1118.sup

SUPPORTING STATEMENT

(Form 1118, Schedule I, Schedule J, an Schedule K)

1. CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION

Section 901 of the Internal Revenue Code provides that corporations that pay income taxes in a foreign country may claim a tax credit based on the lesser of the foreign taxes paid or the overall limitation for each separate limitation income category. The overall limitation for a given income category is computed by dividing the corporation’s separate limitation income by the corporation’s worldwide income. Section 902 allows domestic corporations to claim a foreign tax credit for the taxes paid by the foreign corporation. Section 907 requires corporations that have paid taxes to foreign countries on oil extraction to reduce taxes by the highest rate of tax.

2. USE OF DATA

IRS uses Form 1118 to determine whether corporations have correctly figured their foreign tax credits.

3. USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN

Form 1118 is electronically enabled for 1120 returns.

4. EFFORTS TO IDENTIFY DUPLICATION

We have attempted to eliminate duplication within the agency wherever possible.

5. METHODS TO MINIMIZE BURDEN ON SMALL BUSINESSES OR OTHER SMALL ENTITIES

Not applicable.

6. CONSEQUENCES OF LESS FREQUENT COLLECTION ON FEDERAL

PROGRAMS OR POLICY ACTIVITIES

Not applicable.

7. SPECIAL CIRCUMSTANCES REQUIRING DATA COLLECTION TO BE

INCONSISTENT WITH GUIDELINES IN 5 CFR 1320.5(d)(2)

Not applicable.

8. CONSULTATION WITH INDIVIDUALS OUTSIDE OF THE AGENCY ON

AVAILABILITY OF DATA, FREQUENCY OF COLLECTION, CLARITY

OF INSTRUCTIONS AND FORMS, AND DATA ELEMENTS

Periodic meetings are held between IRS personnel and representatives of the American Bar Association, the National Society of Public Accountants, the American Institute of Certified Public Accountants, and other professional groups to discuss tax law and tax forms. During these meetings, there is an opportunity for those attending to make comments regarding Form 1118.

In response to the Federal Register Notice dated June 10, 2010 (75 F.R. 32990), we received no comments during the comment period regarding Form 1118, Sch. I, Sch. J, and Sch. K.

9. EXPLANATION OF DECISION TO PROVIDE ANY PAYMENT OR GIFT TO

RESPONDENTS

Not applicable.

10. ASSURANCE OF CONFIDENTIALITY OF RESPONSES

Generally, tax returns and tax return information are confidential as required by 26 USC 6103.

11. JUSTIFICATION OF SENSITIVE QUESTIONS

Not applicable.

12. ESTIMATED BURDEN OF INFORMATION COLLECTION

No.of Time per

Form Responses Response Total hours

Form 1118 30,000 140.65 3,297,300

Schedule I 900 11.51 10,359

Schedule J 50 25.93 1,297 Schedule K 6,000 29.01 174,060

36,950 3,483,016

Estimates of the annualized cost to respondents for the hour

burdens shown above are not available at this time.

The following are related regulations which impose no

additional burden. Please continue to assign OMB number

1545-0122 to these regulations.

1.901-3 1.904-2 1.1247-1

1.902-1 1.905-2 through 4

1.904-1 1.960-1

13. ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS

As suggested by OMB, our Federal Register Notice dated June 10, 2010, requested public comments on estimates of cost burden that are not captured in the estimates of burden hours, i.e., estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to

provide information. However, we did not receive any responses from taxpayers on this subject. As a result,

estimates of these cost burdens are not available at this time.

14. ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT

After consultation with various functions within the Service, we have determined that the cost of developing, printing, processing, distributing, and overhead for this form is

$449,512.

15. REASONS FOR CHANGE IN BURDEN

There are no changes Form 1118 at this time. We are making this submission to renew the OMB approval.

16. PLANS FOR TABULATION, STATISTICAL ANALYSIS AND PUBLICATION

Not applicable.

17. REASONS WHY DISPLAYING THE OMB EXPIRATION DATE IS

INAPPROPRIATE

See attachment.

18. EXCEPTIONS TO THE CERTIFICATION STATEMENT ON OMB FORM 83-I

Not applicable.

Note: The following paragraph applies to all of the collections of information in this submission:

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.