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Department of the Treasury
Internal Revenue Service
Instructions for Schedule L

(Form 1118)

(Rev. December 2022)

Section references are to the Internal Revenue the taxpayer computed an amount of Definitions
Code unless otherwise noted. foreign income taxes deemed paid.
Foreign tax redetermination. A foreign
Future Developments Use Part III to report foreign tax tax redetermination means a change in
redeterminations that resulted in a change the liability for foreign income taxes
For the latest information about to the taxpayer’s income inclusions, a including if:
developments related to Schedule L change in the amount of foreign income • Accrued foreign taxes when paid or
(Form 1118) and instructions, such as taxes paid, accrued, or deemed paid, or a later adjusted differ from the amounts
legislation enacted after they were change in the amount of foreign tax credits claimed as credits (including corrections
published, go to IRS.gov/Form1118. claimed in any relation back year. to accrued amounts to reflect final foreign
tax liability and additional payments of tax
What’s New Use Part IV to report foreign tax that accrue after the close of the taxable
redeterminations that resulted in a change year to which the tax relates);
Part I, column 13, now requests in the U.S. tax liability for any relation back • Accrued foreign taxes are not paid
"Reference ID Number for Contested Tax, year or other affected tax year(s) (for within 24 months after the close of the tax
if applicable" to reflect Regulations section example, by reason of a change in year to which they relate; or
1.905-1(d)(4) and new Form 7204. allowable foreign tax credit carryovers). • Any foreign tax paid is fully or partially
refunded.
In Part III, new columns 12 through 15 Use Part V, beginning with the 2023 tax
have been added to better reflect section year, to satisfy the annual reporting Relation back year. Relation back year
905(b) and (c) and Regulations section requirement under Regulations section means the U.S. tax year in which the
1.905-4. 1.905-1(d)(4)(iv) for contested foreign foreign taxes being redetermined were
New Part V, Annual Reporting for income taxes for which the taxpayer originally taken into account.
Contested Taxes, has been developed to claimed a provisional foreign tax credit. Example. In U.S. taxable year 1, a
be used by taxpayers to comply with the taxpayer took into account $2 million of
annual notice requirement described in Who Must File Country X foreign income taxes accrued
Regulations section 1.905-1(d)(4)(iv). For Any taxpayer that has a foreign tax with respect to the foreign tax year that
each tax year following the year in which a redetermination under section 905(c) must ended within U.S. taxable year 1. In year
provisional foreign tax credit election is complete this schedule and attach it to the 3, Country X assessed an additional $1
made on new Form 7204 (see below), up income tax return for the taxable year in million of foreign income taxes with
to and including the tax year in which the which the foreign tax redetermination respect to the foreign taxable year that
contest is resolved, the taxpayer must occurs. This schedule must be submitted ended within U.S. taxable year 1. The
provide the information requested in this irrespective of whether the foreign tax relation back year is U.S. taxable year 1.
new Part V. redetermination changed the taxpayer’s Affected tax year. Affected tax year
U.S. tax liability. means any tax year for which the U.S. tax
liability is changed as a result of a foreign
General Instructions Note. If the U.S. tax liability for any year tax redetermination. This includes tax
changes by reason of the foreign tax years in which the U.S. tax liability is
Purpose of Schedule redetermination, the taxpayer must file an changed as a result of a change in a
Schedule L (Form 1118) is used to identify amended return for the taxable year with carryover of a tax attribute, such as a
foreign tax redeterminations that occur in respect to which the U.S. tax liability is foreign tax credit carryover or a net
the current tax year in each separate adjusted, in addition to filing Schedule L operating loss carryover, from a relation
category, the years to which they relate, for the year in which the foreign tax back year.
and other information that satisfies the redetermination occurs. See Foreign Tax
taxpayer’s obligation to notify the IRS of Redeterminations in the Instructions for Functional currency. Functional
foreign tax redeterminations related to Form 1118 for additional information currency means the dollar, or in the case
prior years. regarding foreign tax redeterminations that of a qualified business unit (QBU), the
result in a change in U.S. tax liability and currency of the economic environment in
Use Part I to report foreign income tax for the related reporting requirements. which a significant part of such unit’s
redeterminations that resulted in an If a foreign tax redetermination does activities are conducted and which is used
increase in the amount of foreign taxes not change the amount of U.S. tax due for by such unit in keeping its books and
accrued and paid by the taxpayer or by a any taxable year, the taxpayer does not records. See section 985(b).
foreign corporation with respect to which need to file an amended return. The Reference ID number for contested
the taxpayer computed an amount of taxpayer satisfies its reporting tax. See the Instructions for Form 7204
foreign income taxes deemed paid. requirements under Regulations section for the definition of and requirements for
Use Part II to report foreign income tax 1.905-4(b)(1)(v) with respect to such the reference ID number for contested
redeterminations that resulted in a foreign tax redetermination by filing a foreign income tax.
decrease in the amount of foreign taxes Schedule L with the return for the taxable
paid or accrued by the taxpayer or by a year in which the foreign tax
foreign corporation with respect to which redetermination occurs.

Dec 29, 2022 Cat. No. 38267T

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Reporting Exchange Rates on respect to pre-2018 tax years in the (as defined under Regulations section
foreign corporation's last pooling year. 1.904-4(f)(3)(vii)) or foreign corporation
Schedule L
that accrued the additional tax.
All exchange rates must be reported using Election to account for foreign tax
a “divide-by convention” rounded to at redeterminations with respect to Column 9. Enter the exchange rate
least four places. That is, the exchange pre-2018 taxable years in the foreign originally used to convert the local
rate must be reported in terms of the corporation’s last pooling year. Under currency (in which the redetermined
amount by which the functional currency Regulations section 1.905-5(e), an foreign tax was paid) to U.S. dollars. See
amount must be divided in order to reflect irrevocable election may be made by a Reporting Exchange Rates on
an equivalent amount of U.S. dollars. As foreign corporation’s controlling domestic Schedule L, earlier, for additional
such, the exchange rate must be reported shareholders to account for all foreign tax information.
as the units of foreign currency that equal redeterminations that occur in taxable Column 11. Enter the U.S. dollar amount
one U.S. dollar, rounded to at least four years ending on or after November 2, of foreign tax of each payor entity that was
places. Do not report the exchange rate 2020, with respect to pre-2018 taxable reported by the taxpayer on its original or
as the number of U.S. dollars that equal years of foreign corporations as if they amended return (not taking into account
one unit of foreign currency. occurred in the foreign corporation’s last the foreign tax redetermination).
taxable year beginning before January 1,
Note. You must round the result to more 2018 (last pooling year). Check the box on Column 13. Enter the reference ID
than four places if failure to do so would line d if an election under Regulations number for contested foreign income tax,
materially distort the exchange rate or the section 1.905-5(e) has been made or is if applicable, using the reference ID
equivalent amount of U.S. dollars. being made in the current tax year. number reported on the Form 7204 filed
with respect to the contested foreign
Computer Generated income tax.
Part I
Schedule L Column 14. Check the box if the foreign
Schedule L (Form 1118) will not be Column 1. Enter the ending date of the
electronically enabled for tax year 2021 or relation back year. See definition of tax redetermination changes the
tax year 2022. However, for those tax Relation back year, earlier. If an election determination as to whether a grouping of
years you may file Schedule L (Form under Regulations section 1.905-5(e) has income and related taxes of a foreign
1118) as a PDF attachment to an been made, report all foreign tax corporation qualifies for the High Tax
electronically filed Form 1118. With redeterminations with respect to pre-2018 Exception or Exclusion described in
respect to such PDF attachments: taxable years under the last pooling year. section 954(b)(4).

• In cases where reporting is required for Columns 2a through 2d. Enter in Part II
more than three payor entities for a columns 2a and 2b the name and the EIN
relation back year, attach a statement that or reference ID number of the payor entity. Columns 1, 2a, 2b, 2c, and 2d. Use the
lists all information requested on If the payor entity is not a corporation, instructions for Part I, columns 1, 2a, 2b,
Schedule L for those payor entities enter in columns 2c and 2d the name and 2c, and 2d to complete the corresponding
following the format of Schedule L. the EIN or reference ID number of the columns in Part II.
• In cases where reporting is required for domestic or foreign corporation that owns Column 3. Enter the code for the country
more than two relation back years, or the payor entity. In columns 2b and 2d, do or U.S. territory from which tax was
there are other affected years in addition not enter “FOREIGNUS” or “APPLIED refunded using the country codes
to the relation back years (Part IV), attach FOR.” Instead, if an entity does not have provided at IRS.gov/CountryCodes.
a statement that lists all information an EIN, the taxpayer must enter a
requested on Schedule L for those years reference ID number that uniquely Columns 4 and 5. Enter in column 4 the
following the format of Schedule L. identifies the payor entity or owner for date(s) the foreign taxes were refunded or
which such number is requested. See deemed refunded and enter in column 5
Reference ID numbers in the Instructions the ending date of the foreign tax year to
Specific Instructions for Form 1118 for requirements and which such taxes relate. If the foreign
Important. All information reported on additional details. taxes are deemed refunded by reason of
the section 905(c)(2) two-year rule
Schedule L (Form 1118) must be in Column 3. Enter the code for the country described in the Note in the instructions
English. All amounts must be stated in or U.S. territory to which tax is paid using for Column 13, enter in column 4 the date
U.S. dollars, unless otherwise specified on the country codes provided at IRS.gov/ that is 24 months after the close of the
Schedule L. CountryCodes. taxable year to which the foreign taxes
Line a. On line a, enter the same Columns 4 and 5. Enter in column 4 the relate.
separate category code as that shown on date(s) the additional foreign taxes were Column 6. Use the instructions for Part I,
the Form 1118 to which this Schedule L paid and enter in column 5 the ending column 6 to complete Part II, column 6.
relates. date of the foreign tax year to which such
Line b. If code 901j is entered on line a, taxes relate. Column 7. Enter the amount of the tax
refunded or deemed refunded in the local
enter on line b the same country code as Column 6. Enter the payor entity’s currency in which the tax is payable.
that shown on the Form 1118 to which this income subject to tax in the foreign
Schedule L relates. jurisdiction, as reported on the foreign tax Column 8. Enter the amount refunded or
Line c. If one of the RBT codes is entered return. deemed refunded denominated in the
functional currency of the taxpayer's QBU
on line a, enter on line c the same country Column 7. Enter the amounts of (as defined under Regulations section
code as that shown on the Form 1118 to additional tax accrued in the local 1.904-4(f)(3)(vii)) or foreign corporation
which this Schedule L relates. currency in which the tax is payable. that paid or accrued the refunded amount.
Line d. Check the box on line d if an Column 8. Enter the amounts of the Columns 9 and 11. Use the instructions
election has been made under additional tax denominated in the for Part I, columns 9 and 11 to complete
Regulations section 1.905-5(e) to account functional currency of the taxpayer's QBU the corresponding columns in Part II.
for foreign tax redeterminations with

-2- Instructions for Schedule L (Form 1118) (Rev. Dec. 2022)

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Column 13. Check the box if the foreign section 951A inclusion and enter in Part V
tax redetermination is a result of the column 9 the amount of section 951A
application of the section 905(c)(2) inclusion reported on the taxpayer’s Important. Do not complete Part V for tax
two-year rule. original or previously amended return. year 2022. Beginning with tax year 2023,
taxpayers will enter the information
Columns 10 and 11. Enter in column 10 requested on Schedule L, Part V, using
Note. Under section 905(c)(2), if accrued the redetermined amount of foreign the instructions provided below.
foreign income taxes are not paid on or income taxes deemed paid under section
before the date that is 24 months after the 960(d) and enter in column 11 the amount Column 1. For taxpayers that claim
close of the taxable year to which they of foreign income taxes deemed paid credits on the accrual basis, enter the
relate (two-year rule), there is a resulting under section 960(d) on the taxpayer’s relation back year. For taxpayers that
foreign tax redetermination that is original or previously amended return. claim credits on the cash basis, enter the
accounted for as if the unpaid portion of year in which the contested foreign
the foreign income taxes were refunded Columns 12 and 13. Enter in column 12 income tax was remitted to the foreign
on that date. Credit may be claimed for the redetermined taxes deemed paid country. The tax year entered in column 1
those taxes if and when they are ultimately under section 960(b)(1) and enter in should correspond with the tax year
paid. Foreign income taxes that first column 13 the section 960(b)(1) deemed entered on line 1 on the Form 7204 that
accrue after the date 24 months after the paid taxes per original or previously was filed in order to claim a provisional
close of the taxable year to which such amended return. credit for the contested foreign income
taxes relate may not be claimed as a Columns 14 and 15. Enter in column 14 tax.
credit or added to PTEP group taxes until the redetermined taxes deemed paid Columns 2 and 3. Enter in column 2 the
paid. under section 902 and enter in column 15 name of the payor entity and enter in
Column 14. Use the instructions for Part the section 902 deemed paid taxes per column 3 the reference ID number for the
I, column 14 to complete Part II, column the taxpayer’s original or previously contested foreign income tax that was
14. amended return. used on the Form 7204.
Columns 16 and 17. Enter in column 16 Columns 4 and 5. Enter in column 4 the
Part III the total amount of foreign tax credit code of the country or U.S. possession to
Column 1. Use the instructions for Part I, claimed in the separate category on the which the tax was paid using the country
column 1 to complete Part III, column 1. taxpayer’s original or previously amended codes provided at IRS.gov/CountryCodes
return and enter in column 17 the total and enter in column 5 the amount of
Columns 2 and 3. Enter in column 2 the amount of foreign tax credit claimed after contested foreign income tax that was
redetermined direct section(s) 901 and/or the foreign tax redetermination. Include provisionally claimed as credit.
903 taxes paid or accrued and enter in changes attributable to foreign tax
column 3 the direct section(s) 901 and/or redeterminations that affect the amount of Columns 6 and 7. Check the box in
903 taxes paid or accrued per the foreign taxes deemed paid under section column 6 if the contest is still ongoing and
taxpayer’s original or previously amended 902 prior to its repeal and under section check the box in column 7 if the contest
return. 960(b) in these totals. was resolved.
Columns 4 and 5. Enter in column 4 the Columns 8 and 9. Enter in column 8 the
redetermined amount of the taxpayer’s Part IV date the contest was resolved and enter in
section 951(a)(1) inclusion (including Column 1. Enter the ending date of the column 9 the amount of tax refunded or
inclusions under sections 956 and 965) relation back year or affected year. See additional tax paid, if any. Any portion of a
and enter in column 5 the amount of definitions of Relation back year and contested foreign income tax for which a
section 951(a)(1) inclusion on the Affected tax year, earlier. If an election provisional credit is claimed that is
taxpayer’s original or previously amended under Regulations section 1.905-5(e) has subsequently refunded results in a foreign
return. been made, report all foreign tax tax redetermination that must be reported
Columns 6 and 7. Enter in column 6 the redeterminations with respect to pre-2018 on Schedule L and, if applicable, an
redetermined amount of foreign income taxable years under the last pooling year. amended return for the taxable year(s)
with respect to the U.S. tax liability
taxes deemed paid under section 960(a) Columns 2 through 4. Enter in column 2 changes as a result of such foreign tax
and enter in column 7 the amount of the total redetermined U.S. tax liability and redemption.
foreign income taxes deemed paid under enter in column 3 the total U.S. tax liability
section 960(a) as reported on the reported on the taxpayer’s original or Additional Information
taxpayer’s original or previously amended previously amended return. In column 4, For more information, see section 905(c)
return. enter the difference by subtracting column and Regulations sections 1.905-1,
Columns 8 and 9. Enter in column 8 the 3 from column 2 for each affected tax 1.905-3, 1.905-4, and 1.905-5.
redetermined amount of the taxpayer’s year.

Instructions for Schedule L (Form 1118) (Rev. Dec. 2022) -3-

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