Instructions For Schedule I (Form 1120-F) - 2009 (Page 2 of 8) in pdf

election and chooses to do so for that

If the foreign corporation has more

Other Forms and Schedules

year. For example, an election to use the

than one set of books and records

Related to Schedule I

adjusted U.S. booked liability method or

relating to assets located in the United

Form 1120-F, Schedule L, and

the separate currency pools method is an

States or assets used in a trade or

Schedule M-3 (Form 1120-F). The set

election that generally must be

business conducted in the United States,

or set(s) of books that give rise to U.S.

maintained for a minimum five-year

it must report the combined amounts on

booked liabilities under Regulations

period. If a corporation is subject to

Schedule L and must eliminate asset and

section 1.882-5(d)(2) are the same sets of

Regulations section 1.882-5 for the first

liability amounts recorded between these

books and records that are reportable as

time, the election is due with a timely filed

books.

of the tax year end on Form 1120-F,

return (excluding the additional extended

Schedule L. They are also the same sets

Required Reporting on

period provided by Regulations section

of books and records that are used by

1.882-4(a)(3)) whether or not the taxpayer

Schedule I

foreign banks to report income and

files a protective return under Regulations

Lines 1 through 9. Schedule I requires

expenses on Schedule M-3 (Form

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

disclosure of data and interest allocation

1120-F).

election need not be filed with subsequent

elections for all parts of the three-step

protective returns filed under Regulations

Form 1120-F, Section III, Part II

formula under Regulations section

section 1.882-4(a)(3)(vi) for any

(branch-level interest tax). The amount

1.882-5. On page 1, the corporation is

subsequent year to which the minimum

of interest expense from Schedule I, line

required to complete Step 1 (lines 1

five-year period applies. However, the

24d is reportable on Form 1120-F,

through 5) to determine its average U.S.

indication of the election with a protective

Section III, Part II, line 7b. The amount of

assets, Step 2 (lines 6 through 7c) to

return is only effective for a year that the

the allocation under Regulations section

determine its U.S.-connected liabilities,

corporation is engaged in trade or

1.882-5 reportable on Schedule I, line 23

and Step 3 (lines 8 and 9) to determine its

business within the United States.

is reportable on Form 1120-F, Section III,

U.S. booked liabilities and U.S. booked

Accordingly, if a protective election is

Part II, line 7c.

interest expense under Regulations

made for a first year protective return and

section 1.882-5(d)(2). The total on line 9,

in fact the taxpayer is not engaged in

Schedule M-3 (Form 1120-F), Part III,

column (c) is also used for purposes of

trade or business until the second year of

lines 26b and 26c. The amount of

determining the corporation’s branch

activity within the United States, the

interest expense allocation reportable on

interest under section 884(f)(1)(A) and

protective election made in the first year

Schedule I, line 23 is includible on

Regulations section 1.884-4(b), and in the

is not effective for the corporation’s

Schedule M-3 (Form 1120-F), Part III, line

calculation of the corporation’s

second year of activity because

26b, columns (d) and (e). The amounts

branch-level interest tax on excess

Regulations section 1.882-5 is not

subject to deferral and disallowance on

interest under section 884(f)(1)(B) and

applicable to the corporation until such

Schedule I, lines 24a through 24c are

Regulations section 1.884-4(a). Line 8,

second year. The elections used by a

reportable on Schedule M-3 (Form

column (c), and line 9, column (c) are also

taxpayer for all years in which it files Form

1120-F), Part III, line 26c, columns (b),

included in the interest expense allocation

1120-F and reports effectively connected

(c), and (e).

computation in Step 3 of the AUSBL

income must be shown on Schedule I,

Schedule P (Form 1120-F). Enter

method if elected by the corporation.

including years subsequent to the year in

amounts from Schedule P (Form 1120-F),

which an election under Regulations

lines 19, 17, and 14c on Schedule I, line

Lines 1 through 9 must be

section 1.882-5(a)(7) is made.

5, column (b); line 8, column (b); and line

completed by all corporations

9, column (b); respectively.

required to file Schedule I,

CAUTION

A corporation that files a protective

regardless of whether the corporation

return under Regulations section

Assets and Liabilities Based on

allocates interest expense under the

1.882-4(a)(3)(vi) need not enter amounts

Schedule L Set(s) of Books and

AUSBL or Separate Currency Pools

on Schedule I (other than for the

method for the applicable year. Schedule

Records

published LIBOR election on line 10d) in

I, lines 1 through 9 must also be

order to preserve an allocation method. If

Generally, the assets and liabilities

completed under the rules of Regulations

a taxpayer files a protective return under

required to be reported on Schedule L are

section 1.882-5 even if the corporation

Regulations section 1.882-4(a)(3)(vi) and

the total assets and liabilities reflected on

reports business profits attributable to a

does not file Schedule I to identify the

the set or sets of books of the foreign

U.S. permanent establishment (other than

relevant elections under Regulations

corporation that give rise to income

under the ECI rules of sections 864(c),

section 1.882-5 for an applicable year,

effectively connected with the

882(a) and 882(c)) pursuant to the

then the Director of Field Operations is

corporation’s trade or business within the

express provisions of an applicable

authorized to make all applicable

United States and to U.S. booked

income tax treaty and accompanying

allocation method elections on behalf of

liabilities (as defined in Regulations

documents (such as an Exchange of

the corporation for such applicable year if

section 1.882-5(d)(2). The total assets

Notes).

it is later determined that the taxpayer

and liabilities reflected on such books

was engaged in trade or business within

include the third party U.S. assets (as

Lines 10 through 20. Allocations,

the United States and had ECI during the

defined in Regulations section 1.884-1(d))

direct interest allocations, deferrals

year.

and third party liabilities (whether with

and other disallowances. Step 3 of the

related or unrelated parties), as well as

AUSBL method is provided on lines 10

Note. Under Regulations section

the interbranch assets and liabilities and

through 15. Step 3 of the Separate

1.882-5(a)(7), no interest expense

assets that give rise to noneffectively

Currency Pools method is provided on

allocation elections may be made on an

connected income in whole or in part.

lines 16 through 20. These Step 3

amended return. In addition, the relief for

Such books reflect the assets of the

methods are mutually exclusive and

late tax elections provided under the rules

foreign corporation located in the United

cannot both apply to the corporation in

of Regulations section 301.9100-1 (and

States and all other of its assets used in

the same year. The methods are subject

any guidance promulgated thereunder) is

its trade or business within the United

to the general five-year minimum period

not available. An election identified on line

States (other than its assets giving rise to

election rules of Regulations section

1 of a change from a fair market value

effectively connected income under

1.882-5(a)(7).

method to a previously elected adjusted

sections 864(c)(6) or (7)), as authorized

basis method for reporting U.S. assets is

under Regulations section

AUSBL method filers. AUSBL

not effective without advance consent of

1.6012-2(g)(1)(iii). A foreign corporation

method filers complete all columns on

the Commissioner or his delegate. See

may instead report its worldwide assets,

lines 1 through 15 and lines 21 through

Regulations section 1.882-5(b)(2)(ii)(A).

liabilities, and equity on Schedule L.

25. Do not complete lines 16 through 20.

-2-

Instructions For Schedule I (Form 1120-F) - 2009 Page 2

Related Articles

Related forms

Related Categories