Instructions For Schedule H (Form 1120-F) - 2017 (Page 4 of 6) in pdf

1.861-17 and Temporary Regulations

deductions for the current tax year

corporation should instead enter the

section 1.861-8T.

that was not used in the prior year.

gross income amount from

Schedule M-3, Part II, line 25, column

Line 19. Enter on line 19, in U.S.

Interbranch amounts in Part IV.

(e) (plus any additional gross income

dollars, the amount of deductible

Check the box to indicate if an

amounts included on line 27, column

expenses allocated and apportioned

expense in respect of any amount

(a)), but only if there are no

to ECI under Regulations sections

included in Part II, line 20, in the home

permanent differences for tax-exempt

1.861-8 and 1.861-17 and Temporary

office allocation and apportionment

income under section 103 or under a

Regulations section 1.861-8T that is

was recorded on the Schedule L

treaty (e.g., force of attraction income

recorded on non-Schedule L books

books that are used to complete Part

not attributable to a U.S. permanent

and records of foreign locations other

IV of Schedule H. Include the full

establishment) that would otherwise

than those of the home office. Attach

amount of the interbranch charge in

be removed in column (c). If the

a statement listing the amount of

Part IV, line 35.

corporation is not required to and

deductions allocated and apportioned

Lines 21 Through 23. Gross

does not report worldwide gross

to ECI from each location.

income in column (a) of Schedule M-3

Income, Asset, and Number of

Line 20. Add lines 18 and 19 and

(Form 1120-F), enter the worldwide

Personnel Ratios

enter the total on line 20. The amount

gross income from any other

The corporation must complete the

entered on line 20 is the total amount

reasonable source. Reasonable

gross income ratio for line 21 whether

of deductible expenses reported on

sources include worldwide income

or not it used such method to allocate

the corporation's non-Schedule L

statements used to report allocations

and apportion deductions in Parts I

books that is allocated and

of income or capital to other

and II. If the corporation used the

apportioned to ECI under Regulations

regulatory or non-federal tax

asset or number of personnel method

sections 1.861-8 and 1.861-17 and

authorities or the worldwide income

(whether separately or as

Temporary Regulations section

statements that would be used if the

components of a multi-factor method),

1.861-8T. This amount is also

corporation was required to report

it must report the attributes on lines 22

reported on Form 1120-F, Section II,

worldwide gross income in column (a)

and 23. If the corporation did not use

line 26, and, for banks only, on

of Schedule M-3 (Form 1120-F).

either the asset or the personnel

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

Worldwide gross income is worldwide

method to allocate and apportion

line 31.

gross receipts less only cost of goods

deductions for the year, then, except

sold, if applicable.

Part III – Allocation and

as provided for worldwide assets

Line 22a. Enter on line 22a the

reported on line 22b, only the

Apportionment Methods

average assets reported on

numerators of each method must be

and Financial Records

Schedule I (Form 1120-F), line 5,

reported on lines 22 and 23. See the

Used to Complete Parts I

column (d). These are the average

instructions for line 22b for disclosure

U.S. assets included in the

of the asset ratio by corporations that

and II

corporation's Regulations section

used the actual ratio to allocate

Part III is used to identify the income,

1.882-5 interest expense allocation. If

interest expense under Regulations

asset, and personnel attributes of the

the corporation does not have any

section 1.882-5.

U.S. trade or business and to report

interest expense for the year and

Line 21a. Enter on line 21a the

the methodologies and financial

does not file Schedule I (Form

corporation's gross ECI reportable on

records used to determine the amount

1120-F), enter the average assets

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

of the deductions that are allocated

derived from the beginning and

line 25, column (e), plus any

and apportioned to ECI in Parts I and

ending U.S. assets included in the

II of Schedule H. The corporation's

additional gross income amounts

computation of U.S. net equity on

ratios of effectively connected gross

reportable on line 27, column (e). If

Form 1120-F, Section III, lines 4a and

income, U.S. assets, and U.S.

the corporation is not required to and

4b. If the corporation is exempt from

does not file Schedule M-3 (Form

personnel to worldwide gross income,

the branch profits tax under an

1120-F) for the tax year, enter the

worldwide assets, and worldwide

applicable income tax treaty and is not

amount of gross income from Form

personnel are reported on lines 21

required to complete Form 1120-F,

1120-F, Section II, line 11.

through 23. Other ratio-based

Section III, Part I, the average U.S.

methods and any non-ratio-based

Line 21b. Enter on line 21b the

assets should be derived from the

methods the corporation used for the

corporation's worldwide gross income

beginning and ending U.S. assets

tax year to allocate and apportion

stated in U.S. dollars. Corporations

included on Form 1120-F,

deductions to non-ECI on lines 8

other than banks enter the worldwide

Schedule L.

through 10 and to ECI on lines 11, 16,

gross income amount from

Line 22b. If the corporation used the

and 19 are identified in statements

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

worldwide actual ratio under

required by the instructions for lines

line 25, column (a), plus any

Regulations section 1.882-5(c)(2) to

24 and 25.

additional gross income amounts

allocate interest expense to ECI, enter

Check Boxes Above Line 21

included on line 27, column (a).

the amount from Schedule I (Form

However, if the corporation's

1120-F), line 6b. If the corporation did

New methods. Check the box to

worldwide income is effectively

not use the actual ratio, but used a

indicate if the corporation used a

connected to its trade or business

worldwide asset ratio to apportion

method to allocate and apportion

within the United States, the

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Instructions for Schedule H (Form 1120-F)

Instructions For Schedule H (Form 1120-F) - 2017 Page 4

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