Instructions For Schedule I (Form 1120-F) - 2017 printable pdf download

2015

Department of the Treasury

Internal Revenue Service

Instructions for Schedule I

(Form 1120-F)

Interest Expense Allocation Under Regulations Section 1.882-5

Section references are to the Internal Revenue

allocating interest expense under

establishment pursuant to the express

Code unless otherwise noted.

section 882(c) to effectively connected

provisions and accompanying

income and for attributing interest

documents of an applicable treaty, then

General Instructions

expense to business profits of a U.S.

Schedule I still must be completed

permanent establishment under all

based on the treaty method used

Future Developments

income tax treaties other than treaties

(substituting the amount of assets,

that expressly permit attribution of

liabilities and interest expense

For the latest information about

business profits to a U.S. permanent

determined under the treaty method for

developments related to Schedule I

establishment under application of the

the amounts that would have been

(Form 1120-F) and its instructions, such

OECD Transfer Pricing Guidelines, by

reported under Regulations section

as legislation enacted after they were

analogy. If the foreign corporation files

1.882-5) and attached to Form 1120-F.

published, go to

its tax return using a treaty-based

The corporation is also required to

form1120f.

method of the type provided in these

complete and attach Form 8833,

treaties, see Treaty-based return

Treaty-Based Return Position

Purpose of Schedule

positions below for reporting

Disclosure.

Schedule I (Form 1120-F) is used to

requirements.

report the amount of interest expense

Exceptions from Filing

allocable to effectively connected

Who Must File

Schedule I

income (“ECI”) and the deductible

All foreign corporations that have

A foreign corporation is not required to

amount of such allocation for the tax

interest expense allocable to ECI under

file Schedule I if it (a) does not have a

year under section 882(c) and

section 882(c) must complete

trade or business within the United

Regulations section 1.882-5. The

Schedule I to report this allocation,

States, (b) has no worldwide interest

schedule discloses the basic

regardless of whether the amount

expense for the tax year to allocate

calculations for the year and also

allocable under Regulations section

under Regulations section 1.882-5, or

identifies the various elections the

1.882-5 is deductible in the current year,

taxpayer uses under Regulations

or is otherwise deferred or permanently

United States for the tax year that it

sections 1.882-5(a)(7) and (d)(5), and

disallowed under other sections of the

determines do not give rise to effectively

under the branch profits tax rules of

Internal Revenue Code (e.g., sections

connected income, or do not give rise to

Regulations section 1.884-1(e)(3).

163(e), 163(j), 263A, 265(a), 267(a)(3)).

a U.S. permanent establishment to

The information reported on Schedule I

Note. The tax election under

which business profits are attributable,

is also needed to complete Form

Regulations section 1.884-1(e)(3) is not

and the corporation files a protective

1120-F, Section III (the determination of

effectuated under the regulations by its

income tax return under Regulations

the branch-level interest tax under

identification on Schedule I (Form

section 1.882-4(a)(3)(vi).

section 884(f)). Interest expense that is

1120-F). See the requirements for the

Protective elections on protective

treated as “branch interest” under

time, place and manner for making the

returns. A corporation that files a

Regulations section 1.884-4(b) may be

branch profits tax liability reduction

protective tax return on Form 1120-F

subject to information reporting under

election under Regulations section

under Regulations section 1.882-4(a)(3)

section 1461 or section 6049 and

1.884-1(e)(3).

(vi) may voluntarily file Schedule I with

potential withholding under sections

the protective return to preserve timely

1441 and 1442. A foreign corporation

Under Regulations section 1.882-5,

elections under Regulations section

that is a reporting corporation and

the amount of interest expense of a

1.882-5(a)(7) if the return is filed by the

required to file Form 1120-F must

foreign corporation that is allocable

original due date (including extensions)

complete Schedule I and attach it to

under section 882(c) to income which is

of the corporation's Form 1120-F. The

Form 1120-F.

effectively connected (or treated as

protective elections are not effective if

effectively connected) with the conduct

Reporting corporation. A reporting

filed during the additional extended

of a trade or business within the United

corporation is any foreign corporation

period described under Regulations

States is the sum of the interest

that is engaged in a trade or business or

section 1.882-4(a)(3). The foreign

expense allocable by the foreign

treated as engaged in a trade or

corporation need only complete the

corporation under the three-step

business within the United States

relevant portions of Schedule I that

process set forth in Regulations

directly or indirectly at any time during

identify its right to use the following

sections 1.882-5(b), (c), and (d), or (e)

the tax year.

elections:

and the directly allocated interest

The Adjusted U.S.-Booked Liability

Treaty-based return positions. If the

expense determined under Regulations

method (“AUSBL”) or Separate

corporation determines its interest

section 1.882-5(a)(1)(ii). The interest

Currency Pools (“SCP”) method (item B

expense attributable to its business

allocation rules of Regulations section

check boxes);

profits of a U.S. permanent

1.882-5 are the exclusive rules for

Nov 17, 2015

Cat. No. 50606A

Instructions For Schedule I (Form 1120-F) - 2017

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