Instructions For Schedule I (Form 1120-F) - 2017 (Page 4 of 10) in pdf

set(s) of books of the corporation that

investment in a disregarded entity

Line 3c, column (a). Total other

are not reportable on Schedule L.

whose books are not reportable on

non-ECI assets. Enter on line 3c,

Schedule L, then the assets of the

column (a), all other assets (or portion

Line 3a, column (a). Total inter-

disregarded entity are not reported on

thereof) included on line 2, column (a)

branch assets. Enter on line 3a,

line 2, column (a). The amount of the

that give rise to domestic or foreign

column (a), the total of the corporation's

investment in the disregarded entity that

source non-ECI. If income from a

average interbranch assets included on

is included in the total assets reported

security is treated as partially ECI and

line 2, column (a). The average

on line 2, column (a) must be reversed

partially non-ECI under Regulations

interbranch assets recorded on the

on line 3d, column (a) to reflect its

section 1.864-4(c)(5)(ii), enter the

set(s) of Schedule L books do not

disregarded treatment in Regulations

amount of the asset on line 3c, column

create U.S. assets under Regulations

section 1.882-5.

(a) in the proportion that the income,

section 1.882-5(b)(1)(iv) and are

gain, or loss from such asset that is

disregarded for purposes of the interest

Line 3e, column (a). Adjustments for

treated as non-ECI bears to the total

expense allocation rules.

assets that give rise to direct inter-

income, gain, or loss from such asset.

est expense allocations under Regu-

Do the same for the non-ECI portion of

Note. If under the global dealing

lations section 1.882-5(a)(1)(ii).

any asset whose income is allocated

proposed regulations (Proposed

Enter on line 3e, column (a), the

under the proposed global dealing

Regulations section 1.863-3(h), which

average value of the portion of all assets

references the Proposed Regulations

regulations or under an Advance Pricing

included on line 2 that give rise to direct

section 1.482-8 principles), the

Agreement pursuant to a competent

interest expense allocations under

corporation recognizes an amount

authority agreement. See Proposed

Regulations section 1.882-5(a)(1)(ii) in

recorded as an interbranch asset, such

Regulations sections 1.884-1(d)(2)(vii)

accordance with the requirements of

amount is treated as the allocation and

and 1.884-1(d)(2)(xi), Example 8.

Temporary Regulations section

source of third-party securities dealing

Attach a statement which describes

1.861-10T(b) or (c), and Temporary

income and is not eliminated from U.S.

each type of “other” non-ECI asset

Regulations section 1.861-10T(d). A

assets on line 3a, column (a). Such

included on line 3c. For each type, show

foreign corporation that allocates its

interbranch assets are eliminated only

the calculation of the amount included

interest expense under the direct

on line 3c for that type, including a total

to the extent they are allocated under

allocation rules shall reduce the basis of

for each type.

Proposed Regulations section

the asset that meets the requirements of

1.863-3(h) to foreign source non-ECI.

Temporary Regulations section

Line 3d, column (a). Adjustments for

The allocable amount to non-ECI is

1.861-10T (b) or (c) by the principal

amounts from partnerships and cer-

eliminated from U.S. assets on line 3c,

amount of the indebtedness that meets

tain disregarded entities included on

column (a) (total other non-ECI assets).

the requirements of Temporary

line 2, column (a). With respect to

Regulations section 1.861-10T (b) or

Line 3b, column (a). Total non-ECI

amounts from partnerships included on

(c). The amount of directly allocable

assets under section 864(c)(4)(D).

line 2, column (a), all such amounts

interest under Regulations section

Enter on line 3b, column (a), the

must be “backed out” on this line 3d,

1.882-5(a)(1)(ii) is reported on line 22.

average assets included on line 2,

column (a). Enter on line 3d, column (a),

column (a) that give rise to non-ECI

all amounts on the Schedule L books for

Line 3f, column (a). Other adjust-

investments in partnerships (whether

received from foreign-related

ments to average assets included on

recorded as an investment in the

corporations under section 864(c)(4)

line 2. Enter on line 3f, column (a), the

partnership interest or in the partnership

(D). Such amounts include assets from

average asset balances for any other

assets) included on line 2, column (a).

transactions with foreign-related

amounts included on line 2, column (a)

corporations that give rise to foreign

that do not constitute U.S. assets as

Note. Partnership interests are

source dividends, interest, rents or

defined in Regulations section

reported in Step 1 as follows: The

royalties, whether or not such amounts

1.884-1(d). Assets includible on this line

corporation's adjusted outside basis in a

are attributable to a U.S. office of the

may include, for example, amounts with

partnership (from Schedule P (Form

corporation under section 864(c)(5). A

respect to securities that are

1120-F), line 20, “Total” column) that is

foreign related corporation is a foreign

marked-to-market for tax purposes

treated as a U.S. asset under

corporation the taxpayer owns (under

under section 475 that are not

Regulations sections 1.882-5 and

section 958(a)) or is treated as owning

marked-to-market on the set(s) of books

1.884-1(d)(3) is generally entered on

(under section 958(b)) more than 50%

reported on line 2, column (a). If the

Schedule I (Form 1120-F), line 5,

of the total combined voting power of all

mark-to-market amount includible for

column (b).

classes of stock entitled to vote. Enter

tax purposes is an increase to the basis

the average asset number for assets

With respect to amounts from

of the assets included on line 2, column

described in section 864(c)(4)(D) on

disregarded entities included on line 2,

(a), include such increase as a negative

line 3b, column (a), regardless of

column (a), enter on line 3d, column (a)

number on line 3f, column (a). Similarly,

whether such assets give rise to

any adjustment needed to reflect the

if the mark-to-market amount decreases

non-ECI under another Code section or

following: Investments in disregarded

the basis of the assets included on

regulation. For example, report income

entities should not be included on line 2,

line 2, column (a), include such

that is non-ECI under section 864(c)(4)

column (a) if the set(s) of books are

decrease as a positive number on

(D) on line 3b, column (a) even if such

reportable on Schedule L. Instead, the

line 3f, column (a). Other adjustments

income is also not attributable to a U.S.

total assets of such disregarded entity's

for book-to-tax differences with respect

office of a banking, financing, or similar

Schedule L books should be combined

to asset values on line 2, column (a),

business under Regulations section

on line 2, column (a) with all other set(s)

such as depreciation and amortization

1.864-6(b)(2)(ii)(b) and the principles of

of books reportable on Schedule L. If

for taxpayers using the adjusted basis

Regulations section 1.864-4(c)(5)(ii).

another Schedule L book reflects an

method for valuing U.S. assets, are also

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Instructions For Schedule I (Form 1120-F) - 2017 Page 4

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