Instructions For Schedule H (Form 1120-F) - 2016 (Page 3 of 6) in pdf

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 in line 7 that are

definitely related to non-ECI booked in

Line 14. If the corporation reports

definitely related and allocable to ECI

those locations are reportable on

expenses and deductions in Part I in

that is exempt from tax under the

line 10. These deductions include

the corporation's foreign functional

Code or an income tax treaty, the

home office deductions definitely

currency, enter the average exchange

deductions should be treated as

related to non-ECI of disregarded

rate that is used to convert those

allocable to non-ECI for purposes of

entities, whether or not the balance

deductions to U.S. dollars for

Schedule H and included in the

sheet from such entity is reportable on

purposes of lines 15 and 17. The

amounts reported on lines 8 through

Schedule L of Form 1120-F. (For

exchange rate must be rounded to at

10.

corporations other than banks, such

least five places.

non-ECI may be reflected as income

Line 8. Enter on line 8 deductions

from includible entities on

Note. You must round the result to

included on line 7 that are definitely

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

more than five places if failure to do

related to non-ECI received from

line 5. Foreign banks record such

so would materially distort the

subsidiaries (other than disregarded

non-ECI on Schedule M-3 (Form

exchange rate or the equivalent

entities whose income and deductions

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

amount of U.S. dollars.

are treated as income and deductions

entity's sets of books are reportable

of the corporation filing Form 1120-F).

If the corporation reports amounts

on Form 1120-F, Schedule L.) See

See, for example, Regulations section

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

the Instructions for Schedule M-3

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

blank.

(Form 1120-F), Part I.

section 1.861-17 (relating to treatment

Line 15. Enter on line 15 the amount

Line 11. Enter on line 11 the portion

of stewardship expenses attributable

on line 13, converted if necessary to

of the deductions included on line 7

to dividends and research and

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

that is definitely related to ECI under

experimentation expenses).

is stated in the corporation's foreign

Regulations sections 1.861-8 and

functional currency, divide line 13 by

Line 9. Enter on line 9 deductions

1.861-17 and Temporary Regulations

the line 14 exchange rate and enter

included on line 7 (other than amounts

section 1.861-8T. Deductions

the result on line 15.

included on line 8) that are definitely

definitely related to ECI may include

related under Regulations sections

specifically identifiable personnel and

Line 16. Enter on line 16 the amount

1.861-8 and 1.861-17 and Temporary

other associated costs incurred in the

of deductions included on line 15 that

Regulations section 1.861-8T to

home office with respect to persons

is allocated and apportioned to ECI

non-ECI of the corporation that is

under Regulations sections 1.861-8

who work on the evaluation and

booked in the corporation's home

and 1.861-17 and Temporary

approval of ECI-producing activities of

office and in other locations in the

Regulations section 1.861-8T. Attach

the corporation's trade or business

corporation's home country. For

a statement describing the

within the United States (e.g.,

example, line 9 includes deductions

apportionment methods used,

specifically identifiable home office

included on line 7 that are definitely

identifying the numerator and

deductions incurred for the evaluation

related to non-ECI of a banking

denominator of any ratio-based

and approval of U.S. loans to

corporation that is booked in the

customers negotiated and solicited by

method, and listing the amount

corporation's home office and in its

the corporation's U.S. branch office

apportioned under each method to

retail banking branches in the

where a banking, financing, or similar

ECI.

corporation's home country. The

business is carried on). Also include

Line 17. Enter on line 17 the amount

amount of any inter-office or

on line 11 deductible research and

entered on line 11, converted if

interbranch charges from the home

experimentation expenditures that are

necessary to U.S. dollars. If the

office to various locations and

definitely related to ECI under

amount on line 11 is stated in the

departments recorded on the home

Regulations section 1.861-17 and

corporation's foreign functional

office books as home office “service”

deductible charitable contributions

currency, divide line 11 by the line 14

fees for internal management or home

that are included on line 7.

exchange rate and enter the result on

office tax accounting purposes (which

line 17.

amounts are eliminated on line 2) is

Part II – Home Office

not determinative of the amount of the

Line 18. Add lines 16 and 17 and

Deductible Expenses

home office's deductible expense that

enter the total on line 18. The amount

Allocated and Apportioned

is definitely related to non-ECI.

on line 18 is the total amount of

to ECI

deductible expenses reported on the

Line 10. Enter on line 10 all other

home office books that is allocated

deductions included on line 7 that are

Line 13. Subtract line 12 from line 7

and apportioned to ECI under

definitely related solely to non-ECI of

and enter the difference on line 13.

Regulations sections 1.861-8 and

the corporation (other than amounts

The amount on line 13 is the residual

1.861-17 and Temporary Regulations

included on lines 8 and 9). For

amount of the deductions entered on

section 1.861-8T.

example, if a banking corporation

line 7 that is not definitely related

conducts global banking operations

solely to the corporation's ECI or

Instructions for Schedule H (Form 1120-F)

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Instructions For Schedule H (Form 1120-F) - 2016 Page 3

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