1118 Schedule i Reduction of Foreign Oil and Gas Taxes

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Reduction of Foreign Oil and Gas Taxes

SCHEDULE I
(Form 1118)
(Rev. December 2021)
Department of the Treasury
Internal Revenue Service
Name of corporation

▶

For calendar year 20

▶ Attach to Form 1118.
Go to www.irs.gov/Form1118 for the latest information.

, or other tax year beginning

, 20

, and ending

, 20
Employer identification number

Use a separate Schedule I (Form 1118) for each applicable category of income (see instructions).
a Separate Category (Enter code—see instructions.) . . . . . . . . . . . . . . . . . . . .
b If code 901j is entered on line a, enter the country code for the sanctioned country (see instructions) . . .
c If one of the RBT codes is entered on line a, enter the country code for the treaty country (see instructions) .
Report all amounts in U.S. dollars.

Part I

OMB No. 1545-0123

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DRAFT AS OF
July 9, 2021
DO NOT FILE

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Combined Foreign Oil and Gas Income and Taxes
1(a). EIN or Reference ID number
(see instructions)*

A
B
C
D
E

Gross Foreign Oil and Gas Income From Sources Outside the United States and Its Possessions (see instructions)
4. Inclusions under
6. Total
3. Gross foreign oil
5. Other
sections 951(a)(1) and
(add columns 2
related income
951A
through 5)

1(b). Foreign country or U.S. possession
(enter two-letter code—use a separate
line for each) (see instructions)

2. Gross foreign oil and
gas extraction income

F
Totals (add lines A through F) . . . . . . . . . . .
* For section 863(b) income, use a single line (see instructions).

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Deductions
7. Allocable deductions

8. Apportioned
deductions

9. Total
(add columns 7 and 8)

10. Taxable income
(column 6 minus
column 9)

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

12. Deemed paid

13. Total
(add columns 11 and 12)

A
B
C
D
E
F
Totals

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

Cat. No. 10237L

Schedule I (Form 1118) (Rev. 12-2021)

Page 2

Schedule I (Form 1118) (Rev. 12-2021)

Part II
1
2
3
4

Combined foreign oil and gas income. (See the instructions for Part II, line 1, below.) . . . . .
Multiply line 1 by the highest rate of tax under section 11(b). (See the instructions for Part II, line 2, below.)
Total taxes (from Part I, column 13, “Totals” line) . . . . . . . . . . . . . . . . .
Reduction (subtract line 2 from line 3; if zero or less, enter -0-). Enter here and on Schedule G,
line B, of the corresponding Form 1118 . . . . . . . . . . . . . . . . . . . .

Part III
1
2
3

Reduction Under Section 907(a)

DRAFT AS OF
July 9, 2021
DO NOT FILE

Foreign Oil and Gas Taxes Available for Use in the Current Tax Year

Excess section 907(a) limitation. Subtract Schedule I, Part II, line 3, from line 2. If zero or less,
enter -0- and do not complete the remainder of Part III . . . . . . . . . . . . . . .
Enter the sum of any carryover of foreign oil and gas tax to the current year. Attach a schedule
showing the computation in detail . . . . . . . . . . . . . . . . . . . . . .
Enter the smaller of lines 1 and 2 here and include on Schedule B, Part II, line 5 . . . . . . .

General Instructions

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

Who Must File

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

Method of Reporting

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

Specific Instructions
Codes at top of page 1. On line a, enter the same separate category
code as that shown on the Form 1118 to which this Schedule I is
attached. If applicable, on line b or c, enter the same country code as
that shown on the Form 1118 to which this Schedule I is attached.

Part I
See section 907(c) and underlying regulations for rules on the
income to include in Part I.
Note: Do not include any dividend or interest income that is passive
income. See the Instructions for Form 1118 for the definition of
passive income.
Column 1(a). For information pertaining to the entry of EINs and
reference ID numbers, see Identifying Numbers in the separate
instructions for Form 1118. For section 863(b) income, leave column
1(a) blank.
Column 1(b). Enter the two-letter codes (from the list at
www.irs.gov/CountryCodes) of all foreign countries and U.S.
possessions within which income is sourced and/or to which taxes
were paid, accrued, or deemed paid. For section 863(b) income,
enter “863(b)” instead of a two-letter code.
Column 2. Enter gross income from sources outside the United
States and its possessions from the following.
• The extraction (by the corporation or any other person) of minerals
from oil or gas wells located outside the United States and its
possessions.
• The sale or exchange of assets used in the trade or business of
extracting minerals from oil or gas wells located outside the United
States and its possessions.
See section 907(c)(1).
Column 3. Enter gross income from sources outside the United
States and its possessions from the following.
• The processing of minerals extracted (by the corporation or any
other person) from oil or gas wells into their primary products.
• The transportation of such minerals or primary products.
• The distribution or sale of such minerals or primary products.

• The disposition of assets used in the trade or business described
in the three previous bulleted items.
• The performance of any other related service.
See section 907(c)(2).
Column 4. Enter amounts taxable under section 951(a) or 951A
(including section 78 gross-up) that are attributable to the controlled
foreign corporation’s combined foreign oil and gas income.
Column 5. Include the corporation’s distributive share of partnership
combined foreign oil and gas income. Include in column 5 interest
income paid by a foreign corporation to the extent the category of
income of such interest is determined under section 904(d)(3). Do
not include interest income paid by a foreign subsidiary out of
foreign oil and gas extraction income of the payor, even if it is not
passive income.
See section 907(c)(3).
Columns 7 and 8. Enter the deductions allocated and apportioned
to foreign oil and gas income in the separate category. See the
regulations under section 861.
Column 10. For each country, subtract column 9 from column 6
and enter the result in column 10. When totaling the column 10
amounts, note that a taxable loss from a foreign country offsets
taxable income from other countries.
Columns 11 and 12. Attach a schedule to show how the foreign
taxes paid, accrued, or deemed paid with respect to combined
foreign oil and gas income were figured.

Part II
Line 1. Enter the total from Part I, column 10, minus any recapture
described in section 907(c)(4).
Line 2. At the time this schedule went to print, the highest rate of
tax specified under section 11(b) was 21%.

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