Instructions For Schedule P (Form 1120-F) - List Of Foreign Partner Interests In Partnerships - 2012

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2012
Department of the Treasury
Internal Revenue Service
Instructions for Schedule P
(Form 1120-F)
List of Foreign Partner Interests in Partnerships
Who Must Complete
Form 8805 to a foreign corporate partner,
Section references are to the Internal Revenue
Code unless otherwise noted.
the corporation must reconcile its entire
Schedule P
distributive share of income and expenses
General Instructions
A foreign corporation that is directly or
reported on Schedule K-1 (Form 1065)
indirectly engaged in trade or business
from such partnership, instead of Form
within the United States is required to file
8805 and report it on Schedule P (Form
Future Developments
Schedule P (Form 1120-F) for all
1120-F).
directly-owned partnership interests that
For the latest information about
Exceptions from Filing
have ECI included in its distributive share
developments related to Schedule P
of income reported to the corporation on
(Form 1120-F) and its instructions, such
Schedule P
Schedule K-1 (Form 1065). If the foreign
as legislation enacted after they were
Do not file Schedule P if the corporation
corporation treats any of its distributive
published, go to
does not have any ECI with respect to its
share of partnership net income or loss
combined distributive shares of income
Purpose of Schedule
from a partnership that is not engaged in
from all directly owned partnership
trade or business within the United States
Schedule P (Form 1120-F) is used to
interests. A foreign corporation that has
as ECI with another trade or business of
identify and reconcile the foreign
ECI reported to it from a partnership is not
the corporation, the corporation's entire
corporation's directly held partnership
required to file Schedule P (Form 1120-F)
distributive share of items of income and
interests with the distributive shares of
if none of the corporation's business
expense must also be reconciled between
partnership effectively connected income
profits including its ECI from the
ECI and non-ECI and reported on
(ECI) and the foreign corporation's
partnership are attributable to a U.S.
Schedule P.
effectively connected outside tax basis in
permanent establishment pursuant to an
A foreign corporation may be engaged
each interest. Part I is used to identify all
applicable income tax treaty and the
in a trade or business within the United
partnership interests the foreign
corporation files a protective tax return
States either directly through its own
corporation directly owns that give rise to
under Regulations section 1.882-4(a)(3)
non-partnership related activities or
a distributive share of income or loss that
(vi).
indirectly through the activities of one or
is effectively connected with a trade or
Protective election on Schedule P.
more partnerships in which the
business within the United States of the
corporation owns a partnership interest. In
See Protective election on page 4 for
foreign corporation. Part II is used to
addition, if a corporation owns an interest
instructions for making a protective
reconcile the foreign corporation's
in a partnership that is itself deemed
partnership outside basis apportionment
distributive share of ECI and allocable
engaged in trade or business within the
election with a protective return filing of
expenses with the total income and
Form 1120-F.
United States as a result of the
expenses reported to it on Schedule K-1
partnership's own directly or indirectly
(Form 1065), Partner's Share of Income,
When and Where To File
owned interest in another partnership
Deductions, Credits, etc. Part III is used as
(“lower tier partnership”), the corporation
follows: The corporation's outside basis in
Attach Schedule P (Form 1120-F) to the
is also treated as engaged in trade or
its directly-held partnership interests that
foreign corporation's Form 1120-F income
business as a result of its direct and
include ECI in the corporation's distributive
tax return. See the Instructions for Form
indirect ownership of such interests. See
share is apportioned between ECI and
1120-F for the time, place, and manner for
section 875(1). The foreign corporation's
non-ECI under Regulations section
filing the foreign corporation's income tax
distributive share of income from a
1.884-1(d)(3) to determine the average
return.
domestic partnership and certain foreign
value treated as a U.S. asset for interest
partnership interests is reported to the
Other Forms and
expense allocation purposes under
partner on Schedule K-1 (Form 1065),
Regulations section 1.882-5. The
Schedules Related to
together with the corporation's allocable
apportionment of the outside basis to ECI
Schedule P
share of partnership liabilities. If the
as of the current and prior tax year end is
partnership is engaged in trade or
also taken into account in determining the
Form 1120-F, Section II. Gross ECI
business directly or indirectly through a
average apportioned value included in the
includible in the corporation's distributive
lower-tier partnership and has ECI to
corporation's U.S. assets for purposes of
share is reportable on Form 1120-F,
report in the distributive share of a foreign
computing the branch profits tax. The U.S.
Section II, lines 3 through 10, in the
partner, it is responsible for making
assets, and partner share of booked
applicable category of income. Expenses
quarterly installment payments of
liabilities and interest expense of the
(other than interest expense) that are
withholding tax under section 1446 on the
partnership are also coordinated with the
deductions allocated and apportioned on
foreign partner's distributive share of
interest expense allocation computations
Schedule P (Form 1120-F) to the partner's
estimated ECI under section 1446 and
reported on Schedule I (Form 1120-F).
ECI are also reported on Form 1120-F,
reporting the amounts to the foreign
Section II.
partner for the tax year on Form 8805,
Foreign Partner's Information Statement of
Schedule I (Form 1120-F). Interest
Section 1446 Withholding Tax. If a
expense reportable on Schedule P is
partnership is required to report ECI on
Aug 24, 2012
Cat. No. 50608W

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