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Question 5c

identified on Schedule M (Form 8858), is

Taxes. See the instructions for

required if no EIN is provided. However,

Schedule C, line 7.

If a separate unit, as defined under Reg.

filers are permitted to provide both an EIN

Attach a separate schedule that lists

1.1503(d)-1(b)(4), incurs a dual

and reference ID number. For more

each applicable adjustment item. For each

consolidated loss after having contributed

information on the reference ID number,

adjustment item, indicate the adjustment

to consolidated taxable income of a group

see the instructions for line 1b(2) of the

amount and whether the amount is a net

in prior years, the dual consolidated loss

Form 8858, earlier.

addition or net subtraction. The separate

may be used to offset income of domestic

schedule should also show two totals, the

affiliates in the year of the dual

Column headings. There are 2 sets of

total net additions amount to be entered

consolidated loss (limited by the amount

column headings above lines 1 through

on line 2, and the total net subtractions

of the separate unit’s prior contribution to

19. The first set of column headings is to

amount to be entered on line 3.

the cumulative consolidated taxable

be used in cases where the tax owner is a

income of the group (“cumulative

CFP. The second set of column headings

Line 5. DASTM gain or (loss), reflecting

is to be used in cases where the tax owner

unrealized exchange gain or loss, should

Reg. 1.1502-21(c).

is a CFC. If you are completing

be entered on line 5 only for FDEs that use

Schedule M (Form 8858) for an FDE for

DASTM.

Schedule H

which the tax owner is a CFP, check the

Line 7. Enter the line 6 functional

box for CFPs and complete lines 1

Use Schedule H to report the FDE's

currency amount translated into U.S.

through 19 using the headings in columns

current earnings and profits (E&P) (if the

dollars at the average exchange rate for

(a) through (e) of the CFP set of columns.

tax owner is a CFC) or taxable income (if

the FDE's tax year. See section 989(b).

If you are completing Schedule M (Form

the tax owner is a U.S. person or a CFP).

Report the exchange rate using the

8858) for an FDE for which the tax owner

Generally, enter the amounts on lines 1

“divide-by convention” specified under

is a CFC, check the box for CFCs and

through 6 in functional currency.

Reporting Exchange Rates on Form 8858,

complete lines 1 through 19 using the

Special rules for DASTM. If the FDE

earlier. If the FDE uses DASTM, enter on

headings in columns (a) through (f) of the

uses DASTM, enter on line 1 the dollar

line 7 the same amount entered on line 6.

CFC set of columns.

GAAP income or (loss) from line 8 of

Blocked income. The E&P or taxable

Column (e). Use column (e) to report

Schedule C. Enter on lines 2 and 3 the

income of the FDE, as reflected on

transactions between the FDE and any

adjustments made in figuring current E&P

Schedule H, must not be reduced by all or

U.S. person with a 10% or more direct

or taxable income for U.S. tax purposes.

any part of such E&P or taxable income

interest in the CFP or any 10% or more

Report these amounts in U.S. dollars.

that could not have been distributed by the

U.S. shareholder of any corporation

Enter on line 5 the DASTM gain or loss

FDE due to currency or other restrictions

controlling the CFC. If you are a Category

figured under Regulations section

or limitations imposed under the laws of

1 filer of Form 8865, or a Category 4 filer

1.985-3(d).

any foreign country.

of Form 5471, do not report transactions

Lines 2 and 3. Certain adjustments must

between yourself and the FDE under

Schedule M

be made to the FDE's line 1 net book

column (e). Report the transactions only

income or (loss) to determine its current

under column (b).

Important: In translating the amounts

E&P or taxable income. The adjustments

from functional currency to U.S. dollars,

Line 6. Report on line 6 dividends

may include those needed to conform the

use the average exchange rate for the

received by the FDE that were not

foreign book income to U.S. GAAP and to

FDE's tax year. See section 989(b).

previously taxed under subpart F in the

U.S. tax accounting principles. If the FDE's

Report the exchange rate in the entry

current year or in any prior year.

books are maintained in functional

space provided at the top of Schedule M

currency in accordance with U.S. GAAP,

Lines 18 and 19. Report on lines 18 and

(Form 8858) using the “divide-by

enter on line 1 the functional currency

19 the largest outstanding balances during

convention” specified under Reporting

GAAP income or (loss) from line 8 of

the year of gross amounts borrowed from,

Exchange Rates on Form 8858, earlier.

Schedule C, rather than starting with

and gross amounts loaned to, the related

Every U.S. person that is required to

foreign book income, and show

parties described in columns (b) through

file Schedule M (Form 8858) (see Who

GAAP-to-tax adjustments on lines 2 and 3.

(f). Do not enter aggregate cash flows,

Must File, earlier) must file the schedule to

year-end loan balances, average

The adjustments may include the

report the transactions that occurred

balances, or net balances. Do not include

following:

during the FDE's annual accounting period

open account balances resulting from

Capital gains and losses.

ending with or within the U.S. person's tax

sales and purchases reported under other

Depreciation, amortization, and

year.

items listed on Schedule M (Form 8858)

depletion.

If a U.S. corporation is the U.S. person

that arise and are collected in full in the

Investment or incentive allowance.

filing Schedule M (Form 8858) and is a

ordinary course of business.

Charges to statutory reserves.

member of a consolidated group, list the

Inventory adjustments. Inventories must

common parent as the U.S. person filing

be taken into account according to the

Schedule M (Form 8858).

rules of sections 471 (incorporating the

provisions of section 263A) and 472 and

Reference ID number. A reference ID

the related regulations.

number for the foreign disregarded entity

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United

States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to

figure and collect the right amount of tax.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form

displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents

may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential,

as required by section 6103.

Instructions for Form 8858 (Rev. 122012)

Instructions For Form 8858 - Information Return Of U.s. Persons With Respect To Foreign Disregarded Entities - 2012 Page 5

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