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code, if any. Do not abbreviate the

For these purposes, the rules of

Schedule F

country name.

section 958(a) (relating to “direct and

Use Schedule F to report a summary

indirect ownership”) apply.

Identifying Numbers

balance sheet for the FDE computed and

translated into U.S. dollars in accordance

Each filer of Form 8858 that is required

Use the following instruction to complete

with U.S. GAAP.

to file an organizational chart with respect

lines 1b, 3c, 4c, and the entry space at

to more than one FDE may satisfy this

the top of page 1 of the form for the filer’s

Special rule for DASTM. If the FDE

requirement by filing a single

identifying number. The identifying

uses DASTM, Schedule F should be

organizational chart that includes the

number of an individual is his or her social

prepared and translated into U.S. dollars

required information with respect to all

security number (SSN). The identifying

according to Regulations section

FDEs.

number of all others is their employer

1.985-3(d), rather than U.S. GAAP.

identification number (EIN).

Schedule G

Schedule C

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

person filing Form 8858 and is a member

Use Schedule C to report a summary

Question 3

of a consolidated group, see Person

income statement for the FDE computed

Filing This Return on page 2.

If the tax owner of the FDE is claiming a

in the FDE’s functional currency in

section 165 loss with respect to worthless

accordance with U.S. generally accepted

Functional Currency

stock or with respect to certain

accounting principles (GAAP). Enter in

Use the following instruction to complete

obligations, see Regulations section

the U.S. dollar column each line item

lines 1i, 3e, and 4d.

1.6011-4 for information relating to a

functional currency amount translated into

disclosure statement that must be

Enter the entity’s functional currency.

dollars using U.S. GAAP translation rules.

attached to Form 8858 if certain

If the FDE does not maintain U.S. GAAP

See sections 985 and 989, and

requirements are met.

income statements in U.S. dollars, you

Regulations sections 1.985-1(a) through

can use the average exchange rate as

Question 4

determined under section 989(b). The

determining the functional currency of a

If the FDE is not owned directly or

rate used should be the rate stated on

qualified business unit (QBU) and the

indirectly by a domestic corporation or the

line 7, Schedule H. If you choose to use

definition of a QBU.

FDE did not incur an NOL for the year,

the average exchange rate rather than

please write “N/A” across the “Yes/No”

Hyperinflationary exception. An entity

the U.S. GAAP translation rules, check

entry spaces for line 4 to indicate that the

that otherwise would be required to use a

the box above line 1 on Schedule C.

question is not applicable. Otherwise, if

hyperinflationary currency as its functional

you are checking the “Yes” box, you may

currency must use the U.S. dollar as its

Special rules for DASTM. If the FDE

need to attach an elective relief

functional currency and compute income

uses DASTM, the functional currency

agreement and/or an annual certification

or loss or earnings and profits using the

column should reflect local

as provided in Regulations section

U.S. dollar approximate separate

hyperinflationary currency amounts

1.1503-2(g)(2).

transactions method of accounting

computed in accordance with U.S. GAAP.

(DASTM) under the special rules of

The U.S. dollar column should reflect

Schedule H

Regulations section 1.985-3. See

such amounts translated into dollars

Regulations section 1.985-1(b)(2).

Use Schedule H to report the FDE’s

under U.S. GAAP translation rules.

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

Differences between this U.S. dollar

Line 1h — Principal Business

tax owner is a CFC) or taxable income (if

GAAP column and the U.S. dollar income

Activity

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

or loss figured for tax purposes under

Generally, enter the amounts on lines 1

Enter a brief description of the FDE’s

Regulations section 1.985-3(c) should be

through 6 in functional currency.

principal business activity.

accounted for on Schedule H. See

Schedule H, Special rules for DASTM,

Special rules for DASTM. If the FDE

below.

uses DASTM, enter on line 1 the dollar

Line 3b

GAAP income or (loss) from line 8 of

If the tax owner is a CFC, enter the

Line 7. Include on line 7, adjustments for

Schedule C. Enter on lines 2 and 3 the

annual accounting period covered by

extraordinary items, prior period

adjustments made in figuring current E&P

Form 5471 (as described in Regulations

adjustments, and the provision for

or taxable income for U.S. tax purposes.

section 1.6038-2(e)). If the tax owner is a

income, war profits, and excess profits

Report these amounts in U.S. dollars.

CFP, enter the annual accounting period

taxes deducted in accordance with U.S.

Enter on line 5 the DASTM gain or loss

covered by Form 8865 (as described in

GAAP. The terms “extraordinary items”

figured under Regulations section

Regulations section 1.6038-3(f)).

and “prior period adjustments” have the

1.985-3(d).

same meaning given to them by U.S.

Line 5

Lines 2 and 3. Certain adjustments

GAAP (see Opinion No. 30 of the

must be made to the FDE’s line 1 net

You must attach an organizational chart

Accounting Principles Board and

book income or (loss) to determine its

that includes the following information

Statement No. 16 of the Financial

current E&P or taxable income. The

with respect to the chain of ownership

Accounting Standards Board).

adjustments may include those needed to

between the tax owner and the FDE and

conform the foreign book income to U.S.

the chain of ownership between the FDE

Important: Differences between this

GAAP and to U.S. tax accounting

and all entities in which the FDE has a

functional currency amount and the

principles. If the FDE’s books are

10% or more direct or indirect interest:

amount of taxes that reduce E&P (in the

maintained in functional currency in

•

case of an FDE of a CFC) or are

The name and percentage of

accordance with U.S. GAAP, enter on line

deductible in computing U.S. taxable

ownership of all entities in the chain of

1 the functional currency GAAP income or

income (in the case of an FDE of a U.S.

ownership, including partnerships and

(loss) from line 8 of Schedule C, rather

person or a CFP) should be accounted for

entities disregarded as separate from

than starting with foreign book income,

on line 2 or 3 of Schedule H.

their owners.

and show GAAP-to-tax adjustments on

•

The FDE’s position in the chain of

lines 2 and 3.

Schedule C-1

ownership.

•

The adjustments may include the

The tax classification of all entities in

Complete a separate Schedule C-1 for

following:

the chain of ownership (see Form 8832

each recipient that has a functional

•

instructions for tax classification rules and

currency that is different than the

Capital gains and losses.

•

related definitions).

functional currency of the FDE. See

Depreciation, amortization, and

•

The country under whose law each

section 987(3) for rules relating to branch

depletion.

•

entity is organized.

remittances.

Investment or incentive allowance.

-3-

Instructions For Form 8858 - Information Return Of U.s. Persons With Respect To Foreign Disregarded Entities Page 3

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