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2024

Instructions for Schedule H 

(Form 1120-F)

Deductions Allocated to Effectively Connected Income Under Regulations Section 
1.861-8

Section references are to the Internal       provided in certain tax treaties) under   pursuant to an income tax treaty to 
Revenue Code unless otherwise noted.         the rules provided in Regulations         report business profits attributable to a 
                                             section 1.882-5 and is reported on        U.S. permanent establishment and 
Future Developments                          Schedule I (Form 1120-F). See             applies OECD Transfer Pricing 
For the latest information about             Regulations section 1.882-5(a)(2).        Guidelines in lieu of the ECI and 
developments related to Schedule H           Bad debt expense allocated to ECI is      expense allocation and apportionment 
(Form 1120-F) and its instructions,          reported directly on Form 1120-F,         rules of section 882(c) and 
such as legislation enacted after they       Section II, line 15.                      Regulations sections 1.861-8 and 
were published, go to                                                                  1.861-17 and Temporary Regulations 
IRS.gov/Form1120F.                           Purpose of Schedule                       section 1.861-8T. This treaty-based 
                                             Schedule H (Form 1120-F) is used by       reporting is permitted only if the 
General Instructions                         a foreign corporation that files Form     applicable income tax treaty and 
                                             1120-F to report the amount of the        accompanying documents (such as 
Regulations section 1.861-8.           Under foreign corporation's deductible          Exchange of Notes) expressly provide 
section 882(c), a foreign corporation's      expenses that are allocated and           that attribution of business profits to a 
expenses are deductible against its          apportioned under Regulations             U.S. permanent establishment is 
U.S. taxable income only if they are         sections 1.861-8 and 1.861-17 and         determined under OECD Transfer 
connected with income effectively            Temporary Regulations section             Pricing Guidelines applied by analogy. 
connected with the conduct of a trade        1.861-8T between ECI and non-ECI.         See the Instructions for Schedule M-3 
or business in the United States             The results reported on Schedule H        (Form 1120-F) for the reporting of 
(“ECI”). The proper allocation and           are included on Form 1120-F,              book-tax differences in Parts II and III 
apportionment of deductions for this         Section II, line 26; and, for banks only, of that schedule under a treaty-based 
purpose is generally determined              on Schedule M-3 (Form 1120-F), Part       return position pursuant to OECD 
under the provisions of Regulations          III, line 31.                             Transfer Pricing Guidelines. See also 
section 1.861-8 and Temporary                                                          Form 8833, Treaty-Based Return 
Regulations section 1.861-8T, with                                                     Position Disclosure Under Section 
                                             Who Must File
special rules for the allocation and                                                   6114 or 7701(b).
apportionment of research and                Any foreign corporation that is 
experimentation expenses at                  required to file Form 1120-F and is (or   Reporting Foreign Tax Information 
Regulations section 1.861-17. Under          is treated as) engaged in a trade or      From Partnerships. If you received a 
Regulations section 1.861-8, a               business within the United States at      Schedule K-3 (Form 1065) from a 
taxpayer must allocate deductions to         any time during the tax year must         partnership that includes foreign tax 
the class of gross income to which the       complete Schedule H and attach it to      information, see the instructions for 
deduction is definitely related and          its Form 1120-F. Also, any foreign        Schedule K-3 (Form 1065), Part X, 
then, if necessary, apportion                corporation that is a partner in a        Section 2 and Section 3, for specific 
deductions among the groups of               partnership that has deductions           instructions for reporting expenses on 
income included in the class.                allocated to ECI under Regulations        Schedule H (Form 1120-F).
Generally, deductions are allocated          section 1.861-8 must also complete 
and apportioned on the basis of the          Schedule H and attach it to its Form 
factual relationship between the             1120-F.                                   Specific Instructions

deduction and gross income. (Under           Protective returns.  If the foreign       Part I – Home Office 
section 882(c)(1)(B), charitable             corporation files a protective Form 
                                                                                       Deductible Expenses 
contributions that are deductible            1120-F under Regulations section 
under section 170 reduce ECI                 1.882-4(a)(3)(vi), Schedule H need        Definitely Related Solely to 
whether or not connected with such           not be completed or attached to the       ECI or Non-ECI
income.) Use Schedule H (Form                protective Form 1120-F.                   Part I is used to identify the total 
1120-F) to report expenses, other                                                      expenses, including interest expense 
                                             Treaty-based return reporting of 
than interest expense and bad debt                                                     and bad debt expense, recorded on 
                                             business profits attributable to a 
expense, allocated and apportioned                                                     the corporation's home office books; 
                                             U.S. permanent establishment.       Do 
to ECI and non-ECI. Interest expense                                                   to report adjustments made to 
                                             not complete Schedule H if the 
of a foreign corporation is allocated to                                               determine the amounts that are 
                                             corporation files Form 1120-F 
ECI exclusively (except to the extent 
                              Instructions for Form 1120FSCHH (2024)  Catalog Number 50605P
Oct 11, 2024                  Department of the Treasury  Internal Revenue Service  www.irs.gov

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deductible for U.S. tax purposes; and Principles (“GAAP”), or other debt expense that is deductible for
to report the portion of the adjusted applicable accounting standards, U.S. tax purposes. Such adjustments
expenses that are definitely related to including International Financial include any amount of bad debt
ECI and non-ECI. To the extent Reporting Standards, applicable to expense included on line 1a that is
included in the home office records the corporation's local accounting treated as an involuntary charge-off
used to report total home office practices or under U.S. GAAP, at the under Regulations section 1.166-2(d)
expenses, interest expense and bad corporation's choosing. Expenses of (2). The deductible amount of bad
debt expense are also identified on other includible entities (that is, debt expense remaining after any
Schedule H and removed from disregarded entities) are included in adjustments on line 2 is eliminated
expenses allocated and apportioned home office expenses reported on from Schedule H expenses on line 5.
under Regulations sections 1.861-8 line 1a only if the expenses of such Attach a statement listing the
and 1.861-17 and Temporary other entities are recorded on the amount of the adjustment for each of
Regulations section 1.861-8T. home office's books. However, if the the following categories.
Deductions reported on home office home office's books and records are
1. Expenses included on line 1a of
books may include expenses incurred maintained as part of a foreign
entities whose expenses are not
outside the foreign corporation's home consolidated financial statement, the
includible in the corporation's
country (other than in the United consolidated group's expenses may
expenses for U.S. tax purposes.
States). Home office deductions do be entered on line 1a, although such
not include deductions that are amounts are adjusted on line 2. If the 2. Temporary differences (for
reported on books and records used consolidated group's expenses are example, costs capitalized under
to complete Form 1120-F, Schedule L used, the corporation must attach a section 263A, carrying charges under
(“Schedule L books”). Schedule L statement listing the foreign section 263(g), depreciation and
books are the set or sets of books of consolidated group members. amortization, general loan loss
the corporation's U.S. trade or Expenses recorded on reserves).
business or books of its U.S. branch non-Schedule L books of disregarded 3. Permanent differences (for
(whether maintained within or outside entities (and not on the home office example, interbranch transactions
the United States) as defined in books) that are allocated and other than interest; non-deductible
Regulations section 1.882-5(d)(2). apportioned to ECI are reported on meals and entertainment and
Part I may be completed in U.S. line 19. If the corporation uses executive salary compensation).
dollars or in the foreign corporation's management cost accounting
functional currency. If the corporation statements for its home office books Do not allocate and apportion
completes Part I in U.S. dollars, check that include expenses of one or more expenses to ECI and non-ECI on
the box in the Part I heading. If the disregarded entities, and also line 2. In addition, do not make
corporation completes Part I in a maintains certified audited adjustments on line 2 to reflect
functional currency other than U.S. third-country GAAP (or other book-to-tax adjustments for any home
dollars, specify the currency in the applicable accounting standards) office interest expense (including
space provided in the Part I heading. statements for a disregarded entity, interbranch interest expense) included
the expenses of the disregarded entity on line 1a. Interest expense included
Line 1a. Enter on line 1a the total must be included on line 1a in either on line 1a is adjusted on line 4. The
expenses recorded on the U.S. dollars or the home office's allocation of deductible interest
non-Schedule L books of the home functional currency even if the audited expense to ECI is reported on
office (including books and records third-country GAAP (or other Schedule I (Form 1120-F).
maintained in locations outside the applicable accounting standards) If the corporation is a foreign bank
United States other than in the statements are in another non-U.S. that charges its U.S. branch office
corporation's home country). The dollar functional currency. cost reimbursements for services and
books and records may be home overhead which are booked by the
office records (for example, Line 2. Enter on line 2 the total of the branch in the third-party category of
management cost accounting reports) adjustments necessary to conform the expense actually incurred rather than
that identify only the expenses amounts on line 1a to the amounts as a lump sum interbranch amount,
included in the corporation's financial that are deductible for U.S. tax list the adjustment for each third-party
statements for the tax year. It is not purposes. These adjustments include category expense separately on the
necessary that the home office temporary and permanent differences statement for permanent differences.
records or reports used also include of the type applicable in determining
items of income, gain or loss the deductions of U.S. corporations Line 3. Combine lines 1a and 2 and
(including bad debt charge-offs), or that file their income tax returns on enter the result on line 3. The amount
financial transaction expenses such Form 1120 (for example, adjustments reported on line 3 is the total amount
as interest expense and periodic eliminating any line 1a expenses of of deductible expenses (determined
notional principal contract expense. entities whose expenses are under U.S. tax principles before
Alternatively, the expenses reported includible in the corporation's apportionment between ECI and
on line 1a may be derived from expenses for book purposes but not non-ECI) of the foreign corporation
audited or unaudited financial for U.S. tax purposes). In addition, that files Form 1120-F, other than
statements. The home office books include adjustments to loan losses those that are included on the
may be books recorded under the and loss reserves included in line 1a corporation's Schedule L books.
Generally Accepted Accounting expenses to reflect the amount of bad

2 Instructions for Schedule H (Form 1120-F) (2024)

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Line 4. Enter on line 4 the total corporation's home office and in its customers negotiated and solicited by
amount of interest expense (including retail banking branches in the the corporation's U.S. branch office
interbranch interest), if any, recorded corporation's home country. The where a banking, financing, or similar
on the home office books that is amount of any interoffice or business is carried on). Also include
included on line 3. interbranch charges from the home on line 11 deductible research and
office to various locations and experimentation expenditures that are
Line 5. Enter on line 5 the bad debt departments recorded on the home definitely related to ECI under
expense, if any, that is included on office books as home office “service” Regulations section 1.861-17,
line 3. Any portion of the amount fees for internal management or home deductible charitable contributions
included on line 5 that is allocable to office tax accounting purposes (which that are included on line 7, and
ECI is reported directly on Form amounts are eliminated on line 2) is stewardship expenses, if any.
1120-F, Section II, line 15. not determinative of the amount of the
Line 7. Subtract line 6 from line 3 and home office's deductible expense that Part II – Home Office
enter the difference on line 7. This is is definitely related to non-ECI. Deductible Expenses
the corporation's remaining home Line 10. Enter on line 10 all other Allocated and Apportioned
office deductions which are to be deductions included on line 7 that are to ECI
allocated and apportioned between definitely related solely to non-ECI of
ECI and non-ECI in Parts I and II of the corporation (other than amounts Line 13. Subtract line 12 from line 7
Schedule H. included on lines 8 and 9). For and enter the difference on line 13.
Lines 8 through 10. The amounts example, if a banking corporation The amount on line 13 is the residual
reported on lines 8 through 10 are conducts global banking operations amount of the deductions entered on
deductions that are definitely related through branch offices (including line 7 that is not definitely related
to non-ECI under Regulations through disregarded entities) in solely to the corporation's ECI or
sections 1.861-8 and 1.861-17 and locations outside the corporation's non-ECI. The amount on line 13 is
Temporary Regulations section home country, the home office subject to apportionment under
1.861-8T. If the corporation has deductions included on line 7 that are Regulations sections 1.861-8 and
deductions included on line 7 that are definitely related to non-ECI booked in 1.861-17 and Temporary Regulations
definitely related and allocable to ECI those locations are reportable on section 1.861-8T.
that is exempt from tax under the line 10. These deductions include Line 14. If the corporation reports
Code or an income tax treaty, the home office deductions definitely expenses and deductions in Part I in a
deductions should be treated as related to non-ECI of disregarded non-U.S. dollar functional currency,
allocable to non-ECI for purposes of entities, whether or not the balance enter the average exchange rate that
Schedule H and included in the sheet from such entity is reportable on is used to convert those deductions to
amounts reported on lines 8 through Schedule L of Form 1120-F. (For U.S. dollars for purposes of lines 15
10. corporations other than banks, such and 17. The exchange rate must be
non-ECI may be reflected as income rounded to at least five places.
Line 8. Enter on line 8 deductions from includible entities on
included on line 7 that are definitely Schedule M-3 (Form 1120-F), Part I, Note. You must round the result to
related to non-ECI received from line 5. Foreign banks record such more than five places if failure to do so
subsidiaries (other than disregarded non-ECI on Schedule M-3 (Form would materially distort the exchange
entities whose income and deductions 1120-F), Part I, line 5, only if the rate or the equivalent amount of U.S.
are treated as income and deductions entity's sets of books are reportable dollars.
of the corporation filing Form 1120-F). on Form 1120-F, Schedule L.) See the If the corporation reports amounts
See, for example, Regulations section Instructions for Schedule M-3 (Form in Part I in U.S. dollars, leave line 14
1.861-8(e)(4)(ii) and Regulations 1120-F), Part I. blank.
section 1.861-17 (relating to treatment
of stewardship expenses and Line 11. Enter on line 11 the portion Line 15. Enter on line 15 the amount
research and experimentation of the deductions included on line 7 on line 13, converted if necessary to
expenses). that is definitely related to ECI under U.S. dollars. If the amount on line 13 is
Regulations sections 1.861-8 and stated in a non-U.S. dollar functional
Line 9. Enter on line 9 deductions 1.861-17 and Temporary Regulations currency, divide line 13 by the line 14
included on line 7 (other than amounts section 1.861-8T. Deductions exchange rate and enter the result on
included on line 8) that are definitely definitely related to ECI may include line 15.
related under Regulations sections specifically identifiable personnel and
1.861-8 and 1.861-17 and Temporary other associated costs incurred in the Line 16. Enter on line 16 the amount
Regulations section 1.861-8T to home office with respect to persons of deductions included on line 15 that
non-ECI of the corporation that is who work on the evaluation and is allocated and apportioned to ECI
booked in the corporation's home approval of ECI-producing activities of under Regulations sections 1.861-8
office and in other locations in the the corporation's trade or business and 1.861-17 and Temporary
corporation's home country. For within the United States (for example, Regulations section 1.861-8T. Attach
example, line 9 includes deductions specifically identifiable home office a statement describing the
included on line 7 that are definitely deductions incurred for the evaluation apportionment methods used,
related to non-ECI of a banking and approval of U.S. loans to identifying the numerator and
corporation that is booked in the denominator of any ratio-based

Instructions for Schedule H (Form 1120-F) (2024) 3

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method, and listing the amount income, U.S. assets, and U.S. the corporation is not required to and
apportioned under each method to personnel to worldwide gross income, does not file Schedule M-3 (Form
ECI. worldwide assets, and worldwide 1120-F) for the tax year, enter the
personnel are reported on lines 21 amount of gross income from Form
Line 17. Enter on line 17 the amount
through 23. Other ratio-based 1120-F, Section II, line 11.
entered on line 11, converted if
methods and any non-ratio-based
necessary to U.S. dollars. If the Line 21b. Enter on line 21b the
methods the corporation used for the
amount on line 11 is stated in a corporation's worldwide gross income
tax year to allocate and apportion
non-U.S. dollar functional currency, stated in U.S. dollars. Corporations
deductions to non-ECI on lines 8
divide line 11 by the line 14 exchange other than banks enter the worldwide
through 10 and to ECI on lines 11, 16,
rate and enter the result on line 17. gross income amount from
and 19 are identified in statements
Schedule M-3 (Form 1120-F), Part II,
Line 18. Add lines 16 and 17 and required by the instructions for lines
line 25, column (a), plus any
enter the total on line 18. The amount 24 and 25.
additional gross income amounts
on line 18 is the total amount of
deductible expenses reported on the Check Boxes Above Line 21 included on line 27, column (a).
However, if the corporation's
home office books that is allocated New methods. Check the box to worldwide income is effectively
and apportioned to ECI under indicate if the corporation used a connected to its trade or business
Regulations sections 1.861-8 and method to allocate and apportion within the United States, the
1.861-17 and Temporary Regulations deductions for the current tax year corporation should instead enter the
section 1.861-8T. that was not used in the prior year. gross income amount from
Line 19. Enter on line 19, in U.S. Interbranch amounts in Part IV. Schedule M-3, Part II, line 25, column
dollars, the amount of deductible Check the box to indicate if an (e) (plus any additional gross income
expenses allocated and apportioned expense in respect of any amount amounts included on line 27, column
to ECI under Regulations sections included in Part II, line 20, in the home (a)), but only if there are no permanent
1.861-8 and 1.861-17 and Temporary office allocation and apportionment differences for tax-exempt income
Regulations section 1.861-8T that is was recorded on the Schedule L under section 103 or under a treaty
recorded on non-Schedule L books of books that are used to complete Part (for example, force of attraction
foreign locations other than those of IV of Schedule H. Include the full income not attributable to a U.S.
the home office. Attach a statement amount of the interbranch charge in permanent establishment) that would
listing the amount of deductions Part IV, line 35. otherwise be removed in column (c). If
allocated and apportioned to ECI from the corporation is not required to and
each location. Lines 21 Through 23. Gross does not report worldwide gross
Income, Asset, and Number of
Line 20. Add lines 18 and 19 and income in column (a) of Schedule M-3
enter the total on line 20. The amount Personnel Ratios (Form 1120-F), enter the worldwide
entered on line 20 is the total amount The corporation must complete the gross income from any other
of deductible expenses reported on gross income ratio for line 21 whether reasonable source. Reasonable
the corporation's non-Schedule L or not it used such method to allocate sources include worldwide income
books that is allocated and and apportion deductions in Parts I statements used to report allocations
apportioned to ECI under Regulations and II. If the corporation used the of income or capital to other
sections 1.861-8 and 1.861-17 and asset or number of personnel method regulatory or non-federal tax
Temporary Regulations section (whether separately or as authorities or the worldwide income
1.861-8T. This amount is also components of a multi-factor method), statements that would be used if the
reported on Form 1120-F, Section II, it must report the attributes on lines 22 corporation was required to report
line 26, and, for banks only, on and 23. If the corporation did not use worldwide gross income in column (a)
Schedule M-3 (Form 1120-F), Part III, either the asset or the personnel of Schedule M-3 (Form 1120-F).
line 31. method to allocate and apportion Worldwide gross income is worldwide
deductions for the year, then, except gross receipts less only cost of goods
Part III – Allocation and as provided for worldwide assets sold, if applicable.
reported on line 22b, only the
Apportionment Methods Line 22a. Enter on line 22a the
numerators of each method must be average assets reported on
and Financial Records reported on lines 22 and 23. See the Schedule I (Form 1120-F), line 5,
Used to Complete Parts I instructions for line 22b for disclosure column (d). These are the average
and II of the asset ratio by corporations that U.S. assets included in the
Part III is used to identify the income, used the actual ratio to allocate corporation's Regulations section
asset, and personnel attributes of the interest expense under Regulations 1.882-5 interest expense allocation. If
U.S. trade or business and to report section 1.882-5. the corporation does not have any
the methodologies and financial Line 21a. Enter on line 21a the interest expense for the year and does
records used to determine the amount corporation's gross ECI reportable on not file Schedule I (Form 1120-F),
of the deductions that are allocated Schedule M-3 (Form 1120-F), Part II, enter the average assets derived from
and apportioned to ECI in Parts I and line 25, column (e), plus any the beginning and ending U.S. assets
II of Schedule H. The corporation's additional gross income amounts included in the computation of U.S.
ratios of effectively connected gross reportable on line 27, column (e). If net equity on Form 1120-F, Section III,

4 Instructions for Schedule H (Form 1120-F) (2024)

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lines 4a and 4b. If the corporation is and apportion deductions to ECI and other than U.S. GAAP. The
exempt from the branch profits tax non-ECI on line 8, 9, 10, 11, 16, or 19 Schedule L books may include more
under an applicable income tax treaty of Schedule H, attach a statement than one set of books, including the
and is not required to complete Form describing the ratio used on each line. set(s) of books of disregarded entities.
1120-F, Section III, Part I, the average Include the numerator and See the Instructions for Schedule M-3
U.S. assets should be derived from denominator of the ratio used for each (Form 1120-F), Part I, lines 4 and 5,
the beginning and ending U.S. assets applicable line. for the Schedule L treatment of
included on Form 1120-F, Schedule L. disregarded entities and the
Line 25. If the corporation used a
combined reporting of multiple sets of
Line 22b. If the corporation used the non-ratio-based method to allocate
books. These rules apply to both
worldwide actual ratio under and apportion deductions to ECI and
banks and non-banks for purposes of
Regulations section 1.882-5(c)(2) to non-ECI on line 8, 9, 10, 11, 16, or 19
determining the expenses reportable
allocate interest expense to ECI, enter of Schedule H, attach a statement
on Schedule H, line 29. Interbranch
the amount from Schedule I (Form describing each such method and the
income and expenses recorded
1120-F), line 6b. If the corporation did percentage used, if any, for each
between separate sets of books must
not use the actual ratio, but used a applicable line. These may include
worldwide asset ratio to apportion methods for which percentage be eliminated in the combined reports.
deductions to ECI for purposes of allocations to ECI or non-ECI are Line 30. Enter on line 30 the total of
line 11, 16, or 19, enter the worldwide estimated and documented by the adjustments necessary to conform
assets used in that ratio. If a questionnaires or home office the amounts on line 29 to the amounts
worldwide asset ratio is not available department interviews (for example, that are deductible for U.S. tax
from either Schedule I (Form 1120-F), estimated percent of time spent by purposes. See the instructions for Part
line 6b, or Schedule H, line 11, 16, or employees of particular home office I, line 2, for a general description of
19, leave line 22b blank. departments or sub-departments on the types of temporary and permanent
U.S. trade or business activities). differences that are reportable as
Line 22c. If an amount is entered on
adjustments to the book expenses in
line 22b, divide line 22a by line 22b to Lines 26 Through 28. determining current year tax
determine the asset ratio and enter Identification of Financial deductions under U.S. tax principles.
the percentage on line 22c. If line 22b Records Used However, do not include on line 30
is blank, leave line 22c blank.
Check the “Yes” or “No” box to any adjustments that are otherwise
Line 23a. Enter on line 23a the indicate whether the types of financial reportable on lines 32a through 35.
number of personnel who worked in books and records indicated were Specifically, third-party interest
the corporation's U.S. trade or used to complete Parts I and II of expense and interbranch interest
business during the tax year. The Schedule H. expense included on line 29 is
corporation may use any reasonable adjusted on lines 32a and 32b,
method to determine the number of Line 28. If the “Yes” box is checked,
instead of line 30. Bad debt expense
personnel, including data that is attach a statement listing the other
included on line 29 is adjusted on
already prepared and used by the documentation used to complete
line 33, instead of line 30. Other
corporation for a non-tax business Parts I and II of Schedule H (for
third-party deductible expenses not
purpose. For example, if the example, home country regulatory
allocated or apportioned to ECI and
corporation maintains headcount data reports or functional analyses).
non-ECI under Regulations section
(such as weighted average headcount 1.861-8 are adjusted on line 34,
data) in its personnel records or for Part IV – Allocation and instead of line 30. Interbranch
other purposes such as budgeting, Apportionment of expenses (other than interest
planning, and control, such numbers Expenses on Books and expense) included on line 29
may be used in the numerator. (including interbranch book charges
Records Used to Prepare
for home office services provided to
Line 23b. If the corporation used a Form 1120-F, Schedule L the U.S. trade or business) are
ratio based on number of personnel to Use Part IV of Schedule H to report adjusted on line 35, instead of line 30.
apportion deductions on line 11, 16, the allocation and apportionment of However, if the corporation is a foreign
or 19, enter the worldwide personnel deductions recorded on the bank that charges its U.S. branch
count used in the denominator of such corporation's Schedule L books, other office cost reimbursements for
ratio on line 23b. If the corporation than interest and bad debt expense, services and overhead which are
does not apportion deductions using a to ECI and non-ECI under Regulations booked by the branch in the
number of personnel ratio, leave sections 1.861-8 and 1.861-17 and third-party category of expense
line 23b blank. Temporary Regulations section actually incurred rather than as a lump
Line 23c. If an amount is entered on 1.861-8T. sum interbranch amount, the
line 23b, divide line 23a by line 23b to Line 29. Enter on line 29 the total interbranch amounts charged and
determine the number of personnel expenses recorded on the Schedule L recorded by the U.S. branch
ratio and enter the percentage on books. Schedule L books should not be
line 23c. If line 23b is blank, leave reported on line 35 as interbranch
line 23c blank. Note. The Schedule L books may be expenses, but should be left in the
Line 24. If the corporation used any maintained using GAAP, or other third-party categories to which they
other ratio-based method to allocate applicable accounting standards, are assigned on the U.S. books and

Instructions for Schedule H (Form 1120-F) (2024) 5

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records. If any such amounts require included in the amount reported on contracts that are sourced under
adjustment for U.S. tax principles, line 31. The interbranch amounts Regulations section 1.863-7 with
then such adjustment should be reportable on line 35 include home respect to non-dealer securities
shown on line 30. office charges reflected on the hedging transactions or from
Attach a statement detailing the Schedule L books for home office securities trading or non-global
items adjusted and amounts of each management services provided to the dealing operations. If notional
adjustment. U.S. trade or business. principal contract periodic expense is
allocated and apportioned under the
Line 32a. Enter on line 32a the Note. Amounts paid or accrued on global dealing rules of Proposed
amount of third-party interest expense the Schedule L books to the home Regulations section 1.863-3(h), such
(whether owed to unrelated or related office are not determinative of the amounts should be included on
parties) that is included in the amount amount of home office expense line 34 and, therefore, are not
reported on line 31. Interest expense allocated and apportioned to ECI on definitely related to ECI or non-ECI
is allocated to ECI under Regulations Schedule H, Part II, line 20. under Regulations section 1.861-8
section 1.882-5 and reported on and Temporary Regulations section
Line 36. Add the amounts on lines
Schedule I (Form 1120-F). 1.861-8T.
32a through 35 and enter the total on
Line 32b. Enter on line 32b any line 36. This amount reflects the
Note. Periodic expenses from
interbranch interest expense that is deductions included on line 31 for
notional principal contracts may be
included in the amount reported on which there are special rules to which
allocated and apportioned to ECI and
line 31. the general allocation and
non-ECI in accordance with the ECI
Line 33. Enter on line 33 any bad apportionment rules under
and non-ECI treatment of the item(s)
debt expense that is included in the Regulations sections 1.861-8 and
the notional principal contract hedges.
amount reported on line 31. Any 1.861-17 and Temporary Regulations
portion of the amount eliminated on section 1.861-8T do not apply. Line 38b. Enter on line 38b all other
deductions included in the amount
line 33 that is allocated and Line 37. Subtract the amount on
reported on line 37 that are definitely
apportioned to ECI is reported directly line 36 from the amount on line 31 and
related to ECI or non-ECI under
on Form 1120-F, Section II, line 15. enter the difference on line 37. The
Regulations sections 1.861-8 and
Line 34. Enter on line 34 other amount reported on line 37 is
1.861-17 and Temporary Regulations
third-party expenses that are included allocated and apportioned to ECI and
section 1.861-8T.
in the amount reported on line 31 and non-ECI under Regulations sections
that are not allocated and apportioned 1.861-8 and 1.861-17 and Temporary Line 39. Add lines 38a and 38b and
between ECI and non-ECI under Regulations section 1.861-8T and enter the total on line 39 for each of
Regulations sections 1.861-8 and reconciled on lines 38a through 41. columns (a) through (c). The amounts
on line 39 are the portion of total
1.861-17 and Temporary Regulations Lines 38a Through 41. deductions reported on line 37 that
section 1.861-8T. Periodic expense Reconciliation of Allocable are definitely related to ECI and
from a notional principal contract is
Expenses on Books Under
not allocated and apportioned under non-ECI.
Regulations section 1.861-8 and Regulations Section 1.861-8 Line 40. Enter on line 40 the
Temporary Regulations section (from line 37) deductions included on line 37 that
1.861-8T if the amount is includible in The amount of deductions reported on are not definitely related to ECI or
the profits and losses of a global line 37 that is allocated and non-ECI that are apportioned to ECI
dealing operation and the corporation apportioned to ECI and non-ECI is and non-ECI under Regulations
allocates and apportions such reported on lines 38a through 41, sections 1.861-8 and 1.861-17 and
amounts under Proposed Regulations columns (a) through (c). With respect Temporary Regulations section
section 1.863-3(h). Such periodic to each of lines 38a through 41, enter 1.861-8T. The total on line 40, column
expense is subject to allocation and the amount included on line 37 that is (c), must equal line 37 minus line 39,
apportionment under Proposed allocated or apportioned to ECI in column (c).
Regulations section 1.863-3(h) in column (a) and the amount allocated
Line 41. Add lines 39 and 40 and
accordance with the principles of or apportioned to non-ECI in column
enter the total on line 41 for each of
Proposed Regulations section (b). Add columns (a) and (b) for each
columns (a) through (c). The amount
1.482-8. If such periodic expense is line and enter the total amount in
entered on line 41, column (a), is the
included on line 31, it should be column (c).
total amount of deductions included
included on line 34 and reported
Line 38a. Enter on line 38a the on line 37 that is allocated and
separately on Form 1120-F, Section II,
amount of derivative transaction apportioned to ECI. These deductions
as either part of the global dealing
deductions included on line 37 that are included on Form 1120-F,
income reported on Form 1120-F,
are definitely related to ECI or Section II, lines 12, 13, 14, 16, 17, 19
Section II, line 10, or as a separately
non-ECI under Regulations section through 24, and 27. The total amount
identified deduction under Form
1.861-8 and Temporary Regulations on line 41, column (c), must equal the
1120-F, Section II, line 27.
section 1.861-8T. Deductions amount on line 37.
Line 35. Enter on line 35 all included on line 38a are periodic
interbranch expenses, other than expense from notional principal
interbranch interest expense, that are

6 Instructions for Schedule H (Form 1120-F) (2024)

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