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Department of the Treasury 2020 Internal Revenue Service Instructions for Schedule V (Form 1120-F) List of Vessels or Aircraft, Operators, and Owners

Section references are to the Internal Revenue pool, joint venture, joint service storage; and the performance of personal Code unless otherwise noted. arrangement, as a partner in a services by individuals. The term also partnership, or as the beneficiary of a trust includes income derived from demurrage, Future Developments or estate. dispatch, and dead freight. For the latest information about The term “transportation income” (as 2. Off board services. Income in this developments related to Schedule V defined in section 863(c)(3)) means any category is derived from services (Form 1120-F) and its instructions, such income derived from, or in connection performed off board any vessel or aircraft as legislation enacted after they were with: by an operator of a vessel or aircraft, published, go to IRS.gov/Form1120F. • The use (or hiring or leasing for use) of provided such services are incidental to any vessel or aircraft, or the operation of vessels or aircraft by such General Instructions • The performance of services directly operator. The term does not include related to the use of any vessel or aircraft. income from services performed by Purpose of Schedule persons other than an operator. Examples The term “vessel” or “aircraft” includes of off board services include terminal Schedule V (Form 1120-F) is used by a any container used in connection with a services such as dockage, wharfage, foreign corporation to report basic vessel or aircraft. However, the term storage, lights, water, refrigeration, information for each vessel or aircraft with “transportation income” does not include refueling and similar services; stevedoring respect to which the corporation is subject income from the disposition of vessels, and other cargo handling services; to the 4% rate of tax on U.S. source gross containers, or aircraft. maintenance and repairs; and services transportation income (USSGTI) under performed as a travel or booking agent. section 887. The term “income derived from, or in connection with, the use (or hiring or The term “operator” includes the actual Who Must File leasing for use) of any vessel or aircraft” operator of a vessel or aircraft, as well as Foreign corporations that are subject to means: a time or voyage charterer of such vessel the 4% tax on their USSGTI under section • Income derived from transporting or aircraft. 887 must complete Schedule V. passengers or property by vessel or aircraft; Specific Instructions When and Where To File • Income derived from hiring or leasing a vessel or aircraft for use in the Important. All information reported on Attach Schedule V (Form 1120-F) to the transportation of passengers or property Schedule V must be in English. All foreign corporation's Form 1120-F income on the vessel or aircraft; and amounts must be stated in U.S. dollars. tax return. See the Instructions for Form Income derived by an operator of • Throughout these instructions, when 1120-F for the time, place, and manner for vessels or aircraft from the rental or use of the pronouns “you” and “your” are used, filing the corporation's income tax return. containers and related equipment they are used in reference to the foreign (container related income) in connection corporation filing Form 1120-F, U.S. with, or incidental to, the transportation of Definitions Income Tax Return of a Foreign cargo on such vessels or aircraft by the The term “United States source gross Corporation. transportation income (USSGTI)” means operator. Persons other than an operator any gross income (without reduction by of a vessel or aircraft do not derive Columns A through D. Complete a any deductions or losses) that is container related income. Such income is separate column for each vessel or aircraft transportation income (as defined in treated as rental income, not with respect to which you are subject to a section 863(c)(3)) to the extent such transportation income. 4% rate of tax under section 887. For income is treated as from sources within example: The term “income derived from, or in the United States under section 863(c)(2) • If you were a bareboat lessor of vessels connection with, the performance of (A). or aircraft during the tax year, complete a services directly related to the use of a separate column for each vessel or aircraft The term does not include vessel or aircraft” includes the following you leased out during the tax year for transportation income which is: categories of income. which you derived USSGTI. • Not sourced under section 863(c)(2); 1. On board services. Income in this • If you earned income during the tax • Taxable as effectively connected with category is derived from services year from the operation of vessels or the corporation's trade or business in the performed on board a vessel or aircraft in aircraft, including time or voyage charter United States pursuant to section 887(b) the course of the actual transportation of hire, complete a separate column for each (4); or passengers or property aboard vessels or vessel or aircraft operated by you during • Taxable in a possession of the United aircraft. Examples of income in this the tax year for which you derived States under a provision of the Code, as category include income from renting USSGTI. made applicable in such possession. staterooms, berths, or living • If you earned income during the tax accommodations; furnishing meals and year from providing services directly Note. Foreign corporations may derive entertainment; operating shops and related to the use of vessels or aircraft, USSGTI directly, from participation in a casinos; providing excess baggage

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complete a separate column for each 4. The number of days during the tax method. For example, where a vessel or vessel or aircraft for which such services year the vessel or aircraft was under aircraft is under charter, one reasonable were performed and for which you derived lease. method of determining the portion of such USSGTI. 5. A description of the method used to charter income which is USSGTI is to If you derive USSGTI subject to a 4% determine the USSGTI from the leases for apply to such charter income the ratio of rate of tax under section 887 from more the vessel or aircraft, and the calculations (a) the number of days of uninterrupted than four vessels or aircraft, attach used to apply this method (see the Note in travel on voyages or flights between the continuation statements using the same the instructions for line 9 for examples of United States and the farthest point(s) size and format as this Schedule V. reasonable methods that may be used). where cargo or passengers are loaded en route to, or discharged en route from, the Line 1. Enter the name of the vessel or Line 5. Enter the name of the registered United States, to (b) the number of days in type of aircraft. owner. If you are the registered owner, the smaller of the tax year or the particular Line 2. For each column, if you are enter “Same as filer above” on line 5. charter period. When determining USSGTI, the number of days the vessel is completing the column for a vessel, enter Line 6. Enter the employer identification the Lloyd's register number on line 2. If located in United States waters for repairs number (EIN) or social security number or maintenance should not be included in you are completing the column for an (SSN) of the registered owner, if known. If aircraft, enter the registration number on either the numerator or in the denominator you are the registered owner, enter “Same of the ratio. line 2. as filer above” on line 6. If you are not the Line 3. For each column, if the answer to registered owner and you do not know the Another reasonable method would be to the question on line 3 is “Yes” and you EIN or SSN of the registered owner, enter use a ratio based on the USSGTI earned operate the vessel or aircraft which is "Not known." from the operation of the vessel or aircraft under a bareboat lease or sublease to by the lessee-operator, compared with the Line 7. Enter the name of the operator, if total gross income of the lessee-operator you, attach to Schedule V the following known. If you are the operator, enter items. from the operation of the vessel or aircraft “Same as filer above” on line 7. If you are during the smaller of the tax year or the 1. The name and address of the not the operator and you do not know the term of the charter. However, an allocation lessor of the vessel or aircraft. name of the operator, enter "Not known." based on the net income of the 2. The term of the bareboat lease or Line 8. Enter the EIN or SSN of the lessee-operator will not be considered charter and the method for calculating the operator, if known. If you are the operator, reasonable for this purpose. rental portion of the payment. enter “Same as filer above” on line 8. If Important. You must attach a statement you are not the operator and you do not Line 4. For each column, if the answer to to Schedule V describing the method used know the EIN or SSN of the operator, to determine the USSGTI from the vessel the question on line 4 is “Yes” and you are enter "Not known." the bareboat lessor of the vessel or or aircraft. aircraft, attach to Schedule V the following Line 9. For each column, enter the Line 11. If the foreign corporation is items. USSGTI the corporation derived with claiming a treaty exemption on its 1. The country of registration of the respect to the vessel or aircraft. See USSGTI, enter the amount on line 11 and vessel or aircraft. Definitions, earlier. attach Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 2. Name and address of each lessee Note. In determining the amount of 7701(b). or person chartering the vessel or aircraft USSGTI, the foreign corporation must from you. establish the actual amount of USSGTI 3. The term of the lease. derived from a charter under a reasonable

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