PDF document

- 1 -

Userid: CPM Schema: instrx Leadpct: 100% Pt. size: 9 Draft Ok to Print
AH XSL/XML Fileid: … 120fschv/202212/a/xml/cycle03/source (Init. & Date) _______

Page 1 of 2 15:28 - 12-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Department of the Treasury
Internal Revenue Service
Instructions for Schedule V

(Form 1120-F)

(Rev. December 2022)
List of Vessels or Aircraft, Operators, and Owners

Section references are to the Internal Revenue arrangement, as a partner in a includes income derived from demurrage,
Code unless otherwise noted. partnership, or as the beneficiary of a trust dispatch, and dead freight.
or estate. 2. Off board services. Income in this
Future Developments category is derived from services
For the latest information about The term “transportation income” (as
developments related to Schedule V defined in section 863(c)(3)) means any performed off board any vessel or aircraft
(Form 1120-F) and its instructions, such income derived from, or in connection by an operator of a vessel or aircraft,
as legislation enacted after they were with: provided such services are incidental to
published, go to IRS.gov/Form1120F. • The use (or hiring or leasing for use) of the operation of vessels or aircraft by such
any vessel or aircraft, or operator. The term does not include
• The performance of services directly income from services performed by
General Instructions related to the use of any vessel or aircraft. persons other than an operator. Examples
of off board services include terminal
The term “vessel” or “aircraft” includes services such as dockage, wharfage,
Purpose of Schedule any container used in connection with a storage, lights, water, refrigeration,
Schedule V (Form 1120-F) is used by a vessel or aircraft. However, the term refueling and similar services; stevedoring
foreign corporation to report basic “transportation income” does not include and other cargo handling services;
information for each vessel or aircraft with income from the disposition of vessels, maintenance and repairs; and services
respect to which the corporation is subject containers, or aircraft. performed as a travel or booking agent.
to the 4% rate of tax on U.S. source gross
transportation income (USSGTI) under The term “income derived from, or in The term “operator” includes the actual
section 887. connection with, the use (or hiring or operator of a vessel or aircraft, as well as
leasing for use) of any vessel or aircraft” a time or voyage charterer of such vessel
Who Must File means: or aircraft.
Foreign corporations that are subject to • Income derived from transporting
the 4% tax on their USSGTI under section passengers or property by vessel or
887 must complete Schedule V. aircraft; Specific Instructions
• Income derived from hiring or leasing a Important. All information reported on
vessel or aircraft for use in the Schedule V must be in English. All
When and Where To File transportation of passengers or property amounts must be stated in U.S. dollars.
Attach Schedule V (Form 1120-F) to the on the vessel or aircraft; and Throughout these instructions, when
foreign corporation's Form 1120-F income • Income derived by an operator of the pronouns “you” and “your” are used,
tax return. See the Instructions for Form vessels or aircraft from the rental or use of they are used in reference to the foreign
1120-F for the time, place, and manner for containers and related equipment corporation filing Form 1120-F, U.S.
filing the corporation's income tax return. (container related income) in connection Income Tax Return of a Foreign
with, or incidental to, the transportation of Corporation.
Definitions cargo on such vessels or aircraft by the
The term “United States source gross operator. Persons other than an operator Columns A through D. Complete a
transportation income (USSGTI)” means of a vessel or aircraft do not derive separate column for each vessel or aircraft
any gross income (without reduction by container related income. Such income is with respect to which you are subject to a
any deductions or losses) that is treated as rental income, not 4% rate of tax under section 887. For
transportation income (as defined in transportation income. example:
section 863(c)(3)) to the extent such • If you were a bareboat lessor of vessels
income is treated as from sources within The term “income derived from, or in or aircraft during the tax year, complete a
the United States under section 863(c)(2) connection with, the performance of separate column for each vessel or aircraft
(A). services directly related to the use of a you leased out during the tax year for
vessel or aircraft” includes the following which you derived USSGTI.
The term does not include categories of income. • If you earned income during the tax
transportation income which is: 1. On board services. Income in this year from the operation of vessels or
• Not sourced under section 863(c)(2); category is derived from services aircraft, including time or voyage charter
• Taxable as effectively connected with performed on board a vessel or aircraft in hire, complete a separate column for each
the corporation's trade or business in the the course of the actual transportation of vessel or aircraft operated by you during
United States pursuant to section 887(b) passengers or property aboard vessels or the tax year for which you derived
(4); or aircraft. Examples of income in this USSGTI.
• Taxable in a possession of the United category include income from renting • If you earned income during the tax
States under a provision of the Code, as staterooms, berths, or living year from providing services directly
made applicable in such possession. accommodations; furnishing meals and related to the use of vessels or aircraft,
entertainment; operating shops and complete a separate column for each
Note. Foreign corporations may derive casinos; providing excess baggage vessel or aircraft for which such services
USSGTI directly, from participation in a storage; and the performance of personal were performed and for which you derived
pool, joint venture, joint service services by individuals. The term also USSGTI.

Dec 12, 2022 Cat. No. 51664Q

- 2 -

Page 2 of 2 Fileid: … 120fschv/202212/a/xml/cycle03/source 15:28 - 12-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

If you derive USSGTI subject to a 4% 5. A description of the method used to method of determining the portion of such
rate of tax under section 887 from more determine the USSGTI from the leases for charter income which is USSGTI is to
than four vessels or aircraft, attach the vessel or aircraft, and the calculations apply to such charter income the ratio of
continuation statements using the same used to apply this method (see the Note in (a) the number of days of uninterrupted
size and format as this Schedule V. the instructions for line 9 for examples of travel on voyages or flights between the
reasonable methods that may be used). United States and the farthest point(s)
Line 1. Enter the name of the vessel or
where cargo or passengers are loaded en
type of aircraft. Line 5. Enter the name of the registered route to, or discharged en route from, the
Line 2. For each column, if you are owner. If you are the registered owner, United States, to (b) the number of days in
completing the column for a vessel, enter enter “Same as filer above” on line 5. the smaller of the tax year or the particular
the Lloyd's register number on line 2. If Line 6. Enter the employer identification charter period. When determining
you are completing the column for an number (EIN) or social security number USSGTI, the number of days the vessel is
aircraft, enter the registration number on (SSN) of the registered owner, if known. If located in United States waters for repairs
line 2. you are the registered owner, enter “Same or maintenance should not be included in
Line 3. For each column, if the answer to as filer above” on line 6. If you are not the either the numerator or in the denominator
the question on line 3 is “Yes” and you registered owner and you do not know the of the ratio.
operate the vessel or aircraft which is EIN or SSN of the registered owner, enter Another reasonable method would be
under a bareboat lease or sublease to "Not known." to use a ratio based on the USSGTI
you, attach to Schedule V the following Line 7. Enter the name of the operator, if earned from the operation of the vessel or
items. known. If you are the operator, enter aircraft by the lessee-operator, compared
1. The name and address of the “Same as filer above” on line 7. If you are with the total gross income of the
lessor of the vessel or aircraft. not the operator and you do not know the lessee-operator from the operation of the
2. The term of the bareboat lease or name of the operator, enter "Not known." vessel or aircraft during the smaller of the
tax year or the term of the charter.
charter and the method for calculating the Line 8. Enter the EIN or SSN of the However, an allocation based on the net
rental portion of the payment. operator, if known. If you are the operator, income of the lessee-operator will not be
enter “Same as filer above” on line 8. If considered reasonable for this purpose.
Line 4. For each column, if the answer to you are not the operator and you do not
the question on line 4 is “Yes” and you are know the EIN or SSN of the operator, Important. You must attach a statement
the bareboat lessor of the vessel or enter "Not known." to Schedule V describing the method used
aircraft, attach to Schedule V the following to determine the USSGTI from the vessel
items. Line 9. For each column, enter the or aircraft.
1. The country of registration of the USSGTI the corporation derived with
vessel or aircraft. respect to the vessel or aircraft. See Line 11. If the foreign corporation is
Definitions, earlier. claiming a treaty exemption on its
2. Name and address of each lessee USSGTI, enter the amount on line 11 and
or person chartering the vessel or aircraft Note. In determining the amount of attach Form 8833, Treaty-Based Return
from you. USSGTI, the foreign corporation must Position Disclosure Under Section 6114 or
3. The term of the lease. establish the actual amount of USSGTI 7701(b).
4. The number of days during the tax derived from a charter under a reasonable
year the vessel or aircraft was under method. For example, where a vessel or
lease. aircraft is under charter, one reasonable

-2- Instructions for Schedule V (Form 1120-F) (12-2022)

PDF file checksum: 122787351

(Plugin #1/9.12/13.0)