Instructions For Schedule H (Form 1120-F) - 2007 (Page 3 of 6) in pdf

Temporary Regulations section

amount of the deductions entered on

exchange rate or the equivalent

1.861-8T to non-ECI of the

line 7 that, under Regulations

amount of U.S. dollars.

corporation that is booked in the

sections 1.861-8 and 1.861-17 and

If the corporation reports amounts

corporation’s home office and in other

Temporary Regulations section

in Part I in U.S. dollars, leave line 15

locations in the corporation’s home

1.861-8T, is definitely related to ECI

blank.

country. For example, line 9 includes

or is apportioned between the

deductions included on line 7 that are

corporation’s ECI and non-ECI.

Line 16. Enter on line 16 the amount

definitely related to non-ECI of a

on line 14, converted if necessary to

Line 13. Enter on line 13 the portion

banking corporation that is booked in

U.S. dollars. If the amount on line 14

of the deductions included on line 12

the corporation’s home office and in

is stated in the corporation’s foreign

that is definitely related to ECI under

its retail banking branches in the

functional currency, multiply line 14

Regulations sections 1.861-8 and

by the line 15 exchange rate and

corporation’s home country. The

1.861-17 and Temporary Regulations

amount of any inter-office or

enter the result on line 16.

section 1.861-8T. Deductions

interbranch charges from the home

Line 17. Enter on line 17 the amount

definitely related to ECI may include

office to various locations and

of deductions included on line 16 that

specifically identifiable personnel and

departments recorded on the home

is apportioned to ECI under

other associated costs incurred in the

office books as home office “service”

Regulations sections 1.861-8 and

home office with respect to persons

fees for internal management or

1.861-17 and Temporary Regulations

who work on the evaluation and

home office tax accounting purposes

section 1.861-8T. Attach a schedule

approval of ECI-producing activities

(which amounts are eliminated on line

describing the apportionment

of the corporation’s trade or business

2) is not determinative of the amount

methods used, identifying the

within the United States (e.g.,

of the home office’s deductible

numerator and denominator of any

specifically identifiable home office

expense that is definitely related to

ratio-based method, and listing the

deductions incurred for the evaluation

non-ECI.

amount apportioned under each

and approval of U.S. loans to

Line 10. Enter on line 10,

method to ECI.

customers negotiated and solicited by

deductions included on line 7 (other

the corporation’s U.S. branch office

Line 18. Enter on line 18 the amount

than amounts included on line 8) that

where a banking, financing or similar

entered on line 13, converted if

are definitely related to non-ECI of

business is carried on). Also include

necessary to U.S. dollars. If the

the corporation that is booked in

on line 13 deductible research and

amount on line 13 is stated in the

locations outside the corporation’s

experimentation expenditures that are

corporation’s foreign functional

home country (including the United

definitely related to ECI under

currency, multiply line 13 by the line

States). For example, if a banking

Regulations section 1.861-17 and

15 exchange rate and enter the result

corporation conducts global banking

deductible charitable contributions

on line 18.

operations through branch offices

that are included on line 7.

Line 19. Add lines 17 and 18 and

(including through disregarded

Line 14. Subtract line 13 from line

enter the total on line 19. The amount

entities) in locations outside the

12 and enter the difference on line

on line 19 is the total amount of

corporation’s home country, the home

14. The amount on line 14 is the

deductible expenses reported on the

office deductions included on line 7

residual amount of the deductions

home office books that is allocated

that are definitely related to non-ECI

entered on line 7 that is not definitely

and apportioned to ECI under

booked in those locations are

related solely to the corporation’s ECI

Regulations sections 1.861-8 and

reportable on line 10. These

or non-ECI. The amount on line 14 is

1.861-17 and Temporary Regulations

deductions include home office

subject to apportionment under

section 1.861-8T.

deductions definitely related to

Regulations sections 1.861-8 and

non-ECI of disregarded entities,

Line 20. Enter on line 20, in U.S.

1.861-17 and Temporary Regulations

whether or not the balance sheet

dollars, the amount of deductible

section 1.861-8T on Part II, line 17.

from such entity is reportable on

expenses allocated and apportioned

Schedule L of Form 1120-F. (For

to ECI under Regulations sections

corporations other than banks, such

Part II – Home Office

1.861-8 and 1.861-17 and Temporary

non-ECI may be reflected as income

Regulations section 1.861-8T that is

Deductions Indirectly

from includable entities on Schedule

recorded on non-Schedule L books

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

Allocated and

and records of foreign locations other

Foreign banks record such non-ECI

than those of the home office. Attach

Apportioned to ECI and

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

a schedule listing the amount of

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

deductions allocated and apportioned

Non-ECI

books are reportable on Form

to ECI from each location.

1120-F, Schedule L.) See instructions

Line 15. If the corporation reports

Line 21. Add lines 19 and 20 and

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

expenses and deductions in Part I in

enter the total on line 21. The amount

the corporation’s foreign functional

entered on line 21 is the total amount

currency, enter the average

Line 11. Add lines 8, 9, and 10 and

of deductible expenses reported on

exchange rate that is used to convert

enter the total on line 11. The amount

the corporation’s non-Schedule L

those deductions to U.S. dollars for

on line 11 constitutes the total portion

books that is allocated and

purposes of lines 16 and 18. The

of the deductions entered on line 7

apportioned to ECI under Regulations

exchange rate must be rounded to at

that are definitely related solely to the

sections 1.861-8 and 1.861-17 and

least five places.

corporation’s non-ECI.

Temporary Regulations section

Line 12. Subtract line 11 from line 7

Note. You must round the result to

1.861-8T. This amount is also

and enter the difference on line 12.

more than five places if failure to do

reported on Form 1120-F, Section II,

The amount on line 12 is the residual

so would materially distort the

line 26, and, for banks only, on

-3-

Instructions for Schedule H (Form 1120-F)

Instructions For Schedule H (Form 1120-F) - 2007 Page 3

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