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2013

Department of the Treasury

Internal Revenue Service

Instructions for Schedule P

(Form 1120-F)

List of Foreign Partner Interests in Partnerships

interest expense allocation computations

partner for the tax year on Form 8805,

Section references are to the Internal Revenue

Code unless otherwise noted.

reported on Schedule I (Form 1120-F).

Foreign Partner's Information Statement of

Section 1446 Withholding Tax. If a

What's New

Who Must Complete

partnership is required to report ECI on

Form 8805 to a foreign corporate partner,

Schedule P

New line 6. Line 6 was added to Part II of

the corporation must reconcile its entire

the schedule requesting net income (loss)

A foreign corporation that is directly or

distributive share of income and expenses

reported on Schedule K-1, other than on

indirectly engaged in trade or business

reported on Schedule K-1 (Form 1065)

lines 1 through 3.

within the United States is required to file

from such partnership, instead of Form

Schedule P (Form 1120-F) for all

8805 and report it on Schedule P (Form

General Instructions

directly-owned partnership interests that

1120-F).

have ECI, or expenses allocable to ECI,

included in its distributive share of income

Exceptions from Filing

Future Developments

reported to the corporation on

Schedule P

For the latest information about

Schedule K-1 (Form 1065). If the foreign

developments related to Schedule P

corporation treats any of its distributive

Do not file Schedule P if the corporation

(Form 1120-F) and its instructions, such

share of partnership net income or loss

does not have any ECI, or expenses

as legislation enacted after they were

from a partnership that is not engaged in

allocable to ECI, from all directly owned

published, go to

trade or business within the United States

partnership interests. A foreign

as ECI with another trade or business of

corporation that has ECI reported to it from

Purpose of Schedule

the corporation, the corporation's entire

a partnership is not required to file

distributive share of items of income and

Schedule P (Form 1120-F) if none of the

Schedule P (Form 1120-F) is used to

expense from any such partnership must

corporation's business profits including its

identify and reconcile the foreign

also be reconciled between ECI and

ECI from the partnership are attributable to

corporation's directly held partnership

non-ECI and reported on Schedule P.

a U.S. permanent establishment pursuant

interests with the distributive shares of

to an applicable income tax treaty and the

partnership effectively connected income

A foreign corporation may be engaged

corporation files a protective tax return

(ECI) and the foreign corporation's

in a trade or business within the United

under Regulations section 1.882-4(a)(3)

effectively connected outside tax basis in

States either directly through its own

(vi).

each interest. Part I is used to identify all

non-partnership related activities or

partnership interests the foreign

indirectly, including through the activities

Protective election on Schedule P.

corporation directly owns that give rise to

of one or more partnerships in which the

See Protective election, later, for

a distributive share of income or loss that

instructions for making a protective

corporation owns a partnership interest. In

is effectively connected with a trade or

partnership outside basis apportionment

addition, if a corporation owns an interest

business within the United States of the

election with a protective return filing of

in a partnership that is itself deemed

foreign corporation. Part II is used to

engaged in trade or business within the

Form 1120-F.

reconcile the foreign corporation's

United States as a result of the

distributive share of ECI and allocable

When and Where To File

partnership's own directly or indirectly

expenses with the total income and

owned interest in another partnership

Attach Schedule P (Form 1120-F) to the

expenses reported to it on Schedule K-1

(“lower tier partnership”), the corporation

foreign corporation's Form 1120-F income

(Form 1065), Partner's Share of Income,

is also treated as engaged in trade or

tax return. See the Instructions for Form

Deductions, Credits, etc. Part III is used as

business as a result of its direct and

1120-F for the time, place, and manner for

follows: The corporation's outside basis in

indirect ownership of such interests. See

filing the foreign corporation's income tax

its directly-held partnership interests that

section 875(1). The foreign corporation's

return.

include ECI in the corporation's distributive

distributive share of income from a

share is apportioned between ECI and

domestic partnership and certain foreign

Other Forms and

non-ECI under Regulations section

partnership interests is reported to the

Schedules Related to

1.884-1(d)(3) to determine the average

partner on Schedule K-1 (Form 1065),

value treated as a U.S. asset for interest

Schedule P

together with the corporation's allocable

expense allocation purposes under

share of partnership liabilities. If the

Regulations section 1.882-5. The

Form 1120-F, Section II. Gross ECI

partnership is engaged in trade or

apportionment of the outside basis to ECI

includible in the corporation's distributive

business directly or indirectly through a

as of the current and prior tax year end is

share is reportable on Form 1120-F,

lower-tier partnership and has ECI to

also taken into account in determining the

Section II, lines 3 through 10, in the

report in the distributive share of a foreign

average apportioned value included in the

applicable category of income. Expenses

partner, it is responsible for making

corporation's U.S. assets for purposes of

(other than interest expense) that are

quarterly installment payments of

computing the branch profits tax. The U.S.

deductions allocated and apportioned on

withholding tax under section 1446 on the

assets, and partner share of booked

Schedule P (Form 1120-F) to the partner's

foreign partner's distributive share of

liabilities and interest expense of the

ECI are also reported on Form 1120-F,

estimated ECI under section 1446 and

partnership are also coordinated with the

Section II.

reporting the amounts to the foreign

Oct 03, 2013

Cat. No. 50608W

Form 1120-F - Instructions For Schedule P - List Of Foreign Partner Interests In Partnerships - 2013

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