Form 1120-F - Instructions For Schedule P - List Of Foreign Partner Interests In Partnerships - 2014

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2014
Department of the Treasury
Internal Revenue Service
Instructions for Schedule P
(Form 1120-F)
List of Foreign Partner Interests in Partnerships
Who Must Complete
partnership is required to report ECI on
Section references are to the Internal Revenue
Code unless otherwise noted.
Form 8805 to a foreign corporate partner,
Schedule P
the corporation must reconcile its entire
Future Developments
A foreign corporation that is directly or
distributive share of income and expenses
indirectly engaged in trade or business
reported on Schedule K-1 (Form 1065)
For the latest information about
within the United States is required to file
from such partnership, instead of Form
developments related to Schedule P
Schedule P (Form 1120-F) for all
8805 and report it on Schedule P (Form
(Form 1120-F) and its instructions, such
directly-owned partnership interests that
1120-F).
as legislation enacted after they were
have ECI, or expenses allocable to ECI,
published, go to
Exceptions from Filing
included in its distributive share of income
reported to the corporation on
Schedule P
General Instructions
Schedule K-1 (Form 1065). If the foreign
Do not file Schedule P if the corporation
corporation treats any of its distributive
Purpose of Schedule
does not have any ECI, or expenses
share of partnership net income or loss
allocable to ECI, from all directly owned
from a partnership that is not engaged in
Schedule P (Form 1120-F) is used to
partnership interests. A foreign
trade or business within the United States
identify and reconcile the foreign
corporation that has ECI reported to it from
as ECI with another trade or business of
corporation's directly held partnership
a partnership is not required to file
the corporation, the corporation's entire
interests with the distributive shares of
Schedule P (Form 1120-F) if none of the
distributive share of items of income and
partnership effectively connected income
corporation's business profits including its
expense from any such partnership must
(ECI) and the foreign corporation's
ECI from the partnership are attributable to
also be reconciled between ECI and
effectively connected outside tax basis in
a U.S. permanent establishment pursuant
non-ECI and reported on Schedule P.
each interest. Part I is used to identify all
to an applicable income tax treaty and the
partnership interests the foreign
A foreign corporation may be engaged
corporation files a protective tax return
corporation directly owns that give rise to
in a trade or business within the United
under Regulations section 1.882-4(a)(3)
a distributive share of income or loss that
States either directly through its own
(vi).
is effectively connected with a trade or
non-partnership related activities or
business within the United States of the
Protective election on Schedule P.
indirectly, including through the activities
foreign corporation. Part II is used to
of one or more partnerships in which the
See Protective election, later, for
reconcile the foreign corporation's
corporation owns a partnership interest. In
instructions for making a protective
distributive share of ECI and allocable
addition, if a corporation owns an interest
partnership outside basis apportionment
expenses with the total income and
in a partnership that is itself deemed
election with a protective return filing of
expenses reported to it on Schedule K-1
Form 1120-F.
engaged in trade or business within the
(Form 1065), Partner's Share of Income,
United States as a result of the
When and Where To File
Deductions, Credits, etc. Part III is used as
partnership's own directly or indirectly
follows: The corporation's outside basis in
owned interest in another partnership
Attach Schedule P (Form 1120-F) to the
its directly-held partnership interests that
(“lower tier partnership”), the corporation
foreign corporation's Form 1120-F income
include ECI in the corporation's distributive
is also treated as engaged in trade or
tax return. See the Instructions for Form
share is apportioned between ECI and
business as a result of its direct and
1120-F for the time, place, and manner for
non-ECI under Regulations section
indirect ownership of such interests. See
filing the foreign corporation's income tax
1.884-1(d)(3) to determine the average
section 875(1). The foreign corporation's
return.
value treated as a U.S. asset for interest
distributive share of income from a
expense allocation purposes under
domestic partnership and certain foreign
Other Forms and
Regulations section 1.882-5. The
partnership interests is reported to the
Schedules Related to
apportionment of the outside basis to ECI
partner on Schedule K-1 (Form 1065),
as of the current and prior tax year end is
Schedule P
together with the corporation's allocable
also taken into account in determining the
share of partnership liabilities. If the
average apportioned value included in the
Form 1120-F, Section II. Gross ECI
partnership is engaged in trade or
corporation's U.S. assets for purposes of
includible in the corporation's distributive
business directly or indirectly through a
computing the branch profits tax. The U.S.
share is reportable on Form 1120-F,
lower-tier partnership and has ECI to
assets, and partner share of booked
Section II, lines 3 through 10, in the
report in the distributive share of a foreign
liabilities and interest expense of the
applicable category of income. Expenses
partner, it is responsible for making
partnership are also coordinated with the
(other than interest expense) that are
quarterly installment payments of
interest expense allocation computations
deductions allocated and apportioned on
withholding tax under section 1446 on the
reported on Schedule I (Form 1120-F).
Schedule P (Form 1120-F) to the partner's
foreign partner's distributive share of
ECI are also reported on Form 1120-F,
estimated ECI under section 1446 and
Section II.
reporting the amounts to the foreign
partner for the tax year on Form 8805,
Schedule I (Form 1120-F). A portion of
Foreign Partner's Information Statement of
the interest expense reportable on
Section 1446 Withholding Tax. If a
Nov 10, 2014
Cat. No. 50608W

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