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(Form 1065-B), box 9 using code M-2

Schedule K-1 (and is not reportable on

subject to allocation under Regulations

(nondeductible expenses) and/or code U

line 2 of Schedule P).

section 1.882-5.

(other information).

Lines 7 and 8. Other gross income.

Line 15b. Direct interest expense allo-

Lines 1 Through 5. ECI and

Enter on line 7 all other gross income from

cation. On line 15b, enter the amount of

Schedule K-1 (Form 1065) that is not

interest expense included in line 15a that

Non-ECI Reconciliation of

included on lines 1 through 3 of the

is directly allocable to ECI under

Income and Non-Interest

Schedule K-1 (and is not reportable on

Regulations section 1.882-5(a)(1)(ii)(B)

Expenses

line 2 of Schedule P). On line 8, enter the

and the applicable requirements of

amount of gross income from line 7 that is

Temporary Regulations section

Line 1. Net income (loss). Enter on

allocated and apportioned to ECI.

1.861-10T(b) or (c). The amount entered

line 1 the combined total income (loss)

on line 15b is also included on Schedule I

Lines 9 and 10. Other non-interest ex-

from Schedule K-1 (Form 1065), Part III,

(Form 1120-F), line 22.

penses. Enter on line 9 all other

line 1, Ordinary business income (loss);

non-interest expense from Schedule K-1

Line 15c. U.S.-booked interest ex-

line 2, Net rental real estate income (loss);

and line 3, Other net rental income (loss).

(Form 1065) that is not included on lines 1

pense of the partnership. Subtract

through 3 of the Schedule K-1 (and is not

line 15b from line 15a and enter the

Enter the combined amount in the column

reportable on lines 4 and 5 of Schedule P).

amount on line 15c. The portion of this

in Part II which corresponds to the

On line 10, enter the amount of

expense amount that arises from U.S.

partnership listed in Part I. The amount

non-interest expense from line 9 that is

booked liabilities is required to be reported

entered on line 1 is grouped into its gross

income and gross expense components

allocated and apportioned to ECI. Include

on Schedule I (Form 1120-F), line 9,

on line 9 (and line 10 if applicable)

column (b). See Regulations section

for allocation and apportionment to ECI

guaranteed payments made by the

1.882-5(d)(4). A portion of the line 15c

and non-ECI under sections 864(c) and

partnership that are not included on lines 4

amount is also taken into account on Form

882(c). The gross income apportionments

and 5.

1120-F, Section III, Part II, line 8 in

are shown on line 3, and the allocation

and apportionments of non-interest

determining the corporation's branch

Lines 11 and 12. Summary of

interest under Regulations section

expenses shown on line 5 are determined

Gross Income

1.884-4(b).

under Regulations sections 1.861-8 and

1.861-17 and Temporary Regulations

Line 11. Total Gross Income. Enter on

Part III – Foreign Partner's

section 1.861-8T(c). See Regulations

line 11 the sum of the gross income

section 1.861-17 for the allocation and ECI

Average Outside Basis

amounts entered on line 2 and line 7. The

apportionment treatment of research and

amount on line 11 is the total gross

Under Regulations

experimentation expenditures that are

income from Schedule K-1 (Form 1065).

Sections 1.882-5(b) and

included in trade or business income on

Line 12. Total Gross Effectively Con-

line 1 or 3, Schedule K-1, and which are

1.884-1(d)(3)

nected Income. Enter on line 12 the sum

also reportable on Schedule P (Form

Report in Part III the corporation's outside

of the ECI amounts entered on lines 3 and

1120-F), lines 4 and 5.

basis for each partnership interest

8. The amount on line 12 is the total gross

Lines 2 and 3. Gross income. Enter on

identified in Part I of this Schedule P (Form

ECI from Schedule K-1 (Form 1065).

line 2 the total gross income included in

1120-F) for purposes of determining the

Lines 13 Through 15c. Interest

Schedule P (Form 1120-F), line 1. On

amount the corporation includes as a U.S.

line 3, enter the amount of ECI included in

Expense Reconciliation

asset in Step 1 of the interest expense

the gross income reported on line 2. If all

allocation under Regulations section

Enter on line 13 the amount of interest

of the gross income reported on line 2 is

1.882-5. The corporation's outside basis in

expense included in the net income (loss)

ECI, then report the same number on

its partnership interests reported on

on lines 1 through 3 of Schedule K-1

line 3.

Schedule P is determined and adjusted

(Form 1065) and in the net income (loss)

under the rules applicable to the

Lines 4 and 5. Non-interest expense.

reported on line 1 of Schedule P (Form

determination of the corporation's outside

Enter on line 4 the total amount of

1120-F). On line 14, enter the sum of the

basis in the partnership for branch profits

non-interest expense included on line 1.

other interest expense reported on

tax purposes under Regulations section

On line 5, enter the amount of non-interest

Schedule K-1 (Form 1065), lines 13 and

1.884-1(d)(3), except that the amounts

expense included on line 1 that is

18.

entered on lines 16 through 20 are the

allocated and apportioned to gross ECI.

average values rather than the

Include on line 4 (and line 5 if applicable),

Note. If interest expense is included on

determination dates used under the

guaranteed payments made by the

any line of Schedule K-1 (Form 1065)

section 884 regulations for branch profits

partnership that are included in the

other than lines 1, 2, 3, 13, or 18, attach a

tax purposes. If the corporation is not

combined net income (loss) reported on

statement indicating the line the interest is

exempt from the branch profits tax under

line 1. Interest expense included in line 1

included on and reclassify the interest

an applicable income tax treaty, attach a

is subject to allocation under Regulations

expense reported on such other line to

statement showing the determination of

section 1.882-5 and is reported in a

Schedule K-1 (Form 1065), line 13 or

the corporation's outside basis in

separate grouping of the corporation's

line 18, as appropriate, for purposes of

accordance with the requirements of lines

distributive share of all interest expense

reporting the reclassified amount on

16 through 20 for an averaging period that

on Schedule P (Form 1120-F), line 13.

line 14 of Schedule P. The reclassification

shows the apportioned outside basis for

will require an adjustment to such other

Lines 6 Through 10. Other

the beginning and ending determination

line to prevent double counting of total

Gross Income and Other

dates of the corporation's tax year.

expenses.

Non-Interest Expenses

Line 16. Section 705 Outside Basis.

Line 15a. Total interest expense. Add

Enter on line 16 the corporation's average

lines 13 and 14 and enter the result on

Line 6. Net income (loss). Enter on

value of the outside basis (otherwise

line 15a. This amount is the corporation's

line 6 the combined total income (loss)

determined under section 705) of the

total distributive share of interest expense

from Schedule K-1 (Form 1065) that is not

partnership in the column which

from Schedule K-1 (Form 1065) that is

included on lines 1 through 3 of the

Instructions for Schedule P (Form 1120-F) (2013)

-3-

Form 1120-F - Instructions For Schedule P - List Of Foreign Partner Interests In Partnerships - 2013 Page 3

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