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deliver mail to the street address and the

The FDE’s position in the chain of

Schedule C-1

U.S. person has a P.O. box, show the box

ownership.

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Complete a separate Schedule C-1 for

number instead.

The tax classification of all entities in

each recipient that has a functional

the chain of ownership (see Form 8832

Foreign Addresses. Enter the

currency that is different than the

instructions for tax classification rules and

information in the following order: city,

functional currency of the FDE. See

related definitions).

province or state, and country. Follow the

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section 987(3) for rules relating to branch

The country under whose law each

country’s practice for entering the postal

remittances.

entity is organized.

code, if any. Do not abbreviate the

country name.

For these purposes, the rules of

Schedule F

section 958(a) (relating to “direct and

Identifying Numbers

Use Schedule F to report a summary

indirect ownership”) apply.

Use the following instruction to complete

balance sheet for the FDE computed and

Each filer of Form 8858 that is required

lines 1b, 3c, 4c, and the entry space at

translated into U.S. dollars in accordance

to file an organizational chart with respect

the top of page 1 of the form for the filer’s

with U.S. GAAP.

to more than one FDE may satisfy this

identifying number. The identifying

Special rule for DASTM. If the FDE

requirement by filing a single

number of an individual is his or her social

uses DASTM, Schedule F should be

organizational chart that includes the

security number (SSN). The identifying

prepared and translated into U.S. dollars

required information with respect to all

number of all others is their employer

according to Regulations section

FDEs.

identification number (EIN).

1.985-3(d), rather than U.S. GAAP.

If a U.S. corporation is the U.S.

Schedule C

Schedule G

person filing Form 8858 and is a member

of a consolidated group, see Person

Use Schedule C to report a summary

Question 3

Filing This Return on page 2.

income statement for the FDE computed

If the tax owner of the FDE is claiming a

in the FDE’s functional currency in

Functional Currency

section 165 loss with respect to worthless

accordance with U.S. generally accepted

Use the following instruction to complete

stock or with respect to certain

accounting principles (GAAP). Enter in

lines 1i, 3e, and 4d.

obligations, see Regulations section

the U.S. dollar column each line item

1.6011-4 for information relating to a

Enter the entity’s functional currency.

functional currency amount translated into

disclosure statement that must be

dollars using U.S. GAAP translation rules.

See sections 985 and 989, and

attached to Form 8858 if certain

If the FDE does not maintain U.S. GAAP

Regulations sections 1.985-1(a) through

requirements are met.

income statements in U.S. dollars, you

can use the average exchange rate as

determining the functional currency of a

Question 4

determined under section 989(b). The

qualified business unit (QBU) and the

If the FDE is not owned directly or

rate used should be the rate stated on

definition of a QBU.

indirectly by a domestic corporation or the

line 7, Schedule H. If you choose to use

Hyperinflationary exception. An entity

FDE did not incur an NOL for the year,

the average exchange rate rather than

that otherwise would be required to use a

please write “N/A” across the “Yes/No”

the U.S. GAAP translation rules, check

hyperinflationary currency as its functional

entry spaces for line 4 to indicate that the

the box above line 1 on Schedule C.

currency must use the U.S. dollar as its

question is not applicable. Otherwise, if

Special rules for DASTM. If the FDE

functional currency and compute income

you are checking the “Yes” box, you may

uses DASTM, the functional currency

or loss or earnings and profits using the

need to attach an elective relief

column should reflect local

U.S. dollar approximate separate

agreement and/or an annual certification

hyperinflationary currency amounts

transactions method of accounting

as provided in Regulations sections

computed in accordance with U.S. GAAP.

(DASTM) under the special rules of

1.1503(d)-6(d) or (g) .

The U.S. dollar column should reflect

Regulations section 1.985-3. See

such amounts translated into dollars

Schedule H

Regulations section 1.985-1(b)(2).

under U.S. GAAP translation rules.

Line 1h — Principal Business

Use Schedule H to report the FDE’s

Differences between this U.S. dollar

current earnings and profits (E&P) (if the

Activity

GAAP column and the U.S. dollar income

tax owner is a CFC) or taxable income (if

or loss figured for tax purposes under

Enter a brief description of the FDE’s

the tax owner is a U.S. person or a CFP).

Regulations section 1.985-3(c) should be

principal business activity.

Generally, enter the amounts on lines 1

accounted for on Schedule H. See

through 6 in functional currency.

Schedule H, Special rules for DASTM,

Line 3b

Special rules for DASTM. If the FDE

below.

uses DASTM, enter on line 1 the dollar

If the tax owner is a CFC, enter the

Line 7. Include on line 7, adjustments for

GAAP income or (loss) from line 8 of

annual accounting period covered by

extraordinary items, prior period

Schedule C. Enter on lines 2 and 3 the

Form 5471 (as described in Regulations

adjustments, and the provision for

adjustments made in figuring current E&P

section 1.6038-2(e)). If the tax owner is a

income, war profits, and excess profits

or taxable income for U.S. tax purposes.

CFP, enter the annual accounting period

taxes deducted in accordance with U.S.

Report these amounts in U.S. dollars.

covered by Form 8865 (as described in

GAAP. The terms “extraordinary items”

Enter on line 5 the DASTM gain or loss

Regulations section 1.6038-3(f)).

and “prior period adjustments” have the

figured under Regulations section

Line 5

same meaning given to them by U.S.

1.985-3(d).

GAAP (see Opinion No. 30 of the

You must attach an organizational chart

Lines 2 and 3. Certain adjustments

Accounting Principles Board and

that includes the following information

must be made to the FDE’s line 1 net

Statement No. 16 of the Financial

with respect to the chain of ownership

book income or (loss) to determine its

Accounting Standards Board).

between the tax owner and the FDE and

current E&P or taxable income. The

the chain of ownership between the FDE

Important: Differences between this

adjustments may include those needed to

and all entities in which the FDE has a

functional currency amount and the

conform the foreign book income to U.S.

10% or more direct or indirect interest:

amount of taxes that reduce E&P (in the

GAAP and to U.S. tax accounting

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The name and percentage of

case of an FDE of a CFC) or are

principles. If the FDE’s books are

ownership of all entities in the chain of

deductible in computing U.S. taxable

maintained in functional currency in

ownership, including partnerships and

income (in the case of an FDE of a U.S.

accordance with U.S. GAAP, enter on line

entities disregarded as separate from

person or a CFP) should be accounted for

1 the functional currency GAAP income or

their owners.

on line 2 or 3 of Schedule H.

(loss) from line 8 of Schedule C, rather

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Instructions For Form 8858 - Information Return Of U.s. Persons With Respect To Foreign Disregarded Entities - 2008 Page 3

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