Instructions For Schedule I (Form 1120-F) - 2017 (Page 5 of 10) in pdf

reportable on line 3f, column (a). Enter

Regulations section 1.864-4(c)(5)(iii)

complete lines 6a through 6c and skip

an aggregate net increase as a negative

that are booked in a foreign bank's

line 6d.

number. Enter an aggregate net

home office or other foreign location.

Fixed ratio information. If the

decrease as a positive number.

Other assets reportable on line 5,

corporation uses the fixed ratio, skip

column (c), may generally also include

Line 4, column (a). Combine lines 3a

lines 6a through 6c and enter the

assets that are no longer held in

through 3f and enter the result on line 4,

applicable fixed ratio on line 6d. For

connection with a trade or business

column (a). The result on line 4, column

foreign banks (described in Regulations

within the United States that give rise to

(a) constitutes the total net adjustment

section 1.882-5(c)(4)), the fixed ratio is

effectively connected income under

to the average book assets from the

95%. For corporations other than

section 864(c)(6) or section 864(c)(7).

Schedule L set(s) of books reported on

foreign banks and insurance

However, not all assets that give rise to

line 2, column (a).

companies, the fixed ratio is 50%.

ECI, including ECI recognized under

section 864(c)(7), constitute U.S. assets

Line 5. Total Value of U.S. Assets

Actual Ratio Filers — Regulations

under Regulations section 1.884-1(d).

for the Tax Year

Section 1.882-5(c)

See Regulations section 1.884-1(d)(2)

(xi), example 5, and Regulations section

Line 5, column (a). Average U.S. as-

Line 6a. Average worldwide liabili-

1.884-1(d)(5).

sets on set(s) of Schedule L books.

ties. Enter on line 6a the average

Line 5, column (d). Total average

Subtract the amount on line 4, column

worldwide liabilities as adjusted for U.S.

value of U.S. assets included in Step

(a) from line 2, column (a) and enter the

tax principles for the year. The

1. Combine the amounts on line 5,

amount on line 5, column (a). The

corporation's worldwide liabilities

columns (a), (b), and (c) and enter the

resulting amount is the total average

include the liabilities of only the

amount on line 5, column (d). This

value of U.S. assets under Regulations

corporation filing the Form 1120-F, plus

amount is the total average value of the

section 1.884-1(d) included on the

the corporation's share of partnership

corporation's U.S. assets included in

Schedule L set(s) of books, excluding

liabilities and any liabilities of any

Step 1 of the Regulations section

any partnership interests included on

disregarded entities that are treated as

1.882-5 formula. If the corporation uses

line 2.

liabilities of the foreign corporation

the Separate Currency Pools method to

under U.S. tax principles. The books of

Line 5, column (b). Average value of

allocate interest expense in Step 3 of

the foreign corporation and any such

partnership interests that is a U.S.

the Regulations section 1.882-5

disregarded entities must be combined,

asset. If the corporation values its U.S.

formula, see the instructions for line 16a

with applicable eliminating entries for

assets under the adjusted basis

later. The amount on line 5, column (d)

transactions between them. See

method, enter on line 5, column (b), the

is also reportable on Schedule H (Form

Regulations section 1.882-5(c)(2)(viii).

amount from Schedule P (Form

1120-F), line 22a.

The classification of the worldwide

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

liabilities is determined under U.S. tax

Lines 6 Through 7c. Step 2:

treated as a U.S. asset under

principles. See Regulations section

Regulations sections 1.882-5 and

Determination of

1.882-5(c)(2)(ii). The value of the

1.884-1(d)(3). This amount is the sum of

U.S.-Connected Liabilities -

worldwide liabilities must be determined

the corporation's outside basis in

Regulations Section 1.882-5(c)

substantially in accordance with U.S.

partnership interests as adjusted under

tax principles. Foreign banks must

Regulations section 1.884-1(d)(3). The

Line 6. Actual ratio or fixed ratio

average the worldwide liabilities using

amount entered from Schedule P,

method. Check the applicable box to

the beginning, middle, and end of year

line 20 may include the corporation's

specify whether the corporation uses

values. Corporations other than banks

outside basis in partnerships whose

the actual ratio or the fixed ratio method

must average the worldwide liabilities

book value is included on line 2, column

for the tax year to determine its

using the year-to-year values of its

(a) as well as partnership interests

U.S.-connected liabilities in Step 2 of

liabilities.

whose book value is not recorded on

the allocation formula. (If the fair market

the Schedule L books and is not

Line 6b. Average worldwide assets.

value method is used (line 1), the actual

included on line 2, column (a). If the fair

Enter the average worldwide assets as

ratio method must also be used.) The

market value method election has been

adjusted for U.S. tax principles on

amount of U.S.-connected liabilities is

made, see Regulations section

line 6b, using the same nonconsolidated

the total value of U.S. assets for the tax

1.882-5(b)(2)(ii)(B) to determine the

books for reporting average worldwide

year (line 5, column (d)) multiplied by

amount to enter on Line 5, column (b).

liabilities on line 6a. Transactions with

the actual ratio or the applicable fixed

disregarded entities included in the

ratio the corporation has timely elected

Line 5, column (c). Average U.S. as-

actual ratio computation constitute

and is eligible to use for the tax year.

sets not includible in set(s) of

interbranch transactions under U.S. tax

The actual ratio or fixed ratio election

Schedule L books reported on line 5,

principles and must be eliminated. See

must be made on a timely filed tax

column (a), or from partnerships re-

Regulations section 1.882-5(c)(2)(viii).

return for the first year the corporation is

ported on line 5, column (b). Enter

Use the same averaging period

subject to Regulations section 1.882-5

on line 5, column (c), the average value

applicable to worldwide liabilities. If the

and is subject to the minimum five-year

of U.S. assets (other than the

corporation uses the actual ratio

period under Regulations section

corporation's outside basis in

method, the amount entered on line 6b

1.882-5(a)(7). An election to change the

partnership interests that is a U.S.

is also reported on Schedule H (Form

method after such minimum five-year

asset) from set(s) of books that are not

1120-F), line 22b.

period is also subject to the minimum

reportable on Schedule L. Such assets

five-year period.

may generally include certain securities

attributable to a U.S. office of a banking,

Actual ratio information. If the

financing, or similar business under

corporation uses the actual ratio,

-5-

Instructions For Schedule I (Form 1120-F) - 2017 Page 5

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