Instructions For Schedule I (Form 1120-F) - 2011 Page 8
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8additional rules that may defer or disallow
prior year that is deductible in the current
amount of current year deduction of a
deductibility in whole or in part.
taxable year. If the amount of current year
prior year deferral for each applicable
deferrals of the interest expense allocated
provision. In the case of deferrals and
Line 24a. Tax-exempt allocations.
and reported on line 23 exceeds the
deductions under section 163(j), attach
Enter on line 24a the amount of allocable
current year amount of the deductible
Form 8926, Disqualified Corporate
interest expense on line 23 that is subject
amount of prior year interest deferrals,
Interest Expense Disallowed Under
to further allocation and apportionment to
enter the excess current year deferral as
Section 163(j) and Related Information, in
tax-exempt income under section 265 or
a negative number on line 24b. If the
lieu of, or in addition to, a schedule.
under the provisions of an applicable
current year deductible amount of prior
income tax treaty. Attach a schedule
Line 24c. Capitalized interest
year deferrals exceeds the current year
showing how such allocation between
expense. Enter on line 24c the amount
deferrals, enter the excess deductible
exempt and non-exempt ECI has been
of interest expense allocation reported on
amount over the current year deferrals as
made. See Regulations section
line 23 that is capitalizable under section
a positive number on line 24b.
1.882-5(a)(5) and Regulations section
263A. Attach a schedule describing how
1.882-5(a)(8), examples (3) and (4).
Note. If the corporation made an
such allocation has been made.
Treaty-exempt income may include
election under section 108(i) to defer
Note. Enter all amounts on line 24c as a
income that is ECI under the force of
income from cancellation of debt in
negative amount. These amounts are
attraction principle of section 864(c)(3)
connection with an applicable debt
treated as a reduction of the allocation in
but which is business profits not
instrument reacquired after December 31,
determining the deductible interest
attributable to a U.S. permanent
2008, and before January 1, 2011, and,
expense for the year.
establishment of the corporation under an
as part of the reacquisition, issues a debt
Line 24d. Total deferrals and
applicable treaty to which Regulations
instrument with Original Issue Discount
disallowances. Combine lines 24a, 24b,
section 1.882-5 applies in determining the
(“OID”) that is subject to section 108(i)(2),
and 24c and enter the result on line 24d.
attributable business profits. For such
the interest deduction for this OID is
The amount entered on line 24d is also
treaties, the amount allocable to ECI
deferred. Include as a negative number
reported and reconciled for its temporary
reported on line 23 requires additional
on line 24b the amount of allocable
and permanent differences on Schedule
allocation and apportionment between
interest expense on line 23 that is subject
M-3 (Form 1120-F), Part III, line 26c,
taxable ECI and treaty-exempt ECI under
to such deferral in the current tax year.
columns (b) and (c). See the Instructions
Regulations section 1.882-5(a)(5).
The accrued OID is allowed as a
for Schedule M-3 (Form 1120-F), Part III,
deduction ratably over the 5-year period
Note. Enter all amounts on line 24a as a
line 26c.
that the income from cancellation of debt
negative amount. These line 24a amounts
Line 25. Amount of allocation
is includible in income. The deduction is
are a reduction of the allocation in
deductible on Form 1120-F, Section II,
limited to the income from the canceled
determining the deductible interest
line 18. Combine lines 23 and 24d and
debt with respect to the debt instrument
expense for the year.
enter the result on line 25. The result is
reacquired. Include as a positive number
Line 24b. Deferred interest expense.
the corporation’s deductible amount of
on line 24b any such deduction which
Enter on line 24b the amount of allocable
interest expense allocation for the tax
pertains to amounts deferred in a prior tax
interest expense on line 23 that is subject
year and is reportable on Form 1120-F,
year that is deductible in the current tax
to deferral (for example, under sections
Section II, line 18.
year.
163(e)(3), 163(j) or 267(a)(3)) in the
Attach a schedule indicating the
current tax year. Also enter on line 24b
amount of current year deferral and the
the amount of allocable interest expense
deferred under any of these sections in a
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