1116 Schedule C Instructions for Schedule C (Form 1116)

Instructions for Schedule C
(Form 1116)

Department of the Treasury
Internal Revenue Service

(Rev. December 2022)

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

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

What’s New
Schedule C has been revised. Part I, column 13, now
requests "Reference ID Number for Contested Tax, if
applicable" to reflect Regulations section 1.905-1(d)(4)
and new Form 7204, Consent To Extend the Time To
Assess Tax Related to Contested Foreign Income
Taxes—Provisional Foreign Tax Credit Agreement.
We added new Part V, Annual Reporting for Contested
Taxes, to be used by taxpayers beginning with the 2023
tax year to comply with the annual notice requirement
described in Regulations section 1.905-1(d)(4)(iv). For
each tax year following the year in which a provisional
foreign tax credit election is made on Form 7204, up to
and including the tax year in which the contest is resolved,
the taxpayer must provide the information requested in
Part V.

General Instructions
Purpose of Schedule

Schedule C (Form 1116) is used to identify foreign tax
redeterminations that occur in the current tax year in each
separate category, the years to which they relate, and
other information that satisfies your obligation to notify the
IRS of foreign tax redeterminations that occurred in the
current year that relate to prior years.
Use Part I to report foreign income tax redeterminations
that resulted in an increase in the amount of foreign
income taxes accrued and paid by the taxpayer.
Note. If you claim credit for foreign income taxes on the
cash basis method of accounting (you checked the box
for “Paid” on Form 1116, Part II), and you pay additional
foreign income taxes that relate to a prior tax year, that
isn’t a foreign tax redetermination. You don’t report those
additional foreign income taxes paid in Part I of
Schedule C. You report those as foreign income taxes
paid on Form 1116, Part II, filed for the tax year in which
you paid the additional foreign income taxes.
Use Part II to report foreign tax redeterminations that
resulted in a decrease in the amount of foreign income
taxes paid or accrued by the taxpayer.
Jan 10, 2023

Use Part III to report foreign tax redeterminations that
resulted in a change in the amount of foreign income
taxes paid or accrued in any relation back year.
Use Part IV to report foreign tax redeterminations that
resulted in a change in the U.S. tax liability for any relation
back year or other affected tax year(s) (for example, by
reason of a change in allowable foreign tax credit
carryovers).
Use Part V, beginning with the 2023 tax year, to satisfy
the annual reporting requirement under Regulations
section 1.905-1(d)(4)(iv) for contested foreign income
taxes for which the taxpayer claimed a provisional foreign
tax credit.

Who Must File

Any taxpayer that has a foreign tax redetermination under
section 905(c) must complete this schedule and attach it
to the U.S. income tax return for the tax year in which the
foreign tax redetermination occurs. This schedule must be
filed irrespective of whether the foreign tax
redetermination changed your U.S. tax liability.

Note. If your U.S. tax liability for any year changes by
reason of the foreign tax redetermination, you must file an
amended return for the tax year with respect to which the
U.S. tax liability is adjusted, in addition to filing
Schedule C for the year in which the foreign tax
redetermination occurs. See Foreign Tax
Redeterminations in the Instructions for Form 1116 for
additional information regarding foreign tax
redeterminations that result in a change in U.S. tax liability
and the related reporting requirements.
If a foreign tax redetermination doesn’t change the
amount of U.S. tax due for any tax year, you don’t need to
file an amended return. You satisfy your reporting
requirements under Regulations section 1.905-4(b)(1)(v)
with respect to the foreign tax redetermination by filing a
Schedule C with the return for the tax year in which the
foreign tax redetermination occurs.

Definitions
Foreign tax redetermination. A foreign tax
redetermination means a change in the liability for foreign
income taxes including if:
• Accrued foreign income taxes when paid or later
adjusted differ from the amounts claimed as credits
(including corrections to accrued amounts to reflect final
foreign income tax liability and additional payments of tax
that accrue after the close of the tax year to which the tax
relates);
• Accrued foreign income taxes aren’t paid within 24
months after the close of the tax year to which they relate;
or

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tax directly, enter your name. If the tax was paid by a
pass-through entity, such as a partnership, in which you
have an ownership interest, enter the information for that
entity.
For additional information on EINs and reference IDs,
see Reference ID numbers in the Instructions for Form
1118.
Parts I and II, column 3. Enter the code for the
country or U.S. possession to which tax is paid using the
country codes provided at IRS.gov/CountryCodes.
Parts I and II, column 6. Enter the payor’s income
subject to tax in the foreign jurisdiction, as reported on the
foreign tax return.
Parts I and II, column 9. Enter the exchange rate
originally used to convert the local currency (in which the
redetermined foreign tax was paid) to U.S. dollars.
Parts I and II, column 11. Enter the U.S. dollar
amount of foreign income tax of each payor that was
reported by the taxpayer on its original or amended return
(not taking into account the foreign tax redetermination).

• Any foreign income tax paid is fully or partially
refunded.
Relation back year. Relation back year means the U.S.
tax year in which the foreign income taxes being
redetermined were originally taken into account.
Example. In U.S. tax year 1, you took into account $2
million of Country X foreign income taxes accrued with
respect to the foreign tax year that ended within U.S. tax
year 1. In year 3, Country X assessed an additional $1
million of foreign income taxes with respect to the foreign
tax year that ended within U.S. tax year 1. The relation
back year is U.S. tax year 1.
Affected tax year. Affected tax year means any tax year
for which the U.S. tax liability is changed as a result of a
foreign tax redetermination. This includes tax years in
which the U.S. tax liability is changed as a result of a
change in a carryover of a tax attribute, such as a foreign
tax credit carryover or a net operating loss carryover, from
a relation back year.
Functional currency. Functional currency means the
dollar, or in the case of a qualified business unit (QBU),
the currency of the economic environment in which a
significant part of such unit’s activities are conducted and
which is used by such unit in keeping its books and
records. See section 985(b).

Part I
Columns 4 and 5. Enter the date(s) the additional
foreign income taxes were paid and the ending date of the
foreign tax year to which such taxes relate.
Column 7. Enter the amounts of additional foreign
income tax accrued in the local currency in which the tax
is payable.

Reference ID number for contested tax. See the
Instructions for Form 7204 for the definition of and
requirements for the reference ID number for contested
foreign income tax.

Column 8. Enter the amounts of the additional foreign
income tax denominated in the functional currency of the
payor that accrued the additional foreign income tax.

Specific Instructions

Column 13. Enter the reference ID number for the
contested foreign income tax, if applicable, using the
reference ID number reported on Form 7204 filed with
respect to the contested foreign income tax.

Important: All information reported on Schedule C must
be in English. All amounts must be stated in U.S. dollars,
unless otherwise specified on the schedule.

Part II

If there are more than three payor entities for a relation
back year, attach a statement that lists all information
requested on Schedule C for those payor entities
following the format of Schedule C. If there are more than
2 relation back years (Parts I, II, III, or IV), there are other
affected years in addition to the relation back years (Part
IV), or more than 5 relation back years (Part V), attach a
statement that lists all information requested on
Schedule C for those years following the format of
Schedule C.

Columns 4 and 5. Enter the date(s) the foreign income
taxes were refunded or deemed refunded and the ending
date of the foreign tax year to which such taxes relate. If
the foreign income taxes are deemed refunded by reason
of the section 905(c)(2) two-year rule described in the
Note in the instructions for column 13, enter in column 4
the date that is 24 months after the close of the tax year to
which the foreign income taxes relate.
Column 7. Enter the amount of the foreign income tax
refunded or deemed refunded in the local currency in
which the foreign income tax is payable.

Checkboxes at top of page 1. Use a separate
Schedule C for each applicable category of income and
check the corresponding box. Check only one box for
each completed Schedule C.
See Categories of Income in the Instructions for Form
1116 for additional information regarding separate
categories. For country codes on lines (h) and (i), see
IRS.gov/CountryCodes for the code to use.

Column 8. Enter the amount refunded or deemed
refunded denominated in the functional currency of the
payor that paid or accrued the refunded amount.
Column 13. Check the box if the foreign tax
redetermination is a result of the application of the section
905(c)(2) two-year rule.

Parts I, II, III, and IV, column 1. In this column, enter the
ending date of the relation back year or affected year (Part
IV).

Note. Under section 905(c)(2), if accrued foreign income
taxes aren’t paid on or before the date that is 24 months
after the close of the tax year to which they relate
(two-year rule), there is a resulting foreign tax
redetermination that is accounted for as if the unpaid

Parts I and II, columns 2a and 2b. In columns 2a and
2b, enter the name and the employer identification
number (EIN) or reference ID of the payor. If you paid the
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Instructions for Schedule C (Form 1116) (Rev. 12-2022)

of contested foreign income tax that was provisionally
claimed as credit.

portion of the foreign income taxes were refunded on that
date. Credit may be claimed for those taxes if and when
they are ultimately paid. Foreign income taxes that first
accrue after the date 24 months after the close of the tax
year to which the taxes relate may not be claimed as a
credit until paid.

Columns 6 and 7. Check the box in column 6 if the
contest is still ongoing and check the box in column 7 if
the contest was resolved.
Columns 8 and 9. Enter the date the contest was
resolved and the amount of foreign income tax refunded
or additional foreign income tax paid, if any. Any portion of
a contested foreign income tax for which a provisional
credit is claimed that is subsequently refunded results in a
foreign tax redetermination that must be reported on
Schedule C and, if applicable, an amended return for the
tax year(s) for which the U.S. tax liability changes as a
result of such foreign tax redetermination.

Part III
Columns 2 and 3. Enter the redetermined foreign
income taxes paid or accrued and the foreign income
taxes paid or accrued per your original or previously
amended return.
Columns 4 and 5. Enter the total amount of foreign tax
credit claimed in the separate category on your original or
previously amended return and the total amount of foreign
tax credit claimed after the foreign tax redetermination.

Additional Information

For more information, see section 905(c) and Regulations
sections 1.905-1, 1.905-3, 1.905-4, and 1.905-5.

Part IV
Columns 2 through 4. Enter the total redetermined U.S.
tax liability, the total U.S. tax liability reported on your
original or previously amended return, and the difference
(subtracting column 3 from column 2) for each affected
tax year.

Paperwork Reduction Act Notice.

We ask for the information on Schedule C to carry out the
Internal Revenue laws of the United States. You're
required to give us the information. We need it to ensure
that you're complying with these laws and to allow us to
figure and collect the right amount of tax.

Part V
Don't complete Part V for the 2022 tax year.
Beginning with the 2023 tax year, taxpayers will
CAUTION enter the information requested on Schedule C,
Part V, using the instructions provided next.

You're not required to provide the information
requested on a form that is subject to the Paperwork
Reduction Act unless the form displays a valid OMB
control number. Books or records relating to a form or its
instructions must be retained as long as their contents
may become material in the administration of any Internal
Revenue law. Generally, tax returns and return
information are confidential, as required by section 6103.

!

Column 1. For taxpayers that claim credits on the
accrual basis, enter the relation back year. For taxpayers
that claim credits on the cash basis, enter the year in
which the contested foreign income tax was remitted to
the foreign country. The tax year entered on column 1
should correspond with the tax year entered on line 1 on
Form 7204 that was filed in order to claim a provisional
credit for the contested foreign income tax.

The time needed to complete and file Schedule C will
vary depending on individual circumstances. The
estimated burden for individual taxpayers filing this form is
approved under OMB control number 1545-0074 and is
included in the estimates shown in the instructions for
their individual income tax return. The estimated burden
for all other taxpayers who file this form is
Recordkeeping, 13 min.; Learning about the law or
the form, 14 min.; Preparing the form, 38 min.

Column 2. Enter the name of the payor. If you paid the
tax directly, enter your name. If the tax was paid by a
pass-through entity, such as a partnership, in which you
have an ownership interest, enter the name of that entity.
Column 3. Enter the reference ID number for the
contested foreign income tax that was used on Form
7204.

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

Columns 4 and 5. Enter the code of the country or U.S.
possession to which the tax was paid using the country
codes provided at IRS.gov/CountryCode and the amount

Instructions for Schedule C (Form 1116) (Rev. 12-2022)

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