1120-S Schedule K- Shareholder's Instructions for Schedule K-3 (Form 1120-S

2021

Shareholder's Instructions
for Schedule K-3
(Form 1120-S)

Department of the Treasury
Internal Revenue Service

Shareholder's Share of Income, Deductions, Credits, etc.—International
(For Shareholder's Use Only)
Section references are to the Internal Revenue
Code unless otherwise noted.

Contents
What’s New . . . . . . . . . . . . . .
General Instructions . . . . . . . .
Purpose of Schedule K-3 . .
How To Use Schedule K-3 .
Specific Instructions . . . . . . . .
Part I. Shareholder's Share
of Corporation’s Other
Current Year International
Information . . . . . . . . .
Part II. Foreign Tax Credit
Limitation . . . . . . . . . .
Part III. Other Information for
Preparation of Form 1116
or 1118 . . . . . . . . . . . .
Part IV. Distributions From
Foreign Corporations to
Corporation . . . . . . . . .
Part V. Information on
Shareholder’s Section
951(a)(1) and Section
951A Inclusions . . . . . .
Part VI. Information To
Complete Form 8621 . . .
Part VII. Shareholder's
Share of Corporation's
Interest in Foreign
Corporation Income
(Section 960) . . . . . . . .

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Future Developments
For the latest information about
developments related to Schedule K-3
(Form 1120-S) and the Shareholder's
Instructions for Schedule K-3 (Form
1120-S), such as legislation enacted
after they were published, go to
IRS.gov/Form1120S.

What’s New
Schedule K-3 is new for the 2021 tax
year. This Schedule K-3 replaces,
supplements, and clarifies the reporting
of certain amounts formerly reported on
Schedule K-1 (Form 1120-S), Part III,
Shareholder's Share of Current Year
Income, Deductions, Credits, and Other
Items, line 14 (Foreign Transactions).
Schedule K-3 also replaces,
supplements, and clarifies the reporting
Jun 07, 2021

of certain amounts formerly reported on
Schedule K-1, Part III, line 17, Other
information. The new format assists S
corporations in providing you with the
information necessary to complete your
returns with respect to the international
tax aspects of the Internal Revenue
Code. For example, the new format
provides information necessary for a
shareholder that makes a section 962
election to figure its deemed paid
foreign tax credit on Form 1118, Foreign
Tax Credit—Corporations, and to figure
their other foreign tax credit on Form
1116, Foreign Tax Credit (Individual,
Estate, or Trust), respectively.

General Instructions
The Shareholder’s Instructions for
Schedule K-1 (Form 1120-S) generally
apply to the Schedule K-3, including
instructions under Inconsistent
Treatment of Items and Errors. These
instructions provide additional
instructions with respect to
Schedule K-3.

Purpose of Schedule K-3

Schedule K-3 reports items of
international tax relevance from the
operation of an S corporation. You must
include this information on your tax or
information returns. See separate parts
for specific instructions. You only need
to use the schedules that are applicable
to you.

See the Purpose of Schedule K-1,
Inconsistent Treatment of Items, and
Errors sections of the instructions for the
Schedule K-1 (Form 1120-S) for
instructions that are equally applicable
with respect to the Schedule K-3. The S
corporation reported items based on the
information known to it, and the actual
treatment of the items with respect to
the shareholder may differ if any
assumptions made by the S corporation
are incorrect (such as ownership
threshold levels and relatedness
Cat. No. 74752V

determinations). In such cases, the
shareholder must treat the items
according to the shareholder's actual
facts and file a Form 8082, Notice of
Inconsistent Treatment or
Administrative Adjustment Request
(AAR), to identify and explain the
inconsistency.

How To Use Schedule K-3
Reporting currency. All amounts are
reported in U.S. dollars except where
otherwise specified.
References to other forms.
References in these instructions to
Form 1040, U.S. Individual Income Tax
Return, are intended, if applicable, to
include Form 1040-SR, U.S. Tax Return
for Seniors, as well as other tax returns
for noncorporate partners such as Form
1041, U.S. Income Tax Return for
Estates and Trusts.
Uses of the parts of Schedule K-3, in
general. The following are brief
descriptions of each part of
Schedule K-3. Detailed information is
provided in Specific Instructions.
Part I. Used to determine any
international tax items not reported
elsewhere on Schedule K-3 (Form
1120-S).
Part II. Used to determine your
share of S corporation income and loss
by source and separate category of
income for purposes of the foreign tax
credit limitation. Shareholders will use
the information to figure a foreign tax
credit on Form 1116 or 1118.
Part III. Used to determine the
allocation and apportionment of
research and experimental (R&E)
expense and interest expense for
purposes of the foreign tax credit
limitation. Also use this part to
determine your share of the S
corporation’s creditable foreign taxes
paid or accrued. Shareholders will use

the information to figure a foreign tax
credit on Form 1116 or 1118.
Part IV. Used, in combination with
other information known to you, such as
information reported on Schedule P
(Form 5471), Information Return of U.S.
Persons With Respect to Certain
Foreign Corporations, to determine your
share of distributions by foreign
corporations to the S corporation that
are attributable to previously taxed
earnings and profits (PTEP) in your
annual PTEP accounts with respect to
the foreign corporations (which are
excluded from your gross income) or
non-previously taxed earnings and
profits (E&P), and the amount of foreign
currency gain or loss on the PTEP that
you are required to recognize under
section 986(c). Use the information to
figure and report the dividends and
foreign currency gain or loss on Form
1040.
Part V. Used to determine your
income inclusions under sections
951(a) and 951A if you are a U.S.
shareholder of any of the listed CFCs.
Shareholders will use the information to
complete Form 8992, U.S. Shareholder
Calculation of Global Intangible
Low-Taxed Income (GILTI), and Form
1040 with respect to subpart F income
inclusions, section 951(a)(1)(B)
inclusions, and section 951A inclusions.
Part VI. Used to complete Form
8621, Information Return by a
Shareholder of a Passive Foreign
Investment Company or Qualified
Electing Fund, and to provide
information required to determine your
inclusion with respect to the passive
foreign investment company (PFIC).
Part VII. Used to determine your
deemed paid taxes on inclusions under
section 951A or 951(a)(1). Shareholders
making a section 962 election will use
the information to figure a deemed paid
foreign tax credit on Form 1118.

Specific Instructions
Identifying Information
Item E—Part applicability. The S
corporation checked the “Yes” box to
indicate the applicable parts of
Schedule K-3.
The S corporation checked the “No”
box to indicate the inapplicable parts of
Schedule K-3.

Part I. Shareholder's Share of
Corporation’s Other Current
Year International Information

This part reports your information for
international tax items not reported
elsewhere on the Schedule K-3.

Box 1. Gain on personal property
sale. In general, income from the sale
of personal property is sourced
according to the residence of the seller.
See section 865. If the S corporation
sells non-depreciable personal property
(other than inventory and certain
intangible property), you, the
shareholder, are treated as the seller.
Therefore, you will need to determine
the source of the gain reported on Part
II, line 1, column (f). In general, if you
are a U.S. citizen or resident alien
individual, the gain is U.S. source.
However, a U.S. citizen or resident alien
individual with a tax home (section
911(d)(3)) in a foreign country is treated
as a nonresident if an income tax of at
least 10% is imposed by and paid to a
foreign country regarding such sale.
See section 865(g)(2).
If the S corporation checked box 1 on
Part I, use the information attached to
Schedule K-3 to determine if a foreign
country imposed a tax of at least 10% or
more on the gain from each sale. If so,
and you have a tax home in a foreign
country, such gain is foreign source
income and reported on Form 1116. For
more information, see Column (f).
Sourced by shareholder, later.
Box 2. Foreign oil and gas taxes. A
separate foreign tax credit limitation is
applied with respect to foreign oil and
gas taxes. See section 907(a) and
Regulations section 1.907(a)-1 for
details. If the S corporation had such
taxes, it checked box 2 and attached a
partially completed Schedule I (Form
1118), to Schedule K-3. You are not
required to complete Form 1118; rather,
use the partially completed Schedule I
and the associated instructions to
complete Form 1116, Part III, line 12, for
the applicable reduction for individuals.
Box 3. Splitter arrangements.
Foreign taxes with respect to a foreign
tax credit splitting event are suspended
until the related income is taken into
account by the taxpayer. See section
909. There is a foreign tax credit
splitting event with respect to foreign
taxes of a payor if in connection with a
splitter arrangement the income is, or
will be taken into account by a covered
person. See Regulations section
-2-

1.909-2(a). A covered person, as
defined in Regulations section
1.909-1(a)(4), includes, for example,
any entity in which the payor holds,
directly or indirectly, at least a 10%
ownership interest (determined by vote
or value). A payor, as defined in
Regulations section 1.909-1(a)(3),
includes, for example, a person that
takes foreign income taxes paid or
accrued by a partnership into account
pursuant to section 702(a)(6).
If the S corporation checked box 3 on
Part I, it attached a statement that
separately identifies any arrangement,
along with your share of the taxes paid
or accrued in connection with the
arrangement in which the S corporation
participates that would qualify as a
splitter arrangement under section 909.
The box should be checked only if the S
corporation knows, or has reason to
know an entity that took into account
related income from the arrangement is
a covered person with respect to one or
more shareholders. For example, you
are a payor of a foreign tax if you take
into account the foreign taxes paid or
accrued by the S corporation under
section 702(a)(6). If the S corporation
wholly owns a reverse hybrid (as
defined in Regulations section
1.909-2(b)(1)(iv)) and you own 10% or
more (determined by vote or value) of
the interest in the S corporation, the
reverse hybrid is a covered person with
respect to you. You cannot credit the
foreign taxes paid or accrued by the S
corporation with respect to the reverse
hybrid until you or the S corporation
takes into account the related income of
the reverse hybrid. Until then, the taxes
are suspended. The S corporation
reported your share of the potentially
suspended taxes as a result of the
application of section 909 on Part III,
Section 3, line 2E. Include on Form
1116, Part III, line 12, taxes suspended
under section 909. If you are required to
complete Form 5471 for a controlled
foreign corporation (CFC), include in
Schedule E-1, column (d), line 3b, taxes
suspended under section 909.
If the S corporation checked box 3,
and the statement indicates that the S
corporation took into account the related
income from the splitter arrangement,
the taxes are partially or fully
unsuspended depending on the amount
of related income taken into account.
Even though the taxes are
unsuspended, in certain cases you
might not be eligible to claim a credit for
those taxes. To the extent you are

Instructions for Schedule K-3 (Form 1120-S) (2021)

eligible to claim a credit for
unsuspended taxes, these amounts
may be claimed on Form 1118 or 1116,
as applicable. If you are required to
complete Form 5471, for a CFC, report
the unsuspended taxes on Form 5471,
Schedule E-1, column (d), line 3a.
In some cases, you may take into
account related income directly that
allows you to partially or fully unsuspend
taxes, for example, by way of a subpart
F or GILTI inclusion with respect to
related income.
There might be a splitter
arrangement with respect to the
CAUTION shareholder even if the S
corporation did not identify one, given
that the S corporation did not have the
information available to the shareholder.
Therefore, you must identify such
arrangement even if box 3 is not
checked.

!

Box 4. Foreign tax translation. If the
S corporation checked box 4, it will
attach a statement described in the
instructions for Part III, Section 3.
Box 5. High-taxed income. If the S
corporation checked box 5, you must
determine if the passive income
reported to you by the S corporation is
treated as income in another separate
category. Income received or accrued
by a U.S. person that would otherwise
be passive income is not treated as
passive income if the income is
determined to be high-taxed income.
See section 904(d)(2)(B)(iii)(II). You
must group your shares of passive
income from a S corporation according
to the rules in Regulations section
1.904-4(c)(3). However, the portion, if
any, of the share of income attributable
to income earned by an S corporation
through a foreign qualified business unit
(QBU) is separately grouped under the
rules of Regulations section 1.904-4(c)
(4). See Regulations section 1.904-4(c)
(5)(ii). The S corporation should have
attached Attachments 1 and/or 2. Use
the attachments and your taxes on your
other passive income (that is, passive
income that is not attributable to your
share of the S corporation’s income) to
determine if you need to assign passive
income and the associated taxes to
another separate category of income.
You must allocate and apportion the
shareholder's expenses to this passive
income to determine if the income is
treated as income in another separate
category. This includes both your share
of S corporation expenses and

expenses incurred by you directly. See
the Instructions for Form 1116 for how
to report your income and taxes
reclassified under the high-taxed
income rule.
Box 6. Section 267A disallowed deductions. If the S corporation checked
box 6 in Part I and attached a statement
titled “Section 267A Disallowed
Deduction,” prepare your tax return by
taking into account that you are not
allowed a deduction for any of the
amounts listed in the statement. Thus,
for example, do not claim as a
deduction any amount reported on lines
41 through 43 of Schedule K-3, Part II,
Section 2, to the extent listed in the
statement as an amount for which a
deduction is disallowed under section
267A.
Box 6 and the accompanying
statement describe only interest
CAUTION or royalty paid or accrued by
the S corporation for which the S
corporation knows, or has reason to
know, that you are disallowed a
deduction under section 267A.

!

For information about section 267A,
see FAQs for section 267A, FAQs for
Form 1065, Schedule B, Other
Information, question 22.
Items 7 through 9. The S corporation
should have attached to the
Schedule K-1 or Schedule K-3 Form
5471; Form 8858, Information Return of
U.S. Persons With Respect to Foreign
Disregarded Entities (FDEs) and
Foreign Branches (FBs); Form 5713,
International Boycott Report; and other
relevant international tax forms.
Box 10. Shareholder loan transactions. If this box is checked, the S
corporation identified upstream or
downstream S corporation loan
transactions. See Regulations section
1.861-9(e)(8) and (9) for purposes of
determining special rules regarding
interest expense allocation and
apportionment if you have such loan
transactions with the S corporation.
The shareholder may have
additional shareholder loan
CAUTION transactions not identified by
the S corporation due to information not
known to the S corporation.

!

Box 11. Entity treatment for certain S
corporations. If this box is checked,
the S corporation has made an election
described in Notice 2020-69, 2020-39
I.R.B. 604, to be treated as owning

Instructions for Schedule K-3 (Form 1120-S) (2021)

-3-

stock of a CFC within the meaning of
section 958(a) for purposes of applying
section 951A, and, therefore, the S
corporation may have an income
inclusion under section 951A that it
reports on Schedule K-1, line 10, Other
income (loss), and does not report in
Schedule K-3, Part V.
Box 12. Other international items. If
the S corporation has transactions,
income, deductions, payments, or
anything else that implicates the
international tax provisions of the
Internal Revenue Code and such items
are not otherwise reported on this part
or other parts of Schedules K-2 and K-3,
the S corporation reported that
information on an attachment and
checked box 12.

Parts II and III

Parts II and III report information you
use to figure the foreign tax credit. In
general, a U.S. individual, estate, or
trust may claim a credit for taxes paid or
accrued, and in some cases deemed
paid, to foreign countries or U.S.
possessions. The amount of foreign tax
credit in a tax year is generally limited to
the lesser of foreign taxes paid or
accrued or U.S. tax on foreign source
income. The limitation is figured by
separate categories of foreign source
income, including foreign branch
category, passive category, and general
category. A shareholder will use Form
1116 to figure its foreign tax credit, but,
if the shareholder makes a section 962
election, it must also complete Form
1118 solely with respect to its
computation of deemed paid credits for
section 951(a) or section 951A
inclusions. See the instructions for
Forms 1116 and 1118, as well as Pub.
514, Foreign Tax Credit for Individuals,
for a summary of the rules for
determining the source and separate
categories of income.

Part II. Foreign Tax Credit
Limitation
Column (a). U.S. source. Do not
report amounts in this column on Form
1116 or 1118 unless you elect to
resource such income under an
applicable U.S. income tax treaty. See
section 904(d)(6). See the instructions
for Forms 1116 and 1118 for income
resourced by treaty reported as a
separate category of income.
Columns (b) through (e). Foreign
source. Add the amounts reported in
these columns to your other income

earned or received directly or through
other pass-through entities in these
separate categories and report the total
amounts on the applicable Form 1116,
Part I, or Form 1118, Schedule A.
Exception. If you are a
less-than-10% limited partner and you
do not hold your partnership interest in
the ordinary course of your active trade
or business, then any amounts reported
on Schedule K-3, Part II, section 1 and
Part III, Section 1, columns (b), (d), and
(e), should be reported as passive
category income. Deductions reported
on Part II, section 2, columns (b), (d),
and (e), should be reported as reducing
passive category income. Similarly, any
foreign taxes paid or accrued on foreign
source income in Part III, Section 3, (b),
(c), (e), and (f), should be assigned to
passive category income. Finally, any
amounts reported in Part III, Section 2,
columns (b), (d), and (e) should be
assigned to passive category income.
See Regulations section 1.904-4(n)(1)
(ii).
Column (f). Sourced by shareholder.
You must determine the source and
separate category of the income
reported in this column. The income in
this column will generally be with
respect to sale of personal property
other than inventory, depreciable
property, and certain intangible property
sourced under section 865. This column
might also include foreign currency gain
on a section 988 transaction. If you are
a U.S. citizen or resident, sales and
gains reported in this column will
generally be U.S. source income and
not reported on Form 1116 or 1118
unless you elect to resource such
income under an applicable income tax
treaty. Also, the source of foreign
currency gain or loss on section 988
transactions may be determined by
reference to the residence of the QBU
on whose books the asset, liability, or
item of income or expense is properly
reflected. See the Instructions for Form
1116 or 1118 and Pub. 514 for
additional details.

Section 1. Gross Income
Lines 1 through 24. Form 1118,
Schedule A, requires a corporation to
separately report certain types of gross
income by source and separate
category. Schedule K-3, Part II, lines 1
through 23, generally follow the
separately reported types of gross
income on Schedule A. Individuals must

follow the same sourcing rules, but
Form 1116 only requires reporting of
total gross income from foreign sources
by separate category. Therefore, those
required to file Form 1116 would report
line 24, taking into account section
904(b)(2) and PTEP adjustments, by
country on their Form 1116, Part I,
line 1a. Because all gross income is
reported on one line on the Form 1116,
there is no need to specify other
reporting lines for gross income below.
Country code. Forms 1116 and 1118
require the taxpayer to report the foreign
country or U.S. possession with respect
to which the gross income is sourced.
Lines 1 through 24 report for each gross
income item, on a separate line (A, B, or
C), the two-letter code (from the list at
IRS.gov/CountryCodes) for the foreign
country or U.S. possession within which
the gross income is sourced. If a type of
income is sourced from more than three
countries, a statement is attached to
expand Schedules K-2 and K-3, Part II,
for that type of income to report the
additional countries.
Lines 7 and 8. Ordinary dividends
and qualified dividends. Some of the
amounts reported on these lines may be
attributable to PTEP in annual PTEP
accounts that you have with respect to a
foreign corporation and thus excludable
from your gross income. See the
Instructions for Form 1116 for additional
information with respect to rules
regarding capital gain rate differentials
(as defined in section 904(b)(3)(D)) for
qualified dividends.
Lines 11 through 15 and 27 through
30. Capital gains and losses. Section
904(b)(2)(B) contains rules regarding
adjustments to account for capital gain
rate differentials (as defined in section
904(b)(3)(D)) for any tax year. These
rules apply to individuals and may
require adjustments to the amounts on
lines 11 through 15, which in turn affects
the total amount on line 24. See the
Instructions for Form 1116 for additional
information. Report lines 27 through 30
on Form 1116, Part I, line 5, by separate
category.
Lines 16 and 46. Section 986(c) gain
and loss. These lines report the S
corporation’s share of a lower-tier
pass-through entity’s section 986(c)
gain or loss, and the amount of section
986(c) gain or loss on distributions of
PTEP sourced from the S corporation’s
annual PTEP accounts. You will need to
determine your foreign currency gain or
-4-

loss under section 986(c) with respect
to distributed PTEP sourced from
annual PTEP accounts that you have
with respect to a foreign corporation,
using Part IV of the Schedule K-3.
The amount of foreign currency gain
and loss that you report on Form 1040
will include your share of the S
corporation’s foreign currency gain or
loss under section 986(c) and your own
foreign currency gain or loss under
section 986(c).
Lines 18 and 48. Section 988 gain
and loss. The source of foreign
currency gain or loss on section 988
transactions is generally determined by
reference to the residence of the
taxpayer or QBU on whose books the
asset, liability, or item of income or
expense is properly reflected. If the
source of the foreign currency gain or
loss is determined by reference to the
residence of the taxpayer, the foreign
currency gain and loss will be reported
in column (f). For example, if you are a
U.S. resident, such gain or loss is U.S.
source and would not be reported on
Form 1116.
Line 19. Section 951(a) inclusions.
If you make a section 962 election, on
Form 1118, add the amount reported on
line 19 to your other section 951(a)
inclusions and report the total on the
Form 1118, Schedule A, column 3(a),
by separate category.
Line 21. Section 951A(a) inclusions.
If you make a section 962 election, on
Form 1118, add the amount reported on
line 21 to your other section 951A(a)
inclusions and report the total on the
Form 1118, Schedule A, column 3(a),
by separate category.
Line 24. Total gross income. Add the
amounts reported in rows A, B, and C
(and additional rows, if applicable) to
your other foreign source gross income
from those countries, and enter the
totals on Form 1116, Part I, line 1a,
taking into account any section 904(b)
adjustments for capital gains, as
described above for lines 11 through 15
and 27 through 30, or PTEP
adjustments, as described above for
lines 7, 8, 16, and 46.

Section 2. Deductions
Lines 25 Through 54
Form 1116 requires a taxpayer to
separately report certain types of
deductions and losses by source and
separate category. Separate reporting is

Instructions for Schedule K-3 (Form 1120-S) (2021)

required because each type of
deduction may be allocated and
apportioned according to a different
methodology. See Regulations sections
1.861-8 through -20. For purposes of
allocating and apportioning expenses,
in general, a shareholder adds their
share of the S corporation's deductions
with other deductions incurred directly
by the shareholder or through other
pass-through entities. See Regulations
section 1.861-8(e)(15). Individuals must
generally follow the same expense
allocation and apportionment rules, but
Form 1116 only requires separate
reporting of certain deductions. See
Form 1116, Part I, lines 2 through 5.
Line 32. R&E expenses. Add the
R&E expenses reported in column (f) to
your other R&E expenses. After
determining the portion of such
expenses that are allocable to U.S.
source income or foreign source income
because they are performed
predominantly in a particular geographic
area, report the remaining R&E expense
on Form 1116. See Regulations section
1.861-17(f).
Line 38. Charitable contributions.
Charitable contribution deductions
should not be reported on Form 1116
because such deductions are allocable
to U.S. source income.
Lines 39 and 40. Interest expense
specifically allocable under Regulations sections 1.861-10 and -10T.
Report interest expense directly
allocated under Regulations sections
1.861-10 and 1.861-10T on Part I,
line 2, on Form 1116.
Lines 41 through 43. Other interest
expense. On Form 1116, allocate and
apportion the sum of the interest
expense included on lines 41 through
43 in column (f) and report the allocated
and apportioned amounts on the
applicable separate category Form
1116, Part I, line 4b. Interest expense
incurred by certain individuals, estates,
and trusts is allocated and apportioned
based on the categories of interest
expense in sections 163 and 469: active
trade or business interest, investment
interest, or passive activity interest,
adjusted for any interest expense
directly allocated under Regulations
section 1.861-10T. See Regulations
section 1.861-9(e)(3) and Temporary
Regulations section 1.861-9T(d)(1) and
(3).

shareholder, the S corporation's interest
expense is directly allocated to your
share of the S corporation’s gross
income based on the source and
character of the income. If your S
corporation interest is not held in the
ordinary course of your active trade or
business, all such income is passive
category income. See Regulations
section 1.861-9(e)(4)(i) for further
guidance. On Form 1116, report such
interest expense on the passive
category Form 1116, Part I, line 4b.
However, if the S corporation interest is
held in the ordinary course of the
shareholder's active trade or business,
your share of the S corporation’s
interest expense is apportioned in
accordance with your share of gross
foreign source income in each separate
category and gross U.S. source income
from the S corporation. See line 24 for
the source and separate category of the
shareholder's share of gross income.
Report the interest expense on the
appropriate Form 1116.
Exception. See Regulations section
1.861-9(e)(8) and (9) for special rules
concerning downstream and upstream
S corporation loans that require a
matching of related interest income to
interest expense allocations.
Exception. See Regulations section
1.861-9T(d)(1) for an exception to the
apportionment of interest expense when
an individual’s foreign source income
(including income excluded under
section 911) does not exceed $5,000.
Such interest expense may be allocated
entirely to U.S. source income.
Line 45. Foreign taxes deductible,
but not creditable. See the
Instructions for Form 1116 for examples
of foreign taxes deductible, but not
creditable.
Note. Foreign taxes that are creditable
(even if a shareholder chooses to
deduct such taxes) are not reported as
expenses on Part II. Do not claim a
foreign tax credit on Form 1116 for
amounts reported on line 45. However,
you may claim a deduction for such
taxes on the applicable form, including
the Form 1040.
Creditable foreign taxes are reported
on Part III, Section 3.

Exception. If you are a
less-than-10% (including constructively)
Instructions for Schedule K-3 (Form 1120-S) (2021)

-5-

Part III. Other Information for
Preparation of Form 1116 or
1118
Section 1. R&E Expenses
Apportionment Factors
This section reports the information you
need to allocate and apportion your
R&E expense for foreign tax credit
limitation purposes. R&E expenses are
allocated and apportioned by the
shareholder. See Regulations section
1.861-17(f)(1). Use this Section 1 to
determine the R&E expense reported on
Form 1116, Part I. See the Instructions
for Form 1116.
Line 1. Add the amounts reported on
line 1 by standard industrial
classification (SIC) code to your other
gross receipts to apportion your R&E
expense.
Line 2. Add the amounts reported on
line 2 to the shareholder's other R&E
expense related to activity performed in
the United States and the amount of
R&E expense related to activity
performed outside the United States by
SIC code. See the Instructions for Form
1116 to determine the exclusive
apportionment of the R&E expenses.

Section 2. Interest Expense
Apportionment Factors
This section includes the information
you need to allocate and apportion your
interest expense for foreign tax credit
limitation purposes. This part is relevant
for all shareholders except shareholders
with less than a 10% S corporation
interest. Use this Section 2 to determine
the interest expense reported on Form
1116, Part I, line 4b. See the
Instructions for Form 1116. Because the
interest expense is reported on one line
on the Form 1116, there is no need to
specify additional reporting on the lines
below.
Lines 7 and 8. The amounts reported
on lines 7 and 8 are subsets of the
amounts reported on line 6 representing
the value of stock held by the S
corporation in certain foreign
corporations.
The amount reported on line 7 is the
value of stock of the S
corporation-owned specified
10%-owned foreign corporation that is
not a CFC.
The amount reported on line 8 is the
value of the stock in S
corporation-owned CFCs.

Section 3. Foreign Taxes
Section 3 reports your share of the
foreign taxes paid or accrued by the S
corporation by separate category and
source.
Line 1. Report the taxes on line 1 in
the applicable portions of Form 1116,
Part II, for the applicable separate
category of income. To complete these
portions, refer to the statement attached
to Schedule K-3, referred to earlier in
the instructions with respect to Part I,
box 4, with the following information.
• The dates on which the taxes were
paid or accrued.
• The exchange rates used.
• The amounts in both foreign currency
and U.S. dollars. See section 986(a).
Note. The shareholder takes its share
of the S corporation’s foreign taxes into
account in the shareholder’s tax year
with or within which the S corporation’s
tax year ends, regardless of whether the
shareholder or S corporation takes
foreign taxes into account on the cash
or accrual basis.
Line 2. Report the total reduction of
taxes for each separate category of
income on line 2 on Form 1116, Part III,
line 12.
Line 3. Report the redetermined
foreign taxes reported on line 3 on the
Foreign Tax Redetermination Schedule
of the Form 1116, and on an amended
return, if required. See the Instructions
for Form 1116 and Regulations sections
1.905-3 through -5 for additional
information.
Note. If you are an accrual method
taxpayer, generally you may not claim a
credit for additional taxes reported on
line 3 by the S corporation unless those
taxes have been paid. See section
905(c)(2) and Regulations section
1.905-3(a).

Part IV. Distributions From
Foreign Corporations to
Corporation

Use Part IV to determine your share of
distributions by foreign corporations to
the S corporation (with your share being
reported in this Part IV) that are
attributable to PTEP in your annual
PTEP accounts with respect to the
foreign corporations (which you exclude
from your gross income) or
non-previously taxed E&P, and the
amount of foreign currency gain or loss
on distributed PTEP that you are

required to recognize under section
986(c). The amount of foreign currency
gain or loss on distributed PTEP that
you are required to recognize under
section 986(c) is equal to the excess of
the U.S. dollar amount of the PTEP over
your U.S. dollar basis in the PTEP. If the
distributed PTEP was maintained in a
functional currency other than the U.S.
dollar, the U.S. dollar amount of the
distributed PTEP is determined by
translating the distributed PTEP into
U.S. dollars using the spot rate on the
date that the PTEP was distributed. See
section 989(b)(1). Your U.S. dollar basis
in the distributed PTEP is generally
equal to the U.S. dollar amount of E&P
that you previously included in gross
income. See section 989(b)(1) and (3).
Also use Part IV, in combination with
other information known to you, to claim
and figure a foreign tax credit on Form
1116.
Include the U.S. dollar amount of
E&P distributions from qualified foreign
corporations in determining the amount
of qualified dividends you report on
line 3a of Form 1040. A foreign
corporation identified as a qualified
foreign corporation in column (j) that is a
PFIC (as defined in section 1297) as to
you for the tax year of the foreign
corporation in which the distribution was
made, or the preceding tax year, is not a
qualified foreign corporation, regardless
of whether it is indicated as such in
column (j). See section 1(h)(11)(C)(iii)(I)
and Notice 2004-70, 2004-44 I.R.B.
724.
Include the U.S. dollar amount of
E&P distributions from a non-qualified
foreign corporation in determining the
amount of ordinary dividends you report
on line 3b of Form 1040.
However, do not include the U.S.
dollar amount of E&P distributions from
a foreign corporation in determining the
amount you report on line 3a or 3b of
Form 1040 to the extent the distributions
are attributable to PTEP in annual PTEP
accounts that you have with respect to
the foreign corporation, or attributable to
E&P that are excludable from your gross
income under section 1293(c). See
Notice 2019-01, 2019-02 I.R.B. 275.

in an annual PTEP account of the S
corporation, or attributable to E&P that
are excludable from the S corporation’s
gross income under section 1293(c),
that is treated as a dividend for
purposes of section 1411 (that is, for
purposes of the net investment income
tax) and, therefore, may be net
investment income (“NII PTEP”), it will
attach an attachment to the
Schedule K-3 regarding your share of
the S corporation’s NII PTEP. If you are
an individual who is a U.S. citizen or
resident, or a domestic trust or estate,
use the U.S. dollar amounts of NII PTEP
reported on the statement, and follow
the Instructions for Form 8960, Net
Investment Income Tax— Individuals,
Estates, and Trusts, to figure and report
your net investment income. See
Regulations sections 1.1411-1
through -10 for details. Note that your
share of a distribution received by the S
corporation that is attributable to PTEP
in your annual PTEP accounts, or
attributable to E&P that are excludable
from your gross income under section
1293(c), may also be treated as a
dividend for purposes of section 1411
and, therefore, may be NII PTEP.
Note. Columns (e) and (f) are reported
in the foreign corporation’s functional
currency.

Part V. Information on
Shareholder’s Section
951(a)(1) and Section 951A
Inclusions

Use Part V to determine your subpart F
income inclusions and section 951(a)(1)
(B) inclusions, or your share of the S
corporation's subpart F income
inclusions and section 951(a)(1)(B)
inclusions, and to complete Form 8992.

Include the amount of foreign
currency gain or loss that you are
required to recognize under section
986(c) in determining the amount to
report on Form 1040.

If the S corporation does not apply
Proposed Regulations section
1.958-1(d)(1) to treat it as not owning
stock of a foreign corporation within the
meaning of section 951, and is a U.S.
shareholder of the foreign corporation,
then any subpart F income inclusions
and section 951(a)(1)(B) inclusions are
inclusions of the S corporation, of which
you generally include in gross income a
share. In such a case, your share of the
S corporation’s subpart F income
inclusions and section 951(a)(1)(B)
inclusions are reported on
Schedule K-1, line 10, Other income
(loss), and are not reported in Part V.

If the S corporation received a
distribution that is attributable to PTEP

If the S corporation elected to be
treated as owning stock of a CFC within

-6-

Instructions for Schedule K-3 (Form 1120-S) (2021)

the meaning of section 958(a) for
purposes of applying section 951A
under Notice 2020-69, 2020-39 I.R.B.
604, the S corporation determines its
GILTI inclusion, of which you generally
include in gross income a share. In such
a case, your share of the S corporation’s
GILTI inclusion is reported on
Schedule K-1, line 10, Other income
(loss), and is not reported in Part V.
For each CFC listed in column (a) of
which you are a U.S. shareholder,
include the amounts of subpart F
income and section 951(a)(1)(B)
inclusion reported on Part V in
determining the amount you report on
Schedule 1 (Form 1040).
For each CFC listed in column (a) of
which you are a U.S. shareholder,
report the tested income and tested loss
for each CFC on Form 8992,
Schedule A, columns (c) and (d),
respectively, and include your share of
each CFC's items described in columns
(i) through (n) in determining the amount
to report on Form 8992, Schedule A,
columns (e) through (j), respectively.

Part VI. Information To
Complete Form 8621

U.S. persons may be required to
complete and file Form 8621 and/or
include amounts in income with respect
to PFICs owned through an S
corporation. This includes PFICs with
respect to which no qualified electing
fund (QEF) or mark-to-market (MTM)
election has been made and
unpedigreed QEFs (section 1291
funds), as well as PFICs with respect to
which a pedigreed QEF, MTM,
qualifying insurance corporation (QIC),
or other election has been, or may be,
made. For information regarding the
requirement to file Form 8621, as well
as certain filing exceptions, see
Regulations section 1.1298-1 and the
Form 8621 instructions.
Use the information provided in this
Schedule K-3, Part VI (including any
supplemental Attachments 5 and 6, if
applicable), as instructed below to
complete Form 8621 with respect to
each PFIC for which you have a filing
obligation. Additionally, for any PFIC
that you own through your interest in the
S corporation, use the information
provided in this Schedule K-3, Part VI
(including any supplemental
Attachments 5 and 6, if applicable) to
determine your income inclusion with
respect to the PFIC (if any) and

complete your U.S. federal income tax
return.
If a PFIC reported on this
Schedule K-3 also constitutes a CFC
within the meaning of section 957
(PFIC/CFC) and you are a U.S.
shareholder (within the meaning of
section 951(b)) with respect to such
PFIC/CFC, the information on this
schedule with respect to such
PFIC/CFC may not be relevant to you.
The box in Section 1, column (m), will
be checked if the PFIC also constitutes
a CFC. See section 1297(d) for
additional information.

Section 1. General Information on
Passive Foreign Investment
Company (PFIC), Qualified
Electing Fund (QEF), or Qualifying
Insurance Corporation (QIC)
Columns (a) through (e). If you are
required to complete Form 8621 with
respect to a PFIC reported on this
schedule, use this information to
complete the Form 8621 background
information.
Columns (f) through (i). If you are
required to complete Form 8621 with
respect to a PFIC reported on this
schedule, enter this information on Form
8621, Part I, lines 1 through 4.
Note. If you are making an election
under Regulations sections 1.1291-10,
1.1297-3, or 1.1298-3 with respect to a
PFIC reported on this Schedule K-3,
Part VI, you may need additional
information from the S corporation
regarding the value of the PFIC shares
reported in column (i) that is not
reported here.
Column (j). This column will indicate to
you (using the codes below) whether
the S corporation has made an election
with respect to the PFIC that binds the
shareholders.

S Corporation Election Codes
Code

Election Type

QEF

Qualified Electing Fund Election

MTM

Mark-to-Market Election

QIC

Qualifying Insurance Corporation
Election

Note. If the S corporation has made a
pedigreed QEF, MTM, or QIC election
with respect to a PFIC, the S
corporation is not required to complete

Instructions for Schedule K-3 (Form 1120-S) (2021)

-7-

Schedule K-3, Part VI with respect to
that PFIC if the S corporation files Form
8621 for that PFIC. In that case, you
may not be required to file Form 8621
with respect to that PFIC and income
inclusions with respect to the PFIC, if
any, will be figured by the S corporation
and reported to you on Schedule K-1,
Part III. However, if the S corporation
has made a pedigreed QEF, MTM, or
QIC election with respect to a PFIC, for
which the S corporation does not file
Form 8621, or if it owns stock of an
unpedigreed QEF, it is required to
complete Schedule K-3, Part VI with
that PFIC’s information, and you may be
required to file Form 8621 with respect
to that PFIC. See Regulations section
1.1298-1(b)(2) and the Form 8621
instructions for additional information.
Columns (k) through (n). Use the
information provided in these columns
to make certain elections with respect to
a PFIC on Form 8621, Part II. If you do
not intend to make any election with
respect to a PFIC reported on this
Schedule K-3, Part VI, you may
generally ignore these boxes for such
PFIC.
Note. If you are making an election
under Regulations sections 1.1291-9,
1.1297-3, or 1.1298-3 with respect to a
PFIC/CFC, or a PFIC that is a “former
PFIC” within the meaning of Regulations
section 1.1291-9(j)(2)(iv), you may need
additional information from the S
corporation that is not reported on this
Schedule K-3, Part VI, including
information regarding the PFIC’s E&P.

Section 2. Additional Information
on PFIC or QEF
Note. The S corporation will complete
Section 2 with respect to each PFIC
reported on Section 1, and each line
completed for a PFIC in Section 1
corresponds to the same line on Section
2. If the PFIC has no current year
activity, or has no other information for
the corporation to report in columns (c)
through (o), the S corporation will only
include the name and EIN of the PFIC or
QEF in columns (a) and (b) and will
leave columns (c) through (o) blank with
respect to that PFIC.

QEF Information
Columns (c) and (d). This information
is to assist you in determining your
income inclusions from certain PFICs

with respect to which a QEF election
has been made.
If the S corporation has made a
pedigreed QEF election with respect to
a PFIC, and the S corporation files Form
8621 for that PFIC, such PFIC will not
be reported on Schedule K-3, Part VI. In
that case, your share of the S
corporation’s QEF inclusions, if any, will
be reported to you on Schedule K-1,
Part III. However, in the event the S
corporation does not file Form 8621 for
a PFIC with respect to which the S
corporation has made a pedigreed QEF
election, or if the S corporation owns
stock of an unpedigreed QEF, you may
be required to file Form 8621 for that
PFIC. See Regulations section
1.1298-1(b)(2) for additional
information.
If you are required to file Form 8621
with respect to a PFIC reported on
Schedule K-3, Part VI, enter your share
of the S corporation’s QEF ordinary
earnings and net capital gain inclusions
from columns (c) and (d) on Form 8621,
Part III, lines 6a and 7a, respectively,
and include these amounts in gross
income on your U.S. federal income tax
return unless you are making an
election under section 1294 with respect
to the QEF for the current tax year. If
you are making a section 1294 election
with respect to the QEF for the current
tax year, use the rest of Form 8621, Part
III, lines 8 and 9 to determine the
amount of deferred tax with respect to
the QEF for the current tax year.

Mark-to-Market Information
Columns (e) and (f). This information
is to assist you in determining your gain
or loss from certain PFICs with respect
to which an MTM election has been
made.
If the S corporation has made an
MTM election with respect to a PFIC
(MTM PFIC), and the S corporation files
Form 8621 for that MTM PFIC, such
MTM PFIC will not be reported on
Schedule K-3, Part VI. In that case, your
share of the S corporation’s MTM gain
or loss, if any, will be reported to you on
Schedule K-1, Part III. However, in the
event the S corporation does not file
Form 8621 for an MTM PFIC, the
reporting burden falls on the
shareholder. See Regulations section
1.1298-1(b)(2) for additional
information.
If you are required to file Form 8621
with respect to a MTM PFIC reported on

Schedule K-3, Part VI, enter the amount
in column (f) on Form 8621, Part IV,
line 10a. You may need additional
information from the S corporation
regarding your share of its adjusted tax
basis in the MTM PFIC stock to
complete the rest of Form 8621, Part IV.
Your share of the S corporation’s
adjusted tax basis in the MTM PFIC
stock may be equal to your share of the
fair market value of the stock at the
beginning of the prior tax year reported
in column (e). However, your share of
the S corporation’s adjusted tax basis in
the MTM PFIC stock may not be equal
to the fair market value of the stock at
the beginning of the prior tax year,
depending on the amounts of the S
corporation’s prior year income
inclusions and the amounts for which
the S corporation was allowed a
deduction with respect to the MTM
PFIC. Once you determine your share of
the S corporation’s adjusted tax basis in
the MTM PFIC shares, enter this
amount on Form 8621, Part IV, line 10b,
and use the rest of Form 8621, Part IV,
lines 10c through 12, to determine your
MTM gain or loss to include in on your
U.S. federal income tax return.

Section 1291 and Other
Information
Note. Generally, this information is to
assist you in satisfying any information
reporting obligations for, and in figuring
income inclusions with respect to,
section 1291 funds. However, except as
otherwise provided, this information
may be relevant to PFICs with respect
to which a pedigreed QEF, MTM, or
other election has been made by you or
the S corporation.
Column (g). This information is
provided to help you assess your
holding period in the PFIC stock through
your ownership in the S corporation.
Unless also provided in Section 1,
column (g), with respect to an
acquisition of stock in the PFIC during
the S corporation’s tax year, these dates
do not need to be entered on Form
8621 or on your U.S. federal income tax
return.
Note. The dates entered in this column
(g) will be the dates on which the S
corporation acquired the PFIC stock. If
you acquired your interest in the S
corporation after the date listed with
respect to a PFIC, you may have a
different holding period with respect to
such PFIC stock.
-8-

Column (h). Your share of the amount
of cash and fair market value of property
distributed by the PFIC during the tax
year may be reported on different parts
of Form 8621, or not reported at all on
Form 8621.

Where on Form 8621 To Report
Distributions From PFICs
IF you are a
shareholder of a...

THEN...

Section 1291 fund,

enter this amount on
Form 8621, Part V,
line 15a.

QEF for which you are
not making a section
1294 election for the
current tax year,

you do not need to
enter this on Form
8621.

QEF for which you are enter this amount on
making a section 1294 Form 8621, Part III,
election for the current line 8b.
tax year,
MTM PFIC,

you do not need to
enter this on Form
8621.

Note. Deemed distributions by QEFs
are not reported on Schedule K-3, Part
VI. If you make, or have made, an
election under section 1294 and are
deemed to have received a distribution
from the QEF, this information is
required to complete Form 8621. See
section 1294(f) and Regulations section
1.1294-1T for additional information.
Note. If you have made a section 1294
election with respect to a QEF owned by
the S corporation, a distribution of
earnings by the QEF will terminate the
section 1294 election to the extent the
election is attributable to the earnings
distributed. In such a case, enter the
amount of such distribution on Form
8621, Part VI, line 22. See Regulations
section 1.1294-1T(e) and the Form
8621, Part VI, instructions for additional
information.
Column (i). This information is to help
you assess any information related to
the date of a distribution from a PFIC.
You do not need to enter these dates on
Form 8621 or on your U.S. federal
income tax return.
Column (j). This information is to help
you assess any available foreign tax
credit attributable to an excess
distribution from a section 1291 fund in
which you are a shareholder through
your ownership in the S corporation. If
you are required to file Form 8621 with

Instructions for Schedule K-3 (Form 1120-S) (2021)

respect to a section 1291 fund owned
by the S corporation, use this amount to
determine your foreign tax credit to
include on Part V, line 16d. See section
1291(g) for additional information on
creditable foreign taxes.
Column (k). This information is to help
you assess your excess distribution and
resulting additional tax and interest
charge with respect to each section
1291 fund in which you are a
shareholder through your ownership in
the S corporation. If you are required to
file Form 8621 with respect to a section
1291 fund owned by the S corporation,
use this amount to determine the
amount to include on Part V, line 15b,
and use the rest of Form 8621, Part V,
lines 15 and 16, to determine the
amount of any excess distribution and
resulting additional tax and interest
charge to include on your U.S. federal
income tax return with respect to the
section 1291 fund.
Note. The information in column (k) is
only relevant with respect to section
1291 funds and is not relevant for any
PFIC with respect to which a pedigreed
QEF or MTM election has been, or may
be, made.
Column (l). This information is
provided to help you assess the
treatment to you on any disposition by
the S corporation of stock in a PFIC in
combination with column (g). These
dates do not need to be entered on
Form 8621.
Note. Your holding period of the PFIC
stock may have begun on a different
date than the S corporation’s holding
period.
Columns (m) through (o). This
information is to assist you in figuring
any gain or loss on the S corporation’s
disposition of PFIC stock.
For each section 1291 fund in which
you are a shareholder through your
ownership in the S corporation, enter
the amount in column (o) on Form 8621,
Part V, line 15f, and use the rest of Form
8621, Part V, line 16, to determine the
amount of any excess distribution and
resulting additional tax and interest
charge to include on your U.S. federal
income tax return with respect to the
section 1291 fund.
For each MTM PFIC in which you are
a shareholder through your ownership in
the S corporation, and with respect to
which you are required to file Form
8621, enter the amounts in columns (m)

and (n) on lines 13a and 13b,
respectively, of Form 8621, Part IV, to
complete the rest of Form 8621, Part IV,
lines 13 and 14, in determining your
MTM gain or loss to include on your
U.S. federal income tax return.
For each QEF in which you are a
shareholder through your ownership in
the S corporation, and with respect to
which you have previously made a
section 1294 election, and for which you
are required to file Form 8621, you may
need the amounts reported in columns
(m) through (o) to complete Part VI,
lines 22 through 24. See Regulations
section 1.1294-1T and the Form 8621
instructions for additional information.

Part VII. Shareholder's Share of
Corporation's Interest in
Foreign Corporation Income
(Section 960)
Note. Amounts on this part are
reported in foreign currency.
Individuals, estates, and trusts may
claim a foreign tax credit for foreign
income taxes deemed paid with respect
to a CFC if they make an election under
section 962.
To figure the foreign taxes deemed
paid by a shareholder that is U.S.
shareholder of a CFC owned by an S
corporation, the income, deductions,
and taxes of the CFC must be assigned
to separate categories of income and
then to income groups in those separate
categories. See Regulations section
1.960-1(c)(1). This is completed on
Schedule Q (Form 5471), CFC Income
by CFC Income Groups. The income
groups include the subpart F income
group, the tested income group, and the
residual income group. Each single item
of foreign base company income as
defined in Regulations section
1.954-1(c)(1)(iii) is a separate subpart F
income group. See Regulations section
1.960-1(d)(2)(ii)(B). The tested income
group consists of tested income within a
section 904 category. See Regulations
section 1.960-1(d)(2)(ii)(C). The
residual income group consists of any
income not in the other income groups
or in a PTEP group. See Regulations
section 1.960-1(d)(2)(ii)(D). See
Regulations section 1.960-3(c)(3) with
respect to the PTEP groups. The PTEP
groups are not reported on this
Schedule K-3, Part VII.
Schedule K-3, Part VII, reports your
share of the CFC's net income in each

Instructions for Schedule K-3 (Form 1120-S) (2021)

-9-

income group in functional currency. An
elector under section 962 will report its
share of the net income in the subpart F
income groups by CFC in column 8(a)
of Form 1118, Schedule C (section
960(a)). The shareholder must also
complete column 5 of Form 1118,
Schedule C, with information from
Schedule K-3, Part VII. An individual
electing under section 962 will report its
share of the net income in the tested
income group by CFC on Form 1118,
Schedule D (section 960(d)).
Note. The amount entered in column
8(a) will not equal the share of the net
income in the subpart F income group if
there is a qualified deficit. See
Regulations section 1.960-2(b)(3)(ii).
The S corporation must attach a
Form 5471 to each Schedule K-3. The
shareholder will use Schedule Q (Form
5471) to determine the total net income
in the subpart F income groups of the
CFC to report on column 6 of Form
1118, Schedule C, and the total current
year taxes by subpart F income groups
of the CFC, to report on column 7 of
Form 1118, Schedule C. This will allow
the shareholder to figure the taxes
deemed paid with respect to section
951(a)(1) inclusions by subpart F
income group on Form 1118,
Schedule C. Similarly, the shareholder
will use Schedule Q (Form 5471) to
determine the total tested taxes in that
group to determine the pro rata share of
tested foreign income taxes to report on
Form 1118, Schedule D, column 8.
Example. In Year 1, USC, an S
corporation, has two U.S. citizen
shareholders with equal interests in the
S corporation. Both shareholders make
elections under section 962. USC
wholly owns CFC. CFC earns passive
category interest income sourced from
Country X of 100u and pays a
withholding tax of $20 to a foreign
country. USC completes Form 5471,
including Schedule Q, for CFC. The
code for Country X is “X.” On
Schedule Q (Form 5471), USC reports
the following.

On Schedule K-3, Part VII, USC
reports the following to each of its
shareholders.

Example, USC’s Schedule Q
(Form 5471) for CFC
A

PAS

B

i
(i)

(xi)

(xii)

XX

100u

$20

1
a (1) CFC

Example, USC’s Schedule K-3,
Part VII for Shareholders
A

PAS

C

i
(i)

(ii)

X

50u

On Form 1118, Schedule C, with
respect to the passive category each
shareholder, reports with respect to the
information received on Schedule K-3
(including the attached Schedule Q
( Form 5471)) as follows.

1
a (1) CFC

Example, Shareholder’s Form 1118, Schedule C
1a

5a

5b

5c

6

7

8a

9

10

CFC

DIRRA

i

CFC

100u

$20

50u

0.500

$10

-10-

Instructions for Schedule K-3 (Form 1120-S) (2021)