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Page 3 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.
Enter the credit from that form on the Complete the following steps to • Line 36. Enter the foreign tax credit
applicable line of Form 1120, Schedule J. determine the corporation’s foreign tax computed for the separate category on
credit. the corporation’s preliminary Form 1118,
23,completes20,followingbefore25,minimum•••Credit,EnterEnterEnteronononExample.FormFormFormcredits).asthethetheexceptions:tax).instructedFormamountamountamount3800,3800,3800,3800,ThelinelinelinefromfromfromoncorporationGeneral91012athat(regularFormFormForm(alternative(foreignform,8895,8895,8895,Businesstaxwithtaxlinelinelinetheto:deemed1118.nondeductible3,ofaccompanyingDRDaswhetheras1. •instructedIncludeorapplicable,CompleteInwhetherreceiveddoingtheyinonunderso,instructions,SchedulequalifyathattheyallfrompreliminarycompletedividendsformsectionareCFCsfordeductibleA,andtheandcolumnForm965).(regardlessFormreceivedsectionbe1118sure2or965ororfororreferredlimitationSchedulecorporation’spreliminaryseparateallowablesmallerrevisedline•theLine36.separatethancredittocategoryorforeignB,37.ThisinFormthePartlinestep amountEnterregularissectioncategory).36,1118taxIII.the1(theabove.theThesubstitutecreditcorporation’sfromsectionislesser965(e)smallercorporation’stheIfthisforlineFormof904thelimitationthelineofthe35line111837is35for
credit). • Use the amount on Form 8895, line the amount tentatively figured on the
• Enter the amount from Form 4626, line 18, with respect to the portion of Form applicable line of Schedule B, Part III, of
12 (calculated in accordance with the 1118, Schedule B, Part II, line 9, which the corporation’s preliminary Form 1118.
instructions for line 25 on page 2) on refers to “regular tax liability.” Enter on the dotted line to the left of the
Form 3800, line 16 (tentative minimum • Pencil in (or otherwise tentatively applicable entry space “from Form 8895,
tax). show) the corporation’s preliminary Part IV, line 37.”
Include the credit from Form 3800, line foreign tax credit amounts on Form 1118, 3. Compute the corporation’s revised
19, on Form 1120, Schedule J, line 6d. Schedule B, Part III. foreign tax credit for all separate
Credit for prior year minimum tax. • Include on Schedule G, line E, all categories and enter the result on Form
taxes paid, accrued, or deemed paid that 8895, line 39, and on Form 1120,
Complete Form 8827, Credit for Prior
Year Minimum Tax–Corporations, as are attributable to the deductible portion Schedule J, line 6a. See the instructions
instructed on that form, with the following of qualifying dividends (Form 8895, line for line 39 below for details.
exception: If the answer to the question 13).
on line 6 is “No,” enter on Form 8827, line With respect to the last bulleted item For additional information, see Notice
6, the tentative minimum tax for the above, the corporation may specifically 2005-64, Section 9.02.
of nondeductible CFC dividends wascurrent year determined as if the amount qualifying dividends. This specificidentify which dividends are treated as Line 38
included on Form 4626, line 1, and the identification is made by entering the Enter the smaller of line 31 or line 34.
creditable tax attributable to qualifying dividends on Form 8895, Part This amount is used to determine the
nondeductible CFC dividends was V, column (e). In the absence of such a portion of the foreign tax credit that may
included on Form 4626, line 11. For more specification, a pro rata portion of each be used to reduce the tax on
information, see Notice 2005-64, Section cash dividend repatriated during the tax nondeductible CFC dividends (see
9.04. year is treated as a qualifying dividend. instructions for line 21 on page 2).
See Notice 2005-64, Section 3.02. The
Enter the amount from Form 8827, line corporation may not claim a credit or Line 39
8, on Form 1120, Schedule J, line 6e. deduction for 85% of the foreign taxes Enter the corporation’s revised foreign tax
Qualified zone academy bond paid, accrued, or deemed paid with credit on line 39. If the corporation
credit. If the corporation is claiming a respect to qualifying dividends. See entered revised amounts on Schedule B,
qualified zone academy bond credit, Notice 2005-64, Section 4, for more Part III, of its preliminary Form 1118 (see
complete Form 8860 as instructed on that information. the instructions for line 37 above),
form, with the following exceptions: 2. Complete Form 8895, Part IV, lines refigure Form 1118, Schedule B, Part III,
• Enter the amount from Form 8895, line 26 through 37, for each separate category lines 9, 10, and 11, and enter the revised
20, on Form 8860, line 4 (regular tax that contains nondeductible CFC amount of the foreign tax credit (Form
before credits). dividends. If you have nondeductible CFC 1118, Schedule B, Part III, line 11) on
• Enter the amount from Form 8895, line dividends in more than one separate Form 8895, line 39, and on Form 1120,
25, on Form 8860, line 5 (alternative category, attach additional Parts IV to Schedule J, line 6a. Otherwise, enter the
minimum tax). Form 8895. Complete lines 26 through 37 amount of the foreign credit from
• Enter the amount from Form 8895, line using the following line instructions. Schedule B, Part III, line 11, of the
23, on Form 8860, line 7a (foreign tax • Line 28. Subtract line 27 from corporation’s preliminary Form 1118 on
credit). Schedule B, Part II, line 6, of the Form 8895, line 39, and on Form 1120,
• Enter the excess, if any, of the amount corporation’s preliminary Form 1118 (see Schedule J, line 6a (i.e., the amounts
from Form 8827, line 8, over the amount step 1 above). This is the corporation’s computed in the corporation’s preliminary
from Form 8895, line 22, on Form 8860, foreign source taxable income exclusive Form 1118, Schedule B, Part III, are the
line 7g (credit for prior year minimum tax). of the nondeductible CFC dividends in the amounts to be used on the corporation’s
actual Form 1118, Schedule B, Part III).
Enter the amount from Form 8860, line separate category.
9, on Form 1120, Schedule J, line 6f. • Line 29. Subtract line 27 from The amount on Form 8895, line
Schedule B, Part II, line 7c, of the ! 39, is generally not the amount to
Part IV–Foreign Tax corporation’s preliminary Form 1118 (see CAUTION enter on the foreign tax credit line
step 1 above). This is the corporation’s of most business credit forms. See the
Credit–Additional worldwide taxable income exclusive of the instructions for line 23 on page 2 and
Limitation for Separate nondeductible CFC dividends in the How to Compute Business Credits on
separate category. page 2 for details.
Categories With • Line 32. Subtract line 31 from
Nondeductible CFC Schedule B, Part II, line 9, of the Part V–Schedule of
corporation’s preliminary Form 1118 (see
Dividends step 1 above). This is the corporation’s Dividends
pre-credit U.S. tax on its worldwide List in Part V all gross “cash dividends”
See Notice 2005-64 for rules taxable income exclusive of the the corporation received from all CFCs
! pertaining to the foreign tax credit nondeductible CFC dividends in the during the tax year. See Notice 2005-64,
CAUTION and expense allocation. separate category. Section 3.01, for more information.
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