Instructions For Schedule S (Form 1120-F) - 2010 (Page 2 of 4) in pdf

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Exchanges diplomatic notes with the

international operation of ships or aircraft

traded on such market or markets during

United States, or enters into an

(as defined in Regulations section

the tax year are at least 10% of the

agreement with the United States, that

1.883-1(g)(1)). For types of activities that

average number of shares outstanding in

provides for a reciprocal exemption for

are not considered incidental to the

that class during the tax year (or, in the

purposes of section 883.

international operation of ships or aircraft,

case of a short tax year, a percentage

see Regulations section 1.883-1(g)(2).

that equals at least 10% of the average

Certain types of exemptions provided

number of shares outstanding in that

to corporations organized in the United

Line 5. If the box on line 4 is checked,

class during the tax year multiplied by the

States by foreign countries do not satisfy

check the box on line 5 if none of the

number of days in the short tax year,

the equivalent exemption requirements of

bearer shares were relied on to satisfy

divided by 365).

Regulations section 1.883-1(h). Examples

any of the stock ownership tests

of types of exemptions that do not qualify

described in Regulations section

A class of stock that is traded during

as equivalent exemptions include:

1.883-1(c)(2). However, for tax years

the tax year on an established securities

•

Reduced tax rate or time limited

beginning on or after September 17,

market located in the United States shall

exemption,

2010, check the box on line 5 if none of

be considered to meet the trading

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Inbound or outbound freight tax,

the bearer shares (other than such shares

requirement described in item 2 above if

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Exemptions for limited types of cargo,

maintained in a dematerialized or

the stock is regularly quoted by dealers

•

Territorial tax systems,

immobilized book-entry system) were

making a market in the stock.

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Countries that tax U.S. corporations

relied on to satisfy any of the stock

A dealer makes a market in a stock

that are not managed and controlled in

ownership tests described in Regulations

only if the dealer regularly and actively

that country on a residence basis, and

section 1.883-1(c)(2).

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offers to, and in fact does, purchase the

Exemptions within categories of

Part II — Stock Ownership

stock from, and sell the stock to,

income. See Regulations section

customers who are not related persons

1.883-1(h)(4) for additional information.

Test for Publicly-Traded

(as defined in section 954(d)(3)) with

respect to the dealer in the ordinary

Corporations

Specific Instructions

course of a trade or business.

A foreign corporation satisfies the stock

In general, a class of stock of a foreign

ownership test of Regulations section

corporation that otherwise meets the

Part I – Qualified Foreign

1.883-1(c)(2) if it is considered a

requirements of the “regularly traded”

publicly-traded corporation and satisfies

Corporation

rules described above shall not be treated

the substantiation and reporting

as meeting such requirements for a tax

requirements of Regulations sections

year if, for more than half the number of

1.883-2(e) and (f). To be considered a

Line 1a. Enter the name of the qualified

days during the tax year, one or more 5%

publicly traded corporation, the stock of

foreign country (defined on page 1) in

shareholders (defined on page 3) own in

the foreign corporation must be primarily

which the foreign corporation was

the aggregate, 50% or more of the vote

and regularly traded (as defined below)

organized.

and value of the outstanding shares of the

on one or more established securities

Line 1b. Type of Equivalent

class of stock.

markets (as defined in Regulations

Exemption. Check one (and only one) of

Note. If the general rule described in the

section 1.883-2(b)) in either the United

the boxes on line 1b to indicate the type

previous paragraph applies, the

States or any qualified foreign country.

of equivalent exemption granted by the

corporation must check the “Yes” box on

foreign country listed in line 1a. For a

Primarily traded. Stock of a

line 9, and must complete lines 10a and

non-inclusive list of countries that grant

corporation is primarily traded in a country

10b, to substantiate that the exception to

equivalent exemptions, see Rev. Rul.

on one or more established securities

this general rule (described next) applies.

2008-17, 2008-12 I.R.B. 626, as modified

markets (as defined in Regulations

If the general rule described in the

by Announcement 2008-57, 2008-26

section 1.883-2(b)) if, with respect to each

previous paragraph does not apply, the

I.R.B. 1192.

class of stock described in item 1 under

corporation checks the “No” box on line 9,

Regularly traded below, the number of

Line 1c. Applicable Authority. Enter

and is not required to complete lines 10a

shares in each such class that are traded

the applicable authority of the equivalent

and 10b.

during the tax year on all established

exemption. For example, enter a citation

Exception: The rules discussed in the

securities markets in that country exceeds

of the statute in the country where the

previous paragraph shall not apply to a

the number of shares in each such class

corporation is organized, a diplomatic

class of stock if the foreign corporation

that are traded during that year on

note between the United States and such

can establish that qualified shareholders

established securities markets in any

country, or an income tax convention

(defined on page 3), applying the

other single country.

between the United States and such

attribution rules of Regulations section

country.

Regularly traded. The stock of a

1.883-4(c), own sufficient shares in the

corporation is regularly traded on one or

Line 2. Gross Income from

closely-held block of stock to preclude

more established securities markets if:

Categories of Qualified Income

nonqualified shareholders in the

1. One or more classes of stock of the

closely-held block of stock from owning

Line 2b. Enter the gross income the

corporation that, in the aggregate,

50% or more of the total value of the

foreign corporation derived from time or

represent more than 50% of the total

class of stock of which the closely-held

voyage (full) charter income of a ship or

combined voting power of all classes of

block is a part for more than half the

wet lease income of an aircraft. See

stock of such corporation entitled to vote

number of days during the tax year. Any

Regulations section 1.883-1(e)(5) for

and the total value of the stock of such

shares that are owned, after application of

definition of terms.

corporation are listed on such market or

the attribution rules in Regulations section

Line 2c. Enter the gross income the

markets during the tax year, and

1.883-4(c), by a qualified shareholder

foreign corporation derived from the

2. With respect to each class relied on

shall not also be treated as owned by a

bareboat charter of a ship or dry lease

to meet the more than 50% requirement

nonqualified shareholder in the chain of

income of an aircraft. See Regulations

above (a) trades in each such class are

ownership for purposes of the preceding

section 1.883-1(e)(5) for definition of

effected, other than in de minimis

sentence. A foreign corporation must

terms.

quantities, on such market or markets on

obtain the documentation described in

Lines 2d, 2e, and 2f. Enter on these

at least 60 days during the tax year

Regulations section 1.883-4(d) from the

lines the gross amount the corporation

(or 1/6 of the number of days in a short

qualified shareholders relied upon to

derived from the activities (specified on

tax year); and (b) the aggregate number

satisfy this exception. However, for tax

these lines) that are incidental to the

of shares in each such class that are

years beginning on or after September

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Instructions For Schedule S (Form 1120-F) - 2010 Page 2

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