Instructions For Form 1118 - 2004 Page 5

ADVERTISEMENT

The corporation’s name and EIN;
domestic corporation that meets the
Specific Instructions
The foreign corporation’s name,
foreign business requirement.
address, and EIN (if any);
Column 6. Include gross income,
Report all amounts in U.S. dollars unless
The amount of any refunds of foreign
including compensation, commissions,
otherwise specified. If it is necessary to
taxes and the exchange rate originally
fees, etc., for technical, managerial,
convert from a foreign currency, attach a
used to translate the refunded foreign
engineering, construction, scientific, or
statement explaining how the conversion
taxes;
similar services outside the United States.
rate was determined.
The amounts of unrefunded foreign
Be sure to include gross income from
Separate category of income boxes.
taxes when paid and when accrued in
services performed through a foreign
The corporation must complete a
foreign currency, the exchange rates
branch.
separate Form 1118 for each applicable
applicable to the unrefunded foreign
Column 7. Include all other gross income
category of income. See Categories of
taxes, and the dollar amounts of
from sources outside the United States
Income beginning on page 1.
unrefunded foreign taxes paid and
for the applicable separate category,
accrued; and
including all other gross income of foreign
The current balances of the pools of
branches and pass-through entities and
Schedule A
E&P and foreign taxes before and after
any exchange gain or loss recognized
the foreign tax adjustment.
Report gross income or (loss) from
under sections 986(c) or 987(3) on a
If an adjustment relates to a foreign tax
sources outside the United States for the
distribution or remittance of previously
overaccrual of 2% or more, identify each
applicable separate category in columns
taxed amounts. Attach a schedule
such adjustment and include a complete
2 through 7. Gross income equals gross
identifying the gross income by type and
factual description justifying the reasons
receipts reduced by cost of goods sold.
by the foreign country or U.S. possession
for the overaccrual (Temporary
Report the applicable deductions to this
from which it was sourced.
Regulations section 1.905-3T(d)(2)(iii)).
gross income in columns 9 and 10. Be
Column 9(d). Include all other
sure to include in all columns the gross
If the corporation fails to attach the
deductions definitely allocable to income
income and deductions that pertain to
required notice, to provide the necessary
from sources outside the United States
foreign branches.
information, or to make the required
(dividends, interest, etc.) for the
adjustments, it must provide notification of
applicable separate category. Include
Aggregate all section 863(b) gross
the foreign tax changes under Temporary
deductions allocable to income of foreign
income and deductions and report the
Regulations section 1.905-4T. The
branches.
totals on a single line.
notification must include a complete
Include any reduction of foreign source
Column 1. Enter the two-letter codes
factual description justifying the reasons
capital gain net income. If foreign source
(from the list beginning on page 11) of all
for the failure to attach the required
capital gain net income from all separate
foreign countries and U.S. possessions
notification or make the required
categories is more than the capital gain
within which income is sourced and/or to
adjustments. The IRS may, in its
net income reported on the corporation’s
which taxes were paid, accrued, or
discretion, make a redetermination of the
tax return, enter a pro rata portion of the
deemed paid.
corporation’s U.S. tax liability and apply
excess as a negative number in each
the interest provisions of section 6601
For section 863(b) income, enter
separate category. See Capital Gains on
and the penalty provisions of section
“863(b)” instead of a two-letter code.
page 3.
6689.
Column 2(a). If the corporation is a U.S.
Column 10. Enter only the apportioned
Important: Temporary Regulations
shareholder in a CFC, report all income
share from Schedule H, Part II, column
section 1.905-3T(d)(2)(ii)(A) has been
deemed received under section
(d) that relates to gross income reported
suspended, as well as that portion of
951(a)(1)(A) (before gross-up). See
in columns 2 through 7.
Regulations section 1.905-3T(d)(2)(ii)(C)
section 904(d)(3) and Look-Through
Note. If the corporation qualified as a
that refers to Regulations section
Rules on page 2 for more information. If
financial services entity because it treated
1.905-3T(d)(2)(ii)(A). These suspensions
the corporation is a U.S. shareholder in a
certain amounts as active financing
are effective for taxes deemed paid or
passive foreign investment company
income that are not listed in Regulations
accrued for E&P of a foreign corporation
(PFIC) and receives distributions from
sections 1.904-4(e)(2)(i)(A) through (X),
accumulated in tax years beginning after
stock in that PFIC, report all income
but that are described as similar items in
1986.
deemed received (before gross-up) under
Regulations section 1.904-4(e)(2)(i)(Y),
section 1291.
Until final regulations are issued under
attach a statement to Form 1118 showing
section 905(c), redeterminations
Column 3(a). Report all other dividends
the types and amounts of the similar
otherwise subject to those regulations
(before gross-up) not included in column
items.
sections must be accounted for through
2(a) from sources outside the United
adjustment to the appropriate pools of
States for the applicable separate
E&P and foreign taxes as described in
category. Other dividends include
Schedule B
Temporary Regulations section
amounts included in gross income under
1.905-3T(d)(3) and subject to the
section 951(a)(1)(B).
Part I—Foreign Taxes Paid,
exceptions in Temporary Regulations
Note. All dividends from a domestic
Accrued, and Deemed Paid
section 1.905-3T(d)(4). See Notice 90-26,
corporation are of U.S. source, including
Report only foreign taxes paid, accrued,
1990-1 C.B. 336, for details.
dividends from a domestic corporation
or deemed paid for the separate category
Interest and Penalties
which has 80% or more of its gross
for which this Form 1118 is being
income from sources outside the United
In most cases, interest is computed on
completed. Report all amounts in U.S.
States.
the deficiency or overpayment that
dollars. If the corporation must convert
Columns 2(b) and 3(b). Include taxes
from foreign currency, attach a schedule
resulted from the foreign tax adjustment
deemed paid by a domestic corporation
showing the amounts in foreign currency
(sections 6601 and 6611 and the related
under section 902 or section 960 on
and the exchange rate used.
regulations). See Temporary Regulations
distributions by a foreign corporation in
section 1.905-4T(c) for additional
For corporations claiming the credit on
income as dividend gross-up. See
information.
the accrual basis, the exchange rate for
Regulations section 1.960-3(b) for
If the corporation does not comply with
translating foreign taxes into U.S. dollars
exceptions.
the requirements discussed above within
will generally be an average exchange
the time for filing specified, the penalty
Column 4. Enter all interest received
rate for the tax year to which the taxes
provisions of section 6689 (and the
from foreign sources. See section 861(c)
relate. However, the exchange rate on the
related regulations) will apply.
for the treatment of interest from a
date of payment must be used if the
-5-

ADVERTISEMENT

00 votes

Related Articles

Related forms

Related Categories

Parent category: Financial