Instructions For Schedule I (Form 1120-F) - 2017 (Page 6 of 10) in pdf

Lines 8 and 9. Step 3: Interest

requirements for U.S.-booked liabilities

Fixed Ratio Filers — Regulations

of foreign banks under Regulations

Expense Allocation (Including

Section 1.882-5(c)(4)

section 1.882-5(d)(2)(iii). Note: The

U.S.-Booked Liabilities and

Line 7a. U.S.-connected liabilities

section 585(a)(2)(B) standard also

U.S.-Booked Interest Expense

before Regulations section

applies for eligibility to reduce excess

Included in the Determination

1.884-1(e)(3) election(s). Multiply the

interest using the deposit liability safe

average U.S. assets from line 5, column

harbor under the branch-level interest

of Branch Interest)

(d), by the ratio entered on line 6e and

tax on excess interest under

Line 8. Average Third Party

enter the result on line 7a. The result is

Regulations section 1.884-4(a)(2)(iii).

U.S.-Booked Liabilities

the amount of U.S.-connected liabilities

Line 8, column (b). U.S.-booked lia-

determined before the application of any

bilities of partnership interests.

Line 8, column (a). Schedule L

liability reduction election(s) made

Enter on line 8, column (b), the portion

U.S.-booked liabilities. Enter on

under Regulations section 1.884-1(e)

of the amount from Schedule P, line 18

line 8, column (a), the average amount

(3).

(“Total” column) that constitutes U.S.

of third-party U.S.-booked liabilities from

Line 7b. U.S. liability reduction elec-

booked liabilities under Regulations

the set(s) of books reportable on

tion amount. Enter the total amount of

section 1.882-5(d)(2). This amount is

Schedule L using the most frequent

U.S. liability reductions made under

the corporation's average U.S.-booked

averaging period available but not less

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

liabilities with respect to its distributive

frequently than the minimum averaging

the current year.

share of liabilities during the averaging

periods required for U.S. assets

period from partnerships engaged in

reported on line 5. The average

Note. A liability reduction election may

trade or business within the United

U.S.-booked liabilities include all

be made only to the extent needed to

States. The amount reportable on line 8,

third-party liabilities on the set(s) of

reduce a dividend equivalent amount

column (b), is the corporation's share of

Schedule L books whether interest

under section 884(b) to zero. See

partnership liabilities for which it is

bearing or not. Exclude interbranch

Regulations section 1.884-1(e)(3)(iv) for

allocated a distributive share of interest

liabilities shown on the Schedule L

the time, place, and manner for making

expense. See Regulations section

books unless such amounts are treated

the liability reduction election and the

1.884-1(d)(3)(vi).

as allocations of third-party amounts

separate disclosures required to be

with respect to a global dealing

attached to Form 1120-F for each

operation under Proposed Regulations

Line 9. U.S.-Booked Interest

liability reduction election made.

section 1.863-3(h) (e.g., mark-to-market

Expense

valuations of dealer derivative securities

If the corporation uses the Separate

may constitute liabilities that are treated

Currency Pools Method for Step 3 (lines

Line 9, column (a). Schedule L

as U.S.-booked liabilities includible on

16a through 20), the amount included

booked interest expense. Enter the

line 8, column (a)). Do not include

on line 7b must also be allocated to

amount of third-party interest expense

determine the U.S.-connected liabilities

liability amounts on line 8a to the extent

from the Schedule L set(s) of books with

for each currency. See the instructions

they give rise to directly allocable

respect to liabilities reported on line 8,

for lines 7c below and line 17b later. If

interest under Regulations section

column (a). Do not include interest

no liability reduction election is made for

1.882-5(a)(1)(ii) or are partnership

expense that is directly allocable under

the tax year, enter -0- on line 7b.

liabilities includible in column (b).

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

including the corporation's distributive

Corporations other than banks.

Line 7c. U.S.-connected liabilities.

share of direct interest expense

The definition of U.S.-booked liability for

Subtract line 7b from line 7a and enter

allocations from partnerships otherwise

a foreign corporation other than a bank

the amount on line 7c. The amount

reportable in column (b). All direct

is described in Regulations section

entered is the amount of

interest expense allocations to ECI are

1.882-5(d)(2)(ii). Liabilities reflected on

U.S.-connected liabilities for purposes

reported on line 22.

the Schedule L books must be recorded

of determining the amount of interest

on such books reasonably

expense allocable to effectively

Line 9, column (b). U.S.-booked in-

contemporaneous to the time the

connected income in Step 3. If the

terest expense from partnerships.

liability is incurred.

corporation uses the Separate Currency

Enter on line 9, column (b), the portion

Foreign banks. The liability

Pools Method for Step 3, the sum of all

of the amount from Schedule P (Form

recorded on the set(s) of Schedule L

U.S.-connected liabilities shown on

1120-F), line 15c (“Total” column) that is

books must be that of a foreign bank

line 17b (including any statements for

interest expense on U.S.-booked

that conducts regulated banking

lines 16a through 19 for additional

liabilities. Do not include interest

operations in the United States as

separate currency pool computations)

expense that is directly allocable under

described in section 585(a)(2)(B). Note:

must equal the amount shown on line 7c

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

This requirement applies only for the

after the liability reduction election has

from the corporation's distributive share

determination of U.S.-booked liabilities

been taken into account.

of a partnership's direct interest

and corresponding U.S.-booked interest

expense allocations. All direct interest

expense. It does not apply for other

expense allocations to ECI are reported

purposes such as determining the

on line 22.

eligibility for the fixed ratio under Step 2,

Line 9, column (c). Total

reportable on line 6d. The liability must

U.S.-booked interest expense. Add

be recorded on the Schedule L books

the amounts on line 9, column (a), and

before the close of the day on which the

line 9, column (b) and enter the result on

liability is incurred unless an inadvertent

line 9, column (c). This result is also

error is shown under the facts and

required to be reported on Form 1120-F,

circumstances. See the definition and

-6-

Instructions For Schedule I (Form 1120-F) - 2017 Page 6

Related Articles

Related forms

Related Categories