Instructions For Schedule K (Form 1118) printable pdf download

Instructions for Schedule K

Department of the Treasury

Internal Revenue Service

(Form 1118)

(Rev. December 2009)

Excess foreign taxes. If the

the 2008 tax year (entered on line 7 of the

Section references are to the Internal

corporation’s current year foreign taxes

Schedule K filed for the 2009 tax year)

Revenue Code unless otherwise noted.

available for credit (the sum of Schedule

exceeds the actual carryback of $15, on

B, Part II, lines 1 through 4) exceed its

the Schedule K for the 2010 tax year,

General Instructions

foreign tax credit limitation (Schedule B,

Corporation A enters the $5 excess ($20 -

Part II, line 11), the corporation has

$15) on line 2a as a positive number.

Purpose of Schedule

excess foreign taxes.

Assuming no other adjustments are

needed, the total carryover amount from

Schedule K (Form 1118) is used to

2009 entered on line 3, column (xii) of the

reconcile the corporation’s prior year

2010 Schedule K will be $85 ($80 + $5).

Specific Instructions

foreign tax carryover with its current year

foreign tax carryover. Corporations are

Line 2b. Adjustments for section

Important: All information reported on

thus reporting running balances of their

905(c) redeterminations. Enter on line

Schedule K (Form 1118) must be in

foreign tax carryovers showing all activity

2b any adjustments needed for section

English. All amounts must be stated in

since the filing of the prior year income

905(c) redeterminations. See Foreign

U.S. dollars.

tax return.

Tax Credit Redeterminations in the

Checkboxes at top of page 1.

instructions for Form 1118 for additional

Lines 1 through 3. On these lines, the

Complete Schedule K separately for each

information.

corporation computes its adjusted foreign

category of income. Check the box for the

tax carryover from the prior tax year

Lines 2c, 2d, 2e, etc. Include on

category of income for which this

which is available for credit in the current

these additional lines the following types

schedule is being completed.

tax year. The line 3 total is included on

of adjustments needed to reflect:

•

Line 1. Foreign tax carryover from the

Form 1118, Schedule B, Part II, line 5.

Carryovers gained or lost due to

prior tax year. Enter on line 1 the

reorganizations of the corporation’s

Line 4. If the corporation has a current

amount from line 6 of the worksheet on

controlled/consolidated group.

year excess limitation (defined below),

•

page 3 of these instructions. See Line 1

Domestic audit adjustments.

some or all of the line 3 adjusted foreign

•

Reconciliation Worksheet instructions on

Any other adjustments needed to

tax carryover amount will be utilized in the

page 2 before completing the worksheet.

properly reflect the total carryover amount

current tax year. This activity is shown on

Line 2. Adjustments to line 1. Report

from the prior tax year that is available for

line 4 of the Schedule K (Form 1118).

on lines 2a, 2b, 2c, 2d, etc. any

credit in the current tax year.

Lines 5 through 8. If the corporation

adjustments resulting from events that

Note. Be sure to enter a brief description

has current year excess foreign taxes

occurred between the filing of the prior

of each applicable adjustment item

(defined below), none of the line 3

year tax return and the filing of the current

immediately after the lower case letter in

adjusted foreign tax carryover amount will

year tax return.

the first column of the schedule.

be utilized in the current tax year. If the

Line 2a. Carryback adjustment.

corporation has any remaining carryover

Line 3. Adjusted foreign tax carryover

Enter on line 2a, column (xii) the

from the 10th preceding tax year, this

from prior tax year. Combine lines 1

difference between any estimated

carryover amount will expire unused. This

and 2. The total amount in line 3, column

carryback amount you may have used on

activity is shown on line 5 of the Schedule

(xiv) is the adjusted carryover amount

your prior year carryover schedule (i.e.,

K (Form 1118). Furthermore, the

from the prior tax year. It is included on

the equivalent of any estimated carryback

corporation will generate a foreign tax

Schedule B, Part II, line 5 (and, if filing an

amount that would have been entered on

carryover in the current tax year which

amended return, combined with

line 7, column (xiii) of the Schedule K

can be carried back to the prior tax year

carrybacks into the current tax year) to

(Form 1118) had that schedule existed

and/or carried forward to future tax years

determine the total amount of foreign

last year) and the actual carryback

(see Carryback and Carryforward of

taxes that are available for credit in the

amount.

Excess Foreign Taxes in the instructions

current tax year.

for Form 1118 for details). This activity is

Example. In the 2009 tax year,

Line 4. Foreign tax carryover utilized in

shown on lines 6 through 8 of the

Corporation A has excess foreign taxes of

current tax year. With respect to a

Schedule K (Form 1118).

$100 (i.e., the sum of lines 1 through 4 of

given separate limitation, line 4 is

Form 1118, Schedule B, Part II exceeds

completed only if the corporation has a

Who Must File

Form 1118, Schedule B, Part II, line 11 by

current year excess limitation (defined

$100) entered on Schedule K (Form

With respect to each separate category of

above).

1118), line 6. Corporation A enters $20 on

income, any corporation filing Form 1118

Enter in each column the foreign tax

line 7 as the estimated amount of line 6 to

that has a foreign tax carryover in the

carryover utilized in the current tax year.

be carried back to the 2008 tax year.

prior tax year, the current tax year, or

Starting with column (i), the amount to be

Corporation A enters $80 on line 8 as the

both must file Schedule K (Form 1118) for

entered on line 4 of a given column will be

carryover amount for following years. The

that separate category of income.

the amount on line 3 of that column, but

actual carryback amount to the 2008 tax

only to the extent that it does not exceed:

year is later determined to be $15. In the

Definitions

•

The amount of the current year excess

2010 tax year, Corporation A enters $80

limitation (defined above), less

Excess limitation. If the corporation’s

on line 1, column (xii) as the carryover

•

The sum of all amounts entered in all

foreign tax credit limitation (Schedule B,

from the 2009 tax year, corresponding to

previous columns of line 4.

Part II, line 11) exceeds its current year

the amount entered on line 8, column (xiii)

foreign taxes available for credit (the sum

of the Schedule K filed for the 2009 tax

Example. For the current tax year,

of Schedule B, Part II, lines 1 through 4),

year. Because the estimated carryback

Corporation A has an excess limitation of

the corporation has excess limitation.

amount of $20 from the 2009 tax year to

$250 (i.e., Form 1118, Schedule B, Part

Cat. No. 52009v

Instructions For Schedule K (Form 1118)

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