Userid: CPM Schema: instrx Leadpct: 100% Pt. size: 9 Draft Ok to Print AH XSL/XML Fileid: … ons/I1120F/2020/A/XML/Cycle06/source (Init. & Date) ______Page 1 of 37 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Department of the Treasury 2020 Internal Revenue Service Instructions for Form 1120-F U.S. Income Tax Return of a Foreign Corporation

Section references are to the Internal Revenue Contents Page contribution of food during 2020 and 2021 Code unless otherwise noted. Schedule W ...... 33 to which section 170(e)(3)(C) applies, a Contents Page corporation can deduct qualified contributions of up to 25% of its aggregate Photographs of Missing Children ....1 Future Developments net income from all trades or businesses The Taxpayer Advocate Service .....1 For the latest information about from which the contributions were made, How To Get Forms and developments related to Form 1120-F and or up to 25% of its taxable income. See Publications ...... 2 the instructions for Section II, line 19. General Instructions ...... 2 its instructions, such as legislation enacted after they were published, go to Purpose of Form ...... 2 Temporary allowance of 100% for IRS.gov/Form1120F. Who Must File ...... 2 business meals. A corporation is Special Returns for Certain allowed a 100% deduction for certain Organizations ...... 3 What’s New business meal expenses paid or incurred Claim for Refund or Credit ...... 3 in 2021 and 2022. See Travel, meals, and New payroll credit for required paid entertainment. Paid Preparer Authorization .....5 sick leave or family leave. Under the Other Forms, Schedules, Families First Coronavirus Response Act Modifications to net operating losses. and Statements That May (FFCRA), as amended, an eligible Losses that occurred in 2018, 2019, or Be Required ...... 5 employer can take a credit against payroll 2020 generally can be carried back up to 5 Assembling the Return ...... 7 taxes owed for amounts paid for qualified tax years preceding the year of the loss. Accounting Methods ...... 7 sick leave or family leave if incurred during Special rules apply to farming losses. See Accounting Period ...... 7 the allowed period. However, there is no the instructions for Section II, line 31. Rounding Off to Whole double tax benefit allowed and the Dollars ...... 8 amounts claimed are reportable as Photographs of Missing Recordkeeping ...... 8 income on Section II, line 10. See the Children Payment of Tax Due ...... 8 instructions for line 10. The Internal Revenue Service is a proud Estimated Tax Payments ...... 8 New employee retention credit. The partner with the National Center for Interest and Penalties ...... 9 Coronavirus Aid, Relief, and Economic Missing & Exploited Children® (NCMEC). Special Rules for Foreign Security Act (CARES Act) allows a new Photographs of missing children selected Corporations ...... 9 employee retention credit for qualified by the Center may appear in instructions Specific Instructions ...... 11 wages. Any qualified wages for which an on pages that would otherwise be blank. Period Covered ...... 11 eligible employer claims against payroll You can help bring these children home Address ...... 11 taxes for the new employee retention by looking at the photographs and calling Employer Identification credit may not be taken into account for 1-800-THE-LOST (1-800-843-5678) if you Number (EIN) ...... 11 purposes of determining other credits. recognize a child. Computation of Tax Due or Temporary suspension of limitations Overpayment ...... 12 The Taxpayer Advocate Section I—Income From on certain contributions. Under the U.S. Sources Not CARES Act, a corporation may elect to Service Effectively Connected deduct certain qualified cash contributions The Taxpayer Advocate Service (TAS) is With the Conduct of a made in 2020 and 2021 without regard to an independent organization within the Trade or Business in the the 10% taxable income limit. The total Internal Revenue Service that helps United States ...... 15 amount of the contribution claimed cannot taxpayers and protects taxpayer rights. Section II—Income exceed 25% of the excess of the TAS's job is to ensure that every taxpayer Effectively Connected corporation's taxable income over all other With the Conduct of a is treated fairly and knows and allowable charitable contributions. See the understands their rights under the Trade or Business in the instructions for Section II, line 19. United States ...... 17 Taxpayer Bill of Rights. Disaster relief charitable contribu- Income ...... 18 As a taxpayer, the corporation has tions. The 10% limit on the deduction for Deductions ...... 19 rights that the IRS must abide by in its charitable contributions does not apply to Schedule C—Dividends and dealings with the corporation. TAS can contributions made after December 31, Special Deductions ...... 26 help the corporation if: 2019, and before February 26, 2021, to Schedule J—Tax • A problem is causing financial difficulty certain charitable organizations for relief in Computation ...... 27 for the business; qualified disaster areas. See Temporary Section III—Branch Profits • The business is facing an immediate Tax and Tax on Excess suspension of 10% limitation for certain threat of adverse action; and Interest ...... 28 disaster-related contributions, later. The corporation has tried repeatedly to Schedule L—Balance • Sheets per Books ...... 31 Increase in limits on contributions of contact the IRS but no one has Schedules M-1 and M-3 ...... 33 food inventory. For any charitable

Mar 05, 2021 Cat. No. 11475L Page 2 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

responded, or the IRS hasn't responded • Was engaged in a trade or business in (including items A through G) at the top of by the date promised. the United States, whether or not it had page 1 of Form 1120-F and a statement U.S. source income from that trade or that indicates the nature and amount of TAS has offices in every state, the business, and whether or not income from the exclusions claimed. In the case of a District of Columbia, and Puerto Rico. such trade or business is exempt from treaty exemption, the corporation may Local advocates' numbers are in their U.S. tax under a tax treaty (see also complete item W(1) on page 2 of Form local directories and at Protective Return Filers, later); 1120-F, which includes completing and TaxpayerAdvocate.IRS.gov. The • Had income, gains, or losses treated as attaching Form 8833, if required in lieu of corporation can also call TAS at if they were effectively connected with the attaching a statement. In the case of a 1-877-777-4778. conduct of a U.S. trade or business (see Code exemption under section 883, the Section II, later);or corporation must attach Schedule S (Form TAS also works to resolve large-scale • Was not engaged in a trade or business 1120-F) in lieu of attaching a statement. or systemic problems that affect many in the United States, but had income from taxpayers. If the corporation knows of one any U.S. source, if its tax liability has not Note. If the corporation does not have of these broad issues, please report it to been fully satisfied by the withholding of any gross income for the tax year because TAS through the Systemic Advocacy tax at source under Chapter 3 of the Code. it is claiming a treaty or Code exemption, Management System at IRS.gov/SAMS. • Was, or had a branch that was, a QDD. and there was withholding at source, the corporation must complete the For more information, go to IRS.gov/ This form is also required to be filed by: Computation of Tax Due or Overpayment Advocate. • A foreign corporation making a claim for section at the bottom of page 1 of Form the refund of an overpayment of tax for the 1120-F (in addition to the information How To Get Forms and tax year. See Simplified Procedure for specified in the previous paragraph) to Publications Claiming a Refund of U.S. Tax Withheld at claim a refund of the amounts withheld. Source, later. Internet. You can access the IRS website • A foreign corporation claiming the Entities electing to be taxed as foreign 24 hours a day, 7 days a week, at IRS.gov benefit of any deductions or credits. See corporations. A foreign eligible entity to: Other Filing Requirements, later. that elected to be classified as a • Download forms, instructions, and • A foreign corporation making a claim corporation must file Form 1120-F under publications; that an income treaty overruled or the same circumstances as a per se • Order IRS products online; modified any provision of the Internal corporation and an entity that defaults into • Research your tax questions online; Revenue Code with respect to income corporate status unless it is required to file • Search publications online by topic or derived by the foreign corporation at any a special return listed under Special keyword; time during the tax year, and such position Returns for Certain Organizations, later. • View Internal Revenue Bulletins (IRBs) is required to be disclosed on Form 8833. The entity must also have filed Form 8832, published in recent years; and See the instructions for Form 8833 for who Entity Classification Election. A foreign • Sign up to receive local and national tax must file Form 8833, and who is exempt corporation filing Form 1120-F for the year news by email. from filing by reason of a waiver provided of the election must attach a copy of Form under section 6114 and the regulations 8832 to its Form 1120-F. See Form 8832, Tax forms and publications. The later, for additional information. corporation can download or print all of the thereunder. If Form 8833 is required, forms and publications it may need on complete item W(1) on page 2 of the form. Protective return. If a foreign IRS.gov/FormsPubs. Otherwise, the corporation conducts limited activities in corporation can go to IRS.gov/ Others that must file Form 1120-F the United States in a tax year that the OrderForms to place an order and have include the following. foreign corporation determines does not forms mailed to it. The IRS will process • A Mexican or Canadian branch of a give rise to gross income which is your order for forms and publications as U.S. mutual life insurance company. The effectively connected with the conduct of a soon as possible. branch must file Form 1120-F on the same trade or business within the United States, basis as a foreign corporation if the U.S. the foreign corporation should follow the company elects to exclude the branch's instructions for filing a protective return to General Instructions income and expenses from its own gross safeguard its right to receive the benefit of income. the deductions and credits attributable to Purpose of Form • A receiver, assignee, or trustee in that gross income under Regulations Use Form 1120-F to report the income, dissolution or bankruptcy, if that person section 1.882-4(a)(3)(vi) in the event that it gains, losses, deductions, credits, and to has or holds title to virtually all of a foreign is subsequently determined that the figure the U.S. income tax liability of a corporation's property or business. Form original determination was incorrect. A foreign corporation. Also, use Form 1120-F is due whether or not the property foreign corporation should also file a 1120-F to claim any refund that is due, to or business is being operated (see protective return if it determines initially transmit Form 8833, Treaty-Based Return Who Must Sign, later, for additional that it has no U.S. tax liability under the Position Disclosure Under Section 6114 or information). provisions of an applicable income tax 7701(b), or to calculate and pay a foreign • An agent in the United States, if the treaty (for example, because its income is corporation's branch profits tax liability foreign corporation has no office or place not attributable to a permanent and tax on excess interest, if any, under of business in the United States when the establishment in the United States). See section 884. return is due. Protective Return Filers, later. A foreign Treaty or Code exemption. If the corporation that does not file a return will Who Must File corporation does not have any gross lose the right to take deductions and Unless one of the exceptions under income for the tax year because it is credits against effectively connected Exceptions From Filing below applies or a claiming a treaty or Code exemption, it income (ECI). See Other Filing special return is required (see Special must still file Form 1120-F to show that the Requirements, later. Returns for Certain Organizations, later), a income was exempted by treaty or Code. Qualified opportunity fund. To be foreign corporation must file Form 1120-F In this case, the corporation should only certified as a qualified opportunity fund if, during the tax year, the corporation: complete the identifying information

-2- Instructions for Form 1120-F (2020) Page 3 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

(QOF), a foreign corporation organized in corporation can authorize an electronic Page 3. Section I. Enter in column (b) a U.S. possession must file Form 1120-F funds withdrawal while e-filing. Form 1099 the gross amount of each type of income and attach Form 8996, even if the and other information returns can also be received that is required to be reported in corporation had no income or expenses to electronically filed. The option to e-file Section I (see Section I, later, for details). report. See Item II on page 3 of Form does not, however, apply to certain Include income from foreign sources that 1120-F. Also, see the Instructions for returns. was subject to backup withholding. Do not Form 8996. Certain corporations with total assets of include income from which no U.S. tax Qualified opportunity investment. If a $10 million or more that file at least 250 was withheld. If the corporation is subject foreign corporation is required to file Form returns a year are required to e-file Form to backup withholding on gross proceeds 8977 because it held a qualified 1120-F. See Regulations section from sales of securities or transactions in investment in a QOF at any time during 301.6011-5. However, these corporations regulated futures contracts, enter the the year, the corporation must file Form can request a waiver of the electronic filing gross proceeds on line 10. 1120-F and attach Form 8997, Initial and requirements. See Notice 2010-13, Enter in columns (c) and (d), Annual Statement of Qualified Opportunity 2010-4 I.R.B. 327, available at respectively, the correct rate and amount Fund Investments. See the instructions for IRS.gov/irb/2010–04_IRB#NOT-2010–13. of U.S. income tax liability for each type of Form 8997. income reported in column (b). If the For more information, visit IRS.gov/ corporation is claiming a refund of U.S. tax Exceptions From Filing Businesses. withheld in excess of the rate provided in a A foreign corporation does not have to file tax treaty with the United States, enter the Form 1120-F if neither the foreign Claim for Refund or Credit applicable treaty rate in column (c) and corporation nor any of its branches was a If the corporation is filing Form 1120-F figure the correct U.S. income tax liability QDD and any of the following apply. only as a claim for refund or credit of tax on the gross income reported in column • It did not engage in a U.S. trade or paid or withheld at source, the simplified (b). business during the year, and its full U.S. procedure described below may be used. Enter in column (e) the U.S. tax actually tax was withheld at source. This simplified procedure may not be used withheld at source (and not refunded by Its only U.S. source income is exempt • by a corporation that was a QDD or had a the payer or the withholding agent) from from U.S. taxation under section 881(c) or branch that was a QDD. each type of income reported. This should (d). be the amount reported to you in box 10, It is a beneficiary of an estate or trust • Note. You cannot claim a refund based Total withholding credit, of Form(s) engaged in a U.S. trade or business, but on a reduced rate of, or exemption from, 1042-S, which includes the total amount of would itself otherwise not need to file. U.S tax withheld from a substitute federal tax withheld at source less any dividend payment made in connection amount that was repaid to you by the Special Returns for with a securities lending or similar withholding agent. If multiple rates of tax Certain Organizations transaction if the tax was withheld by a are applicable to a type of income, attach withholding agent other than the Instead of filing Form 1120-F, certain a statement showing the gross amounts of withholding agent from which you received income, applicable rate, and amount of foreign organizations must file special the payment (amounts are reported in returns. liability and withholding imposed for the box 8 of Form 1042-S). See Notice respective amounts at each tax rate (for • Form 1120-L, U.S. Life Insurance 2010-46, 2010-24 I.R.B. 757, available at Company Income Tax Return, as a foreign example, if a corporation receives IRS.gov/irb/2010–24_IRB#NOT-2010–46, subsidiary dividends subject to tax at 5% life insurance company. for further information on limitations on • Form 1120-PC, U.S. Property and and portfolio dividends subject to tax at refunds and credits permitted in such 15%, a statement must be attached for Casualty Insurance Company Income Tax cases. Return, as a foreign nonlife insurance Section I, line 2a, to show the amount of company. Simplified Procedure for dividend and tax liability for each • Form 1120-FSC, U.S. Income Tax Claiming a Refund of U.S. Tax respective rate). Return of a Foreign Sales Corporation, if Withheld at Source Enter on line 11 the total U.S. tax the corporation elected to be treated as a liability for the reported income. To make a claim for a refund, complete FSC and the election is still in effect. Enter on line 12 the total U.S. tax Form 1120-F as follows. Consolidated returns. A foreign actually withheld from such income. corporation, regardless of whether it files a Page 1. Enter the complete name, Check the appropriate box on line 13. A special return, may not belong to an address, and employer identification fiscally transparent entity is one that is not affiliated group of corporations that files a number (EIN) of the corporation. Check itself generally subject to income tax but consolidated return. However, a Canadian the applicable box to indicate the type of one whose tax attributes flow through to or Mexican corporation described in filing. Provide all the information required its owners. section 1504(d), maintained solely for in items A through G. complying with the laws of Canada or Refund amount. Enter on lines 1 and Additional Documentation Mexico for title and operation of property, 4, page 1, the amount from line 11, Required may elect to be treated as a domestic page 3. Enter on lines 5i and 5j the corporation and thereby file as part of an amount from line 12, page 3. Enter the The corporation must attach to Form affiliated group. excess of line 5j over line 4 on lines 8a 1120-F the following. Electronic Filing and 9. This is the amount to be refunded 1. Proof of the withholding (for to you. example, Form 1042-S). Corporations can generally electronically file (e-file) Form 1120-F, related forms, Signature. An authorized officer of the 2. A statement that describes the schedules, and attachments, Form 7004 corporation must sign and date the return. basis for the claim for refund. (automatic extension of time to file), and Pages 2 and 3. Additional information. 3. Any required tax certifications (for Forms 940, 941, and 944 (employment tax example, Form W-8BEN-E). returns). If there is a balance due, the Complete all items on pages 2 and 3 of Form 1120-F that apply to the corporation.

Instructions for Form 1120-F (2020) -3- Page 4 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

4. Any additional documentation to • If claiming a refund for overwithholding Extension of time to file. File Form support the claim. on a distribution from a mutual fund or a 7004 by the 15th day of the 6th month real estate investment trust (REIT) with after the end of the tax year to request an Refund of backup withholding tax. If respect to its stock because the extension of time to file. See the the corporation is claiming a refund of distribution was designated as long-term Instructions for Form 7004 for additional backup withholding tax based on its status capital gain or a return of capital, provide a information. as a non-U.S. resident, it must: statement that identifies the mutual fund or • Provide a copy of the Form 1099 that REIT and provide the basis for the claim. Other Filing Requirements shows the amount of reportable payment • If claiming a refund for overwithholding • If the due date of any filing falls on a and backup withholding, and on a distribution from a U.S. corporation Saturday, Sunday, or legal holiday, the • Attach a statement signed under with respect to its stock because, in the corporation may file on the next business penalties of perjury that the corporation is foreign corporation's particular day. exempt from backup withholding because circumstances, the transaction qualifies as • Form 1120-F must be filed on a timely it is not a U.S. corporation or other U.S. a redemption of stock under section 302, basis and in a true and accurate manner in resident (for example, Form W-8BEN-E). provide a statement that describes the order for a foreign corporation to take Refunds of U.S. withholding. If any of transaction and presents the facts deductions and credits against its ECI. For the following apply, attach the information necessary to establish that the payment these purposes, Form 1120-F is generally requested in addition to the additional was (a) a complete redemption, (b) a considered to be timely filed if it is filed no documentation described earlier. disproportionate redemption, or (c) not later than 18 months after the due date of essentially equivalent to a dividend. the current year's return. An exception • If you are claiming a refund of U.S. tax may apply to foreign corporations that withheld under Chapter 4, you must have yet to file Form 1120-F for the provide a statement explaining the basis When To File preceding tax year. These filing deadlines for the claim and must provide the other Foreign Corporation With an may be waived in limited situations based information requested in this section to Office or Place of Business in on the facts and circumstances, where the establish a reduced rate, or exemption foreign corporation establishes to the from, tax under section 881. See the United States satisfaction of the Commissioner that the Regulations section 1.1474-5 for the A foreign corporation that maintains an foreign corporation acted reasonably and requirements for claiming a credit or office or place of business in the United in good faith in failing to file Form 1120-F. refund of tax withheld under Chapter 4. States must generally file Form 1120-F by See Regulations section 1.882-4(a)(3)(ii) • If claiming a refund of U.S. tax withheld the 15th day of the 4th month after the end for more information about the waiver. from portfolio interest, include a of its tax year. A new corporation filing a description of the relevant debt obligation, short-period return must generally file by A foreign corporation is allowed the including the name of the issuer, CUSIP the 15th day of the 4th month after the following deductions and credits number (if any), interest rate, scheduled short period ends. A corporation that has regardless of whether Form 1120-F is maturity date, and the date the debt was dissolved must generally file by the 15th timely filed. issued. Also, include a statement, signed day of the 4th month after the date it 1. The charitable contributions under penalties of perjury, that the dissolved. deduction (page 4, Section II, line 19). corporation is the beneficial owner of the interest income and not a U.S. corporation However, a corporation with a fiscal tax 2. The credit from Form 2439 (page 1, or other U.S. resident (for example, Form year ending June 30 must file by the 15th line 5f). W-8BEN-E). day of the 3rd month after the end of its 3. The credit for federal tax on fuels • If claiming a reduced rate of, or tax year. A corporation with a short tax (page 1, line 5g). exemption from, tax based on a tax treaty, year ending anytime in June will be treated as if the short year ended on June 4. U.S. income tax paid or withheld at provide a certificate of entitlement to treaty source (page 1, line 5i). benefits (for example, Form W-8BEN-E). 30, and must file by the 15th day of the 3rd A separate statement should be provided month after the end of its tax year. See Regulations section 1.882-4 for that contains any additional Extension of time to file. The details. representations necessary to explain the corporation must file Form 7004, Private Delivery Services basis for the claim. The corporation may Application for Automatic Extension of complete item W(1) on page 2 of the form Time To File Certain Business Income Corporations can use certain private (which includes completing and attaching Tax, Information, and Other Returns, by delivery services (PDS) designated by the Form 8833, if required) in lieu of attaching the return due date specified in the IRS to meet the “timely mailing as timely a statement. previous two paragraphs to request an filing” rule for tax returns. Go to extension of time to file. However, there is www.irs.gov/pds. Note. To claim a reduced rate of, or an exception that applies under The PDS can tell you how to get written exemption from, tax based on a tax treaty, Regulations section 1.6081-5. See the proof of the mailing date. the corporation must generally be a Instructions for Form 7004 for additional resident of the particular treaty country information. For the IRS mailing address to use if within the meaning of the treaty and satisfy you're using a PDS, go to the limitation on benefits article, if any, in Foreign Corporation With No IRS.gov/PDSStreetAddresses. the treaty with that country. Office or Place of Business in Private delivery services cannot • If claiming a refund for overwithholding the United States on a distribution from a U.S. corporation ! deliver items to P.O. boxes. You with respect to its stock because the A foreign corporation that does not CAUTION must use the U.S. Postal Service corporation has insufficient earnings and maintain an office or place of business in to mail any item to an IRS P.O. box profits to support ordinary dividend the United States must generally file Form address. treatment, provide a statement that 1120-F by the 15th day of the 6th month identifies the distributing corporation and after the end of its tax year. provides the basis for the claim.

-4- Instructions for Form 1120-F (2020) Page 5 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Where To File • Respond to certain IRS notices about Form 8275, Disclosure Statement, and math errors, offsets, and return File Form 1120-F with the Internal Form 8275-R, Regulation Disclosure preparation. Revenue Service Center, P.O. Box Statement. Use these forms to disclose 409101, Ogden, UT 84409. The corporation is not authorizing the items or positions taken on a tax return paid preparer to receive any refund check, that are not otherwise adequately Who Must Sign bind the corporation to anything (including disclosed on a tax return or that are contrary to Treasury regulations (to avoid The return must be signed and dated by: any additional tax liability), or otherwise parts of the accuracy-related penalty or The president, vice president, treasurer, represent the corporation before the IRS. • certain preparer penalties). assistant treasurer, chief accounting The authorization will automatically end officer; or no later than the due date (excluding Form 8300, Report of Cash Payments • Any other corporate officer (such as tax extensions) for filing the corporation's Over $10,000 Received in a Trade or officer) authorized to sign. 2021 tax return. If the corporation wants to Business. Use this form to report the expand the paid preparer's authorization receipt of more than $10,000 in cash or If a return is filed on behalf of a or revoke the authorization before it ends, foreign currency in one transaction or a corporation by a receiver, trustee, or see Pub. 947, Practice Before the IRS and series of related transactions. assignee, the fiduciary must sign the Power of Attorney. return, instead of the corporate officer. Form 8302, Electronic Deposit of Tax Returns and forms signed by a receiver or Refund of $1 Million or More. The form trustee in bankruptcy on behalf of a Other Forms, Schedules, must be filed to request an electronic corporation must be accompanied by a and Statements That May deposit of a tax refund of $1 million or more. copy of the order or instructions of the Be Required court authorizing signing of the return or Form 8832, Entity Classification Election. form. Forms This form is filed by an eligible entity to A foreign corporation may have to file elect how it will be classified for federal tax If an employee of the corporation some of the following forms and purposes. If the corporation filed Form completes Form 1120-F, the paid preparer schedules. See the form or schedule for 8832 to make an initial classification space should remain blank. Anyone who more information. election to be a corporation or to change prepares Form 1120-F but does not For a list of additional forms the its classification to be a corporation charge the corporation should not corporation may need to file (most effective during the current tax year, the complete that section. Generally, anyone notably, forms pertaining to the reporting corporation must attach a copy of the who is paid to prepare the return must sign of various types of income, and any Form 8832 to its Form 1120-F. If the it and fill in the “Paid Preparer Use Only” related withholding, to U.S. persons, corporation owns a direct or indirect area. foreign persons, and the IRS), see Pub. interest in an entity that is not required to 542, Corporations. file a return, but for which a Form 8832 The paid preparer must complete the was filed to make a change in the required preparer information and: Form 1094-C, Transmittal of Employer classification of the entity that is effective • Sign the return in the space provided Health Coverage Statements, and Form during the current tax year, the for the preparer's signature, and 1095-C, Employer-Provided Health corporation must attach a copy of the • Give a copy of the return to the Coverage Statement. Employers with 50 Form 8832 with respect to that entity taxpayer. or more full-time employees (including to its Form 1120-F for the current tax A paid preparer may sign original full-time equivalent employees) use Forms year. Examples of when the corporation TIP or amended returns by rubber 1094-C and 1095-C to report the must attach a copy of the Form 8832 for stamp, mechanical device, or information required under sections 6055 an entity in which it has an interest include computer software program. and 6056 about offers of health coverage the corporation's ownership of: and enrollment in health coverage for their • An entity that elected to be a employees. Form 1094-C must be used to disregarded entity, report to the IRS summary information for Paid Preparer • A foreign entity that elected to be a each employer and to transmit Forms Authorization partnership but does not itself have a 1095-C to the IRS. Form 1095-C is used If the corporation wants to allow the IRS to Form 1065 filing requirement, and to report information about each discuss its 2020 tax return with the paid • A foreign corporation that owns a employee. In addition, Forms 1094-C and preparer who signed it, check the “Yes” foreign entity that elected to be a 1095-C are used in determining whether box in the signature area of the return. disregarded entity. an employer owes payments under the This authorization applies only to the employer shared responsibility provisions The corporation does not need to individual whose signature appears in the under section 4980H. For more attach the Form 8832 for an entity in which “Paid Preparer Use Only” section of the information, see the Instructions for Forms it has an indirect interest if an entity in return. It does not apply to the firm, if any, 1094-C and 1095-C. Also, for more which it has an interest is already shown in that section. information related to the Affordable Care attaching a copy of the Form 8832 with its Act, visit IRS.gov/ACA. return. See Regulations section If the “Yes” box is checked, the 301.7701-3(c)(1)(ii). corporation is authorizing the IRS to call Form 5472, Information Return of a 25% the paid preparer to answer any questions Foreign-Owned U.S. Corporation or a Form 8833, Treaty-Based Return that may arise during the processing of its Foreign Corporation Engaged in a U.S. Position Disclosure Under Section 6114 or return. The corporation is also authorizing Trade or Business. This form is filed by or 7701(b). Use this form to make the the paid preparer to: for a foreign corporation engaged in a U.S. treaty-based return position disclosure • Give the IRS any information that is trade or business that had certain required by section 6114. missing from the return; reportable transactions with a related Form 8848, Consent To Extend the Time • Call the IRS for information about the party. See the Instructions for Form 5472 To Assess the Branch Profits Tax Under processing of the return or the status of for filing instructions and information for Regulations Sections 1.884-2(a) and (c). any related refund or payment(s); and failure to file and maintain records.

Instructions for Form 1120-F (2020) -5- Page 6 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Use this form to execute a waiver of period IRS. For details, see the Instructions for sections 1.883-1 through 1.883-4. See the of limitations in regard to a termination or Form 8918. separate Instructions for Schedule S incorporation of a U.S. trade or business (Form 1120-F) for details. or liquidation or reorganization of a foreign Schedules Schedule V, List of Vessels or Aircraft, corporation or its domestic subsidiary. Schedule H, Deductions Allocated to Operators, and Owners. This schedule See the instructions for Section III, Part I, Effectively Connected Income Under is required to be attached if the of Form 1120-F. Regulations Section 1.861-8. This corporation is required to report gross Form 8886, Reportable Transaction schedule is required to be attached to transportation income in Section I, line 9, Disclosure Statement. Use this form to report certain deductions of the column (b). See the separate Instructions disclose information for each reportable corporation that are allocable to ECI. If the for Schedule V (Form 1120-F) for details. transaction in which the corporation corporation has any deductions reportable participated. Form 8886 must be filed for on Form 1120-F, Section II, lines 12 Statements each tax year that the federal income tax through 27, then Schedule H is required to liability of the corporation is affected by its be attached. See the separate Instructions Transfers to a corporation controlled participation in the transaction. The for Schedule H for details. by the transferor. Every significant following are reportable transactions. transferor (as defined in Regulations Note. Line 20 of Schedule H is reportable section 1.351-3(d)) that receives stock of 1. Any listed transaction, which is a on Form 1120-F, Section II, line 26. a corporation in exchange for property in a transaction that is the same as or nonrecognition event must include the substantially similar to one of the types of Schedule I, Interest Expense Alloca- statement required by Regulations section transactions that the IRS has determined tion Under Regulations Section 1.351-3(a) on or with the transferor's tax to be a tax avoidance transaction and 1.882-5. This schedule is required to be return for the tax year of the exchange. identified by notice, regulation, or other attached to report any interest expense The transferee corporation must include published guidance as a listed allocable to ECI under Regulations section the statement required by Regulations transaction. 1.882-5. The schedule must be attached whether or not such allocable interest is section 1.351-3(b) on or with its return for 2. Any transaction offered under deductible against ECI in the current year. the tax year of the exchange, unless all the conditions of confidentiality for which the See the separate Instructions for required information is included in any corporation (or a related party) paid an Schedule I (Form 1120-F) for identification statement(s) provided by a significant advisor a fee of at least $250,000. of elective allocation methods and transferor that is attached to the same 3. Certain transactions for which the computation of the allocable and return for the same section 351 exchange. corporation (or a related party) has deductible amounts of interest expense. If the transferor or transferee corporation contractual protection against is a controlled foreign corporation, each disallowance of the tax benefits. Note. Line 25 of Schedule I is reportable U.S. shareholder (within the meaning of 4. Certain transactions resulting in a on Form 1120-F, Section II, line 18. section 951(b)) must include the required statement on or with its return. loss of at least $10 million in any single Schedule P, List of Foreign Partner In- year or $20 million in any combination of terests in Partnerships. This schedule Distributions under section 355. Every years. is required to be attached to report all ECI corporation that makes a distribution of 5. Any transaction identified by the included in Schedules K-1 the foreign stock or securities of a controlled IRS by notice, regulation, or other corporation receives for each of its directly corporation, as described in section 355 published guidance as a “transaction of held partnership interests. Schedule P is (or so much of section 356 as relates to interest.” also required to report the corporation's section 355), must include the statement adjusted outside basis in its directly held required by Regulations section For more information, see Regulations partnership interest and the amount of the 1.355-5(a) on or with its return for the year section 1.6011-4. Also, see the outside basis of each such interest of the distribution. A significant distributee Instructions for Form 8886. apportioned to ECI under Regulations (as defined in Regulations section Penalties. The corporation may have section 1.884-1(d)(3). See the separate 1.355-5(c)) that receives stock or to pay a penalty if it is required to disclose Instructions for Schedule P (Form 1120-F) securities of a controlled corporation must a reportable transaction under section for the reconciliation of ECI and include the statement required by 6011 and fails to properly complete and distributive share of expenses reported on Regulations section 1.355-5(b) on or with file Form 8886. Penalties may also apply Schedules K-1. Do not file Schedule P if its return for the year of the receipt. If the under section 6707A if the corporation the corporation has no partnership distributing or distributee corporation is a fails to file Form 8886 with its corporate interests that give rise to ECI that is controlled foreign corporation, each U.S. return, fails to provide a copy of Form included in the income reported to the shareholder (within the meaning of section 8886 to the Office of Tax Shelter Analysis corporation on Schedules K-1. 951(b)) must include the statement on or (OTSA), or files a form that fails to include with its return. all the information required (or includes Note. If the corporation has received Election to reduce basis under section incorrect information). Other penalties, Form 8805, Foreign Partner's Information 362(e)(2)(C). If property is transferred to such as an accuracy-related penalty under Statement of Section 1446 Withholding a corporation subject to section 362(e)(2), section 6662A, may also apply. See the Tax, it will have ECI includible in its the transferor and the acquiring Instructions for Form 8886 for details on Schedule K-1 that is required to be corporation may elect, under section these and other penalties. reported on Schedule P. 362(e)(2)(C), to reduce the transferor's Reportable transactions by material Schedule S, Exclusion of Income From basis in the stock received instead of advisors. Material advisors to any the International Operation of Ships or reducing the acquiring corporation's basis reportable transaction must disclose Aircraft Under Section 883. This in the property transferred. Once made, certain information about the reportable schedule is required to be attached to the election is irrevocable. For more transaction by filing Form 8918, Material claim a Code exemption under section information, see section 362(e)(2) and Advisor Disclosure Statement, with the 883. This schedule incorporates the Regulations section 1.362-4. If an election information required under Regulations is made, a statement must be filed in

-6- Instructions for Form 1120-F (2020) Page 7 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

accordance with Regulations section order as the schedules or forms they tax purposes. To obtain consent, the 1.362-4(d)(3). support and attach them last. Show the corporation must generally file Form 3115, totals on the printed forms. Enter the Application for Change in Accounting Foreign corporation with income ex- corporation's name and EIN on each Method, during the tax year for which the cluded from gross income. If the supporting statement or attachment. change is requested. See the Instructions foreign corporation has income excluded for Form 3115 and Pub. 538 for more from gross income for the tax year, do not information and exceptions. complete the Form 1120-F schedules. Accounting Methods Instead, attach a statement to the return In general, figure taxable income using the Section 481(a) adjustment. If the showing the types and amounts of income method of accounting regularly used in corporation's taxable income for the excluded from gross income. See Treaty keeping the corporation's books and current tax year is figured under a method or Code exemption, earlier, for more records. In all cases, the method used of accounting different from the method information. must clearly show taxable income. used in the preceding tax year, the Permissible overall methods of accounting corporation may have to make an Election to reduce liabilities under include cash, accrual, or any other method adjustment under section 481(a) to Regulations section 1.884-1(e)(3). If a authorized by the Internal Revenue Code. prevent amounts of income or expense taxpayer has a dividend equivalent from being duplicated or omitted. The amount that is subject to the branch profits Generally, the following rules apply. For section 481(a) adjustment period is tax under section 884(a), it may elect to more information, see Pub. 538, generally 1 year for a net negative reduce its U.S. liabilities under the branch Accounting Periods and Methods. adjustment and 4 years for a net positive profits tax regulations to treat its effectively • A corporation cannot use the cash adjustment. connected earnings and profits as method of accounting unless it is a small reinvested rather than remitted. A business taxpayer (defined later). A tax In some cases, a corporation can elect taxpayer may elect to reduce the amount shelter (defined in section 448(d)(3)) may to modify the section 481(a) adjustment of its liabilities by an amount that does not never use the cash method. See sections period. The corporation may have to exceed the lesser of the amount of U.S. 448(a)(1) through (a)(3). However, see complete the appropriate lines of Form liabilities or the amount of U.S. liability Nonaccrual experience method for service 3115 to make an election. See the reduction needed to reduce a dividend providers in the instructions for Section II, Instructions for Form 3115 for more equivalent amount to zero. The election is line 1a, later. information and exceptions. made by attaching a statement to a timely • Unless it is a small business taxpayer If the net section 481(a) adjustment is filed tax return (including the extension (defined below), a corporation must use positive, report the ratable portion on Form due date) indicating the amount of U.S. an accrual method for sales and 1120-F, Section II, line 10, as other liabilities reduced for branch profits tax purchases of inventory items. See the income. If the net section 481(a) purposes and the corresponding amount instructions for Form 1125-A. adjustment is negative, report the ratable also reduced from U.S.-connected • A corporation engaged in farming must portion on line 27 of Section II as a liabilities for interest expense allocation use an accrual method. For exceptions, deduction. purposes. See Regulations section see section 447 and Pub. 225. 1.884-1(e)(3). • Special rules apply to long-term Accounting Period contracts. See section 460. Assembling the Return • Dealers in securities must use the A corporation must figure its taxable mark-to-market accounting method. income on the basis of a tax year. A tax To ensure that the corporation's tax return Dealers in commodities and traders in year is the annual accounting period a is correctly processed, attach all securities and commodities may elect to corporation uses to keep its records and schedules and other forms after page 8 of use the mark-to-market accounting report its income and expenses. Form 1120-F, in the following order. method. See section 475. Generally, corporations may use a 1. Schedule D (Form 1120). calendar year or a fiscal year. Personal Small business taxpayer. For tax years service corporations, however, must use a 2. Form 8949. beginning in 2020, a corporation qualifies calendar year unless they meet one of the 3. Form 8996. as a small business taxpayer if (a) it has exceptions discussed under Personal 4. Form 4136. average annual gross receipts of $26 Service Corporation, later. Furthermore, million or less for the 3 prior tax years, and 5. Form 8978. special rules apply to specified foreign (b) is not a tax shelter (as defined in corporations. See Specified Foreign 6. Form 8941. section 448(d)(3)). Corporations below. 7. Form 3800. A small business taxpayer can adopt or Change of tax year. Generally, a 8. Additional schedules in change its accounting method to account corporation, including a personal service alphabetical order. for inventories (a) in the same manner it corporation, must get the consent of the 9. Additional forms in numerical order. would use to adopt or change its method IRS before changing its tax year by filing of accounting for non-incidental material Form 1128, Application To Adopt, 10. Supporting statements and and supplies, or (b) to conform to its attachments. Change, or Retain a Tax Year. However, treatment of inventories in an applicable exceptions may apply. See the Complete every applicable entry space financial statement (as defined in section Instructions for Form 1128 and Pub. 538 on Form 1120-F. Do not enter “See 451(b)(3)). If it does not have an for more information. Attached” or “Available Upon Request” applicable financial statement, it can use instead of completing the entry spaces. If the method of accounting used in its Specified Foreign Corporations more space is needed on the forms or books and records prepared according to The annual accounting period of a schedules, attach separate sheets using its accounting procedures. specified foreign corporation (defined the same size and format as the printed Change in accounting method. below) is generally required to be the tax forms. Generally, the corporation must get IRS year of its majority U.S. shareholder. If consent to change either an overall there is more than one majority If there are supporting statements and shareholder, the required tax year will be attachments, arrange them in the same method of accounting or the accounting treatment of any material item for income the tax year that results in the least

Instructions for Form 1120-F (2020) -7- Page 8 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

aggregate deferral of income to all U.S. Foreign corporations that do not Electronic deposit requirement. shareholders of the foreign corporation. maintain an office or place of business in Foreign corporations with an office or For more information, see section 898; the United States must generally pay any place of business in the United States Rev. Proc. 2006-45, 2006-2 C.B. 851, tax due (page 1, line 7) in full no later than must use electronic funds transfer to make available at IRS.gov/irb/ the 15th day of the 6th month after the end all federal tax deposits (such as deposits 2006-45_IRB#RP-2006-45; and Rev. of the tax year. However, see the of employment, excise, and corporate Proc. 2002-39, 2002-1 C.B. 1046, instructions for line 7, later. If the foreign income tax). Generally, electronic funds available at IRS.gov/pub/irs-irbs/irb02-22, corporation files Form 1120-F transfers are made using EFTPS. as modified by Notice 2002-72, 2002-2 electronically, it may pay the tax due by However, if the corporation does not want C.B. 843, available at initiating an electronic funds withdrawal to use EFTPS, it can arrange for its tax IRS.gov/pub/irs-irbs/irb02-46. (direct debit). It does so by checking the professional, financial institution, payroll box on line 6c of Form 8453-I, Foreign Specified foreign corporation. A service, or other trusted third party to Corporation Income Tax Declaration for an specified foreign corporation (as defined make deposits on its behalf. Also, it may IRS e-file Return. If the foreign corporation in section 898) is any foreign corporation arrange for its financial institution to does not file Form 1120-F electronically, that is treated as a controlled foreign submit a same-day payment (discussed or if it files Form 1120-F electronically and corporation (CFC) under subpart F below) on its behalf. EFTPS is a free does not choose the direct debit option, (sections 951 through 964) and with service provided by the Department of the the foreign corporation may use the respect to which more than 50% of the Treasury. Services provided by a tax Electronic Federal Tax Payment System total voting power or value of all classes of professional, financial institution, payroll (EFTPS) to pay the tax due if it has a U.S. stock of the corporation is treated as service, or other third party may have a bank account. If the foreign corporation owned by a U.S. shareholder. fee. does not have a U.S. bank account, it may arrange for its financial institution to initiate To get more information about EFTPS Rounding Off to Whole a same-day payment on its behalf or it can or to enroll in EFTPS, visit EFTPS.gov or Dollars arrange for either a qualified intermediary, call 1-800-555-4477 (TTY/TDD 1-800-733-4829). The corporation may enter decimal points tax professional, payroll service, or other and cents when completing its return. trusted third party to make a deposit on its Depositing on time. For any deposit However, the corporation should round off behalf using a master account. In addition, made by EFTPS to be on time, the cents to whole dollars on its return, forms, the foreign corporation still has the option corporation must submit the deposit by 8 and schedules to make completing its to pay by check or money order, payable p.m. Eastern time the day before the date return easier. The corporation must either to “United States Treasury.” To help the deposit is due. If the corporation uses round off all amounts on its return to whole ensure proper crediting, write the a third party to make deposits on its dollars or use cents for all amounts. To corporation's EIN, “Form 1120-F,” and the behalf, they may have different cutoff round, drop amounts under 50 cents and tax period to which the payment applies times. on the check or money order. Enclose the increase amounts from 50 to 99 cents to Same-day wire payment option. If the the next dollar. For example, $8.40 rounds payment when the corporation files Form 1120-F. corporation fails to submit a deposit to $8 and $8.50 rounds to $9. transaction on EFTPS by 8 p.m. Eastern Foreign corporations that do maintain time the day before the date a deposit is If two or more amounts must be added an office or place of business in the United due, it can still make the deposit on time to figure the amount to enter on a line, States must generally pay any tax due by using the Federal Tax Collection include cents when adding the amounts (page 1, line 7) in full no later than the due Service (FTCS). To use the same-day and round off only the total. date for filing Form 1120-F (not including wire payment method, the corporation will extensions). See When To File, earlier, for need to make arrangements with its Recordkeeping this due date. However, see Regulations financial institution ahead of time Keep the corporation's records for as long section 1.6081-5 for an exception. Also, regarding availability, deadlines, and as they may be needed for the see the instructions for line 7, later. If the costs. Financial institutions may charge a administration of any provision of the foreign corporation files Form 1120-F fee for payments made this way. To learn Internal Revenue Code. Usually, records electronically, it may pay the tax due by more about the information the that support an item of income, deduction, initiating an electronic funds withdrawal corporation will need to provide to its or credit on the return must be kept for 3 (direct debit). It does so by checking the financial institution to make a same-day years from the date the return is due or box on line 6c of Form 8453-I. If the wire payment, go to IRS.gov/ filed, whichever is later. Keep records that foreign corporation does not file Form SameDayWire. verify the corporation's basis in property 1120-F electronically, or if it files Form for as long as they are needed to figure 1120-F electronically and does not choose Estimated Tax Payments the basis of the original or replacement the direct debit option, the tax may be paid Generally, the following rules apply to a property. QDDs should see the Qualified as follows. The foreign corporation may foreign corporation's payments of Intermediary Agreement for additional pay the tax using EFTPS or it can arrange estimated tax. requirements. for its tax professional, financial institution, • The corporation must make installment payroll service, or other trusted third party payments of estimated tax if it expects its The corporation should keep copies of to make deposits on its behalf. In addition, all filed returns. They help in preparing total tax for the year (less applicable the foreign corporation also has the option credits) to be $500 or more. future and amended returns and in the to arrange for its financial institution to calculation of earnings and profits. • The installments are due by the 15th initiate a same-day payment. day of the 4th, 6th, 9th, and 12th months of the tax year. If any date falls on a Note. If the due date falls on a Saturday, Payment of Tax Due Saturday, Sunday, or legal holiday, the Sunday, or legal holiday, the payment is The requirements for payment of tax installment is due on the next regular due on the next day that isn't a Saturday, depend on whether the foreign business day. Sunday, or legal holiday. corporation has an office or place of • Use Form 1120-W, Estimated Tax for business in the United States. Corporations, as a worksheet to compute

-8- Instructions for Form 1120-F (2020) Page 9 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

estimated tax. See the Instructions for payment. The interest charge is figured at transaction understatements, and fraud. Form 1120-W. a rate determined under section 6621. See sections 6662, 6662A, and 6663. If the foreign corporation maintains an • Penalty for late filing of return. A office or place of business in the United corporation that does not file its tax return Special Rules for Foreign States, it must use electronic funds by the due date, including extensions, transfer to make installment payments of Corporations may be penalized 5% of the unpaid tax for estimated tax. each month or part of a month the return is Source of Income Rules • If the foreign corporation does not late, up to a maximum of 25% of the The source of income is important in maintain an office or place of business in unpaid tax. The minimum penalty for a determining the extent to which income is the United States, it may pay the return that is more than 60 days late is the taxable to foreign corporations. Each type estimated tax by EFTPS, providing it has a smaller of the tax due or $435. The of income has its own sourcing rules. U.S. bank account. The foreign penalty will not be imposed if the corporation may also arrange for its corporation can show that the failure to file financial institution to submit a same-day Interest Income on time was due to reasonable cause. payment on its behalf or can arrange for The source of interest income is usually its qualified intermediary, tax professional, If you believe that reasonable determined by the residence of the payroll service, or other trusted third party ! cause exists, do not attach an obligor. to make a deposit on its behalf using a CAUTION explanation when you file Form master account. In addition, the foreign 1120-F. Instead, if the corporation For example, interest paid by an obligor corporation still has the option to pay the receives a penalty notice after the return is who is a resident of the United States is estimated tax due by check or money filed, send an explanation to the IRS at U.S. source income, and interest paid by order. See the Instructions for Form that time and the IRS will determine if the an obligor who is a resident of a country 1120-W for additional payment corporation meets reasonable-cause other than the United States is foreign information. criteria. source income. Interest paid by a foreign • Penalties may apply if the corporation partnership that is predominantly engaged does not make required estimated tax Penalty for late payment of tax. A in the active conduct of a trade or payment deposits. See Estimated tax corporation that does not pay the tax when business outside the United States is 1 penalty below. due generally may be penalized /2 of 1% treated as U.S.-source income only if the • If the corporation overpaid estimated of the unpaid tax for each month or part of interest is paid by a U.S. trade or business tax, it may be able to get a quick refund by a month the tax is not paid, up to a conducted by the partnership or is filing Form 4466, Corporation Application maximum of 25% of the unpaid tax. The allocable to income that is treated as for Quick Refund of Overpayment of penalty will not be imposed if the effectively connected with the conduct of a Estimated Tax. See the instructions for corporation can show that the failure to U.S. trade or business. See section 861(a) line 5c, later. pay on time was due to reasonable cause. (1)(B). See Caution above. Estimated tax penalty. A corporation Exceptions. The following types of that does not make estimated tax Trust fund recovery penalty. This interest income are treated as foreign payments when due may be subject to an penalty may apply if certain excise, source income. underpayment penalty for the period of income, social security, and Medicare • Interest income received from foreign underpayment. Generally, a corporation is taxes that must be collected or withheld branches of U.S. banks and savings and subject to the penalty if its tax liability is are not collected or withheld, or these loan associations. $500 or more and it did not timely pay at taxes are not paid. These taxes are • In the case of a foreign partnership that least the smaller of: generally reported on: is predominantly engaged in the active • Its tax liability for the current year, or • Form 720, Quarterly Federal Excise conduct of a trade or business outside the • Its prior year's tax. Tax Return; United States, any interest not paid by a No estimated tax payments are • Form 941, Employer's QUARTERLY trade or business engaged in by the required with respect to a foreign Federal Tax Return; partnership in the United States and not corporation's liability for the branch profits • Form 943, Employer's Annual Federal allocable to income that is effectively tax. See Regulations section 1.884-1(a). Tax Return for Agricultural Employees; connected (or treated as effectively • Form 944, Employer's ANNUAL Use Form 2220, Underpayment of connected) with the conduct of a U.S. Federal Tax Return; or trade or business. Estimated Tax by Corporations, to see if • Form 945, Annual Return of Withheld the corporation owes a penalty and to Federal Income Tax. The following types of interest income figure the amount of the penalty. If Form are treated as domestic source income 2220 is completed, enter the penalty on The trust fund recovery penalty may be even though paid by a foreign corporation. Form 1120-F, page 1, line 6. See the imposed on all persons who are • For a foreign corporation engaged in a instructions for line 6, estimated tax determined by the IRS to have been U.S. trade or business, interest paid by the penalty, later. responsible for collecting, accounting for, U.S. trade or business (branch interest) is or paying over these taxes, and who acted treated as if paid by a domestic Interest and Penalties willfully in not doing so. The penalty is corporation to the actual recipient of the equal to the full amount of the unpaid trust interest. See section 884(f)(1)(A) and the Interest. Interest is charged on taxes fund tax. See the Instructions for Form regulations thereunder. Interest paid from paid late even if an extension of time to file 720; Pub. 15 (Circular E), Employer's Tax a U.S. trade or business is only treated as is granted. Interest is also charged on Guide; or Pub. 51 (Circular A), Agricultural branch interest to the extent the interest is penalties imposed for failure to file, Employer's Tax Guide, for details, allocable to ECI under the interest negligence, fraud, substantial valuation including the definition of responsible expense allocation rules in Regulations misstatements, substantial persons. section 1.882-5. Amounts paid but not understatements of tax, and reportable Other penalties. Other penalties may be allocable to ECI are not branch interest. transaction understatements from the due imposed for negligence, substantial See Regulations section 1.884-4(b)(6). date (including extensions) to the date of understatement of tax, reportable • If the foreign corporation has allocable interest in excess of branch interest

Instructions for Form 1120-F (2020) -9- Page 10 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

(excess interest), the foreign corporation Dividend Equivalents Exception. Income from the sale of must treat that interest as if paid by a A dividend equivalent generally is treated inventory property is foreign source wholly owned domestic corporation to the income if the goods were sold for use, foreign corporation. See section 884(f)(1) as a dividend from sources within the United States. disposition, or consumption outside the (B) and the instructions for Section III, Part United States and a foreign office of the II, later. corporation materially participated in the Rent and Royalty Income sale. Dividend Income The source of rent and royalty income for The source of dividend income is usually the use of property is determined based Income on Guarantees on where the property is located. determined by the residence of the payer. With respect to guarantees issued after For example, dividends paid by a September 27, 2010: corporation that was incorporated in the Income From the Sale or Exchange • The following income is U.S. source: United States are generally U.S. source of Real Estate Amounts received directly or indirectly income and dividends paid by a from (1) a noncorporate resident or corporation that was incorporated in a Gain from the disposition of a U.S. real property interest (a USRPI) is U.S. source. domestic corporation for the provision of a foreign country are generally foreign guarantee of any indebtedness of such source income. A USRPI includes, but is not limited to, real property situated in the United States, resident or corporation, or (2) any foreign Exceptions: an interest in real property other than person for the provision of a guarantee of • Dividends paid by a U.S. corporation solely as a creditor (such as a contingent any indebtedness of such person, if such are foreign source income: interest in real property), and an interest in amount is connected with income which is effectively connected (or treated as 1. If the U.S. corporation has made a a United States real property holding effectively connected) with the conduct of valid election under section 936 (or corporation (USRPHC). See section 897 a trade or business in the United States. section 30A), relating to certain U.S. and the regulations thereunder. See section 861(a)(9). corporations operating in a U.S. The following income is foreign source: possession; or • Income From the Sale or Exchange Amounts received, directly or indirectly, 2. To the extent the dividends are of Personal Property from a foreign person for the provision of a from qualified export receipts described in Income from the sale of personal property guarantee of indebtedness of such person section 993(a)(1) (other than interest and by a foreign corporation is generally other than amounts which are derived gains described in section 995(b)(1)). treated as foreign source under section from sources within the United States as • Dividends paid by a foreign corporation 865(a). However, special rules may apply provided in section 861(a)(9). See section are U.S. source income: to source such income as follows. 862(a)(9). 1. If the dividend is treated under • Income from the purchase and sale of Other Special Rules section 243(e) as a distribution from the inventory property is generally sourced accumulated profits of a predecessor U.S. under section 861(a)(6) as U.S. source if Basis of Property and Inventory corporation; or the property is purchased without the Costs for Property Imported by a 2. To the extent the foreign United States and sold within the United Related Person corporation's effectively connected gross States and under section 862(a)(6) as If property is imported into the United income for the testing period (defined foreign source if the property is purchased States by a related person in a transaction below) bears to all of the foreign within the United States and sold without and the property has a customs value, the corporation's gross income for the testing the United States. See also U.S. source basis or inventory cost to the importer may period, but only if 25% or more of the treatment of inventory sales attributable to not exceed the customs value. See foreign corporation's gross income during a U.S. office or fixed place of business section 1059A. the testing period was effectively under section 865(e)(2). connected with the conduct of a U.S. trade • Income from the production and sale of or business. inventory property is generally sourced Income of Foreign Governments solely on place-of-production activities and International Organizations The testing period is generally the 3 under section 863(b). tax years of the foreign corporation payer • Income from the sale of depreciable Income of foreign governments and preceding the tax year during which it property is generally sourced as mixed international organizations from the declared the dividend. If the foreign U.S. and foreign source under section following sources is generally not subject corporation existed for fewer than 3 years 865(c). to tax or withholding under Chapter 3 or 4 before the tax year of declaration, the • Income from certain sales of intangibles of the Code. testing period is the term of the foreign is generally subject to the source rules • Investments in the United States in corporation's existence before the current applicable to royalties, found in section stocks, bonds, or other domestic year. If the foreign corporation declared 861(a)(4). See section 865(d). securities owned by such foreign the dividend in its first tax year, that year is government or international organization. the testing period. Regardless of source, Foreign corporations with an office or • Interest on deposits in banks in the however, there is no tax imposed on any fixed place of business in the United United States of money belonging to such dividends paid by a foreign corporation out States. Income from the sale of personal foreign government or international of earnings and profits for a tax year in property attributable to an office or fixed organization. which the foreign corporation was subject place of business is U.S. source income • Investments in the United States in to the branch profits tax (determined after regardless of any of the above rules financial instruments held (by a foreign application of any income tax treaty). See relating to the source of income from the government) in executing governmental Regulations section 1.1441-1(b)(4)(vii). sale or exchange of personal property, financial or monetary policy. except that this source rule is not applicable for purposes of defining an Exception. The income described in export trade corporation (see sections section 892(a)(2) that is received directly 865(e)(2)(A) and 971). or indirectly from commercial activities is

-10- Instructions for Form 1120-F (2020) Page 11 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

subject to both tax and withholding under Corporations located in the United end of the tax year, or (b) are not required Chapter 3 or 4 of the Code. ! States or U.S. possessions can to file Schedule M-3 (Form 1120-F) and CAUTION use the online application. Foreign voluntarily file Schedule M-3 (Form corporations should call 1-267-941-1099 1120-F), must either (i) complete Specific Instructions (not a toll-free number) for more Schedule M-3 (Form 1120-F) entirely, or information on obtaining an EIN. See the (ii) complete Schedule M-3 (Form 1120-F) Period Covered Instructions for Form SS-4. through Part I, and complete File the 2020 return for calendar year 2020 Schedule M-1, instead of completing Parts and fiscal years that begin in 2020 and EIN applied for, but not received. If the II and III of Schedule M-3 (Form 1120-F). If end in 2021. For a fiscal or short tax year corporation has not received its EIN by the the corporation chooses to complete return, fill in the tax year space at the top time the return is due, enter “Applied For” Schedule M-1 instead of completing Parts of the form. and the date the corporation applied in the II and III of Schedule M-3 (Form 1120-F), space for the EIN. However, if the the amount on Schedule M-1, line 1, must The 2020 Form 1120-F may also be corporation is filing its return electronically, equal the amount on Schedule M-3 (Form used if: an EIN is required at the time the return is 1120-F), Part I, line 11. See the • The corporation has a tax year of less filed. instructions for Schedule M-1 (Form than 12 months that begins and ends in For more information, see the 1120-F) and the Instructions for 2021, and Instructions for Form SS-4. Schedule M-3 (Form 1120-F) for more • The 2021 Form 1120-F is not available details. at the time the corporation is required to file its return. Initial Return, Name or If you are filing Schedule M-3, check the “Schedule M-3 attached” box at the The corporation must show its 2021 tax Address Change, Final top of page 1 of Form 1120-F. year on the 2020 Form 1120-F and take Return, First Post-Merger Protective return filers. Check the into account any tax law changes that are Return, Amended Return, "Protective return" box if the foreign effective for tax years beginning after corporation is filing a protective return. December 31, 2020. Schedule M-3 Attached, See Protective return, earlier, for Protective Return information concerning who should file a Address Check all of the applicable box(es). protective return. Include the room, suite, or other unit Address change. If the corporation has If the corporation is filing a protective number after the street address. If the post changed its address since it last filed Form return, complete Form 1120-F as follows. office does not deliver mail to the street 1120-F (including a change to an “in care address and the corporation has a P.O. of” address), check the box for “Name or Page 1. Enter the complete name, box, show the box number instead. address change.” address, and EIN of the corporation. Check the “Protective return” box. Provide If the corporation receives its mail in all the information required in items A care of a third party (such as an Note. If a change in address or through G. accountant or an attorney), enter “C/O” on responsible party occurs after the return is the street address line followed by the filed, use Form 8822-B, Change of Address or Responsible Party — Note. If the corporation is filing Form third party's name and street address or 1120-F to claim a refund for P.O. box. Business, to notify the IRS. See the instructions for Form 8822-B for details. overwithholding reported in Section I on If the corporation has a foreign page 3, the return may also assert First post-merger return. Check the address, include the city or town, state or protective return status for the right to “First post-merger return” box if, due to a province, country, and foreign postal claim deductions and credits attributable corporate merger, the foreign corporation code. Do not abbreviate the country to ECI by also checking the “Protective has acquired a new EIN. Check the “First name. Follow the country's practice for return” box at the top of page 1. post-merger return” box if the foreign entering the name of the state or province corporation has merged with a foreign or Refund amount. Enter on lines 1 and and postal code. domestic corporation with U.S. operations. 4, page 1, the amount from line 11, Do not check the “First post-merger page 3. Enter on lines 5i and 5j the Employer Identification return” box if the foreign corporation has amount from line 12, page 3. Enter the Number (EIN) merged with another foreign corporation excess of line 5j over line 4 on lines 8a Enter the corporation's EIN. If the and the merger has no effect on the filer's and 9. This is the amount to be refunded corporation does not have an EIN, it must U.S. operations. to you. apply for one. An EIN may be applied for: Schedule M-3 attached. A corporation Signature. An authorized officer of the • Online—Go to IRS.gov/EIN. The EIN is with total assets reportable on Form corporation must sign and date the return. issued immediately once the application 1120-F, Schedule L, of $10 million or more If the protective return is being filed information is validated. on the last day of the tax year must file pursuant to an income tax treaty • By faxing or mailing Form SS-4, Schedule M-3 (Form 1120-F), Net Income exemption, attach a completed Form 8833 Application for Employer Identification (Loss) Reconcilation for Foreign to the return. Number. Corporations With Reportable Assets of Page 2. Provide all the information $10 Million or More, instead of While a corporation that was a QDD or required in items N, O, Q, T, V, W(1), Schedule M-1. A foreign corporation filing had a branch that was a QDD is generally W(2), X, Y, AA, BB, and any other Form 1120-F that is not required to file required to use an EIN, if the only reason applicable questions. With respect to item Schedule M-3 (Form 1120-F) may the corporation is filing a Form 1120-F is Y, it is not necessary for the corporation to voluntarily file Schedule M-3 (Form because it or its branch was a QDD, it may file Schedule P, even if the answer to item 1120-F) instead of Schedule M-1. use its QI-EIN instead. Y(1) is “Yes.” However, a corporation that Corporations that (a) are required to file files a protective tax return may voluntarily Schedule M-3 (Form 1120-F) and have less than $50 million total assets at the

Instructions for Form 1120-F (2020) -11- Page 12 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

file Schedules I and P to preserve certain files its tax return. See the instructions for withheld or paid that are reported on timely elections. Form 4466. line 5i. Page 3. Complete all applicable Line 5f. Credit for Tax Paid on Include on line 5i only amounts portions of Section I, Income From U.S. Undistributed Capital Gains ! withheld under Chapter 3 or 4 of Sources Not Effectively Connected With CAUTION the Code. Do not include other the Conduct of a Trade or Business in the Enter any credit from Form 2439, Notice to amounts, such as backup withholding, on United States. Shareholder of Undistributed Long-Term line 5i. Enter backup withholding on line 5j Capital Gains, for the corporation's share (see below). Identifying Information of the tax paid by a regulated investment company (RIC) or a real estate investment Line 5j. Total Payments Requested at Top of Page trust (REIT) on undistributed long-term 1 of Form capital gains included in the corporation's Backup withholding. If the corporation income. Attach Form 2439. had income tax withheld from any Complete items A though G. payments it received due to backup Item A. Enter the foreign corporation’s Line 5g. Credit for Federal Tax withholding, include the amount withheld country of incorporation or organization. If on Fuels in the total for line 5j. Enter the amount the corporation is incorporated or Enter the total income tax credit claimed withheld and the words “Backup organized in more than one country, list all on Form 4136, Credit for Federal Tax Paid Withholding” in the blank space in the countries. on Fuels. Attach Form 4136. right-hand column between lines 4 and 5j. Item B. Enter the foreign country or Credit for tax on ozone-depleting Line 6. Estimated Tax Penalty countries under whose laws the income chemicals. Include on line 5g any credit Generally, the corporation does not have reported on Form 1120-F is also subject to the corporation is claiming under section to file Form 2220 because the IRS can tax. This may include the country where 4682(g)(2) for tax on ozone-depleting figure the penalty amount, if any, and bill the corporation is managed and chemicals. Enter “ODC” on the dotted line the corporation. However, even if the controlled, as well as the country or to the left of the entry space. corporation does not owe the penalty, it countries in which the corporation is Line 5h. Refundable Credit must complete and attach Form 2220 if: incorporated or organized. • The annualized income or adjusted Item F. See the list of Principal Business From Form 8827 method is used, or Activity Codes at the end of these Enter on line 5h the amounts from Form • The corporation is a large corporation instructions. Using the list of codes and 8827, line 5c. (as defined in the Instructions for Form activities, determine from which activity 2220) computing its first required the corporation derives the highest Line 5i. U.S. Income Tax Paid or installment based on the prior year's tax. percentage of its total receipts. Enter on Withheld at Source If Form 2220 is attached, check the box lines F(1), F(2), and F(3) the principal Enter on line 5i U.S. income tax amounts on line 6, and enter any penalty on this business activity code number, the paid or withheld at source and reported line. corporation's principal business activity, on: and a description of the principal product • Form 1042-S pertaining to amounts Line 7. Amount Owed or service of the corporation. reported on page 3, line 12 (income from If the corporation cannot pay the full U.S. sources not effectively connected amount of tax owed, it can apply for an Computation of Tax Due or with the conduct of a trade or business in installment agreement online. The Overpayment the United States). The amount included corporation can apply for an installment on line 5i should be the total amount of agreement online if: Line 5b. Estimated Tax federal tax withheld reported to you on the • It cannot pay the full amount shown on Payments applicable Form(s) 1042-S less any line 7, amount that was repaid to you by the • The total amount owed is $25,000 or Enter any estimated tax payments the withholding agent. See the instructions corporation made for the tax year. less, and below the title of Section I on page 3 of the • The corporation can pay the liability in Beneficiaries of trusts. If the form for information pertaining to when full in 24 months. corporation is the beneficiary of a trust, amounts should be reported on line 12. To apply using the Online Payment and the trust makes a section 643(g) • Form 8805 pertaining to amounts Agreement Application, go to IRS.gov/ election to credit its estimated tax reported on page 4, Section II, that relate OPA. payments to its beneficiaries, include the to ECI from a partnership under section corporation's share of the payment in the 1446. Under an installment agreement, the total for line 5b. Enter “T” and the amount • Form 1042-S pertaining to amounts corporation can pay what it owes in on the dotted line next to the entry space. reported on page 4, Section II, that relate monthly installments. There are certain to ECI from a publicly traded partnership conditions that must be met to enter into Line 5c. 2020 Refund Applied under section 1446. and maintain an installment agreement, for on Form 4466 • Form 8288-A pertaining to amounts such as paying the liability within 24 months and making all required deposits If the corporation overpaid estimated tax, it reported on page 4, Section II, that relate and timely filing tax returns during the may be able to get a quick refund by filing to income from dispositions of U.S. real length of the agreement. Form 4466. The overpayment must be at property interests under section 1445 and income from dispositions of interests in least 10% of the corporation's expected If the installment agreement is partnerships that are engaged in the income tax liability and at least $500. File accepted, the corporation will be charged conduct of a trade or business in the Form 4466 after the end of the a fee and it will be subject to penalties and United States under section 1446(f). corporation's tax year, and no later than interest on the amount of tax not paid by the due date for filing the corporation's tax You must attach any Forms 8288-A, the due date of the return. return (not including extensions). Form 8805, and 1042-S to substantiate amounts 4466 must be filed before the corporation

-12- Instructions for Form 1120-F (2020) Page 13 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Line 8b • Answer “Yes” if the corporation had a • It elects under section 444 to have a tax permanent establishment in the United year other than a calendar year. To make Enter on line 8b the amount of States at any time during the tax year or in the election, use Form 8716, Election To overpayment on line 8a resulting from tax any prior tax year to which income was Have a Tax Year Other Than a Required deducted and withheld under Chapters 3 attributable, and enter the name of the Tax Year. and 4. This amount is computed by country of residence of the foreign completing Schedule W on page 8 of If a corporation makes the section 444 corporation. Form 1120-F. election, its deduction for certain amounts • Answer “No” if the corporation does not paid to employee-owners may be limited. Line 9 have a permanent establishment in the See Schedule H (Form 1120), Section Enter the portion of line 8a you want United States. 280H Limitations for a Personal Service credited to your 2021 estimated tax and Corporation (PSC), to figure the maximum If the answer to item L is “No” and the the portion of line 8a you want refunded. deduction. answer to item K(1) is “Yes,” complete item W(1) on page 2 of the form and If a section 444 election is terminated Note. The election to apply some or all of and the termination results in a short tax the overpayment amount to the attach a completed Form 8833 to the return, including a statement indicating the year, type or print at the top of the first corporation's 2021 estimated tax cannot page of Form 1120-F for the short tax year be changed at a later date. nature and amount (or reasonable estimate thereof) of gross receipts of the “SECTION 444 ELECTION TERMINATED.” Note. You can credit any or all of the foreign corporation exempt by reason of line 8a overpayment to your 2021 not having a permanent establishment in Other rules. For other rules that apply to estimated tax, even those amounts on the United States. personal service corporations, see line 8b resulting from tax deducted and Item M Passive activity limitations, later. withheld under Chapters 3 and 4. See Form 5472, earlier. Item P Note. Refunds of certain overpayments Item O—Personal Service Enter any tax-exempt interest received or (for example, those which pertain to tax accrued. Include any exempt-interest withheld and reported on Forms 1042-S, Corporation dividends received as a shareholder in a 8805, and 8288-A) may require additional A personal service corporation is a mutual fund or other RIC. Also, if required, time to be processed. Therefore, please corporation whose principal activity include the same amount on allow up to 6 months for these refunds to (defined below) for the testing period for Schedule M-1, line 7a, or Schedule M-3, be issued. the tax year is the performance of Part II, line 4a. personal services. The services must be Electronic deposit of refund. If the substantially performed by Item R corporation has a refund of $1 million or employee-owners. If the corporation has a net operating loss more and wants it electronically deposited (NOL) for 2020, it can generally elect to into its checking or savings account at any Testing period. Generally, the testing waive the entire carryback period for the U.S. bank or other financial institution period for a tax year is the prior tax year. NOL and instead carry the NOL forward to instead of having a check sent to the However, the testing period for a new future tax years. To do so, check the box corporation, complete Form 8302 and corporation starts with the first day of its in item R and file Form 1120-F by its due attach it to Form 1120-F. first tax year and ends on the earlier of: date, including extensions. Do not attach • The last day of its first tax year, or the statement described in Temporary Additional Information • The last day of the calendar year in Regulations section 301.9100-12T. Requested on Pages 2 and which the first tax year began. Generally, once made, the election is Principal activity. The principal activity irrevocable. See Special rules for farming 3 of Form of a corporation is considered to be the loss NOLs, later. Complete items H through II. performance of personal services if, If the corporation timely filed its return during the testing period, the corporation's Item K(1) for the loss year without making the compensation costs for the performance election, it can make the election on an If the foreign corporation was not engaged of personal services (defined below) are amended return filed within 6 months of in a U.S. trade or business at any time more than 50% of its total compensation the due date of the loss year return during the tax year, or was engaged in a costs. U.S. trade or business but did not derive (excluding extensions). Attach the election any gross income effectively connected to Performance of personal services. to the amended return and write "Filed such trade or business, answer “No” to The term “performance of personal pursuant to section 301.9100-2" on the item K(1). services” includes any activity involving election statement. See the Instructions the performance of personal services in for Form 1139. If the foreign corporation had gross the fields of health, law, engineering, income effectively connected with or architecture, accounting, actuarial Item S treated as effectively connected with the science, performing arts, or consulting. Enter the amount of the NOL carryover to conduct of a trade or business in the the tax year from prior years, even if some Accounting period. A personal service United States, answer “Yes” to item K(1). of the loss is used to offset income on this corporation must use a calendar tax year return. The amount to enter is the total of Item L unless: all NOLs generated in prior years but not It elects to use a 52-53-week tax year Skip item L (leave blank) if the foreign • used to offset income (either as a that ends with reference to the calendar corporation is a resident of a country that carryback or carryover) to a tax year prior year or tax year elected under section does not have an income tax treaty with to 2020. Do not reduce the amount by any 444; the United States. If the foreign NOL deduction reported on Section II, It can establish a business purpose for corporation is a resident of a country that • line 30a. has an income tax treaty with the United a different tax year and obtains the States: approval of the IRS (see the Instructions for Form 1128 and Pub. 538); or

Instructions for Form 1120-F (2020) -13- Page 14 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Item T Item Y(2) Attach Schedule UTP to the corporation's income tax return. Do not file Check the “Yes” box for item T if the If the corporation owned at least a 10% it separately. A taxpayer that files a corporation is a subsidiary in a interest, directly or indirectly, in any protective Form 1120-F must also file parent-subsidiary controlled group. This foreign partnership, attach a statement Schedule UTP if it satisfies the applies even if the corporation is a listing the following information for each requirements set forth above. subsidiary member of one group and the foreign partnership. For this purpose, a parent corporation of another. For a foreign partnership includes an entity For details, see the Instructions for definition of a parent-subsidiary controlled treated as a foreign partnership under Schedule UTP. group, see the Instructions for Schedule O Regulations section 301.7701-2 or (Form 1120). 301.7701-3. Item BB • Name and EIN (if any) of the foreign If the foreign corporation made any Note. If the corporation is an “excluded partnership. payment(s) in 2020, that would require the member” of a controlled group (see • Identify which, if any, of the following foreign corporation to file any Forms 1042 definition in the Instructions for forms the foreign partnership filed for its and 1042-S, check the “Yes” box. See the Schedule O (Form 1120)), it is still tax year ending with or within the Instructions for Form 1042 and the considered a member of a controlled corporation's tax year: Form 1042, 1065, Instructions for Form 1042-S for group for this purpose. or 8804. information regarding who is required to Item W(1) • Name of tax matters partner (if any). file Forms 1042 and 1042-S and what • Beginning and ending dates of the types of payments are subject to reporting If a foreign corporation claims that a treaty foreign partnership's tax year. on Forms 1042 and 1042-S. overrules or modifies any provision of the Internal Revenue Code and thereby In addition, report any ECI included on Item CC effects a reduction of any tax with respect Schedule K-1 reported by the foreign If the corporation or any branch of the to an item reported on this Form 1120-F, partnership to the corporation, and the ECI corporation was a QDD, check the “Yes” check the “Yes” box. Check the “Yes” box, apportionment of the corporation's outside box, enter the QI-EIN, and attach a for example, if a treaty benefit has been basis in the foreign partnership as Schedule Q (Form 1120-F) for each QDD. claimed based on: required in Schedule P. You must complete and attach The nondiscrimination provision of a • Schedule Q (Form 1120-F) even if the treaty. Item Z(2) QDD has zero tax liability. • The business profits article of a treaty, if If the answer to item Z(2) is “Yes,” attach a expenses are claimed in determining the statement explaining whether the Item DD business profits of the foreign corporation, interbranch transactions are recognized If the corporation had gross receipts of at notwithstanding an inconsistent provision under Proposed Regulations section least $500 million in any one of the 3 of the Code. 1.863-3(h) (Global Dealing Regulations) or preceding tax years, complete and attach • The gains article, if a treaty benefit is some other proposed regulation. If Form 8991. For this purpose, the claimed relating to gain or loss on the interbranch transactions are recognized corporation's gross receipts include the disposition of a U.S. real property interest. pursuant to a U.S. income tax treaty other gross receipts of all persons aggregated • The branch profits tax article (or portion than one that, in its text or accompanying with the corporation as specified in section of the dividends article relating to the documents (including an exchange of 59A(e)(3). See the Instructions for Form branch profits tax) and tax on excess notes), allows for such recognition by 8991 to determine if the corporation is interest. explicitly incorporating an arm's-length subject to the base erosion minimum tax. • A waiver of insurance excise tax under method applying the OECD Transfer section 4371 (if the foreign corporation Pricing Guidelines, then such treaty-based Item EE has not entered into a closing agreement position should be disclosed on Form Section 267A disallows a deduction for with the IRS and has not filed an annual 8275-R, in addition to the treaty disclosure certain interest or royalty paid or accrued Form 720). required on Form 8833. pursuant to a hybrid arrangement, to the • The interest, dividends, or royalty Item AA extent that, under the foreign tax law, article, if a refund of withholding tax is due. there is not a corresponding income A corporation filing Form 1120-F must file Item W(2) inclusion (including long-term deferral). Schedule UTP (Form 1120), Uncertain Report in Item EE the total amount of Check the "Yes" box if the foreign Tax Position Statement, with its 2020 interest and royalty paid or accrued by a corporation is claiming tax treaty benefits income tax return if: U.S. taxable branch (which includes a pursuant to a Competent Authority • For 2020, the corporation's total assets U.S. permanent establishment) of the determination or Advance Pricing equal or exceed $10 million. The assets of foreign corporation for which a deduction Agreement that it qualifies for the treaty a corporation filing a Form 1120-F equal or is disallowed under section 267A. benefits being claimed. You must attach a exceed $10 million if the higher of the copy of the Competent Authority beginning or end of year total worldwide Payments to which section 267A ap- determination letter or Advance Pricing assets of the corporation reported on plies. Interest or royalty considered paid Agreement to the return. Form 1120-F, Schedule L, line 17, would or accrued by a U.S. taxable branch of the be at least $10 million if the corporation foreign corporation is subject to section Item Y(1) were to prepare a Schedule L on a 267A. See Regulations section For more information regarding a worldwide basis; 1.267A-5(b)(3) for rules regarding U.S. corporation's distributive share of income • The corporation or a related party taxable branch payments, including from a directly owned partnership interest issued audited financial statements interest or royalties considered paid or that is ECI or treated as ECI by the reporting all or a portion of the accrued by a U.S. taxable branch. Section partnership or the corporation (partner), corporation's operations for all or a portion 267A generally applies to interest or see Who Must Complete Schedule P in of the corporation's tax year; and royalties paid or accrued pursuant to a the separate Instructions for Schedule P • The corporation has one or more tax hybrid arrangement (such as, for example, (Form 1120-F). positions that must be reported on a payment pursuant to a hybrid Schedule UTP. instrument, or a payment to a reverse

-14- Instructions for Form 1120-F (2020) Page 15 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

hybrid), provided that the payment or Additionally, see Rev. Proc. 2020-22, Item HH accrual is to a related party (or pursuant to 2020-18 I.R.B. 745, available at In general, if a foreign corporation owns, a structured arrangement). In addition, IRS.gov/irb/2020–18_IRB#REV- directly or indirectly, an interest in a pursuant to an imported mismatch rule, Proc-2020-22, which provides an partnership that is engaged in a U.S. trade section 267A generally applies to interest automatic extension of time for certain or business, gain or loss on the sale or or royalties paid or accrued pursuant to a taxpayers to file a real property trade or exchange of all (or any portion of) such non-hybrid arrangement where the income business election or a farming business interest is treated as effectively connected attributable to that payment or accrual is election for tax years 2018, 2019, or 2020. with the conduct of such trade or business directly or indirectly offset by certain Rev. Proc. 2020-22 also provides an to the extent effectively connected gain or deductions involving hybridity incurred by opportunity for certain taxpayers to loss would have flowed through the a related party or pursuant to a structured withdraw a prior election. Rev. Proc. partnership to the foreign corporation had arrangement. However, section 267A 2020-22 does not apply to utility trades or the partnership sold all of its assets at fair does not apply if a de minimis exception is businesses. market value (FMV) as of the date of the satisfied. See Regulations section sale or exchange. See section 864(c)(8) 1.267A-1(c). For purposes of section Check "Yes" if the corporation has an for more details. Also, see the Proposed 267A, interest and royalties are defined election in effect to exclude a real property Regulations under section 864(c)(8) broadly. For additional information about trade or business or a farming business (REG-113604-18) for additional guidance arrangements subject to section 267A, from section 163(j). For more information, concerning gain or loss of foreign persons see Regulations sections 1.267A-2 and see section 163(j) and the Instructions for from the sale or exchange of certain 1.267A-4. Also see the anti-avoidance rule Form 8990. partnership interests. under Regulations section 1.267A-5(b)(6). Item GG Extent to which deduction is disal- Generally, a taxpayer with a trade or Item II lowed. When section 267A applies to business must file Form 8990 to claim a If a foreign corporation is organized in a interest or royalties paid or accrued deduction for business interest. In U.S. possession, it may be a Qualified pursuant to a hybrid arrangement, it addition, Form 8990 must be filed by any Opportunity Fund (QOF) only if it is generally disallows a deduction for the taxpayer that owns an interest in a organized for the purpose of investing in amount to the extent that, under the partnership with current year, or prior year qualified opportunity zone property that foreign tax law, there is not a carryover, excess business interest relates to a trade or business operated in corresponding income inclusion (including expense allocated from the partnership. the U.S. possession in which the long-term deferral). However, the corporation is organized. To be certified deduction is not disallowed to the extent Exclusions from filing. A taxpayer is as a QOF, the corporation must file Form the amount is directly or indirectly included not required to file Form 8990 if the 1120-F and attach Form 8996, even if the in income in the United States, such as if taxpayer is a small business taxpayer corporation had no income or expenses to the amount is taken into account with (defined below) and does not have excess report. If the corporation is attaching Form respect to a U.S. shareholder under business interest expense from a 8996, check the “Yes” box for Item II. On section 951(a) or section 951A. For partnership. A taxpayer is also not the line following the dollar sign, enter the additional information, see Regulations required to file Form 8990 if the taxpayer amount from Form 8996, line 15. sections 1.267A-2 through 1.267A-4. For only has business interest expense from The penalty reported on this line from examples illustrating the application of these excepted trades or businesses: Form 8996, line 15, is not due with the section 267A, see Regulations section • An electing real property trade or filing of this form. The IRS will separately 1.267A-7. business, • An electing farming business, or send to you a notice setting forth the due Item FF • Certain utility businesses. date for the penalty payment and where that payment should be sent. The limitation on business interest Small business taxpayer. A small expense applies to every taxpayer with a business taxpayer is not subject to the trade or business, unless the taxpayer business interest expense limitation and is Section I—Income From meets certain specified exceptions. A not required to file Form 8990. A small U.S. Sources Not taxpayer may elect out of the limitation for business taxpayer is a taxpayer that (a) is Effectively Connected certain businesses otherwise subject to not a tax shelter (as defined in section the business interest expense limitation. 448(d)(3), and (b) meets the gross With the Conduct of a receipts test of section 448(c) discussed Certain real property trades or Trade or Business in the next. businesses and farming businesses United States qualify to make an election not to limit Gross receipts test. A taxpayer meets Note. Complete Section I only if you business interest expense. This is an the gross receipts test if the taxpayer has derived U.S. source income not effectively irrevocable election. If you make this average annual gross receipts of $26 connected with the conduct of a trade or election, you are required to use the million or less for the 3 prior tax years. A business in the United States and either alternative depreciation system to taxpayer’s average annual gross receipts your withholding tax liability was not depreciate any nonresidential real for the 3 prior tax years is determined by correctly withheld at source or not property, residential rental property, and adding the gross receipts for the 3 prior correctly reported on Form 1042-S, you qualified improvement property for an tax years and dividing the total by 3. Gross have a QDD tax liability (see section 3.09 electing real property trade or business, receipts include the aggregate gross of the Qualified Intermediary Agreement), and any property with a recovery period of receipts from all persons treated as a or you are claiming a credit or refund of an 10 years or more for an electing farming single employer, such as a controlled amount withheld at source. You must business. See section 168(g)(1)(F). Also, group of corporations, commonly attach any Forms 1042-S (and any you are not entitled to the special controlled partnerships, or proprietorships, supporting documentation) related to depreciation allowance for that property. and affiliated service groups. See section amounts for which you are claiming a For a taxpayer with more than one 448(c) and the Instructions for Form 8990 credit or refund for overwithholding (see qualifying business, the election is made for additional information. the instructions for line 5i). The amount with respect to each business. reported in column (e) is the amount that

Instructions for Form 1120-F (2020) -15- Page 16 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

was actually withheld at source (and not previously taken into account and if the tax Revenue Code as applied to that repaid to you by the withholding agent), as imposed on the OID does not exceed the possession. reported to you in box 10 of the Form(s) payment received less the tax imposed on 1042-S issued by the withholding any interest included in the payment Transportation income of the agent(s). See Claim for Refund or Credit, received. This rule applies to payments corporation will not be treated as ECI earlier, for additional documentation received for OID obligations issued after unless: requirements. March 31, 1972. • The corporation has a fixed place of business in the United States involved in Only report amounts on these lines if: Certain OID is not taxable for OID • The amount received is fixed or the earning of transportation income, and obligations issued after July 18, 1984. See • Substantially all of the corporation's determinable, annual or periodic (FDAP) section 881(c) for more details. (see definition below). U.S. source gross transportation income For rules that apply to other OID The amount received is includible in the (determined without regard to the rule that • obligations, see Pub. 515. gross income of the foreign corporation. such income does not include ECI) is Therefore, receipts that are excluded from 5. Gains from the sale or exchange of attributable to regularly scheduled income (for example, interest income patents, copyrights, and other intangible transportation (or, in the case of income received on state and local bonds that is property if the gains are from payments from the leasing of a vessel or aircraft, is excluded under section 103) would not be that are contingent on the productivity, attributable to a fixed place of business in included as income in Section I. use, or disposition of the property or the United States). interest sold or exchanged. • The amount received is from U.S. For more information, see section 887. sources (see Source of Income Rules, For more information, see section Enter the foreign corporation's U.S. earlier). 881(a) and Regulations section 1.881-2. • The amount received is not effectively source gross transportation income on connected with the conduct of a U.S. trade Note. For purposes of determining line 9, column (b). Also, attach Schedule V or business (see Section II, later). whether its income is taxable under (Form 1120-F). • The amount received is not exempt (by section 881(a), a corporation created or See Exclusion from gross income for Code) from taxation. For example, interest organized in Guam, American Samoa, the on deposits that are exempted by section certain income from ships and aircraft, Northern Mariana Islands, or the U.S. later. 881(d) would not be included as income in Virgin Islands will not be treated as a Section I. In addition, certain portfolio foreign corporation if it meets the rules of Line 10. Other Items of Income interest is not taxable for obligations section 881(b). For dividends paid after Include on line 10 all other income not issued after July 18, 1984. See section October 22, 2004, a corporation created reportable on lines 1 through 9. For any 881(c) for more details. or organized in Puerto Rico will be taxed amounts received by a QDD in its equity If you are a QDD, report all QDD tax • under section 881(a) at a rate of 10% with derivatives dealer capacity, include a liabilities (see Qualified Intermediary respect to such dividends received during statement detailing each type of income. Agreement), whether or not the amounts the tax year in the circumstances outlined In addition, if the foreign corporation are subject to withholding or correctly in section 881(b)(2). received a specified federal procurement withheld. Line 9. Gross Transportation payment (as defined in section 5000C(b)) that was not fully withheld upon at source, Such income (except as indicated Income below) will generally be subject to tax at a enter the payment in Section I, line 10, 30% rate. See section 881(a). A 4% tax is imposed on a foreign column (b); enter a 2% rate of tax in corporation's U.S. source gross column (c); enter the tax liability in column Amounts fixed or determinable, transportation income for the tax year. (d); and enter any withholding in column annual or periodic include the following. U.S. source gross transportation income (e). generally is any gross income that is 1. Interest (other than original issue Increase or decrease in tax attributa- discount (OID) as defined in section transportation income if such income is treated as from U.S. sources. ble to partner's additional reporting 1273), dividends, rents, royalties, salaries, year tax. If the taxpayer is a foreign wages, premiums, annuities, Transportation income is any income corporate partner and received a Form compensation, and other FDAP gains, from or connected with: 8986 from a partnership that has elected profits, and income. • The use (or hiring or leasing for use) of to have each reviewed partner take into Note. Item 1 above includes dividend a vessel or aircraft, or account the partner's share of the equivalents described in section 871(m); • The performance of services directly adjustments, as finally determined, however, dividends and dividend related to the use of a vessel or aircraft. instead of paying the imputed equivalents received in calendar years For this purpose, the term “vessel or underpayment, the foreign corporate 2018 through 2020 by a QDD in its equity aircraft” includes any container used in partner (taxpayer) will have to complete derivatives dealer capacity are excluded. connection with a vessel or aircraft. Form 8978 to report adjustments shown on the Form 8986 they received from the 2. Gains described in section 631(b) Generally, 50% of all transportation partnership. The foreign corporate partner or (c), relating to disposal of timber, coal, income that is attributable to (taxpayer) must complete a separate Form or domestic iron ore with a retained transportation that either begins or ends in 8978 to report adjustments pertaining to economic interest. the United States is treated as from U.S. income that is effectively connected with sources. See section 863(c)(2)(B) for a 3. On a sale or exchange of an OID the conduct of a trade or business in the special rule for personal service income. obligation, the amount of the OID accruing United States under section 882 (an “ECI while the obligation was held by the Exceptions. U.S. source gross Form 8978”) and a separate Form 8978 to foreign corporation, unless this amount transportation income does not include report adjustments pertaining to income was taken into account on a payment. income that is: from U.S. sources not effectively 4. On a payment received on an OID • Effectively connected with the conduct connected with the conduct of a trade or obligation, the amount of the OID accruing of a U.S. trade or business, or business in the United States under while the obligation was held by the • Taxable in a possession of the United section 881 (an “FDAP Form 8978”). foreign corporation, if such OID was not States under the provisions of the Internal Include any increase or decrease in taxes

-16- Instructions for Form 1120-F (2020) Page 17 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

due from the FDAP Form 8978, line 14 FDAP items are generally ECI (and are United States and an office of the foreign that was not fully withheld upon at source, therefore includible in Section II) if the corporation in a foreign country materially on a separate line on Form 1120-F, asset-use test, the business-activities test, participated in the sale. Section I, line 10. Enter “From Form 8978” or both tests (explained below) are met. • Any income or gain that is equivalent to in column (a) and skip (leave blank) any item of income or gain listed above columns (b) and (c) . Enter in column (d) If neither test is met, FDAP items are must be treated in the same manner as the amount of the increase or decrease generally not ECI (and are therefore such item for purposes of determining from the FDAP Form 8978, line 14. Enter includible in Section I instead of whether that income is foreign source ECI. any withholding in column (e). Attach the Section II). For more information, see FDAP Form 8978 to Form 1120-F. section 864(c)(2) and Regulations section See section 864(c)(5)(A) and 1.864-4(c). Regulations section 1.864-7 for the Note. The taxpayer will generally skip definition of office or other fixed place of Finance business. See Regulations lines 3a, 3b, 4, 7, 9a, 9b, and 10 of the business in the United States. See section 1.864-4(c)(5) for special rules FDAP Form 8978. sections 864(c)(5)(B) and (C) and relating to banking, financing, or similar Regulations section 1.864-6 for special business activities. Such rules apply to Line 13 rules for determining when foreign source certain stocks and securities of a banking, Check the “Yes” box if you received an income received by a foreign corporation financing, or similar business in lieu of the item of income during the tax year with is from an office or other fixed place of asset-use and business-activities tests. respect to which you are treated as fiscally business in the United States. transparent under the laws where you are Asset-use test. The FDAP items are Foreign insurance companies. Foreign organized. In such a case, you may not from assets used in, or held for use in, the source income of a foreign insurance claim a reduced rate of tax under a treaty conduct of U.S. trade or business. For company that is attributable to its U.S. with respect to that item. See Regulations example, the following items are ECI. trade or business is ECI. See section section 1.894-1(d)(1). Income earned on a trade or note • 864(c)(4)(C) and Regulations section receivable acquired in the conduct of the If the item of income has been withheld 1.864-5(c). upon, your interest holders may, however, U.S. trade or business. be able to claim treaty benefits, but only if • Interest income earned from the Excluded foreign source income. the tax jurisdiction in which your interest temporary investment of funds needed in Foreign source income that would holders qualify for treaty benefits treats the foreign corporation's U.S. trade or otherwise be ECI under any of the above you as fiscally transparent and the interest business. rules for foreign source income is excluded if: holders are not fiscally transparent with Business-activities test. The activities It is foreign source dividends, interest, respect to that item of income. An interest of the U.S. trade or business were a • or royalties paid by a foreign corporation in holder claiming a benefit should file a material factor in the realization of the which the taxpayer owns or is considered separate Form 1120-F, if appropriate. See FDAP items. Regulations section 1.894-1(d)(3) for the to own (within the meaning of section 958) more than 50% of the total combined definition of fiscally transparent and Foreign Source Effectively Regulations section 1.894-1(d)(5) for voting power of all classes of stock examples. Connected Income entitled to vote; or The taxpayer is a CFC (as defined in Foreign source income is generally not • section 957) and the foreign source ECI. However, if the foreign corporation Section II—Income income is subpart F income (as defined in has an office or other fixed place of Effectively Connected section 952). business in the United States, the With the Conduct of a following types of foreign source income it For more information, see section Trade or Business in the receives from that U.S. office are ECI. 864(c)(4)(D) and Regulations section 1.864-5(d). United States • Rents or royalties received for the use outside the United States of intangible Foreign Corporations Not Foreign Corporations Engaged personal property described in section 862(a)(4) if derived from the active Engaged in a U.S. Trade or in a U.S. Trade or Business conduct of a U.S. trade or business. Business These corporations are taxed on their ECI • Gains or losses on the sale or If a foreign corporation is not engaged in a at the same 21% tax rate that applies to exchange of intangible personal property U.S. trade or business during the tax year, domestic corporations. ECI can be U.S. located outside the United States or from it will complete Section II only if such source or foreign source income as any interest in such property, if such gains corporation: explained below. or losses are derived in the active conduct • Had current year income or gain from a of the trade or business in the United sale or exchange of property or from U.S. Source Effectively Connected States. performing services (or any other Income • Dividends, interest, amounts received transaction) in any other tax year that for the provision of a guarantee of would have been ECI in that other tax year U.S. source income derived by a foreign indebtedness, issued after September 27, (see section 864(c)(6)); corporation engaged in a U.S. trade or 2010, if derived from the active conduct of • Had current year income or gain from a business other than FDAP and capital a U.S. banking, financing, or similar disposition of property that is no longer gains is ECI. See Regulations section business or if the principal business of the used or held for use in conducting a U.S. 1.864-4(b). foreign corporation is trading in stocks or trade or business within the 10-year period securities for its own account. before the disposition that would have Note. For purposes of the preceding • Income from the sale or exchange of been ECI immediately before such paragraph, U.S. source income includes inventory outside the United States cessation (see section 864(c)(7)); income with respect to activities related to through the U.S. office, unless the Elected to treat real property income as the exploration and exploitation of natural • property is sold or exchanged for use, ECI (see below); resources in continental shelf areas (see consumption, or disposition outside the section 638).

Instructions for Form 1120-F (2020) -17- Page 18 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

• Was created or organized and was Income disposition” is any disposition of (a) conducting a banking business in a U.S. personal property by a person who possession, and received interest on U.S. Line 1. Gross Receipts or Sales regularly sells or otherwise disposes of obligations that is not portfolio interest Line 1a. Enter gross income effectively personal property of the same type on the (see section 882(e)); or connected with the conduct of a U.S. trade installment plan, or (b) real property held • Had gain or loss from disposing of a or business (except for those income for sale to customers in the ordinary U.S. real property interest (see Disposition items that must be reported on lines 4 course of the taxpayer's trade or business. of U.S. Real Property Interest by a Foreign through 10). Include on line 1a effectively The restrictions on using the Corporation, later). connected gross receipts or sales. installment method do not apply to the Election To Treat Real Property Special rules apply to certain income, following. Income as Effectively as discussed below. • Dispositions of property used or produced in the trade or business of Connected Income Advance payments. In general, farming. A foreign corporation that derives, during advance payments are reported in the • Certain dispositions of timeshares and the tax year, any income from real year of receipt. For exceptions to this residential lots reported under the property located in the United States, or general rule for corporations that use the installment method for which the from any interest in such real property, accrual method of accounting, see the corporation elects to pay interest under may elect, for the tax year, to treat all such following. section 453(l)(3). income as ECI. See section 871(d). • To report income from long-term contracts, see section 460. Enter on line 1a (and carry to line 3) the Income to which this election applies gross profit on collections from these includes: • For rules that allow a limited deferral of advance payments beyond the current tax installment sales. Attach a statement • Gains from the sale or exchange of real showing the following information for the property or an interest therein; year, see the "Applicability Dates" discussion in the final regulations under current and the 3 preceding years: (a) • Rents or royalties from mines, wells, or gross sales, (b) cost of goods sold, (c) other natural deposits; and section 451(c), T.D. 9941. • For information on adopting or gross profits, (d) percentage of gross • Gains described in section 631(b) or profits to gross sales, (e) amount (c). changing to a permissible method for reporting advance payments for services collected, and (f) gross profit on the The election may be made whether or and certain goods by an accrual method amount collected. not the corporation is engaged in a U.S. corporation, see the Instructions for Form For sales of timeshares and residential trade or business during the tax year for 3115. lots reported under the installment which the election is made or whether or method, if the corporation elects to pay not the corporation has income from real Exclusion from gross income for interest under section 453(I)(3), the property that, for the tax year, is effectively certain income from ships and aircraft. corporation's income tax is increased by connected with the conduct of a U.S. trade A foreign corporation engaged in the the interest payable under section 453(l) or business. international operation of ships or aircraft (3). Report this addition to the tax on and organized in a qualified foreign Schedule J, line 8, and be sure to check To make the election, attach a country may exclude qualified income the “Other” box. statement that includes the information from its gross income, provided that the required in Regulations section corporation can satisfy certain ownership Nonaccrual experience method for 1.871-10(d)(1)(ii) to Form 1120-F for the requirements. See Schedule S (Form service providers. Accrual method first tax year for which the election is to 1120-F) and its separate instructions for corporations are not required to accrue apply. Use Section II to figure the tax on additional information. certain amounts to be received from the this income. performance of services that, based on Income from qualifying shipping their experience, will not be collected, if: Disposition of U.S. Real activities (tonnage tax). The • The services are in the fields of health, Property Interest by a Foreign corporation's gross income does not law, engineering, architecture, accounting, include income from qualifying shipping actuarial science, performing arts, or Corporation activities (as defined in section 1356) if the consulting; or A foreign corporation that disposes of a corporation makes an election under • The corporation meets the definition of U.S. real property interest (as defined in section 1354 to be taxed on its notional a small business taxpayer (discussed section 897(c)) must treat the gain or loss shipping income (as defined in section earlier). For more details, see section from the disposition as ECI, even if the 1353) at the highest corporate tax rate. If 448(d)(5) and section 448(c). corporation is not engaged in a U.S. trade the election is made, the corporation may This provision does not apply to any or business. Figure this gain or loss on generally not claim any loss, deduction, or amount if interest is required to be paid on Schedule D (Form 1120), Capital Gains credit with respect to qualifying shipping the amount or if there is any penalty for and Losses. Carry the result to Section II, activities. A corporation making this failure to timely pay the amount. See line 8, on page 4 of Form 1120-F. election may also elect to defer gain on certain dispositions of qualifying vessels Regulations section 1.448-2 for A foreign corporation may elect to be under section 1359. information on the nonaccrual experience treated as a domestic corporation for method, including information on safe Use Form 8902, Alternative Tax on harbor methods. For information on a purposes of sections 897 and 1445. See Qualifying Shipping Activities, to figure the section 897(i). book safe harbor method of accounting for tax. Include the alternative tax from Form corporations that use the nonaccrual 8902, line 30, on Schedule J, line 8, and See Temporary Regulations section experience method of accounting, see be sure to check the “Form 8902” box on 1.897-5T for the applicability of section Rev. Proc. 2011-46, 2011-42 I.R.B. 518, that line. 897 to reorganizations and liquidations. available at IRS.gov/irb/2011– Installment sales. Generally, the 42_IRB#RP-2011–46 as modified by Rev. If the corporation had income tax installment method may not be used for Proc. 2016-29, 2016-21 I.R.B. 880, withheld on Form 8288-A, include the dealer dispositions of property. A “dealer available at IRS.gov/ amount withheld on line 5i, page 1. irb2016-21_IRB#RP-2016-29. Also, see

-18- Instructions for Form 1120-F (2020) Page 19 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

the Instructions for Form 3115 for Line 10. Other Income in a U.S. trade or business, deductions are procedures to obtain automatic consent to allowed only if they are connected with change to this method or make certain Enter any other taxable income not income effectively connected with the changes within this method. reported on lines 1 through 9. List the type conduct of a trade or business in the and amount of income on an attached United States. Charitable contributions, Corporations that qualify to use the statement. If the corporation has only one nonaccrual experience method should however, may be deducted whether or not item of other income, describe it in they are so connected. See section 882(c) attach a statement showing total gross parentheses on line 10. receipts, the amount not accrued because and Regulations section 1.882-4(b) for more information. of the application of section 448(d)(5), and Examples of other income to report on the net amount accrued. Enter the net line 10 include the following. amount on line 1a. • Recoveries of bad debts deducted in Apportionment of Expenses Line 1b. Returns and Allowances. prior years under the specific charge-off In general, expenses that are definitely Enter cash and credit refunds the method. related to a class of gross income corporation made to customers for • The amount included in income from (including tax-exempt income) must be returned merchandise, rebates, and other Form 6478, Biofuel Producer Credit. allocated to that class of gross income. allowances made on gross receipts or • The amount included in income from Expenses not definitely related to a class sales. Form 8864, Biodiesel and Renewable of gross income should be allocated to all Diesel Fuels Credit. classes of income based on the ratio of • Refunds of taxes deducted in prior Line 2. Cost of Goods Sold gross income in each class of income to years to the extent they reduced the total gross income, or some other ratio Complete and attach Form 1125-A, Cost amount of tax imposed. See section 111 that clearly relates to the classes of of Goods Sold, if applicable. Enter on and the related regulations. Do not offset income. See Regulations section 1.861-8 Form 1120-F, line 2, the amount from current year taxes against tax refunds. and Temporary Regulations section Form 1125-A, line 8. See Form 1125-A • Ordinary income from trade or business 1.861-8T for more information. and its instructions. activities of a partnership (from Schedule K-1 (Form 1065)). Do not offset Attach Schedule H (Form 1120-F) to Line 4. Dividends ordinary losses against ordinary income. show the definitely related and indirect Instead, include the losses on Section II, allocation and apportionment of expenses See the instructions for Schedule C, later. line 27. Show the partnership's name, to ECI. The amount on Schedule H, Part II, Then complete Schedule C and enter on address, and EIN on Schedule P (Form line 20, is reportable on Form 1120-F, line 4 the amount from Schedule C, 1120-F). If the amount entered is from Section II, line 26. line 13. more than one partnership, identify the amount from each partnership on Note. The allocation and apportionment Line 5. Interest Schedule P. of bad debt deductions is not included on • The ratable portion of any net positive Enter taxable interest on U.S. obligations Schedule H but is reported only on Form section 481(a) adjustment. See Section 1120-F, Section II, line 15. and on loans, notes, mortgages, bonds, 481(a) adjustment, earlier. bank deposits, corporate bonds, tax • Part or all of the proceeds received refunds, etc. Do not offset interest from certain corporate-owned life Limitations on Deductions expense against interest income. Special insurance contracts issued after August rules apply to interest income from certain Uniform capitalization rules. The 17, 2006. Corporations that own one or uniform capitalization rules of section below-market-rate loans. See section more employer-owned life insurance 7872 for details. 263A require corporations to capitalize contracts issued after this date must file certain costs to inventory or other Form 8925, Report of Employer-Owned Note. Report tax-exempt interest on Form property. Life Insurance Contracts. See section 1120-F, page 2, item P. Also, if required, 101(j) for details. Corporations subject to the section include the same amount on Net income from notional principal 263A uniform capitalization rules are Schedule M-1, line 7a, or Schedule M-3, • contracts. required to capitalize: Part II, line 4a. • Interest and dividend equivalents (for 1. Direct costs of assets produced or example, confirmation and acceptance acquired for resale, and Line 6. Gross Rents letter of credit fees and other guarantee 2. Certain indirect costs (including Enter the gross amount received for the fees). taxes) that are properly allocable to rental of property. Deduct expenses such • Income from cancellation of debt (COD) property produced or property acquired for as repairs, interest, taxes, and from the repurchase of a debt instrument resale. depreciation on the proper lines for for less than its adjusted issue price. deductions. A rental activity held by a • The amount of payroll tax credit taken The corporation cannot deduct the closely held corporation or a personal by an employer on its employment tax costs required to be capitalized under service corporation may be subject to the returns (Forms 941, 943, and 944) for section 263A until it sells, uses, or passive activity loss rules. See Passive qualified paid sick and qualified paid otherwise disposes of the property (to activity limitations, later. family leave under FFCRA (both the which the costs relate). The corporation nonrefundable and refundable portions). recovers these costs through These amounts must be included in gross depreciation, amortization, or costs of Line 8. Capital Gain Net Income income for the tax year that includes the goods sold. Every effectively connected sale or last day of the calendar quarter in which exchange of a capital asset must be the credit is allowed. Note. A small business taxpayer (defined reported in detail on Schedule D (Form in Accounting Methods, earlier) is not 1120), even if there is no gain or loss. Deductions required to capitalize costs under section Important. In computing the taxable 263A. A small business taxpayer that income of a foreign corporation engaged wants to discontinue capitalizing costs under section 263A must change its

Instructions for Form 1120-F (2020) -19- Page 20 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

method of accounting. See section If the corporation timely filed its return • At any time during the last half of the tax 263A(i). Also, see Change in accounting for the year without making an election, it year, more than 50% in value of its method, earlier. can still make an election by filing an outstanding stock is directly or indirectly For more information on the uniform amended return within 6 months of the owned by or for not more than five capitalization rules, see Pub. 538. For due date of the return (excluding individuals; and information on non-small business extensions). Clearly indicate the election • The corporation is not a personal taxpayers, see Regulations sections on the amended return and write “Filed service corporation. 1.263A-1 through 1.263A-3. See section pursuant to section 301.9100-2” at the top Certain organizations are treated as 263A(d), Regulations section 1.263A-4, of the amended return. File the amended individuals for purposes of this test. See and Pub. 225 for rules for property return at the same address the corporation section 542(a)(2). For rules for produced in a farming business. filed its original return. The election determining stock ownership, see section applies when figuring taxable income for 544 (as modified by section 465(a)(3)). Transactions between related taxpay- the current tax year and all subsequent ers. Generally, an accrual basis taxpayer years. Reducing certain expenses for which may only deduct business expenses and credits are allowable. If the corporation The corporation can choose to forgo interest owed to a related party in the year claims certain credits, it may need to the elections above by affirmatively the payment is included in the income of reduce the otherwise allowable electing to capitalize its start-up or the related party. See sections 163(e)(3) deductions for expenses used to figure the organizational costs on its income tax and 267(a)(2) for limitations on deductions credit. This applies to credits such as the return filed by the due date (including for unpaid interest and expenses. See the following. extensions) for the tax year in which the instructions for Schedule I (Form 1120-F), Work opportunity credit (Form 5884). active trade or business begins. • line 24b, for limitations under these • Employee retention credit (Form sections of the interest expense allocable Note. The election to either amortize or 5884-A). under Regulations section 1.882-5. capitalize start-up costs is irrevocable and • Credit for increasing research activities (Form 6765). Limitations on business interest ex- applies to all start-up costs that are related Orphan drug credit (Form 8820). pense. Business interest expense is to the trade or business. • Disabled access credit (Form 8826). limited for tax years beginning after 2017. • Report the deductible amount of Empowerment zone employment credit This limit is taken into account on • start-up and organizational costs and any (Form 8844). Schedule I (Form 1120-F). See section amortization on line 27. For amortization Indian employment credit (Form 8845). 163(j), the instructions for Schedule I • that begins during the current tax year, Credit for employer social security and (Form 1120-F), and Form 8990. Also, see • complete and attach Form 4562, Medicare taxes paid on certain employee the instructions for item FF and item GG, Depreciation and Amortization. tips (Form 8846). earlier. Passive activity limitations. Limitations • Credit for small employer pension plan Section 291 limitations. Corporations on passive activity losses and credits start-up costs (Form 8881). may be required to adjust deductions for under section 469 apply to personal • Credit for employer-provided childcare depletion of iron ore and coal, intangible service corporations (for definition, see facilities and services (Form 8882). drilling and exploration and development item O, Personal Service Corporation, • Low sulfur diesel fuel production credit costs, certain deductions for financial earlier) and closely held corporations (see (Form 8896). institutions, and the amortizable basis of definition below). • Mine rescue team training credit (Form pollution control facilities. See section 291 8923). Generally, the two kinds of passive to determine the amount of the Credit for employer differential wage activities are: • adjustment. payments (Form 8932). • Trade or business activities in which the Credit for small employer health Election to deduct business start-up corporation did not materially participate • insurance premiums (Form 8941). and organizational costs. A corporation for the tax year; and Employer credit for paid family and can elect to deduct a limited amount of • Rental activities, regardless of its • medical leave (Form 8994). start-up and organizational costs it paid or participation. If the corporation has any of the credits incurred. Any remaining costs must For exceptions, see Form 8810, listed above, figure the current year credit generally be amortized over a 180-month Corporate Passive Activity Loss and before figuring the deduction for expenses period. See sections 195 and 248 and the Credit Limitations. related regulations. on which the credit is based. If the Corporations subject to the passive corporation capitalized any costs on which Time for making an election. The activity limitations must complete Form it figured the credit, it may need to reduce corporation generally elects to deduct 8810 to compute their allowable passive the amount capitalized by the credit start-up or organizational costs by activity loss and credit. Before completing attributable to these costs. claiming the deduction on its income tax Form 8810, see Temporary Regulations See the instructions for the form used return filed by the due date (including section 1.163-8T, which provides rules for to figure the applicable credit for more extensions) for the tax year in which the allocating interest expense among details. active trade or business begins. However, activities. If a passive activity is also for start-up or organizational costs paid or subject to the at-risk rules of section 465 Limitations on deductions related to incurred before September 9, 2008, the or the tax-exempt use loss rules of section property leased to tax-exempt entities. corporation is required to attach a 470, those rules apply before the passive If a corporation leases property to a statement to its return to elect to deduct loss rules. governmental or other tax-exempt entity, such costs. For more information, see section 469, the corporation cannot claim deductions For more details, including special the related regulations, and Pub. 925, related to the property to the extent that rules for costs paid or incurred before Passive Activity and At-Risk Rules. they exceed the corporation's income from September 9, 2008, see the Instructions the lease payments. This disallowed for Form 4562. Also, see Pub. 535, Closely held corporations. A tax-exempt use loss may be carried over Business Expenses. corporation is a closely held corporation if: to the next tax year and treated as a deduction with respect to the property for

-20- Instructions for Form 1120-F (2020) Page 21 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

that tax year. See section 470(d) for 1.263(a)-3(n) for information on how to exceptions. make the election. And the vehicle's FMV The lease term on the first day of the Contributions. See the instructions for New buildings, machinery, or began: lease exceeded: line 19, later, for limitations that apply to permanent improvements that increase Cars (excluding contributions. the value of the property are not trucks and vans) deductible as repair and maintenance Line 12. Compensation of Officers expenses. These expenses must be After 12/31/17 but $50,000 before 1/1/21 Enter deductible officers' compensation capitalized and depreciated or amortized. on line 12. Do not include compensation However, amounts paid for routine After 12/31/12 but $19,000 before 1/1/18 deductible elsewhere on the return, such maintenance on property, including buildings, may be deductible. See as amounts included in cost of goods sold, After 12/31/07 but before 1/1/13 $18,500 elective contributions to a section 401(k) Regulations section 1.263(a)-3(i). Trucks and vans cash or deferred arrangement, or amounts contributed under a salary reduction SEP Line 15. Bad Debts After 12/31/17 but $50,000 before 1/1/21 agreement or a SIMPLE IRA plan. Enter the total debts that became worthless in whole or in part during the tax After 12/31/13 but $19,500 If the corporation's total receipts year. A small bank or thrift institution using before 1/1/18 (line 1a, plus lines 4 through 10) are the reserve method of section 585 should After 12/31/09 but before 1/1/14 $19,000 $500,000 or more, complete Form attach a statement showing how it figured After 12/31/08 but before 1/1/10 $18,500 1125-E, Compensation of Officers. Enter the current year's provision. A corporation After 12/31/07 but before 1/1/09 $19,000 on Form 1120-F, line 12, the amount from that uses the cash method of accounting Form 1125-E, line 4. cannot claim a bad debt deduction unless the amount was previously included in Line 13. Salaries and Wages income. See Pub. 463, Travel, Gift, and Car Enter the total salaries and wages paid for Specific charge-off method. Attach to Expenses, for instructions on figuring the the tax year. Do not include salaries and the return a list of each debtor and the inclusion amount. wages deductible elsewhere on the return, amount of the bad debt deduction where such as amounts included in officers' the amount of the loans charged off (or Note. The inclusion amount for lease compensation, cost of goods sold, treated as charged off under Regulations terms beginning in 2021 will be published elective contributions to a section 401(k) section 1.166-2) for that debtor total in in the Internal Revenue Bulletin in early cash or deferred arrangement, or amounts excess of $500,000 in the tax year. 2021. contributed under a salary reduction SEP agreement or a SIMPLE IRA plan. Line 16. Rents Line 17. Taxes and Licenses If the corporation rented or leased a Enter taxes paid or accrued during the tax If the corporation provided taxable vehicle, enter the total annual rent or lease year, but do not include the following. fringe benefits to its employees, such as expense paid or incurred during the year. • Federal income taxes. personal use of a car, do not deduct as Also, complete Part V of Form 4562. If the • Foreign or U.S. possession income wages the amount allocated for corporation leased a vehicle for a term of taxes if a foreign tax credit is claimed. depreciation and other expenses claimed 30 days or more, the deduction for vehicle • Taxes not imposed on the corporation. on lines 20 and 27. lease expense may have to be reduced by • Taxes, including state or local sales If the corporation claims a credit an amount includible in income called the taxes, that are paid or incurred in ! for any wages paid or incurred, it inclusion amount. The corporation may connection with an acquisition or CAUTION may need to reduce any have an inclusion amount if: disposition of property (these taxes must corresponding deduction for officers' be treated as a part of the cost of the compensation and salaries and wages. acquired property or, in the case of a See Reducing certain expenses for which disposition, as a reduction in the amount credits are allowable, earlier. realized on the disposition). • Taxes assessed against local benefits Also, reduce the amounts that increase the value of the property deducted as compensation of assessed (such as for paving, etc.). officers and salaries and wages • Taxes deducted elsewhere on the by the nonrefundable and refundable return, such as those reflected in cost of portions of the new CARES Act employee goods sold. retention credit claimed on the corporation's employment tax return(s). See section 164(d) for information on apportionment of taxes on real property between seller and purchaser. Line 14. Repairs and Maintenance Do not reduce the corporation's Enter the cost of repairs and maintenance deduction for social security and not claimed elsewhere on the return, such Medicare taxes by the following as labor and supplies, that do not add to amounts claimed on its employment tax the value of the property or appreciably returns: (1) the nonrefundable and prolong its life. See Regulations section refundable portions of the CARES Act 1.162-4. The corporation may elect to employee retention credit (ERC), and (2) capitalize certain repair and maintenance the nonrefundable and refundable costs consistent with its books and portions of the FFCRA credits for qualified records. See Regulations section sick and family leave wages. Instead, item

Instructions for Form 1120-F (2020) -21- Page 22 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

(1) reduces the deductions for elections for such applicable year or Special rules apply if the corporation compensation of officers and salaries and years. In this case, under certain has an NOL carryover to the tax year. In wages on Section II, lines 12 and 13, and circumstances, the Director of Field figuring the charitable contributions item (2) must be reported as income on Operations may make any or all of the deduction for the current tax year, the 10% Section II, line 10. binding elections provided under limit is applied using the corporation’s Regulations section 1.882-5 in taxable income after taking into account See section 906(b)(1) for rules accordance with Regulations section any deduction for the NOL. concerning certain foreign taxes imposed 1.882-5(a)(7)(ii) (and may make the To figure the amount of any remaining on income from U.S. sources that may not binding partnership basis apportionments NOL carryover to later years, taxable be deducted or credited. election under Regulations section income must be modified (see section 1.884-1(d)(3)(v)) on behalf of the 172(b)). To the extent that contributions corporation. Line 18. Interest Expense From are used to reduce taxable income for this purpose and increase an NOL carryover, a Schedule I, Line 25 Line 19. Charitable Contributions contributions carryover is not allowed. See Enter the interest expense from section 170(d)(2)(B). Note. This deduction is allowed for all Schedule I (Form 1120-F), line 25. Attach Suspension of 10% limitation for farm- Schedule I to the Form 1120-F. See contributions, whether or not connected ers and ranchers. A qualified farmer or Schedule I and its separate instructions for with income that is effectively connected rancher (as defined in section 170(b)(1)(E) additional information relating to the with the conduct of a trade or business in (v)) that does not have publicly traded allocation of interest expense to ECI and the United States. See section 882(c)(1) stock may deduct contributions of the amount that may be claimed as a (B). qualified conservation property without deduction on Form 1120-F, Section II, regard to the general 10% limit. line 18. Enter contributions or gifts actually paid within the tax year to or for the use of The total amount of the contribution Treaty-based interest expense alloca- charitable and governmental claimed for the qualified conservation tion methods. The three-step formula organizations described in section 170(c) property cannot exceed 100% of the under Regulations section 1.882-5 and any unused contributions carried over excess of the corporation's taxable provides the exclusive rules for from prior years. Special rules and limits income (as computed above, substituting determining the interest expense apply to contributions to organizations "100%" for "10%") over all other allowable attributable to the business profits of a conducting lobbying activities. See section charitable contributions. Any excess permanent establishment under a U.S. 170(f)(9). qualified conservation contributions can income tax treaty, other than treaties that be carried over to the next 15 years, expressly permit attribution of business Corporations reporting taxable income subject to the 100% limitation. See profits to a U.S. permanent establishment on the accrual method may elect to treat sections 170(b)(2)(B) and (C). under application of the OECD Transfer as paid during the tax year any Temporary suspension of limitations Pricing Guidelines, by analogy. contributions paid by the due date for filing on certain contributions. The CARES Form 1120-F (not including extensions), if Protective elections under section Act allows a corporation to elect to deduct the contributions were authorized by the 1.882-5. A taxpayer that files a protective qualified cash contributions without regard board of directors during the tax year. tax return under Regulations section to the 10% taxable income limit. Qualified Attach a declaration to the return stating 1.882-4(a)(3)(vi) may voluntarily file contributions are charitable contributions that the resolution authorizing the Schedule I with the protective return to that were made during calendar year 2020 contributions was adopted by the board of preserve timely elections under or 2021 to an organization described in directors during the tax year. The Regulations section 1.882-5(a)(7). If a section 170(b)(1)(A) (other than certain declaration must include the date the taxpayer uses the provisions of an private foundations described in section resolution was adopted. See section applicable treaty to allocate interest 509(a)(3) or donor-advised funds 170(a)(2)(B). expense rather than Regulations section described in section 4966(d)(2)). The total 1.882-5, it remains subject to the time, Limitation on deduction. Generally, the amount of the contribution claimed cannot place, and manner provisions of total amount claimed may not exceed 10% exceed 25% of the excess of the Regulations section 1.882-5(a)(7) for of taxable income (line 31) computed corporation's taxable income (as making its interest expense allocation without regard to the following. computed above substituting “25%” for elections for any subsequent year that it • Any deduction for contributions. “10%”) over all other allowable charitable chooses to use the three-step allocation • The special deductions on line 30b. contributions. Contributions over the 25% formula of the regulations instead of the • The limitation under section 249 on the limitation cannot be deducted for the tax treaty. Protective interest expense deduction for bond premium. year, but can be carried over to the next 5 allocation elections under Regulations • Any NOL carryback to the tax year tax years. section 1.882-5(a)(7) may be made for a under section 172. Temporary suspension of 10% limita- year in which a treaty method is used in Any capital loss carryback to the tax • tion for certain disaster-related contri- lieu of the rules of Regulations section year under section 1212(a)(1). butions. A corporation may elect to 1.882-5 by completing and filing Deduction for income attributable to • deduct qualified cash contributions Schedule I on a timely filed income tax domestic production activities of specified without regard to the 10% taxable income return for any year that the election would agricultural or horticultural cooperatives. be required to be made under the rules of limit. Qualified contributions are any Regulations section 1.882-5. If a Carryover. Charitable contributions over charitable contributions that were made corporation uses an applicable treaty, the 10% limitation (or the 25% limitation, if after December 31, 2019, and before rather than the rules of Regulations elected, see Temporary suspension of February 26, 2021, to an organization section 1.882-5, to allocate interest limitations on certain contributions, later) described in section 170(b)(1)(A) (other expense and does not file Schedule I, then cannot be deducted for the tax year but than certain private foundations described the taxpayer has forfeited its right to make may be carried over to the next 5 tax in section 509(a)(3) or donor-advised the Regulations section 1.882-5 method years. See the exception below for funds described in section 4966(d)(2)) for farmers and ranchers. relief efforts in one or more qualified

-22- Instructions for Form 1120-F (2020) Page 23 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

disaster areas. The corporation must qualified conservation contributions, See sections 263(i), 616, and 617 for obtain contemporaneous written including contributions of certain details. acknowledgment (within the meaning of easements on buildings located in a section 170(f)(8)) from the qualified registered historic district. See section See Pub. 535 for more information on charitable organization that the 170(h) and Pub. 526, Charitable depletion. contribution was used or is to be used for Contributions. disaster relief efforts. Other special rules. The corporation Line 23. Pension, Profit-Sharing, The total amount of the contribution must reduce its deduction for contributions etc., Plans claimed for disaster relief efforts cannot of certain capital gain property. See exceed 100% of the excess of the sections 170(e)(1) and 170(e)(5). Enter the deduction for contributions to corporation's taxable income (as qualified pension, profit-sharing, or other computed above substituting "100%" for A larger deduction is allowed for certain funded deferred compensation plans. "10%" ) over all other allowable charitable contributions including: Employers who maintain such a plan must contributions. Any excess qualified • Inventory and other property to certain generally file one of the forms listed below contributions are carried over to the next 5 organizations for use in the care of the ill, unless exempt from filing under years. needy, or infants (see section 170(e)(3)), regulations or other applicable guidance, including qualified contributions of even if the plan is not a qualified plan Cash contributions. For contributions of “apparently wholesome food” (discussed under the Internal Revenue Code. The cash, check, or other monetary gifts below); and filing requirement applies even if the (regardless of the amount), the • Scientific equipment used for research corporation does not claim a deduction for corporation must maintain a bank record, to institutions of higher learning or to the current tax year. There are penalties or a receipt, letter, or other written certain scientific research organizations for failure to file these forms on time and communication from the donee (other than by personal holding for overstating the pension plan deduction. organization indicating the name of the companies and service organizations). See sections 6652(e) and 6662(f). Also, organization, the date of the contribution, See section 170(e)(4). see the instructions for the applicable and the amount of the contribution. Increase in limits on contributions form. Contributions of $250 or more. A of food inventory. For any charitable Form 5500, Annual Return/Report of corporation can deduct a contribution of contribution of food during 2020 or 2021 to Employee Benefit Plan. $250 or more only if it gets a written which section 170(e)(3)(C) applies, a acknowledgment from the donee corporation can deduct qualified Form 5500-SF, Short Form Annual organization that shows the amount of contributions of up to 25% of its aggregate Return/Report of Small Employee Benefit cash contributed, describes any property net income from all trades or businesses Plan. File this form instead of Form 5500 contributed (but not its value), and either from which the contributions were made or generally if there were under 100 gives a description and a good faith up to 25% of its taxable income. participants at the beginning of the plan estimate of the value of any goods or year. services provided in return for the For more information on charitable Note. Form 5500 and Form 5500-SF contribution or states that no goods or contributions, including substantiation and must be filed electronically under the services were provided in return for the recordkeeping requirements, see section computerized ERISA Filing Acceptance contribution. The acknowledgment must 170 and the related regulations, and Pub. System (EFAST2). For more information, be obtained by the due date (including 526. For other special rules that apply to see the EFAST2 website at extensions) of the corporation's return, or, corporations, see Pub. 542. if earlier, the date the return is filed. Do not Efast.dol.gov. attach the acknowledgment to the tax Line 20. Depreciation Form 5500-EZ, Annual Return of return, but keep it with the corporation's One-Participant (Owners/Partners and records. Include on line 20 depreciation and the Their Spouses) Retirement Plan or a cost of certain property that the Contributions of property other than Foreign Plan. File this form for a plan that corporation elected to expense under cash. If a corporation (other than a only covers the owner (or the owner and section 179. Enter the amount from Form closely held or personal service his or her spouse) or a foreign plan that is 4562, but include on line 20 only amounts corporation) contributes property other required to file an annual return and does not claimed on Form 1125-A or elsewhere than cash and claims a deduction of more not file the annual return electronically on on the return. See Form 4562 and the than $500 for the property, it must attach a Form 5500-SF. See the Instructions for Instructions for Form 4562. statement to the return describing the kind Form 5500-EZ. of property contributed and the method used to determine its FMV. Closely held Line 21. Depletion Line 24. Employee Benefit corporations and personal service See sections 613 and 613A for Programs corporations must complete Form 8283, percentage depletion rates applicable to Noncash Charitable Contributions, and natural deposits. Also, see section 291 for Enter contributions to employee benefit attach it to their returns. All other the limitation on the depletion deduction programs not claimed elsewhere on the corporations must generally complete and for iron ore and coal (including lignite). return (for example, insurance or health attach Form 8283 to their returns for and welfare programs) that are not an incidental part of a pension, profit-sharing, contributions of property (other than Attach Form T (Timber), Forest etc., plan included on line 23. money) if the total claimed deduction for Activities Schedule, if a deduction for all property contributed was more than depletion of timber is claimed. $5,000. Special rules apply to the Line 26. Deductions Allocated and contribution of certain property. See the Foreign intangible drilling costs and Apportioned to ECI From Instructions for Form 8283. foreign exploration and development costs Schedule H, Line 20 Qualified conservation must either be added to the corporation's Enter the total home office deductions contributions. Special rules apply to basis for cost depletion purposes or be deducted ratably over a 10-year period. allocated and apportioned to ECI from

Instructions for Form 1120-F (2020) -23- Page 24 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Schedule H (Form 1120-F), line 20. See may elect to amortize over 84 months any Travel, meals, and entertainment. Schedule H and its separate instructions amount not deducted. See Pub. 535. Subject to limitations and restrictions for additional information. Attach • Insurance premiums. discussed below, a corporation may Schedule H to the Form 1120-F. • Legal and professional fees. deduct ordinary and necessary travel, • Supplies used and consumed in the meal, and non-entertainment expenses Deductions definitely related and business. paid or incurred in its trade or business. indirectly allocated and apportioned to ECI • Travel, meals, and entertainment Generally, entertainment expenses, that are not includible on Form 1120-F, expenses. Special rules apply (discussed membership dues, and facilities used in Section II, lines 12 through 14, 16 and 17, later). connection with these activities cannot be 19 through 25, and 27 are reported on • Utilities. deducted. In addition, no deduction is Schedule H, line 20 and on Form 1120-F, • Ordinary losses from trade or business generally allowed for qualified line 26. Deductions that are includible on activities of a partnership (from transportation fringe benefits. Special Form 1120-F, Section II, lines 12 through Schedule K-1 (Form 1065)). Do not offset rules apply to deductions for gifts, luxury 14, 16 and 17, 19 through 24, and 27 are ordinary income against ordinary losses. water travel, and convention expenses. those derived from set(s) of books and Instead, include the income on line 10. See section 274, Pub. 463, and Pub. 535 records required to be reported on Form Show the partnership's name, address, for details. 1120-F, Schedule L. and EIN on Schedule P (Form 1120-F). If the amount is from more than one Travel. The corporation cannot deduct Note. The books and records of a U.S. partnership, identify the amount from each travel expenses of any individual office where a trade or business is carried partnership on Schedule P. accompanying a corporate officer or on do not necessarily constitute all of the • Any net negative section 481(a) employee, including a spouse or books and records required to be reported adjustment. See Section 481(a) dependent of the officer or employee, on Schedule L. See the instructions for adjustment, earlier. unless: Schedule L, later. Deductions that are • Any applicable deduction under section • That individual is an employee of the reported on Form 1120-F, Section II, lines 179D for costs of energy efficient corporation, and 12 through 14, lines 16 and 17, lines 19 commercial building property. • His or her travel is for a bona fide through 24, and line 27 are also reconciled • Dividends paid in cash on stock held by business purpose and would otherwise be to ECI on Schedule H (Form 1120-F), Part an employee stock ownership plan. deductible by that individual. IV, lines 38 through 41. However, a deduction may be taken for Meals. Generally, the corporation can these dividends only if, according to the deduct only 50% of the amount otherwise Line 27. Other Deductions plan, the dividends are: allowable for non-entertainment related Attach a statement, listing by type and 1. Paid in cash directly to the plan meal expenses paid or incurred in its trade amount, all allowable deductions that are participants or beneficiaries; or business. However, the corporation can not deductible elsewhere on Form 1120-F. 2. Paid to the plan, which distributes deduct 100% of business meal expenses Enter the total on line 27. them in cash to the plan participants or for food and beverages provided by a their beneficiaries no later than 90 days restaurant. This applies only to amounts paid or incurred after December 31, 2020. Examples of other deductions include after the end of the plan year in which the the following. See Pub. 535 for details on dividends are paid; Meals not separately stated from other deductions that may apply to 3. At the election of such participants entertainment are generally not corporations. or their beneficiaries (a) payable as deductible. In addition (subject to • Amortization. See Part VI of Form 4562. provided under (1) or (2) above, or (b) exceptions under section 274(k)(2)): • Certain costs of a qualified film, paid to the plan and reinvested in • Meals must not be lavish or television, or live theatrical production qualifying employer securities; or extravagant, and commencing before January 1, 2026 (after • An employee of the corporation must 4. Used to make payments on a loan December 31, 2015, and before January be present at the meal. described in section 404(a)(9). 1, 2026, for a live theatrical production). See section 274(n)(3) for a special rule This deduction does not apply to any that applies to expenses for meals portion of the aggregate cost of the See section 404(k) for more details and consumed by individuals subject to the production above $15 million. There is a the limitation on certain dividends. hours of service limits of the Department higher allowance for production in certain of Transportation. areas. See section 181 and the related Do not deduct expenses such as the regulations. following. Qualified transportation fringes Note. Certain film, television, or live • Amounts paid or incurred to, or at the (QTFs). Generally, no deduction is theatrical productions acquired and direction of, a government or allowed under section 274(a)(4) for QTFs placed in service after September 27, governmental entity for the violation, or provided by employers to their employees. 2017 (for which a deduction would have investigation or inquiry into the potential QTFs are defined in section 132(f)(1) and been allowable under section 181 without violation, of a law. However, see Fines or include: regard to the dollar limitation), are similar penalties, later. • Transportation in a commuter highway qualified property eligible for the special • Any amount that is allocable to a class vehicle between the employee’s residence depreciation allowance under section of exempt income. See section 265(b) for and place of employment, 168(k). See the Instructions for Form exceptions. • Any transit pass, and 4562. • Lobbying expenses. However, see • Qualified parking. • Certain business start-up and exceptions (discussed later). See section 274, Pub. 15-B and Pub. organizational costs (discussed earlier, • Amounts paid or incurred for any 535 for details. under Limitations on Deductions). settlement, payout, or attorney fees Membership dues. The corporation • Reforestation costs. The corporation related to sexual harassment or sexual can deduct amounts paid or incurred for may elect to deduct up to $10,000 of abuse, if such payments are subject to a membership dues in civic or public service qualifying reforestation expenses for each nondisclosure agreement. See section organizations, professional organizations qualified timber property. The corporation 162(q).

-24- Instructions for Form 1120-F (2020) Page 25 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

(such as bar and medical associations), Lobbying expenses. Generally, Line 30a. Net Operating Loss business leagues, trade associations, lobbying expenses are not deductible. Deduction chambers of commerce, boards of trade, These expenses include: A corporation may use the NOL incurred and real estate boards. However, no • Amounts paid or incurred in connection in one tax year to reduce its taxable deduction is allowed if a principal purpose with influencing federal, state, or local income in another tax year. Enter on of the organization is to entertain or legislation; or line 30a the total NOL carryovers from provide entertainment facilities for • Amounts paid or incurred in connection other tax years, but do not enter more than members or their guests. In addition, with any communication with certain the corporation's taxable income (after corporations cannot deduct membership federal executive branch officials in an special deductions). Attach a statement dues in any club organized for business, attempt to influence the official actions or showing the computation of the NOL pleasure, recreation, or other social positions of the officials. See Regulations deduction. Also, complete item S on purpose. This includes country clubs, golf section 1.162-29 for the definition of page 2 of the form. and athletic clubs, airline and hotel clubs, “influencing legislation.” and clubs operated to provide meals under conditions favorable to business Dues and other similar amounts paid to The following special rules apply. discussion. certain tax-exempt organizations may not • If an ownership change (described in be deductible. section 382(g)) occurs, the amount of the Entertainment facilities. Generally, If certain in-house lobbying taxable income of a loss corporation that the corporation cannot deduct an expense expenditures do not exceed $2,000, they may be offset by the pre-change NOL paid or incurred for a facility (such as a are deductible. carryovers may be limited. See section yacht or hunting lodge) used for an activity 382 and the related regulations. A loss usually considered entertainment, Line 29. Taxable Income Before corporation must include the information amusement, or recreation. statement as provided in Regulations NOL Deduction and Special section 1.382-11(a) with its income tax Amounts treated as compensation. return for each tax year that it is a loss Generally, the corporation may be able to Deductions corporation in which an ownership shift, deduct otherwise nondeductible At-risk rules. Generally, special at-risk equity structure shift, or other transaction entertainment, amusement, or recreation rules under section 465 apply to closely described in Temporary Regulations expenses if the amounts are treated as held corporations (see Passive activity section 1.382-2T(a)(2)(i) occurs. If the compensation to the recipient and limitations, earlier) engaged in any activity corporation makes the reported on Form W-2 for an employee or as a trade or business or for the closing-of-the-books election, see on Form 1099-NEC for an independent production of income. These corporations Regulations section 1.382-6(b). contractor. may have to adjust the amount on line 29 The limitations under section 382 do However, if the recipient is an officer, (see below). not apply to certain ownership changes director, beneficial owner (directly or The at-risk rules do not apply to: after February 17, 2009, made pursuant to indirectly), or other “specified individual” • Holding real property placed in service a restructuring plan under the Emergency (as defined in section 274(e)(2)(B) and by the taxpayer before 1987; Economic Stabilization Act of 2008. See Regulations section 1.274-9(b)), special • Equipment leasing under sections section 382(n). rules apply. See section 274(e)(2) and 465(c)(4), (5), and (6); or For guidance in applying section 382 to Regulations sections 1.274-9 and • Any qualifying business of a qualified loss corporations whose instruments were 1.274-10. corporation under section 465(c)(7). acquired by Treasury under certain Fines or similar penalties. However, the at-risk rules do apply to programs under the Emergency Economic Generally, no deduction is allowed for the holding of mineral property. Stabilization Act of 2008, see Notice fines or similar penalties paid or incurred If the at-risk rules apply, adjust the 2010-2, 2010-2 I.R.B. 251, available at to, or at the direction of, a government or amount on this line for any section 465(d) IRS.gov/irb/2010–02_IRB#NOT-2010-2. governmental entity for violating any law, losses. These losses are limited to the • If a corporation acquires control of or for the investigation or inquiry into the amount for which the corporation is at risk another corporation (or acquires its assets potential violation of a law, except: for each separate activity at the close of in a reorganization), the amount of • Amounts that constitute restitution or the tax year. If the corporation is involved pre-acquisition losses that may offset remediation of property, in one or more activities, any of which recognized built-in gain may be limited • Amounts paid to come into compliance incurs a loss for the year, report the losses (see section 384). with the law, for each activity separately. Attach Form • If a corporation elects the alternative tax • Amounts paid or incurred as the result 6198, At-Risk Limitations, showing the on qualifying shipping activities under of orders or agreements in which no amount at risk and gross income and section 1354, no deduction is allowed for government or governmental entity is a deductions for the activities with the an NOL attributable to the qualifying party, and losses. shipping activities to the extent that the • Amounts paid or incurred for taxes due. If the corporation sells or otherwise loss is carried forward from a tax year No deduction is allowed unless the disposes of an asset or its interest (either preceding the first tax year for which the amounts are specifically identified in the total or partial) in an activity to which the alternative tax election was made. See order or agreement and the corporation at-risk rules apply, determine the net profit section 1358(b)(2). establishes that the amounts were paid for or loss from the activity by combining the For more details on the NOL deduction, that purpose. Also, any amount paid or gain or loss on the sale or disposition with see section 172 and the Instructions for incurred as reimbursement to the the profit or loss from the activity. If the Form 1139. government for the costs of any corporation has a net loss, it may be investigation or litigation are not eligible for limited because of the at-risk rules. the exceptions and are nondeductible. Line 30b. Special Deductions See section 162(f). Treat any loss from an activity not allowed for the tax year as a deduction See the instructions for Schedule C, later. allocable to the activity in the next tax year.

Instructions for Form 1120-F (2020) -25- Page 26 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Line 31. Taxable Income or (Loss) Line 2, Column (a) allowed the 26.7% deduction provided in sections 244 and 247 (as affected by Net operating loss (NOL). If line 31 is Enter on line 2: P.L.113-295, Div. A, section 221(a)(41) zero or less, the corporation may have an • Dividends (except those received on (A), Dec. 19, 2014, 128 Stat. 4043) for NOL that may be carried back or forward certain debt-financed stock acquired after dividends paid. as a deduction to other tax years. July 18, 1984) that are received from 20%-or-more-owned domestic An NOL incurred in a tax year corporations subject to income tax and Line 6, Column (a) beginning in 2018, 2019, or 2020 can be that are subject to the 65% deduction carried back 5 years preceding the year of Enter the U.S.-source portion of dividends under section 243(c), and that: the loss. For NOLs that can be carried • Taxable distributions from an IC-DISC back, the corporation can elect to waive • Are received from or former DISC that are considered less-than-20%-owned foreign the carryback period and instead carry the eligible for the 65% deduction. NOL forward to future tax years. corporations, and • Qualify for the 50% deduction under See Special rules for farming loss Line 3, Column (a) section 245(a). To qualify for the 50% NOLs, below. See the instructions for item deduction, the corporation must own at R, earlier, for information on making the Enter the following. least 10% of the stock of the foreign election to waive the entire carryback • Dividends received on certain corporation by vote and value. period for 2020. See the Instructions for debt-financed stock acquired after July 18, Form 1139 for other special rules and 1984, from domestic and foreign elections. corporations subject to income tax that Line 7, Column (a) would otherwise be subject to the Enter the U.S.-source portion of dividends Special rules for farming loss NOLs. dividends-received deduction under that are received from If the corporation has an NOL from a section 243(a)(1), 243(c), or 245(a). 20%-or-more-owned foreign corporations farming loss (as defined in section 172(b) Generally, debt-financed stock is stock and that qualify for the 65% deduction (1)(B)(ii) for a tax year beginning in 2018, that the corporation acquired by incurring under sections 243 and 245(a). 2019, or 2020, the corporation can elect to a debt (for example, it borrowed money to disregard the amendments made by the buy the stock). Line 8, Column (c) CARES Act, section 2303(a) and (b). • Dividends received from a RIC on Schedule C—Dividends and debt-financed stock. The amount of Limitation on dividends-received de- dividends eligible for the Special Deductions duction. Generally, line 8, column (c), dividends-received deduction is limited by cannot exceed the amount from the For purposes of the 20% ownership test section 854(b). The corporation should Worksheet for Schedule C, Line 8. on lines 1 through 7, the percentage of receive a notice from the RIC specifying However, in a year in which an NOL stock owned by the corporation is based the amount of dividends that qualify for the occurs, this limitation does not apply, even on voting power and value of the stock. deduction. if the loss is created by the dividends-received deduction. See Line 1, Column (a) Line 3, Columns (b) and (c) sections 172(d) and 246(b). Enter dividends (except those received on Dividends received on certain certain debt-financed stock acquired after debt-financed stock acquired after July 18, Line 9, Column (a) July 18, 1984—see section 246A) that: 1984, are not entitled to the full 50% or Enter the foreign dividends not reportable • Are received from 65% dividends-received deduction under on line 3, 6, or 7 of column (a). less-than-20%-owned domestic section 243 or 245(a). The 50% or 65% corporations subject to income tax, and deduction is reduced by a percentage that Attach a statement identifying the • Qualify for the 50% deduction under is related to the amount of debt incurred to amount of each dividend reported on section 243(a)(1). acquire the stock. See section 246A. Also, line 9 and the provision pursuant to which see section 245(a) before making this a deduction is not allowed with respect to Also, include on line 1 the following. computation for an additional limitation such dividend. • Taxable distributions from an IC-DISC that applies to certain dividends received or former DISC that are designated as from foreign corporations. Attach a Line 10, Column (a) eligible for the 50% deduction and certain statement to Form 1120-F showing how dividends of Federal Home Loan Banks. the amount on line 3, column (c), was Enter taxable distributions from an See section 246(a)(2). computed. IC-DISC or former DISC that are • Dividends (except those received on designated as not eligible for a certain debt-financed stock acquired after dividends-received deduction. July 18, 1984) from a RIC. The amount of Line 4, Column (a) dividends eligible for the Enter dividends received on preferred No deduction is allowed under section dividends-received deduction under stock of a less-than-20%-owned public 243 for a dividend from an IC-DISC or section 243 is limited by section 854(b). utility that is subject to income tax and is former DISC (as defined in section 992(a)) The corporation should receive a notice allowed the 23.3% deduction provided in to the extent the dividend: from the RIC specifying the amount of sections 244 and 247 (as affected by • Is paid out of the corporation's dividends that qualify for the deduction. P.L.113-295, Div. A, section 221(a)(41) accumulated IC-DISC income or (A), Dec. 19, 2014, 128 Stat. 4043) for previously taxed income, or Report so-called dividends or earnings dividends paid. • Is a deemed distribution under section received from mutual savings banks, etc., 995(b)(1). as interest. Do not treat them as Line 5, Column (a) dividends. Enter dividends received on preferred Line 11, Column (a) stock of a 20%-or-more-owned public Include the following. utility that is subject to income tax and is

-26- Instructions for Form 1120-F (2020) Page 27 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Worksheet for Schedule C, Line 8 Keep for Your Records

1. Refigure Section II, line 29, without any adjustment under section 1059, and without any capital loss carryback to the tax year under section 1212(a)(1) ...... 1. 2. Multiply line 1 by 65% (0.65) ...... 2. 3. Add lines 2, 5, and 7, column (c), and the part of the deduction on line 3, column (c), that is attributable to dividends from 20%-or-more-owned corporations ...... 3. 4. Enter the smaller of line 2 or line 3. If line 3 is greater than line 2, stop here; enter the amount from line 4 on line 8, column (c), and do not complete the rest of this worksheet ...... 4. 5. Enter the total amount of dividends from 20%-or-more-owned corporations that are included on lines 2, 3, 5, and 7, column (a) ...... 5. 6. Subtract line 5 from line 1 ...... 6. 7. Multiply line 6 by 50% (0.50) ...... 7. 8. Subtract line 3 above from line 8, column (c) ...... 8. 9. Enter the smaller of line 7 or line 8 ...... 9. 10. Dividends-received deduction after limitation (section 246(b)). Add lines 4 and 9. Enter the result here and on line 8, column (c) ...... 10.

• Dividends (other than capital gain related payments with respect to positions Increase in tax attributable to partner’s distributions reported on Schedule D in substantially similar or related property. additional reporting year tax. If the (Form 1120) and exempt-interest • Any other taxable dividend income not taxpayer is a foreign corporate partner and dividends) that are received from RICs properly reported elsewhere on received a Form 8986 from a partnership and that are not subject to the 50% Schedule C. that has elected to have each reviewed deduction. year partner take into account the • Dividends from tax-exempt If patronage dividends or per-unit retain partner's share of the adjustments, as organizations. allocations are included on line 11, identify finally determined, instead of paying the • Dividends (other than capital gain the total of these amounts in a statement imputed underpayment, the foreign distributions) received from a REIT that and attach it to Form 1120-F. corporate partner (taxpayer) will have to qualifies, for the tax year of the trust in complete Form 8978 to report adjustments which the dividends are paid, under Line 12, Column (c) shown on the Form 8986 they received sections 856 through 860. from the partnership. The foreign • Dividends not eligible for a dividends- Section 247 (as affected by P.L.113-295, Div. A, section 221(a)(41)(A), Dec. 19, corporate partner (taxpayer) must received deduction, which include the complete a separate Form 8978 to report following. 2014, 128 Stat. 4043) allows public utilities a deduction of 40% of the smaller adjustments pertaining to income that is 1. Dividends received on any share of of: effectively connected with the conduct of a stock held for less than 46 days during the • Dividends paid on their preferred stock trade or business in the United States 91-day period beginning 45 days before during the tax year, or under section 882 (an “ECI Form 8978”) the ex-dividend date. When counting the • Taxable income computed without and a separate Form 8978 to report number of days the corporation held the regard to this deduction. adjustments pertaining to income from stock, you cannot count certain days U.S. sources not effectively connected during which the corporation's risk of loss In a year in which an NOL occurs, with the conduct of a trade or business in was diminished. See section 246(c)(4) compute the deduction without regard to the United States under section 881 (an and Regulations section 1.246-5 for more section 247(a)(1)(B). “FDAP Form 8978”). Include any increase details. in taxes due from the ECI Form 8978, 2. Dividends received on any share of Schedule J—Tax Computation line 14 in the total for Form 1120-F, preferred stock which are attributable to Section II, Schedule J, line 2. On the periods totaling more than 366 days if Line 1 dotted line next to line 2, enter “FROM such stock was held for less than 91 days If the corporation is a member of a FORM 8978” and the amount. Attach the during the 181-day period that began 90 controlled group, check the box on line 1 ECI Form 8978 to Form 1120-F. If the ECI days before the ex-dividend date. When and complete and attach Schedule O Form 8978, line 14, shows a decrease in counting the number of days the (Form 1120), Consent Plan and tax, see the instructions for Schedule J, corporation held the stock, you cannot Apportionment Schedule for a Controlled line 6. count certain days during which the Group. Component members of a Additional tax under section 197(f). A corporation's risk of loss was diminished. controlled group must use Schedule O to corporation that elects to recognize gain See section 246(c)(4) and Regulations report the apportionment of certain tax and pay tax on the sale of a section 197 section 1.246-5 for more details. Preferred benefits between the members of the intangible under the related person dividends attributable to periods totaling group. See Schedule O and the exception to the anti-churning rules should less than 367 days are subject to the Instructions for Schedule O for more include any additional tax due in the total 46-day holding period rule discussed information. for line 2. On the dotted line next to line 2, above. enter “Section 197” and the amount. See 3. Dividends on any share of stock to Line 2. Income Tax section 197(f)(9)(B)(ii). the extent the corporation is under an Multiply taxable income (page 4, obligation (including a short sale) to make Section II, line 31) by 21%. Enter this amount on line 2.

Instructions for Form 1120-F (2020) -27- Page 28 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Line 3. Base Erosion Minimum Tax that has elected to have each reviewed Instructions for Form 8697. Check the box Amount year partner take into account the for Form 8697 and include any interest partner's share of the adjustments, as due on line 8. If the corporation had gross receipts of at finally determined, instead of paying the Interest due under the look-back meth- least $500 million in any one of the 3 tax imputed underpayment, the foreign od for property depreciated under the years preceding the current tax year, corporate partner (taxpayer) will have to income forecast method. If the complete and attach Form 8991. Enter on complete Form 8978 to report adjustments corporation used the income forecast line 3 the base erosion minimum tax shown on the Form 8986 they received method to depreciate property, it must amount from Form 8991, Part IV, line 5e. from the partnership. The foreign figure any interest due or to be refunded See section 59A and the Instructions for corporate partner (taxpayer) must using the look-back method described in Form 8991. Also, see the instructions for complete a separate Form 8978 to report section 167(g)(2). Use Form 8866, item DD, earlier. adjustments pertaining to income that is Interest Computation Under the effectively connected with the conduct of a Look-Back Method for Property trade or business in the United States Line 5a. Foreign Tax Credit Depreciated Under the Income Forecast under section 882 (an “ECI Form 8978”) Method, to figure any interest due or to be A foreign corporation engaged in a U.S. and a separate Form 8978 to report refunded. See the Instructions for Form trade or business during the tax year may adjustments pertaining to income from 8866. Check the box for Form 8866 and take a credit for income, war profits, and U.S. sources not effectively connected include any interest due on line 8. excess profits taxes paid, accrued, or with the conduct of a trade or business in deemed paid to any foreign country or the United States under section 881 (an Alternative tax on qualifying shipping U.S. possession for income effectively “FDAP Form 8978”). Include any decrease activities. Enter any alternative tax on connected with the conduct of a trade or in taxes due (negative amount) from the qualifying shipping activities from Form business in the United States. See section ECI Form 8978, line 14, in the total for 8902. Check the box for Form 8902. 906 and Form 1118, Foreign Tax Form 1120-F, Section II, Schedule J, Other. Include on line 8 additional taxes Credit—Corporations. line 6. On the dotted line next to line 6, and interest such as the following. Attach enter “FROM FORM 8978” and the a statement showing the computation of Line 5b. General Business Credit amount. Attach the ECI Form 8978 to each item included in the total for line 8 Form 1120-F. If the ECI Form 8978, Include on line 5b the corporation's and identify the applicable Code section line 14, shows an increase in tax, see the allowable credit from Form 3800, Part II, and the type of tax or interest. instructions for Schedule J, line 2. line 38. • Recapture of Indian employment credit. Generally, if an employer terminates the The corporation is required to file Form Line 8. Other Taxes employment of a qualified employee less 3800, General Business Credit, to claim Include any of the following taxes and than 1 year after the date of initial any of the business credits. See the interest. Check the appropriate box(es) for employment, any Indian employment Instructions for Form 3800 for exceptions. the form, if any, used to compute the tax credit allowed for a prior tax year because For a list of allowable credits, see Form or interest. of wages paid or incurred to that employee 3800. Also, see the applicable credit form must be recaptured. For details, see Form and its instructions. Recapture of investment credit. If the 8845 and section 45A. corporation disposed of investment credit • Recapture of new markets credit (see property or changed its use before the end Also, include on line 5b the amount of Form 8874, New Markets Credit, and of its useful life or recovery period, or is any qualified electric vehicle passive Form 8874-B, Notice of Recapture Event required to recapture a qualifying activity credits from prior years allowed for for New Markets Credit). therapeutic discovery project grant, enter the current tax year from Form 8834, • Recapture of employer-provided the increase in tax from Form 4255, Qualified Electric Vehicle Credit, line 7. childcare facilities and services credit (see Recapture of Investment Credit. See the Attach Form 8834. Form 8882). Instructions for Form 4255. • Interest on deferred tax attributable to certain nondealer installment obligations Line 5c. Credit for Prior Year Recapture of low-income housing credit. If the corporation disposed of (section 453A(c)) and dealer installment Minimum Tax property (or there was a reduction in the obligations (section 453(l)). Enter any allowable credit from Form qualified basis of the property) for which it • Interest due on deferred gain (section 8827, Credit for Prior Year Minimum took the low-income housing credit, and 1260(b)). Tax—Corporations. Complete and attach the corporation did not follow the Form 8827. procedures that would have prevented Section III—Branch Profits recapture of the credit, it may owe a tax. Tax and Tax on Excess Line 5d. Bond Credits From Form See Form 8611, Recapture of Low-Income Housing Credit. Interest 8912 Interest due under the look-back meth- Part I—Branch Profits Tax Enter the allowable credits from Form od for completed long-term contracts. 8912, Credit to Holders of Tax Credit Section 884(a) imposes a 30% branch If the corporation used the Bonds, line 12. profits tax on the after-tax earnings of a percentage-of-completion method under foreign corporation's U.S. trade or section 460(b) for certain long-term business (that is, effectively connected Line 6. Total credits contracts, figure any interest due or to be earnings and profits (ECEP)) that are not Add lines 5a through 5d. Enter the total on refunded using the look-back method reinvested in a U.S. trade or business by line 6. described in section 460(b)(2). Use Form the close of the tax year, or are 8697, Interest Computation Under the disinvested in a later tax year. Changes in Decrease attributable to partner’s ad- Look-Back Method for Completed the value of the equity of the foreign ditional reporting year tax. If the Long-Term Contracts, to figure any corporation's U.S. trade or business (that taxpayer is a foreign corporate partner and interest due or to be refunded. See the is, U.S. net equity) are used as a measure received a Form 8986 from a partnership

-28- Instructions for Form 1120-F (2020) Page 29 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

of whether earnings have been reinvested See Temporary Regulations section If the corporation is electing to reduce in, or disinvested from, a U.S. trade or 1.884-2T for any adjustments to ECEP liabilities under Regulations section business. An increase in U.S. net equity due to a reorganization, liquidation, or 1.884-1(e)(3), attach a statement that it is during the tax year is generally treated as incorporation. making the election and indicate the a reinvestment of earnings for the current amount of the reduction of U.S. liabilities Exceptions. Do not include the following tax year. A decrease in U.S. net equity is and the corresponding reduction in types of income when computing ECEP. generally treated as a disinvestment of interest expense. The aggregate amount Income from the operation of ships or prior year's earnings that have not • of the corporation's liability reduction aircraft exempt from taxation under previously been subject to the branch elections is also required to be reported on section 883(a)(1) or (2). profits tax. Schedule I (Form 1120-F), line 7b. • FSC income and distributions treated The amount subject to the branch as ECI under section 921(d) or 926(b), as Reporting requirements. In the profits tax for the tax year is the dividend in effect before their repeal, that are not statements required for lines 4a and 4b, equivalent amount. See Regulations otherwise ECI. report U.S. assets according to the section 1.884-1(b). • Gain on the disposition of an interest in categories of U.S. assets in Regulations a domestic corporation that is a U.S. real section 1.884-1(d). For U.S. liabilities, Other entities subject to the branch property interest under section 897(c)(1) show the formula used to calculate the profits tax. (A)(ii) if the gain is not otherwise ECI. U.S. liabilities figure. • A foreign corporate partner of a • Related person insurance company partnership engaged in a U.S. trade or income that a taxpayer elects to treat as Line 6. Branch Profits Tax business is subject to the branch profits ECI under section 953(c)(3)(C) if the tax on its ECEP attributable to its income is not otherwise ECI. Qualification for treaty benefits. In distributive share of ECI. • Income that is exempt from tax under general, a foreign corporation must be a • A foreign government is subject to both section 892. qualified resident (see definition later) in the branch profits tax and the branch-level • Interest income derived by a the tax year in which it has a dividend interest tax. However, no branch profits possession bank from U.S. obligations if equivalent amount to obtain treaty benefits tax or branch-level interest tax will be the interest is treated as ECI under section for the branch profits tax. It must also meet imposed on ECEP and interest accrued 882(e) and is not otherwise ECI. the requirements of any limitation on prior to September 11, 1992. See benefits article in the treaty. However, a Regulations section 1.884-0. Note. Deductions and other adjustments foreign corporation is not required to be a attributable (under the principles of qualified resident if it meets the Line 2 Regulations section 1.861-8) to the types requirements of a limitation on benefits of income not includible in ECEP listed article of an income tax treaty that entered Attach a statement showing the following above do not reduce ECEP. into force after December 31, 1986. adjustments (based on the principles of Treaties other than income tax treaties do section 312) to the corporation's line 1 Lines 4a and 4b. U.S. Net Equity not exempt a foreign corporation from the effectively connected taxable income branch profits tax. (ECTI) (before the NOL deduction and U.S. net equity is U.S. assets reduced by special deductions) to get ECEP. U.S. liabilities. U.S. net equity may be less Foreign corporations that meet the re- • Positive adjustments for certain ECI than zero. See Temporary Regulations quirements of the limitation on bene- items that are excluded from ECTI but that section 1.884-2T for specific rules fits article of an income tax treaty that must be included in computing ECEP regarding the computation of the foreign entered into force after December 31, (such as tax-exempt interest income). corporation's U.S. net equity due to a 1986. Most limitation on benefits articles • Positive adjustments for certain items reorganization, liquidation, or of treaties that entered into force after deducted in computing ECTI but that may incorporation. December 31, 1986, include a series of not be deducted in computing ECEP. objective tests including ownership tests U.S. assets. In general, property is a U.S. Include adjustments for certain deductions (generally describing the circumstances asset if all income from its use and all gain claimed in computing ECTI, such as: under which individuals, publicly traded from its disposition (if used or sold on the corporations, subsidiaries of publicly 1. Excess of percentage depletion last day of the tax year) are or would be over cost depletion, traded corporations, etc., will be treated as ECI. The amount of property taken into qualified residents under a treaty), a base 2. Excess of accelerated depreciation account as a U.S. asset is the adjusted erosion test, and a trade or business test. over straight line depreciation (but only if basis (for purposes of computing earnings These tests are self-executing. A person 20% or more of the foreign corporation's and profits) of the property. Special rules that does not meet these objective tests gross income from all sources is U.S. exist for specific types of property, such as may still be granted benefits under the source), and depreciable property, inventory, and treaty (and may be treated as a qualified 3. Capital loss carrybacks and installment obligations. Special rules also resident for branch profits tax purposes) at carryovers. exist to determine the amount of a the discretion of the Competent Authority. • Negative adjustments for certain partnership interest that is treated as a See Rev. Proc. 2015-40, 2015-35 I.R.B. deductible items (that are allocable to ECI) U.S. asset. See Regulations section 236, available at IRS.gov/irb/ that may not be deducted in computing 1.884-1(d). 2015-35_IRB#RP-2015-40, or its ECTI but that must be deducted in U.S. liabilities. In general, U.S. liabilities successor. computing ECEP (for example, federal are U.S.-connected liabilities of a foreign Foreign corporations that do not meet income taxes, capital losses in excess of corporation (determined under the requirements of a limitation on capital gains, and interest and expenses Regulations section 1.882-5), computed benefits article of an income tax treaty that are not deductible under section 265). as of the end of the tax year, rather than that entered into force after December as an average, as required under Note. Do not reduce ECEP by any 31, 1986. A foreign corporation that does Regulations section 1.882-5. Special rules not meet the requirements of a limitation dividends or other distributions made by may apply to foreign insurance the foreign corporation to its shareholders on benefits article of an income tax treaty companies. For more details, see that entered into force after December 31, during the year. Regulations section 1.884-1(e).

Instructions for Form 1120-F (2020) -29- Page 30 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

1986, is a qualified resident of a country under section 351, see Temporary is negative, enter as a positive number. If if it meets one of the three tests explained Regulations section 1.884-2T(d) for the line 24d is positive, enter as a negative in the regulations under section 1.884-5. rules for determining the foreign number. This is the total amount of interest See these regulations for details on these corporation's branch profits tax liability in expense included in the amount allocable tests and certain circumstances in which a the year of the transfer, and other rules under Regulations section 1.882-5 that is foreign corporation that does not meet applicable to the domestic transferee deferred, capitalized, and disallowed these tests may request a ruling to be corporation. If a foreign corporation under other sections after application of treated as a qualified resident. transfers its U.S. assets to another foreign the interest expense allocation rules. The corporation, the foreign corporation must number on line 24d will be negative if the Rate of tax. If treaty benefits apply, the compute its branch profits tax liability corporation has only disallowed and rate of tax is the rate on branch profits under Regulations section 1.884-1. capitalized expense on lines 24a and 24c. specified in the treaty. If the treaty does If the corporation has currently deductible not specify a rate for branch profits, the Coordination with withholding tax. If a interest in the current year reportable on rate of tax is the rate specified in the treaty foreign corporation is subject to the Schedule I (Form 1120-F), line 24b, that for dividends paid by a wholly owned branch profits tax in a tax year, it will not was deferred in a prior year (for example, domestic corporation to the foreign be subject to withholding at source under section 163(j)), line 24d may be corporation. See Regulations section (section 871(a), 881(a), 1441, or 1442) on positive. 1.884-1(g) for applicable rates of tax. dividends paid out of earnings and profits Benefits other than a rate reduction may for the tax year. Line 7c. Combine lines 7a and 7b. be available under certain treaties, such The combined amount is the amount of as the Canadian income tax treaty. Part II—Tax on Excess interest expense allocable to ECI for the Interest year under Regulations section 1.882-5. Note. Many treaties listed in Regulations The amount on line 7c must equal the section 1.884-1(g)(3) and (g)(4) are no If a foreign corporation is engaged in a amount on Schedule I (Form 1120-F), longer in force and have been replaced by U.S. trade or business, has effectively line 23. more recently ratified treaty agreements. connected gross income, or has U.S. The corporation should use the applicable assets for purposes of Regulations section Line 8. Branch Interest rate of tax specified in the treaty 1.882-5, it is subject to the tax on excess interest. Foreign banks. Enter from Schedule I agreement currently in force with the (Form 1120-F), the sum of line 9, column United States. Excess interest is the interest (c), and line 22, which is the amount of Effect of complete termination. If the apportioned to ECI of the foreign interest expense included on books that foreign corporation has completely corporation (including capitalized and give rise to U.S. booked liabilities and that terminated its U.S. trade or business nondeductible interest) under Regulations which is directly allocable to ECI under (within the meaning of Temporary section 1.882-5, less branch interest. Regulations section 1.882-5(a)(1)(ii). The Regulations section 1.884-2T(a)) during Branch interest is the interest paid by the sum of these two amounts is the amount the tax year, enter zero on line 6, and U.S. trade or business of the foreign of book interest expense paid or accrued complete line 11 at the bottom of page 6 of corporation (including capitalized and on U.S. booked liabilities defined in Form 1120-F. other nondeductible interest). Regulations section 1.882-5(d)(2). In general, a foreign corporation has Important. See the instructions for Definition of branch interest. The term terminated its U.S. trade or business if it line 10, Tax on Excess Interest, later, to “branch interest” means interest that is: no longer has any U.S. assets, except determine if the foreign corporation is 1. Paid by a foreign corporation with those retained to pay off liabilities. The exempt from the tax on excess interest. If respect to a liability that is (a) a U.S. foreign corporation (or a related it is exempt from the tax, and not simply booked liability within the meaning of corporation) may not use assets from the subject to a reduced rate of tax, do not Regulations section 1.882-5(d)(2) (other terminated U.S. trade or business or the complete Part II of Section III. However, be than a U.S. booked liability of a partner proceeds from their sale in a U.S. trade or sure to complete item W(1) on page 2 of within the meaning of Regulations section business within 3 years after the complete Form 1120-F. 1.882-5(d)(2)(vii)), or (b) described in termination. The foreign corporation must Regulations section 1.884-1(e)(2) (relating also attach Form 8848 extending the Line 7a to insurance liabilities on U.S. business period for assessment for the year of Enter the amount of interest expense and liabilities giving rise to interest complete termination to a date not earlier deduction allocable to ECI under expense that is directly allocated to than the close of the 6th year following the Regulations section 1.882-5, from income from a U.S. asset); or close of that tax year. Section II, line 18. 2. In the case of a foreign corporation Effect of complete liquidation or reor- Lines 7b and 7c other than a bank (as defined in section ganization. If a foreign corporation 585(a)(2)(B) without regard to the second transfers its U.S. assets in a liquidation or Lines 7b and 7c reconcile the deduction sentence thereof), a liability specifically reorganization described in section claimed in Section II, line 18, with the identified as a liability of a U.S. trade or 381(a), see Temporary Regulations amount of interest expense allocable to business of the foreign corporation on or section 1.884-2T(c). If the transferee is a ECI under Regulations section 1.882-5. before the earlier of the date on which the domestic corporation, the foreign Amounts that increase or decrease the first payment of interest is made with corporation must also file Form 8848. See amount allocable to ECI are reported on respect to the liability or the due date Temporary Regulations section line 7b from Schedule I (Form 1120-F), (including extensions) of the foreign 1.884-2T(c) and Regulations section line 24d. Line 7c reconciles to the amount corporation's income tax return for the tax 1.884-2(c)(2)(iii). of interest expense reported on Schedule I year provided that (a) the amount of such (Form 1120-F), line 23. Lines 7b and 7c interest does not exceed 85% of the Effect of incorporation under section are completed as follows. 351. If a foreign corporation transfers all amount of interest of the foreign or a part of its U.S. assets to a domestic Line 7b. Enter the inverse of the corporation that would be excess interest corporation in a transaction that qualifies amount reported on Schedule I (Form before taking into account interest treated 1120-F), line 24d. For example, if line 24d as branch interest; (b) certain recipient

-30- Instructions for Form 1120-F (2020) Page 31 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

notification requirements are satisfied; and to foreign persons (unless the interest is are the total assets, liabilities, and equity (c) the liability was not incurred in the exempt from withholding under a treaty or amounts reflected on the same set(s) of ordinary course of a foreign business or the Code) and is required to file Forms books that gives rise to U.S. ECI and U.S. secured by foreign assets, or is not a U.S. 1042 and 1042-S for the payments. booked liabilities (as defined in booked liability, or is not an insurance Special treaty shopping rules apply if Regulations sections 1.882-5(d)(2)(ii)(A) liability on a U.S. business, or is not a the recipient of the interest paid by the (foreign corporations other than banks) liability giving rise to interest expense that U.S. trade or business is a foreign and 1.882-5(d)(2)(iii) (foreign banking is directly allocated to income from a U.S. corporation. corporations)). asset. See Regulations section The set(s) of books required to be 1.884-4(b). Line 9b reported on Schedule L by a foreign bank A foreign bank may treat a percentage of are the same set(s) of books the foreign All other foreign corporations. In its excess interest as if it were interest on bank must use to derive the net book general, branch interest of foreign deposits and thus exempt from tax. income on Schedule M-3 (Form 1120-F), corporations (other than banks) includes: Multiply the amount on line 9a by the Part I, line 11. The total assets and 1. Interest on liabilities shown on the greater of 85% (0.85) or the ratio of the liabilities required to be reported include books and records of the U.S. trade or foreign bank's worldwide interest-bearing the interbranch assets and liabilities and business for purposes of Regulations deposits to its worldwide interest-bearing the noneffectively connected assets section 1.882-5(d)(2), liabilities as of the close of the tax year. reflected on such books. The set(s) of 2. Interest on liabilities that are Line 10. Tax on Excess Interest books that gives rise to U.S. booked secured predominantly by U.S. assets or liabilities under Regulations section that cause certain nondeductible interest The rate of tax on excess interest is the 1.882-5(d)(2) will generally be the set(s) of (such as capitalized interest) related to same rate that would apply to interest paid books maintained within the United States U.S. assets, and to the foreign corporation by a wholly by the corporation's U.S. trade or owned domestic corporation. The tax on business. However, one or more sets of 3. Interest on liabilities identified as excess interest is not prohibited by any books required to be reported on liabilities of the U.S. trade or business on provision in any treaty to which the United Schedule L do not have to be maintained or before the earlier of the date on which States is a party. The corporation may within the United States so long as the the first interest payment is made or the qualify for treaty benefits if it meets certain totality of the books reflects a substantial due date (including extensions) of the requirements. See line 6, Branch Profits ECI activity that gives rise to inclusion of foreign corporation's income tax return for Tax, earlier. The corporation is exempt the books' third-party liabilities as U.S. the tax year. from the tax on excess interest if the rate booked liabilities under Regulations However, a liability may not be of tax that would apply to interest paid to section 1.882-5(d)(2). This determination identified under 3 above if the liability is the foreign corporation by a wholly owned is made under the facts and incurred in the ordinary course of the domestic corporation is zero and the circumstances pertaining to materiality of foreign corporation's trade or business, or foreign corporation qualifies for treaty the ECI activities reflected on the set(s) of if the liability is secured predominantly by benefits. books in accordance with the assets that are not U.S. assets. The requirements of the interest expense interest on liabilities identified in 3 above Schedule L—Balance allocation regulations. See Regulations that will be treated as interest paid by the Sheets per Books section 1.882-5(d)(6), example 5. This U.S. trade or business is capped at 85% standard is used to determine U.S. of the interest of the foreign corporation Balance Sheet per Books booked liability qualification regardless of that would be excess interest before The balance sheet assets, liabilities, and whether the foreign corporation uses the considering interest on liabilities identified equity amounts required to be reported on Adjusted U.S. Booked Liabilities Method in 3 above. See Regulations section Schedule L are either the worldwide or the Separate Currency Pools Method to 1.884-4. assets, liabilities, and equity of the allocate interest expense under Regulations section 1.882-5. Interbranch interest. Any interest paid corporation, or, at the taxpayer's election, the set(s) of books that contains assets for interbranch liabilities is disregarded in A Schedule L set of books does not located in the United States and other computing branch interest of any include a book whose only assets are assets used in the trade or business corporation. those that give rise to ECI under section conducted in the United States. See 864(c)(6) or (c)(7). A set of books that has 80% rule. If 80% or more of a foreign Regulations section 1.6012-2(g)(1)(iii). If a only ECI assets under section 864(c)(6) corporation's assets are U.S. assets, the corporation (including a foreign bank) and (c)(7) is not a set of books that gives foreign corporation's branch interest will chooses worldwide reporting on rise to U.S. booked liabilities under the generally equal the interest reported on Schedule L, the profit and loss results applicable test for a bank or a corporation line 7c. However, any interest included on from the same set(s) of books must be other than a bank in Regulations section line 7c that has accrued but has not been used to report the adjusted worldwide net 1.882-5(d)(2). Books and records of this paid will not be treated as branch interest income (loss) results in Part I, line 11, of type are generally books maintained in a on line 8 unless an election is made under Schedule M-3 (Form 1120-F). Regulations section 1.884-4(c)(1) to treat foreign location that include assets either such interest as paid in that year for all Set(s) of books based on Regulations originated through the material activities of purposes of the Code. section 1.882-5(d)(2). If the corporation the U.S. trade or business or assets chooses to limit the Schedule L reporting formerly held in connection with a U.S. If this 80% rule applies, check the box to the books that gives rise to ECI from trade or business that are no longer held on line 8. assets located in the United States and or used for that purpose. Transferred Note. Branch interest of a foreign other assets used in the trade or business assets from a set of books of the U.S. corporation is treated as if paid by a conducted in the United States, the total trade or business will generally reflect domestic corporation. A foreign assets, liabilities, and equity on the set(s) assets described in section 864(c)(6) or corporation is thus required to withhold on of books that contain these characteristics (c)(7). See Regulations section 1.884-1(d) interest paid by its U.S. trade or business must be reported on Schedule L. These (2)(xi), example 5. Securities that are attributable to a U.S. office of a banking,

Instructions for Form 1120-F (2020) -31- Page 32 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

financing, or similar business that are • State and local government obligations, Line 15. Other non-current interbranch transferred to a foreign location of a the interest on which is excludable from assets. Include on line 15 non-current continuing U.S. banking office remain gross income under section 103(a); and interbranch amounts on the Schedule L attributable to such U.S. office under • Stock in a mutual fund or other RIC that books recorded with other non-Schedule L Regulations section 1.864-4(c)(5)(iii) and distributed exempt-interest dividends books of the corporation (including do not constitute assets described in during the tax year of the corporation. disregarded entities whose books are not section 864(c)(6) or (c)(7). However, a Line 6. Current assets. On line 6a, enter reportable on Schedule L). Non-current foreign set of books and records that all current interbranch assets (in assets are determined in accordance with reflects securities of a banking, financing, accordance with the corporation's the accounting practices of the or similar business that gives rise to ECI, accounting practices) reflected on the corporation on its books and records. may or may not constitute books that give combined sets of books that are rise to U.S. booked liabilities under the Line 16. Other non-current third-party transacted with other books of the facts and circumstances. Generally, a assets. Report on line 16a, other corporation that are not reportable on relatively small number of securities non-current, non-U.S. assets on the Schedule L (including books of reflected on the books and records of the Schedule L books with third parties disregarded entities, if applicable). On home office of a foreign bank that reflects (whether related or unrelated parties). line 6b, enter the current non-U.S. assets predominantly noneffectively connected Non-U.S. assets are those that give rise to on the sets of books reportable on assets of the same type will not cause the noneffectively connected income. Attach a Schedule L. Non-U.S. assets are foreign book to give rise to U.S. booked statement to indicate the amount for each third-party assets (whether with related or liabilities under Regulations section category of non-U.S. assets (for example, unrelated parties) that give rise only to 1.882-5(d)(2)(iii). foreign-related party assets that give rise noneffectively connected income. On to non-ECI under section 864(c)(4)(D)). If the foreign corporation has more than line 6c, enter the current U.S. assets on Report on line 16b other non-current U.S. one set of books and records that give rise the Schedule L reportable books. U.S. assets on the Schedule L books with third to U.S. booked liabilities under assets are assets that give rise to ECI and parties (whether related or unrelated Regulations section 1.882-5(d)(2), it must constitute U.S. assets in whole or in part parties). U.S. assets are those that give report the combined amounts shown on all under Regulations section 1.884-1(d). rise to ECI in accordance with Regulations such books and records on Schedule L. Enter assets held for trading or dealing to section 1.884-1(d). Attach a statement For example, the books and records of a customers in the applicable category on indicating the amount for each category of foreign insurance company required to file line 6. Attach a statement to indicate the assets that give rise to ECI. amount for each category of current Form 1120-F include, but are not limited Line 19. Mortgages, notes, bonds pay- to, amounts reported on statements (for assets included in line 6, such as money market deposits of banks, trading assets able in less than 1 year. Enter on example, NAIC statements) filed with a line 19a interbranch liabilities on the domestic state insurance authority. If a held for the taxpayer's own account, and dealing assets held for customers Schedule L books that are payable in less foreign bank maintains a consolidation of than one year to books of the corporation two or more sets of books that collectively including amounts recorded on the books of a global dealing operation that are that are not reportable on Schedule L give rise to U.S. booked liabilities, the (including books of disregarded entities corporation may report the financial allocated between ECI and non-ECI under Proposed Regulations section 1.863-3(h) that are not reportable on Schedule L). consolidation of such set of books on Report only interbranch liabilities that Schedule L. See Regulations section and Proposed Regulations section 1.864-4(c)(2)(iv). accrue or pay interest on the Schedule L 1.882-5(d)(6), example 5. However, if the books and records to other books of the foreign corporation has a set of books Line 9. Other loans and investments. corporation in accordance with the from a disregarded entity that is not On line 9a, enter the amount of other corporation's internal accounting included in a U.S. trade or business non-U.S. asset loans and investments to practices. Attach a statement indicating consolidation and such other set of books third parties (whether related or unrelated the amount for each category of gives rise to U.S. booked liabilities under parties). Non-U.S. assets in this category interbranch liabilities (for example, money Regulations section 1.882-5(d)(2), then are loans and investments that give rise to market deposit liabilities, other short-term such set of books must be included in the non-effectively connected income. If a liabilities, etc.). On line 19b, enter liabilities consolidation of books reported on taxpayer has investments that give rise to on the Schedule L books that are payable Schedule L. Combined books reported on ECI in part and non-ECI in part, enter the in less than one year to third parties Schedule L must be adjusted to eliminate proportionate amount of the investment (whether related or unrelated). Attach a transactions recorded between the asset that gives rise to non-ECI on line 9a. statement indicating the amount for each reportable books. However, amounts Do not include interbranch amounts on category of liability owed to third parties recorded between the set(s) of books and line 9a. On line 9b, report the U.S. asset (for example, money market deposit other divisions of the foreign corporation loans and investments to third parties liabilities, other short-term borrowings, or disregarded entities whose books do (whether related or unrelated parties). Vostro accounts, etc.). not give rise to U.S. booked liabilities, are U.S. asset loans and investments are not eliminated unless the taxpayer assets that give rise to ECI. If an Line 22. Mortgages, notes, bonds pay- chooses worldwide reporting under the investment asset gives rise to ECI in part able in 1 year or more. Enter on line 22a general rule in Regulations section and non-ECI in part, enter the interbranch liabilities on the Schedule L 1.6012-2(g)(1)(iii). proportionate amount of the investment books that are payable in one year or more to books of the corporation that are Line 1. Cash. Corporations other than asset that gives rise to ECI on line 9b. See Regulations section 1.884-1(d)(2)(vii). not reportable on Schedule L (including banks include certificates of deposit as books of disregarded entities that are not cash on line 1. Foreign banks include Attach a statement indicating the amount for each category of loans and investment reportable on Schedule L). Report only certificates of deposit as current or interbranch liabilities that accrue or pay non-current assets, as the case may be, in assets held by the corporation that give rise to non-ECI (line 9a) and ECI (line 9b) interest on the Schedule L books and their appropriate interbranch, U.S. asset or records to other books of the corporation non-U.S. asset categories. (for example, loans to customers, securities described in Regulations in accordance with the corporation's Line 5. Tax-exempt securities. Include: section 1.864-4(c)(5)(ii)(b)(3)). internal accounting practices. Attach a

-32- Instructions for Form 1120-F (2020) Page 33 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

statement indicating the amounts for each (5)(iii)) if under the facts and See the Instructions for Schedule M-3 category of liability (for example, long-term circumstances, such assets also (Form 1120-F) for more information. interbranch borrowings). Enter on line 22b constitute a set of books that give rise to • If Schedule M-3 is not required, the liabilities on the Schedule L books that are U.S. booked liabilities under Regulations foreign corporation must report on line 1 of payable in one year or more to third section 1.882-5(d)(2). Under such Schedule M-1 the net income (loss) per parties (whether related or unrelated circumstances, the set of books would the set of books taken into account on parties). Attach a statement indicating the remain reportable on Schedule L for Schedule L. amounts for each category of liability (for Code-based reporting purposes, but for • The foreign corporation must report on example, long-term certificates of deposit, treaty-based reporting purposes, such line 1 of Schedule M-2 the balance of other long-term borrowings, etc.). transfer may effect attribution to another unappropriated retained earnings per the part of the corporate enterprise under a set(s) of books taken into account on Line 24. Other liabilities. Enter on functional and factual analysis and no Schedule L. line 24a other interbranch liability amounts longer be reportable on Schedule L as on the Schedule L books owed to other part of the U.S. permanent establishment Note. If Schedule M-3 is filed in lieu of books of the corporation (including to after the transfer is made. Additionally, a Schedule M-1, the corporation is still books of disregarded entities) not set of books having no ECI or U.S. booked required to file Schedule M-2. reportable on Schedule L, including liabilities under Regulations section amounts that do not give rise to interest Do not file Schedules M-1 and M-2 1.882-5(d)(2) might still constitute a set of accruals or payments in accordance with (Form 1120-F) if total assets at the end of books of the U.S. permanent the corporation's internal accounting the tax year (line 17, column (d), of establishment because the items recorded practices. Attach a statement indicating Schedule L) are less than $25,000. thereon are primarily attributable to the the amount for each category of U.S. permanent establishment under the interbranch liability reported on line 24a. application by analogy of the OECD Schedule W Enter on line 24b other liability amounts on Transfer Pricing Guidelines as authorized Complete Schedule W to determine the the Schedule L books owed to third by the relevant treaty (for example, see portion of the foreign corporation's parties (whether related or unrelated Article 7 (Business Profits) and the overpayment (on Form 1120-F, page 1, parties) including amounts that do not give accompanying Exchange of Notes). In line 8a) resulting from tax deducted and rise to interest accruals or payments in such cases, the set(s) of books that must withheld under Chapter 3 or 4. accordance with the corporation's be reported on Schedule L are those of accounting practices. Attach a statement Line 3. The amount to be entered on the U.S. permanent establishment as indicating the amount for each category of Schedule W, line 3, may be computed determined under the OECD Transfer third-party liability reported on line 24b. using the general guidelines set forth in Pricing Guidelines. the following table. Line 29. Adjustments to shareholders' equity. Some examples of adjustments to Schedules M-1 and M-3 a. Tax on ECI per the tax return. report on this line include: In completing Schedules M-1 and M-3, the Enter the amount from Form

• Unrealized gains and losses on following apply. 1120-F, page 1, line 2...... a. securities held “available for sale.” • A corporation with total assets of $10 b. To properly reflect the • Foreign currency translation million or more on the last day of the tax overpayment described in section adjustments. year that are reportable on Schedule L 6611(e)(4), refigure the taxable • The excess of additional pension must file Schedule M-3 (Form 1120-F) income on Form 1120-F, Section II, line 31, by excluding from liability over unrecognized prior service instead of Schedule M-1. cost. Section II, lines 8 through 10, any • A corporation filing Form 1120-F that is amount from the disposition of a • Guarantees of employee stock (ESOP) not required to file Schedule M-3 may debt. U.S. real property interest, any voluntarily file Schedule M-3 instead of partnership ECTI allocable to the • Compensation related to employee Schedule M-1. See the Instructions for corporation under the rules of stock award plans. Schedule M-3 (Form 1120-F) for more Regulations section 1.1446-2, If the total adjustment to be entered on information. and for transactions occurring line 29 is a negative amount, enter the • Corporations that (a) are required to file after December 31, 2018, any amount in parentheses. Schedule M-3 (Form 1120-F) and have amount from the disposition of an interest (that is not publicly less than $50 million total assets at the Adaptation of Schedule L for traded) in a partnership that is end of the tax year, or (b) are not required treaty-based reporting. The set(s) of engaged in the conduct of a trade to file Schedule M-3 (Form 1120-F) and books reported on Schedule L for or business in the United States voluntarily file Schedule M-3 (Form treaty-based reporting purposes will (attach explanation of amounts 1120-F), must either (i) complete excluded)...... b. generally be the same set(s) of books Schedule M-3 (Form 1120-F) entirely, or reported on Schedule L, as described c. Refigured tax on ECI. Using the (ii) complete Schedule M-3 (Form 1120-F) below. However, certain books that give refigured taxable income from line through Part I, and complete b, refigure the tax for Schedule II rise to ECI might not necessarily give rise Schedule M-1 instead of completing Parts of Form 1120-F on Schedule J to treaty-based reporting. For example, II and III of Schedule M-3 (Form 1120-F). If and enter the refigured tax from the assets on a set of books could still be the corporation chooses to complete Schedule J, line 9 here. .... c. attributed to a U.S. office for ECI reporting Schedule M-1 instead of completing Parts d. Subtract line c from line a. Enter purposes even when transferred away II and III of Schedule M-3, the amount on the result here and on from the U.S. permanent establishment for Schedule M-1, line 1, must equal the Schedule W, line 3...... d. treaty reporting purposes (see, for amount on Schedule M-3, Part I, line 11. example, Regulations section 1.864-4(c)

Instructions for Form 1120-F (2020) -33- Page 34 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by Internal Revenue Code section 6103. The estimated burden for taxpayers filing this form is approved under OMB control number 1545-0123. If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. You can send us comments through IRS.gov/FormsComments. Or you can write to the Internal Revenue Service, Tax Forms and Publications Division, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send the tax form to this address. Instead, see Where To File, earlier, near the beginning of the instructions.

-34- Instructions for Form 1120-F (2020) Page 35 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Form 1120-F Using the list of activities and codes below, considered a manufacturer and must use one of the determine from which activity the company derives the manufacturing codes (311110-339900). Principal Business Activity Codes largest percentage of its “total receipts.” Total receipts is defined as the sum of gross receipts or sales (page 4, Once the principal business activity is determined, This list of principal business activities and their line 1a) plus all other income (page 4, lines 4 through entries must be made on page 1, items F(1), F(2), and associated codes is designed to classify an enterprise 10). If the company purchases raw materials and F(3). For item F(1), enter the six-digit code selected by the type of activity in which it is engaged to facilitate supplies them to a subcontractor to produce the finished from the list below. For item F(2), enter the company's the administration of the Internal Revenue Code. These product, but retains title to the product, the company is business activity. For item F(3), enter a brief description principal business activity codes are based on the North of the principal product or service of the company. American Industry Classification System. Agriculture, Forestry, Fishing, 238300 Building Finishing Contractors 325900 Other Chemical Product & Furniture and Related Product (including drywall, insulation, Preparation Mfg Manufacturing and Hunting painting, wallcovering, flooring, Plastics and Rubber Products 337000 Furniture & Related Product Crop Production tile, & finish carpentry) Manufacturing Manufacturing 111100 Oilseed & Grain Farming 238900 Other Specialty Trade 326100 Plastics Product Mfg Miscellaneous Manufacturing Contractors (including site 111210 Vegetable & Melon Farming preparation) 326200 Rubber Product Mfg 339110 Medical Equipment & Supplies (including potatoes & yams) Nonmetallic Mineral Product Mfg 111300 Fruit & Tree Nut Farming Manufacturing Manufacturing 339900 Other Miscellaneous 111400 Greenhouse, Nursery, & Food Manufacturing 327100 Clay Product & Refractory Mfg Manufacturing Floriculture Production 311110 Animal Food Mfg 327210 Glass & Glass Product Mfg Wholesale Trade 111900 Other Crop Farming (including 311200 Grain & Oilseed Milling 327300 Cement & Concrete Product Mfg tobacco, cotton, sugarcane, hay, Merchant Wholesalers, Durable Goods peanut, sugar beet & all other 311300 Sugar & Confectionery Product 327400 Lime & Gypsum Product Mfg 423100 Motor Vehicle & Motor Vehicle crop farming) Mfg 327900 Other Nonmetallic Mineral Parts & Supplies Animal Production 311400 Fruit & Vegetable Preserving & Product Mfg 423200 Furniture & Home Furnishings Specialty Food Mfg 112111 Beef Cattle Ranching & Farming Primary Metal Manufacturing 423300 Lumber & Other Construction 311500 Dairy Product Mfg 112112 Cattle Feedlots 331110 Iron & Steel Mills & Ferroalloy Materials 311610 Animal Slaughtering and Mfg 112120 Dairy Cattle & Milk Production 423400 Professional & Commercial Processing 331200 Steel Product Mfg from Equipment & Supplies 112210 Hog & Pig Farming 311710 Seafood Product Preparation & Purchased Steel 423500 Metal & Mineral (except 112300 Poultry & Egg Production Packaging 331310 Alumina & Aluminum Production Petroleum) 112400 Sheep & Goat Farming 311800 Bakeries, Tortilla & Dry Pasta & Processing 423600 Household Appliances and 112510 Aquaculture (including shellfish & Mfg 331400 Nonferrous Metal (except Electrical & Electronic Goods finfish farms & hatcheries) 311900 Other Food Mfg (including Aluminum) Production & 423700 Hardware, & Plumbing & Heating 112900 Other Animal Production coffee, tea, flavorings & Processing Equipment & Supplies seasonings) Forestry and Logging 331500 Foundries 423800 Machinery, Equipment, & Beverage and Tobacco Product Fabricated Metal Product Supplies 113110 Timber Tract Operations Manufacturing Manufacturing 423910 Sporting & Recreational Goods & 113210 Forest Nurseries & Gathering of 312110 Soft Drink & Ice Mfg Forest Products 332110 Forging & Stamping Supplies 312120 Breweries 113310 Logging 332210 Cutlery & Handtool Mfg 423920 Toy & Hobby Goods & Supplies 312130 Wineries Fishing, Hunting and Trapping 332300 Architectural & Structural Metals 423930 Recyclable Materials 312140 Distilleries Mfg 114110 Fishing 423940 Jewelry, Watch, Precious Stone, 312200 Tobacco Manufacturing 332400 Boiler, Tank, & Shipping & Precious Metals 114210 Hunting & Trapping Textile Mills and Textile Product Mills Container Mfg 423990 Other Miscellaneous Durable Support Activities for Agriculture and 332510 Hardware Mfg Goods Forestry 313000 Textile Mills 314000 Textile Product Mills 332610 Spring & Wire Product Mfg Merchant Wholesalers, Nondurable 115110 Support Activities for Crop Goods Production (including cotton Apparel Manufacturing 332700 Machine Shops; Turned Product; & Screw, Nut, & Bolt Mfg 424100 Paper & Paper Products ginning, soil preparation, 315100 Apparel Knitting Mills planting, & cultivating) 332810 Coating, Engraving, Heat 424210 Drugs & Druggists' Sundries 315210 Cut & Sew Apparel Contractors 115210 Support Activities for Animal Treating, & Allied Activities 424300 Apparel, Piece Goods, & Notions 315220 Men's & Boys' Cut & Sew Production 332900 Other Fabricated Metal Product 424400 Grocery & Related Products Apparel Mfg Mfg 115310 Support Activities For Forestry 424500 Farm Product Raw Materials 315240 Women's, Girls' and Infants' Cut Machinery Manufacturing & Sew Apparel Mfg 424600 Chemical & Allied Products Mining 333100 Agriculture, Construction, & 211120 Crude Petroleum Extraction 315280 Other Cut & Sew Apparel Mfg Mining Machinery Mfg 424700 Petroleum & Petroleum Products 211130 Natural Gas Extraction 315990 Apparel Accessories & Other 333200 Industrial Machinery Mfg 424800 Beer, Wine, & Distilled Alcoholic Apparel Mfg Beverages 212110 Coal Mining 333310 Commercial & Service Industry Leather and Allied Product 424910 Farm Supplies 212200 Metal Ore Mining Machinery Mfg Manufacturing 424920 Book, Periodical, & Newspapers 212310 Stone Mining & Quarrying 333410 Ventilation, Heating, 316110 Leather & Hide Tanning & Air-Conditioning, & Commercial 424930 Flower, Nursery Stock, & Florists' 212320 Sand, Gravel, Clay, & Ceramic & Finishing Refrigeration Equipment Mfg Supplies Refractory Minerals Mining & 316210 Footwear Mfg (including rubber 333510 Metalworking Machinery Mfg 424940 Tobacco & Tobacco Products Quarrying & plastics) 212390 Other Nonmetallic Mineral 333610 Engine, Turbine & Power 424950 Paint, Varnish, & Supplies 316990 Other Leather & Allied Product Transmission Equipment Mfg Mining & Quarrying Mfg 424990 Other Miscellaneous Nondurable 333900 Other General Purpose Goods 213110 Support Activities for Mining Wood Product Manufacturing Machinery Mfg Wholesale Electronic Markets and Utilities 321110 Sawmills & Wood Preservation Computer and Electronic Product Agents and Brokers 221100 Electric Power Generation, 321210 Veneer, Plywood, & Engineered Manufacturing 425110 Business to Business Electronic Transmission & Distribution Wood Product Mfg 334110 Computer & Peripheral Markets 221210 Natural Gas Distribution 321900 Other Wood Product Mfg Equipment Mfg 425120 Wholesale Trade Agents & 221300 Water, Sewage & Other Systems Paper Manufacturing 334200 Communications Equipment Mfg Brokers 221500 Combination Gas & Electric 322100 Pulp, Paper, & Paperboard Mills 334310 Audio & Video Equipment Mfg Retail Trade 322200 Converted Paper Product Mfg Construction 334410 Semiconductor & Other Motor Vehicle and Parts Dealers Printing and Related Support Activities Electronic Component Mfg 441110 New Car Dealers Construction of Buildings 323100 Printing & Related Support 334500 Navigational, Measuring, 236110 Residential Building Construction Activities Electromedical, & Control 441120 Used Car Dealers Instruments Mfg 236200 Nonresidential Building Petroleum and Coal Products 441210 Recreational Vehicle Dealers Construction Manufacturing 334610 Manufacturing & Reproducing 441222 Boat Dealers Magnetic & Optical Media Heavy and Civil Engineering 324110 Petroleum Refineries (including 441228 Motorcycle, ATV, and All Other Construction integrated) Electrical Equipment, Appliance, and Motor Vehicle Dealers Component Manufacturing 237100 Utility System Construction 324120 Asphalt Paving, Roofing, & 441300 Automotive Parts, Accessories, 237210 Land Subdivision Saturated Materials Mfg 335100 Electric Lighting Equipment Mfg & Tire Stores 237310 Highway, Street, & Bridge 324190 Other Petroleum & Coal 335200 Major Household Appliance Mfg Furniture and Home Furnishings Stores Construction Products Mfg 335310 Electrical Equipment Mfg 442110 Furniture Stores 237990 Other Heavy & Civil Engineering Chemical Manufacturing 335900 Other Electrical Equipment & 442210 Floor Covering Stores Construction 325100 Basic Chemical Mfg Component Mfg 442291 Window Treatment Stores Specialty Trade Contractors 325200 Resin, Synthetic Rubber, & Transportation Equipment 442299 All Other Home Furnishings 238100 Foundation, Structure, & Building Artificial & Synthetic Fibers & Manufacturing Stores Filaments Mfg Exterior Contractors (including 336100 Motor Vehicle Mfg Electronics and Appliance Stores framing carpentry, masonry, 325300 Pesticide, Fertilizer, & Other 336210 Motor Vehicle Body & Trailer Mfg glass, roofing, & siding) 443141 Household Appliance Stores Agricultural Chemical Mfg 336300 Motor Vehicle Parts Mfg 238210 Electrical Contractors 325410 Pharmaceutical & Medicine Mfg 443142 Electronics Stores (including 336410 Aerospace Product & Parts Mfg Audio, Video, Computer, and 238220 Plumbing, Heating, & 325500 Paint, Coating, & Adhesive Mfg Camera Stores) Air-Conditioning Contractors 336510 Railroad Rolling Stock Mfg 325600 Soap, Cleaning Compound, & 336610 Ship & Boat Building Building Material and Garden 238290 Other Building Equipment Toilet Preparation Mfg Equipment and Supplies Dealers Contractors 336990 Other Transportation Equipment Mfg 444110 Home Centers

-35- Page 36 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Form 1120-F (Continued)

444120 Paint & Wallpaper Stores Transit and Ground Passenger brokers, check clearing, & 541214 Payroll Services money transmitting) 444130 Hardware Stores Transportation 541219 Other Accounting Services 485110 Urban Transit Systems Securities, Commodity Contracts, and 444190 Other Building Material Dealers Other Financial Investments and Architectural, Engineering, and Related 444200 Lawn & Garden Equipment & 485210 Interurban & Rural Bus Related Activities Services Transportation Supplies Stores 523110 Investment Banking & Securities 541310 Architectural Services Food and Beverage Stores 485310 Taxi and Ridesharing Services Dealing 541320 Landscape Architecture Services 445110 Supermarkets and Other 485320 Limousine Service 523120 Securities Brokerage 541330 Engineering Services Grocery (except Convenience) 485410 School & Employee Bus 523130 Commodity Contracts Dealing 541340 Drafting Services Stores Transportation 523140 Commodity Contracts Brokerage 541350 Building Inspection Services 445120 Convenience Stores 485510 Charter Bus Industry 523210 Securities & Commodity 541360 Geophysical Surveying & 445210 Meat Markets 485990 Other Transit & Ground Exchanges Mapping Services Passenger Transportation 445220 Fish & Seafood Markets 523900 Other Financial Investment 541370 Surveying & Mapping (except 445230 Fruit & Vegetable Markets Pipeline Transportation Activities (including portfolio Geophysical) Services 445291 Baked Goods Stores 486000 Pipeline Transportation management & investment 541380 Testing Laboratories advice) 445292 Confectionery & Nut Stores Scenic & Sightseeing Transportation Specialized Design Services Insurance Carriers and Related 445299 All Other Specialty Food Stores 487000 Scenic & Sightseeing 541400 Specialized Design Services Transportation Activities 445310 Beer, Wine, & Liquor Stores (including interior, industrial, Support Activities for Transportation 524140 Direct Life, Health, and Medical graphic, & fashion design) Health and Personal Care Stores Insurance and Reinsurance 488100 Support Activities for Air Carriers Computer Systems Design and Related 446110 Pharmacies & Drug Stores Transportation Services 524150 Direct Insurance and 446120 Cosmetics, Beauty Supplies, & 488210 Support Activities for Rail 541511 Custom Computer Programming Perfume Stores Reinsurance (except Life, Transportation Health, and Medical) Carriers Services 446130 Optical Goods Stores 488300 Support Activities for Water 524210 Insurance Agencies & 541512 Computer Systems Design 446190 Other Health & Personal Care Transportation Brokerages Services Stores 488410 Motor Vehicle Towing 524290 Other Insurance Related 541513 Computer Facilities Management Gasoline Stations 488490 Other Support Activities for Road Activities (including third-party Services 447100 Gasoline Stations (including Transportation administration of insurance and 541519 Other Computer Related convenience stores with gas) 488510 Freight Transportation pension funds) Services Clothing and Clothing Accessories Arrangement Funds, Trusts, and Other Financial Other Professional, Scientific, and Stores 488990 Other Support Activities for Vehicles Technical Services 448110 Men's Clothing Stores Transportation 525100 Insurance & Employee Benefit 541600 Management, Scientific, & 448120 Women's Clothing Stores Couriers and Messengers Funds Technical Consulting Services 448130 Children's & Infants' Clothing 492110 Couriers 525910 Open-End Investment Funds 541700 Scientific Research & (Form 1120-RIC) Development Services Stores 492210 Local Messengers & Local 448140 Family Clothing Stores Delivery 525920 Trusts, Estates, & Agency 541800 Advertising & Related Services Accounts 448150 Clothing Accessories Stores Warehousing and Storage 541910 Marketing Research & Public 525990 Other Financial Vehicles Opinion Polling 448190 Other Clothing Stores 493100 Warehousing & Storage (except (including mortgage REITs & 541920 Photographic Services 448210 Shoe Stores lessors of miniwarehouses & closed-end investment funds) self-storage units) 541930 Translation & Interpretation 448310 Jewelry Stores “Offices of Bank Holding Companies” and Services Information “Offices of Other Holding Companies” are 448320 Luggage & Leather Goods 541940 Veterinary Services Stores Publishing Industries (except Internet) located under Management of Companies (Holding Companies), later. 541990 All Other Professional, Scientific, Sporting Goods, Hobby, Book, and 511110 Newspaper Publishers & Technical Services Music Stores 511120 Periodical Publishers Real Estate and Rental and 451110 Sporting Goods Stores Management of Companies 511130 Book Publishers Leasing 451120 Hobby, Toy, & Game Stores (Holding Companies) 511140 Directory & Mailing List Real Estate 451130 Sewing, Needlework, & Piece Publishers 551111 Offices of Bank Holding Goods Stores 531110 Lessors of Residential Buildings 511190 Other Publishers Companies 451140 Musical Instrument & Supplies & Dwellings (including equity 511210 Software Publishers REITs) 551112 Offices of Other Holding Stores Companies 451211 Book Stores Motion Picture and Sound Recording 531120 Lessors of Nonresidential Industries Buildings (except Administrative and Support and 451212 News Dealers & Newsstands 512100 Motion Picture & Video Industries Miniwarehouses) (including General Merchandise Stores equity REITs) Waste Management and (except video rental) Remediation Services 452200 Department Stores 512200 Sound Recording Industries 531130 Lessors of Miniwarehouses & Self-Storage Units (including 452300 General Merchandise Stores Broadcasting (except Internet) Administrative and Support Services Incl. Warehouse Clubs and equity REITs) 515100 Radio & Television Broadcasting 561110 Office Administrative Services Supercenters 531190 Lessors of Other Real Estate 561210 Facilities Support Services Miscellaneous Store Retailers 515210 Cable & Other Subscription Property (including equity REITs) Programming 561300 Employment Services 453110 Florists 531210 Offices of Real Estate Agents & Telecommunications Brokers 561410 Document Preparation Services 453210 Office Supplies & Stationery Stores 517000 Telecommunications (including 531310 Real Estate Property Managers 561420 Telephone Call Centers paging, cellular, satellite, cable & 531320 Offices of Real Estate Appraisers 561430 Business Service Centers 453220 Gift, Novelty, & Souvenir Stores other program distribution, (including private mail centers & 453310 Used Merchandise Stores resellers, other 531390 Other Activities Related to Real copy shops) Estate 453910 Pet & Pet Supplies Stores telecommunications, & Internet 561440 Collection Agencies service providers) Rental and Leasing Services 453920 Art Dealers 561450 Credit Bureaus Data Processing Services 532100 Automotive Equipment Rental & 453930 Manufactured (Mobile) Home Leasing 561490 Other Business Support Services Dealers 518210 Data Processing, Hosting, & (including repossession services, Related Services 532210 Consumer Electronics & court reporting, & stenotype 453990 All Other Miscellaneous Store Appliances Rental Retailers (including tobacco, Other Information Services services) candle, & trophy shops) 519100 Other Information Services 532281 Formal Wear & Costume Rental 561500 Travel Arrangement & Nonstore Retailers (including news syndicates, 532282 Video Tape & Disc Rental Reservation Services libraries, Internet publishing & 532283 Home Health Equipment Rental 454110 Electronic Shopping & broadcasting) 561600 Investigation & Security Services Mail-Order Houses 532284 Recreational Goods Rental 561710 Exterminating & Pest Control 454210 Vending Machine Operators Finance and Insurance 532289 All Other Consumer Goods Services 454310 Fuel Dealers (including Heating Depository Credit Intermediation Rental 561720 Janitorial Services Oil and Liquefied Petroleum) 522110 Commercial Banking 532310 General Rental Centers 561730 Landscaping Services 454390 Other Direct Selling 522120 Savings Institutions 532400 Commercial & Industrial 561740 Carpet & Upholstery Cleaning Establishments (including Machinery & Equipment Rental & Services door-to-door retailing, frozen 522130 Credit Unions Leasing 522190 Other Depository Credit 561790 Other Services to Buildings & food plan providers, party plan Lessors of Nonfinancial Intangible Dwellings merchandisers, & coffee-break Intermediation Assets (except copyrighted works) service providers) Nondepository Credit Intermediation 561900 Other Support Services 533110 Lessors of Nonfinancial (including packaging & labeling Transportation and 522210 Credit Card Issuing Intangible Assets (except services, & convention & trade Warehousing 522220 Sales Financing copyrighted works) show organizers) 522291 Consumer Lending Professional, Scientific, and Waste Management and Remediation Air, Rail, and Water Transportation Services 522292 Real Estate Credit (including Technical Services 481000 Air Transportation mortgage bankers & originators) 562000 Waste Management & 482110 Rail Transportation 522293 International Trade Financing Legal Services Remediation Services 483000 Water Transportation 522294 Secondary Market Financing 541110 Offices of Lawyers Educational Services Truck Transportation 541190 Other Legal Services 522298 All Other Nondepository Credit 611000 Educational Services (including 484110 General Freight Trucking, Local Intermediation Accounting, Tax Preparation, schools, colleges, & universities) 484120 General Freight Trucking, Activities Related to Credit Bookkeeping, and Payroll Services Long-distance Intermediation 541211 Offices of Certified Public 484200 Specialized Freight Trucking 522300 Activities Related to Credit Accountants Intermediation (including loan 541213 Tax Preparation Services

-36- Page 37 of 37 Fileid: … ons/I1120F/2020/A/XML/Cycle06/source 13:38 - 5-Mar-2021

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Form 1120-F (Continued)

Hospitals marinas, fitness centers, & Automotive & Electronic) Repair Health Care and Social bowling centers) & Maintenance 622000 Hospitals Assistance 811410 Home & Garden Equipment & Nursing and Residential Care Facilities Accommodation and Food Offices of Physicians and Dentists Appliance Repair & Maintenance 623000 Nursing & Residential Care Services 811420 Reupholstery & Furniture Repair 621111 Offices of Physicians (except Facilities mental health specialists) Accommodation 811430 Footwear & Leather Goods Social Assistance 621112 Offices of Physicians, Mental 721110 Hotels (except Casino Hotels) & Repair Health Specialists 624100 Individual & Family Services Motels 811490 Other Personal & Household 621210 Offices of Dentists 624200 Community Food & Housing, & 721120 Casino Hotels Goods Repair & Maintenance Emergency & Other Relief 721191 Bed & Breakfast Inns Personal and Laundry Services Offices of Other Health Practitioners Services 621310 Offices of Chiropractors 721199 All Other Traveler 812111 Barber Shops 624310 Vocational Rehabilitation Accommodation 621320 Offices of Optometrists Services 812112 Beauty Salons 721210 RV (Recreational Vehicle) Parks 812113 Nail Salons 621330 Offices of Mental Health 624410 Child Day Care Services & Recreational Camps Practitioners (except Physicians) 812190 Other Personal Care Services Arts, Entertainment, and 721310 Rooming & Boarding Houses, (including diet & weight reducing 621340 Offices of Physical, Occupational Dormitories, & Workers’ Camps & Speech Therapists, & Recreation centers) Food Services and Drinking Places Audiologists Performing Arts, Spectator Sports, and 812210 Funeral Homes & Funeral 621391 Offices of Podiatrists Related Industries 722300 Special Food Services (including Services food service contractors & 812220 Cemeteries & Crematories 621399 Offices of All Other 711100 Performing Arts Companies caterers) Miscellaneous Health 711210 Spectator Sports (including 812310 Coin-Operated Laundries & Practitioners 722410 Drinking Places (Alcoholic Drycleaners sports clubs & racetracks) Beverages) Outpatient Care Centers 812320 Drycleaning & Laundry Services 711300 Promoters of Performing Arts, 722511 Full-Service Restaurants 621410 Family Planning Centers Sports, & Similar Events (except Coin-Operated) 722513 Limited-Service Restaurants 621420 Outpatient Mental Health & 711410 Agents & Managers for Artists, 812330 Linen & Uniform Supply Substance Abuse Centers Athletes, Entertainers, & Other 722514 Cafeterias and Buffets 812910 Pet Care (except Veterinary) 621491 HMO Medical Centers Public Figures 722515 Snack and Non-alcoholic Services Beverage Bars 621492 Kidney Dialysis Centers 711510 Independent Artists, Writers, & 812920 Photofinishing Performers 621493 Freestanding Ambulatory Other Services 812930 Parking Lots & Garages Surgical & Emergency Centers Museums, Historical Sites, and Similar 812990 All Other Personal Services Institutions Repair and Maintenance 621498 All Other Outpatient Care 811110 Automotive Mechanical & Religious, Grantmaking, Civic, Centers 712100 Museums, Historical Sites, & Professional, and Similar Organizations Similar Institutions Electrical Repair & Maintenance Medical and Diagnostic Laboratories 811120 Automotive Body, Paint, Interior, 813000 Religious, Grantmaking, Civic, Amusement, Gambling, and Recreation Professional, & Similar 621510 Medical & Diagnostic Industries & Glass Repair Laboratories Organizations (including 713100 Amusement Parks & Arcades 811190 Other Automotive Repair & condominium and homeowners Home Health Care Services Maintenance (including oil 713200 Gambling Industries associations) 621610 Home Health Care Services change & lubrication shops & car 713900 Other Amusement & Recreation washes) Other Ambulatory Health Care Services Industries (including golf 811210 Electronic & Precision 621900 Other Ambulatory Health Care courses, skiing facilities, Equipment Repair & Services (including ambulance Maintenance services & blood & organ banks) 811310 Commercial & Industrial Machinery & Equipment (except

-37-