Instructions For Schedule S (Form 1120-F) - 2011 printable pdf download

2011

Department of the Treasury

Internal Revenue Service

Instructions for Schedule S

(Form 1120-F)

Exclusion of Income From the International Operation of Ships or Aircraft Under

Section 883

•

Section references are to the Internal

United States an equivalent exemption

The activities of travel agents and tour

(defined below) for the category of

operators,

Revenue Code unless otherwise noted.

•

qualified income, derived by the foreign

Rental by a container leasing company

corporation seeking qualified foreign

of containers and related equipment, and

What’s New

•

corporation status. A foreign country may

The activities of a concessionaire.

be a qualified foreign country with respect

The term international operation of

•

Part I, line 5b was added to request

to one category of qualified income but

ships or aircraft means the operation of

information under Regulations section

not with respect to another such category.

ships or aircraft (as defined above) with

1.883-1(c)(3)(i)(G), which was added by

A qualified foreign corporation is a

respect to the carriage of passengers or

T.D. 9502, 2010-46 I.R.B. 641.

•

corporation as defined in section

cargo on voyages or flights that begin or

Part III, line 11b was added to request

7701(a)(3) that is organized in a qualified

end in the United States, as determined in

information under Regulations section

foreign country and considered engaged

Regulations section 1.883-1(f)(2). The

1.883-3(d)(4), which was added by T.D.

in the international operation of ships or

term does not include the carriage of

9502.

aircraft. Furthermore, to be a qualified

passengers or cargo on a voyage or flight

•

Part IV, line 16c was added to request

foreign corporation, the corporation must

that begins and ends in the United States,

information under Regulations section

satisfy one of the stock ownership tests

even if the voyage or flight contains a

1.883-4(e)(2), which was added by T.D.

described in the instructions for Parts II,

segment extending beyond the territorial

9502.

III, and IV on pages 2, 3, and 4.

limits of the United States, unless the

passenger disembarks or the cargo is

Note. A corporation may be a qualified

General Instructions

unloaded outside the United States.

foreign corporation with respect to one

Operation of ships or aircraft beyond the

category of qualified income but not with

territorial limits of the United States does

respect to another such category.

Purpose of Schedule

not constitute in itself international

operation of ships or aircraft.

A foreign corporation is considered

Schedule S (Form 1120-F) is used by

engaged in the operation of ships or

foreign corporations to claim an exclusion

Equivalent Exemption. A foreign

aircraft only during the time it is an owner

of income under section 883 and to

country grants an equivalent exemption

or lessee of one or more entire ships or

provide reporting information required by

when it exempts from taxation income

aircraft and uses such ships or aircraft in

the section 883 regulations.

from the international operation of ships

one or more of the following activities:

or aircraft derived by corporations

Who Must File

•

Carriage of passengers or cargo for

organized in the United States. Whether a

hire,

Qualified foreign corporations engaged in

foreign country provides an equivalent

•

In the case of a ship, the leasing out of

the international operation of ships or

exemption must be determined separately

the ship under a time or voyage charter

aircraft that are claiming an exclusion of

with respect to each category of income

(full charter), space or slot charter, or

gross income under section 883 must

listed on lines 2a through 2h of the

bareboat charter (as those terms are

complete Schedule S (Form 1120-F). See

schedule. See Regulations section

defined in Regulations section

Definitions below.

1.883-1(h)(2) for rules for determining

1.883-1(e)(5)), provided the ship is used

equivalent exemptions for each category

to carry passengers or cargo for hire, and

When and Where to File

of income.

•

In the case of aircraft, the leasing out of

Attach Schedule S (Form 1120-F) to the

the aircraft under a wet lease (full

An equivalent exemption may be

foreign corporation’s Form 1120-F income

charter), space, slot, or block-seat

available for income derived from the

tax return. See the Instructions for Form

charter, or dry lease (as those terms are

international operation of ships even

1120-F for the time, place, and manner

defined in Regulations section

though income derived from the

for filing the corporation’s income tax

1.883-1(e)(5)), provided the aircraft is

international operation of aircraft may not

return.

used to carry passengers or cargo for

be exempt, and vice versa. For rules

hire. See Regulations sections

regarding foreign corporations organized

Definitions

1.883-1(e)(1) and (2) for additional

in countries that provide exemptions only

information.

through an income tax convention, see

Qualified income is income derived from

Regulations section 1.883-1(h)(3).

the international operation of ships or

Activities that do not constitute

aircraft that is (a) properly includible in

operation of ships or aircraft include, but

An equivalent exemption may exist

any of the income categories described

are not limited to:

where the foreign country:

on lines 2a through 2h of the schedule,

•

The activities of a non-vessel operating

Generally imposes no tax on income,

and (b) the subject of an equivalent

common carrier,

including income from the international

exemption (defined below) granted by the

•

Ship or aircraft management,

operation of ships or aircraft,

qualified foreign country (defined below)

•

Obtaining crews for ships or aircraft

Specifically provides a domestic law tax

in which the corporation is organized.

operated by another party,

exemption for income derived from the

•

A qualified foreign country is a

Acting as a ship’s agent,

international operation of ships or aircraft,

•

foreign country or U.S. possession that

Ship or aircraft brokering,

either by statute, decree, income tax

•

grants to corporations organized in the

Freight forwarding,

convention, or otherwise, or

Nov 18, 2011

Cat. No. 51665B

Instructions For Schedule S (Form 1120-F) - 2011

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