Foreign Tax Credit (Estate or Trust)

2019

Instructions for Form 1116

Department of the Treasury
Internal Revenue Service

Foreign Tax Credit
(Individual, Estate, or Trust)
Section references are to the Internal Revenue
Code unless otherwise noted.

Contents
General Instructions . . . . . . . . .
Election To Claim the
Foreign Tax Credit
Without Filing Form 1116
Purpose of Form . . . . . . . .
Credit or Deduction . . . . . .
Foreign Taxes Eligible for a
Credit . . . . . . . . . . . . .
Foreign Taxes Not Eligible
for a Credit . . . . . . . . . .
Foreign Currency
Conversion . . . . . . . . .
Foreign Tax
Redeterminations . . . . .
Income From Sources
Outside the United States
Categories of Income . . . . .
Special Rules . . . . . . . . . .
Foreign Qualified Dividends
and Capital Gains
(Losses) . . . . . . . . . . .
Specific Instructions . . . . . . . . .
Part I—Taxable Income or
Loss From Sources
Outside the United States
Part II—Foreign Taxes Paid
or Accrued . . . . . . . . . .
Part III—Figuring the Credit .
Part IV—Summary of
Credits From Separate
Parts III . . . . . . . . . . . .

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Future Developments
For the latest information about
developments related to Form 1116 and
its instructions, such as legislation
enacted after they were published, go to
IRS.gov/Form1116.

More Information
For more information about, or
assistance with, figuring the foreign tax
credit, the following IRS resources are
available.
Publications. See Pub. 514, Foreign
Tax Credit for Individuals. The following
publications may also be helpful.
• Pub. 54, Tax Guide for U.S. Citizens
and Resident Aliens Abroad.
• Pub. 519, U.S. Tax Guide for Aliens.
• Pub. 570, Tax Guide for Individuals
With Income From U.S. Possessions.
• Pub. 575, Pension and Annuity
Income.
Feb 18, 2020

If you are overseas, call
267-941-1000 (not toll free).
Write to Internal Revenue
Service, International Accounts,
Philadelphia, PA 19255-0725.

General Instructions
Election To Claim the
Foreign Tax Credit Without
Filing Form 1116

You may be able to claim the foreign tax
credit without filing Form 1116. By
making this election, the foreign tax
credit limitation (lines 15 through 21 of
the form) won't apply to you. This
election is available only if you meet all
of the following conditions.

• All of your foreign source gross
income was “passive category income”
(which includes most interest and
dividends). See c. Passive Category
Income, later. However, for this
purpose, passive income also includes
(a) income subject to the special rule for
High-taxed income described later, and
(b) certain export financing interest.
• All the income and any foreign taxes
paid on it were reported to you on a
qualified payee statement. Qualified
payee statements include Form
1099-DIV, Form 1099-INT,
Schedule K-1 (Form 1041),
Schedule K-1 (Form 1065),
Schedule K-1 (Form 1120-S), or similar
substitute statements.
• Your total creditable foreign taxes
aren't more than $300 ($600 if married
filing a joint return).
This election isn't available to estates
or trusts.
If you make this election, the
following rules apply.
• You can't carry over to or from any
other year any foreign taxes paid or
accrued in a tax year to which the
election applies (but carryovers to and
from other years are unaffected). See
the instructions for Line 10, later.
• You are still required to take into
account the general rules for
determining whether a tax is creditable.
Cat. No. 11441F

See Foreign Taxes Eligible for a Credit
and Foreign Taxes Not Eligible for a
Credit, later.
• You are still required to reduce the
taxes available for credit by any amount
you would have entered on line 12 of
Form 1116. See the instructions for
Line 12, later.
To make the election, just enter on
the foreign tax credit line of your tax
return (for example, Schedule 3 (Form
1040 or 1040-SR), Part I, line 1) the
smaller of (a) your total foreign tax, or
(b) your regular tax (for example, the
total of Form 1040 or 1040-SR, line 12a,
and Schedule 2 (Form 1040 or
1040-SR), Part I, line 2).

Purpose of Form
Who should file. File Form 1116 to
claim the foreign tax credit if the
election, earlier, doesn't apply and:
• You are an individual, estate, or trust;
and
• You paid or accrued certain foreign
taxes to a foreign country or U.S.
possession.
See Foreign Taxes Eligible for a
Credit, later, to determine if the taxes
you paid or accrued qualify for the
credit.
Don't use Form 1116 to figure a
credit for taxes paid to the U.S. Virgin
Islands. Instead, use Form 8689,
Allocation of Individual Income Tax to
the U.S. Virgin Islands.
Nonresident aliens. If you are a
nonresident alien, you generally can't
take the credit. However, you may be
able to take the credit if:
• You were a resident of Puerto Rico
during your entire tax year, or
• You pay or accrue tax to a foreign
country or U.S. possession on income
from foreign sources that is effectively
connected with a trade or business in
the United States. But if you must pay
tax to a foreign country or U.S.
possession on income from U.S.
sources only because you are a citizen
or a resident of that country or U.S.
possession, don't use that tax in figuring
the amount of your credit.

See section 906 for more information
on the foreign tax credit allowed to a
nonresident alien individual.

Credit or Deduction

Instead of claiming a credit for eligible
foreign taxes, you can choose to deduct
foreign income taxes. Form 1040 or
1040-SR filers choosing to do so would
deduct foreign income taxes on
Schedule A (Form 1040 or 1040-SR),
Itemized Deductions. Generally, if you
take the credit for any eligible foreign
taxes, you can't take any part of that
year's foreign taxes as a deduction.
However, even if you take the credit for
eligible foreign taxes for the year, you
can take a deduction for the following.
• Foreign taxes not allowed as a credit
because of boycott provisions.
• Taxes paid to certain foreign
countries for which a credit has been
denied, as described in item 2 under
Foreign Taxes Not Eligible for a Credit,
later.
• Taxes on income or gain that aren't
creditable because you don't meet the
holding period requirement, as
described in item 3 or 5 under Foreign
Taxes Not Eligible for a Credit, later.
• Taxes on income or gain that aren't
creditable because you have to make
related payments, as described in item
4 or 6 under Foreign Taxes Not Eligible
for a Credit, later.
• Certain taxes paid or accrued to a
foreign country in connection with the
purchase or sale of oil or gas extracted
in that country, as described in item 8
under Foreign Taxes Not Eligible for a
Credit, later.
• Taxes on income or gain that aren't
creditable because they were paid or
accrued in connection with a covered
asset acquisition, as described in item
10 under Foreign Taxes Not Eligible for
a Credit, later.
If you want to change your election to
take a deduction instead of a credit, or a
credit instead of a deduction, you must
do so within a special 10-year limitation
period. Although the limitations period
for refund claims relating to a foreign tax
credit generally runs parallel with the
election period, the limitations period for
refund claims relating to a deduction of
foreign tax doesn't, and may expire
before the end of the election period.
See Pub. 514 for more information.

Foreign Taxes Eligible for
a Credit

You can take a credit for income, war
profits, and excess profits taxes paid or
accrued during your tax year to any

foreign country or U.S. possession, or
any political subdivision (for example,
city, state, or province) of the country or
possession. This includes taxes paid or
accrued in lieu of a foreign or
possession income, war profits, or
excess profits tax that is otherwise
generally imposed. For purposes of the
credit, U.S. possessions include Puerto
Rico and American Samoa.
U.S. citizens living in certain treaty
countries may be able to take an
additional foreign tax credit for foreign
tax imposed on certain items of income
from the United States. See Tax
Treaties in Pub. 514 for details. If this
applies to you, use the worksheet near
the back of Pub. 514 to help you figure
this additional credit.

Foreign Taxes Not Eligible
for a Credit

You can't take a credit for the following
foreign taxes.
1. Taxes paid to a foreign country
that you don't legally owe, including
amounts eligible for refund by the
foreign country. If you don't exercise
your available remedies to reduce the
amount of foreign tax to what you legally
owe, a credit for the excess amount isn't
allowed. The amount of tax actually
withheld by a foreign country isn't
necessarily 100% creditable. See
Regulations section 1.901-2(e)(2)(i).
Example. Country X withholds $25
of tax from a payment made to you.
Under the income tax treaty between
the United States and Country X, you
owe only $15 and can claim a refund
from Country X for the other $10. Only
$15 is eligible for the foreign tax credit
(whether or not you apply for a refund).
2. Taxes imposed by and paid to
certain foreign countries. These
countries are those designated by the
Secretary of State as countries that
repeatedly provide support for acts of
international terrorism, countries with
which the United States doesn't have or
doesn't conduct diplomatic relations, or
countries whose governments aren't
recognized by the United States and
aren't otherwise eligible to purchase
defense articles or services under the
Arms Export Control Act. Pub. 514
contains a list of these countries.
3. Foreign taxes withheld on a
dividend from a corporation, if you
haven't held the stock for at least 16
days within the 31-day period that
begins 15 days before the ex-dividend
date. This required holding period is
greater for preferred-stock dividends
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attributable to periods totaling more
than 366 days. See section 901(k)(3) or
Pub. 514.
4. Foreign taxes withheld on a
dividend to the extent that you have to
make related payments on positions in
substantially similar or related property.
Example. You receive a dividend
subject to foreign withholding tax. You
are obligated to pay someone else an
amount equal to all these dividends you
receive. You can't claim a foreign tax
credit for the withholding tax on these
dividends.
5. Foreign taxes withheld on income
or gain (other than dividends) from
property if you haven't held the property
for at least 16 days within the 31-day
period that begins 15 days before the
date on which the right to receive the
payment arises. See section 901(l) or
Pub. 514.
6. Foreign taxes withheld on income
or gain (other than dividends) from
property to the extent you have to make
related payments on positions in
substantially similar or related property.
7. Payments of foreign tax that are
returned to you in the form of a subsidy.
8. Taxes paid or accrued to a
foreign country in connection with the
purchase or sale of oil or gas extracted
in that country if you don't have an
economic interest in the oil or gas, and
the purchase price or sales price is
different from the fair market value of
the oil or gas at the time of the purchase
or sale.
9. Foreign taxes paid or accrued on
income for which you are claiming an
exclusion on Form 8873, Extraterritorial
Income Exclusion. However, see
section 943(d) for an exception for
certain withholding taxes.
10. The disqualified portion of any
foreign tax paid or accrued in
connection with a covered asset
acquisition. Covered asset acquisitions
include certain acquisitions that result in
a stepped-up basis for U.S. tax
purposes. For more information, see
section 901(m) and the temporary
regulations under that section, including
Treasury Decision 9800, in Internal
Revenue Bulletin 2016-52 at
IRS.gov/irb/2016-52_IRB/ar09.html.
11. Foreign taxes disallowed under
section 965(g).
You can't take a credit for any
interest or penalties you must pay.
For more information, see Foreign
Taxes for Which You Cannot Take a
Credit in Pub. 514.
Instructions for Form 1116 (2019)

Foreign Currency
Conversion

Report all amounts in U.S. dollars
except where specified otherwise in
Part II. If you have to convert from
foreign currency, attach a detailed
explanation of how you figured the
conversion rate.
If you take a credit for taxes paid, the
conversion rate is the rate of exchange
in effect on the day you paid the foreign
taxes (or on the day the tax was
withheld). If you receive a refund of
foreign taxes paid, the conversion rate
is the rate in effect when you paid the
taxes, not when you receive the refund.
If you choose to account for foreign
income taxes on an accrual basis, you
must generally use the average
exchange rate for the tax year to which
the taxes relate. However, you can't do
so if any of the following apply.
1. The foreign taxes are actually
paid more than 2 years after the close of
the tax year to which they relate.
2. The foreign taxes are actually
paid in a tax year prior to the year to
which they relate.
3. The foreign tax liability is
denominated in any inflationary
currency.
Accrued foreign taxes not eligible for
conversion at the yearly average
exchange rate must be converted using
the exchange rate on the date of
payment of the tax. However, accrued
but unpaid foreign taxes denominated in
inflationary currency must be translated
into U.S. dollars using the exchange
rate on the last day of the U.S. tax year
to which those taxes relate.
Inflationary currency. Inflationary
currency means the currency of a
country in which there is cumulative
inflation during the 36 calendar months
immediately preceding the last day of
the tax year of at least 30%, as
determined by reference to the
consumer price index of the country
listed in the monthly issues of
International Financial Statistics, or a
successor publication, of the
International Monetary Fund.
Election to use exchange rate on
date paid. If you have accrued foreign
taxes that you are otherwise required to
convert using the average exchange
rate, you can elect to use the exchange
rate in effect on the date the foreign
taxes are paid if the taxes are
denominated in a nonfunctional foreign
currency. If any of the accrued taxes are
unpaid, you must translate them into
Instructions for Form 1116 (2019)

U.S. dollars using the exchange rate on
the last day of the U.S. tax year to which
those taxes relate. Once made, the
election applies to the tax year for which
made and all subsequent tax years
unless revoked with the consent of the
IRS. It must be made by the due date
(including extensions) for filing the tax
return for the first tax year to which the
election applies. Make the election by
attaching a statement to the applicable
tax return.
Special rules for a qualified business unit. If you have a qualified
business unit, see Pub. 514 for special
rules for converting foreign income and
taxes into U.S. dollars. You may have a
qualified business unit if you own and
operate a business or are self-employed
in a foreign country.

Foreign Tax
Redeterminations

If you claim a credit for foreign taxes
paid, and you receive a refund of all or
part of those taxes in a later year, you
must file an amended return reducing
the taxes credited by the amount
refunded.
If you claim the foreign tax credit
based on foreign taxes accrued instead
of foreign taxes paid, your credit must
be redetermined in any of the following
situations.
1. Your accrued taxes when paid
differ from the amount you claimed as a
credit.
2. You don't pay the accrued taxes
within 2 years after the close of the tax
year to which they relate.
If this applies to you, you must
reduce the credit previously claimed by
the amount of the unpaid taxes. You
won't be allowed a credit for the unpaid
taxes until you pay them. When you pay
the accrued taxes, a new tax
redetermination occurs and you must
translate the taxes into U.S. dollars
using the exchange rate as of the date
they were paid. The foreign tax credit is
allowed for the year to which the foreign
tax relates. See Foreign Currency
Conversion, earlier.
3. After you pay the accrued taxes,
you receive a full or partial refund of
them.
4. For taxes taken into account
when accrued but translated into dollars
on the date of payment, the dollar value
of the accrued tax differs from the dollar
value of the tax paid because of
fluctuations in the exchange rate
between the date of accrual and the
date of payment. However, no
-3-

redetermination is required if the change
in foreign tax liability for each foreign
country is solely attributable to
exchange rate fluctuation and is less
than the smaller of:
a. $10,000, or
b. 2% of the total dollar amount of
the foreign tax initially accrued for that
foreign country for the U.S. tax year.
In this case, you must adjust your
U.S. tax in the tax year in which the
accrued foreign taxes are paid.
If any of the above situations occurs
after you file your return, you generally
must file Form 1040-X, Amended U.S.
Individual Income Tax Return, or other
amended return, to notify the IRS so
that your U.S. tax for the year or years
affected can be redetermined.
Complete and attach to Form 1040-X
(or other amended return) a revised
Form 1116 for the tax year(s) affected
and a statement that contains
information sufficient for the IRS to
redetermine your U.S. tax liability. In
some cases, you may not have to file
Form 1040-X or attach Form 1116. See
Pub. 514 for more information, including
exceptions.
If you don't notify the IRS of a
foreign tax refund or change in
CAUTION the dollar amount of foreign
taxes paid or accrued, you will have to
pay a penalty unless you can show that
the failure to notify the IRS is due to
reasonable cause and not due to willful
neglect.

!

Income From Sources
Outside the
United States

Foreign source income generally
includes, but isn't limited to, the
following.
• Compensation for services performed
outside the United States.
• Interest income from a payer located
outside the United States.
• Dividends from a corporation
incorporated outside the United States.
• Subpart F income inclusions and
section 951A category income
inclusions.
• Gain on the sale of nondepreciable
personal property you sold while
maintaining a tax home outside the
United States, if you paid a tax of at
least 10% of the gain to a foreign
country.
Foreign source income generally
doesn't include gain realized on the sale
or exchange of personal property by a

U.S. resident as defined in section
865(g).
Special rules apply in determining the
source of income from the sale of
inventory; sale of depreciable property
used in a trade or business; sale of
intangible property such as a patent,
copyright, or trademark; and
transportation services that begin or end
in the United States or a U.S.
possession. See Pub. 514 for more
information.
Compensation for labor or personal
services as an employee. If you are
an employee and receive compensation
for labor or personal services performed
both inside and outside the United
States, special rules apply in
determining the source of the
compensation. Compensation (other
than fringe benefits) is sourced on a
time basis. Fringe benefits (such as
housing and education) are sourced on
a geographical basis. Or you may be
able to use an alternative basis to
determine the source. If you use an
alternative basis, you may have to
check the box on line 1b (discussed
later). See Pub. 514 for more
information.

Categories of Income

Use a separate Form 1116 to figure the
credit for each category of foreign
source income listed above Part I of
Form 1116. The following instructions
tell you what kind of income to include in
each category. For more information,
see Pub. 514, Code section 904, and
Regulations sections 1.904-4 and
1.904-5.

a. Section 951A Category
Income

Section 951A category income includes
any amount included in gross income
under section 951A category (other than
passive category income). Section
951A category income is otherwise
referred to as global intangible
low-taxed income (GILTI) and is
included by U.S. shareholders of certain
controlled foreign corporations. See
Pub. 514 for additional details.

b. Foreign Branch Category
Income

Foreign branch category income
consists of the business profits of U.S.
persons that are attributable to one or
more qualified business units (QBUs) in
one or more foreign countries. Foreign
branch category income doesn’t include
any passive category income. See Pub.
514 for further information.

c. Passive Category Income

Passive category income consists of
passive income and specified passive
category income.
Passive category income doesn't
include gain from the sale of inventory
or property held primarily for sale to
customers in the ordinary course of your
trade or business; gain from
commodities hedging transactions; and
active business gains or losses of
producers, processors, merchants, or
handlers of commodities. It may also not
include dividends, interest, rents, or
royalties received from a controlled
foreign corporation (CFC) in which you
are a U.S. shareholder who owns 10%
or more of the total voting power or the
total value of all classes of the
corporation's stock.
Passive income. Passive income
generally includes dividends, interest,
royalties, rents, annuities, excess of
gains over losses from the sale of
property that produces such income or
of non-income-producing investment
property, and excess of gains over
losses from foreign currency or
commodities transactions. Capital gains
not related to the active conduct of a
trade or business are also generally
passive income.
Passive income doesn't include
export financing interest, active
business rents and royalties, or
high-taxed income. High-taxed income
is income if the foreign taxes you paid
on the income (after allocation of
expenses) exceed the highest U.S. tax
that can be imposed on the income.
Passive income also doesn't include
financial services income derived by a
financial services entity. You are a
financial services entity if you are
predominantly engaged in the active
conduct of a banking, insurance,
financing, or similar business for the tax
year. Financial services income of a
financial services entity generally
includes income derived in the active
conduct of a banking, financing,
insurance, or similar business. If you
qualify as a financial services entity
because you treat certain items of
income as active financing income
under Regulations section 1.904-4(e)(2)
(i)(Y), you must show the type and
amount of each item on an attachment
to Form 1116.
Specified passive category income.
Dividends from a DISC (domestic
international sales corporation) or
former DISC to the extent they are
treated as foreign source income, and
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certain distributions from a former FSC
(foreign sales corporation) are specified
passive category income.

d. General Category Income

General category income is income that
isn't section 951A category income,
foreign branch category income,
passive category income, or income
described in categories e, f, and g,
discussed later. General category
income may include the following.
• Wages, salary, and overseas
allowances of an individual as an
employee.
• Income earned in the active conduct
of a trade or business.
• Gains from the sale of inventory or
depreciable property used in a trade or
business. See Pub. 514 for additional
details.

e. Section 901(j) Income

No credit is allowed for foreign taxes
imposed by and paid or accrued to
certain sanctioned countries. However,
income derived from each sanctioned
country is subject to a separate foreign
tax credit limitation. Therefore, you must
use a separate Form 1116 for income
derived from each sanctioned country.
Note. A foreign tax credit may be
claimed for foreign taxes paid or
accrued with respect to section 901(j)
income if such tax is paid or accrued to
a country other than a sanctioned
country. For example, if a U.S. citizen
resident in a non-sanctioned country
pays a residence-based income tax in
that country on income derived from
business activities in a sanctioned
country, those foreign taxes would be
eligible for a foreign tax credit. Any
taxes imposed on that income by the
sanctioned country would not be eligible
for a foreign tax credit. If no taxes are
paid or accrued to sanctioned countries,
you would generally complete Form
1116 for this category only through
line 17.
Sanctioned countries are those
designated by the Secretary of State as
countries that repeatedly provide
support for acts of international
terrorism, countries with which the
United States doesn't have or doesn't
conduct diplomatic relations, or
countries whose governments aren't
recognized by the United States and
aren't otherwise eligible to purchase
defense articles or services under the
Arms Export Control Act. Pub. 514
contains a list of these countries.
If you paid taxes to a country that
ceased to be a sanctioned country
Instructions for Form 1116 (2019)

Worksheet for Lump-Sum Distributions

Keep for Your Records

received. See Pub. 575 for more
information.

1. Enter the amount from Form 1116, line 8. . . .

1.

2. Enter the sum of the amounts from Form 4972, lines 6 and 12,
that are from foreign sources. Also enter this amount
on Form 1116, line 17. . . .

2.

3. Enter the sum of the amounts from Form 4972, lines 6 and 12,
that are from all sources (both U.S. and foreign). Also enter
this amount on Form 1116, line 18. . . .

3.

4. Divide line 2 by line 3. Enter the result as a decimal (rounded
to at least four places) here and on Form 1116, line 19. If
line 2 is equal to or more than line 3, enter “1”. . . .

4.

If you are able to elect, and do elect,
to figure your U.S. tax on a lump-sum
distribution using Form 4972, Tax on
Lump-Sum Distributions, a separate
foreign tax credit limitation applies. Use
a separate Form 1116. On this separate
Form 1116, check box g above Part I.
Skip Part I. Complete Part II showing
only foreign taxes that are attributable to
the lump-sum distribution. Then,
complete the Worksheet for Lump-Sum
Distributions to figure the amounts to
enter in Part III.

5. Enter the amount from Form 4972, line 30. Also include
this amount on Form 1116, line 20. . . .

5.

Special Rules

!

CAUTION

Don't include the amount on line 5 above in the
tax you enter on line 20 of any other Form 1116 you
are filing.

6. Multiply line 5 by line 4. Enter the result here and on
Form 1116, line 21. . . .

6.

7. Enter the smaller of line 1 or line 6 here and on Form 1116,
line 22. To the left of line 22, write “LSD” . . . .

7.

during the tax year, see Pub. 514 for
details on how to figure the foreign tax
credit for the period that begins after the
end of the sanctions.
Presidential waiver. The President of
the United States has the authority to
waive the denial of the credit with
respect to a sanctioned country if:
• The waiver is in the national interest
of the United States and will expand
trade and investment opportunities for
U.S. companies in the sanctioned
country; and
• The President reports to the
Congress, not less than 30 days before
the waiver is granted, the intention to
grant the waiver and the reason for the
waiver.
Note. Taxpayers will complete one
Schedule H of Form 965, Inclusion of
Deferred Foreign Income Upon
Transition to Participation Exemption
System, with respect to income derived
from all sanctioned countries. However,
a separate Form 1116 must be
completed with respect to section 965
inclusions attributable to each
sanctioned country.

f. Certain Income Re-Sourced
by Treaty

If a sourcing rule in an applicable
income tax treaty treats U.S. source
income as foreign source, and you elect
Instructions for Form 1116 (2019)

to apply the treaty, the income will be
treated as foreign source.
Important. You must compute a
separate foreign tax credit limitation for
any income for which you claim benefits
under a treaty, using a separate Form
1116 for each amount of re-sourced
income from a treaty country. This rule
does not apply to income that is
re-sourced by reason of the relief from
double taxation rules in any U.S. income
tax treaty that is solely applicable to
U.S. citizens who are residents of the
foreign treaty country. See sections
865(h), 904(d)(6), and 904(h)(10) and
the regulations under those sections
(including 1.904-4(k)) for any grouping
rules and other exceptions. Add the
amounts from line 22 of each separate
Form 1116 and enter the total on line 28
of your summary Form 1116 (that is, the
Form 1116 for which you are completing
Part IV). In addition, you may be
required to file Form 8833,
Treaty-Based Return Position
Disclosure Under Section 6114 or
7701(b), for the re-sourced income.

g. Lump-Sum Distributions

You can take a foreign tax credit for
taxes you paid or accrued on a foreign
source lump-sum distribution from a
pension plan. Special formulas may be
used to figure a separate tax on a
qualified lump-sum distribution for the
year in which the distribution is
-5-

Look-Through Rules

Certain income received or accrued by
you as a 10%-or-more U.S. shareholder
in a controlled foreign corporation (CFC)
is treated as income in one of the
separate categories listed under
Categories of Income, earlier. For
example, Subpart F inclusions,
dividends, interest, rents, and royalties
from a CFC are only treated as passive
category income to the extent they are
attributable to passive category income
of the CFC. See Regulations section
1.904-5 for more information.

Reporting Foreign Tax
Information From Partnerships
and S Corporations

If you received a 2019 Schedule K-1
from a partnership or S corporation that
includes foreign tax information, use the
rules below to report that information on
Form 1116.

General Information for Partners
and S Corporation Shareholders
Less-than-10% limited partners and
certain less-than-10% S corporation
shareholders. If you are a limited
partner or an S corporation shareholder
who doesn't actively participate in the
management of the S corporation and
you own a less-than-10% interest (by
value) in the partnership or S
corporation, you generally may
categorize your distributive share of
foreign source income and deductions
from that partnership or S corporation
as passive income. See Regulations
section 1.904-4(n) for more details and
exceptions.
This rule takes precedence over
the income category rules
CAUTION outlined in the instructions that
follow for line 16, codes C and D–H, of
Schedule K-1 (Form 1065) (or line 14,

!

codes C and D–H, of Schedule K-1
(Form 1120-S)), and the apportionment
of deductions rules outlined in the
instructions for line 16, later, codes J
and K–O (or line 14, codes J and K–O)
of the Schedule K-1.
Reporting amounts on Form 1116.
Include amounts reported to you on
Schedule K-1 with any other amounts
reportable on Form 1116 using:
• A separate Form 1116 for each
category of income, and
• A separate column in Part I and a
separate line in Part II for each country
or possession.

Explanation of Certain Line Items
on Schedule K-1
In each instance that follows,

TIP the first line reference is to the

Schedule K-1 for Form 1065
and the second line reference is to the
Schedule K-1 for Form 1120-S.
Line 16, code B; or line 14, code
B—Gross income from all sources.
Combine your distributive share of
“gross income from all sources” with all
of your other gross income and enter
the total on line 3e. “Gross income from
all sources” is a constant amount (that
is, you will enter the same amount on
line 3e of all Forms 1116 that you file).
Line 16, code C; or line 14, code
C—Gross income sourced at partner
or shareholder level. This line
includes income from the sale of eligible
personal property (most personal
property other than inventory,
depreciable property, and certain
intangible property). See Pub. 514 for
details.
Although all income reported to
you on this line of the
CAUTION Schedule K-1 has been
apportioned to separate categories of
income, you must nevertheless first
determine (using the rules below)
whether the income on this line is U.S.
source income or foreign source
income. Then, enter only foreign source
income in Part I of each of the
applicable Forms 1116 (that is, those
Forms 1116 for each category of
income you received from the
partnership or S corporation).

!

Use the following rules to source the
income reported to you on this line of
the Schedule K-1. If you are a U.S.
resident (as defined below), the income
is U.S. source income. If you are a
nonresident (as defined later), the
income is foreign source income.

U.S. resident. A U.S. resident is a
U.S. citizen or resident alien who
doesn't have a tax home in a foreign
country or a nonresident alien who has
a tax home in the United States.
Tax home. Generally, your tax
home is the general area of your main
place of business, employment, or post
of duty, regardless of where you
maintain your family home. Your tax
home is the place where you are
permanently or indefinitely engaged to
work as an employee or self-employed
individual. If you don't have a regular or
main place of business because of the
nature of your work, then your tax home
is the place where you regularly live. If
you don't fit either of these categories,
you are considered an itinerant and your
tax home is wherever you work.
Nonresident. A nonresident is any
person who isn't a U.S. resident. U.S.
citizens and resident aliens with a
foreign tax home won't be treated as
nonresidents for a sale of eligible
personal property unless a foreign tax of
10% or more was paid or accrued on
the gain on the sale (or, in the case of a
loss sale, a foreign tax of 10% or more
would have been paid had the sale
resulted in a gain).
Note. To help you with these rules, the
partnership or S corporation has
specifically identified the following.
• Gains on the sale of eligible personal
property for which a foreign tax of 10%
or more was paid or accrued.
• Losses on the sale of eligible
personal property for which a foreign tax
of 10% or more would have been paid
had the sale resulted in a gain.
Include foreign source income in Part
I of the applicable Form 1116 (that is,
the Form 1116 for each category of
income provided to you for this line of
the Schedule K-1). Don't include in Part
I of Form 1116 income that you
determined (using the above rules) to
be U.S. source income.
If the partnership or S
corporation has specifically
CAUTION identified any capital gains or
losses or unrecaptured section 1250
gain on this line (Schedule K-1, line 16,
code C, or line 14, code C) and you
have determined that those gains or
losses are foreign source, see Foreign
Qualified Dividends and Capital Gains
(Losses), later, before entering an
amount in Part I of Form 1116.

!

Line 16, codes D, E, F, G, and H; or
line 14, codes D, E, F, G, and H—Foreign gross income sourced at part-6-

nership or S corporation level.
Income reported on this line has already
been sourced for you by the partnership
or S corporation. The partnership or S
corporation has reported this income to
you by country and by category of
income. Include these amounts in Part I
of each of the applicable Forms 1116
(that is, those Forms 1116 for each
category of income you received).
Line 16, code I; or line 14, code I—Interest expense. See the instructions
for Line 4b, later, to allocate and
apportion the interest expense shown
on this line of Schedule K-1. In applying
those instructions, take into account
your distributive share of the
partnership's or S corporation's gross
income (for purposes of the $5,000
threshold) or your pro rata share of the
partnership's or S corporation's assets.
However, if you were a limited partner or
an S corporation shareholder who didn't
actively participate in the management
of the S corporation and your interest in
the partnership or S corporation was
less than 10%, see the next paragraph.
Include interest expense that you
allocate to foreign source income on
line 4b of the applicable Form 1116.
Don't enter in Part I of Form 1116 any
interest expense that you allocate to
U.S. source income.
Less-than-10% limited partners
and certain less-than-10% S
corporation shareholders. If you are
a limited partner or an S corporation
shareholder (who doesn't actively
participate in the management of the S
corporation) and you own (directly or
indirectly) a less-than-10% interest (by
income) in the partnership or S
corporation, you may generally allocate
your distributive share of interest
expense from that partnership or S
corporation to foreign or U.S. source
income based on your distributive share
of the gross foreign or U.S. source
income of that partnership or S
corporation. The interest expense you
allocate to foreign source income
generally may be apportioned
exclusively to passive category income.
However, see Temporary Regulations
section 1.861-9T(e)(4) for exceptions.
Line 16, code J; or line 14, code
J—Other expenses. This line includes
expenses (other than interest expense)
of the partnership or S corporation that
must be allocated and apportioned at
the partner or shareholder level (for
example, research and experimental
expenses).
Combine your distributive share of
these expenses with all of your other
Instructions for Form 1116 (2019)

like expenses, if any, and then allocate
and apportion them using the applicable
rules (for example, for research and
experimental expenses, the rules under
Regulations section 1.861-17(f)).
Include expenses that you allocate to
foreign source income on line 2 of the
applicable Form 1116. Expenses that
you allocate to U.S. source income
shouldn't be entered on any line of Part I
of Form 1116.
Line 16, codes K, L, M, N, and O; or
line 14, codes K, L, M, N, and O. Deductions allocated and apportioned
at partnership or S corporation level
to foreign source income. The
partnership or S corporation has already
allocated these expenses to foreign
source income and has reported them
to you by country and by category of
income. Include these amounts on line 2
of each of the applicable Forms 1116
(that is, those Forms 1116 for each
category of income you received).
Line 16, codes P and Q; or line 14,
codes P and Q—Total foreign taxes.
The partnership or S corporation has
already allocated and apportioned total
foreign taxes for you and has reported
them to you by country and by category
of income. Include these amounts in
Part II of each of the applicable Forms
1116 (that is, those Forms 1116 for
each category of income you received).
Line 16, code R; or line 14, code
R—Reduction in taxes available for
credit. The partnership or S
corporation has already apportioned the
reduction in taxes available for credit
and has reported it to you by country
and by category of income. Include
these amounts on line 12 of each of the
applicable Forms 1116 (that is, those
Forms 1116 for each category of
income you received).

Foreign Qualified
Dividends and Capital
Gains (Losses)
Qualified dividends are the

TIP amounts you entered on Form

1040 or 1040-SR, line 3a; or
Form 1040-NR, line 10b.

If you have foreign source qualified
dividends or foreign source capital gains
(including any foreign source capital
gain distributions) or losses, you may be
required to make certain adjustments to
those amounts before taking them into
account on line 1a (gross income) or
line 5 (losses).
If you completed the Qualified
Dividends and Capital Gain Tax
Instructions for Form 1116 (2019)

Worksheet in the instructions for your
tax return, and aren't required to file
Schedule D, see Qualified Dividends
and Capital Gain Tax Worksheet
(Individuals) next to determine the
adjustments you may be required to
make. If you completed the Qualified
Dividends Tax Worksheet in the
Instructions for Form 1041, see
Qualified Dividends Tax Worksheet
(Estates and Trusts), later, to determine
the adjustments you may be required to
make. If you are required to file
Schedule D, see Schedule D Filers,
later, to determine the adjustments you
may be required to make.
You can elect not to make the
adjustments to your qualified dividends
and capital gains if you qualify for the
adjustment exception. See Adjustment
exception under Qualified Dividends
and Capital Gain Tax Worksheet
(Individuals), Qualified Dividends Tax
Worksheet (Estates and Trusts), and
Schedule D Filers.

Qualified Dividends and Capital
Gain Tax Worksheet
(Individuals)

If you completed the Qualified
Dividends and Capital Gain Tax
Worksheet in your tax return instructions
and you don't have to file Schedule D,
you may have to adjust the amount of
your foreign source qualified dividends
and capital gain distributions.
Form 1040 or 1040-SR filers. You
must adjust the amount of your foreign
source qualified dividends and capital
gain distributions if both of the following
apply.
• Line 7 of the Qualified Dividends and
Capital Gain Tax Worksheet is greater
than zero.
• Line 25 of the Qualified Dividends
and Capital Gain Tax Worksheet is less
than line 26 of that worksheet.
Form 1040-NR filers. You must adjust
the amount of your foreign source
qualified dividends and capital gain
distributions if both of the following
apply.
• Line 5 of the Qualified Dividends and
Capital Gain Tax Worksheet is greater
than zero.
• Line 23 of the Qualified Dividends
and Capital Gain Tax Worksheet is less
than line 24 of that worksheet.
Adjustment exception. If you qualify
for the adjustment exception, you can
elect not to adjust your foreign source
capital gain distributions and qualified
dividends. You make this election by not
adjusting these items. If you make this
-7-

election, you must elect not to adjust
any of your foreign source qualified
dividends or capital gain distributions.
Adjustment exception for Form
1040 or 1040-SR filers. You qualify for
the adjustment exception if you meet
both of the following requirements.
1. Line 7 of the Qualified Dividends
and Capital Gain Tax Worksheet
doesn't exceed:
a. $321,450 if married filing jointly or
qualifying widow(er),
b. $160,725 if married filing
separately,
c. $160,725 if single, or
d. $160,700 if head of household.
2. The amount of your foreign
source capital gain distributions, plus
the amount of your foreign source
qualified dividends, is less than
$20,000. For this purpose, ignore any
capital gain distributions or qualified
dividends you elected to include on
Form 4952, line 4g.
See special rules if you are subject to
the alternative minimum tax.
Adjustment exception for Form
1040-NR filers. If you file Form
1040-NR, you qualify for the adjustment
exception if you meet both of the
following requirements.
1. Line 5 of the Qualified Dividends
and Capital Gain Tax Worksheet
doesn't exceed:
a. $321,450 if you checked filing
status box 6,
b. $160,725 if you checked filing
status box 5, or
c. $160,725 if you checked filing
status box 2.
2. The amount of your foreign
source capital gain distributions, plus
the amount of your foreign source
qualified dividends, is less than
$20,000.
See special rules if you are subject to
the alternative minimum tax.
How to make adjustments. To adjust
your foreign source qualified dividends
or capital gain distributions, multiply
your foreign source qualified dividends
or capital gain distributions in each
separate category by 0.4054 if the
foreign source qualified dividends or
capital gain distributions are taxed at a
rate of 15%, and by 0.5405 if they are
taxed at a 20% rate. Include the results
on line 1a of the applicable Form 1116.
You adjust your foreign source
qualified dividends or capital gain

distributions taxed at the 0% rate by not
including them on line 1a.
Don't adjust the amount of any
foreign source qualified
CAUTION dividends or capital gain
distributions that you elected to include
on Form 4952, line 4g.

!

No adjustments required. If you
aren't required to adjust the amount of
your foreign source qualified dividends
or capital gain distributions, or you
qualify for the adjustment exception and
elect not to adjust these items, include
the amount of your foreign source
qualified dividends and capital gain
distributions in each separate category
(without adjustment) on line 1a of the
applicable Form 1116.

Qualified Dividends Tax
Worksheet (Estates and Trusts)

If you completed the Qualified
Dividends Tax Worksheet in the
Instructions for Form 1041, you must
adjust the amount of your foreign source
qualified dividends if:
• Line 5 of the Qualified Dividends Tax
Worksheet is greater than zero, and
• Line 21 of the Qualified Dividends
Tax Worksheet is less than line 22 of
that worksheet.

Adjustment exception. If you qualify
for the adjustment exception, you can
elect not to adjust your foreign source
qualified dividends. You make this
election by not adjusting these
dividends. If you make this election, you
must elect not to adjust any of your
foreign source qualified dividends.
See section 904(b) and the regulations
issued under that Code section to
determine if you qualify for the
adjustment exception.
How to make adjustment. To adjust
your foreign source qualified dividends,
multiply your foreign source qualified
dividends in each separate category by
0.4054 if the foreign source qualified
dividends are taxed at a rate of 15%,
and by 0.5405 if they are taxed at a 20%
rate. Include the results on line 1a.
You adjust your foreign source
qualified dividends taxed at the 0% rate
by not including them on line 1a.
Don't adjust the amount of any
foreign source qualified
CAUTION dividends that you elected to
include on Form 4952, line 4g.

!

No adjustment required. If you aren't
required to make adjustments to your
foreign source qualified dividends (or
you qualify for the adjustment exception

and you elected not to adjust these
dividends), include your foreign source
qualified dividends on line 1a of the
applicable Form 1116 without
adjustment.

Schedule D Filers

Note. Throughout these instructions,
references to Schedule D (Form 1041)
are for estates and trusts only.

Adjustments to foreign qualified dividends. If you are required to file
Schedule D (Form 1040 or 1040-SR or
Form 1041), you must adjust the
amount of your foreign source qualified
dividends that you include on line 1a of
Form 1116 if one of the following
applies to you.
1. You figured your tax using the
Qualified Dividends and Capital Gain
Tax Worksheet in the Form 1040 or
1040-SR instructions, line 7 of that
worksheet is greater than zero, and
line 25 of that worksheet is less than
line 26.
2. You figured your tax using the
Qualified Dividends and Capital Gain
Tax Worksheet in the Form 1040-NR
instructions, line 5 of that worksheet is
greater than zero, and line 23 of that
worksheet is less than line 24.
3. You figured your tax using
Schedule D (Form 1041), line 27 of
Schedule D is greater than zero, and
line 43 of Schedule D is less than
line 44.
4. You figured your tax using the
Schedule D Tax Worksheet (in the
Schedule D (Form 1040 or 1040-SR)
instructions), line 18 of the Schedule D
Tax Worksheet is greater than zero, and
line 45 of the Schedule D Tax
Worksheet is less than line 46.
5. You figured your tax using the
Schedule D Tax Worksheet (in the
Schedule D (Form 1041) instructions),
line 17a of the Schedule D Tax
Worksheet is greater than zero, and
line 42 of the Schedule D Tax
Worksheet is less than line 43.
Adjustment exception. If you
qualify for the adjustment exception,
you can elect not to adjust your foreign
source qualified dividends. You make
this election by not adjusting these
dividends or your foreign capital gains
(or losses). If you make this election,
you must elect not to adjust any of your
foreign source qualified dividends. You
qualify for the adjustment exception if
the amount of your foreign source net
capital gain, plus the amount of your
foreign source qualified dividends, is

-8-

less than $20,000 and one of the
following applies to you.
1. Line 7 of the Qualified Dividends
and Capital Gain Tax Worksheet in the
Form 1040 or 1040-SR instructions or
line 18 of the Schedule D Tax
Worksheet in the Schedule D (Form
1040 or 1040-SR) instructions is less
than or equal to:
a. $321,450 if married filing jointly or
qualifying widow(er),
b. $160,725 if married filing
separately,
c. $160,725 if single, or
d. $160,700 if head of household.
2. Line 5 of the Qualified Dividends
and Capital Gain Tax Worksheet in the
Form 1040-NR instructions or line 18 of
the Schedule D Tax Worksheet in the
Schedule D (Form 1040 or 1040-SR)
instructions is less than or equal to:
a. $321,450 if you checked filing
status box 6,
b. $160,725 if you checked filing
status box 5, or
c. $160,725 if you checked filing
status box 2.
For trusts and estates, see section
904(b) and the regulations issued under
that Code section to determine if you
qualify for the adjustment exception.
See special rules if you are subject to
the alternative minimum tax.
Note. Your foreign source net capital
gain is the excess of your net long-term
capital gain from foreign sources over
your net short-term capital loss from
foreign sources. Ignore any long-term
capital gains you elected to include on
Form 4952, line 4g, in determining your
foreign source net capital gain. Ignore
any qualified dividends you elected to
include on Form 4952, line 4g, in
determining the amount of your foreign
source qualified dividends.
How to make adjustment. To
adjust your foreign source qualified
dividends, multiply your foreign source
qualified dividends in each separate
category by 0.4054 if the foreign source
qualified dividends are taxed at a rate of
15%, and by 0.5405 if they are taxed at
a 20% rate. Include the results on
line 1a of the applicable Form 1116.
You adjust your foreign source
qualified dividends taxed at the 0% rate
by not including them on line 1a.

Instructions for Form 1116 (2019)

Don't adjust the amount of any
foreign source qualified
CAUTION dividends that you elected to
include on Form 4952, line 4g.

!

No adjustment required. If you
aren't required to adjust your foreign
source qualified dividends (or you
qualify for the adjustment exception and
elect not to adjust these dividends),
include on line 1a of Form 1116 the full
amount of foreign source qualified
dividends without adjustment.
Adjustments to foreign capital gains
and losses. You must use Worksheet
A, Worksheet B, or the instructions
under Capital Gains and Losses in Pub.
514 to determine the adjustments you
must make to your foreign capital gains
or losses. Read the instructions below
to see if you qualify to use Worksheet A
or Worksheet B. If you don't qualify to
use Worksheet A or Worksheet B, use
the instructions under Capital Gains and
Losses in Pub. 514 to determine the
adjustments you must make.
Before you complete Worksheet
A or Worksheet B, you must
CAUTION reduce each foreign source
long-term capital gain by the amount of
that gain you elected to include on Form
4952, line 4g. The gain you elected to
include on Form 4952, line 4g, must be
entered directly on line 1a of the
applicable Form 1116 without
adjustment.

!

Worksheet A. You can use
Worksheet A to determine the
adjustments you must make to your
foreign source capital gains or losses if
you have foreign source capital gains or

Instructions for Form 1116 (2019)

losses in no more than two separate
categories and any of the following
apply.
• You qualify for the adjustment
exception discussed earlier under
Adjustments to foreign qualified
dividends under Schedule D Filers and
you didn't make any adjustments to your
foreign qualified dividends (if any).
• Line 15 or 16 of Schedule D (Form
1040 or 1040-SR) (line 18a or 19 of
Schedule D (Form 1041)) is zero or a
loss.
• You figured your tax using the
Qualified Dividends and Capital Gain
Tax Worksheet in the Form 1040 or
1040-SR instructions and (a) line 3 of
that worksheet minus the amount on
Form 4952, line 4e, that you elected to
include on Form 4952, line 4g, is zero or
less; (b) line 7 of that worksheet is zero;
or (c) line 25 of that worksheet is equal
to or greater than line 26.
• You figured your tax using the
Qualified Dividends and Capital Gain
Tax Worksheet in the Form 1040-NR
instructions and (a) line 3 of that
worksheet is zero, (b) line 5 of that
worksheet is zero, or (c) line 23 of that
worksheet is equal to or greater than
line 24.
• You figured your tax using
Schedule D (Form 1041) and (a) line 27
of Schedule D is zero; (b) line 22 of
Schedule D minus the amount on Form
4952, line 4e, that you elected to include
on Form 4952, line 4g, is zero or less; or
(c) line 43 is equal to or greater than
line 44.
• You figured your tax using the
Schedule D Tax Worksheet (in the
Schedule D (Form 1040 or 1040-SR)
instructions) and (a) line 18 is zero, (b)

-9-

line 9 is zero or less, or (c) line 45 is
equal to or greater than line 46.
• You figured your tax using the
Schedule D Tax Worksheet (in the
Schedule D (Form 1041) instructions)
and (a) line 17a is zero, (b) line 9 is zero
or less, or (c) line 42 is equal to or
greater than line 43.
Complete Worksheet A only once,
even if you have capital gains or losses
in two separate categories. Keep the
completed Worksheet A for your
records. Don't file Worksheet A with
your tax return.
Capital losses are deductible only up
to $3,000 ($1,500 if married filing
separately) of ordinary income.
Worksheet B. If you don't qualify to
use Worksheet A, use Worksheet B to
determine the adjustments you must
make to your foreign source capital
gains or losses if:
• You have foreign source capital gains
or losses in no more than two separate
categories,
• You didn't complete the
Unrecaptured Section 1250 Gain
Worksheet or the 28% Rate Gain
Worksheet in the Schedule D
instructions, and
• You don't have any capital gains
taxed at a rate of 0% or 20%.
Complete Worksheet B only once,
even if you have capital gains or losses
in two separate categories. Keep the
completed Worksheet B for your
records. Don't file Worksheet B with
your tax return.
Capital losses are deductible only up
to $3,000 ($1,500 if married filing
separately) of ordinary income.

Keep for Your Records

Worksheet A (See instructions.)
Category #1
Specify

Category #2

▶ 

1. Separate category capital gain or (loss) . . . . . . . . . . . . . . . . . . . . . 1.
2. Foreign source capital gain net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
3. Capital gain net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
4. Total U.S. capital loss adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
5. Adjusted separate category capital gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
6. U.S. capital loss adjustment factor. (For each separate category,
divide line 1 by line 2 and round off the result
to at least four decimal places.) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
7. U.S. capital loss adjustment. (For each separate category, multiply
line 4 by line 6.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
8. Adjusted separate category capital gain. (For each
separate category, subtract line 7 from line 1. Enter
the result here and include the result on line 1a of the
applicable Form 1116.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.
Instructions for Worksheet A
Line 1. For each separate category for which you have foreign source capital gains or losses, combine your foreign source capital gains
and losses in that separate category and enter the result on line 1. Show a loss on line 1 of this worksheet as a negative amount and
include the loss on line 5 of the Form 1116 you are filing for that separate category.
Line 2. Combine the amounts entered on line 1. If the result is zero or less, don't complete the rest of the worksheet. Instead, for each
separate category with a positive amount on line 1 of this worksheet, include that positive amount on line 1a of the Form 1116 you are filing
for that separate category.
Line 3. Enter the amount from line 16 of Schedule D (Form 1040 or 1040-SR), less the portion of net capital gain you included on Form
4952, line 4g. If the result is zero or less, enter -0-.
Estates and trusts: Enter the amount from line 19 of Schedule D (Form 1041), less any amount shown on line 25 of that Schedule D. If
the result is zero or less, enter -0-.
Line 4. Subtract line 3 from line 2 and enter the result on line 4. If the result is zero or less, don't complete the rest of the worksheet. Instead,
for each separate category with a positive amount on line 1 of this worksheet, include that positive amount on line 1a of the Form 1116 you
are filing for that separate category.
Line 5.
• If both separate categories have a positive amount on line 1, skip line 5 and go to line 6.
• If only one separate category has a positive amount on line 1, subtract line 4 from that positive amount. Enter the result here and include
the result on line 1a of the Form 1116 you are filing for that separate category. Skip lines 6–8 of this worksheet.

-10-

Instructions for Form 1116 (2019)

Keep for Your Records

Worksheet B (See instructions.)
Category #1
Specify

▶ ____________

(1)
Short-Term

(2)
Long-Term
(15%)

1. Separate category rate
group capital gain or (loss)
2. U.S. capital loss adjustment
amount
3. Subtotal (subtract line 2 from
line 1 gain amounts)
4. Net U.S. long-term capital
loss
5. U.S. long-term capital loss
adjustment
6. Excess net U.S. long-term
capital loss
7. Long-term capital gain (or
adjustment amount)
8. Limitation percentage
9. Long-term limitation amounts
10. Adjustment amounts
11. Rate differential adjustments
12. Long-term gains
13. Rate differential adjustment
14. Long-term gain
15. Adjusted separate category
capital gains and losses

Instructions for Form 1116 (2019)

-11-

Category #2
Specify

▶ __________

(3)
Short-Term

(4)
Long-Term
(15%)

(5)
Other

Instructions for Worksheet B

Line 1. For each separate category, combine the capital gains and losses as follows.
• Combine your foreign source short-term capital gains and losses and enter the result in column (1) or (3).
• Combine your foreign source long-term capital gains and losses and enter the result in column (2) or (4).
Line 2. Complete the Line 2 Worksheet for each column on line 1 with a gain.
Line 4. Enter your net long-term capital loss (if any) from U.S. sources. To determine this amount, subtract your long-term
capital losses from U.S. sources from your long-term capital gains from U.S. sources. Enter the loss (if any) as a positive
amount in column (5). If you don't have a loss, leave line 4 blank and skip lines 5 through 14.
Line 5. Combine the amounts (if any) from columns (2) and (4) on line 2. Enter the result in column (5). If you don't have any
amount entered in either column, enter -0- in column (5).
Line 6. Subtract line 5 from line 4. Enter the result in column (5). If the result is zero or less, leave line 6 blank and skip lines 7
through 14 of this worksheet.
Line 7.
• If you entered an amount in either column (2) or (4) (but not both) of line 3, subtract line 6 from the amount entered in
either column (2) or (4) of line 3. Enter the result in column (2) or (4) on line 7 and skip lines 8 through 12.
• If you entered amounts in both columns (2) and (4) on line 3, combine those amounts and enter the result in column (5) on
line 7.
Line 8. Divide line 3, column (2), by line 7, column (5). Enter the result on line 8, column (2). Divide line 3, column (4), by
line 7, column (5). Enter the result on line 8, column (4). Round off each result to at least four decimal places.
Line 9. Multiply each decimal amount on line 8 by line 6 and enter the results in the appropriate columns on line 9.
Line 10. Subtract line 9, column (2), from line 3, column (2) and enter the result on line 10, column (2). Subtract line 9,
column (4), from line 3, column (4), and enter the result on line 10, column (4).
Line 11. Multiply each amount on line 10 by 0.4054 and enter the results here.
Line 12. Combine line 11, column (2), with line 9, column (2), and enter the result on line 12, column (2). Combine line 11,
column (4), with line 9, column (4), and enter the result on line 12, column (4). Include the amounts on line 1a of the
applicable Form 1116. Skip lines 13 and 14.
Line 13. Multiply the amount on line 7 by 0.4054 and enter the result here in the applicable column.
Line 14. Combine line 6 and line 13 and enter the result here. Include the result on line 1a of the applicable Form 1116.
Line 15.
If you have a:
• Short-term gain shown in column (1) or (3) of line 3, enter the amount of that short-term gain on line 15, column (1) or (3).
• Long-term gain shown in column (2) or (4) of line 3, and line 6 is blank, multiply the amount of each gain by 0.4054 and
enter the result on line 15, column (2) or (4).
• Short-term loss in any column of line 1, complete the Line 15 Worksheet for each column with a loss.
• Long-term loss in column (2) or (4) of line 1, multiply the amount of the loss by 0.4054 and enter the result on line 15 in the
appropriate column.
After you have completed line 15:
• Include line 15 gain amounts on line 1a of the applicable Form 1116.
• Include line 15 loss amounts on line 5 of the applicable Form 1116.

-12-

Instructions for Form 1116 (2019)

Line 2 Worksheet (For Line 2 of Worksheet B)
(See instructions below.)

Keep for Your Records

Category #1
Specify

Category #2

▶
Short-Term

Long-Term

Short-Term

Long-Term

1. Separate category rate group
gain (or loss) . . . . . . . . . . . . . . . . 1.
2. Separate category gain (or loss) 2.
3. Foreign source capital gain net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
4. Capital gain net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
5. Total U.S. capital loss adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
6. Separate category
adjustment . . . . . . . . . . . . . . . . . . 6.
7. Rate Group Factor . . . . . . . . . . . 7.
8. Rate Group Adjustment . . . . . . . 8.
Instructions for Line 2 Worksheet
Line 1. Enter your gains and losses from line 1 of Worksheet B. Enter a loss as a negative amount (in parentheses).
Line 2. For each separate category, combine the amounts from line 1. Enter a loss as a negative amount (in parentheses).
Line 3. Combine the amounts from line 2 of this worksheet. If the result is zero or less, stop here. Don't enter any amount on
line 2 of Worksheet B.
Line 4. Enter the amount from line 16 of Schedule D (Form 1040 or 1040-SR), less the portion of net capital gain you
included on Form 4952, line 4g. If the amount entered on line 4 is zero or less, stop here. Don't continue with this worksheet
or Worksheet B. Instead, complete Worksheet A.
Estates and trusts: Enter the amount from line 19 of Schedule D (Form 1041), less any amount shown on line 25 of that
Schedule D. If the amount entered on line 4 is zero or less, stop here. Don't continue with this worksheet or Worksheet B.
Instead, complete Worksheet A.
Line 5. Subtract line 4 from line 3 and enter the result on line 5. If the result is zero or less, stop here. Don't enter any amount
on line 2 of Worksheet B.
Line 6.
• If only one separate category has a positive amount on line 2, enter the amount from line 5 on line 6 (in the column for the
separate category with the positive amount on line 2).
• If both separate categories have positive amounts on line 2, divide each amount on line 2 by line 3. Multiply each result by
line 5. Enter the results on line 6 in the appropriate columns.
Line 7.
For each separate category, the following rules apply.
• If you entered an amount on line 6 and you entered positive amounts in both the short-term and long-term columns on
line 1, divide each positive amount on line 1 by line 2 and enter the results in the appropriate columns.
• Leave line 7 blank if you didn't enter an amount on line 6 or only one column on line 1 has a positive amount.
Line 8.
For each separate category, the following rules apply.
• If you entered amounts on line 7, multiply each amount on line 7 by line 6. Enter the results in the appropriate columns on
line 8 of this worksheet and on line 2 of Worksheet B.
• If line 7 is blank, enter the amount from line 6 in the same column on line 8 as the column that has a gain on line 1. Also,
enter the amount on line 2 of Worksheet B in the appropriate column. If line 6 is blank, don't enter any amount on line 8 of this
worksheet or line 2 of Worksheet B.

Instructions for Form 1116 (2019)

-13-

Keep for Your Records

Line 15 Worksheet (For Line 15 of Worksheet B)

1. Enter your net short-term capital gain (if any) from U.S. sources. To determine this amount, subtract your
short-term capital losses from U.S. sources from your short-term capital gains from U.S. sources. If the result is
zero or a loss, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.

2. If you entered a short-term gain on line 3 of Worksheet B, enter that amount here . . . . . . . . . . . . . . . . . . . . . . . .

2.

3. Add lines 1 and 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.

4. Did you enter a short-term capital loss on line 1 of Worksheet B for one (but not both) of the separate
categories?
Yes.

Complete lines 5–10 and skip the rest of this worksheet.

No.

Skip lines 5–10 and go to line 11.

5. Enter the short-term capital loss from line 1 of Worksheet B (enter the loss as a positive amount) . . . . . . . .

5.

6. Enter the gain, if any, determined on line 3. If line 3 isn't a gain, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.

7. Subtract line 6 from line 5. If zero or a loss, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.

8. Multiply line 7 by 0.4054 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8.

9. Enter the smaller of line 5 or line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9.

10. Add lines 8 and 9. Enter the result here and on line 15 of Worksheet B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
11. Is the amount on line 1 zero?
Yes.

Multiply each short-term loss by 0.4054. Enter the results on line 15 of Worksheet
B. Skip the rest of this worksheet.

No.

Go to line 12.

12. Enter your short-term loss from Worksheet B, line 1, column (1) (enter the loss as a positive
amount) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
13. Enter your short-term loss from Worksheet B, line 1, column (3) (enter the loss as a positive
amount) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
14. Add lines 12 and 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
15. Enter the gain determined in line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.
16. Subtract line 15 from line 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.
Is the result zero or less?
Yes.

Skip the rest of this worksheet. Enter each short-term loss from line 1 on line 15 of
Worksheet B, in the applicable column, without adjustment (that is, each
short-term loss you enter on line 15 of Worksheet B will be the same as the
short-term loss you entered on line 1 of Worksheet B).

No.

Complete lines 17–22.

17. Multiply line 16 by 0.4054 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.
18. Add lines 15 and 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.
19. Divide line 12 by line 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.
20. Multiply line 19 by line 18. Enter the result here and on Worksheet B, line 15, column (1) . . . . . . . . . . . . . . . . . . 20.
21. Divide line 13 by line 14

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.

22. Multiply line 21 by line 18. Enter the result here and on Worksheet B, line 15, column (3) . . . . . . . . . . . . . . . . . . 22.

-14-

Instructions for Form 1116 (2019)

Specific Instructions

951A, enter the total inclusion in a single
column in Part l. Enter “951A” on line i.

Part I—Taxable Income or
Loss From Sources
Outside the United States

Lines 1a and 1b—Foreign
Gross Income

Part I must be completed by all
filers unless specifically
CAUTION indicated otherwise in these
instructions.

!

Line i—Foreign Country or U.S.
Possession

Generally, if you received income from,
or paid taxes to, more than one foreign
country or U.S. possession, report
information on a country-by-country
basis on Form 1116, Parts I and II. Use
a separate column in Part I and a
separate line in Part II for each country
or possession. If you paid taxes to more
than three countries or possessions,
attach additional sheets following the
format of Parts I and II.
If you have passive income that is
high-taxed income, use a separate
column in Part I. Enter "HTKO" on line i
of Forms 1116 for passive category
income and the other category of
income to which such passive category
income is reclassified.
If you had a foreign tax credit splitting
event in a previous year and you are
taking the related income into account in
2019, enter “909 income” on line i for
that income instead of the country or
possession name.
You don't need to report income
TIP passed through from a mutual
fund or other regulated
investment company (RIC) on a
country-by-country basis. Total all
income, in the applicable category,
passed through from the mutual fund or
other RIC and enter the total in a single
column in Part I. Enter “RIC” on line i.
Total all foreign taxes passed through
and enter the total on a single line in
Part II for the applicable category.
Because computations for inclusions
under sections 951A and 965 are
reported on separate forms, Form 8892,
Global Intangible Low-Taxed income,
and Form 965, Inclusion of Deferred
Foreign Income Upon Transition to
Participation Exemption System, you
don’t need to report those inclusions on
a country-by-country basis. For
inclusions under section 965, in the
applicable category, enter the total in a
single column in Part l. Enter “965” on
line i. For inclusions under section
Instructions for Form 1116 (2019)

Include income in the category checked
above Part I that is taxable by the United
States and is from sources within the
country entered on line i. You must
include income even if it isn't taxable by
that foreign country. Identify the type of
income on the dotted line next to line 1a.
Don't include any earned income
excluded on Form 2555, Foreign
Earned Income.

Example. If you received dividends
(passive category income) and wages
(general category income) from foreign
sources, you must complete two Forms
1116. On one Form 1116, check box c
(passive category income), enter the
dividends on line 1a, and write
“Dividends” on the dotted line. On the
other Form 1116, check box d (general
category income), enter on line 1a
wages not excluded on Form 2555, and
write “Wages” on the dotted line.
Complete Parts I, II, and III of each Form
1116. Then, complete Part IV on the
Form 1116 with the larger amount
entered on line 22.
If you are filing a Form 1116 that
includes foreign source qualified
CAUTION dividends or foreign source
capital gains or losses, see Foreign
Qualified Dividends and Capital Gains
(Losses), earlier.

!

Don’t report the inclusion under
section 965(a) net of the
CAUTION deduction allowed under
section 965(c). Furthermore, don’t
report the inclusion under section 951A
net of the deduction allowed under
section 250. The deduction under
section 965(c) and the deduction under
section 250 are included in Part I, line 2.

!

High-taxed income. On your Form
1116 for passive category income,
passive income that is treated as
another category of income because it
is high taxed should be included on
line 1a in the column for the country
entered on line i. Also, enter the
high-taxed income in the “HTKO”
column on line 1a as a negative
number. On your Form 1116 for the
other category of income, the
high-taxed income should be entered as
a positive number on line 1a in the
"HTKO" column.

-15-

Line 1b
You must check the box on line 1b if all
of the following apply.
• The income on line 1a is
compensation for services you
performed as an employee.
• Your total employee compensation
from both U.S. and foreign sources was
$250,000 or more.
• You used an alternative basis
(discussed in Pub. 514) to determine
the source of the compensation entered
on line 1a.
In addition, attach to Form 1116 a
statement that contains the following
information.
• The specific compensation income or
the specific fringe benefit for which the
alternative basis is used.
• For each such item, the alternative
basis of allocation of source used.
• For each such item, a computation
showing how the alternative allocation
was computed.
• A comparison of the dollar amount of
the compensation sourced within and
without the United States under both the
alternative basis and the time or
geographical basis for determining the
source.
You must keep documentation
showing why the alternative basis more
properly determines the source of the
compensation.

Lines 2 Through 5—Deductions
and Losses

You must reduce your foreign gross
income on line 1a by entering on lines 2
through 5:
• Any of your deductions that definitely
relate to that foreign income; and
• A ratable share of your other
deductions that don't definitely relate to
that foreign income, any other foreign
income, or U.S. source income.
Don't enter any amounts on lines 2
through 5 for your HTKO column. Add
all deductions that are definitely related
or apportioned to passive income that is
treated as another category of income
because it is high taxed and enter the
total amount of those deductions on
line 6 in the HTKO column. Enter the
amount as a negative number on your
Form 1116 for passive category income.
Enter the amount as a positive number
on your Form 1116 for the other
category of income.
Don't include deductions and losses
related to exempt or excluded income
such as foreign earned income you
have excluded on Form 2555 on lines 2
through 5.

Special rules apply to the allocation
of research and experimental
expenditures. See Regulations section
1.861-17.
If the law of a U.S. state to which you
pay income taxes doesn't specifically
exempt foreign source income from tax,
you may be required to make a special
allocation of state taxes you paid. See
Pub. 514 for more information.

Line 2
Enter your deductions that definitely
relate to the gross income from foreign
sources shown on line 1a. For example,
if you are an employee reporting foreign
earned income on line 1a, include on
line 2 expenses such as those incurred
to move to a new principal place of work
outside the United States or supplies
you bought for your job outside the
United States.
Don't include any interest expense
on line 2. See lines 4a and 4b for
special rules for interest expense. If you
are reporting an income inclusion under
section 965(a), include on line 2 the
deduction allowed under section 965(c).
If you are reporting an income inclusion
under section 951A, include on line 2
the deduction allowed under section
250.

Lines 3a and 3b
Some deductions don't definitely relate
to either your foreign source income or
your U.S. source income. Enter on lines

3a and 3b any deductions (other than
interest expense) that:
• Aren't shown on line 2, and
• Aren't definitely related to your U.S.
source income.
Line 3a. Enter the following itemized
deductions (from Schedule A (Form
1040 or 1040-SR)) on line 3a.
• Medical expenses (line 4).
• General sales taxes (line 5a).
• Real estate taxes for your home
(line 5b).
If you don't itemize deductions, enter
your standard deduction on
line 3a.
Line 3b. Enter on line 3b any other
deductions that don't definitely relate to
any specific type of income (for
example, the deduction for alimony paid
from Schedule 1 (Form 1040 or
1040-SR), line 18a).

Lines 3d and 3e
For lines 3d and 3e, gross income
means the total of your gross receipts
(reduced by cost of goods sold), total
capital and ordinary gains (before
subtracting any losses), and all other
income (before subtracting any
deductions).
Line 3d. Enter your gross foreign
source income from the category you
checked above Part I of this
Form 1116. Include any foreign earned
income you have excluded on Form
2555 but don't include any other exempt
income.

Worksheet for Home Mortgage Interest
—Line 4a

Keep for Your Records

Note. Before you complete this worksheet, read the instructions for Line 4a,
earlier.
1. Enter gross foreign source income* of the type shown on
Form 1116. Don't enter income excluded on Form
2555 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.

2. Enter gross income from all sources. Don't enter income
excluded on Form 2555 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.

3. Divide line 1 by line 2 and enter the result as a decimal
(rounded to at least four places) . . . . . . . . . . . . . . . . . . . . . .

3.

4. Enter deductible home mortgage interest (from line 8e of
Schedule A (Form 1040 or 1040-SR)) . . . . . . . . . . . . . . . . .

4.

5. Multiply line 4 by line 3. Enter the result here and on the
appropriate Form 1116, line 4a . . . . . . . . . . . . . . . . . . . . . . .

5.

Line 3e. Enter on line 3e in each
column your gross income from all
sources and all categories, both U.S.
and foreign. Include any foreign earned
income you have excluded on Form
2555 but don't include any other exempt
income.
If you are a nonresident alien, include
on both lines 3d and 3e your income
that isn't effectively connected with a
trade or business in the United States.
If you had to adjust your foreign
qualified dividends or capital gains
(discussed earlier), include those
amounts without regard to any
adjustments.

Line 3f
Divide line 3d by line 3e and round off
the result to at least four decimal places
(for example, if your result is 0.8756782,
round off to 0.8757, not to 0.876 or
0.88). Enter the result, but don't enter
more than “1.”

Line 4a
If your gross foreign source income
(including income excluded on Form
2555) doesn't exceed $5,000, you can
allocate all of your interest expense to
U.S. source income. Otherwise,
deductible home mortgage interest
(including points) is apportioned using a
gross income method. Use the
Worksheet for Home Mortgage Interest
to figure the amount to enter on line 4a.

Line 4b

*If you have to report income from more than one country on Form 1116,
complete a separate worksheet for each country. Use only the income from that
country on line 1 of the worksheet.

-16-

If you had income from more than
one country, you must enter income
from only one country in each column.
If you had to adjust your foreign
qualified dividends or capital gains
(discussed earlier), include those
amounts without regard to any
adjustments.

Other interest expense includes
investment interest, interest incurred in
a trade or business, and passive activity
interest. If you are a U.S. citizen,
resident alien, or a domestic estate, and
your gross foreign source income
(including any income excluded on
Form 2555) doesn't exceed $5,000, you
can allocate all of your interest expense
to U.S. source income. Otherwise, each
type of interest expense is apportioned
separately using an “asset method.”
See Pub. 514 for more information.
Example. You have investment
interest expense of $2,000. Your assets
of $100,000 consist of stock generating
U.S. source income (adjusted basis,
Instructions for Form 1116 (2019)

$40,000) and stock generating foreign
source income (adjusted basis,
$60,000). You apportion 40%
($40,000/$100,000) of $2,000, or $800
of your investment interest, to U.S.
source income and 60%
($60,000/$100,000) of $2,000, or
$1,200, to foreign source income. In this
example, you will enter the $1,200
apportioned to foreign source income
on line 4b. You wouldn't enter the $800
apportioned to U.S. source income on
any line of Part I of Form 1116.

Line 5
If you have capital losses from foreign
sources, see Foreign Qualified
Dividends and Capital Gains (Losses),
earlier, for information on adjustments
you may be required to make.

Part II—Foreign Taxes
Paid or Accrued
See General Instructions,
earlier, for descriptions of
CAUTION foreign taxes that are eligible for
the foreign tax credit and for foreign
taxes that aren't eligible for the foreign
tax credit.

!

Generally, you can take a foreign tax
credit in the tax year you paid or
accrued the foreign taxes, depending
on your method of accounting. If you
report on the cash basis, you can
choose to take the credit for accrued
taxes by checking the “accrued” box in
Part II. But once you choose to do this,
you must credit foreign taxes in the year
they accrue on all future returns.
Generally, you must enter in Part II
the amount of foreign taxes, in both the
foreign currency denomination(s) and
as converted into U.S. dollars, that
relate to the category of income
checked above Part I. Taxes are related
to the income if the income is included
in the foreign tax base on which the tax
is imposed. If the foreign tax you paid or
accrued relates to more than one
category of income, apportion the tax
among the categories. The
apportionment is based on the ratio of
net foreign taxable income in each
category to the total net income subject
to the foreign tax. See Allocation of
Foreign Taxes in Pub. 514 for an
example.
Enter in Part II the foreign taxes that
were previously suspended under
section 909 and that are allowed in
2019 because the related income is
taken into account in 2019. Enter “909
taxes” in column (l) instead of the date
Instructions for Form 1116 (2019)

paid or accrued. Complete the other
columns as appropriate.

earlier tax year to which you are carrying
back excess foreign taxes.

If foreign tax paid on passive

Special rules for carryforwards of
pre-2018 unused foreign taxes.
Unused foreign taxes in the pre-2018
separate category for general income
carried forward generally are allocated
to your post-2017 separate category for
general income. Alternatively, you can
allocate those foreign taxes to the
post-2017 separate category for foreign
branch category income to the extent
the unused foreign taxes would have
been allocated to your post-2017
separate category for foreign branch
category income, and would have been
unused foreign taxes with respect to
that separate category, if that separate
category had applied in the year or
years the unused foreign taxes arose. A
simplified safe harbor is also available
for determining the portion of the
unused foreign taxes that may be
allocated to the post-2017 separate
category for foreign branch category
income. See Regulations section
1.904-2(j)(iiii) for further details.

TIP income is reported to you in

U.S. dollars on a Form
1099-DIV, 1099-INT, or similar
statement, you don't have to convert the
amount shown into foreign currency.
This rule applies whether or not you can
make the election to claim the foreign
tax credit without filing Form 1116 (as
explained earlier). Enter “1099 taxes” in
Part II, column (l), and complete
columns (q) through (u) for each foreign
country indicated in Part I.
Note. If you are taking a credit for
additional taxes paid or accrued as the
result of an audit by a foreign taxing
authority or you are filing an amended
return reflecting a foreign tax refund,
attach a statement to Form 1116
identifying these taxes.

Part III—Figuring the
Credit
Line 10

Enter the unused foreign taxes in the
separate category from another tax year
that are eligible to be carried forward to
or back to 2019.
You can carry back 1 year and then
forward 10 years any foreign tax you
paid or accrued to any foreign country
or U.S. possession (reduced as
described under Line 12, later) on
income in a separate category that is
more than the limitation. First, apply the
excess to the earliest year to which it
may be carried. Then, apply it to the
next earliest year, and so on. The
carryback-carryforward period can't be
extended even if you are unable to take
a credit in one of the intervening years.
Special rules apply to the carryback
and carryforward of foreign taxes paid
or accrued on foreign oil and gas
income. In addition, a special transition
rule applies to the carryforward of
pre-2009 unused oil and gas extraction
taxes to years beginning after 2008.
See section 907(f).
No foreign tax carryovers are allowed
for foreign taxes paid or accrued on
section 951A category income. Leave
line 10 of Form 1116 blank if you
complete a Form 1116 for section 951A
category income as carrybacks and
carryovers are not allowed for this
category of income.
File Form 1040-X or other amended
return and a revised Form 1116 for the
-17-

Restrictions. You can't carry a credit
back to a tax year for which you claimed
a deduction, rather than a credit, for
foreign taxes paid or accrued. However,
you must reduce the amount of any
carryback or carryforward by the
amount that you would have used had
you chosen to claim a credit rather than
a deduction in that year.
If, for any year, you elected to claim
the foreign tax credit without filing Form
1116 (as explained earlier), the
following rules apply.
• You can't carry over unused foreign
taxes paid or accrued in a year to which
the election doesn't apply to or from any
year for which you made the election.
• The carryback-carryforward period
isn't extended if you are unable to use a
carryback or carryforward because you
made the election.
• Don't reduce the carryback or
carryforward by the amount you would
have used in the election year if you
hadn't made the election.
More information. See Pub. 514 for
more information on carryback and
carryforward provisions, including
examples.

Line 12

You may have to reduce the foreign
taxes you paid or accrued by the
following items.
• Taxes on income excluded on
Form 2555. Reduce taxes paid or
accrued by the taxes allocable to any
foreign earned income excluded on

Form 2555. If only part of your foreign
earned income is excluded, you must
determine the amount of tax allocable to
excluded income. To do so, multiply the
foreign taxes paid or accrued on foreign
earned income received or accrued
during the tax year by the following
fraction.
Numerator: Foreign earned income
and housing amounts you excluded for
the tax year minus otherwise deductible
expenses (not including the foreign
housing deduction) allocable to that
income.
Denominator: Your total foreign
earned income received or accrued
during the tax year minus deductible
expenses (including the foreign housing
deduction) allocable to that income.
However, if the foreign jurisdiction
charges tax on foreign earned income
and some other income (for example,
earned income from U.S. sources or a
type of income not subject to U.S. tax)
and the taxes on the other income can't
be segregated, the denominator is the
total amount of income subject to
foreign tax minus deductible expenses
allocable to that income.
• Taxes on income from Puerto Rico
exempt from U.S. tax. The reduction
applies if you have income from Puerto
Rican sources that isn't taxable on your
U.S. tax return. To figure the credit,
reduce your foreign taxes paid or
accrued by the taxes allocable to the
exempt income. See Pub. 570 for more
information.
• Taxes on income from American
Samoa excluded on Form 4563. If
you are a bona fide resident of
American Samoa, reduce taxes paid or
accrued by any taxes attributable to
income from sources in American
Samoa excluded on Form 4563. For
more information, see Pub. 570.
• Taxes on combined foreign oil
and gas income. Reduce taxes paid or
accrued by a portion of taxes imposed
on combined foreign oil and gas
income. The amount of the reduction is
the amount by which your foreign oil and
gas taxes exceed the amount of your
combined foreign oil and gas income for
the year multiplied by a fraction equal to
your pre-credit U.S. tax liability (for
example, the total of Form 1040 or
1040-SR, line 12a, and Schedule 2
(Form 1040 or 1040-SR), Part I, line 2)
divided by your worldwide taxable
income. You may be entitled to carry
over to other years taxes reduced under
this rule. See section 907(f).
Combined foreign oil and gas income is
the sum of foreign oil-related income
and foreign oil and gas extraction

income. Foreign oil and gas taxes are
the sum of foreign oil and gas extraction
taxes and foreign oil-related taxes.
• Taxes on foreign mineral income.
Reduce taxes paid or accrued on
mineral income from a foreign country
or U.S. possession if you took a
deduction for percentage depletion
under section 613 for any part of the
mineral income.
• Reduction for failure to file Form
5471. U.S. shareholders who control a
foreign corporation must file Form 5471,
Information Return of U.S. Persons With
Respect To Certain Foreign
Corporations. If you don't file Form 5471
and furnish all of the information
required by the due date of your tax
return, reduce by 10% all foreign taxes
that you otherwise may take into
account for the foreign tax credit. You
may have to make additional reductions
if the failure continues. See section
6038(c) and Regulations section
1.6038-2(k) for details and exceptions.
Note. The reduction in foreign taxes is
reduced by any dollar penalty imposed
under section 6038(b).

• Reduction for failure to file Form
8865. U.S. partners who control a
foreign partnership must file Form 8865,
Return of U.S. Persons With Respect to
Certain Foreign Partnerships. If you
don't file Form 8865 and furnish all of
the information required by the due date
of your tax return, reduce by 10% all
foreign taxes that you otherwise may
take into account for the foreign tax
credit. You may have to make additional
reductions if the failure continues. See
section 6038(c) and Regulations section
1.6038-3(k) for details and exceptions.
Note. The reduction in foreign taxes is
reduced by any dollar penalty imposed
under section 6038(b).

• Reduction of taxes or credit due
to international boycott operations.
In general, if you agree to participate in,
or cooperate with, an international
boycott, you must file Form 5713,
International Boycott Report, and attach
all supporting schedules. In addition,
you must reduce either the total taxes
available for credit or the credit
otherwise allowable by your foreign
taxes resulting from boycott activities. If
you can figure the taxes specifically
attributable to boycott operations, enter
the amount on line 12. If you can't figure
the amount of taxes specifically
attributable to boycott operations,
multiply the credit otherwise allowable
by the international boycott factor
-18-

(figured on Schedule A (Form 5713),
International Boycott Factor) and enter
the result on Form 1116, line 32. Attach
a statement to Form 1116 showing in
detail how you figured the reduction.
For more information, see Form 5713
and its instructions.

• Taxes related to a foreign tax
credit splitting event. Reduce taxes
paid or accrued by any taxes paid or
accrued with respect to a foreign tax
credit splitting event. If there is a foreign
tax credit splitting event, you may not
take the foreign tax into account before
the tax year in which you take the
income into account. There is a foreign
tax credit splitting event with respect to
a foreign income tax if the related
income is (or will be) taken into account
by a covered person. A covered person
is either of the following.
1. An entity in which you hold,
directly or indirectly, at least a 10%
ownership interest (determined by vote
or value).
2. Any person who is related to you.
For a list of related persons, see
Nondeductible Loss in chapter 2 of Pub.
544.
A covered asset acquisition under
section 901(m) isn't a foreign tax credit
splitting event under section 909.
For more information, see section
909 and the regulations under that
section.

Line 13

You must adjust the foreign taxes paid
or accrued if they relate to passive
income that is treated as other category
income because it is high taxed. On
your Form 1116 for passive category
income, enter as a negative number (in
parentheses) the amount of your foreign
taxes that relate to that income. On your
Form 1116 for the other category
income, enter as a positive number the
amount of foreign taxes that relate to
that income.

Line 15

The amount on line 15 is your taxable
income (or loss), before adjustments,
from sources outside the United States.
If the amount on line 15 is zero or a loss,
you generally have no foreign tax credit
for the category of income checked
above Part I of this Form 1116.
However, you must complete line 16
and continue with the form even if
line 15 is zero or a loss.

Instructions for Form 1116 (2019)

Line 16

You are required to increase or
decrease the amount on line 15 by the
following adjustments. The adjustments
must be made in the order listed. If you
have more than one adjustment, enter
the net adjustment on line 16 and attach
a detailed statement showing your
computation. See Pub. 514 for more
details on each of these adjustments.
The adjustments are as follows.

1. Adjustment for disallowed business loss under section 461(l).
Increase the amount on line 15 by the
amount of any business loss that is
disallowed under section 461(l) to the
extent it is attributable to the separate
category of income of the applicable
Form 1116. For purposes of
adjustments 2–6 described below, any
reference to an amount on line 15 shall
mean the amount on line 15 after taking
into account this adjustment for
disallowed business loss.
2. Allocation of foreign losses. If you
have a loss on line 15 of one Form 1116
and you have income on line 15 of one
or more other Forms 1116, you must
reduce the foreign income by a pro rata
share of the loss before you use any
remaining loss to reduce U.S. source
income.
If the loss reduces foreign source
income, you must create, or increase
the balance of, a separate limitation loss
account and you must recharacterize
the income you receive in the loss
category in later years. See under 5.
Recapture of separate limitation loss
accounts, later. In situations where the
loss to be allocated exceeds foreign
income in other categories:
• The excess reduces U.S. source
income (as modified under Capital
losses next);
• You must create, or increase the
balance in, an overall foreign loss
account; and
• For later years, you must follow the
rules described under 4. Recapture of
prior year overall foreign loss accounts,
later.
If the loss in one category reduces
foreign source income in another
category and that second category has
a separate limitation loss account with
respect to the first category, then the
two offsetting separate limitation loss
account balances are netted for
purposes of determining the amount of
income in either category that is subject
to recharacterization under 5.
Recapture of separate limitation loss
accounts, later.
Instructions for Form 1116 (2019)

Capital losses. In determining your
U.S. source income, reduce the amount
of any capital losses from U.S. sources
by the amount you entered on line 4 of
Worksheet A or line 5 of the Line 2
Worksheet for Worksheet B. If you have
capital losses from U.S. sources and
you didn't use either Worksheet A or
Worksheet B, see Pub. 514 to
determine your U.S. source income.
Example. For 2019, you completed
three Forms 1116. The first had a loss
from general category income of $2,000
on line 15, the second had passive
category income of $4,000 on line 15,
and the third had income of $1,000 from
the certain income re-sourced by treaty
category on line 15. You must allocate
the $2,000 loss between the passive
category income and the certain income
re-sourced by treaty category in the
same proportion as each category's
income bears to the total foreign
income.
The amount of the loss that would
reduce passive category income would
be 80% ($4,000/$5,000) of the $2,000
loss or $1,600. Include the $1,600 (in
parentheses) on line 16 of the passive
category income Form 1116. Assuming
you have no other line 16 adjustments,
enter $2,400 ($4,000 − $1,600) on
line 17 of that form.
The amount of the loss that would
reduce the certain income re-sourced
by treaty would be 20% ($1,000/$5,000)
of the $2,000 loss or $400. Include the
$400 (in parentheses) on line 16 of the
certain income re-sourced by treaty
Form 1116. Assuming you have no
other line 16 adjustments, enter $600
($1,000 − $400) on line 17 of that form.
In this case, all of the $2,000 loss
was allocated between the foreign
source passive category income and
the certain income re-sourced by treaty
category, and no reduction was made to
U.S. source income.
If you receive general category
income in a later year, you must
recharacterize all or part of that income
as passive category income and certain
income re-sourced by treaty in that later
year. See the example under 5.
Recapture of separate limitation loss
accounts, later.
3. Allocation of U.S. losses. If you
have a net loss from U.S. sources,
proportionately allocate that loss among
the separate categories of your foreign
income. Reduce the income on line 15
(adjusted by any allocation of losses, as
described under 2. Allocation of foreign
losses in these line 16 instructions) by
-19-

including (in parentheses) on line 16 the
allocable portion of any U.S. loss. In
later years, you will be allowed to treat
part of your U.S. source income as
foreign source income.
A U.S. loss includes a rental loss on
property located in the United States. If
you have any qualified dividends or
capital gains (including capital gain
distributions) or losses for the tax year
and you are required to make any
adjustments to those amounts, as
explained under Foreign Qualified
Dividends and Capital Gains (Losses),
earlier, or in the instructions for line 18,
the amount of your U.S. loss is the
excess of:
a. The total of the amounts entered
on line 15 for each Form 1116 you are
filing, over
b. The amount entered on line 18 of
the Form 1116.
You allocate the net loss to a
separate category of income by
multiplying the net loss by a fraction.
The numerator of the fraction is the
foreign source income in a separate
category and the denominator is the
total foreign source income in all
separate categories.
4. Recapture of prior year overall
foreign loss accounts. If you had an
overall foreign loss in a prior year that
offset U.S. source income, a part of your
foreign income (in the same category as
the loss) is recharacterized as U.S.
source income in each following tax
year.
The part of your total foreign income
subject to recharacterization is the
lesser of the following.
a. The total amount of maximum
potential recapture in all overall foreign
loss accounts. The maximum potential
recapture in any account for a category
is the lesser of:
i. The current year taxable income
from foreign sources in that category
(the amount from line 15, less any
adjustment for allocation of losses, as
described earlier under 2. Allocation of
foreign losses and 3. Allocation of U.S.
losses for that category); or
ii. The balance in the overall foreign
loss account for that category.
b. 50% (or more, if you choose) of
your total taxable income from foreign
sources.
If the total foreign income subject to
recharacterization is the amount
described in (a), earlier, then for each
separate category the recapture amount
is the maximum potential recapture

amount for that category. If the total
foreign income subject to
recharacterization is the amount
described in (b) above, then for each
separate category the recapture amount
is computed by multiplying the total
recapture amount by the following
fraction:
Maximum potential recapture amount
for the overall foreign loss account in
the separate category
Total amount of maximum potential
recapture in all overall foreign loss
accounts

Reduce the amount on line 15 by
including (in parentheses) on line 16 the
amount of the recapture for the category
checked above Part I as determined
above. Be sure to attach your
computation. If you elect to recapture
more of an overall foreign loss than is
required ((b) above), show in your
computation the percentage of taxable
income recharacterized and the dollar
amount recharacterized.
Attach a statement to Form 1116
showing the balance in each separate
category overall foreign loss account.
See Regulations section 1.904(f)-1(b)
for more information.
Dispositions of certain property.
If you generated foreign source gain in
the same category as the overall foreign
loss on a disposition of property that
was used predominantly in a foreign
trade or business and that generated
foreign source income in the same
category as the overall foreign loss,
then the gain on the disposition may be
subject to recharacterization as U.S.
source income to the extent of 100% of
your foreign source taxable income.
This is true whether or not you would
otherwise recognize gain on the
disposition. See section 904(f)(3).
The above rule also generally applies
to a gain on the disposition of stock in a
controlled foreign corporation (CFC), if
you owned more than 50% (by vote or
value) of the stock right before you
disposed of it. See section 904(f)(3)(D)
for more information and exceptions.
Reduce line 15 by including (in
parentheses) on line 16 the smallest of:
a. The amount of the gain not
recaptured above;
b. The remaining amount of the
overall foreign loss not recaptured in
earlier years or in the current year; or
c. The amount from line 15 (less any
adjustment for allocation of losses, as

described under 2. Allocation of foreign
losses and under 3. Allocation of U.S.
losses in these line 16 instructions, and
any adjustment for any recapture
above).
See Pub. 514 if you disposed of
property described above and you
recognized foreign source gain in a
different category than the overall
foreign loss, you recognized U.S.
source gain, or you didn't recognize
gain.
5. Recapture of separate limitation
loss accounts. If, in a prior tax year,
you reduced your foreign taxable
income in the category checked above
Part I by a pro rata share of a loss from
another category, you must
recharacterize in 2019 all or part of any
income you receive in 2019 in that loss
category. If you have separate limitation
loss accounts in the loss category
relating to more than one other category
and the total balances in those loss
accounts exceed the income you
receive in 2019 in the loss category,
then income in the loss category is
recharacterized as income in those
other categories in proportion to the
balances of the separate limitation loss
accounts for those other categories.
You recharacterize the income by:
• Increasing the amount on line 15
(adjusted by any of the other
adjustments previously mentioned in
these line 16 instructions) of the Form
1116 for each of the separate
categories, other than the loss category,
previously reduced by including on
line 16 any recharacterized income; and
• Decreasing the amount on line 15
(adjusted by any of the other
adjustments previously mentioned in
these line 16 instructions) of the Form
1116 for the loss category by including
on line 16 the amount of recharacterized
income as a negative number (in
parentheses).
Example. Using the facts in the
Example under 2. Allocation of foreign
losses, earlier, in the next year (2020),
you have $5,000 of general category
income, $3,000 of passive category
income, and $500 of certain income
re-sourced by treaty. Because $1,600 of
the general category income loss was
used to reduce your passive category
income in 2019, $1,600 of your 2020
general category income must be
recharacterized as passive category
income. Similarly, $400 of the general
category income must be
recharacterized as certain income
re-sourced by treaty. On your 2020
Form 1116 for passive category income,
-20-

you would include $1,600 on line 16. On
your 2020 Form 1116 for certain income
re-sourced by treaty, you would include
$400 on line 16. On your 2020 Form
1116 for general category income, you
would include ($2,000) on line 16.
Recharacterizing income from a

TIP separate category doesn't result
in recharacterizing any tax.

6. Recapture of overall domestic
loss accounts. If you have an overall
domestic loss for any tax year beginning
after 2006, you must create, or increase
the balance in, an overall domestic loss
account and you must recharacterize a
portion of your U.S. source taxable
income as foreign source taxable
income in succeeding years for
purposes of the foreign tax credit.
The part that is treated as foreign
source taxable income for the tax year is
the smaller of:
• The total balance in your overall
domestic loss account in each separate
category (less amounts recaptured in
earlier years), or
• 50% of your U.S. source taxable
income for the tax year.
Under the Tax Cuts and Jobs
Act, section 904(g)(5) allows for
CAUTION an election to recapture up to
100% of any pre-2018 unused overall
domestic loss from a prior year, as
opposed to the 50% stated in the
previous paragraph. This election is
applicable for any taxable year
beginning after December 31, 2017,
and before January 1, 2028.

!

You must establish and maintain
separate overall domestic loss accounts
for each separate category in which
foreign source income is offset by the
domestic loss. The balance in each
overall domestic loss account is the
amount of the overall domestic loss
subject to recapture. The
recharacterized income is allocated
among and increases foreign source
income in separate categories in
proportion to the balances of the overall
domestic loss accounts for those
separate categories. You increase the
amount on line 15 (as adjusted by any
of the other adjustments previously
mentioned in these line 16 instructions)
of the Form 1116 for each of the
separate categories to which the
recharacterized income is allocated.
Overall domestic loss defined. In
a tax year in which you choose to claim
the foreign tax credit, the overall
domestic loss is the domestic loss for
that tax year to the extent that it offsets
Instructions for Form 1116 (2019)

Worksheet for Line 18 (Worldwide Qualified Dividends and Capital Gains)

!

Keep for Your Records

See the instructions for Line 18 below before starting this worksheet.

CAUTION

1. Individuals: Enter the amount from Form 1040 or 1040-SR, line 11b. If you are a nonresident
alien, enter the amount from Form 1040-NR, line 41.
Estates and trusts: Enter taxable income without the deduction for your exemption.
2. Enter your worldwide 28% gains (see instructions).

2.

3. Multiply line 2 by 0.2432.

3.

4. Enter your worldwide 25% gains (see instructions).

4.

5. Multiply line 4 by 0.3243.

5.

6. Enter your worldwide 20% gains and qualified dividends (see
instructions).

6.

7. Multiply line 6 by 0.4595.

7.

8. Enter your worldwide 15% gains and qualified dividends (see
instructions).

8.

9. Multiply line 8 by 0.5946.

9.

10. Enter your worldwide 0% gains and qualified dividends (see
instructions).

1.

10.

11. Add lines 3, 5, 7, 9, and 10.

11.

12. Subtract line 11 from line 1. Enter the result here and on Form 1116, line 18.

12.

foreign source taxable income for that
tax year or for any preceding tax year (in
which you choose to claim the foreign
tax credit) because of a carryback. If
you don't choose to claim the foreign tax
credit for a tax year, the overall
domestic loss is the domestic loss for
that tax year to the extent that it offsets
foreign source taxable income for any
preceding tax year (in which you chose
to claim the foreign tax credit) because
of a carryback.
Domestic loss. A domestic loss is
the amount by which the U.S. source
gross income for the tax year is
exceeded by the sum of the expenses,
losses, and other deductions properly
allocated or apportioned to that income.
Determine this amount by taking into
account any net operating loss carried
forward from a prior tax year (but not
any loss carried back). If you have any
capital gains or losses, take them into
account after any adjustments required
under Foreign Qualified Dividends and
Capital Gains (Losses), earlier.

Line 18

If you have qualified dividends or capital
gains, you may be required to make
adjustments to those qualified dividends

Instructions for Form 1116 (2019)

and gains before you take those
amounts into account on line 18.

Worksheet is less than line 24 of that
worksheet.

Individuals Who Completed a
Qualified Dividends and Capital
Gain Tax Worksheet

Adjustment exception. If you qualify
for the adjustment exception, you can
elect not to adjust your qualified
dividends and capital gains. You make
this election by not completing the
Worksheet for Line 18. You must make
this election if you have any foreign
qualified dividends or foreign capital
gains (or losses) and you chose not to
make any adjustments to those
amounts when you completed lines 1a
and 5. You can't make this election if
you have any foreign qualified dividends
or foreign capital gains (or losses) and
you made adjustments to those
amounts when you completed lines 1a
and 5. In this case, complete the
Worksheet for Line 18.
If you aren't required to complete the
Worksheet for Line 18 or you qualify for
the adjustment exception and elect not
to adjust your qualified dividends and
capital gains, enter on line 18 of Form
1116 your taxable income without the
deduction for your exemption (for
example, the amount from Form 1040 or
1040-SR, line 11b).

If you completed the Qualified
Dividends and Capital Gain Tax
Worksheet in the instructions for your
tax return, you must use the Worksheet
for Line 18 to figure the amount to enter
on line 18 if:
1. You file Form 1040 or 1040-SR
and
a. Line 7 of your Qualified Dividends
and Capital Gain Tax Worksheet is
greater than zero, and
b. Line 25 of your Qualified
Dividends and Capital Gain Tax
Worksheet is less than line 26 of that
worksheet; or
2. You file Form 1040-NR and
a. Line 5 of your Qualified Dividends
and Capital Gain Tax Worksheet is
greater than zero, and
b. Line 23 of your Qualified
Dividends and Capital Gain Tax

-21-

Adjustment exception for Form
1040 or 1040-SR filers. You qualify for
the adjustment exception if you meet
both of the following requirements.
1. Line 7 of the Qualified Dividends
and Capital Gain Tax Worksheet
doesn't exceed:
a. $321,450 if married filing jointly or
qualifying widow(er),
b. $160,725 if married filing
separately,
c. $160,725 if single, or
d. $160,700 if head of household.
2. The amount of your foreign
source net capital gain, plus the amount
of your foreign source qualified
dividends, is less than $20,000. For this
purpose, ignore any capital gain
distributions or qualified dividends you
elected to include on Form 4952,
line 4g.
See special rules if you are subject to
the alternative minimum tax.
Adjustment exception for Form
1040-NR filers. You qualify for the
adjustment exception if you meet both
of the following requirements.
1. Line 5 of the Qualified Dividends
and Capital Gain Tax Worksheet
doesn't exceed:
a. $321,450 if you checked filing
status box 6,
b. $160,725 if you checked filing
status box 5, or
c. $160,725 if you checked filing
status box 2.
2. The amount of your foreign
source net capital gain, plus the amount
of your foreign source qualified
dividends, is less than $20,000.
See special rules if you are subject to
the alternative minimum tax.
Your foreign source net capital

TIP gain is the excess of your

foreign source net long-term
capital gain over your foreign source net
short-term capital loss.
Completing the Worksheet for
Line 18. If you do need to complete the
Worksheet for Line 18, do the following.
Lines 2 through 5. Skip these lines.
Line 6. Enter the amount from:

• Line 22 of the Qualified Dividends

and Capital Gain Tax Worksheet in the
Form 1040 or 1040-SR instructions, or
• Line 20 of the Qualified Dividends
and Capital Gain Tax Worksheet in the
Form 1040-NR instructions.

Line 8. Enter the amount from:

• Line 19 of the Qualified Dividends

and Capital Gain Tax Worksheet in the
Form 1040 or 1040-SR instructions, or
• Line 17 of the Qualified Dividends
and Capital Gain Tax Worksheet in the
Form 1040-NR instructions.
Line 10. Enter the amount from:

• Line 11 of the Qualified Dividends

and Capital Gain Tax Worksheet in the
Form 1040 or 1040-SR instructions, or
• Line 9 of the Qualified Dividends and
Capital Gain Tax Worksheet in the Form
1040-NR instructions.
Complete all other lines as instructed
on the worksheet.

Estates and Trusts That
Completed a Qualified Dividends
Tax Worksheet or Schedule D
If you completed the Qualified
Dividends Tax Worksheet in the
Instructions for Form 1041 or you
completed Part V of Schedule D (Form
1041), you must use the Worksheet for
Line 18 to figure the amount to enter on
line 18 if:
1. You figured your tax using the
Qualified Dividends Tax Worksheet,
line 5 of that worksheet is greater than
zero, and line 21 of that worksheet is
less than line 22; or
2. You figured your tax using Part V
of Schedule D (Form 1041), line 27 of
Schedule D is greater than zero, and
line 43 of Schedule D is less than
line 44.
Adjustment exception. If you qualify
for the adjustment exception, you can
elect not to adjust your qualified
dividends and capital gains. You make
this election by not completing the
Worksheet for Line 18. You must make
this election if you have any foreign
qualified dividends or foreign capital
gains (or losses) and you chose not to
make any adjustments to those
amounts when you completed lines 1a
and 5. You can't make this election if
you have any foreign qualified dividends
or foreign capital gains (or losses) and
you made adjustments to those
amounts when you completed lines 1a
and 5. In this case, complete the
Worksheet for Line 18. See section
904(b) and the regulations issued under
that Code section to determine if you
qualify for the adjustment exception.

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Your foreign source net capital

TIP gain is the excess of your

foreign source net long-term
capital gain over your foreign source net
short-term capital loss.
If you aren't required to complete the
Worksheet for Line 18 or you qualify for
the adjustment exception and elect not
to adjust your qualified dividends and
capital gains, enter on line 18 of Form
1116 the estate's or trust's taxable
income without the deduction for its
exemption.
Completing the Worksheet for
Line 18. If you do need to complete the
Worksheet for Line 18, do the following.
Lines 2 through 5. Skip these lines.
Line 6. Enter the amount from
line 18 of the Qualified Dividends Tax
Worksheet or line 40 of Schedule D.
Line 8. Enter the amount from
line 14 of the Qualified Dividends Tax
Worksheet or line 36 of Schedule D.
Line 10. Enter the amount from
line 8 of the Qualified Dividends Tax
Worksheet or line 30 of Schedule D.
Complete all other lines as instructed
on the worksheet.

Taxpayers Who Completed the
Schedule D Tax Worksheet
If you figured your tax using the
Schedule D Tax Worksheet (in the
Schedule D (Form 1040 or 1040-SR)
instructions or in the Schedule D (Form
1041) instructions), you may have to
use the Worksheet for Line 18 to figure
the amount of tax to enter on line 18 of
Form 1116.
Form 1040 or 1040-SR or 1040-NR
filers. You must use the Worksheet for
Line 18 to figure the amount of tax to
enter on line 18 of Form 1116 if:
• Line 18 of the Schedule D Tax
Worksheet is greater than zero, and
• Line 45 of the Schedule D Tax
Worksheet is less than line 46.
Form 1041 filers. You must use the
Worksheet for Line 18 to figure the
amount of tax to enter on line 18 of
Form 1116 if:
• Line 17a of the Schedule D Tax
Worksheet is greater than zero, and
• Line 42 of the Schedule D Tax
Worksheet is less than line 43.
Adjustment exception. If you qualify
for the adjustment exception, you can
elect not to adjust your qualified
dividends and capital gains. You make
this election by not completing the
Instructions for Form 1116 (2019)

Worksheet for Line 18. You must make
this election if you have any foreign
qualified dividends or foreign capital
gains (or losses) and you chose not to
make any adjustments to those
amounts when you completed lines 1a
and 5. You can't make this election if
you have any foreign qualified dividends
or foreign capital gains (or losses) and
you made adjustments to those
amounts when you completed lines 1a
and 5. In this case, complete the
Worksheet for Line 18. You qualify for
the adjustment exception if:
1. The amount of your foreign
source qualified dividends, plus the
amount of your foreign source net
capital gain, is less than $20,000; and
2. Line 18 of the Schedule D Tax
Worksheet in the Schedule D (Form
1040 or 1040-SR) instructions is less
than or equal to:
a. $321,450 if married filing jointly or
qualifying widow(er),
b. $160,725 if married filing
separately,
c. $160,725 if single, or
d. $160,700 if head of household

Line 4. Enter the amount (if any)
from line 39 of the Schedule D Tax
Worksheet in the Schedule D (Form
1040 or 1040-SR) instructions or line 36
of the Schedule D Tax Worksheet in the
Schedule D (Form 1041) instructions.

(or, for trusts and estates, see section
904(b) and the regulations issued under
that Code section to determine if you
qualify for the adjustment exception).

If you are completing line 20 for
separate category g (lump-sum
distributions), enter the amount from
line 5 of the Worksheet for Lump-Sum
Distributions.

See special rules if you are subject to
the alternative minimum tax.
Your foreign source net capital

TIP gain is the excess of your

foreign source net long-term
capital gain over your foreign source net
short-term capital loss. Ignore any
foreign source qualified dividends or
capital gains that you elected to include
on Form 4952, line 4g, in determining
the amount of your foreign source
qualified dividends and net capital gain.
If you aren't required to complete the
Worksheet for Line 18 or you qualify for
the adjustment exception and elect not
to adjust your qualified dividends and
capital gains, enter on line 18 of Form
1116 your taxable income without the
deduction for your exemption (for
example, the amount from Form 1040 or
1040-SR, line 11b).
If you do need to complete the
Worksheet for Line 18, do the following.
Line 2. Enter the amount (if any)
from line 42 of the Schedule D Tax
Worksheet in the Schedule D (Form
1040 or 1040-SR) instructions or line 39
of the Schedule D Tax Worksheet in the
Schedule D (Form 1041) instructions.
Instructions for Form 1116 (2019)

Line 6. Enter the amount (if any)
from line 33 of the Schedule D Tax
Worksheet in the Schedule D (Form
1040 or 1040-SR) instructions or line 30
of the Schedule D Tax Worksheet in the
Schedule D (Form 1041) instructions.
Line 8. Enter the amount (if any)
from line 30 of the Schedule D Tax
Worksheet in the Schedule D (Form
1040 or 1040-SR) instructions or line 26
of the Schedule D Tax Worksheet in the
Schedule D (Form 1041) instructions.
Line 10. Enter the amount (if any)
from line 22 of the Schedule D Tax
Worksheet in the Schedule D (Form
1040 or 1040-SR) instructions or line 19
of the Schedule D Tax Worksheet in the
Schedule D (Form 1041) instructions.
Complete all other lines as instructed
on the worksheet.

Line 20

Don't complete line 20 for separate
category e (section 901(j) income),
discussed earlier.
For all other applicable categories,
complete line 20 as follows.
Individuals.
• Form 1040 or 1040-SR filers. Enter
the total of Form 1040 or 1040-SR,
line 12a, and Schedule 2 (Form 1040 or
1040-SR), Part I, line 2, less any tax
included on line 44 from Form 4972.
• Form 1040-NR filers. Enter the total
of lines 42 and 44 from Form 1040-NR,
less any tax included on line 42 from
Form 4972.
Estates and trusts.
• Form 1041 filers. Enter the amount
from Form 1041, Schedule G, line 1a.
• Form 990-T filers. Enter the total of
Form 990-T, lines 41, 42, and 44.
• Form 1040-NR filers. Enter the
amount from line 42 from Form
1040-NR, less any tax included on
line 42 from Form 4972.

Line 22

The maximum foreign tax credit you can
claim in the current year is generally
limited to the allocated amount of U.S.
-23-

tax imposed on the foreign income, or
the actual amount of foreign tax paid or
accrued on the foreign income (after
reductions required on line 12),
whichever is less. However, see Foreign
Taxes Eligible for a Credit, earlier, for
additional information.
If the amount on line 21 is smaller
than the amount on line 14, see
Pub. 514 for more information on
carryback and carryforward provisions,
including examples.

Part IV—Summary of
Credits From Separate
Parts III

Complete lines 23 through 29 in
Part IV only if you must complete more
than one Form 1116 because you have
more than one of the categories of
income listed above Part I.
Complete Part IV on only one Form
1116 (the one with the largest amount
entered on line 22) to summarize the
credits you figured on all of your Forms
1116. However, see Exception below.
Enter the credits from line 22 of all of
your Forms 1116 on lines 23 through 29
of the Form 1116 with the largest
amount entered on line 22 to summarize
your credits. File the other Forms 1116
as attachments.

Exception. If you completed a Form
1116 for category g (lump-sum
distributions) or e (section 901(j)
income), don't use Part IV of that Form
1116 as your summary, unless you are
filing both a Form 1116 for category g
and e but no other category.

Line 31

Enter the smaller of line 20 or line 30.

Note. Generally, line 30 will exceed
line 20 only if you have U.S. capital
gains or qualified dividends that are
subject to the capital gain rate
differential (figured in the Worksheet for
Line 18).
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 aren't 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.
The time needed to complete and file
this form 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:
Recordkeeping, 2 hr., 43 min.;
Learning about the law or the form, 1
hr., 1 min.; Preparing the form, 1 hr.,

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42 min.; Copying, assembling, and
sending the form to the IRS, 34 min.
If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form
simpler, we would be happy to hear
from you. You can write to the IRS at the
address listed in the instructions of the
tax return with which this form is filed.

Instructions for Form 1116 (2019)