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Part I – List of Foreign

includible in the corporation's interest

Accordingly, with respect to each

expense allocation computation under

partnership interest, check the “Yes” box if

Partner Interests in

Regulations section 1.882-5. The

the foreign corporation is engaged in a

Partnerships

corporation's distributive share of interest

U.S. trade or business indirectly through

expense that is directly allocable to

the activities of the partnership. Check the

In Part I, list the name, address, and

effectively connected income under

“No” box if the foreign corporation has

Employer Identification Number (EIN) of

Regulations section 1.882-5(a)(1)(ii)(B) is

applied ECI principles solely at the partner

each directly owned partnership interest

reported on Schedule P, line 14b, and on

level and not as a result of the

that has effectively connected income

Schedule I (Form 1120-F), line 22. The

partnership's activities.

(ECI) included in the partner's distributive

corporation's distributive share of interest

share on Schedule K-1 (Form 1065). Also

Part II – Foreign Partner

expense that is included in the taxpayer's

include in the list of partnership interests

three-step allocation formula is reported

Income and Expenses:

any interest in a partnership that is not

on Schedule P, line 14c, and the total from

engaged in trade or business within the

Reconciliation to

line 14c is reported on Schedule I (Form

United States if the corporation treats

Schedule K-1 (Form 1065)

1120-F), line 9, column (b). The average

some or all of its distributive share as ECI

value of partnership liabilities the

with a separate trade or business of its

Part II reconciles the partner's ECI and

corporation includes in the determination

own within the United States. Do not

non-ECI to its Schedule K-1 (Form 1065)

of its outside basis for which the

report on Schedule P any indirectly

distributive share from each partnership

corporation also receives a distributive

owned partnership interests (lower-tier

listed in Part I. The Schedule K-1 lines are

share of interest expense is reported on

partnership interests) that have income

grouped for reconciliation of their income

Schedule P (Form 1120-F), line 17 (Total

effectively connected with the lower-tier

and expense in the following manner:

column), and on Schedule I (Form

partnership's own trade or business within

Schedule P, lines 1 through 5: ECI and

1120-F), line 8, column (b). The average

the United States unless the corporation

non-ECI reconciliation of income and

value of partnership liabilities reported on

also owns a direct interest in the lower-tier

non-interest expenses from Schedule K-1

Schedule P (Form 1120-F) and Schedule I

partnership. The corporation's distributive

(Form 1065), lines 1 through 3.

(Form 1120-F) does not include the

share of ECI earned through lower-tier

Schedule P, lines 6 through 9:

partnership liabilities that give rise to

partnership interests is includable on the

Reconciliation of other income and other

directly allocable interest expense under

Schedule K-1 (Form 1065) reportable to

non-interest expenses from Schedule K-1

Regulations section 1.882-5(a)(1)(ii)(B),

the corporation by the partnership in which

(Form 1065).

reportable on Schedule P (Form 1120-F),

the corporation owns a direct interest,

Schedule P, lines 10 and 11: Total

line 14b. The average value of the

whether or not the directly owned

gross income and total gross ECI from

partner's outside basis apportioned to ECI

partnership is itself directly engaged in

Schedule K-1 (Form 1065).

is reported on Schedule P (Form 1120-F),

trade or business within the United States.

Schedule P, lines 12 through 14:

line 19, and as a U.S. asset on Schedule I

Reconciliation of total interest expense

Schedule P (Form 1120-F)

(Form 1120-F), line 5, column (b).

from Schedule K-1 (Form 1065).

accommodates reporting for four

Schedule H (Form 1120-F), Part I, Part

directly-owned partnership interests.

II, and Part IV. The corporation's

Note. If you are reconciling the foreign

Complete a separate line in Part I, and the

distributive share of non-interest expenses

corporation's distributive share of ECI and

corresponding columns in Parts II and III,

included on Schedule P, lines 4 and 5 is

allocable expenses with the total income

for each directly owned partnership

also included in the corporation's overall

and expenses reported to the corporation

interest. If the corporation directly owns

allocation and apportionment of expenses

on Schedule K-1 (Form 1065-B), the

more than four partnership interests which

on Schedule H (Form 1120-F), Part IV,

relevant information will be located in

are required to be reported on Schedule P

lines 38a through 41, if the partnership

box 9 of the Schedule K-1 (Form 1065-B)

(Form 1120-F), report the required

books constitute set(s) of books that are

or in an attachment for box 9. Specifically,

information for those additional

also reportable on Form 1120-F,

the lines on Schedule K-1 (Form 1065)

partnership interests on attached separate

Schedule L or the partnership interest is

noted throughout these instructions

sheets using the same size and format as

recorded on Schedule L books of the

correspond to the box 9 information on

shown on the schedule. Also, in the

corporation's own separate trade or

Schedule K-1 (Form 1065-B) as follows:

“Totals” column of Parts II and III, for each

business within the United States. If the

Schedule K-1 (Form 1065), line 1

line item, enter the sum for all directly

partnership interest is not reported on

corresponds to the information reported

owned partnership interests, including

Schedule L, the distributive share of

on Schedule K-1 (Form 1065-B), box 9

those interests reported on attached

partnership expenses allocable to the

using code A1.

sheets.

corporation's distributive share of ECI is

Schedule K-1 (Form 1065), line 2

included on Schedule H (Form 1120-F) in

Entities treated as partnerships for tax

corresponds to the information reported

Parts I and II. See the Instructions for

purposes include Limited Liability

on Schedule K-1 (Form 1065-B), box 9

Schedule H (Form 1120-F).

Partnerships (LLPs) and Limited Liability

using code B1.

Companies (LLCs) that are not classified

Schedule K-1 (Form 1065), line 3

Schedule M-3 (Form 1120-F), Part II.

as corporations for federal income tax

corresponds to the information reported

The corporation's distributive share of

purposes and may be domestic or foreign.

on Schedule K-1 (Form 1065-B), box 9

partnership income or loss may be

Do not include any interest in any entity

using code C1.

reported on Schedule M-3 (Form 1120-F),

treated as a disregarded entity as

Part II, line 9 (domestic partnerships) and

Also note that other interest expense

described under Regulations section

line 10 (certain foreign partnerships) in

reported on Schedule K-1 (Form 1065),

301.7701-2(c)(2).

accordance with the corporation's

lines 13 and 18 corresponds to the

reporting on its applicable financial

information reported on Schedule K-1

Column (d). With respect to each

statements for Schedule M-3 (Form

(Form 1065-B), box 9 using code M-2

partnership interest, check the “Yes” box if

1120-F) purposes. See the Instructions for

(nondeductible expenses) and/or code U

the foreign corporation's distributive share

Schedule M-3 (Form 1120-F), Part II, lines

(other information).

is ECI, or treated as ECI, in whole or in

9 and 10 for the specific reporting

part, with a U.S. trade or business

requirements.

determined under section 875.

-2-

Instructions For Schedule P (Form 1120-F) - List Of Foreign Partner Interests In Partnerships - 2012 Page 2

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