Instructions For Schedule H (Form 1120-F) - 2017 (Page 3 of 6) in pdf

included on lines 8 and 9). For

amount of the deductions entered on

Lines 8 through 10. The amounts

example, if a banking corporation

line 7 that is not definitely related

reported on lines 8 through 10 are

conducts global banking operations

solely to the corporation's ECI or

deductions that are definitely related

through branch offices (including

non-ECI. The amount on line 13 is

to non-ECI under Regulations

through disregarded entities) in

subject to apportionment under

sections 1.861-8 and 1.861-17 and

locations outside the corporation's

Regulations sections 1.861-8 and

Temporary Regulations section

home country, the home office

1.861-17 and Temporary Regulations

1.861-8T. If the corporation has

deductions included on line 7 that are

section 1.861-8T on Part II, line 16.

deductions included on line 7 that are

definitely related to non-ECI booked in

definitely related and allocable to ECI

Line 14. If the corporation reports

those locations are reportable on

that is exempt from tax under the

expenses and deductions in Part I in

line 10. These deductions include

Code or an income tax treaty, the

the corporation's foreign functional

home office deductions definitely

deductions should be treated as

currency, enter the average exchange

related to non-ECI of disregarded

allocable to non-ECI for purposes of

rate that is used to convert those

entities, whether or not the balance

Schedule H and included in the

deductions to U.S. dollars for

sheet from such entity is reportable on

amounts reported on lines 8 through

purposes of lines 15 and 17. The

Schedule L of Form 1120-F. (For

10.

exchange rate must be rounded to at

corporations other than banks, such

least five places.

Line 8. Enter on line 8 deductions

non-ECI may be reflected as income

included on line 7 that are definitely

from includible entities on

Note. You must round the result to

related to non-ECI received from

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

more than five places if failure to do

subsidiaries (other than disregarded

line 5. Foreign banks record such

so would materially distort the

entities whose income and deductions

non-ECI on Schedule M-3 (Form

exchange rate or the equivalent

are treated as income and deductions

1120-F), Part I, line 5, only if the

amount of U.S. dollars.

of the corporation filing Form 1120-F).

entity's sets of books are reportable

If the corporation reports amounts

See, for example, Regulations section

on Form 1120-F, Schedule L.) See

in Part I in U.S. dollars, leave line 14

1.861-8(e)(4)(ii) and Regulations

the Instructions for Schedule M-3

blank.

section 1.861-17 (relating to treatment

(Form 1120-F), Part I.

of stewardship expenses attributable

Line 15. Enter on line 15 the amount

Line 11. Enter on line 11 the portion

to dividends and research and

on line 13, converted if necessary to

of the deductions included on line 7

experimentation expenses).

U.S. dollars. If the amount on line 13

that is definitely related to ECI under

is stated in the corporation's foreign

Line 9. Enter on line 9 deductions

Regulations sections 1.861-8 and

functional currency, divide line 13 by

included on line 7 (other than amounts

1.861-17 and Temporary Regulations

the line 14 exchange rate and enter

included on line 8) that are definitely

section 1.861-8T. Deductions

the result on line 15.

related under Regulations sections

definitely related to ECI may include

1.861-8 and 1.861-17 and Temporary

Line 16. Enter on line 16 the amount

specifically identifiable personnel and

Regulations section 1.861-8T to

of deductions included on line 15 that

other associated costs incurred in the

non-ECI of the corporation that is

is allocated and apportioned to ECI

home office with respect to persons

booked in the corporation's home

under Regulations sections 1.861-8

who work on the evaluation and

office and in other locations in the

and 1.861-17 and Temporary

approval of ECI-producing activities of

corporation's home country. For

Regulations section 1.861-8T. Attach

the corporation's trade or business

example, line 9 includes deductions

a statement describing the

within the United States (e.g.,

included on line 7 that are definitely

specifically identifiable home office

apportionment methods used,

related to non-ECI of a banking

deductions incurred for the evaluation

identifying the numerator and

corporation that is booked in the

and approval of U.S. loans to

denominator of any ratio-based

corporation's home office and in its

method, and listing the amount

customers negotiated and solicited by

retail banking branches in the

apportioned under each method to

the corporation's U.S. branch office

corporation's home country. The

ECI.

where a banking, financing, or similar

amount of any inter-office or

business is carried on). Also include

Line 17. Enter on line 17 the amount

interbranch charges from the home

on line 11 deductible research and

entered on line 11, converted if

office to various locations and

experimentation expenditures that are

necessary to U.S. dollars. If the

departments recorded on the home

definitely related to ECI under

amount on line 11 is stated in the

office books as home office “service”

Regulations section 1.861-17 and

corporation's foreign functional

fees for internal management or home

deductible charitable contributions

currency, divide line 11 by the line 14

office tax accounting purposes (which

that are included on line 7.

exchange rate and enter the result on

amounts are eliminated on line 2) is

line 17.

Part II – Home Office

not determinative of the amount of the

Line 18. Add lines 16 and 17 and

home office's deductible expense that

Deductible Expenses

enter the total on line 18. The amount

is definitely related to non-ECI.

Allocated and Apportioned

on line 18 is the total amount of

Line 10. Enter on line 10 all other

to ECI

deductible expenses reported on the

deductions included on line 7 that are

home office books that is allocated

Line 13. Subtract line 12 from line 7

definitely related solely to non-ECI of

and apportioned to ECI under

and enter the difference on line 13.

the corporation (other than amounts

Regulations sections 1.861-8 and

The amount on line 13 is the residual

Instructions for Schedule H (Form 1120-F)

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Instructions For Schedule H (Form 1120-F) - 2017 Page 3

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