Instructions For Schedule H (Form 1120-F) - 2008 (Page 3 of 6) in pdf

subsidiaries (other than disregarded

Foreign banks record such non-ECI

If the corporation reports amounts

entities whose income and

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

in Part I in U.S. dollars, leave line 14

deductions are treated as income and

I, line 5 only if the entity’s sets of

blank.

deductions of the corporation filing

books are reportable on Form

Line 15. Enter on line 15 the amount

Form 1120-F). See, for example,

1120-F, Schedule L.) See instructions

on line 13, converted if necessary to

Temporary Regulations section

for Schedule M-3 (Form 1120-F), Part

U.S. dollars. If the amount on line 13

1.861-8T(e)(4)(ii) and Regulations

is stated in the corporation’s foreign

section 1.861-17 (relating to

Line 11. Enter on line 11 the portion

functional currency, divide line 13 by

treatment of stewardship expenses

of the deductions included on line 7

the line 14 exchange rate and enter

attributable to dividends and research

that is definitely related to ECI under

the result on line 15.

and experimentation expenses).

Regulations sections 1.861-8 and

Line 16. Enter on line 16 the amount

1.861-17 and Temporary Regulations

Line 9. Enter on line 9 deductions

of deductions included on line 15 that

included on line 7 (other than

section 1.861-8T. Deductions

is apportioned to ECI under

amounts included on line 8) that are

definitely related to ECI may include

Regulations sections 1.861-8 and

specifically identifiable personnel and

definitely related under Regulations

1.861-17 and Temporary Regulations

sections 1.861-8 and 1.861-17 and

other associated costs incurred in the

section 1.861-8T. Attach a schedule

Temporary Regulations section

home office with respect to persons

describing the apportionment

1.861-8T to non-ECI of the

who work on the evaluation and

methods used, identifying the

approval of ECI-producing activities

corporation that is booked in the

numerator and denominator of any

corporation’s home office and in other

of the corporation’s trade or business

ratio-based method, and listing the

locations in the corporation’s home

within the United States (e.g.,

amount apportioned under each

country. For example, line 9 includes

specifically identifiable home office

method to ECI.

deductions included on line 7 that are

deductions incurred for the evaluation

definitely related to non-ECI of a

and approval of U.S. loans to

Line 17. Enter on line 17 the amount

banking corporation that is booked in

customers negotiated and solicited by

entered on line 11, converted if

the corporation’s U.S. branch office

the corporation’s home office and in

necessary to U.S. dollars. If the

its retail banking branches in the

where a banking, financing, or similar

amount on line 11 is stated in the

corporation’s home country. The

business is carried on). Also include

corporation’s foreign functional

amount of any inter-office or

on line 11 deductible research and

currency, divide line 11 by the line 14

interbranch charges from the home

experimentation expenditures that are

exchange rate and enter the result on

office to various locations and

definitely related to ECI under

line 17.

departments recorded on the home

Regulations section 1.861-17 and

Line 18. Add lines 16 and 17 and

deductible charitable contributions

office books as home office “service”

enter the total on line 18. The amount

fees for internal management or

that are included on line 7.

on line 18 is the total amount of

home office tax accounting purposes

deductible expenses reported on the

(which amounts are eliminated on line

Part II – Home Office

home office books that is allocated

2) is not determinative of the amount

and apportioned to ECI under

Deductible Expenses

of the home office’s deductible

Regulations sections 1.861-8 and

expense that is definitely related to

Allocated and

1.861-17 and Temporary Regulations

non-ECI.

section 1.861-8T.

Apportioned to ECI

Line 10. Enter on line 10

Line 19. Enter on line 19, in U.S.

deductions included on line 7 (other

Line 13. Subtract line 12 from line 7

dollars, the amount of deductible

than amounts included on line 8) that

and enter the difference on line 13.

expenses allocated and apportioned

are definitely related to non-ECI of

The amount on line 13 is the residual

to ECI under Regulations sections

the corporation that is booked in

amount of the deductions entered on

1.861-8 and 1.861-17 and Temporary

locations outside the corporation’s

line 7 that is not definitely related

Regulations section 1.861-8T that is

home country (including the United

solely to the corporation’s ECI or

recorded on non-Schedule L books

States). For example, if a banking

non-ECI. The amount on line 13 is

and records of foreign locations other

corporation conducts global banking

subject to apportionment under

than those of the home office. Attach

operations through branch offices

Regulations sections 1.861-8 and

a schedule listing the amount of

(including through disregarded

1.861-17 and Temporary Regulations

deductions allocated and apportioned

entities) in locations outside the

section 1.861-8T on Part II, line 16.

to ECI from each location.

corporation’s home country, the home

Line 14. If the corporation reports

office deductions included on line 7

Line 20. Add lines 18 and 19 and

expenses and deductions in Part I in

that are definitely related to non-ECI

enter the total on line 20. The amount

the corporation’s foreign functional

booked in those locations are

entered on line 20 is the total amount

currency, enter the average

reportable on line 10. These

of deductible expenses reported on

exchange rate that is used to convert

deductions include home office

the corporation’s non-Schedule L

those deductions to U.S. dollars for

deductions definitely related to

books that is allocated and

purposes of lines 15 and 17. The

non-ECI of disregarded entities,

apportioned to ECI under Regulations

exchange rate must be rounded to at

whether or not the balance sheet

sections 1.861-8 and 1.861-17 and

least five places.

from such entity is reportable on

Temporary Regulations section

Schedule L of Form 1120-F. (For

Note. You must round the result to

1.861-8T. This amount is also

corporations other than banks, such

more than five places if failure to do

reported on Form 1120-F, Section II,

non-ECI may be reflected as income

so would materially distort the

line 26, and, for banks only, on

from includible entities on Schedule

exchange rate or the equivalent

Schedule M-3 (Form 1120-F), Part III,

M-3 (Form 1120-F), Part I, line 5.

amount of U.S. dollars.

line 31.

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Instructions for Schedule H (Form 1120-F)

Instructions For Schedule H (Form 1120-F) - 2008 Page 3

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