line 8. section 1.882-5(d)(2). If the corporation
interest does not exceed 85% of the chooses to limit the Schedule L reporting
amount of interest of the foreign Note. Branch interest of a foreign to the books that gives rise to ECI from
corporation that would be excess interest corporation is treated as if paid by a assets located in the United States and
before taking into account interest treated domestic corporation. A foreign other assets used in the trade or business
as branch interest; (b) certain recipient corporation is thus required to withhold on conducted in the United States, the total
notification requirements are satisfied; and interest paid by its U.S. trade or business assets, liabilities, and equity on the set(s)
(c) the liability was not incurred in the to foreign persons (unless the interest is of books that contain these characteristics
ordinary course of a foreign business or exempt from withholding under a treaty or must be reported on Schedule L. These
secured by foreign assets, or is not a U.S. the Code) and is required to file Forms are the total assets, liabilities, and equity
booked liability, or is not an insurance 1042 and 1042-S for the payments. amounts reflected on the same set(s) of
liability on a U.S. business, or is not a Special treaty shopping rules apply if books that gives rise to U.S. ECI and U.S.
liability giving rise to interest expense that the recipient of the interest paid by the booked liabilities (as defined in
is directly allocated to income from a U.S. U.S. trade or business is a foreign Regulations sections 1.882-5(d)(2)(ii)(A)
asset. See Regulations section corporation. (foreign corporations other than banks)
1.884-4(b). and 1.882-5(d)(2)(iii) (foreign banking
Line 9b
corporations)).
All other foreign corporations. In A foreign bank may treat a percentage of
general, branch interest of foreign its excess interest as if it were interest on The set(s) of books required to be
corporations (other than banks) includes: deposits and thus exempt from tax. reported on Schedule L by a foreign bank
1. Interest on liabilities shown on the Multiply the amount on line 9a by the are the same set(s) of books the foreign
books and records of the U.S. trade or greater of 85% (0.85) or the ratio of the bank must use to derive the net book
business for purposes of Regulations foreign bank's worldwide interest-bearing income on Schedule M-3 (Form 1120-F),
section 1.882-5(d)(2), deposits to its worldwide interest-bearing Part I, line 11. The total assets and
liabilities as of the close of the tax year. liabilities required to be reported include
2. Interest on liabilities that are the interbranch assets and liabilities and
secured predominantly by U.S. assets or the noneffectively connected assets
that cause certain nondeductible interest reflected on such books. The set(s) of
books that gives rise to U.S. booked

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

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category of non-U.S. assets (for example, the corporation's internal accounting Transfer Pricing Guidelines as authorized
foreign-related party assets that give rise practices. Attach a statement indicating by the relevant treaty (for example, see
to non-ECI under section 864(c)(4)(D)). the amount for each category of Article 7 (Business Profits) and the
Report on line 16b other non-current U.S. interbranch liability reported on line 24a. accompanying Exchange of Notes). In
assets on the Schedule L books with third Enter on line 24b other liability amounts on such cases, the set(s) of books that must
parties (whether related or unrelated the Schedule L books owed to third be reported on Schedule L are those of
parties). U.S. assets are those that give parties (whether related or unrelated the U.S. permanent establishment as
rise to ECI in accordance with Regulations parties) including amounts that do not give determined under the OECD Transfer
section 1.884-1(d). Attach a statement rise to interest accruals or payments in Pricing Guidelines.
indicating the amount for each category of accordance with the corporation's
assets that give rise to ECI. accounting practices. Attach a statement Schedules M-1 and M-3
indicating the amount for each category of
Line 19. Mortgages, notes, bonds pay- In completing Schedules M-1 and M-3, the
third-party liability reported on line 24b.
able in less than 1 year. Enter on following apply.
line 19a interbranch liabilities on the Line 29. Adjustments to shareholders' • A corporation with total assets of $10
Schedule L books that are payable in less equity. Some examples of adjustments to million or more on the last day of the tax
than one year to books of the corporation report on this line include: year that are reportable on Schedule L
that are not reportable on Schedule L • Unrealized gains and losses on must file Schedule M-3 (Form 1120-F)
(including books of disregarded entities securities held “available for sale.” instead of Schedule M-1.
that are not reportable on Schedule L). • Foreign currency translation • A corporation filing Form 1120-F that is
Report only interbranch liabilities that adjustments. not required to file Schedule M-3 may
accrue or pay interest on the Schedule L • The excess of additional pension voluntarily file Schedule M-3 instead of
books and records to other books of the liability over unrecognized prior service Schedule M-1. See the Instructions for
corporation in accordance with the cost. Schedule M-3 (Form 1120-F) for more
corporation's internal accounting • Guarantees of employee stock (ESOP) information.
practices. Attach a statement indicating debt. • Corporations that (a) are required to file
the amount for each category of • Compensation related to employee Schedule M-3 (Form 1120-F) and have
interbranch liabilities (for example, money stock award plans. less than $50 million total assets at the
market deposit liabilities, other short-term If the total adjustment to be entered on end of the tax year, or (b) are not required
liabilities, etc.). On line 19b, enter liabilities line 29 is a negative amount, enter the to file Schedule M-3 (Form 1120-F) and
on the Schedule L books that are payable amount in parentheses. voluntarily file Schedule M-3 (Form
in less than one year to third parties 1120-F), must either (i) complete
(whether related or unrelated). Attach a Adaptation of Schedule L for Schedule M-3 (Form 1120-F) entirely, or
statement indicating the amount for each treaty-based reporting. The set(s) of (ii) complete Schedule M-3 (Form 1120-F)
category of liability owed to third parties books reported on Schedule L for through Part I, and complete
(for example, money market deposit treaty-based reporting purposes will Schedule M-1 instead of completing Parts
liabilities, other short-term borrowings, generally be the same set(s) of books II and III of Schedule M-3 (Form 1120-F). If
Vostro accounts, etc.). reported on Schedule L, as described the corporation chooses to complete
below. However, certain books that give Schedule M-1 instead of completing Parts
Line 22. Mortgages, notes, bonds pay- rise to ECI might not necessarily give rise II and III of Schedule M-3, the amount on
able in 1 year or more. Enter on line 22a to treaty-based reporting. For example, Schedule M-1, line 1, must equal the
interbranch liabilities on the Schedule L the assets on a set of books could still be amount on Schedule M-3, Part I, line 11.
books that are payable in one year or attributed to a U.S. office for ECI reporting See the Instructions for Schedule M-3
more to books of the corporation that are purposes even when transferred away (Form 1120-F) for more information.
not reportable on Schedule L (including from the U.S. permanent establishment for • If Schedule M-3 is not required, the
books of disregarded entities that are not treaty reporting purposes (see, for foreign corporation must report on line 1 of
reportable on Schedule L). Report only example, Regulations section 1.864-4(c) Schedule M-1 the net income (loss) per
interbranch liabilities that accrue or pay (5)(iii)) if under the facts and the set of books taken into account on
interest on the Schedule L books and circumstances, such assets also Schedule L.
records to other books of the corporation constitute a set of books that give rise to • The foreign corporation must report on
in accordance with the corporation's U.S. booked liabilities under Regulations line 1 of Schedule M-2 the balance of
internal accounting practices. Attach a section 1.882-5(d)(2). Under such unappropriated retained earnings per the
statement indicating the amounts for each circumstances, the set of books would set(s) of books taken into account on
category of liability (for example, long-term remain reportable on Schedule L for Schedule L.
interbranch borrowings). Enter on line 22b Code-based reporting purposes, but for
liabilities on the Schedule L books that are treaty-based reporting purposes, such Note. If Schedule M-3 is filed in lieu of
payable in one year or more to third transfer may effect attribution to another Schedule M-1, the corporation is still
parties (whether related or unrelated part of the corporate enterprise under a required to file Schedule M-2.
parties). Attach a statement indicating the functional and factual analysis and no Do not file Schedules M-1 and M-2
amounts for each category of liability (for longer be reportable on Schedule L as (Form 1120-F) if total assets at the end of
example, long-term certificates of deposit, part of the U.S. permanent establishment the tax year (line 17, column (d), of
other long-term borrowings, etc.). after the transfer is made. Additionally, a Schedule L) are less than $25,000.
Line 24. Other liabilities. Enter on set of books having no ECI or U.S. booked
line 24a other interbranch liability amounts liabilities under Regulations section
on the Schedule L books owed to other 1.882-5(d)(2) might still constitute a set of Schedule W
books of the corporation (including to books of the U.S. permanent Complete Schedule W to determine the
books of disregarded entities) not establishment because the items recorded portion of the foreign corporation's
reportable on Schedule L, including thereon are primarily attributable to the overpayment (on Form 1120-F, page 1,
amounts that do not give rise to interest U.S. permanent establishment under the line 8a) resulting from tax deducted and
accruals or payments in accordance with application by analogy of the OECD withheld under Chapter 3 or 4.

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Line 3. The amount to be entered on a. Tax on ECI per the tax return.
Schedule W, line 3, may be computed Enter the amount from Form
using the general guidelines set forth in 1120-F, page 1, line 2 . . . . . a.
the following table. 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.

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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 (2022) -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 4,        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 4, 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    Plastics and Rubber Products             Furniture and Related Product 
                                                             (including drywall, insulation,   Manufacturing                            Manufacturing
and Hunting                                                  painting, wallcovering, flooring, 326100 Plastics Product Mfg              337000   Furniture & Related Product 
Crop Production                                              tile, & finish carpentry)         326200 Rubber Product Mfg                         Manufacturing
111100 Oilseed & Grain Farming            238900             Other Specialty Trade             Nonmetallic Mineral Product              Miscellaneous Manufacturing
111210 Vegetable & Melon Farming                             Contractors (including site       Manufacturing                            339110   Medical Equipment & Supplies 
       (including potatoes & yams)                           preparation)                                                                        Mfg
                                                                                               327100 Clay Product & Refractory Mfg
111300 Fruit & Tree Nut Farming           Manufacturing                                        327210 Glass & Glass Product Mfg         339900   Other Miscellaneous 
111400 Greenhouse, Nursery, &             Food Manufacturing                                   327300 Cement & Concrete Product Mfg              Manufacturing
       Floriculture Production            311110             Animal Food Mfg                   327400 Lime & Gypsum Product Mfg         Wholesale Trade
111900 Other Crop Farming (including      311200             Grain & Oilseed Milling           327900 Other Nonmetallic Mineral         Merchant Wholesalers, Durable Goods
       tobacco, cotton, sugarcane, hay,   311300             Sugar & Confectionery Product            Product Mfg                       423100   Motor Vehicle & Motor Vehicle 
       peanut, sugar beet & all other                        Mfg                               Primary Metal Manufacturing                       Parts & Supplies
       crop farming)
Animal Production                         311400             Fruit & Vegetable Preserving &    331110 Iron & Steel Mills & Ferroalloy   423200   Furniture & Home Furnishings
112111 Beef Cattle Ranching & Farming                        Specialty Food Mfg                       Mfg                               423300   Lumber & Other Construction 
112112 Cattle Feedlots                    311500             Dairy Product Mfg                 331200 Steel Product Mfg from                     Materials
112120 Dairy Cattle & Milk Production     311610             Animal Slaughtering and                  Purchased Steel                   423400   Professional & Commercial 
                                                             Processing                        331310 Alumina & Aluminum Production              Equipment & Supplies
112210 Hog & Pig Farming                  311710             Seafood Product Preparation &            & Processing                      423500   Metal & Mineral (except 
112300 Poultry & Egg Production                              Packaging                         331400 Nonferrous Metal (except                   Petroleum)
112400 Sheep & Goat Farming               311800             Bakeries, Tortilla & Dry Pasta           Aluminum) Production &            423600   Household Appliances and 
112510 Aquaculture (including shellfish &                    Mfg                                      Processing                                 Electrical & Electronic Goods
       finfish farms & hatcheries)        311900             Other Food Mfg (including         331500 Foundries                         423700   Hardware, & Plumbing & Heating 
112900 Other Animal Production                               coffee, tea, flavorings &         Fabricated Metal Product                          Equipment & Supplies
Forestry and Logging                                         seasonings)                       Manufacturing                            423800   Machinery, Equipment, & 
113110 Timber Tract Operations            Beverage and Tobacco Product                         332110 Forging & Stamping                         Supplies
                                          Manufacturing
113210 Forest Nurseries & Gathering of    312110             Soft Drink & Ice Mfg              332210 Cutlery & Handtool Mfg            423910   Sporting & Recreational Goods & 
       Forest Products                    312120             Breweries                         332300 Architectural & Structural Metals          Supplies
                                                                                                      Mfg                               423920   Toy & Hobby Goods & Supplies
113310 Logging                            312130             Wineries                          332400 Boiler, Tank, & Shipping          423930   Recyclable Materials
Fishing, Hunting and Trapping             312140             Distilleries                             Container Mfg                     423940   Jewelry, Watch, Precious Stone, 
114110 Fishing                            312200             Tobacco Manufacturing             332510 Hardware Mfg                               & Precious Metals
114210 Hunting & Trapping                 Textile Mills and Textile Product Mills              332610 Spring & Wire Product Mfg         423990   Other Miscellaneous Durable 
Support Activities for Agriculture and    313000             Textile Mills                     332700 Machine Shops; Turned Product;             Goods
Forestry                                                                                              & Screw, Nut, & Bolt Mfg          Merchant Wholesalers, Nondurable 
115110 Support Activities for Crop        314000             Textile Product Mills                                                      Goods
       Production (including cotton       Apparel Manufacturing                                332810 Coating, Engraving, Heat 
       ginning, soil preparation,         315100             Apparel Knitting Mills                   Treating, & Allied Activities     424100   Paper & Paper Products
       planting, & cultivating)           315210             Cut & Sew Apparel Contractors     332900 Other Fabricated Metal Product    424210   Drugs & Druggists' Sundries
                                                                                                      Mfg                               424300   Apparel, Piece Goods, & Notions
115210 Support Activities for Animal      315250             Cut & Sew Apparel Mfg (except     Machinery Manufacturing                  424400   Grocery & Related Products
       Production (including farriers)                       Contractors)                      333100 Agriculture, Construction, &      424500   Farm Product Raw Materials
115310 Support Activities For Forestry    315990             Apparel Accessories & Other              Mining Machinery Mfg              424600   Chemical & Allied Products
Mining                                                       Apparel Mfg                       333200 Industrial Machinery Mfg          424700   Petroleum & Petroleum Products
211120 Crude Petroleum Extraction         Leather and Allied Product                           333310 Commercial & Service Industry     424800   Beer, Wine, & Distilled Alcoholic 
211130 Natural Gas Extraction             Manufacturing                                               Machinery Mfg                              Beverages
                                                             Finishing
212110 Coal Mining                        316110             Leather & Hide Tanning &          333410 Ventilation, Heating,             424910   Farm Supplies
212200 Metal Ore Mining                   316210             Footwear Mfg (including rubber           Air-Conditioning, & Commercial 
212310 Stone Mining & Quarrying                              & plastics)                              Refrigeration Equipment Mfg       424920   Book, Periodical, & Newspapers
212320 Sand, Gravel, Clay, & Ceramic &    316990             Other Leather & Allied Product    333510 Metalworking Machinery Mfg        424930   Flower, Nursery Stock, & Florists' 
       Refractory Minerals Mining &                          Mfg                               333610 Engine, Turbine & Power                    Supplies
       Quarrying                          Wood Product Manufacturing                                  Transmission Equipment Mfg        424940   Tobacco Products & Electronic 
212390 Other Nonmetallic Mineral          321110             Sawmills & Wood Preservation      333900 Other General Purpose                      Cigarettes
                                                                                                      Machinery Mfg                     424950   Paint, Varnish, & Supplies
       Mining & Quarrying                 321210             Veneer, Plywood, & Engineered     Computer and Electronic Product          424990   Other Miscellaneous Nondurable 
213110 Support Activities for Mining                         Wood Product Mfg                  Manufacturing                                     Goods
Utilities                                 321900             Other Wood Product Mfg            334110 Computer & Peripheral             Wholesale Electronic Markets and 
221100 Electric Power Generation,         Paper Manufacturing                                         Equipment Mfg                     Agents and Brokers
       Transmission & Distribution        322100             Pulp, Paper, & Paperboard Mills   334200 Communications Equipment Mfg      425120   Wholesale Trade Agents & 
221210 Natural Gas Distribution           322200             Converted Paper Product Mfg       334310 Audio & Video Equipment Mfg                Brokers
221300 Water, Sewage & Other Systems      Printing and Related Support Activities              334410 Semiconductor & Other             Retail Trade
221500 Combination Gas & Electric         323100             Printing & Related Support               Electronic Component Mfg          Motor Vehicle and Parts Dealers
Construction                                                 Activities                        334500 Navigational, Measuring,          441110   New Car Dealers
                                          Petroleum and Coal Products                                 Electromedical, & Control 
Construction of Buildings                 Manufacturing                                               Instruments Mfg                   441120   Used Car Dealers
236110 Residential Building Construction  324110             Petroleum Refineries (including   334610 Manufacturing & Reproducing       441210   Recreational Vehicle Dealers
236200 Nonresidential Building                               integrated)                              Magnetic & Optical Media          441222   Boat Dealers
       Construction                       324120             Asphalt Paving, Roofing, &        Electrical Equipment, Appliance, and     441227   Motorcycle, ATV, and All Other 
Heavy and Civil Engineering                                  Saturated Materials Mfg           Component Manufacturing                           Motor Vehicle Dealers
Construction                              324190             Other Petroleum & Coal            335100 Electric Lighting Equipment Mfg   441300   Automotive Parts, Accessories, 
237100 Utility System Construction                           Products Mfg                      335200 Major Household Appliance Mfg              & Tire Retailers
237210 Land Subdivision                   Chemical Manufacturing                               335310 Electrical Equipment Mfg          Furniture and Home Furnishings 
237310 Highway, Street, & Bridge          325100             Basic Chemical Mfg                335900 Other Electrical Equipment &      Retailers
       Construction                       325200             Resin, Synthetic Rubber, &               Component Mfg                     449110   Furniture Retailers
237990 Other Heavy & Civil Engineering                       Artificial & Synthetic Fibers &   Transportation Equipment                 449121   Floor Covering Retailers
       Construction                                          Filaments Mfg                     Manufacturing                            449122   Window Treatment Retailers
Specialty Trade Contractors               325300             Pesticide, Fertilizer, & Other    336100 Motor Vehicle Mfg                 449129   All Other Home Furnishings 
238100 Foundation, Structure, & Building                     Agricultural Chemical Mfg         336210 Motor Vehicle Body & Trailer Mfg           Retailers
       Exterior Contractors (including    325410             Pharmaceutical & Medicine Mfg     336300 Motor Vehicle Parts Mfg           Electronics and Appliance Retailers
       framing carpentry, masonry,        325500             Paint, Coating, & Adhesive Mfg    336410 Aerospace Product & Parts Mfg     449210   Electronics & Appliance Retailers 
       glass, roofing, & siding)          325600             Soap, Cleaning Compound, &        336510 Railroad Rolling Stock Mfg                 (including computers)
238210 Electrical Contractors                                Toilet Preparation Mfg            336610 Ship & Boat Building              Building Material and Garden 
                                                                                                                                        Equipment and Supplies Dealers
238220 Plumbing, Heating, &               325900             Other Chemical Product &          336990 Other Transportation Equipment    444110   Home Centers
       Air-Conditioning Contractors                          Preparation Mfg                          Mfg
238290 Other Building Equipment                                                                                                         444120   Paint & Wallpaper Retailers
       Contractors                                                                                                                      444140   Hardware Retailers

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Form 1120-F (Continued)
444190 Other Building Material Dealers      485320 Limousine Service                 523210    Securities & Commodity            541360  Geophysical Surveying & 
444200 Lawn & Garden Equipment &            485410 School & Employee Bus                       Exchanges                                 Mapping Services
       Supplies Retailers                          Transportation                    523900    Other Financial Investment        541370  Surveying & Mapping (except 
Food and Beverage Retailers                 485510 Charter Bus Industry                        Activities (including portfolio           Geophysical) Services
445110 Supermarkets and Other               485990 Other Transit & Ground                      management & investment           541380  Testing Laboratories
       Grocery Retailers (except                   Passenger Transportation                    advice)                           Specialized Design Services
       Convenience)                         Pipeline Transportation                  Insurance Carriers and Related              541400  Specialized Design Services 
                                                                                     Activities
445131 Convenience Retailers                486000 Pipeline Transportation           524110    Direct Life, Health, and Medical          (including interior, industrial, 
445132 Vending Machine Operators            Scenic & Sightseeing Transportation                Insurance Carriers                        graphic, & fashion design)
445230 Fruit and Vegetable Markets          487000 Scenic & Sightseeing              524120    Direct Insurance (except Life,    Computer Systems Design and Related 
445240 Meat Retailers                              Transportation                              Health, and Medical) Carriers     Services
445250 Fish & Seafood Retailers             Support Activities for Transportation    524210    Insurance Agencies &              541511  Custom Computer Programming 
445291 Baked Goods Retailers                488100 Support Activities for Air                  Brokerages                                Services
445292 Confectionery & Nut Retailers               Transportation                    524290    Other Insurance Related           541512  Computer Systems Design 
445298 All Other Specialty Food             488210 Support Activities for Rail                 Activities (including third-party         Services
       Retailers                                   Transportation                              administration of insurance and   541513  Computer Facilities Management 
445320 Beer, Wine, & Liquor Retailers       488300 Support Activities for Water                pension funds)                            Services
Health and Personal Care Retailers                 Transportation                    Funds, Trusts, and Other Financial          541519  Other Computer Related 
456110 Pharmacies & Drug Retailers          488410 Motor Vehicle Towing              Vehicles                                            Services
456120 Cosmetics, Beauty Supplies, &        488490 Other Support Activities for Road 525100    Insurance & Employee Benefit      Other Professional, Scientific, and 
       Perfume Retailers                           Transportation                              Funds                             Technical Services
456130 Optical Goods Retailers              488510 Freight Transportation            525910    Open-End Investment Funds         541600  Management, Scientific, & 
                                                   Arrangement                                 (Form 1120-RIC)                           Technical Consulting Services
456190 Other Health & Personal Care         488990 Other Support Activities for      525920    Trusts, Estates, & Agency         541700  Scientific Research & 
       Retailers                                   Transportation                              Accounts                                  Development Services
Gasoline Stations & Fuel Dealers            Couriers and Messengers                  525990    Other Financial Vehicles          541800  Advertising, Public Relations, & 
                                                                                               (including mortgage REITs &               Related Services
457100 Gasoline Stations (including         492110 Couriers                                    closed-end investment funds)      541910  Marketing Research & Public 
       convenience stores with gas)         492210 Local Messengers & Local                    “Offices of Bank Holding                  Opinion Polling
457210 Fuel Dealers (including Heating             Delivery                                    Companies” and “Offices of        541920  Photographic Services
       Oil and Liquefied Petroleum)         Warehousing and Storage                            Other Holding Companies” are      541930  Translation & Interpretation 
                                                                                               located under Management of 
Clothing and Accessories Retailers          493100 Warehousing & Storage (except               Companies (Holding                        Services
458110 Clothing and Clothing                       lessors of miniwarehouses &                 Companies), later.                541940  Veterinary Services
       Accessories Retailers                       self-storage units)                                                           541990  All Other Professional, Scientific, 
458210 Shoe Retailers                                                                Real Estate and Rental and                          & Technical Services
458310 Jewelry Retailers                    Information                              Leasing                                     Management of Companies 
       Retailers                            Industries
458320 Luggage & Leather Goods              Motion Picture and Sound Recording       Real Estate                                 (Holding Companies)
Sporting Goods, Hobby, Book, Musical        512100 Motion Picture & Video Industries 531110    Lessors of Residential Buildings 
Instrument and Miscellaneous Retailers             (except video rental)                       & Dwellings (including equity     551111  Offices of Bank Holding 
459110 Sporting Goods Retailers             512200 Sound Recording Industries                  REITs)                                    Companies
459120 Hobby, Toy, & Game Retailers         Publishing Industries                    531120    Lessors of Nonresidential         551112  Offices of Other Holding 
                                                                                               Buildings (except                         Companies
459130 Sewing, Needlework, & Piece          513110 Newspaper Publishers                        Miniwarehouses) (including        Administrative and Support and 
       Goods Retailers                      513120 Periodical Publishers                       equity REITs)
459140 Musical Instrument & Supplies        513130 Book Publishers                   531130    Lessors of Miniwarehouses &       Waste Management and 
       Retailers                            513140 Directory & Mailing List                    Self-Storage Units (including     Remediation Services
459210 Book Retailers & News Dealers               Publishers                                  equity REITs)
       (including newsstands)               513190 Other Publishers                  531190    Lessors of Other Real Estate      Administrative and Support Services
                                                                                               Property (including equity REITs) 561110  Office Administrative Services
459310 Florists                             513210 Software Publishers               531210    Offices of Real Estate Agents &   561210  Facilities Support Services
459410 Office Supplies & Stationery         Broadcasting, Content Providers, and               Brokers                           561300  Employment Services
       Retailers                            Telecommunications                       531310    Real Estate Property Managers     561410  Document Preparation Services
459420 Gift, Novelty, & Souvenir            516100 Radio & Television Broadcasting   531320    Offices of Real Estate Appraisers 561420  Telephone Call Centers
       Retailers                                   Stations                          531390    Other Activities Related to Real  561430  Business Service Centers 
459510 Used Merchandise Retailers           516210 Media Streaming, Social                     Estate                                    (including private mail centers & 
459910 Pet & Pet Supplies Retailers                Networks, & Other Content         Rental and Leasing Services                         copy shops)
459920 Art Dealers                                 Providers
459930 Manufactured (Mobile) Home           517000 Telecommunications (including     532100    Automotive Equipment Rental &     561440  Collection Agencies
       Dealers                                     Wired, Wireless, Satellite, Cable           Leasing                           561450  Credit Bureaus
459990 All Other Miscellaneous Retailers           & Other Program Distribution,     532210    Consumer Electronics &            561490  Other Business Support Services 
       (including tobacco, candle, &               Resellers, Agents, Other                    Appliances Rental                         (including repossession services, 
       trophy retailers)                           Telecommunications, & Internet    532281    Formal Wear & Costume Rental              court reporting, & stenotype 
                                                   Service Providers)
General Merchandise Retailers               Data Processing, Web Search Portals,     532282    Video Tape & Disc Rental                  services)
455110 Department Stores                    & Other Information Services             532283    Home Health Equipment Rental      561500  Travel Arrangement & 
455210 Warehouse Clubs,                     518210 Computing Infrastructure          532284    Recreational Goods Rental                 Reservation Services
       Supercenters, & Other General               Providers, Data Processing, Web   532289    All Other Consumer Goods          561600  Investigation & Security Services
       Merch. Retailers                            Hosting, & Related Services                 Rental                            561710  Exterminating & Pest Control 
Nonstore Retailers                          519200 Web Search, Rentals, Libraries,   532310    General Rental Centers                    Services
       Nonstore retailers sell all types of        Archives, & Other Info. Services  532400    Commercial & Industrial           561720  Janitorial Services
       merchandise using such               Finance and Insurance                              Machinery & Equipment Rental &    561730  Landscaping Services
       methods as Internet, mail-order                                                         Leasing                           561740  Carpet & Upholstery Cleaning 
       catalogs, interactive television, or Depository Credit Intermediation         Lessors of Nonfinancial Intangible                  Services
       direct sales. These types of         522110 Commercial Banking                Assets (except copyrighted works)           561790  Other Services to Buildings & 
       Retailers should select the PBA      522130 Credit Unions                     533110    Lessors of Nonfinancial                   Dwellings
       associated with their primary line                                                      Intangible Assets (except         561900  Other Support Services 
       of products sold. For example,       522180 Savings Institutions & Other                copyrighted works)                        (including packaging & labeling 
       establishments primarily selling            Depository Credit Intermediation                                                      services, & convention & trade 
       prescription and non-prescription    Nondepository Credit Intermediation      Professional, Scientific, and                       show organizers)
       drugs, select PBA code 456110        522210 Credit Card Issuing               Technical Services                          Waste Management and Remediation 
       Pharmacies & Drug Retailers                                                                                               Services
                                            522220 Sales Financing
Transportation and                          522291 Consumer Lending                  Legal Services                              562000  Waste Management & 
Warehousing                                 522292 Real Estate Credit (including     541110    Offices of Lawyers                        Remediation Services
Air, Rail, and Water Transportation                mortgage bankers & originators)   541190    Other Legal Services
481000 Air Transportation                   522299 Intl. Secondary Market, & Other   Accounting, Tax Preparation,                Educational Services
482110 Rail Transportation                         Nondepos. Credit Intermediation   Bookkeeping, and Payroll Services           611000  Educational Services (including 
483000 Water Transportation                 Activities Related to Credit             541211    Offices of Certified Public               schools, colleges, & universities)
                                            Intermediation                                     Accountants                       Health Care and Social 
Truck Transportation                        522300 Activities Related to Credit      541213    Tax Preparation Services          Assistance
484110 General Freight Trucking, Local             Intermediation (including loan    541214    Payroll Services
484120 General Freight Trucking,                   brokers, check clearing, &        541219    Other Accounting Services         Offices of Physicians and Dentists
       Long-distance                               money transmitting)               Architectural, Engineering, and Related     621111  Offices of Physicians (except 
484200 Specialized Freight Trucking         Securities, Commodity Contracts, and     Services                                            mental health specialists)
Transit and Ground Passenger                Other Financial Investments and          541310    Architectural Services            621112  Offices of Physicians, Mental 
Transportation                              Related Activities                                                                           Health Specialists
485110 Urban Transit Systems                523150 Investment Banking & Securities   541320    Landscape Architecture Services   621210  Offices of Dentists
                                                   Intermediation                    541330    Engineering Services              Offices of Other Health Practitioners
485210 Interurban & Rural Bus               523160 Commodity Contracts               541340    Drafting Services                 621310  Offices of Chiropractors
       Transportation                              Intermediation                    541350    Building Inspection Services      621320  Offices of Optometrists
485310 Taxi and Ridesharing Services

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Form 1120-F (Continued)
621330 Offices of Mental Health          624310 Vocational Rehabilitation       721199 All Other Traveler                811430 Footwear & Leather Goods 
       Practitioners (except Physicians)        Services                               Accommodation                            Repair
621340 Offices of Physical, Occupational 624410 Children Services               721210 RV (Recreational Vehicle) Parks   811490 Other Personal & Household 
       & Speech Therapists, &            Arts, Entertainment, and                      & Recreational Camps                     Goods Repair & Maintenance
       Audiologists                                                             721310 Rooming & Boarding Houses,        Personal and Laundry Services
621391 Offices of Podiatrists            Recreation                                    Dormitories, & Workers’ Camps     812111 Barber Shops
621399 Offices of All Other              Performing Arts, Spectator Sports, and Food Services and Drinking Places        812112 Beauty Salons
       Miscellaneous Health              Related Industries                     722300 Special Food Services (including  812113 Nail Salons
       Practitioners                     711100 Performing Arts Companies              food service contractors &        812190 Other Personal Care Services 
Outpatient Care Centers                  711210 Spectator Sports (including            caterers)                                (including diet & weight reducing 
621410 Family Planning Centers                  sports clubs & racetracks)      722410 Drinking Places (Alcoholic               centers)
621420 Outpatient Mental Health &        711300 Promoters of Performing Arts,          Beverages)                        812210 Funeral Homes & Funeral 
       Substance Abuse Centers                  Sports, & Similar Events        722511 Full-Service Restaurants                 Services
621491 HMO Medical Centers               711410 Agents & Managers for Artists,  722513 Limited-Service Restaurants       812220 Cemeteries & Crematories
621492 Kidney Dialysis Centers                  Athletes, Entertainers, & Other 722514 Cafeterias and Buffets            812310 Coin-Operated Laundries & 
621493 Freestanding Ambulatory                  Public Figures                  722515 Snack and Non-alcoholic                  Drycleaners
       Surgical & Emergency Centers      711510 Independent Artists, Writers, &        Beverage Bars                     812320 Drycleaning & Laundry Services 
621498 All Other Outpatient Care                Performers                                                                      (except Coin-Operated)
       Centers                           Museums, Historical Sites, and Similar Other Services
Medical and Diagnostic Laboratories      Institutions                           Repair and Maintenance                   812330 Linen & Uniform Supply
621510 Medical & Diagnostic              712100 Museums, Historical Sites, &    811110 Automotive Mechanical &           812910 Pet Care (except Veterinary) 
       Laboratories                             Similar Institutions                   Electrical Repair & Maintenance          Services
Home Health Care Services                Amusement, Gambling, and Recreation    811120 Automotive Body, Paint, Interior, 812920 Photofinishing
                                         Industries                                    & Glass Repair                    812930 Parking Lots & Garages
621610 Home Health Care Services         713100 Amusement Parks & Arcades       811190 Other Automotive Repair &         812990 All Other Personal Services
Other Ambulatory Health Care Services    713200 Gambling Industries                    Maintenance (including oil        Religious, Grantmaking, Civic, 
621900 Other Ambulatory Health Care      713900 Other Amusement & Recreation           change & lubrication shops & car  Professional, and Similar Organizations
       Services (including ambulance            Industries (including golf             washes)                           813000 Religious, Grantmaking, Civic, 
       services & blood & organ banks)          courses, skiing facilities,     811210 Electronic & Precision                   Professional, & Similar 
Hospitals                                       marinas, fitness centers, &            Equipment Repair &                       Organizations (including 
622000 Hospitals                                bowling centers)                       Maintenance                              condominium and homeowners 
Nursing and Residential Care Facilities  Accommodation and Food                 811310 Commercial & Industrial                  associations)
                                                                                       Machinery & Equipment (except 
623000 Nursing & Residential Care        Services                                      Automotive & Electronic) Repair          Other
       Facilities                                                                      & Maintenance                     999000 Unclassified Establishments 
Social Assistance                        Accommodation                          811410 Home & Garden Equipment &                (unable to classify)
624100 Individual & Family Services      721110 Hotels (except Casino Hotels) &        Appliance Repair & Maintenance
624200 Community Food & Housing, &              Motels                          811420 Reupholstery & Furniture Repair
       Emergency & Other Relief          721120 Casino Hotels
       Services                          721191 Bed & Breakfast Inns

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