Form Schedule I (Form 1 Schedule I (Form 1 Reduction of Oil and Gas Extraction Taxes

Reduction of Foreign Oil and Gas Taxes

SCHEDULE I
(Form 1118)
(Rev. December 2012)
Department of the Treasury
Internal Revenue Service
Name of corporation

Information about Schedule I (Form 1118) and its instructions is at www.irs.gov/form1118.
▶ Attach to Form 1118.
, or other tax year beginning
, 20
, and ending
▶

For calendar year 20

OMB No. 1545-0122

, 20
Employer identification number

Use a separate Schedule I (Form 1118) for each applicable category of income listed below. Check only one box on each schedule.
Section 901(j) Income: Name of Sanctioned Country ▶
Passive Category Income
Income Re-sourced by Treaty: Name of Country ▶
General Category Income
Report all amounts in U.S. dollars.

Part I

Combined Foreign Oil and Gas Income and Taxes
1. Name of foreign country
(Use a separate line for
each country.) *

Gross Foreign Oil and Gas Income From Sources Outside the United States and its Possessions (see instructions)
2. Gross foreign oil and
gas extraction income

3. Gross foreign oil related
income

4. Certain dividends from
foreign corporations

5. Constructive
distributions under
section 951(a)

6. Other

7. Total (add columns 2
through 6)

A
B
C
D
E
F
Totals (add lines A through F)
* For section 863(b) income, use a single line (see instructions).
Deductions
8. Definitely allocable
deductions

9. Apportioned deductions
not definitely allocable

10. Total (add columns 8
and 9)

11. Taxable income
(column 7 minus
column 10)

Foreign Oil and Gas Taxes (attach schedule)
12. Paid or accrued

13. Deemed paid

14. Total (add columns 12
and 13)

A
B
C
D
E
F
Totals

For Paperwork Reduction Act Notice, see the Instructions for Form 1118.

Cat. No. 10237L

Schedule I (Form 1118) (Rev. 12-2012)

Page 2

Schedule I (Form 1118) (Rev. 12-2012)

Part II

Reduction Under Section 907(a)

1

Combined foreign oil and gas income. (See the instructions for line 1 below.)

2

Multiply line 1 by the highest rate of tax under section 11(b). (See the instructions for line 2 below.)

3

Total taxes (from Part I, column 14, “Totals” line) .

4

Reduction (subtract line 2 from line 3; if zero or less, enter -0-). Enter here and on Schedule G,
line B of the corresponding Form 1118 . . . . . . . . . . . . . . . . . . . .

Part III
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Foreign Oil and Gas Taxes Available For Use in the Current Tax Year

Excess section 907(a) limitation. Subtract Schedule I, Part II, line 3 from line 2. If zero or
less, enter -0- and do not complete the remainder of Part III . . . . . . . . . . .

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Enter the sum of any carryover of foreign oil and gas tax to the current year. Attach a
schedule showing the computation in detail. . . . . . . . . . . . . . .

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Enter the smaller of lines 1 and 2 here and include on Schedule B, Part II, line 5 . .

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General Instructions

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Section references are to the Internal Revenue Code unless otherwise noted.

Who Must File

Method of Reporting

If the corporation claims a credit for any income taxes paid, accrued,
or deemed paid during the tax year on combined foreign oil and gas
income, the amount of such taxes eligible for credit may be reduced.
See section 907(a) and Regulations section 1.907(a)-1 for details.

Report all amounts in U.S. dollars. If it is necessary to convert
from foreign currency, attach a statement explaining how the
rate was determined.

Part I

Column 5. Enter amounts taxable under section 951(a) (including
section 78 gross-up) that are attributable to the controlled foreign
corporation’s combined foreign oil and gas income.
Column 6. Include the corporation’s distributive share of
partnership combined foreign oil and gas income. Also include in
column 6 interest income paid by a foreign corporation on which
taxes are deemed paid under section 902, to the extent it is paid
out of foreign oil related income. However, do not include interest
income paid by a foreign subsidiary out of foreign oil and gas
extraction income of the payor, even if it is not passive income.
See section 907(c)(3).
Column 11. For each country, subtract column 10 from column
7 and enter the result in column 11. When totaling the column
11 amounts, note that a taxable loss from a foreign country
offsets taxable income from other countries.
Columns 12 and 13. Attach a schedule to show how the foreign
taxes paid, accrued, or deemed paid with respect to combined
foreign oil and gas income were figured.

Specific Instructions

See section 907(c) and underlying regulations for rules on the
income to include in Part I.
Note. Do not include any dividend or interest income that is
passive income. See the Instructions for Form 1118 for the
definition of passive income.
Column 1. Enter the two-letter codes (from the list at
www.IRS.gov/countrycodes) of all foreign countries and U.S.
possessions within which income is sourced and/or to which
taxes were paid, accrued, or deemed paid. For section 863(b)
income, enter "863(b)" instead of a two-letter code.
Column 2. Enter gross income from sources outside the United
States and its possessions from the following:
• The extraction (by the corporation or any other person) of
minerals from oil or gas wells located outside the United States
and its possessions.
• The sale or exchange of assets used in the trade or business
of extracting minerals from oil or gas wells located outside the
United States and its possessions.
See section 907(c)(1).
Column 3. Enter gross income from sources outside the United
States and its possessions from the following:
• The processing of minerals extracted (by the corporation or any
other person) from oil or gas wells into their primary products.
• The transportation of such minerals or primary products.
• The distribution or sale of such minerals or primary products.
• The disposition of assets used in the trade or business
described in the three previous bulleted items.
• The performance of any other related service.
See section 907(c)(2).
Column 4. Enter dividends (including section 78 gross-up) from
a foreign corporation on which taxes are deemed paid under
section 902 only if the dividends are paid out of foreign oil and
gas extraction income or foreign oil related income of the
distributing corporation and are not passive income. Dividends
from foreign corporations for which the corporation is not
entitled to compute a deemed paid credit are passive income
and are not included in Part I.

Part II
Line 1. Enter the total from Part I, column 11, minus any
recapture described in section 907(c)(4).
Line 2. At the time this schedule went to print, the highest rate
of tax specified under section 11(b) was 35%.

Part III
Line 2. Enter the sum of any carryover of foreign oil and gas tax
to the current year. Attach a schedule showing the computation
in detail. Corporations are encouraged to attach a schedule
that is similar to Schedule K (Form 1118), which is used to report
a running balance of the corporation’s section 904(c) carryovers.
If this approach is taken, the amount to be entered on line 2 is the
amount that corresponds to Schedule K (Form 1118), line 3,
column (xiv). Please note that special rules apply to the carryback
and carryover of foreign taxes paid or accrued on combined
foreign oil and gas income and related taxes. For example, in
applying foreign tax carryovers from prior tax years, in the case of
any tax year that is an unused credit year (as defined in section
907(f)) under each of sections 907(f) and 904(c), the provisions of
section 907(f) are to be applied before section 904(c). See section
907(f) and Regulations section 1.907(f)-1 for additional
information.