Userid: ________ Leading adjust: -15% ❏ Draft ❏ Ok to Print
PAGER/SGML Fileid: I8895.SGM (18-Aug-2005) (Init. & date)
Filename: D:\USERS\2c4bb\documents\Epicfiles\2005\8895\8895-p11OTP.sgm
Page 1 of 4 Instructions for Form 8895 11:19 - 18-AUG-2005
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 Form 8895
(August 2005)
One-Time Dividends Received Deduction for Certain Cash Dividends from
Controlled Foreign Corporations
Section references are to the Internal Revenue Code unless otherwise noted.
reason of section 814(e)(2) (dealing with purposes, use the definition of “related
General Instructions contiguous country branches). See Notice person” in section 954(d)(3). For more
2005-38, Section 9.02. information, see Notice 2005-38, Sections
CAUTION! useCorporations965theseelectioninstructions(definedmaking abelow)tosectioncompletemust NoteFormalso.1120S,Ifyouyouarearenota corporationeligible to claimfiling 2.04,Section7,10.and 10, and Notice 2005-64,
all portions of their tax returns affected by the section 965 DRD. See section Line 11. Qualifying Dividends
the election. These pages contain many 1373(a). Subtract line 10 from line 7. If zero or
instructions that supplement information less, the corporation is not entitled to
provided in other tax forms and Part I–Qualifying claim the section 965 DRD and should
instructions issued prior to this instruction Information not file Form 8895.
booklet.
Line 11 is the portion of the gross
For additional information, see Notice Items A through C “cash dividends” reported on line 1 that
2005-10, 2005-6 I.R.B. 474; Notice See Notice 2005-10, Section 4, for qualify for the DRD (after taking into
2005-38, 2005-22 I.R.B. 1100; Notice detailed information about domestic account all of the limits contained in
2005-64, 2005-36 I.R.B. (page number reinvestment plans (DRPs). sections 965(b)(1) through (4)). If line 11
subsequent guidance issued by the IRSnot available at time of printing), and any Item D and E Schedule C, line 12, column (a)is more than zero, enter it on Form 1120,
and Treasury with respect to section 965. If the corporation is a member of a (dividends from CFCs subject to the 85%
controlled group, see Notice 2005-38, deduction).
Purpose of Form Sections 2.03 and 4, and Notice 2005-64,
A corporate U.S. shareholder of a Section 10.03. Also see Notice 2005-64, Section 965(c)(4) states that no
controlled foreign corporation (CFC) uses Section 10.04, for information relating to CAUTION! deduction is allowed under section
Form 8895 to elect the 85% dividends restatements of financial statements. 243 or 245 for any dividend for
received deduction (DRD) provided under which a deduction is allowed under
section 965 (section 965 election) and to Part II–Dividends section 965. As such, do not enter on
make the election for:compute the DRD. The corporation may Received Deduction or 11, any amount from Form 8895, lineForm 1120, Schedule C, lines 3, 6, 7, 8,
•one-yearOctober2004.•ItsIts firstlast22,taxperiodtax2004,yearyearbeginningthatthatorbeginsbeginsonbeforeduringOctoberthe22,corporationLinethe3,EnterNoticetaxthe1.year.Cash2005-38,grossreceivedSee“cashDividendsNoticeSectionfromdividends”2005-10,all9.06,CFCsandtheSectionduring11includedScheduleEnterLine(whichall12sectiononC,islinecarriedline11.965(a)(2)12).overSee thetoamountsForminstructions1120,
The corporation makes the section 965 Notice 2005-64, Section 3.01, regarding for Part V beginning on page 3. These
election by attaching Form 8895 to its “cash dividends.” amounts are included on Form 1120,
timely filed tax return (including Schedule C, line 12, column (a). Do not
extensions) for such tax year. However, a Line 3. Section 965(b)(1) Limit include on Form 1120, Schedule C, line
corporation that filed its return before If the corporation is a member of a 14, column (a), any section 965(a)(2)
Form 8895 was made available in final controlled group, see Notice 2005-38, amount included on Form 1120, Schedule
form need not file the form with an Sections 2.03 and 4, and Notice 2005-64, C, line 12, column (a).
amended return, but should retain the Section 10.03.
information requested on the form to be Line 13. Deductible Portion of
made available to the IRS upon request. Line 5. Section 965(b)(2) Limit Qualifying Dividends
Section2005-38,See Notice3,Sectionfor more2005-10,5,information.andSectionNotice 2005-64,2, Notice Subtractsectionthe8895.corporation965lineDRD4 fromisandnotlineentitledshould1. If zeronotto claimfileor less,Formthe dividends.Multiplydeductiblelineportion11 byof85%.lineThis11 qualifyingis the
Note. The corporation cannot take a
Line 6. Section 965(b)(4) Limit foreign tax credit or deduction for foreign
Enter amounts to be reinvested in the taxes paid, accrued, or deemed paid on
Specific Instructions United States under a DRP. See Notice line 13 dividends. See the instructions for
! Thereferencesform andto specificinstructionslinescontainon 2005-10,information.SectionsAlso see5, 6,Noticeand 8,2005-38,for detailed Partinformation.IV on page 3 for additional
CAUTION Form 1120. If you are filing Form Sections 2.05, 8, 9.03, 9.05, 10, and 11, Line 14. Expenses Disallowed
1120-L, 1120-PC, or 990-C, use the and Notice 2005-64, Sections 10 and 11. Under Section 965(d)(2) With
comparable line of your tax return for the Lines 8 Through 10. Section Respect to Line 13 Amount
line referenced for Form 1120. 965(b)(3) Limit Enter the amount of expenses disallowed
Note. If you are a domestic life For purposes of determining related party under section 965(d)(2) with respect to
insurance company filing Form 1120-L, indebtedness of the CFC on lines 8 and the amount entered on line 13. See
you are not eligible for the section 965 9, all CFCs with respect to which the Notice 2005-38, Section 9.01, and Notice
DRD with respect to any amount added to corporation is a U.S. shareholder are 2005-64, Section 5, for additional
life insurance company taxable income by treated as a single CFC. Also, for these information.
Cat. No. 39824S