U.S. Individual Income Tax Return

Instructions for Form 8858
(Rev. December 2012)

Department of the Treasury
Internal Revenue Service

Information Return of U.S. Persons
With Respect To Foreign Disregarded Entities
Section references are to the Internal Revenue
Code unless otherwise noted.

Future Developments

For the latest information about
developments related to Form 8858,
Schedule M (Form 8858), and their
instructions, such as legislation enacted
after they were published, go to
www.irs.gov/form8858.

What's New

A reference ID number for the foreign
disregarded entity must be entered on
page 1, line 1b(2), of Form 8858, if no
employer identification number (EIN) is
entered on line 1b(1). See the instructions
for line 1b(2) for more information.
Line 3c(2) has been added to page 1 of
Form 8858 to request the reference ID
number of the tax owner of the foreign
disregarded entity. See the instructions for
line 3c(2) for additional information.
Questions 4 through 7, have been
added to Schedule G. See the instructions
for more information regarding questions 4
and 5, which relate to dual consolidated
losses.
Filers of Schedule M (Form 8858) must
identify the foreign disregarded entity with
a reference ID number, if no EIN is
provided. Also, the name and U.S.
identifying number of the tax owner must
be provided. See the instructions for
Schedule M (Form 8858) for more
information.

General Instructions
Purpose of Form

Form 8858 is used by certain U.S.
persons that own a foreign disregarded
entity (FDE) directly or, in certain
circumstances, indirectly or constructively.
See U.S. Person Filing Form 8858 below.
The form and schedules are used to
satisfy the reporting requirements of
sections 6011, 6012, 6031, and 6038, and
related regulations.

Who Must File

The following U.S. persons that are tax
owners of FDEs (see definitions below),
or that own certain interests in foreign tax
owners of FDEs, must file Form 8858.
1. U.S. Persons That Are Tax Owners
of FDEs at any time during the U.S.
person's taxable year or annual
Dec 28, 2012

accounting period. Complete the entire
Form 8858, but do not complete the
separate Schedule M (Form 8858),
Transactions Between Foreign
Disregarded Entity of a Foreign Tax
Owner and the Filer or Other Related
Entities.
2. Certain U.S. Persons That Are Re­
quired To File Form 5471 With Respect
To a Controlled Foreign Corporation
(CFC) That is a Tax Owner of an FDE
at any time during the CFC's annual
accounting period:
Category 4 filers of Form 5471.
Complete the entire Form 8858 and the
separate Schedule M (Form 8858).
Category 5 filers of Form 5471.
Complete only the identifying information
on page 1 of Form 8858 (i.e., everything
above Schedule C) and Schedules G and
H on page 2 of Form 8858. Do not
complete the separate Schedule M (Form
8858).
3. Certain U.S. Persons That Are Re­
quired To File Form 8865 With Respect
To a Controlled Foreign Partnership
(CFP) That is a Tax Owner of an FDE
at any time during the CFP's annual
accounting period:

requirements with respect to both Form
8858 and Form 5471 or Form 8865. If you
and one or more other persons are
required to furnish information for the
same FDE for the same period, this
information may be included with or
attached to, and filed in the same manner
as, the multiple filer information provided
with respect to the CFC or the CFP. See
Multiple filers of same information in the
Form 5471 instructions or Multiple
Category 1 filers in the Form 8865
instructions.

When and Where to File

Form 8858 is due when your income tax
return or information return is due,
including extensions. If you are the tax
owner of the FDE, attach Form 8858 and
the separate Schedule M (Form 8858), if
required, to your income tax return or
information return. If you are not the tax
owner of the FDE, attach Form 8858 to
any Form 5471 or Form 8865 you are filing
with respect to the CFC or the CFP that is
the tax owner of the FDE.

Definitions
U.S. Person

Note. Complete a separate Form 8858
and all applicable schedules for each
FDE.

A U.S. person is:
A citizen or resident alien of the United
States (see Pub. 519, U.S. Tax Guide for
Aliens, for guidance on determining
resident alien status),
A domestic partnership,
A domestic corporation,
Any estate (other than a foreign estate,
within the meaning of section 7701(a)(31)
(A)), and
Any domestic trust.
A domestic trust is any trust if:
1. A court within the United States is
able to exercise primary supervision over
the administration of the trust and
2. One or more U.S. persons have the
authority to control all substantial
decisions of the trust.

Exceptions To Filing Form 8858

U.S. Person Filing Form 8858

Category 1 filers of Form 8865.
Complete the entire Form 8858 and the
separate Schedule M (Form 8858).
Category 2 filers of Form 8865.
Complete only the identifying information
on page 1 of Form 8858 (i.e., everything
above Schedule C) and Schedules G and
H on page 2 of Form 8858. Do not
complete the separate Schedule M (Form
8858). You are not required to complete
Form 8858 if there is a Category 1 filer of
Form 8865 that completes the entire Form
8858 and separate Schedule M (Form
8858) with respect to the FDE.

Multiple filers of the same information.
In the case of category 4 or 5 filers of Form
5471 or category 1 filers of Form 8865
who are also required to file Form 8858,
one person may file Form 8858 and
Schedule M (Form 8858), if applicable, for
other persons who have the same filing
Cat. No. 38123Q

The U.S. person filing Form 8858 is any
U.S. person that:
Is the tax owner of an FDE.
Owns a specified interest in an FDE
indirectly or constructively through a CFC
or a CFP. See items 2 and 3 of Who Must
File above for more detailed information.

Throughout these instructions, when
the pronouns “you” and “your” are used,
they are used in reference to the U.S.
person filing Form 8858.

Foreign Disregarded Entity
(FDE)

An FDE is an entity that is not created or
organized in the United States and that is
disregarded as an entity separate from its
owner for U.S. income tax purposes under
Regulations sections 301.7701-2 and
301.7701-3. See the instructions for Form
8832, Entity Classification Election, for
more information.
An eligible entity uses Form 8832 to
elect how it will be classified for federal tax
purposes. A copy of Form 8832 is
attached to entity's federal tax return for
the tax year of the election; however,
special rules apply if the entity is not
required to file a tax return. For more
information, see Where To File in the
instructions for Form 8832.
Note. New rules, effective September 28,
2009, allow an eligible entity to request a
late entity classification election. See Rev.
Proc. 2009-41, 2009-39 I.R.B. 439 for
more information.

Tax Owner of FDE

The tax owner of the FDE is the person
that is treated as owning the assets and
liabilities of the FDE for purposes of U.S.
income tax law.

Direct Owner of FDE

The direct owner of an FDE is the legal
owner of the disregarded entity.
For example, assume A, a U.S.
individual, is a 60% partner of CFP, a
controlled foreign partnership. FDE 1 is a
foreign disregarded entity owned by CFP,
and FDE 2 is a foreign disregarded entity
owned by FDE 1. In this example, FDE 1
is the direct owner of FDE 2, and CFP is
the direct owner of FDE 1. CFP is the tax
owner with respect to both FDE 1 and
FDE 2. A would be required to file the
Forms 8858 relating to FDE 1 and FDE 2
with the Form 8865 it files with respect to
CFP.

Penalties
Failure to file information required by
section 6038(a) (Form 8858 and
Schedule M (Form 8858)).
A $10,000 penalty is imposed for each
annual accounting period of each CFC or
CFP for failure to furnish the required
information within the time prescribed. If
the information is not filed within 90 days
after the IRS has mailed a notice of the
failure to the U.S. person, an additional
$10,000 penalty (per CFC or CFP) is
charged for each 30-day period, or
fraction thereof, during which the failure

continues after the 90-day period has
expired. The additional penalty is limited
to a maximum of $50,000 for each failure.
Any person who fails to file or report all
of the information required within the time
prescribed will be subject to a reduction of
10% of the foreign taxes available for
credit under sections 901, 902, and 960. If
the failure continues 90 days or more after
the date the IRS mails notice of the failure
to the U.S. person, an additional 5%
reduction is made for each 3-month
period, or fraction thereof, during which
the failure continues after the 90-day
period has expired. See section 6038(c)
(2) for limits on the amount of this penalty.
Criminal penalties. Criminal penalties
under sections 7203, 7206, and 7207 may
apply for failure to file the information
required by section 6038.
Note. Any person required to file Form
8858 and Schedule M (Form 8858) who
agrees to have another person file the
form and schedules for him or her may be
subject to the above penalties if the other
person does not file a correct and proper
form and schedule.

Other Reporting
Requirements
Reporting Exchange Rates on
Form 8858

When translating amounts from functional
currency to U.S. dollars, you must use the
method specified in these instructions.
But, regardless of the specific method
required, all exchange rates must be
reported using a “divide-by convention”
rounded to at least 4 places. That is, the
exchange rate must be reported in terms
of the amount by which the functional
currency amount must be divided in order
to reflect an equivalent amount of U.S.
dollars. As such, the exchange rate must
be reported as the units of foreign
currency that equal one U.S. dollar,
rounded to at least 4 places. Do not report
the exchange rate as the number of U.S.
dollars that equal one unit of foreign
currency.
Note. You must round the result to more
than 4 places if failure to do so would
materially distort the exchange rate or the
equivalent amount of U.S. dollars.
Example. During its annual
accounting period, an FDE owned by a
U.S. person had current income of
30,255,400 Yen on Schedule H, line 6.
The Schedule H instructions specify that
the filer must translate these amounts into
U.S. dollars at the average exchange rate
for the tax year in accordance with the
rules of section 989(b). The average
exchange rate is 118.5050 Japanese Yen
to 1 U.S. dollar (0.00843846 U.S. dollars
­2­

to 1 Japanese Yen). Divide 30,255,400
Yen by 118.5050 to determine the U.S.
dollar amount to enter on line 7 of
Schedule H. Enter 118.5050 after the flush
language following line 7.

Electronic Filing of Form 8858

If you file your income tax return
electronically, see the instructions for your
income tax return for general information
about electronic filing.
Note. If you are filing Form 1120 or 1065
electronically, you must attach Form 8858
electronically (as an attachment to your
electronically filed Form 5471, Form 8865,
Form 1120, or Form 1065). If you are filing
Form 1040 or Form 1041 electronically
(with or without a Form 5471 or Form
8865), attach Form 8858 to the applicable
Form 8453.

Computer­Generated Form
8858 and Schedules

A computer-generated Form 8858 and its
schedules may be filed if they conform to
and do not deviate from the official form
and schedules. Generally, all
computer-generated forms must receive
prior approval from the IRS and are
subject to an annual review.
Submit all requests for approval to:
Internal Revenue Service, Attention:
Substitute Forms Program,
SE:W:CAR:MP:T:M:S, 1111 Constitution
Avenue NW, IR-6526, Washington, DC
20224.
Important: Be sure to attach the approval
letter to Form 8858.
Every year, the IRS issues a revenue
procedure to provide guidance for filers of
computer-generated forms. In addition,
every year the IRS issues Pub. 1167,
General Rules and Specifications For
Substitute Forms and Schedules, which
reprints the most recent applicable
revenue procedure. Pub. 1167 is available
at www.irs.gov/pub1167, or can be
ordered by calling 1-800-TAX-FORM
(1-800-829-3676).

Dormant FDEs

Announcement 2004-4, 2004-4 I.R.B. 357,
provides for a summary filing procedure
for filing Form 8858 for a dormant FDE. A
dormant FDE is an FDE that would be a
dormant controlled foreign corporation
(CFC) if it were treated as a foreign
corporation for U.S. tax purposes.

If you elect the summary procedure,
complete only the identifying information
above Schedule C on page 1 of Form
8858 for each dormant FDE as follows:
The top margin of the summary return
must be labeled “Filed Pursuant to
Announcement 2004-4 for Dormant FDE.”
Instructions for Form 8858 (Rev. 12­2012)

Include the name, address, identifying
number, and tax year of the U.S. person
filing Form 8858 (see definition, earlier).
Include the annual accounting period of
the dormant FDE (below the title of the
form) and complete items 1a through 1e
and 1g.
Complete items 3a through 3d, if
applicable.
Complete items 4a through 4c, if
applicable.
File this summary return in the manner
described in When and Where To File,
earlier.

Specific Instructions
Important: If the information required in a
given section exceeds the space provided
within that section, do not write “see
attached” in the section and then attach all
of the information on additional sheets.
Instead, complete all entry spaces in the
section and attach the remaining
information on additional sheets. The
additional sheets must conform with the
IRS version of that section.

Identifying Information
Annual Accounting Period

Enter, in the space provided below the title
of Form 8858, the annual accounting
period of the FDE for which you are
furnishing information. The annual
accounting period of an FDE is the annual
accounting period or taxable year of the
tax owner. Therefore, in the case of a U.S.
tax owner, the annual accounting period of
the FDE is the taxable year of the U.S. tax
owner; and in the case of a CFC or CFP
that is a tax owner, the annual accounting
period of the FDE is the annual accounting
period of the CFC or CFP.

Person Filing This Return

In the spaces provided at the top of page 1
of Form 8858, provide the identifying
information for the U.S. person filing Form
8858 (see definition, earlier).
If a U.S. corporation is the U.S. person
filing Form 8858 and is a member of a
consolidated group, list the common
parent as the person filing the return and
enter its identifying information in the
spaces provided at the top of page 1 of
the form.

Name Change

If the name of the person filing the return,
the tax owner, the direct owner, or the
FDE whose activities are being reported
changed within the past 3 years, show the
prior name(s) in parentheses after the
current name.

Instructions for Form 8858 (Rev. 12­2012)

Addresses

Use the following instructions to complete
lines 1a, 2a, 2b, 3a, 4a, and the entry
spaces at the top of page 1 of the form for
the filer's address.
U.S. Addresses. Include the suite, room,
or other unit number after the street
address. If the Post Office does not deliver
mail to the street address and the U.S.
person has a P.O. box, show the box
number instead.
Foreign Addresses. Enter the
information in the following order: city,
province or state, and country. Follow the
country's practice for entering the postal
code, if any. Do not abbreviate the country
name. However, if you are filing Form
8858 electronically, enter a valid country
code posted on the IRS website
www.irs.gov/countrycodes instead of the
country name.

Identifying Numbers

Use the following instruction to complete
lines 1b, 3c, 4c, and the entry space at the
top of page 1 of the form for the filer's
identifying number. The identifying
number of an individual is his or her social
security number (SSN). The identifying
number of all others is their employer
identification number (EIN).
If a U.S. corporation is the U.S. person
filing Form 8858 and is a member of a
consolidated group, see Person Filing
This Return, earlier.

Functional Currency

Use the following instruction to complete
lines 1i, 3e, and 4d.
Enter the entity's functional currency.
See sections 985 and 989, and
Regulations sections 1.985-1(a) through
(c) and 1.989(a)-1(b) for rules for
determining the functional currency of a
qualified business unit (QBU) and the
definition of a QBU.

Hyperinflationary exception. An entity
that otherwise would be required to use a
hyperinflationary currency as its functional
currency must use the U.S. dollar as its
functional currency and compute income
or loss or earnings and profits using the
U.S. dollar approximate separate
transactions method of accounting
(DASTM) under the special rules of
Regulations section 1.985-3. See
Regulations section 1.985-1(b)(2).

Line 1b(2)—Reference ID
Number

A reference ID number (defined below) is
required on line 1b(2) only in cases where
no EIN was entered on line 1b(1) for the
foreign disregarded entity. However, filers
are permitted to enter both an EIN on
line 1b(1) and a reference ID number on
­3­

line 1b(2). If applicable, enter the
reference ID number you have assigned to
the foreign disregarded entity identified on
line 1a.
A "reference ID number" is a number
established by or on behalf of the U.S.
person identified at the top of page 1 of
the form that is assigned to a foreign
disregarded entity with respect to which
Form 8858 reporting is required. These
numbers are used to uniquely identify the
foreign disregarded entity in order to keep
track of the foreign disregarded entity from
tax year to tax year.
The reference ID number must meet
the requirements set forth below.
Note. Because reference ID numbers are
established by or on behalf of the U.S.
person filing Form 8858, there is no need
to apply to the IRS to request a reference
ID number or for permission to use these
numbers.

Requirements

The reference ID number that is entered in
item 1b(2) must be alphanumeric and no
special characters or spaces are
permitted. The length of a given reference
ID number is limited to 50 characters.
The same reference ID number must
be used consistently from tax year to tax
year with respect to a given foreign
disregarded entity or tax owner. If for any
reason a reference ID number falls out of
use (for example, the foreign disregarded
entity or tax owner no longer exists due to
disposition or liquidation), the reference ID
number used for that foreign disregarded
entity or tax owner cannot be used again
for another foreign disregarded entity or
tax owner for purposes of Form 8858
reporting.
There are some situations that warrant
correlation of a new reference ID number
with a previous reference ID number when
assigning a new reference ID number to a
foreign disregarded entity or tax owner
partnership. For example:
In the case of a merger or acquisition, a
Form 8858 filer must use a reference ID
number which correlates the previous
reference ID number with the new
reference ID number assigned to the
foreign disregarded entity or tax owner.
In the case of a foreign disregarded
entity that has made an entity
classification election on Form 8832,
Regulations section 301.6109-1(b)(2)(v)
requires the foreign disregarded entity to
obtain an EIN in order to make the entity
classification election on Form 8832. For
the first year that the foreign disregarded
entity files Form 8858 after making an
entity classification on Form 8832, the
foreign disregarded entity is required to
enter the new EIN on line 1b(1) of Form
8858 and the old reference ID number on

line 1b(2) of Form 8858. The foreign
disregarded entity or tax owner may
continue to enter both the EIN and the
reference ID number in subsequent years,
but must enter at least the EIN on
line 1b(1).
You must correlate the reference ID
numbers as follows: New reference ID
number (space) Old reference ID number.
If there is more than one old reference ID
number, you must enter a space between
each such number. As indicated above,
the length of a given reference ID number
is limited to 50 characters and each
number must be alphanumeric and no
special characters are permitted.
Note. This correlation requirement
applies only to the first year the new
reference ID number is used.

Line 1h—Principal Business
Activity
Enter a brief description of the FDE's
principal business activity.

Line 3b

If the tax owner is a CFC, enter the annual
accounting period covered by Form 5471
(as described in Regulations section
1.6038-2(e)). If the tax owner is a CFP,
enter the annual accounting period
covered by Form 8865 (as described in
Regulations section 1.6038-3(f)).

Line 3c(2)—Reference ID
Number

A reference ID number (defined earlier) is
required on line 3c(2) only in cases where
no EIN was entered on line 3c(1).
However, filers are permitted to enter both
an EIN on line 3c(1) and a reference ID
number on line 3c(2). If this tax owner is a
CFC, enter the reference ID number for
the CFC from Form 5471 Item 1b(2). If this
tax owner is a CFP, enter the reference ID
number for the CFP from Form 8865 Item
F2(b). See the instructions for line 1b(2)
for more information about the
requirements for the reference ID number.

Line 5

You must attach an organizational chart
that includes the following information with
respect to the chain of ownership between
the tax owner and the FDE and the chain
of ownership between the FDE and all
entities in which the FDE has a 10% or
more direct or indirect interest:
The name and percentage of ownership
of all entities in the chain of ownership,
including partnerships and entities
disregarded as separate from their
owners.
The FDE's position in the chain of
ownership.
The tax classification of all entities in the
chain of ownership (see Form 8832

instructions for tax classification rules and
related definitions).
The country under whose law each
entity is organized.
For these purposes, the rules of section
958(a) (relating to “direct and indirect
ownership”) apply.
Each filer of Form 8858 that is required
to file an organizational chart with respect
to more than one FDE may satisfy this
requirement by filing a single
organizational chart that includes the
required information with respect to all
FDEs.

Schedule C

Use Schedule C to report a summary
income statement for the FDE computed
in the FDE's functional currency in
accordance with U.S. generally accepted
accounting principles (GAAP). Enter in the
U.S. dollar column each line item
functional currency amount translated into
dollars using U.S. GAAP translation rules.
If the FDE does not maintain U.S. GAAP
income statements in U.S. dollars, you
can use the average exchange rate as
determined under section 989(b). The rate
used should be the rate stated on line 7,
Schedule H. If you choose to use the
average exchange rate rather than the
U.S. GAAP translation rules, check the
box above line 1 on Schedule C.

Special rules for DASTM. If the FDE
uses DASTM, the functional currency
column should reflect local
hyperinflationary currency amounts
computed in accordance with U.S. GAAP.
The U.S. dollar column should reflect such
amounts translated into dollars under U.S.
GAAP translation rules. Differences
between this U.S. dollar GAAP column
and the U.S. dollar income or loss figured
for tax purposes under Regulations
section 1.985-3(c) should be accounted
for on Schedule H. See Special rules for
DASTM, under Schedule H, below.
Line 7. Include on line 7 adjustments for
extraordinary items, prior period
adjustments, and the provision for income,
war profits, and excess profits taxes
deducted in accordance with U.S. GAAP.
The terms “extraordinary items” and “prior
period adjustments” have the same
meaning given to them by U.S. GAAP (see
Opinion No. 30 of the Accounting
Principles Board and Statement No. 16 of
the Financial Accounting Standards
Board).
Important: Differences between this
functional currency amount and the
amount of taxes that reduce E&P (in the
case of an FDE of a CFC) or are
deductible in computing U.S. taxable
income (in the case of an FDE of a U.S.
person or a CFP) should be accounted for
on line 2 or 3 of Schedule H.
­4­

Schedule C­1

Complete a separate Schedule C-1 for
each recipient that has a functional
currency that is different than the
functional currency of the FDE. See
section 987(3) for rules relating to branch
remittances.

Schedule F

Use Schedule F to report a summary
balance sheet for the FDE computed and
translated into U.S. dollars in accordance
with U.S. GAAP.

Special rule for DASTM. If the FDE uses
DASTM, Schedule F should be prepared
and translated into U.S. dollars according
to Regulations section 1.985-3(d), rather
than U.S. GAAP.

Schedule G
Question 3

If the tax owner of the FDE is claiming a
section 165 loss with respect to worthless
stock or with respect to certain obligations,
see Regulations section 1.6011-4 for
information relating to a disclosure
statement that must be attached to Form
8858 if certain requirements are met.

Question 4

If the interest in the FDE is not treated as
a separate unit or as part of a combined
separate unit or the interest in the FDE is
treated as a separate unit or as part of a
combined separate unit but the separate
unit or combined separate unit does not
have a dual consolidated loss, check “No”
to indicate that the question is not
applicable. Otherwise, if you check “Yes”
enter the amount of the dual consolidated
loss and answer question 5a.

Question 5a

Subject to certain exceptions, a domestic
use of a dual consolidated loss is not
permitted (“domestic use limitation rule”).
A domestic use is deemed to occur in the
year the dual consolidated loss is included
in the computation of the taxable income
of a consolidated group, unaffiliated dual
resident corporation or unaffiliated
domestic owner, as applicable. See Reg.
1.1503(d)-2.

Question 5b

A domestic use of a dual consolidated
loss is permitted if an exception to the
domestic use limitation rule applies. See
Reg. 1.1503(d)-6 for exceptions. For
example, a domestic use election made
pursuant to Reg. 1.1503(d)-6(d) is such an
exception. If you check “Yes” you may
need to include a domestic use election
with your U.S. income tax return.

Instructions for Form 8858 (Rev. 12­2012)

Question 5c

If a separate unit, as defined under Reg.
1.1503(d)-1(b)(4), incurs a dual
consolidated loss after having contributed
to consolidated taxable income of a group
in prior years, the dual consolidated loss
may be used to offset income of domestic
affiliates in the year of the dual
consolidated loss (limited by the amount
of the separate unit’s prior contribution to
the cumulative consolidated taxable
income of the group (“cumulative
register”)). See Reg. 1.1503(d)-4(c) and
Reg. 1.1502-21(c).

Schedule H

Use Schedule H to report the FDE's
current earnings and profits (E&P) (if the
tax owner is a CFC) or taxable income (if
the tax owner is a U.S. person or a CFP).
Generally, enter the amounts on lines 1
through 6 in functional currency.
Special rules for DASTM. If the FDE
uses DASTM, enter on line 1 the dollar
GAAP income or (loss) from line 8 of
Schedule C. Enter on lines 2 and 3 the
adjustments made in figuring current E&P
or taxable income for U.S. tax purposes.
Report these amounts in U.S. dollars.
Enter on line 5 the DASTM gain or loss
figured under Regulations section
1.985-3(d).
Lines 2 and 3. Certain adjustments must
be made to the FDE's line 1 net book
income or (loss) to determine its current
E&P or taxable income. The adjustments
may include those needed to conform the
foreign book income to U.S. GAAP and to
U.S. tax accounting principles. If the FDE's
books are maintained in functional
currency in accordance with U.S. GAAP,
enter on line 1 the functional currency
GAAP income or (loss) from line 8 of
Schedule C, rather than starting with
foreign book income, and show
GAAP-to-tax adjustments on lines 2 and 3.
The adjustments may include the
following:
Capital gains and losses.
Depreciation, amortization, and
depletion.
Investment or incentive allowance.
Charges to statutory reserves.
Inventory adjustments. Inventories must
be taken into account according to the
rules of sections 471 (incorporating the
provisions of section 263A) and 472 and
the related regulations.

Taxes. See the instructions for
Schedule C, line 7.
Attach a separate schedule that lists
each applicable adjustment item. For each
adjustment item, indicate the adjustment
amount and whether the amount is a net
addition or net subtraction. The separate
schedule should also show two totals, the
total net additions amount to be entered
on line 2, and the total net subtractions
amount to be entered on line 3.
Line 5. DASTM gain or (loss), reflecting
unrealized exchange gain or loss, should
be entered on line 5 only for FDEs that use
DASTM.
Line 7. Enter the line 6 functional
currency amount translated into U.S.
dollars at the average exchange rate for
the FDE's tax year. See section 989(b).
Report the exchange rate using the
“divide-by convention” specified under
Reporting Exchange Rates on Form 8858,
earlier. If the FDE uses DASTM, enter on
line 7 the same amount entered on line 6.
Blocked income. The E&P or taxable
income of the FDE, as reflected on
Schedule H, must not be reduced by all or
any part of such E&P or taxable income
that could not have been distributed by the
FDE due to currency or other restrictions
or limitations imposed under the laws of
any foreign country.

Schedule M

Important: In translating the amounts
from functional currency to U.S. dollars,
use the average exchange rate for the
FDE's tax year. See section 989(b).
Report the exchange rate in the entry
space provided at the top of Schedule M
(Form 8858) using the “divide-by
convention” specified under Reporting
Exchange Rates on Form 8858, earlier.
Every U.S. person that is required to
file Schedule M (Form 8858) (see Who
Must File, earlier) must file the schedule to
report the transactions that occurred
during the FDE's annual accounting period
ending with or within the U.S. person's tax
year.
If a U.S. corporation is the U.S. person
filing Schedule M (Form 8858) and is a
member of a consolidated group, list the
common parent as the U.S. person filing
Schedule M (Form 8858).

identified on Schedule M (Form 8858), is
required if no EIN is provided. However,
filers are permitted to provide both an EIN
and reference ID number. For more
information on the reference ID number,
see the instructions for line 1b(2) of the
Form 8858, earlier.
Column headings. There are 2 sets of
column headings above lines 1 through
19. The first set of column headings is to
be used in cases where the tax owner is a
CFP. The second set of column headings
is to be used in cases where the tax owner
is a CFC. If you are completing
Schedule M (Form 8858) for an FDE for
which the tax owner is a CFP, check the
box for CFPs and complete lines 1
through 19 using the headings in columns
(a) through (e) of the CFP set of columns.
If you are completing Schedule M (Form
8858) for an FDE for which the tax owner
is a CFC, check the box for CFCs and
complete lines 1 through 19 using the
headings in columns (a) through (f) of the
CFC set of columns.
Column (e). Use column (e) to report
transactions between the FDE and any
U.S. person with a 10% or more direct
interest in the CFP or any 10% or more
U.S. shareholder of any corporation
controlling the CFC. If you are a Category
1 filer of Form 8865, or a Category 4 filer
of Form 5471, do not report transactions
between yourself and the FDE under
column (e). Report the transactions only
under column (b).
Line 6. Report on line 6 dividends
received by the FDE that were not
previously taxed under subpart F in the
current year or in any prior year.
Lines 18 and 19. Report on lines 18 and
19 the largest outstanding balances during
the year of gross amounts borrowed from,
and gross amounts loaned to, the related
parties described in columns (b) through
(f). Do not enter aggregate cash flows,
year-end loan balances, average
balances, or net balances. Do not include
open account balances resulting from
sales and purchases reported under other
items listed on Schedule M (Form 8858)
that arise and are collected in full in the
ordinary course of business.

Reference ID number. A reference ID
number for the foreign disregarded entity

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 section 6103.

Instructions for Form 8858 (Rev. 12­2012)

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The time needed to complete and file this form and related schedules will vary depending on individual circumstances. The
estimated burden for individual taxpayers filing this form is approved under OMB control number 1545-0074 and is included in the
estimates shown in the instructions for their individual income tax return. The estimated burden for all other taxpayers who file this
form is shown below.
Learning about the
law or the form

Preparing and sending
the form to the IRS

Form

Recordkeeping

8858

17 hr., 56 min.

4 hr., 10 min.

4 hr., 38 min.

24 hr., 9 min.

6 min.

30 min.

Sch. M (Form 8858)

If you have comments concerning the accuracy of these time estimates or suggestions for making this form and related schedules
simpler, we would be happy to hear from you. See the instructions for the tax return with which this form is filed.

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Instructions for Form 8858 (Rev. 12­2012)