Form Schedue I (Form 11 Schedue I (Form 11 Interest Expense Allocation Under Regulations Section 1.

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I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
SCHEDULE I (FORM 1120-F), PAGE 1 OF 2
MARGINS; TOP 13mm (1/2"), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 216mm (8-1/2") x 279mm (11")
PERFORATE: None
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

This is a new product that was developed in response to the Form 1120-F
redesign. Accordingly, no changes or additions are highlighted.

Action

Revised proofs
requested

Ref. checks = Rev. Rul. XX-XX
OMB No. 1545-0126

2007

© Attach to Form 1120-F.
© See separate instructions.

Department of the Treasury
Internal Revenue Service

Signature

O.K. to print

Interest Expense Allocation Under Regulations
Section 1.882-5

SCHEDULE I
(Form 1120-F)

Name of corporation

A.
B.

Date

Employer identification number

©

Check here if the corporation is a foreign bank as defined in Temporary Regulations section 1.882-5T(c)(4)
This Schedule I is being completed with respect to (check one):
Adjusted U.S. booked liabilities method under Regs. sec. 1.882-5(d). Complete lines 1 through 15 and 21 through 25.
Separate currency pools method under Regs. sec. 1.882-5(e). Complete lines 1 through 9 and 16a through 25.

Step 1
1

Average U.S. Assets for the Tax Year: Regulations Section 1.882-5(b)

Specify the method used to determine the value of the
corporation’s U.S. assets on lines 2 through 5 below (check
one):
Adjusted basis method: Regs. sec. 1.882-5(b)(2)(i)

(a)
Set(s) of Books that
Give Rise to U.S.
Booked Liabilities
(see inst.)

(c)
Set(s) of Books
Other than those
Described in
Columns (a) and (b)

(b)
Partnership
Interests

(d)
Totals. Add
columns (a)
through (c)

Fair market value method: Temp. Regs. sec. 1.882-5T(b)(2)(ii)

2
3a
b
c
d

Total assets per books
Total interbranch assets
Total non-ECI assets under section 864(c)(4)(D)
Total other non-ECI assets

f
o
s
a
7
t
0
f
0
a
2
r
/
D /05
7
0

Adjustments for amounts from partnerships and certain
disregarded entities included on line 2, column (a)

e

Adjustments for assets that give rise to direct interest
expense allocations under Regs. sec. 1.882-5(a)(1)(ii)

f

Other adjustments to average assets included in line 2 (e.g.,
mark-to-market differences)

4
5

Combine lines 3a through 3f

Total value of U.S. assets for the tax year

Column (a): Subtract line 4 from line 2.
Column (b): Enter total from Schedule P, line 19.
Column (c): See instructions for amount to enter.

Step 2
6

U.S.-Connected Liabilities for the Tax Year: Regulations Section 1.882-5(c)

Step 2

Specify the method used to determine the amounts in Part II (check one):

Actual ratio under Regs. sec. 1.882-5(c)(2). Complete lines 6a through 6c below.
Fixed ratio under Temp. Regs. sec. 1.882-5T(c)(4). Complete line 6d below.

a
b
c

Average worldwide liabilities

d

Fixed ratio under Temp. Regs. sec. 1.882-5T(c)(4). If the corporation is a foreign bank as defined in
Temp. Regs. sec. 1.882-5T(c)(4), enter 95% on line 6d. If the corporation is not a foreign bank, enter
50% on line 6d

e
7a
b
c

Average worldwide assets
Divide line 6a by line 6b

%

%

Enter the ratio from line 6c or 6d, as applicable
U.S.-connected liabilities before Regs. sec. 1.884-1(e)(3) election(s). Multiply line 5, column (d) by line 6e
Total amount of U.S. liability reduction under Regs. sec. 1.884-1(e)(3) election(s)
U.S.-Connected Liabilities. Subtract line 7b from line 7a

Step 3

©

Interest Expense Paid or Accrued on Average U.S. Booked Liabilities: Regulations Section 1.882-5(d)
(a)
Set(s) of Books that Give
Rise to U.S. Booked
Liabilities (see inst.)

8

%

(b)
Partnership
Interests

(c)
Totals.
Add columns
(a) and (b)

Total average amount of U.S. booked liabilities as defined
in Regs. sec. 1.882-5(d)(2) (see instructions)
Column (a): Do not include amounts that give rise to
directly allocable interest under Regs. sec. 1.882-5(a)(1)(ii)
or from partnerships includible in column (b).
Column (b): Enter the total from Schedule P, line 17.

9

Total interest paid or accrued during the tax year on line 8 amount
Column (a): Do not include amounts that give rise to
directly allocable interest under Regs. sec. 1.882-5(a)(1)(ii)
or from partnerships includible in column (b).
Column (b): Enter the total from Schedule P, line 14c
Cat. No. 49680W

Schedule I (Form 1120-F) 2007

12
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
SCHEDULE I (FORM 1120-F), PAGE 2 OF 2
MARGINS; TOP 13mm (1/2"), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 216mm (8-1/2") x 279mm (11")
PERFORATE: None
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

7c

7c

column (c),

column (c),

Schedule I (Form 1120-F) 2007

Step 3 (cont.)

Page

2

Adjusted U.S. Booked Liabilities Method: Regulations Section 1.882-5(d)

If line 7 is greater than line 8, complete lines 10 through 13 below and skip lines 14a and 14b.
If line 7 is less than or equal to line 8, skip lines 10 through 13 and complete lines 14a and 14b.

10

If the corporation is a foreign bank which is making a current-year election to use the published average
30-day LIBOR (see instructions), check the box on this line, skip lines 10a through 10c, and enter the rate
©
on line 10d

a Total interest paid or accrued during the tax year on U.S. dollar liabilities that are not
U.S. booked liabilities included on line 8

10a

f
o

b Average U.S. dollar denominated liabilities that are not U.S. booked liabilities
included on line 8

c
d
e
11
12
13
14a
b
15

10b
10c

Divide line 10a by line 10b

s
a
ft

Enter the 30-day LIBOR rate, if elected under Temp. Regs. sec. 1.882-5T(d)(5)(ii)(B)

%
%

10d

Excess U.S.-connected liabilities. Subtract line 8 from line 7c

a
r
D

Scaling ratio. Divide line 7c by line 8, column (c)

©

7
0

©

Excess interest. Multiply line 10e by line 11
Add lines 9, column (c) and 12

0
2
/
5
/0

Multiply line 9, column (c) by line 14a. See instructions for hedging amounts

Interest expense allocable to ECI under the adjusted U.S. booked liabilities method. Enter the result from
©
line 13 or line 14b here and on line 21

Step 3 (cont.)

%

10e

Enter the rate from line 10c or, if elected, the 30-day LIBOR rate on line 10d

11
12
13

%

14a
14b
15

Separate Currency Pools Method: Regulations Section 1.882-5(e)

7
0

©

16a U.S. assets. Enter the corporation’s U.S. assets, using the

(d)
Other Currency.
Specify:

(c)
Other Currency.
Specify:

(b)
Home Country
Currency. Specify:

(a)
U.S. Dollar
Denominated

©

©

methodology in Regs. sec. 1.882-5(e)(1)(i). If more columns
are needed, attach schedule (see instructions)
b Check here if a less than 3% currency election was
©
made

17a Enter the percentage from line 6e

%

%

%

%

%

%

%

b U.S.-connected liabilities. Multiply line 16a by line 17a, or,
if a liability reduction election is made, see instructions

18a Enter the total interest expense paid or accrued for the tax
year with respect to the foreign corporation’s worldwide
liabilities denominated in that foreign currency (enter in
functional currency)

b Enter the corporation’s average worldwide liabilities
(whether interest bearing or not) denominated in that foreign
currency (enter in functional currency)

c Borrowing rate: Divide line 18a by line 18b

%

19

Interest expense allocation by separate currency pool.
Multiply line 17b by line 18c

20

Interest expense allocable to ECI under the separate currency pools method. Total the amounts on line 19, columns
(a) through (d), and amounts from attached schedule, if any, and enter the result here and on line 21

SUMMARY—Interest Expense Allocation and Deduction under Regulations Section 1.882-5
21
22

Amount from line 15 or line 20, as applicable

21

Enter the corporation’s interest expense directly allocable under Temp.
Regs. sec. 1.882-5T(a)(1)(ii). (Include total from Schedule P, line 14b.)

22

23 Interest expense allocable to ECI under Regs. sec. 1.882-5. Add lines 21 and 22
24a Amount of line 23 that is disallowed as a deduction under section 265 or
under an income tax treaty (attach schedule—see instructions)

24a (

©

23

)

b Deferred interest expense under section 163(e)(3), 163(j), or 267(a)(3) (attach
schedule—see instructions)

24b

c Amount of line 23 that is capitalized under section 263A (attach
schedule—see instructions)

24c (

)

24d
d Combine lines 24a through 24c
25 Total interest expense deduction under Regs. sec. 1.882-5. Combine lines 23 and 24d and enter here and
on Form 1120F, Section II, line 18. The amount entered on line 25 may not exceed the total interest expense
©
paid or accrued by the foreign corporation

25
Schedule I (Form 1120-F) 2007

Printed on recycled paper

move percent sign
down to line 18c