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Department of the Treasury
Internal Revenue Service
Instructions for Form 8993

(Rev. December 2020)
Section 250 Deduction for Foreign-Derived Intangible Income (FDII) and Global
Intangible Low-Taxed Income (GILTI)

Section references are to the Internal Revenue 6. FDII is determined.
Code unless otherwise noted. General Instructions 7. If there is excess FDII and GILTI
over taxable income, the FDII reduction
Future Developments Purpose of Form and the GILTI reduction are determined.
For the latest information about Public Law 115-97 (Tax Cuts and Jobs 8. The eligible deduction under
developments related to Form 8993 and Act of 2017) enacted section 250 for the section 250 is determined.
its instructions, such as legislation allowance of a deduction for the eligible
enacted after they were published, go to percentage of FDII and GILTI. FDDEI
IRS.gov/Form8993. See Form 8992, U.S. Shareholder FDDEI means, with respect to a
Calculation of Global Intangible taxpayer for its tax year, any deduction
What’s New Low-Taxed Income (GILTI), and its eligible income of the taxpayer that is
instructions for more information on derived in connection with:
Changes have been made throughout 1. Property that is sold by the
GILTI.
these instructions based on the taxpayer to any person who is a foreign
proposed section 250 regulations (84 Use Form 8993 to figure the amount person and that the taxpayer
FR 8188, March 6, 2019) and final of the eligible deduction for FDII and establishes to the satisfaction of the
section 250 regulations (T.D. 9901, 85 GILTI under section 250. Secretary is for a foreign use (see
FR 43042, July 15, 2020). There is a Proposed and Final Regulations
change in the manner in which Who Must File sections 1.250(b)-3 and 1.250(b)-4); or
foreign-derived deduction eligible All domestic corporations (and U.S. 2. Services provided by the
income (FDDEI) is now reported in Part individual shareholders of controlled taxpayer that the taxpayer establishes
II. See the instructions for lines 9–19 for foreign corporations (CFCs) making a to the satisfaction of the Secretary are
details. section 962 election (962 electing provided to any person, or with respect
Although final section 250 regulations individual)) must use Form 8993 to to property, located outside the United
apply to tax years beginning on or after determine the allowable deduction States (see Proposed and Final
January 1, 2021, taxpayers may choose under section 250. Regulations sections 1.250(b)-3 and
to apply either the proposed or the final 1.250(b)-5).
The deduction is allowed only to
regulations for tax years beginning on or
domestic corporations (not including
after January 1, 2018, and before Special rules for determining foreign
real estate investment trusts (REITs),
January 1, 2021 (provided they apply use apply to transactions that involve
regulated investment companies (RICs),
either the proposed or final regulations property or services provided to related
and S corporations) and section 962
in their entirety, with the limited parties (see section 250(b)(5)(C) and
electing individuals. For the treatment of
exception of certain special Proposed and Final Regulations section
a domestic corporation that is a partner
substantiation requirements as 1.250(b)-6).
in a partnership, see Proposed and
specified in the final section 250 Sale
Final Regulations sections 1.250(b)-1(e)
regulations, and once they choose to
and 1.250(b)-3(e). The terms “sold,” “sells,” and “sale”
apply the final regulations, they must
include any lease, license, exchange, or
apply those final regulations for all
subsequent tax years beginning before When and Where To File other disposition of property.
January 1, 2021). See Final Regulations Attach Form 8993 to your income tax Foreign Use
section 1.250-1(b) for more details. return and file both by the due date
(including extensions) for that return. “Foreign use” is defined to mean “any
use, consumption, or disposition which
Important Reminders is not within the United States.” See
Definitions and Overview
Domestic corporation’s deduction. Proposed Regulations sections
For tax years beginning on or after Steps for Computing the 1.250(b)-4(d) and (e), and Final
January 1, 2018, and before January 1, Deduction Under Section 250 Regulations section 1.250(b)-4(d). For
the latest guidance about foreign use,
2026, section 250 generally allows a 1. Deduction Eligible Income (DEI) go to IRS.gov/Form8993.
deduction equal to the sum of 37.5% of is determined.
the corporation's FDII plus 50% of its Qualified Business Asset
GILTI (thereafter, these deductions are 2. Deemed Tangible Income Return
reduced to 21.875% and 37.5%, (DTIR) is determined. Investment (QBAI)
respectively). 3. Deemed Intangible Income (DII) A domestic corporation’s QBAI is the
is determined. average of the aggregate of its adjusted
Deduction limitation. If the sum of bases, determined as of the close of
FDII and GILTI exceeds taxable income, 4. FDDEI is determined.
each quarter of the tax year, in specified
the deduction under section 250 is 5. Foreign-Derived Ratio (FDR) is tangible property used in its trade or
limited to taxable income. determined.

Mar 17, 2021 Cat. No. 71352N

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business and of a type with respect to submitted electronically to 1.250(b)-1(d)(2) for more details.
which a deduction is allowable under substituteforms@irs.gov, or requests Deductions properly allocable to gross
section 167. See Proposed and Final may be mailed to: Internal Revenue DEI are determined without regard to
Regulations section 1.250(b)-2. Service, Attention: Substitute Forms sections 163(j), 170(b)(2), 172, 246(b),
Program, SE:W:CAR:MP:P:TP, 1111 and 250.
Information From Partnership Constitution Ave. NW, Room 6554,
A domestic corporate partner of a Washington, DC 20224. Include the partner's share of the
partnership takes into account its partnership's deductions properly
distributive share of a partnership's allocable to the amount on line 4. Do not
gross DEI, gross FDDEI, and Specific Instructions duplicate expenses already included on
deductions in order to calculate the line 1.
partner's FDII. See Proposed and Final Part I. Determining DEI Line 7. Deemed Tangible
Regulations section 1.250(b)-1(e)(1). In and DII Income Return (10% of QBAI)
addition, for purposes of determining a DEI means, with respect to any The DTIR with respect to a domestic
domestic corporate partner's DTIR, a domestic corporation, the excess (if corporation is the corporation’s QBAI for
domestic corporation's QBAI is any) of the gross income of the the year multiplied by 10%.
increased by its share of the corporation, less exclusions, over
partnership's adjusted basis in deductions (including taxes) properly First, compute QBAI (defined earlier).
partnership specified tangible property. allocable to such gross income. See Proposed and Final Regulations
See Proposed and Final Regulations section 1.250(b)-2. “Specified tangible
section 1.250(b)-2(g). Line 1. Gross Income property” means any tangible property
For partners in a partnership, attach For purposes of this form, gross income used in the production of the gross
a statement to Form 8993 listing each includes all income from whatever income included in DEI. If such property
partnership's name; employer source derived. Enter the amount from was used in the production of DEI and
identification number (EIN); the Form 1120, line 11. income that is not DEI (such as dual-use
partner's share of the partnership's Line 2. Exclusions property), the property is treated as
specified tangible property in the same
QBAI reported on line 7; and other Exclude the following items to the extent proportion that the amount of the gross
FDDEI items reported on lines 9b, 10b, included on line 1. income included in DEI produced with
13, and 17.
1. Any amount included in the gross respect to the property bears to the total
Documentation income of such corporation under amount of gross income produced with
For special substantiation requirements section 951(a)(1). Include the section 78 respect to the property. If specified
under Final Regulations, see sections gross-up with respect to the inclusion tangible property is only partially
1.250(b)-3(f), 1.250(b)-4(d)(3), and under section 951(a)(1). depreciable, then only the depreciable
1.250(b)-5(e)(4). Also see Final 2. Any amount included in the gross portion is QBAI. The adjusted basis is
Regulations section 1.250-1(b) for income of such corporation under determined by using the alternative
information about the applicability date section 951A. Section 951A defines depreciation system under section
of the final regulations and a special GILTI. Include the section 78 gross-up 168(g) and allocating depreciation
transition rule. with respect to the inclusion under deductions with respect to such
section 951A. property ratably to each day during the
Section 250 Deduction period in the tax year to which such
Limitation 3. Any financial services income (as
depreciation relates.
defined under section 904(d)(2)(D)) of
If the sum of FDII and GILTI exceeds such corporation. Include the amount, if any, of a
taxable income, the deduction under partner's share of the partnership's
section 250 is subject to limitation. See 4. Any dividend received from a
the instructions for lines 26 and 27, CFC with respect to which the QBAI. Then, multiply QBAI by 10%
later, for additional information. corporation is a U.S. shareholder, as (0.10). Finally, enter this result on Form
defined under section 951(b). 8993, line 7.
See the instructions for lines 26 and 5. Any domestic oil and gas Line 8. DII
27, later, for additional information. extraction income. The term “domestic DII is the excess (if any) of the
Corrections to Form 8993 oil and gas extraction income” means corporation’s DEI over its DTIR.
income described in section 907(c)(1),
If you file a Form 8993 that you later
determined by substituting “within the
determine is incomplete or incorrect, file Part II. Determining FDDEI
United States” for “without the United
a corrected Form 8993 with an Each place where general property is
States.”
amended tax return, using the amended listed refers to amounts connected to
return instructions for the return with 6. Any foreign branch income (as the sale, lease, exchange, or other
which you originally filed Form 8993. defined in section 904(d)(2)(J)). disposition of general property to a
Enter “Corrected” at the top of the foreign person and, as established to
Line 5. Deductions Properly
corrected Form 8993. the satisfaction of the Secretary, is for a
Allocable to the Amount on foreign use as defined in Proposed and
Computer-Generated Form Line 4 Final Regulations sections 1.250(b)-3
8993 Allocable deductions include all and 1.250(b)-4(d). The term “general
Generally, all computer-generated deductions (including taxes) properly property” means any property other than
forms must receive prior approval from allocable to gross DEI on line 4. See intangible property; a security (as
the IRS and are subject to an annual Proposed and Final Regulations section defined in section 475(c)(2)); an interest
review. Requests for approval may be in a partnership, trust, or estate; or a

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commodity described in section 475(e) Column B. Intangible Property Line 12. Allocable Deductions
(2)(A) that is not a physical commodity Enter the amount of foreign-derived Enter the amount of the deductions that
or a commodity described in section gross receipts from all sales of are allocated and apportioned to gross
475(e)(2)(B) through (D). intangible property. FDDEI on line 11. See Proposed and
Final Regulations section 1.250(b)-1(d)
Each place where intangible property Column C. Services (2) for more details. Report interest and
is listed refers to amounts connected to Enter the amount of foreign-derived research and experimental (R&E)
the sale, license, exchange, or other gross receipts from all services. deductions on lines 14 and 15,
disposition of intangible property to a
foreign person and, as established to Line 9b. Gross Receipts From respectively. Deductions are
determined without regard to sections
the satisfaction of the Secretary, is for a Partnerships 163(j),170(b)(2), 172, 246(b), and 250.
foreign use as defined in Proposed
Enter the amount, if any, of the partner’s
Regulations sections 1.250(b)-3 and Column A. General Property
share of the partnership’s
1.250(b)-4(e) and Final Regulations Enter the amount of the deductions that
foreign-derived gross receipts.
sections 1.250(b)-3 and 1.250(b)-4(d) are allocated and apportioned to gross
(2). Column A. General Property FDDEI from all sales of general
Enter the amount, if any, of the partner’s
Each place where services are listed property.
share of the partnership’s
refers to amounts connected to services Column B. Intangible Property
foreign-derived gross receipts from all
that, as established to the satisfaction of Enter the amount of the deductions that
sales of general property.
the Secretary, are provided to any are allocated and apportioned to gross
person, or with respect to property, Column B. Intangible Property FDDEI from all sales of intangible
located outside the United States as Enter the amount, if any, of the partner’s property.
defined in Proposed and Final share of the partnership’s
Regulations section 1.250(b)-5. foreign-derived gross receipts from all Column C. Services
sales of intangible property. Enter the amount of the deductions that
If a transaction includes both a sales are allocated and apportioned to gross
component and a service component, Column C. Services FDDEI from all services.
the transaction is classified as either a Enter the amount, if any, of the partner’s
sale or as a service according to the share of the partnership’s Line 13. Allocable Deductions
overall predominant character of the foreign-derived gross receipts from all From Partnerships
transaction. See Proposed Regulations services. Enter the amount, if any, of the partner’s
section 1.250(b)-3(e) and Final
Regulations section 1.250(b)-3(d). Line 10a. Cost of Goods Sold share of the partnership’s deductions
that are allocated and apportioned to
Enter the amount of cost of goods sold gross FDDEI on line 11.
For purposes of determining a attributable to the amount(s) on line 9a.
domestic corporation’s deductions that Column A. General Property
are properly allocable to gross FDDEI, For purposes of this form, when Enter the amount, if any, of the partner’s
the corporation’s deductions are figuring FDDEI, cost of goods sold share of the partnership’s deductions
allocated and apportioned to gross includes the: that are allocated and apportioned to
FDDEI under the rules of sections 1. Cost of goods sold to customers, gross FDDEI from all sales of general
1.861-8 through 1.861- 14T and and property.
1.861-17 by treating section 250(b) as
an operative section described in 2. Adjusted basis of non-inventory Column B. Intangible Property
section 1.861-8(f). See Proposed and property sold or otherwise disposed of
Final Regulations section 1.250(b)-1(d) in trade or business. Enter the amount, if any, of the partner’s
share of the partnership’s deductions
(2). In making that determination, that are allocated and apportioned to
attribute costs of goods sold to gross gross FDDEI from all sales of intangible
The partnership should determine receipts using a reasonable method in property.
and report the partner’s share of each accordance with Proposed and Final
item necessary to compute FDII in Regulations section 1.250(b)-1(d)(1). Column C. Services
accordance with the partner’s Enter the amount, if any, of the partner’s
distributive share of the underlying item Cost of goods sold must be attributed share of the partnership’s deductions
of income, gain, deduction, and loss of to gross receipts with respect to gross that are allocated and apportioned to
the partnership. DEI or gross FDDEI regardless of gross FDDEI from all services.
Line 9a. Gross Receipts whether certain costs included in cost of
goods sold can be associated with Line 14. Interest Deductions
“Foreign-derived gross receipts” means activities undertaken in an earlier tax The total interest deductions for the
gross receipts that are used to compute year (including a year before the members of the corporation's affiliated
gross FDDEI as defined in Proposed effective date of section 250). group are allocated and apportioned to
and Final Regulations section the statutory and residual groupings
1.250(b)-1. Line 10b. Cost of Goods Sold under proposed, final, and Temporary
Column A. General Property From Partnerships Regulations sections 1.861-8 through
Enter the amount of foreign-derived Enter the amount, if any, of the partner’s 1.861-14. The term “interest” refers to
gross receipts from all sales of general share of the partnership’s cost of goods the gross amount of interest expense
property. sold attributable to the amount on incurred by a taxpayer in a given year.
line 9b. Interest expense includes any expense

Instructions for Form 8993 (Rev. 12-2020) -3-

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that is currently deductible under Manual (SIC code). R&E expenses are Line 24. Taxable Income
section 163 (including original issue apportioned between the statutory and Enter the taxable income of the
discount), and interest equivalents. See residual groupings based on either the domestic corporation (determined
Temporary Regulations section gross income or sales method. See without regard to section 250).
1.861-9T(b) for the definition of interest Regulations section 1.861-17.
equivalents and Temporary Regulations Line 25. Excess FDII and GILTI
section 1.861-9T(c) for sections that The amount reported on this line
disallow, suspend, or require the should include R&E deductions of the Over Taxable Income
capitalization of interest deductions. taxpayer and the taxpayer’s share of Subtract the taxable income amount
R&E deductions incurred by a reported on line 24 from the total FDII
Interest deductions are apportioned partnership. Partnerships with corporate and GILTI on line 23.
to gross FDDEI based ordinarily on the partners must provide the information If the result reported on line 25 is
tax book value of the taxpayer’s assets. sufficient to perform these R&E zero or negative, your taxable income is
See Regulations section 1.861-9T(g)(1) calculations. See Regulations section greater than the sum of FDII and GILTI,
(i). For years beginning after December 1.861-17(f). This requires that the and your deduction under section 250 is
31, 2017, the fair market value method partnership report to its partners on the not limited.
is not allowed with respect to allocations Schedule K-1 (Form1065) the sales and
and apportionments of interest gross income by SIC code according to If the result reported on line 25 is a
expense. See section 864(e)(2). A the statutory and residual groupings and positive number, your taxable income is
corporation may elect to use the the partner’s distributive share of the less than the sum of your FDII and
alternative tax book value method. See partnership’s R&E deductions GILTI, and your deduction under section
Regulations section 1.861-9(i). See connected with the product lines. 250 is limited to taxable income. Refer
Regulations sections 1.861-10 and Taxpayers that use the sales method for to the instructions for lines 26 and 27, to
1.861-10T for exceptions to the general apportioning R&E expenses can use determine the amount by which you
rule of fungibility (such as qualified Proposed Regulations section 1.861-17, need to reduce FDII and GILTI.
nonrecourse indebtedness, integrated provided the proposed regulations are
financial transactions, and excess applied consistently. Line 26. FDII Reduction
related party indebtedness). The reduction in FDII for which a
Line 16. Other Apportioned
The amount reported on this line deduction is allowed equals such
should include interest paid or accrued Deductions excess multiplied by a percentage equal
by the taxpayer and the taxpayer’s Enter all other apportioned deductions to the corporation’s FDII divided by the
share of interest expense incurred by a that relate to gross FDDEI that are not sum of its FDII and GILTI.
partnership. With respect to corporate otherwise included on lines 12, 14, and Use the Line 26 Worksheet to
partners with an interest in the 15. If a deduction does not bear a compute the FDII reduction.
partnership of 10% or more, interest definite relationship to a class of gross
expense, including the partner’s income constituting less than all of
distributive share of partnership interest gross income, it shall ordinarily be
expense, is apportioned by reference to treated as definitely related and
the partner’s assets, including the allocable to all of the taxpayer's gross
partner’s pro rata share of partnership income, including gross DEI and gross
assets. See Regulations section FDDEI, except where otherwise
1.861-9(e)(2). A corporate partner with directed in the regulations.
a less-than-10% interest in a
Line 17. Other Apportioned
partnership shall directly allocate its
distributive share of the partnership’s Deductions From Partnerships
interest expense to its distributive share Enter all other apportioned deductions
of partnership gross income and be that relate to gross FDDEI from
apportioned in accordance with the partnerships that are not otherwise
partner’s relative distributive share of included on lines 13, 14, and 15.
gross FDDEI. See Regulations section
1.861-9(e)(4). The above partnership Part III. Determining FDII
information should have been reported and/or GILTI Deduction
to the partners on Schedule K-1 (Form
1065). Line 20. Foreign-Derived Ratio
Line 15. Research and FDR is determined by computing the
ratio of FDDEI over DEI. See Definitions
Experimental Deductions and Overview, earlier, for discussion of
R&E expenses deducted under section FDDEI. Divide the amount on line 19 by
174 are definitely related to all income the amount on line 6. The resulting ratio
reasonably connected with relevant must not exceed 1.
broad product categories of the
taxpayer and are allocable to all items of Line 22. GILTI Inclusion
gross income as a class related to such Enter the amount of GILTI reported on
product categories. The product Form 8992, Part II, line 5. Attach Form
categories are generally determined by 8992 to your income tax return.
reference to the three-digit classification
of the Standard Industrial Classification

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Line 26 Worksheet Line 27 Worksheet received by the corporation (or 962
electing individual) that is treated as a
Line A Enter the Line F Enter the dividend under section 78 which is
amount amount attributable to GILTI, from Form 1118,
from from Schedule A, column 3(b). Lastly,
line 25. If line 25. If multiply that amount by 50% (0.50).
zero or zero or
less, less, enter Enter the sum of lines 28 and 29 on
enter -0- on zero on line Form 1120, Schedule C, line 22, or on
the comparable schedules of other
line E of H of this
corporate returns.
this worksheet
worksheet and stop. Paperwork Reduction Act Notice.
and stop. We ask for the information on this form
Line G Enter the
Line B Enter the amount to carry out the Internal Revenue laws of
amount from line E the United States. You are required to
from line 21. in the give us the information. We need it to
worksheet ensure that you are complying with
Line C Enter the these laws and to allow us to figure and
above, as
amount collect the right amount of tax. You are
reported on
from line 23. not required to provide the information
line 26, of
Line D Divide line Form 8993. requested on a form that is subject to
B by line C. the Paperwork Reduction Act unless the
Line H Subtract form displays a valid OMB control
Line E Multiply line line G from number. Books or records relating to a
A by line D. line F. form or its instructions must be retained
Enter this Enter this as long as their contents may become
line E line H material in the administration of any
amount on amount on Internal Revenue law. Generally, tax
Form 8993, Form 8993, returns and return information are
line 26. line 27. confidential, as required by section
6103.
The time needed to complete and file
Line 27. GILTI Reduction Line 28. FDII Deduction this form will vary depending on
The reduction in GILTI is determined by To figure the FDII deduction, subtract individual circumstances. The estimated
the excess amount less the FDII the amount from line 26 (FDII burden for business taxpayers filing this
reduction. reduction), from the amount on line 21 form is approved under OMB control
(FDII). number 1545-0123 and is included in
Use the Line 27 Worksheet to the estimates shown in the instructions
compute the FDII reduction. Then, multiply the resulting amount for their business income tax return.
by 37.5% (0.375) to obtain the FDII
deduction and enter it on line 28. If you have comments concerning the
accuracy of these time estimates or
Line 29. GILTI Deduction suggestions for making this form
To figure the GILTI deduction, subtract simpler, we would be happy to hear
the amount from line 27 (GILTI from you. See the instructions for the tax
reduction), from the amount on line 22 return with which this form is filed.
(GILTI inclusion). Then, add any amount

Instructions for Form 8993 (Rev. 12-2020) -5-

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