8991 Instructions for Form 8991

Instructions for Form 8991

Department of the Treasury
Internal Revenue Service

(Rev. February 2020)

(Use with the December 2018 revision of Form 8991)
Tax on Base Erosion Payments of Taxpayers With Substantial Gross Receipts
Section references are to the Internal Revenue
Code unless otherwise noted.

Future Developments
For the latest information about
developments related to Form 8991, its
schedules, and its instructions, such as
legislation enacted or guidance published
after the form and instructions were
issued, go to IRS.gov/Form8991.

Background

The Tax Cuts and Jobs Act of 2017 (P.L.
115-97) added new section 59A, which
applies to large corporations that have the
ability to reduce U.S. tax liabilities by
making deductible payments to foreign
related parties. The Base Erosion and
Anti-Abuse Tax (BEAT) is generally levied
on certain large corporations that have
deductions paid or accrued to foreign
related parties that are greater than 3% of
their total deductions (2% in the case of
certain banks or registered securities
dealers), a determination referred to as
the base erosion percentage test. Large
corporations are those with gross receipts
of $500 million or more, as calculated
under the regulations of section 59A, a
determination referred to as the gross
receipts test. The BEAT operates as a
minimum tax, so a taxpayer is only subject
to additional tax under the BEAT if the
BEAT tax rate multiplied by the taxpayer's
modified taxable income exceeds the
taxpayer's regular tax liability adjusted for
certain credits.
On December 21, 2018, the
Department of the Treasury (“Treasury
Department”) and the IRS published
proposed regulations under sections 59A,
383, 1502, 6038A, and 6655 in the
Federal Register (83 FR 65956) (the
“2018 proposed regulations”). Taxpayers
may apply the 2018 proposed regulations
in their entirety for all tax years ending on
or before December 6, 2019.
On December 6, 2019, the Treasury
Department and the IRS published final
regulations (the “final regulations”) under
sections 59A, 383, 1502, and 6038A, and
proposed regulations which propose other
regulations under sections 59A and 6031
(the “2019 proposed regulations”).

Feb 28, 2020

Reminders
Corrected Form 8991. If you file a Form
8991 that you later determine is
incomplete or incorrect, file a corrected
Form 8991 with an amended tax return,
using the amended return instructions for
the return with which you originally filed
Form 8991. Write “Corrected” at the top of
the form and attach a statement identifying
the changes.
Reporting requirements and penalties.
P.L. 115-97 also expanded the information
reporting requirements under section
6038A and increased the amount of the
penalty for failure to furnish information or
maintain records under section 6038A(d)
(1) and (2) from $10,000 to $25,000. See
Form 5472 and its instructions for further
details.

General Instructions
Purpose of Form

Use Form 8991 to determine an
applicable taxpayer’s base erosion
minimum tax amount for the year.

Use Schedule A to determine the
amount of base erosion payments and
base erosion tax benefits for purposes of:
• Determining the applicable taxpayer’s
base erosion percentage, and
• Determining the applicable taxpayer’s
modified taxable income.
Use Schedule B to determine the
credits that reduce regular tax liability in
computing the base erosion minimum tax
amount.

Definitions
Applicable taxpayer. An applicable
taxpayer is, with respect to any tax year, a
taxpayer which meets all of the following
criteria.
• The taxpayer is a corporation other than
a regulated investment company (RIC), a
real estate investment trust (REIT), or an S
corporation.
• The taxpayer has average annual gross
receipts for the 3-tax-year period ending
with the preceding tax year that are at
least $500 million (the “gross receipts
test”).
• The taxpayer has a base erosion
percentage for the tax year of 3% or
higher; 2% or higher for a taxpayer who is
a member of an affiliated group which
Cat. No. 71330Z

includes a bank or a registered securities
dealer as defined in Regulations section
1.59A-1(b)(15) (the “base erosion
percentage test”).
See Regulations section 1.59A-2 for
more information on how to determine
whether a taxpayer is an applicable
taxpayer.
Base erosion minimum tax amount.
The base erosion minimum tax amount for
the tax year is the excess of 10% (5% in
the case of a tax year beginning in 2018)
of the modified taxable income of the
applicable taxpayer for the tax year over
the applicable taxpayer’s regular tax
liability under section 26(b), reduced (but
not below zero) by the excess, if any, of:
1. The credits allowed under
chapter 1 of subtile A of the Code (the
“chapter 1”) against the applicable
taxpayer’s regular tax liability over
2. The sum of:
a. The credit allowed under section 38
which is properly allocable to the research
credit determined under section 41(a),
plus
b. The portion of the applicable
section 38 credits not in excess of 80% of
the lesser of the amount of the applicable
section 38 credits or the base erosion
minimum tax amount determined without
taking the applicable section 38 credits
into account, plus
c. Any credits allowed under sections
33, 37, and 53.
If the applicable taxpayer is a member
of an affiliated group under section
1504(a)(1) which includes a bank (as
defined in section 581) or a registered
securities dealer under section 15(a) of
the Securities Exchange Act of 1934, the
tax rate in effect for the tax year for the
base erosion minimum tax amount is
increased by an additional 1%.
See Regulations section 1.59A-5 for
more information on how to compute the
base erosion minimum tax amount.
Base erosion payment. A base erosion
payment is any amount paid or accrued by
an applicable taxpayer to a foreign person
(as defined in Regulations section
1.59A-1(b)(10)) that is a related party (as
defined in Regulations section 1.59A-1(b)
(12)) with respect to which a deduction is
allowable under chapter 1.

The amount paid or accrued, and the
identity of the payor and recipient of the
amount paid or accrued, is determined
under general tax principles.
An amount paid or accrued includes an
amount paid or accrued using any form of
consideration, such as cash, property,
stock, a partnership interest, or the
assumption of a liability.
Base erosion payments are generally
determined on a gross basis, unless the
Code or regulations expressly permit
netting of amounts in determining
payments.
For purposes of determining whether a
taxpayer has made a base erosion
payment, the taxpayer must treat a
payment to or from a partnership as made
to or from each partner. See Regulations
section 1.59A-7 for more information on
how the BEAT applies to partnerships.
Base erosion payments also include
the following.
• Amounts paid or accrued by an
applicable taxpayer to a foreign related
person in connection with the acquisition
of depreciable or amortizable property.
• Premiums or other consideration paid
or accrued by an applicable taxpayer to a
foreign related person for reinsurance
payments which are taken into account
under section 803(a)(1)(B) or section
832(b)(4)(A).
• Any amount paid or accrued by an
applicable taxpayer to a foreign related
person that is a surrogate foreign
corporation (if such foreign person first
became a surrogate foreign corporation
after November 9, 2017), or a foreign
person which is a member of the same
expanded affiliated group as the surrogate
foreign corporation (if such foreign person
first became a surrogate foreign
corporation after November 9, 2017), or a
foreign person which is a member of the
same expanded affiliated group as the
surrogate foreign corporation (collectively,
“expatriated entities”), which results in a
reduction to gross receipts. See section
59A(d)(4) for more information.
See Regulations section 1.59A-3 for
more information on the definition of a
base erosion payment.
Base erosion payments do not include
the following types of payments made to a
foreign person that is a related party.
• Amounts resulting in a reduction to
determine gross income, such as cost of
goods sold.
• Amounts paid or accrued for services if
such services are services that meet the
requirements for eligibility for use of the
services cost method under section 482
(determined without regard to the
requirement that the services not
contribute significantly to the fundamental
risks of business success or failure), but
only to the extent of the total services cost

of those services. The mark-up
component paid or accrued to a foreign
related party is a base erosion payment.
• Qualified derivative payments. A
qualified derivative payment is a payment
made by an applicable taxpayer pursuant
to a derivative with respect to which the
applicable taxpayer (a) recognizes gain or
loss as if the derivative were sold for its
fair market value on the last business day
of the tax year and any additional times
required by the taxpayer’s method of
accounting, (b) treats the recognized gain
or loss as ordinary, and (c) treats the
character of all payments made with
respect to the derivative as ordinary. A
qualified derivative payment will not be
excluded from being characterized as a
base erosion payment if the payment is
properly allocable to a non-derivative
component of a contract or if the payment
would be treated as a base erosion
payment if it were not made pursuant to a
derivative, such as an interest, royalty, or
services payment.
• Effectively connected income and
income taken into account in taxable
income under an income tax treaty.
1. Amounts paid or accrued that are
subject to U.S. federal income taxation as
income that is effectively connected to a
U.S. trade or business if the taxpayer
receives a withholding certificate with
respect to the income.
2. If the foreign related party
determines its taxable income applying
the business profits provisions of an
income tax treaty, amounts paid or
accrued to the foreign related party that
are taken into account in determining its
taxable income.
• Exchange loss from section 988
transactions.
• Certain deductions for amounts paid or
accrued with respect to certain total loss
absorbing capacity securities (TLAC)
securities and certain foreign TLAC
securities.
• Amounts transferred in connection with
certain specified nonrecognition
transactions. See Regulations section
1.59A-3(b)(3)(viii) for more information.
• Amounts paid by the taxpayer to a
regulated foreign insurance company
under a reinsurance contract for
reinsurance losses incurred or claims
payments that are ultimately paid by the
foreign insurance company to an
unrelated party.
See Regulations section 1.59A-3(b)(3)
(i)–(ix) for further information on whether a
payment or accrual is not a base erosion
payment.
Related party. A related party is:
• Any 25% owner of the applicable
taxpayer (as defined in Regulations
section 1.59A-1(b)(17)(ii)(A)),

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• Any person who is related (within the
meaning of section 267(b) or 707(b)(1)) to
the applicable taxpayer or any 25% owner
of the applicable taxpayer, or
• Any other person who is related to the
applicable taxpayer within the meaning of
Regulations section 1.59A-1(b)(17)(iii).
Section 318, with certain modifications,
applies in determining whether a person is
a related party. See Regulations section
1.59A-1(b)(17)(iii) for additional rules
relating to the modification of section 318
for use in determining a person’s
relatedness.
Base erosion tax benefit. Generally, a
base erosion tax benefit is any deduction
that is allowed under chapter 1 for the tax
year for any base erosion payment. Base
erosion tax benefits also include any
deductions allowed for the tax year for
depreciation or amortization with respect
to the property acquired with a base
erosion payment (that are paid or accrued
in tax years beginning after 2017). Base
erosion tax benefits also include certain
reductions in the gross amount of
premiums and other consideration on
insurance and annuity contracts, or any
deduction from the amount of gross
premiums written on insurance contracts
during the tax year for premiums paid for
reinsurance, and payments to expatriated
entities (as defined under Base erosion
payment, earlier) that cause a reduction in
gross receipts in computing gross income
of the taxpayer for the tax year. See
Regulations section 1.59A-3(c)(3) for
more information about base erosion tax
benefits.
See the instructions for Schedule A for
special rules applicable in determining the
amount of the base erosion tax benefit
when taxes have been imposed by section
871 or 881 and withheld under section
1441 or 1442 on a base erosion payment;
or when the taxpayer has made an interest
payment that gives rise to a base erosion
tax benefit and section 163(j) applies for
the tax year.
Base erosion percentage. The base
erosion percentage is the percentage
determined by dividing:
1. The aggregate amount of base
erosion tax benefits of the taxpayer for the
tax year by
2. The aggregate amount of the
taxpayer’s denominator for the tax year.
The aggregate amount of the applicable
taxpayer’s denominator includes allowed
deductions and also includes the
taxpayer’s base erosion tax benefits but
excludes the following deductions.
a. Any deduction allowed under
sections 172, 245A, or 250.
b. Any deduction for amounts paid or
accrued for services to which the
exception under Regulations section
Instructions for Form 8991 (Rev. 2-2020)

1.59A-3(b)(3)(i) for the section 482
services cost method applies.
c. Any deduction for qualified
derivative payments which are not treated
as base erosion payments.
d. Exchange loss from section 988
transactions that is not a base erosion
payment as a result of the exception under
Regulations section 1.59A-3(b)(3)(iv).
e. Any deduction for amounts paid or
accrued to foreign related parties with
respect to TLAC securities and foreign
TLAC securities that are not treated as
base erosion payments.
f. Any reinsurance losses incurred or
claims payments that are not treated as
base erosion payments.
g. Any deduction not allowed in
determining taxable income.
See Regulations section 1.59A-2(e)(3)
for further information on how to compute
the base erosion percentage.
Modified taxable income. Modified
taxable income is the taxpayer’s taxable
income plus any base erosion tax benefit
with respect to any base erosion payment
and the base erosion percentage of any
net operating loss deduction allowed
under section 172 for the tax year. See
Regulations section 1.59A-4(b) for further
information on the computation of
modified taxable income.
Applicable section 38 credits.
Applicable section 38 credits are the
credits allowed under section 38 for the
tax year that are properly allocable to:
• The low-income housing credit
determined under section 42(a);
• The renewable electricity production
credit determined under section 45(a);
and
• The investment credit determined
under section 46, but only to the extent
properly allocable to the energy credit
determined under section 48.
See also the instructions for
Schedule B, later.
Aggregation rules. When applying the
gross receipts test and base erosion
percentage test, a taxpayer that is a
member of an aggregate group
determines its gross receipts and base
erosion percentage as if it were one
person, on the basis of its aggregate
group. A taxpayer is a member of an
aggregate group if it belongs to a
controlled group of corporations. The term
“controlled group of corporations” has the
meaning given by section 1563(a) except
that:
1. “More than 50%” is substituted for
“at least 80%” each place it appears in
section 1563(a), and
2. The determination of the controlled
group of corporations is made without
Instructions for Form 8991 (Rev. 2-2020)

regard to sections 1563(a)(4) and (e)(3)
(C).
Foreign corporations are excluded from
an aggregate group except to the extent
the foreign corporation has income
effectively connected with the conduct of a
trade or business in the United States or
income taken into account in determining
net taxable income using a treaty.
An aggregate group is determined for
each taxpayer. A taxpayer that is a
member of an aggregate group
determines its gross receipts and base
erosion percentage of the aggregate
group by taking into account the gross
receipts, base erosion payments, base
erosion tax benefits, and deductions of the
members of the aggregate group for the
tax years that end with or within the
taxpayer's tax year.
See Regulations section 1.59A-2(c) for
further information on how to apply the
aggregation rules.

Who Must File

Any corporation, other than a RIC, a REIT,
or an S corporation, that has gross
receipts of at least $500 million in 1 or
more of the 3 preceding tax years ending
with the preceding tax year, must file Form
8991.
See Form 8991, Part I, lines 1a through
1g, and Specific Instructions, later, to
determine whether the corporation has
gross receipts of at least $500 million in 1
or more of the 3 preceding tax years.
See also questions/items and related
instructions in the following forms.
• Question 22, Schedule K, Form 1120.
• Item DD, Form 1120-F.
• Question 14, Schedule M, Form
1120-L.
• Question 15, Schedule I, Form
1120-PC.
• Question 16, Schedule K, Form
1120-C.

When To File

Attach Form 8991 to your income tax
return (or, if applicable, exempt
organization business income tax return)
and file by the due date (including
extensions) for that return.

Specific Instructions
Note. Complete every applicable entry
space on Form 8991. Do not enter “See
Attached” or “Available Upon Request”
instead of completing the entry spaces. If
more space is needed on the forms or
schedules, attach separate sheets using
the same size and format as the printed
forms.
If there are supporting statements and
attachments, arrange them in the same
order as the schedules or forms they
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support and attach them last. Show the
totals on the printed forms. Enter the filer’s
name and EIN on each supporting
statement or attachment.

Part I—Applicable
Taxpayer
Average Annual Gross
Receipts for the 3-Tax-Year
Period Ending With the
Preceding Tax Year

A taxpayer that falls within the definition of
Who Must File, earlier, and is filing Form
8991 should complete lines 1a through 1g
to determine your average annual gross
receipts for the 3-tax-year period ending
with the preceding tax year.

Line 1a. Enter in column (a) your gross
receipts for the first preceding tax year.
Enter in column (b) your gross receipts for
the second preceding tax year. Enter in
column (c) your gross receipts for the third
preceding tax year.
Only include the gross receipts of the
filer on line 1a. Do not include on this line
the gross receipts of all other persons
treated as 1 person under the aggregation
rules of Regulations section 1.59A-2(c)
which should be reported on line 1c. See
the instructions for line 1c below.
For purposes of determining gross
receipts of a filer, a foreign person’s gross
receipts are included only when such
gross receipts are taken into account
when determining the foreign person’s
income effectively connected with a U.S.
trade or business (“ECI”).
Line 1b. Enter in column (a) gross
receipts from partnerships for the first
preceding tax year. Enter in column (b)
gross receipts from partnerships for the
second preceding tax year. Enter in
column (c) gross receipts from
partnerships for the third preceding tax
year.
A filer may report gross receipts from
Form 1065 (Sch K-1), box 20, Partner's
Share of Income, Deductions, Credits,
etc., received from partnerships in which
the applicable taxpayer holds partnership
interests.
Line 1c. Enter in column (a) gross
receipts of all other persons treated as 1
person under the aggregation rules of
Regulations section 1.59A-2(c) (the
“aggregate gross receipts”) for the first
preceding tax year. Enter in column (b) the
aggregate gross receipts for the second
preceding tax year. Enter in column (c) the
aggregate gross receipts for the third
preceding tax year. Do not include on
line 1c gross receipts that have already
been included on line 1a.

Line 1g. If you check “No” on line 1g, you
are not subject to the section 59A tax on
base erosion payments of taxpayers with
substantial gross receipts. Do not
complete the remaining lines. Attach Form
8991 to your tax return.

Base Erosion Percentage for
the Tax Year

Complete lines 2a through 2l to determine
your base erosion percentage for the tax
year.

Line 2b. Enter the aggregate amount of
deductions allowed under chapter 1
(sections 1 through 1400) for the tax year.
The amount entered should be the
aggregate deductions allowed to all
persons that are treated as 1 person under
the aggregation rules.
Line 2c. Do not make an entry on this
line.
Line 2d. For reinsurance payments paid
or accrued that are base erosion
payments described in Regulations
section 1.59A-3(b)(1)(iii), enter the
aggregate amount of:
• Any reduction under section 803(a)(1)
(B) in the gross amount of premiums and
other consideration on insurance and
annuity contracts for premiums and other
consideration arising out of indemnity
insurance, and
• Any deduction under section 832(b)(4)
(A) from the amount of gross premiums
written on insurance contracts during the
tax year for premiums paid for
reinsurance.
Line 2e. Enter the aggregate amount
paid or accrued with respect to expatriated
entities that results in a reduction of the
gross receipts of the applicable taxpayer.
Line 2g. Enter the amount from
Schedule A, line 5b.
Line 2h. Enter the amount from
Schedule A, line 9b.
Line 2i. Complete Worksheet A and
attach to your tax return. Enter the amount
from Worksheet A, Part II, line 9. This
amount includes:
• Waived deductions under proposed
Regulations section 1.59A-3(c)(6)(i);
• Deductions allowed under sections
172, 245A, and 250;
• Deductions for exchange losses from
section 988 transactions described in
Regulations section 1.59A-2(e)(3)(ii)(D);
• Deductions for TLAC securities and
foreign TLAC securities described in
Regulations section 1.59A-2(e)(3)(ii)(E);
• Reinsurance losses incurred and
claims payments described in Regulations
section 1.59A-2(e)(3)(ii)(F); and
• Deductions not allowed in determining
taxable income described in Regulations
section 1.59A-2(e)(3)(ii)(G).

If the taxpayer is electing to waive
certain deductions to be excluded in
computing the base erosion percentage
for the tax year, check the box on Part I of
Worksheet A indicating an election has
been made under Regulations section
1.59A-3(c)(6)(i).
Line 2m. If you check “No” for line 2m,
you are not subject to the tax on base
erosion payments of taxpayers with
substantial gross receipts. Do not
complete the remaining lines. Attach Form
8991 and the completed Schedule A to
your tax return.
An applicable taxpayer is subject to the
2% base erosion percentage threshold if it
is a member of an affiliated group (as
defined in section 1504(a)(1)) that
includes a bank (as defined in section
581) or a registered securities dealer
under section 15(a) of the Securities
Exchange Act of 1934.

Part II—Modified Taxable
Income
See Regulations section 1.59A-4 for
further details.

Line 3a. Enter the amount of taxable
income after any net operating loss and
special deductions.
If the current year reports a loss,
without any net operating loss carryovers,
the amount entered here may be less than
zero.
If the current year reports taxable
income and there is a net operating loss
carryover that would reduce taxable
income below zero, enter -0-. Do not enter
an amount less than zero.
Line 3b. Enter the amount of base
erosion tax benefits for the tax year with
respect to base erosion payments from
Schedule A, line 16.
Line 3c. Enter the amount of net
operating loss deduction to be added back
to taxable income for purposes of
determining modified taxable income. To
calculate this amount, first determine the
amount of net operating loss deduction
allowed under section 172 that does not
exceed taxable income before taking into
account the net operating loss deduction
for all applicable tax years. Second,
multiply this net operating loss deduction
by the base erosion percentage for the tax
year in which the net operating loss arose.
If the net operating loss deduction is
attributable to net operating losses that
arose in more than one tax year, multiply
the portion attributable to each tax year by
the base erosion percentage for that tax
year and determine the total amount by
adding the result from each tax year. For
any tax year beginning before 2018, the
base erosion percentage is zero.

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Line 3d. Combine the amounts on lines
3a through 3c.

Part III—Regular Tax
Liability Adjusted for
Purposes of Computing
Base Erosion Minimum
Tax Amount
Line 4a. Enter the amount of regular tax
liability (as defined in section 26(b)) of the
applicable taxpayer for the tax year.
Consolidated groups. Affiliated
groups of corporations filing consolidated
returns, please review any additional
information at IRS.gov/Form8991.

Part IV—Computation of
Base Erosion Minimum
Tax Amount
Line 5b. Enter the applicable tax rate for
the tax year. For tax years beginning
during 2018, the applicable rate is 5%,
without regard to section 15. For tax years
beginning and ending during 2019 through
2025, the applicable rate is 10%. For any
tax year that includes January 1, 2026, the
applicable rate is a blended rate (as
described in section 15) based on the
number of days in the tax year before
January 1 and the number of days in the
tax year on or after January 1.
The rates above are increased by 1% if
the applicable taxpayer is a member of an
affiliated group (as defined in section
1504(a)(1)) which includes either a bank
(as defined in section 581), or a registered
securities dealer under section 15(a) of
the Securities Exchange Act of 1934.
Line 5e. Subtract line 5d from line 5c. If
zero or less, enter “-0-.” This is your base
erosion minimum tax amount. For an
applicable taxpayer filing Form 1120,
enter this amount on Schedule J, line 3.
For an applicable taxpayer filing Form
1120-F, enter this amount on Section II,
Schedule J, line 3. For an applicable
taxpayer filing Form 1120-L, enter this
amount on Schedule K, line 3. For an
applicable taxpayer filing Form 1120-PC,
enter this amount on page 1, line 6.

Schedule A—Base Erosion
Payments and Base Erosion
Tax Benefits

Schedule A is required to be attached if a
corporation has average annual gross
receipts of $500 million or more for the
3-tax-year period ending with the
preceding tax year. This schedule requires
a taxpayer to report all amounts that are
base erosion payments as defined in
Regulations section 1.59A-3(b) and base
erosion tax benefits as defined in
Regulations section 1.59A-3(c). This
Instructions for Form 8991 (Rev. 2-2020)

Worksheet A

If the taxpayer elects to waive deductions in accordance with Proposed Regulations section 1.59A-3(c)(6)(i), check here and complete Part I . . . . . . . . . . . .
Part I
1a. Description of item or
1b. Date
property to which the deduction on which,
relates
or period in
which, the
waived
deduction
was paid or
accrued

1c. Provision
of Code and
regulations,
as applicable,
that allows
the deduction
for which this
election
relates

1d. Line
number on
applicable
tax
return
where
the
deduction
would be

1e. Name
of foreign
related party
that is or will
be the
recipient of
the payment
that generates
the deduction

1f. EIN
or TIN
(if applicable)
of foreign
related party

1g.
Country of
organization
of the foreign
related party

2. Amount of
3. Amount of
deduction
deduction in
claimed for the
column 2
tax year with
being waived
respect to the
for the tax
item or property
year with
respect to the
item or
property

4. Total deductions waived per Proposed Regulations section 1.59A-3(c)(6)(i). Add the amounts in column 3. Enter the result here and
on Part II, line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
Part II—Amounts excluded from the denominator of the base erosion percentage
1. Total deductions waived from Part I, line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2. Total deductions allowed under section 172

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.

3. Total deductions allowed under section 245A
4. Total deductions allowed under section 250

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.

5. Deductions for exchange losses from section 988 transactions described in Regulations section 1.59A-2(e)(3)(ii)(D)

. . . . . . . . . . . . . 5.

6. Deductions for TLAC securities and foreign TLAC securities described in Regulations section 1.59A-2(e)(3)(ii)(E) . . . . . . . . . . . . . . . 6.
7. Reinsurance losses incurred and claims payments described in Regulations section 1.59A-2(e)(3)(ii)(F)

. . . . . . . . . . . . . . . . . . . . . 7.

8. Deductions not allowed in determining taxable income described in Regulations section 1.59A-2(e)(3)(ii)(G) . . . . . . . . . . . . . . . . . . . 8.
9. Total exclusions from the denominator of the Base Erosion Percentage. Add lines 1 through 8. Enter the result here and on Form 8991,
Part I, line 2i . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
Part III—Other elections
1. If the taxpayer elects to use financial statements per Regulations section 1.59A-3(b)(4)(i)(D) for purposes of calculating interest expense allocable to a
foreign corporation's effectively connected income, check here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

schedule also requires a taxpayer to
report any amounts that qualify for certain
exceptions applicable to amounts that are
not treated as base erosion payments.
Instructions for Form 8991 (Rev. 2-2020)

For lines 3 through 11, complete
columns a-1, a-2, b-1, and b-2 for each
type of payment made by the taxpayer to a
foreign person which is a related party of
the taxpayer during the tax year. For each
-5-

type of payment reported on lines 3
through 11 of column a-1, check all
applicable boxes in columns c, d, and e to
indicate the type of related party who

received the base erosion payment from
the taxpayer.
Consolidated groups. Affiliated groups
of corporations filing consolidated returns,
please review any additional information
at IRS.gov/Form8991.
Columns a-1 and a-2. Columns a-1 and
a-2 are used to determine the base
erosion percentage as defined in
Regulations section 1.59A-2(e). Enter in
columns a-1 and a-2 the amount of
aggregate base erosion payments and
aggregate base erosion tax benefit,
respectively, that correspond to each type
of base erosion payments specified on
lines 3 through 11. The aggregate base
erosion tax benefit in column a-2, lines 3
through 11, should be an amount
determined before applying the exception
in Regulations section 1.59A-3(c)(3) (tax
benefits disregarded if tax withheld on
base erosion payment).
Aggregate base erosion payments
include the base erosion payments of all
persons treated as 1 person pursuant to
the aggregation rules (see the definition of
“aggregation rules” earlier in the General
Instructions). Similarly, aggregate base
erosion tax benefits include the base
erosion tax benefits of all persons treated
as 1 person pursuant to the aggregation
rules.
Columns b-1 and b-2. Columns b-1 and
b-2 are used to determine modified
taxable income as described in
Regulations section 1.59A-4. Enter in
columns b-1 and b-2 the amount of base
erosion payments and base erosion tax
benefit, respectively, that correspond to
the type of base erosion payments
specified in lines 3 through 11. Enter in
these columns the applicable taxpayer’s
base erosion payments and base erosion
tax benefit, without applying the
aggregation rules. The base erosion tax
benefit in column b-2, lines 3 through 11,
should be an amount determined before
applying the exception in Regulations
section 1.59A-3(c)(3) (tax benefits
disregarded if tax withheld on base
erosion payment).
Line 1 and line 2. These lines are
reserved and should not be used at this
time.
Line 3, columns a-1 and b-1. Enter the
amount paid or accrued to a foreign
person that is a related party in connection
with the acquisition or creation of
intangible property rights (patents,
copyrights, trademarks, trade secrets,
etc.) that is subject to the allowance for
depreciation (or amortization in lieu of
depreciation).
Line 3, columns a-2 and b-2. Enter the
amount of deductions allowed under
chapter 1 for the tax year for depreciation

(or amortization in lieu of depreciation)
with respect to intangible property rights
acquired in the current or prior years from
a foreign person that is a related party.
Line 4, columns a-1 and b-1. Enter the
amount paid or accrued to a foreign
person that is a related party for the use or
right to use tangible or intangible property
resulting in rents, royalties, and/or license
fees.
Line 4, columns a-2 and b-2. Enter the
amount of deductions allowed under
chapter 1 for the tax year for amounts paid
or accrued to a foreign person that is a
related party for the use or right to use
tangible or intangible property that results
in rents, royalties, and/or license fees.
Line 5a, columns a-1 and b-1. Enter the
amount paid or accrued to a foreign
person that is a related party as
compensation or consideration for
services, but excluding any amount that
falls within the exception in Regulations
section 1.59A-3(b)(3)(i). Generally, enter
amounts paid or accrued in excess of the
total services cost of the services eligible
for the services cost method exception (or
the mark-up component). Also enter
amounts paid or accrued for services
ineligible for the services cost method
exception.
Line 5a, columns a-2 and b-2. Enter the
amount of deductions allowed under
chapter 1 for the tax year for amounts paid
or accrued to a foreign person that is a
related party as compensation or
consideration for services, but excluding
any deduction for amounts paid or
accrued that fall within the exception in
Regulations section 1.59A-3(b)(3)(i).
Generally, enter amounts of deductions
allowed under chapter 1 for the tax year
for amounts paid or accrued in excess of
the total services cost of the services
eligible for the services cost method
exception (or the mark-up component).
Also enter amounts of deductions for
services ineligible for the services cost
method exception.
Line 5b. Enter the amount paid or
accrued to a foreign person that is a
related party as compensation or
consideration for services that are defined
under the exception in Regulations section
1.59A-3(b)(3)(i). Determine the amount of
compensation or consideration eligible for
this exception after applying the
aggregation rules.
Line 6, columns a-1 and b-1. Enter the
amount of all interest paid or accrued to a
foreign person that is a related party with
respect to which a deduction is allowable
in the tax year.
Line 6, columns a-2 and b-2. Enter the
amount of deductible interest expense
allowed under chapter 1 for the tax year
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with respect to amounts paid or accrued to
a foreign person that is a related party. For
purposes of completing line 6, column b-2,
any reduction in the amount of interest for
which a deduction is allowed for the tax
year under section 163(j) is treated as
allocable first to interest paid or accrued to
persons who are not related parties with
respect to the applicable taxpayer and
then to such related parties.
Line 7, columns a-1 and b-1. Enter the
amount paid or accrued to a foreign
person that is a related party for the
purchase of tangible personal property.
Line 7, columns a-2 and b-2. Enter the
amount of deductions allowed under
chapter 1 for the tax year for amounts paid
or accrued to a foreign person that is a
related party for the purchase of tangible
property.
Line 8, columns a-1 and b-1. Enter the
amount of any premiums or other
consideration paid or accrued to a foreign
person that is a related party for insurance
and reinsurance that are taken into
account under section 803(a)(1)(B)
(relating to return premiums and premiums
or other consideration arising out of
indemnity reinsurance that reduces life
insurance gross income) or section 832(b)
(4)(A) (relating to amounts deducted from
gross premiums written on insurance
contracts for return premiums and
premiums paid for reinsurance).
Line 8, columns a-2 and b-2. Enter the
amount of any reduction under section
803(a)(1)(B) in gross premiums and other
consideration on insurance and annuity
contracts for premiums and other
consideration arising out of indemnity
insurance paid to a foreign person that is a
related party, and the amount of any
deduction under section 832(b)(4)(A) from
the amount of gross premiums written on
insurance contracts during the tax year for
premiums paid to a foreign person that is a
related party for reinsurance.
Line 9a, columns a-1 and b-1. Enter the
amount paid or accrued to a foreign
person that is a related party with respect
to any derivative contract that is not a
qualified derivative payment as defined in
Regulations section 1.59A-6. Do not
include any amount paid that is a qualified
derivative payment.
Line 9a, columns a-2 and b-2. Enter the
amount of deductions allowed under
chapter 1 for the tax year for amounts paid
or accrued to a foreign person that is a
related party with respect to any payment
that is not a qualified derivative payment.
Do not include any deductions allowed
under chapter 1 for the tax year if the
deductible amount is a qualified derivative
payment.

Instructions for Form 8991 (Rev. 2-2020)

Line 9b. Enter the amount paid to a
foreign person that is a related party that is
a qualified derivative payment excepted
by Regulations section 1.59A-6(b).
Determine the amount of the qualified
derivative payments after applying the
aggregation rules. Generally, a qualified
derivative payment is any payment made
by the taxpayer pursuant to a derivative
contract provided that the taxpayer
recognizes gain or loss on the derivative
contract as if it were sold for its fair market
value on the last business day of the tax
year; treats the gain or loss as ordinary;
and treats the character of all other items
of income, deduction, gain, or loss with
respect to a payment pursuant to the
derivative as ordinary. A payment is not a
qualified derivative payment if the
payment would be treated as a base
erosion payment if it were not made
pursuant to a derivative (such as interest,
royalty, or services income). With respect
to a contract with both derivative and
non-derivative components, a payment is
not a qualified derivative payment if it is
properly allocable to the non-derivative
component.
A taxpayer meets the reporting
requirement of Regulations sections
1.59A-6(b)(2) and 1.6038A-2(b)(7)(ix) by
entering the amount on line 9b. For tax

Instructions for Form 8991 (Rev. 2-2020)

years beginning after June 7, 2021, a
taxpayer will also need to provide a
representation that all payments satisfy for
the requirements of Regulations section
1.59A-6(b)(2) to meet the reporting
requirement of Regulations sections
1.59A-6(b)(2) and 1.6038A-2(b)(7)(ix).
Line 10, columns a-1 and b-1. Enter the
amount paid or accrued to certain
expatriated entities that results in a
reduction of the gross receipts of the
taxpayer. This amount includes payments
to a surrogate foreign corporation that is a
related party, but only if the entity first
became a surrogate foreign corporation
after November 9, 2017. The amount also
includes payments to a foreign person that
is a member of the same expanded
affiliated group, as defined in section
7874(c)(1), as the surrogate foreign
corporation. A surrogate foreign
corporation is defined in section 7874(a)
(2)(B), but does not include a foreign
corporation that is treated as a domestic
corporation under section 7874(b).
Line 10, columns a-2 and b-2. Enter the
amount of the reduction to gross receipts
with respect to payments to expatriated
entities that were used to compute gross
income for the tax year.
Line 11, columns a-1 and b-1. Enter the
total amount of any other base erosion

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payments that were paid or accrued to a
foreign person that is a related party and
for which a deduction is allowable under
chapter 1. Only include those amounts
that have not otherwise been included in
Schedule A on lines 3 through 10.
Line 11, columns a-2 and b-2. Enter the
amount of deductions allowed under
chapter 1 for the tax year for other base
erosion payments paid or accrued to a
foreign person which is a related party.
Only include those amounts that have not
otherwise been included in Schedule A on
lines 3 through 10.
Attach a statement for line 11. For
amounts reported on line 11, attach a
statement describing the type and amount
of other payments, using the same column
headings as specified in Schedule A:
“Aggregate Base Erosion Payment,”
“Aggregate Base Erosion Tax Benefit,”
“Base Erosion Payment,” and “Base
Erosion Tax Benefit.” For each type of
payment, the attachment must identify the
relationship of the recipients consistent
with the categories and instructions for
columns c, d, and e of Schedule A.
Line 12. For columns a-1, a-2, b-1, and
b-2, add lines 3 through 11 and enter the
total amount.

Keep for Your Records

Worksheet for Schedule A, Line 13, Column a-2
Part I
A

B

C

D

E

Type of base erosion
payment

Amount of base erosion
payment

Treaty-reduced withholding
rate

Divide column C by 30% (0.30)
(round to four decimal places)

Multiply column B by column
D

%
%
%
%
%
%
Add the amounts in column E and enter the total on Part II, line 2, below
Part II
1. Enter the aggregate amount of base erosion tax benefits from Schedule A, columns b-2, of lines 3 through 11 on which tax is
imposed under section 871 or section 881, and with respect to which tax has been deducted and withheld under section
1441 or section 1442 at the 30% statutory withholding tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2. Total amount of base erosion tax pay benefits to which tax has been deducted and withheld at a reduced withholding tax
rate pursuant to a U.S. income tax treaty from Part I, column E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.

3. Add lines 1 and 2. Enter here and on Schedule A, line 13, column a-2

3.

Line 13, column a-2. Complete the
worksheet above to determine the portion
of base erosion tax benefits from column
a-2 of lines 3 through 11 that were subject
to tax withheld under section 871 or
section 881 to which tax has been
withheld under section 1441 or section
1442 and/or deducted and withheld at a
reduced withholding tax rate pursuant to a
U.S. income tax treaty.
Complete Part I of the worksheet for tax
that was withheld at a reduced withholding
rate pursuant to a U.S. income tax treaty.
Refer to the specific instructions below for

...................................

Worksheet for Schedule A, Line 15,
Column b-2 for completing columns A
through E.
Complete Part II of the worksheet for
tax that was withheld at the statutory rate
of 30% and the total amounts from Part I.
Enter the amount from line 3 of the
worksheet on Schedule A, line 13, column
a-2. Keep a copy of the completed
worksheet for your records.

3 through 11 on which tax is imposed
under section 871 or section 881, and with
respect to which tax has been deducted
and withheld under section 1441 or
section 1442 at a 30% rate.

Line 13, column b-2. Enter the
aggregate amount of base erosion tax
benefits from columns a-2 and b-2 of lines

Line 14, column a-2. Subtract line 13,
column a-2, from line 12, column a-2, and
enter the difference on line 14, column
a-2. Line 14, column a-2, is the total
amount of aggregate base erosion tax
benefits for the tax year that is used for
purposes of determining the taxpayer’s
base erosion percentage.

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Instructions for Form 8991 (Rev. 2-2020)

Keep for Your Records

Worksheet for Schedule A, Line 15, Column b-2
A

B

C

D

E

Type of base erosion payment

Amount of base erosion tax
benefit

Treaty-reduced withholding
rate

Divide Column C by 30%
(0.30) (round to four decimal
places)

Multiply Column B by Column D

%
%
%
%
%
Add the amounts in column E and enter the total on Schedule A, line 15, column b-2

Line 15, column b-2. Complete the
worksheet above to determine the portion
of the base erosion tax benefits from
column b-2 of lines 3 through 11 on which
tax is imposed under section 871 or
section 881, and with respect to which tax
has been deducted and withheld at a
reduced withholding rate (but not exempt
from tax) pursuant to a U.S. income tax
treaty. The amount to be entered on
line 15, column b-2, is the same proportion
of such base erosion tax benefits as the
reduced rate of tax specified by the
relevant treaty bears to the rate of tax
imposed without regard to the treaty. Keep
a copy of the completed worksheet for
your records.
Line 16, column b-2. Subtract the sum
of line 13, column b-2, and line 15, column
b-2, from line 12, column b-2, and enter
the amount on line 16, column b-2.
Line 16, column b-2, is the total amount of
base erosion tax benefits for the tax year
that is used for purposes of determining
the taxpayer’s modified taxable income.

Instructions for Worksheet
for Schedule A, Line 15,
Column b-2
General

Use a separate row for each type of base
erosion payment and each treaty-reduced
withholding tax rate to which the
corresponding base erosion tax benefit is
subject.
Do not include a base erosion tax
benefit that is subject to the 30% statutory
withholding tax rate or a base erosion tax
benefit that is exempt from tax pursuant to
relevant income tax treaty provisions.
Do not combine the base erosion tax
benefits that are subject to different
withholding rates. Do not enter any
blended withholding tax rates.
Column A. Enter the type of base erosion
payment that corresponds to the type of
base erosion payment in Schedule A.
Instructions for Form 8991 (Rev. 2-2020)

Column B. Enter the amount of base
erosion tax benefits that correspond to the
specific type of base erosion payment on
which tax is imposed under section 871 or
section 881, and with respect to which tax
is deducted and withheld at a reduced
withholding rate pursuant to a U.S. income
tax treaty.
Column C. Enter the treaty-reduced
withholding tax rate to which the base
erosion tax benefit is subject.
Column D. Divide the tax rate in column
C by 30% (0.30). Round to four decimal
places.
Column E. Multiply the amount in column
B by column D. The amount is the portion
of base erosion tax benefits with respect
to the specific type of base erosion
payment and the specific treaty-reduced
rate of withholding that is not taken into
account in computing modified taxable
income. Add the amounts in column E and
enter the total on Schedule A, line 15,
column b-2.

Schedule B—Credits Reducing
Regular Tax Liability in
Computing Base Erosion
Minimum Tax Amount (BEMTA)
Part I—Credits Allowed Against
Regular Tax
Line 1. You must enter the total credits
allowed against your regular tax liability in
the tax year, except for credits allowed
under sections 33, 37, and 53. Total
credits include the sum of all credits
shown on Form 1120 or other applicable
return.
Line 2. Enter the total amount of credit for
increasing research activities reported on
line 1c, “Increasing research activities
(Form 6765),” of all Parts III, Form 3800,
with box A, B, C, or D checked. This total
equals the available credit for increasing
research activities in the tax year.

-9-

Line 3. Enter only the portion of the
available credit for increasing research
activities which was included on Form
3800, Part II, line 38, and used against
regular tax liability. You must apply the
general rules and the ordering rules for
use of general business credits from the
Instructions for Form 3800. The
Instructions for Form 3800 provide that
credits reported on Form 3800 are treated
as used on a first-in, first-out basis by
offsetting the earliest earned credits first.
Therefore, the order in which the credits
are used in any tax year is:
• Carryforwards to that year, the earliest
ones first;
• The general business credit earned in
that year; and
• The carryback to that year.
If your general business credits exceed
your tax liability limit, the credits are used
in the order as they are listed in section
38(b). Although general business credits
are aggregated on Form 3800, you should
have a separate record of each credit.
Line 5. Section 59A(b)(1)(B)(ii)(II) limits
the allowable adjustment for applicable
section 38 credits to 80% of the lesser of
applicable section 38 credits or the
BEMTA computed without the adjustment
for applicable section 38 credits computed
in Part III.

Part II—Applicable Section 38
Credits
Line 8. Enter the total amount of credit
shown on line 1d, “Low-income housing
(Form 8586, Part I only),” and line 4d,
“Low-income housing (Form 8586, Part
II),” of all Parts III, Form 3800, with box A,
B, C, or D checked. This total equals the
available credit for low-income housing in
the tax year.
Line 9. Enter the total amount of section
45 credit shown on Form 3800, lines 1f
and 4e, “Renewable electricity, refined
coal, and Indian coal production (Form
8835),” of all Parts III, with box A, B, C, or

D checked (other than any amount
allocable to refined coal and Indian coal
production). This total equals the available
credit for renewable electricity production
in the tax year.

12a, 12b, 12c, 12f, 12i, 12l, 12o, 12r, 12t,
12u, 12v, 12w, 12x, 12y, 12z, and 12aa.
This total equals the available investment
credit properly allocable to the energy
credit in the tax year.

Line 10. Enter only the total amount of
investment credit allocable to the section
48 energy credit shown on line 4a,
“Investment (Form 3468, Part III)” of all
Parts III, Form 3800, with box A, B, C, or D
checked. The section 48 energy credit
portion of the amount in Part III, line 4a,
equals the sum of the amounts reported in
Form 3468, Part III, Energy credit, on lines

Line 11. Enter only the portion of the
available applicable credits which was
included on Form 3800, Part II, line 38,
and used against regular tax liability. This
represents the amount of applicable
credits allowed in the current year. Refer
to the ordering rules described in the
earlier instructions for Schedule B, line 3.

Part III–BEMTA Determined
Without Adjustment for Applicable
Section 38 Credits
Line 15. Subtract line 14 from line 13. If
zero or less, enter -0-.
Line 16. You must compute the BEMTA
without adjustment for applicable section
38 credits to allow computation of the
limitation of applicable section 38 credits
on lines 4 and 5 of Part I.

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United
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You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form
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The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden for business
taxpayers filing this form is approved under OMB control number 1545-0123 and is included in the estimates shown in the instructions
for their business income tax return.

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Instructions for Form 8991 (Rev. 2-2020)