2019-40, earlier, for more details. Report current-year taxes allocated and apportioned to the item of gross income reported for each QBU or tested unit as well as the aggregate amount of such foreign taxes allocated and apportioned to each group. Therefore, Schedule I-1 is completed once (for general category income, passive category income, or both). as of the close of each quarter of the tax year. Subtract the sum of line 9b and line 9c from line 9a and enter the result on line 9d. For example, the taxpayer may still be required to complete a Form 1116 or a Form 1118, and/or a Form 5471 (including Schedule J and Schedule P), and separately report passive category income and section 951A category income. See sections 6662(j) and 6664(c) for additional information. If there is a difference between last years ending balance on Schedule J and the amount that should be last years ending balance, taking into account modifications in Schedule J, include the difference on line 1b and attach an explanation for the difference. Such tax is also reported as a negative number on line 10, column (e)(x), of Schedule E1 of CFC2s Form 5471. See Regulations section 1.960-1(d)(2)(ii)(B). Except for columns (a), (b), and (c), which are new this year, if the balance on line 18 of prior year Schedule E-1 was adjusted after the filing of the original prior year Form 5471, such adjustments should be reflected on line 1b. Unrelated section 958(a) U.S. shareholder, unrelated section 958(a) U.S. shareholder, www.currency-iso.org/en/home/tables/table-a1.html, www.currency-iso.org/en/home/tables/tables-a1.html. Enter the net amount of any additional adjustments not included on lines 2a through 2h. If the sum of foreign base company income (determined without regard to section 954(b)(5)) and gross insurance income for the tax year exceeds 70% of gross income for income tax purposes, the entire gross income for the tax year must (subject to the high-tax exception described below, the section 952(b) exclusion, and the deductions to be taken into account under section 954(b)(5)) be treated as foreign base company income or insurance income, whichever is appropriate. As of the date these instructions were revised, section 901(j) applied to Iran, North Korea, Sudan, and Syria. The third quarter of the tax year" field, "1d. Begin by providing the name of the person filling the form and the identifying . Line 9b. Every year, the IRS issues a revenue procedure to provide guidance for filers of computer-generated forms. If this is the case, you do not have to also report these assets on Form 8938, Statement of Specified Foreign Financial Assets. Owns (either directly or indirectly, within the meaning of section 958(a)) any stock of a CFC (as defined in sections 953(c)(1)(B) and 957(b)), unless the foreign corporation has an effective section 953(c)(3)(C) election in place for the tax year. 6038 and 6046, Form 5471 is required to be filed by certain U.S. persons who are officers, directors, or shareholders in certain foreign corporations. An amended 2017 tax return should be filed by or for the U.S. person(s) with respect to which Form 5471 was required and that return should include an amended Form 5471. Taxpayers no longer have the option of entering FOREIGNUS or APPLIED FOR in a column that requests an EIN or reference ID number with respect to a foreign entity. A Category 2 filer does not have to file Form 5471 if: Immediately after a reportable stock acquisition, three or fewer U.S. persons own 95% or more in value of the outstanding stock of the foreign corporation and the U.S. person making the acquisition files a return for the acquisition as a Category 3 filer; or. Enter the appropriate code on line a (above Part I). Subtract line 18d from line 18c" field, "19.Adjusted net foreign base company income. 12/28/2021. In other words, is line 13g, 14d, 15d, 16d, 18d, or 19d of Worksheet A greater than zero? The foreign corporation divides 30,255,400 Yen by 108.8593 to determine the U.S. dollar amount to enter in column (l) of Schedule E, Part I, Section 1, line 1. This column is used to report current tax imposed solely by reason of the receipt of a disregarded payment other than a reattribution payment, and which is therefore either a remittance or a contribution. Report the total of the amounts listed in column (l) on this line 5. PTEP attributable to section 1248 amounts under section 959(e) and reclassified as investments in U.S. property. Report the exchange rate using the divide-by convention specified under Reporting Exchange Rates on Form 5471, earlier. Qualified interest expense is defined in Regs. If a U.S. corporation that owns stock in a foreign corporation is a member of a consolidated group, list the common parent as the U.S. person filing See Schedule B (Form 5713). Enter the amount, if any, of the CFCs gross income or loss taken into account in determining the CFCs subpart F income (as defined in section 952). Persons With Respect to Certain Foreign Corporations . For purposes of the preceding sentence, a CFC includes an SFC that is only treated as a CFC for limited purposes under section 965(e)(2). This amount is the sum of post-2017 E&P not previously taxed, post-1986 undistributed earnings, pre-1987 E&P not previously taxed, and PTEP. With respect to distributions of PTEP resulting from inclusions under section 965, report the taxes properly attributable to such PTEP without reduction for the foreign tax credit disallowance. Translate the line 3 amount from functional currency to U.S. dollars using, in general, the average exchange rate as defined by section 989(b)(3). The line 5c current year E&P amount may include amounts with respect to the general category, passive category, or section 901(j) category. Summary: This is an example of worksheet A, which is used to determine the shareholder's share of Subpart F income. Enter the income tax expense (benefit) allocated to OCI items in the intraperiod allocation. As a result, the amount reported in column (ii) on line 1(a) is the sum of the amounts reported in column (ii) on line 1(a)(2) and 1(a)(3), which is equal to $175 ($100 + $75). Reference ID number of foreign corporation. Enter the CFCs gross income. See Regulations section 1.960-1. During Year 1, Domestic Corporation reports an inclusion under section 951(a)(1) of $100 as a result of subpart F income of CFC3. See Rev. A CFC that would not be a CFC if the determination were made without applying subparagraphs (A), (B), and (C) of section 318(a)(3) so as to consider a U.S. person as owning stock that is owned by a foreign person (for purposes of Category 5 filers). circle3 Covered bonds debt backed by a segregated pool of assets called "cover pool" 3.1.4 Credit Enhancement circle3 Credit enhancement variety of provisions that can be used to barb1down the credit risk of a bond issue. Adjustments include additional payments, refunds, and downward adjustments for accrued foreign taxes that are not paid within 2 years after the close of the tax year to which such taxes relate. See section 381(c)(2)(B) and Regulations section 1.367(b)-7(d)(2)(ii). Subtract line 11 from line 10" field, "13. On Form 5471 and separate schedules, in entry spaces that request identifying information with respect to a foreign entity, taxpayers will no longer have the option to enter FOREIGNUS or APPLIED FOR. Instead, if a foreign entity does not have an EIN, the taxpayer must enter a reference ID number that uniquely identifies the foreign entity. See Item 1(b)(2)Reference ID number for more information about reference ID numbers. Specifically, if you are reporting with respect to more than two units, add to pages 1 and 2, as appropriate, new lines (3), (4), (5), etc. See section 952(c)(2). Its current year E&P, computed under the special rule of section 952(c)(1). At the time of investment in such property, CFC2 continues to maintain a $36 balance in its section 959(c)(2) previously taxed E&P account. 92-70 for Dormant Foreign Corporation.. field, "17. For amounts included in Other Comprehensive Income (OCI), see the instructions for, If the subpart F income of any CFC for any tax year was reduced because of the current E&P limitation, any excess of the E&P of the CFC for any subsequent tax year over the subpart F income of the CFC for the tax year must be recharacterized as subpart F income. Subtract line 21b from line 21a" field, "21d.Net related person insurance income excluded under high-tax exception" field, "21e.Subtract line 21d from line 21c" field, "22.International boycott income (section 952(a)(3))" field, "23.Illegal bribes, kickbacks, and other payments (section 952(a)(4))" field, "24.Enter the portion of line 13h that is U.S. source income effectively connected with a U.S. trade or business (section 952(b))" field, "25.Exclusions under section 959(b) that apply to line 13h amount" field, "26.Section 954(c) subpart F Foreign Personal Holding Company Income. As a result, if the foreign corporation has E&P for the tax period covered by this return that is subject to recapture as a result of a prior-year E&P limitation, add such recapture amount to the result from Worksheet A, line 69, and include the combined amount on line 1h (Other subpart F income). With respect to a CFC, Regulations section 1.954-1(c)(1)(iii)(A)(2) identifies as a single item of income all foreign base company income (other than foreign personal holding company income) that falls within both a single separate category (typically, general category income) and a single category of foreign base company income described in each of Regulations sections 1.954-1(c)(1)(iii)(A)(2)(i) through (v). For example, if U.S. GAAP income reported on Schedule C contains items related to PTEP, include the necessary adjustments on line 2i of Schedule H for the appropriate category of income (general or passive) and attach a statement that itemizes and explains those adjustments. 0122. Column (viii). When translating amounts from functional currency to U.S. dollars, you must use the method specified in these instructions. Changes to separate Schedule P (Form 5471). However, insurance income does not include exempt insurance income (as defined in section 953(e)). If the filer is described in more than one filing category, do not duplicate information. Include as a positive amount in column (d) foreign income taxes related to the current tax year that have been suspended due to the rules of section 909. See Regulations section 1.482-7(b)(1)(i). This adjustment is necessary because foreign taxes imposed on PTEP distributions do not reduce current year E&P. Report the exchange rate using the "divide-by convention" specified under Reporting exchange rates on Form 5471. Use the December 2020 revision of the schedule. "field, "41.Section 954(c) subpart F Foreign Base Company Sales Income subtotal. Columns (e)(i) and (e)(ii) are PTEP originally attributable to inclusions under section 965(a) and E&P treated as PTEP under section 965(b)(4)(A), respectively, and reclassified as investments in U.S. property (section 959(c)(1)(A) amounts). These headings must comport to those used on the Schedule M (Form 5471) to which this statement is attached. In addition to the separate category codes referred to above, if you have more than one of the categories of income referred to above, you must complete and file a separate Schedule E (including Schedule E-1) using code "TOTAL" that aggregates all amounts listed for each line and column of all other Schedules E and E-1. See section 965(g) and Regulations section 1.965-5 for more information. If a U.S. shareholder wholly owns the CFC, Schedule P should . Audited separate-entity financial statements of the foreign corporation that are prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). Also, a trade or service receivable acquired or treated as acquired by a CFC from a related U.S. person is considered an investment in U.S. property for purposes of section 956 (Worksheet B) if the obligor is a U.S. person. On page 1, Schedule E, Part I, Section 1, new column (c) (unsuspended taxes) requires taxpayers to check the box in that column in cases where taxes were previously suspended under section 909 and the related income is now being taken into account in the current year. Line 5b. Base erosion payments also include amounts received or accrued by the foreign corporation in connection with the acquisition of depreciable or amortizable property (section 59A(d)(2)), reinsurance payments (section 59A(d)(3)), and certain payments relating to expatriated entities (section 59A(d)(4)). Line 2g has been modified to update the references to Schedule E, due to changes made to that schedule. Under section 367(d), a U.S. transferor must report an annual income inclusion attributed to the intangible property transferred to a foreign corporation over the useful life of the property. Foreign income taxes reclassified from section 959(c)(2) previously taxed E&P to section 959(c)(1) previously taxed E&P should be reported as negative numbers in columns (e)(vi) through (e)(x) and as positive numbers in columns (e)(i) through (e)(v). Check the Yes box if during the tax year the reporting corporation had any loans to or from the related party to which the safe haven rate rules of Regulations section 1.482-2(a)(2)(iii)(B) are applicable, and for which the reporting corporation used a rate of interest within the safe-haven range of Regulations section 1.482-2(a)(2)(iii)(B)(1) (100% to 130% of the AFR for the relevant term). It would be very rare in 2021 for a domestic corporation to have taxes deemed paid under section 902 on distributions with respect to a pre-2018 foreign corporate tax year. Each single item of foreign base company income (as defined in Regulations section 1.954-1(c)(1)(iii)) is a separate subpart F income group. The annual accounting period of an SFC (as defined in section 898) is generally required to be the tax year of the corporation's majority U.S. shareholder. The foreign corporation reports on the cash basis. The filer is a U.S. shareholder that only owns stock, within the meaning of section 958(b), in the foreign corporation. See Regulations section 1.951A-1(d)(1). What information must be provided? During the tax year, did the CFC derive income (either directly or through a branch or similar establishment, for example, disregarded entity) in connection with the purchase or sale from, to, or on behalf of a related person, of personal property manufactured by the CFC within the meaning of Regulations section 1.954-3(a)(4)(iv)? A U.S. shareholder who is a Category 1 filer (defined above) must complete Form 5471 and file all information required of a Category 1a filer if that U.S. shareholder does not qualify as a Category 1b or 1c filer. Also, new lines 14 and 29 were added for reporting other amounts received (line 14) and other amounts paid (line 29). The balances in the previously taxed accounts of prior section 956 inclusions (see section 959(c)(1)(A)) and current or prior subpart F inclusions (see section 959(c)(2)) reduce what would otherwise be the current section 956 inclusion. A "reference ID number" is a number established by or on behalf of the U.S. person identified at the top of page 1 of the form that is assigned to a foreign corporation with respect to which Form 5471 reporting is required. 37784Z Form 8962 2018 Page Allocation of Policy Amounts Complete the following information for up to four policy amount allocations. Check Yes if, during the tax year, the filer engaged in at least one of the transactions described in Regulations section 1.385-3(b)(2). However, if 20% or more of the foreign corporation's gross income is from U.S. sources, depreciation must be figured on a straight line basis according to Regulations section 1.312-15. Enter the applicable corresponding code in capital letters. On lines 1j through 1l, enter international boycott income described in section 952(a)(3), illegal bribes, kickbacks, and other payments described in section 952(a)(4), and income included in a section 901(j) separate category described in section 952(a)(5). If category code PAS is entered on line A, a separate Schedule Q must be completed for each applicable grouping under Regulations section 1.904-4(c)(3). Subtract the sum of lines 27 and 28 from line 14e." Subpart F income reportable on lines 1e through 1h includes the following. The total present value of all platform contributions made by the U.S. taxpayer during the tax year should be entered even if only a portion (or none) of the value of those platform contributions was included in the U.S. taxpayer's taxable income as platform contribution transaction (PCT) payments during the tax year. In other words, are any amounts described in section 954(c)(3)(A)(i) excluded from line 1a of Worksheet A? Is not related (using principles of section 954(d)(3)) to the foreign-controlled corporation. See Temporary Regulations section 1.921-1T(b)(3). See section 959(c). Any transaction offered under conditions of confidentiality for which the corporation (or a related party) paid an advisor a fee of at least $250,000. See section 960(a) and (d). Report the exchange rate using the divide-by convention specified under Reporting exchange rates on Form 5471, earlier. Enter the greater of line 7a or line 7b" field, "9. Proc. Indicate the regarded entity owner's name in parentheses after the FDE's name. If you and one or more other persons are required to furnish information for the same foreign corporation for the same period, a joint information return that contains the required information may be filed with your tax return or with the tax return of any one of the other persons. See Regulations section 1.482-7(g) for more information on the methods applicable to PCTs. In general, see Regulations section 1.951A4(b)(1) to determine how to compute the CFCs tested interest expense. Unaudited separate-entity financial statements of the foreign corporation that are prepared in accordance with U.S. GAAP.