PDF document

- 1 -

Userid: CPM Schema: Leadpct: 100% Pt. size: 9.5 Draft Ok to Print
instrx
AH XSL/XML Fileid: … ns/i8993/202201/a/xml/cycle02/source (Init. & Date) _______
Page 1 of 5 10:20 - 10-Nov-2021

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 8993

(Rev. January 2022)
Section 250 Deduction for Foreign-Derived Intangible Income (FDII) and Global
Intangible Low-Taxed Income (GILTI)

Section references are to the Internal Revenue determine the allowable deduction to property, located outside the United
Code unless otherwise noted. under section 250. States (see Regulations section
1.250(b)-5).
Future Developments The deduction is allowed only to
domestic corporations (not including Special rules for determining foreign
For the latest information about real estate investment trusts (REITs), use apply to transactions that involve
developments related to Form 8993 and regulated investment companies (RICs), property or services provided to related
its instructions, such as legislation and S corporations) and section 962 parties (see section 250(b)(5)(C) and
enacted after they were published, go to electing individuals. For the treatment of Regulations section 1.250(b)-6).
IRS.gov/Form8993. a domestic corporation that is a partner
in a partnership, see Regulations Sale
What’s New sections 1.250(b)-1(e) and The terms “sold,” “sells,” and “sale”
1.250(b)-3(e). include any lease, license, exchange, or
Changes have been made throughout other disposition of property.
these instructions based on the final When and Where To File Foreign Use
section 250 regulations (T.D. 9901, 85 Attach Form 8993 to your income tax “Foreign use” is defined to mean “any
FR 43042, July 15, 2020). return and file both by the due date use, consumption, or disposition which
(including extensions) for that return. is not within the United States.” See
Important Reminders Regulations section 1.250(b)-4(d). For
Domestic corporation’s deduction. Definitions and Overview the latest guidance about foreign use,
For tax years beginning on or after Steps for Computing the go to IRS.gov/Form8993.
January 1, 2018, and before January 1,
Deduction Under Section 250
2026, section 250 generally allows a Qualified Business Asset
deduction equal to the sum of 37.5% of 1. Deduction Eligible Income (DEI) Investment (QBAI)
the corporation's FDII plus 50% of its is determined. A domestic corporation’s QBAI is the
GILTI (thereafter, these deductions are 2. Deemed Tangible Income Return average of the aggregate of its adjusted
reduced to 21.875% and 37.5%, (DTIR) is determined. bases, determined as of the close of
respectively). 3. Deemed Intangible Income (DII) each quarter of the tax year, in specified
Deduction limitation. If the sum of is determined. tangible property used in its trade or
business and of a type with respect to
FDII and GILTI exceeds taxable income, 4. Foreign-Derived Deduction which a deduction is allowable under
the deduction under section 250 is Eligible Income (FDDEI) is determined. section 167. See Regulations section
limited to taxable income. 5. Foreign-Derived Ratio (FDR) is 1.250(b)-2.
determined.
Information From Partnership
General Instructions 6. FDII is determined.
A domestic corporate partner of a
7. If there is excess FDII and GILTI partnership takes into account its
Purpose of Form over taxable income, the FDII reduction distributive share of a partnership's
Public Law 115-97 (Tax Cuts and Jobs and the GILTI reduction are determined. gross DEI, gross FDDEI, deductions,
Act of 2017) enacted section 250 for the
8. The eligible deduction under
allowance of a deduction for the eligible and its share of partnership QBAI, in
section 250 is determined.
percentage of FDII and GILTI. order to calculate the partner's FDII. See
Regulations section 1.250(b)-1(e)(1).
See Form 8992, U.S. Shareholder FDDEI The above partnership information
Calculation of Global Intangible FDDEI means, with respect to a should have been reported to the
Low-Taxed Income (GILTI), and its taxpayer for its tax year, any deduction partners on Schedule K-3 (Form 1065).
instructions for more information on eligible income of the taxpayer that is
GILTI. derived in connection with: For partners in a partnership, attach
a statement to Form 8993 listing each
1. Property that is sold by the partnership's name; employer
Use Form 8993 to figure the amount taxpayer to any person who is a foreign identification number (EIN); the
of the eligible deduction for FDII and person and that the taxpayer partner's share of the partnership's
GILTI under section 250. establishes to the satisfaction of the QBAI reported on line 7b; and other
Secretary is for a foreign use (see FDDEI items reported on lines 9b, 10b,
Who Must File Regulations section 1.250(b)-4); or 13, and 17.
All domestic corporations (and U.S. 2. Services provided by the
individual shareholders of controlled taxpayer that the taxpayer establishes Documentation
foreign corporations (CFCs) making a to the satisfaction of the Secretary are For special substantiation requirements
section 962 election (962 electing provided to any person, or with respect under the Regulations, see sections
individual)) must use Form 8993 to

Nov 10, 2021 Cat. No. 71352N

- 2 -

Page 2 of 5 Fileid: … ns/i8993/202201/a/xml/cycle02/source 10:20 - 10-Nov-2021

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

1.250(b)-3(f), 1.250(b)-4(d)(3), and with respect to the inclusion under amount of the gross income included in
1.250(b)-5(e)(4). section 951A. DEI produced with respect to the
Section 250 Deduction 3. Any financial services income (as property bears to the total amount of
defined under section 904(d)(2)(D)) of gross income produced with respect to
Limitation such corporation. the property. If specified tangible
If the sum of FDII and GILTI exceeds property is only partially depreciable,
4. Any dividend received from a
taxable income, the deduction under then only the depreciable portion is
CFC with respect to which the
section 250 is subject to limitation. See QBAI. The adjusted basis is determined
corporation is a U.S. shareholder, as
the instructions for lines 26 and 27, by using the alternative depreciation
defined under section 951(b).
later, for additional information. system under section 168(g) and
5. Any domestic oil and gas allocating depreciation deductions with
Corrections to Form 8993 extraction income. The term “domestic respect to such property ratably to each
If you file a Form 8993 that you later oil and gas extraction income” means day during the period in the tax year to
determine is incomplete or incorrect, file income described in section 907(c)(1), which such depreciation relates. Then,
a corrected Form 8993 with an determined by substituting “within the multiply QBAI by 10% (0.10) and enter
amended tax return, using the amended United States” for “without the United this result on Form 8993, line 7a.
return instructions for the return with States.” Multiply a partner's share of the
which you originally filed Form 8993. 6. Any foreign branch income (as partnership's QBAI by 10% (0.10) and
Enter “Corrected” at the top of the defined in section 904(d)(2)(J)). enter this result on Form 8993, line 7b.
corrected Form 8993.
Line 5. Deductions Properly Line 8. DII
Computer-Generated Form DII is the excess (if any) of the
Allocable to the Amount on
8993 corporation’s DEI over its DTIR. If the
Line 4
Generally, all computer-generated result is zero or negative, enter zero on
forms must receive prior approval from Allocable deductions include all line 8, and your FDII deduction under
the IRS and are subject to an annual deductions (including taxes) properly section 250 is zero. Enter zero on lines
review. Requests for approval may be allocable to gross DEI on line 4. See 21 and 28.
submitted electronically to Regulations section 1.250(b)-1(d)(2) for
substituteforms@irs.gov, or requests more details. Deductions properly
Part II. Determining FDDEI
may be mailed to: Internal Revenue allocable to gross DEI are determined
Service, Attention: Substitute Forms without regard to sections 163(j), 170(b) Each place where general property is
Program, SE:W:CAR:MP:P:TP, 1111 (2), 172, 246(b), and 250. listed refers to amounts connected to
the sale, lease, exchange, or other
Constitution Ave. NW, Room 6554, Include the partner's share of the disposition of general property to a
Washington, DC 20224. partnership's deductions properly foreign person and, as established to
allocable to the amount on line 4. Do not the satisfaction of the Secretary, is for a
Specific Instructions duplicate expenses already included on foreign use as defined in Regulations
line 1. sections 1.250(b)-3 and 1.250(b)-4(d)
(1) and (2). The term “general property”
Part I. Determining DEI Line 6. DEI means any property other than
and DII If the result is zero or negative, enter intangible property; a security (as
DEI means, with respect to any zero on line 6, and your FDII deduction defined in section 475(c)(2)); an interest
domestic corporation, the excess (if under section 250 is zero. Enter zero on in a partnership, trust, or estate; or a
any) of the gross income of the lines 21 and 28. commodity described in section 475(e)
corporation, less exclusions, over (2)(A) that is not a physical commodity
deductions (including taxes) properly Line 7. Deemed Tangible or a commodity described in section
allocable to such gross income. Income Return (10% of QBAI) 475(e)(2)(B) through (D).
The DTIR with respect to a domestic
Line 1. Gross Income corporation is the corporation’s QBAI for Each place where intangible property
For purposes of this form, gross income the year multiplied by 10%. In addition, is listed refers to amounts connected to
includes all income from whatever for purposes of determining a domestic the sale, license, exchange, or other
source derived. Enter the amount from corporate partner's DTIR, a domestic disposition of intangible property to a
Form 1120, line 11. corporation's QBAI is increased by its foreign person and, as established to
share of the partnership's adjusted the satisfaction of the Secretary, is for a
Line 2. Exclusions foreign use as defined in Regulations
basis in partnership specified tangible
Exclude the following items to the extent property. See Regulations section sections 1.250(b)-3 and 1.250(b)-4(d)
included on line 1. 1.250(b)-2(g). (2).
1. Any amount included in the gross Each place where services are listed
income of such corporation under First, compute QBAI (defined earlier). refers to amounts connected to services
section 951(a)(1). Include the section 78 See Regulations section 1.250(b)-2. that, as established to the satisfaction of
gross-up with respect to the inclusion “Specified tangible property” means any the Secretary, are provided to any
under section 951(a)(1). tangible property used in the production person, or with respect to property,
of the gross income included in DEI. If located outside the United States as
2. Any amount included in the gross such property was used in the defined in Regulations section
income of such corporation under production of DEI and income that is not 1.250(b)-5.
section 951A. Section 951A defines DEI (such as dual-use property), the
GILTI. Include the section 78 gross-up property is treated as specified tangible If a transaction includes both a sales
property in the same proportion that the component and a service component,

-2- Instructions for Form 8993 (Rev. 1-2022)

- 3 -

Page 3 of 5 Fileid: … ns/i8993/202201/a/xml/cycle02/source 10:20 - 10-Nov-2021

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

the transaction is classified as either a Line 10a. Cost of Goods Sold that are allocated and apportioned to
sale or as a service according to the Enter the amount of cost of goods sold gross FDDEI on line 11.
overall predominant character of the attributable to the amount(s) on line 9a. Column A. General Property
transaction. See Regulations section
1.250(b)-3(d). For purposes of this form, when Enter the amount, if any, of the partner’s
figuring FDDEI, cost of goods sold share of the partnership’s deductions
For purposes of determining a includes the: that are allocated and apportioned to
domestic corporation’s deductions that gross FDDEI from all sales of general
are properly allocable to gross FDDEI, 1. Cost of goods sold to customers,
the corporation’s deductions are and property.
allocated and apportioned to gross 2. Adjusted basis of non-inventory Column B. Intangible Property
FDDEI under the rules of sections property sold or otherwise disposed of Enter the amount, if any, of the partner’s
1.861-8 through 1.861-14T and in trade or business. share of the partnership’s deductions
1.861-17 by treating section 250(b) as that are allocated and apportioned to
In making that determination,
an operative section described in gross FDDEI from all sales of intangible
attribute costs of goods sold to gross
section 1.861-8(f). See Regulations property.
receipts using a reasonable method in
section 1.250(b)-1(d)(2).
accordance with Regulations section Column C. Services
The partnership should determine 1.250(b)-1(d)(1).
and report the partner’s share of each Enter the amount, if any, of the partner’s
Cost of goods sold must be attributed
item necessary to compute FDII in share of the partnership’s deductions
to gross receipts with respect to gross
accordance with the partner’s that are allocated and apportioned to
DEI or gross FDDEI regardless of
distributive share of the underlying item gross FDDEI from all services.
whether certain costs included in cost of
of income, gain, deduction, and loss of Line 14. Interest Deductions
goods sold can be associated with
the partnership.
activities undertaken in an earlier tax The term “interest” refers to the gross
Line 9a. Gross Receipts year (including a year before the amount of interest expense incurred by
“Foreign-derived gross receipts” means effective date of section 250). a taxpayer in a given year. For purposes
of determining properly allocable
gross receipts that are used to compute Line 10b. Cost of Goods Sold interest deductions, the corporation’s
gross FDDEI as defined in Regulations From Partnerships interest expense deduction is
section 1.250(b)-1.
Enter the amount, if any, of the partner’s determined without regard to section
Column A. General Property share of the partnership’s cost of goods 163(j), and includes any expense under
Enter the amount of foreign-derived sold attributable to the amount on section 163 (including original issue
gross receipts from all sales of general line 9b. discount), and interest equivalents. See
Regulations section 1.250(b)-1(d)(2)(ii).
property. Line 12. Allocable Deductions See Temporary Regulations section
Column B. Intangible Property Enter the amount of the deductions that 1.861-9T(b) for the definition of interest
Enter the amount of foreign-derived are allocated and apportioned to gross equivalents and Regulations section
gross receipts from all sales of FDDEI on line 11. See Regulations 1.861-9T(c) for sections that disallow,
intangible property. section 1.250(b)-1(d)(2) for more suspend, or require the capitalization of
details. Report interest and research interest deductions.
Column C. Services and experimental (R&E) deductions on
Enter the amount of foreign-derived lines 14 and 15, respectively. Interest deductions are apportioned
gross receipts from all services. Deductions are determined without to gross DEI and gross FDDEI based
regard to sections 163(j),170(b)(2), 172, ordinarily on the tax book value of the
Line 9b. Gross Receipts From 246(b), and 250. taxpayer’s assets. See Regulations
Partnerships section 1.250(b)-1(d)(2)(i). A taxpayer
Enter the amount, if any, of the partner’s Column A. General Property may elect to use the alternative tax book
share of the partnership’s Enter the amount of the deductions that value method. See Regulations sections
foreign-derived gross receipts. are allocated and apportioned to gross 1.861-9(g)(1)(ii) and 1.861-9(i). When
FDDEI from all sales of general reporting the asset that is the basis of
Column A. General Property property. stock in nonaffiliated 10%-owned
Enter the amount, if any, of the partner’s corporations, adjust such amount for
share of the partnership’s Column B. Intangible Property earnings and profits. See Regulations
foreign-derived gross receipts from all Enter the amount of the deductions that section 1.861-12(c)(2)(i)(A). See
sales of general property. are allocated and apportioned to gross Regulations sections 1.861-10 and
FDDEI from all sales of intangible 1.861-10T for exceptions to the general
Column B. Intangible Property property. rule of fungibility (such as qualified
Enter the amount, if any, of the partner’s nonrecourse indebtedness, integrated
share of the partnership’s Column C. Services financial transactions, and excess
foreign-derived gross receipts from all Enter the amount of the deductions that related party indebtedness).
sales of intangible property. are allocated and apportioned to gross
FDDEI from all services. The total interest deductions for the
Column C. Services members of the corporation's affiliated
Enter the amount, if any, of the partner’s Line 13. Allocable Deductions group are allocated and apportioned to
share of the partnership’s From Partnerships the statutory and residual groupings
foreign-derived gross receipts from all Enter the amount, if any, of the partner’s under proposed, final, and Temporary
services. share of the partnership’s deductions

Instructions for Form 8993 (Rev. 1-2022) -3-

- 4 -

Page 4 of 5 Fileid: … ns/i8993/202201/a/xml/cycle02/source 10:20 - 10-Nov-2021

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

Regulations sections 1.861-8 through The amount reported on this line If the result reported on line 25 is
1.861-14. should include R&E deductions of the zero or negative, your taxable income is
taxpayer and the taxpayer’s share of greater than the sum of FDII and GILTI,
The amount reported on this line R&E deductions incurred by a and your deduction under section 250 is
should include interest paid or accrued partnership. This requires that the not limited.
by the taxpayer and the taxpayer’s partnership report to its partners the
share of interest expense incurred by a gross receipts related to certain income If the result reported on line 25 is a
partnership. With respect to corporate within the statutory and residual positive number, your taxable income is
partners with an interest in the groupings within a SIC code and the less than the sum of your FDII and
partnership of 10% or more, interest partner’s distributive share of the GILTI, and your deduction under section
expense, including the partner’s partnership’s R&E deductions, if any, 250 is limited to taxable income. Refer
distributive share of partnership interest connected with the SIC codes. See to the instructions for lines 26 and 27,
expense, is apportioned by reference to section 1.861-17(f). The above later, to determine the amount by which
the partner’s assets, including the partnership information should have you need to reduce FDII and GILTI.
partner’s pro rata share of partnership been reported to the partners on Line 26. FDII Reduction
assets. See Regulations section Schedule K-3 (Form 1065). The reduction in FDII for which a
1.861-9(e)(2). A corporate partner with
a less-than-10% interest in a Line 16. Other Apportioned deduction is allowed equals such
partnership shall directly allocate its Deductions excess multiplied by a percentage equal
to the corporation’s FDII divided by the
distributive share of the partnership’s Enter all other apportioned deductions sum of its FDII and GILTI.
interest expense to its distributive share that relate to gross FDDEI that are not
of partnership gross income and be otherwise included on lines 12, 14, and Use the Line 26 Worksheet to
apportioned in accordance with the 15. If a deduction does not bear a compute the FDII reduction.
partner’s relative distributive share of definite relationship to a class of gross
gross FDDEI. See Regulations section income constituting less than all of Line 26 Worksheet
1.861-9(e)(4). The above partnership gross income, it shall ordinarily be
information should have been reported treated as definitely related and Line A Enter the
to the partners on Schedule K-3 (Form allocable to all of the taxpayer's gross amount
1065). income, including gross DEI and gross from
Line 15. Research and FDDEI, except where otherwise line 25. If
directed in the regulations.
Experimental Deductions zero or
R&E expenses deducted under section Line 17. Other Apportioned less,
enter -0- on
174 are definitely related to gross Deductions From Partnerships line E of
intangible income reasonably Enter all other apportioned deductions this
connected with relevant broad product that relate to gross FDDEI from worksheet
categories of the taxpayer and are partnerships that are not otherwise and stop.
allocable to all items of gross intangible included on lines 13, 14, and 15.
income as a class related to such Line B Enter the
product categories. Gross intangible Part III. Determining FDII amount
income is all gross income attributable from line 21.
to intangible property including sales, and/or GILTI Deduction
Line C Enter the
services, and royalties (including Line 20. Foreign-Derived Ratio amount
section 367(d) inclusions), but does not
include dividends or other inclusions FDR is determined by computing the from line 23.
with respect to stock such as sections ratio of FDDEI over DEI. See Definitions
951, 951A, and 1293. See Regulations and Overview, earlier, for the discussion Line D Divide line
section 1.861-17(b)(2). The product of FDDEI. Divide the amount on line 19 B by line C.
categories are generally determined by by the amount on line 6. The resulting Line E Multiply line
reference to the three-digit Standard ratio must not exceed 1. A by line D.
Industrial Classification (SIC) code. See Line 22. GILTI Inclusion Enter this
Regulations section 1.861-17(b)(3). Enter the amount of GILTI reported on line E
R&E expenses are apportioned in the Form 8992, Part II, line 5. Attach Form amount on
same proportions that the amounts of 8992 to your income tax return. Form 8993,
the taxpayer’s gross receipts (including line 26.
those of certain controlled and Line 24. Taxable Income
uncontrolled parties) from certain sales, Enter the taxable income of the
leases, licenses, and services that are domestic corporation (determined Line 27. GILTI Reduction
related to gross intangible income in the without regard to section 250).
statutory or residual grouping bear to The reduction in GILTI is determined by
the total amount of gross receipts in the Line 25. Excess FDII and GILTI the excess amount less the FDII
class. See Regulations section Over Taxable Income reduction.
1.861-17(d). The exclusive Subtract the taxable income amount Use the Line 27 Worksheet to
apportionment rule in Regulations reported on line 24 from the total FDII compute the FDII reduction.
section 1.861-17(c) does not apply for and GILTI on line 23.
purposes of apportioning R&E to
determine the deduction for FDII.

-4- Instructions for Form 8993 (Rev. 1-2022)

- 5 -

Page 5 of 5 Fileid: … ns/i8993/202201/a/xml/cycle02/source 10:20 - 10-Nov-2021

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

Line 27 Worksheet Line 28. FDII Deduction collect the right amount of tax. You are
To figure the FDII deduction, subtract not required to provide the information
Line F Enter the the amount from line 26 (FDII requested on a form that is subject to
amount reduction), from the amount on line 21 the Paperwork Reduction Act unless the
from (FDII). form displays a valid OMB control
line 25. If number. Books or records relating to a
zero or Then, multiply the resulting amount form or its instructions must be retained
less, enter by 37.5% (0.375) to obtain the FDII as long as their contents may become
zero on line deduction and enter it on line 28. material in the administration of any
Internal Revenue law. Generally, tax
H of this Line 29. GILTI Deduction returns and return information are
worksheet
To figure the GILTI deduction, subtract
and stop. confidential, as required by section
the amount from line 27 (GILTI 6103.
Line G Enter the reduction), from the amount on line 22
amount (GILTI inclusion). Then, add any amount The time needed to complete and file
from line E received by the corporation (or 962 this form will vary depending on
in the electing individual) that is treated as a individual circumstances. The estimated
worksheet dividend under section 78 which is burden for business taxpayers filing this
above, as attributable to GILTI, from Form 1118, form is approved under OMB control
reported on Schedule A, column 3(b). Lastly, number 1545-0123 and is included in
line 26, of multiply that amount by 50% (0.50). the estimates shown in the instructions
for their business income tax return.
Form 8993. Enter the sum of lines 28 and 29 on
Line H Subtract Form 1120, Schedule C, line 22, or on If you have comments concerning the
line G from the comparable schedules of other accuracy of these time estimates or
line F. corporate returns. suggestions for making this form
simpler, we would be happy to hear
Enter this from you. See the instructions for the tax
Paperwork Reduction Act Notice.
line H return with which this form is filed.
We ask for the information on this form
amount on
to carry out the Internal Revenue laws of
Form 8993, the United States. You are required to
line 27. give us the information. We need it to
ensure that you are complying with
these laws and to allow us to figure and

Instructions for Form 8993 (Rev. 1-2022) -5-

PDF file checksum: 1502352945

(Plugin #1/9.12/13.0)