1120-F Instructions for Form 1120-F

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2024

Instructions for
Form 1120-F
U.S. Income Tax Return of a Foreign Corporation

Future Developments

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

Photographs of Missing Children . . . . . . . . . . . .
The Taxpayer Advocate Service . . . . . . . . . . . . .
How To Get Forms and Publications . . . . . . . . . .
General Instructions . . . . . . . . . . . . . . . . . . . . .
Purpose of Form . . . . . . . . . . . . . . . . . . . . .
Who Must File . . . . . . . . . . . . . . . . . . . . . .
Special Returns for Certain Organizations . . .
Claim for Refund or Credit . . . . . . . . . . . . . .
Paid Preparer Authorization . . . . . . . . . . . . .
Other Forms, Schedules, and Statements
That May Be Required . . . . . . . . . . . . . .
Assembling the Return . . . . . . . . . . . . . . . .
Accounting Methods . . . . . . . . . . . . . . . . . .
Accounting Period . . . . . . . . . . . . . . . . . . .
Rounding Off to Whole Dollars . . . . . . . . . . .
Recordkeeping . . . . . . . . . . . . . . . . . . . . . .
Payment of Tax Due . . . . . . . . . . . . . . . . . .
Estimated Tax Payments . . . . . . . . . . . . . . .
Interest and Penalties . . . . . . . . . . . . . . . . .
Special Rules for Foreign Corporations . . . . .
Specific Instructions . . . . . . . . . . . . . . . . . . . . .
Period Covered . . . . . . . . . . . . . . . . . . . . .
Address . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employer Identification Number (EIN) . . . . . .
Computation of Tax Due or Overpayment . . .
Section I—Income From U.S. Sources Not
Effectively Connected With the Conduct of
a Trade or Business in the United States . .
Section II—Income Effectively Connected
With the Conduct of a Trade or Business in
the United States . . . . . . . . . . . . . . . . . .
Income . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deductions . . . . . . . . . . . . . . . . . . . . . . . .
Schedule C—Dividends and Special
Deductions . . . . . . . . . . . . . . . . . . . . . .
Schedule J—Tax Computation . . . . . . . . . . .
Section III—Branch Profits Tax and Tax on
Excess Interest . . . . . . . . . . . . . . . . . . . .
Schedule L—Balance Sheets per Books . . .
Schedules M-1 and M-3 . . . . . . . . . . . . . . .
Schedule W . . . . . . . . . . . . . . . . . . . . . . . .

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For the latest information about developments related to Form
1120-F and its instructions, such as legislation enacted after they
were published, go to IRS.gov/Form1120F.

What’s New
Amended returns. Instructions for filing an amended return
have been added. See Amended Return, later.
Increase in penalty for failure to file. For tax returns required
to be filed in 2025, the minimum penalty for failure to file a return
that is more than 60 days late has increased to the smaller of the
tax due or $510. See Penalty for late filing of return, later.
Relief from additions to tax for underpayments applicable
to the corporate alternative minimum tax (CAMT). For tax
year 2024, the IRS will waive the penalty imposed under section
6655 for failure to make estimated tax payments attributable to a
CAMT liability. See Notice 2024–66. Also, see the instructions for
Form 1120-F, page 1, line 6.

Photographs of Missing Children

The Internal Revenue Service is a proud partner with the
National Center for Missing & Exploited Children® (NCMEC).
Photographs of missing children selected by the Center may
appear in instructions on pages that would otherwise be blank.
You can help bring these children home by looking at the
photographs and calling 1-800-THE-LOST (1-800-843-5678) if
you recognize a child.

The Taxpayer Advocate Service

The Taxpayer Advocate Service (TAS) is an independent
organization within the IRS that helps taxpayers and protects
taxpayer rights. TAS's job is to ensure that every taxpayer is
treated fairly and knows and understands their rights under the
Taxpayer Bill of Rights.
As a taxpayer, the corporation has rights that the IRS must
abide by in its dealings with the corporation. TAS can help the
corporation if:
• A problem is causing financial difficulty for the business;
• The business is facing an immediate threat of adverse action;
or
• The corporation has tried repeatedly to contact the IRS but no
one has responded, or the IRS hasn't responded by the date
promised.
TAS has offices in every state, the District of Columbia, and
Puerto Rico. Local advocates' numbers are in their local
directories and at TaxpayerAdvocate.IRS.gov. The corporation
can also call TAS at 877-777-4778.
TAS also works to resolve large-scale or systemic problems
that affect many taxpayers. If the corporation knows of one of
these broad issues, please report it to TAS through the Systemic
Advocacy Management System at IRS.gov/SAMS.
For more information, go to IRS.gov/Advocate.

Nov 14, 2024

Instructions for Form 1120F (2024) Catalog Number 11475L
Department of the Treasury Internal Revenue Service www.irs.gov

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How To Get Forms and Publications
Internet. Access IRS.gov 24 hours a day, 7 days a week, to:
• Download free forms, instructions, and publications;
• Order IRS products online;
• Research your tax questions online;
• Search publications online by topic or keyword;
• View Internal Revenue Bulletins (IRBs) published in recent
years; and
• Sign up to receive local and national tax news by email.
Tax forms and publications. The corporation can view, print,
or download all of the forms and publications it may need on
IRS.gov/FormsPubs. Or, the corporation can go to IRS.gov/
OrderForms to place an order and have forms mailed to it.

General Instructions
Purpose of Form

Use Form 1120-F to report the income, gains, losses,
deductions, credits, and to figure the U.S. income tax liability of a
foreign corporation. Also, use Form 1120-F to claim any refund
that is due, to transmit Form 8833, Treaty-Based Return Position
Disclosure Under Section 6114 or 7701(b), or to calculate and
pay a foreign corporation's branch profits tax liability and tax on
excess interest, if any, under section 884.

Who Must File

Unless one of the exceptions under Exceptions From Filing
below applies or a special return is required (see Special
Returns for Certain Organizations, later), a foreign corporation
must file Form 1120-F if, during the tax year, the corporation:
• Was engaged in a trade or business in the United States,
whether or not it had U.S. source income from that trade or
business, and whether or not income from such trade or
business is exempt from U.S. tax under a tax treaty (see also
Protective Return Filers, later);
• Had income, gains, or losses treated as if they were effectively
connected with the conduct of a U.S. trade or business (see
Section II, later);
• Was not engaged in a trade or business in the United States,
but had income from any U.S. source, if its tax liability has not
been fully satisfied by the withholding of tax at source under
Chapter 3 of the Code; or
• Was, or had a branch that was, a qualified derivatives dealer
(QDD).
This form is also required to be filed by:

• A foreign corporation making a claim for the refund of an

overpayment of tax for the tax year. See Simplified Procedure for
Claiming a Refund of U.S. Tax Withheld at Source, later.
• A foreign corporation claiming the benefit of any deductions or
credits. See Other Filing Requirements, later.
• A foreign corporation making a claim that an income treaty
overruled or modified any provision of the Internal Revenue
Code with respect to income derived by the foreign corporation
at any time during the tax year, and such position is required to
be disclosed on Form 8833. See the instructions for Form 8833
for who must file Form 8833, and who is exempt from filing by
reason of a waiver provided under section 6114 and the
regulations thereunder. If Form 8833 is required, complete item
W(1) on page 2 of the form.
Others that must file Form 1120-F include the following.

• A Mexican or Canadian branch of a U.S. mutual life insurance

company. The branch must file Form 1120-F on the same basis
as a foreign corporation if the U.S. company elects to exclude
the branch's income and expenses from its own gross income.
• A receiver, assignee, or trustee in dissolution or bankruptcy, if
that person has or holds title to virtually all of a foreign
2

corporation's property or business. Form 1120-F is due whether
or not the property or business is being operated (see
Who Must Sign, later, for additional information).
• An agent in the United States, if the foreign corporation has no
office or place of business in the United States when the return is
due.
Treaty or Code exemption. If the corporation does not have
any gross income for the tax year because it is claiming a treaty
or Code exemption, it must still file Form 1120-F to show that the
income was exempted by treaty or Code. In this case, the
corporation should only complete the identifying information
(including items A through G) at the top of page 1 of Form
1120-F and a statement that indicates the nature and amount of
the exclusions claimed. In the case of a treaty exemption, the
corporation may complete item W(1) on page 2 of Form 1120-F,
which includes completing and attaching Form 8833, if required
in lieu of attaching a statement. In the case of a Code exemption
under section 883, the corporation must attach Schedule S
(Form 1120-F) in lieu of attaching a statement.
Note. If the corporation does not have any gross income for the
tax year because it is claiming a treaty or Code exemption, and
there was withholding at source, the corporation must complete
the Computation of Tax Due or Overpayment section at the
bottom of page 1 of Form 1120-F (in addition to the information
specified in the previous paragraph) to claim a refund of the
amounts withheld.
Entities electing to be taxed as foreign corporations. A
foreign eligible entity that elected to be classified as a
corporation must file Form 1120-F under the same
circumstances as a per se corporation and an entity that defaults
into corporate status unless it is required to file a special return
listed under Special Returns for Certain Organizations, later. The
entity must also have filed Form 8832, Entity Classification
Election. A foreign corporation filing Form 1120-F for the year of
the election must attach a copy of Form 8832 to its Form 1120-F.
See Form 8832, later, for additional information.
Protective return. If a foreign corporation conducts limited
activities in the United States in a tax year that the foreign
corporation determines does not give rise to gross income that is
effectively connected with the conduct of a trade or business
within the United States, the foreign corporation should follow
the instructions for filing a protective return to safeguard its right
to receive the benefit of the deductions and credits attributable to
that gross income under Regulations section 1.882-4(a)(3)(vi) in
the event that it is subsequently determined that the original
determination was incorrect. A foreign corporation should also
file a protective return if it determines initially that it has no U.S.
tax liability under the provisions of an applicable income tax
treaty (for example, because its income is not attributable to a
permanent establishment in the United States). See Protective
Return Filers, later. A foreign corporation that does not file a
return will lose the right to take deductions and credits against
effectively connected income (ECI). See Other Filing
Requirements, later.
Qualified derivatives dealer. A foreign corporation that was, or
had a branch that was, a qualified derivatives dealer must file
Form 1120-F even if one of the exceptions in Exceptions From
Filing below applies.
Qualified opportunity fund. To certify as a qualified
opportunity fund (QOF), a foreign corporation organized in a U.S.
terrritory must file Form 1120-F and attach Form 8996, even if
the corporation had no income or expenses to report. See Item II
on page 3 of Form 1120-F. Also, see the Instructions for Form
8996.
Qualified opportunity investment. If the foreign corporation
held a qualified investment in a QOF at any time during the year,
Instructions for Form 1120-F (2024)

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the corporation must file its return with Form 8997 attached. See
the instructions for Form 8997.
Note. A foreign corporation that was, or held an investment in, a
QOF must meet the filing requirements indicated in the two
preceding paragraphs even if one of the exceptions in
“Exceptions From Filing ” below applies.

Exceptions From Filing

A foreign corporation does not have to file Form 1120-F if any of
the following apply.
• It did not engage directly or indirectly in a U.S. trade or
business during the year, and its full U.S. tax was withheld at
source.
• Its only U.S. source income is exempt from U.S. taxation
under section 881(c) or (d).
• It is a beneficiary of an estate or trust engaged in a U.S. trade
or business, but would itself otherwise not need to file.

Special Returns for Certain
Organizations

Instead of filing Form 1120-F, certain foreign organizations must
file special returns.
• Form 1120-L, U.S. Life Insurance Company Income Tax
Return, as a foreign life insurance company.
• Form 1120-PC, U.S. Property and Casualty Insurance
Company Income Tax Return, as a foreign nonlife insurance
company.
• Form 1120-FSC, U.S. Income Tax Return of a Foreign Sales
Corporation, if the corporation elected to be treated as an FSC
and the election is still in effect.
Consolidated returns. A foreign corporation, regardless of
whether it files a special return, may not belong to an affiliated
group of corporations that files a consolidated return. However, a
Canadian or Mexican corporation described in section 1504(d),
maintained solely for complying with the laws of Canada or
Mexico for title and operation of property, may elect to be treated
as a domestic corporation and thereby file as part of an affiliated
group.

Electronic Filing

Corporations can generally electronically file (e-file) Form
1120-F, related forms, schedules, and attachments; Form 7004
(automatic extension of time to file); and Forms 940, 941, and
944 (employment tax returns). If there is a balance due, the
corporation can authorize an electronic funds withdrawal while
e-filing. Form 1099 and other information returns can also be
electronically filed. The option to e-file does not, however, apply
to certain returns.
For returns filed on or after January 1, 2024, corporations that
file 10 or more returns are required to e-file Form 1120-F. See
Regulations section 301.6011-5. However, these corporations
can request a waiver of the electronic filing requirements.
For more information on e-filing, see E-file for Business and
Self-employed Taxpayers on IRS.gov.

Exclusions From Electronic Filing
Waivers. The IRS may waive the electronic filing rules if the
corporation demonstrates that a hardship would result if it were
required to file its return electronically. A corporation interested in
requesting a waiver of the mandatory electronic filing
requirement must file a written request, and request one in the
manner prescribed by the IRS. All written requests for waivers
should be mailed to:

Instructions for Form 1120-F (2024)

Internal Revenue Service
Ogden Submission Processing Center
Attn: Form 1120-F e-file Waiver Request
Mail Stop 1057
Ogden, UT 84201
If using a delivery service, requests for waivers should be mailed
to:
Internal Revenue Service
Ogden Submission Processing Center
Attn: Form 1120-F e-file Waiver Request
Mail Stop 1057
1973 N. Rulon White Blvd.
Ogden, UT 84404
Waiver requests can also be faxed to 877-477-0575. Contact the
e-Help Desk at 866-255-0654 for questions regarding the waiver
procedures or process.
Exemptions. The IRS may provide exemptions from the
requirements to electronically file. If using the technology
required to electronically file conflicts with your religious beliefs,
the corporation is exempt from the requirement. Clearly indicate
the exemption on the corporation’s return. Write "Religious
Exemption" at the top of page 1 of Form 1120-F. File the foreign
corporation's return at the applicable IRS address. See Where
To File, later. For more information, see Notice 2024-18, 2024-5
I.R.B. 625, available at IRS.gov/irb/2024-05_IRB#NOT-2024-18.

Claim for Refund or Credit

If the corporation is filing Form 1120-F only as a claim for refund
or credit of tax paid or withheld at source, the simplified
procedure described below may be used. This simplified
procedure may not be used by a corporation that was a QDD or
had a branch that was a QDD.
Note. You cannot claim a refund based on a reduced rate of, or
exemption from, U.S tax withheld from a substitute dividend
payment made in connection with a securities lending or similar
transaction if the tax was withheld by a withholding agent other
than the withholding agent from which you received the payment
(amounts are reported in box 8 of Form 1042-S). See Notice
2010-46, 2010-24 I.R.B. 757, available at IRS.gov/irb/
2010-24_IRB#NOT-2010-46, for further information on
limitations on refunds and credits permitted in such cases.

Simplified Procedure for Claiming a Refund of
U.S. Tax Withheld at Source

To make a claim for a refund, complete Form 1120-F as follows.

Page 1. Enter the complete name, address, and employer
identification number (EIN) of the corporation. Check the
applicable box to indicate the type of filing. Provide all the
information required in items A through G.
Refund amount. Enter on lines 1 and 4, page 1, the amount
from line 11, page 4. Enter on lines 5i and 5z the amount from
line 12, page 4. Enter the excess of line 5z over line 4 on lines 8a
and 9. This is the amount to be refunded to you.
Signature. An authorized officer of the corporation must sign
and date the return.
Pages 2 and 3. Additional information. Complete all items on
pages 2 and 3 of Form 1120-F that apply to the corporation.
Page 4. Section I. Enter in column (b) the gross amount of
each type of income received that is required to be reported in
Section I (see Section I, later, for details). Include income from
foreign sources that was subject to backup withholding. Do not
include income from which no U.S. tax was withheld. If the
corporation is subject to backup withholding on gross proceeds
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from sales of securities or transactions in regulated futures
contracts, enter the gross proceeds on line 10.
Enter in columns (c) and (d), respectively, the correct rate and
amount of U.S. income tax liability for each type of income
reported in column (b). If the corporation is claiming a refund of
U.S. tax withheld in excess of the rate provided in a tax treaty
with the United States, enter the applicable treaty rate in column
(c) and figure the correct U.S. income tax liability on the gross
income reported in column (b).
Enter in column (e) the U.S. tax actually withheld at source
(and not refunded by the payer or the withholding agent) from
each type of income reported. This should be the amount
reported to you in box 10, Total withholding credit, of Form(s)
1042-S, which includes the total amount of federal tax withheld
at source less any amount that was repaid to you by the
withholding agent. If multiple rates of tax are applicable to a type
of income, attach a statement showing the gross amounts of
income, applicable rate, and amount of liability and withholding
imposed for the respective amounts at each tax rate (for
example, if a corporation receives subsidiary dividends subject
to tax at 5% and portfolio dividends subject to tax at 15%, a
statement must be attached for Section I, line 2a, to show the
amount of dividend and tax liability for each respective rate).
Enter on line 11 the total U.S. tax liability for the reported
income.
Enter on line 12 the total U.S. tax actually withheld from such
income.
Check the appropriate box on line 13. A fiscally transparent
entity is one that is not itself generally subject to income tax but
one whose tax attributes flow through to its owners.

Additional Documentation Required
The corporation must attach to Form 1120-F the following.
1. Proof of the withholding (for example, Form 1042-S).
2. A statement that describes the basis for the claim for
refund.
3. Any required tax certifications (for example, Form
W-8BEN-E).
4. Any additional documentation to support the claim.
Refund of backup withholding tax. If the corporation is
claiming a refund of backup withholding tax based on its status
as a non-U.S. resident, it must:
• Provide a copy of the Form 1099 that shows the amount of
reportable payment and backup withholding, and
• Attach a statement signed under penalties of perjury that the
corporation is exempt from backup withholding because it is not
a U.S. corporation or other U.S. resident (for example, Form
W-8BEN-E).
Refunds of U.S. withholding. If any of the following apply,
attach the information requested in addition to the additional
documentation described earlier.
• If you are claiming a refund of U.S. tax withheld under
Chapter 4, you must provide a statement explaining the basis for
the claim and must provide the other information requested in
this section to establish a reduced rate, or exemption from, tax
under section 881. See Regulations section 1.1474-5 for the
requirements for claiming a credit or refund of tax withheld under
Chapter 4.
• If claiming a refund of U.S. tax withheld from portfolio interest,
include a description of the relevant debt obligation, including the
name of the issuer, CUSIP number (if any), interest rate,
scheduled maturity date, and the date the debt was issued. Also,
include a statement, signed under penalties of perjury, that the
corporation is the beneficial owner of the interest income and not
4

a U.S. corporation or other U.S. resident (for example, Form
W-8BEN-E).
• If claiming a reduced rate of, or exemption from, tax based on
a tax treaty, provide a certificate of entitlement to treaty benefits
(for example, Form W-8BEN-E). A separate statement should be
provided that contains any additional representations necessary
to explain the basis for the claim. The corporation may complete
item W(1) on page 2 of the form (which includes completing and
attaching Form 8833, if required) in lieu of attaching a statement.
Note. To claim a reduced rate of, or exemption from, tax based
on a tax treaty, the corporation must generally be a resident of
the particular treaty country within the meaning of the treaty and
satisfy the limitation on benefits article, if any, in the treaty with
that country.
• If claiming a refund for overwithholding on a distribution from a
U.S. corporation with respect to its stock because the
corporation has insufficient earnings and profits to support
ordinary dividend treatment, provide a statement that identifies
the distributing corporation and provides the basis for the claim.
• If claiming a refund for overwithholding on a distribution from a
mutual fund or a real estate investment trust (REIT) with respect
to its stock because the distribution was designated as long-term
capital gain or a return of capital, provide a statement that
identifies the mutual fund or REIT and provide the basis for the
claim.
• If claiming a refund for overwithholding on a distribution from a
U.S. corporation with respect to its stock because, in the foreign
corporation's particular circumstances, the transaction qualifies
as a redemption of stock under section 302, provide a statement
that describes the transaction and presents the facts necessary
to establish that the payment was (a) a complete redemption, (b)
a disproportionate redemption, or (c) not essentially equivalent
to a dividend.

When To File
Foreign Corporation With an Office or Place of
Business in the United States

A foreign corporation that maintains an office or place of
business in the United States must generally file Form 1120-F by
the 15th day of the 4th month after the end of its tax year. A new
corporation filing a short-period return must generally file by the
15th day of the 4th month after the short period ends. A
corporation that has dissolved must generally file by the 15th day
of the 4th month after the date it dissolved.
However, a corporation with a fiscal tax year ending June 30
must file by the 15th day of the 3rd month after the end of its tax
year. A corporation with a short tax year ending anytime in June
will be treated as if the short year ended on June 30, and must
file by the 15th day of the 3rd month after the end of its tax year.
If the due date falls on a Saturday, Sunday, or legal holiday,
the corporation can file on the next business day.
Extension of time to file. The corporation must file Form 7004,
Application for Automatic Extension of Time To File Certain
Business Income Tax, Information, and Other Returns, by the
return due date specified in the previous two paragraphs to
request an extension of time to file. However, there is an
exception that applies under Regulations section 1.6081-5. See
the Instructions for Form 7004 for additional information.

Foreign Corporation With No Office or Place of
Business in the United States

A foreign corporation that does not maintain an office or place of
business in the United States must generally file Form 1120-F by
the 15th day of the 6th month after the end of its tax year.

Instructions for Form 1120-F (2024)

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If the due date falls on a Saturday, Sunday, or legal holiday,
the corporation can file on the next business day.
Extension of time to file. File Form 7004 by the 15th day of the
6th month after the end of the tax year to request an extension of
time to file. See the Instructions for Form 7004 for additional
information.

Other Filing Requirements
• If the due date of any filing falls on a Saturday, Sunday, or

legal holiday, the corporation may file on the next business day.
• Form 1120-F must be filed on a timely basis and in a true and
accurate manner in order for a foreign corporation to take
deductions and credits against its ECI. For these purposes,
Form 1120-F is generally considered to be timely filed if it is filed
no later than 18 months after the due date of the current year's
return. An exception may apply to foreign corporations that have
yet to file Form 1120-F for the preceding tax year. These filing
deadlines may be waived in limited situations based on the facts
and circumstances, where the foreign corporation establishes to
the satisfaction of the Commissioner that the foreign corporation
acted reasonably and in good faith in failing to file Form 1120-F.
See Regulations section 1.882-4(a)(3)(ii) for more information
about the waiver.
A foreign corporation is allowed the following deductions and
credits regardless of whether Form 1120-F is timely filed.
1. The charitable contributions deduction (page 5, Section II,
line 19).
2. The credit from Form 2439 (page 1, line 5f).
3. The credit for federal tax on fuels (page 1, line 5g).
4. U.S. income tax paid or withheld at source (page 1,
line 5i).
See Regulations section 1.882-4 for details.

Private Delivery Services

Corporations can use certain private delivery services (PDS)
designated by the IRS to meet the “timely mailing as timely filing”
rule for tax returns. Go to IRS.gov/PDS.
The PDS can tell you how to get written proof of the mailing
date.
For the IRS mailing address to use if you're using a PDS, go
to IRS.gov/PDSStreetAddresses.

!

CAUTION

Private delivery services cannot deliver items to P.O.
boxes. You must use the U.S. Postal Service to mail any
item to an IRS P.O. box address.

Where To File

File Form 1120-F with the Internal Revenue Service Center, P.O.
Box 409101, Ogden, UT 84409.

Who Must Sign

The return must be signed and dated by:
• The president, vice president, treasurer, assistant treasurer,
chief accounting officer; or
• Any other corporate officer (such as tax officer) authorized to
sign.
If a return is filed on behalf of a corporation by a receiver,
trustee, or assignee, the fiduciary must sign the return, instead of
the corporate officer. Returns and forms signed by a receiver or
trustee in bankruptcy on behalf of a corporation must be
accompanied by a copy of the order or instructions of the court
authorizing signing of the return or form.
Paid Preparer Use Only section. If an employee of the
corporation completes Form 1120-F, the paid preparer section
Instructions for Form 1120-F (2024)

should remain blank. Anyone who prepares Form 1120-F but
does not charge the corporation should not complete that
section. Generally, anyone who is paid to prepare the return
must sign and complete the section.
The paid preparer must complete the required preparer
information and:
• Sign the return in the space provided for the preparer's
signature,
• Include their Preparer Tax Identification Number (PTIN), and
• Give a copy of the return to the taxpayer.
A paid preparer may sign original or amended returns by

TIP rubber stamp, mechanical device, or computer software
program.

Paid Preparer Authorization

If the corporation wants to allow the IRS to discuss its 2024 tax
return with the paid preparer who signed it, check the “Yes” box
in the signature area of the return. This authorization applies only
to the individual whose signature appears in the “Paid Preparer
Use Only” section of the return. It does not apply to the firm, if
any, shown in that section.

If the “Yes” box is checked, the corporation is authorizing the
IRS to call the paid preparer to answer any questions that may
arise during the processing of its return. The corporation is also
authorizing the paid preparer to:
• Give the IRS any information that is missing from the return;
• Call the IRS for information about the processing of the return
or the status of any related refund or payment(s); and
• Respond to certain IRS notices about math errors, offsets,
and return preparation.
The corporation is not authorizing the paid preparer to receive
any refund check, bind the corporation to anything (including any
additional tax liability), or otherwise represent the corporation
before the IRS.
The authorization will automatically end no later than the due
date (excluding extensions) for filing the corporation's 2025 tax
return. If the corporation wants to expand the paid preparer's
authorization or revoke the authorization before it ends, see Pub.
947, Practice Before the IRS and Power of Attorney.

Other Forms, Schedules, and
Statements That May Be Required
Forms

A foreign corporation may have to file some of the following
forms and schedules. See the form or schedule for more
information.
For a list of additional forms the corporation may need to file
(most notably, forms pertaining to the reporting of various types
of income, and any related withholding, to U.S. persons, foreign
persons, and the IRS), see Pub. 542, Corporations.
Form 1094-C, Transmittal of Employer Health Coverage
Statements, and Form 1095-C, Employer-Provided Health
Coverage Statement. Employers with 50 or more full-time
employees (including full-time equivalent employees) use Forms
1094-C and 1095-C to report the information required under
sections 6055 and 6056 about offers of health coverage and
enrollment in health coverage for their employees. Form 1094-C
must be used to report to the IRS summary information for each
employer and to transmit Forms 1095-C to the IRS. Form 1095-C
is used to report information about each employee. In addition,
Forms 1094-C and 1095-C are used in determining whether an
employer owes payments under the employer shared
responsibility provisions under section 4980H. For more
information, see the Instructions for Forms 1094-C and 1095-C.
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Also, for more information related to the Affordable Care Act, visit
IRS.gov/ACA.
Form 5472, Information Return of a 25% Foreign-Owned U.S.
Corporation or a Foreign Corporation Engaged in a U.S. Trade or
Business. This form is filed by or for a foreign corporation
engaged in a U.S. trade or business that had reportable
transactions with a related party. See the Instructions for Form
5472 for filing instructions and information for failure to file and
maintain records.
Form 8275, Disclosure Statement, and Form 8275-R,
Regulation Disclosure Statement. Use these forms to disclose
items or positions taken on a tax return that are not otherwise
adequately disclosed on a tax return or that are contrary to
Treasury regulations (to avoid parts of the accuracy-related
penalty or certain preparer penalties).
Form 8300, Report of Cash Payments Over $10,000 Received
in a Trade or Business. Use this form to report the receipt of
more than $10,000 in cash or foreign currency in one transaction
or a series of related transactions.
Form 8302, Electronic Deposit of Tax Refund of $1 Million or
More. The form must be filed to request an electronic deposit of
a tax refund of $1 million or more.
Form 8832, Entity Classification Election. This form is filed by
an eligible entity to elect how it will be classified for federal tax
purposes. If the corporation filed Form 8832 to make an initial
classification election to be a corporation or to change its
classification to be a corporation effective during the current tax
year, the corporation must attach a copy of the Form 8832
to its Form 1120-F. If the corporation owns a direct or indirect
interest in an entity that is not required to file a return, but for
which a Form 8832 was filed to make a change in the
classification of the entity that is effective during the current tax
year, the corporation must attach a copy of the Form 8832
with respect to that entity to its Form 1120-F for the current
tax year. Examples of when the corporation must attach a copy
of the Form 8832 for an entity in which it has an interest include
the corporation's ownership of:
• An entity that elected to be a disregarded entity,
• A foreign entity that elected to be a partnership but does not
itself have a Form 1065 filing requirement, and
• A foreign corporation that owns a foreign entity that elected to
be a disregarded entity.
The corporation does not need to attach the Form 8832 for an
entity in which it has an indirect interest if an entity in which it has
an interest is already attaching a copy of the Form 8832 with its
return. See Regulations section 301.7701-3(c)(1)(ii).
Form 8833, Treaty-Based Return Position Disclosure Under
Section 6114 or 7701(b). Use this form to make the treaty-based
return position disclosure required by section 6114.
Form 8848, Consent To Extend the Time To Assess the Branch
Profits Tax Under Regulations Sections 1.884-2(a) and (c). Use
this form to execute a waiver of period of limitations in regard to a
termination or incorporation of a U.S. trade or business or
liquidation or reorganization of a foreign corporation or its
domestic subsidiary. See the instructions for Section III, Part I, of
Form 1120-F.
Form 8886, Reportable Transaction Disclosure Statement. Use
this form to disclose information for each reportable transaction
in which the corporation participated. Form 8886 must be filed
for each tax year that the federal income tax liability of the
corporation is affected by its participation in the transaction. The
following are reportable transactions.
1. Any listed transaction, which is a transaction that is the
same as or substantially similar to one of the types of
transactions that the IRS has determined to be a tax avoidance
6

transaction and identified by notice, regulation, or other
published guidance as a listed transaction.
2. Any transaction offered under conditions of confidentiality
for which the corporation (or a related party) paid an advisor a
fee of at least $250,000.
3. Certain transactions for which the corporation (or a
related party) has contractual protection against disallowance of
the tax benefits.
4. Certain transactions resulting in a loss of at least $10
million in any single year or $20 million in any combination of
years.
5. Any transaction identified by the IRS by notice, regulation,
or other published guidance as a “transaction of interest.”
For more information, see Regulations section 1.6011-4.
Also, see the Instructions for Form 8886.
Penalties. The corporation may have to pay a penalty if it is
required to disclose a reportable transaction under section 6011
and fails to properly complete and file Form 8886. Penalties may
also apply under section 6707A if the corporation fails to file
Form 8886 with its corporate return, fails to provide a copy of
Form 8886 to the Office of Tax Shelter Analysis (OTSA), or files a
form that fails to include all the information required (or includes
incorrect information). Other penalties, such as an
accuracy-related penalty under section 6662A, may also apply.
See the Instructions for Form 8886 for details on these and other
penalties.
Reportable transactions by material advisors. Material
advisors to any reportable transaction must disclose certain
information about the reportable transaction by filing Form 8918
with the IRS. For details, see the Instructions for Form 8918.

Schedules
Schedule H, Deductions Allocated to Effectively Connected
Income Under Regulations Section 1.861-8. This schedule is
required to be attached to report certain deductions of the
corporation that are allocable to ECI. If the corporation has any
deductions reportable on Form 1120-F, Section II, lines 12
through 27, then Schedule H is required to be attached. See the
separate Instructions for Schedule H for details.
Note. Line 20 of Schedule H is reportable on Form 1120-F,
Section II, line 26.
Schedule I, Interest Expense Allocation Under Regulations
Section 1.882-5. This schedule is required to be attached to
report any interest expense allocable to ECI under Regulations
section 1.882-5. The schedule must be attached whether or not
such allocable interest is deductible against ECI in the current
year. See the separate Instructions for Schedule I (Form 1120-F)
for identification of elective allocation methods and computation
of the allocable and deductible amounts of interest expense.
Note. Line 25 of Schedule I is reportable on Form 1120-F,
Section II, line 18.
Schedule P, List of Foreign Partner Interests in Partnerships. This schedule is required to be attached to report all ECI
included in Schedules K-3 (Form 1065) the foreign corporation
receives for each of its directly held partnership interests.
Schedule P is also required to report the corporation's adjusted
outside basis in its directly held partnership interest and the
amount of the outside basis of each such interest apportioned to
ECI under Regulations section 1.884-1(d)(3). See the separate
Instructions for Schedule P (Form 1120-F) for the reconciliation
of ECI and distributive share of expenses reported on Schedules
K-3 (Form 1065). Finally, Schedule P is required to report
information regarding a foreign corporate partner's transfer of an
interest in a partnership and the calculation of gain or loss on the
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transfer when the partnership directly or indirectly either is
engaged in the conduct of a trade or business within the United
States or holds any U.S. real property interests. Do not file
Schedule P if the corporation has no partnership interests that
give rise to ECI that is included in the income reported to the
corporation on Schedules K-3 (Form 1065) and there has not
been a transfer of an interest in a partnership that directly or
indirectly either is engaged in the conduct of a trade or business
within the United States or holds any U.S. real property interests.
Note. If the corporation has received Form 8805, Foreign
Partner's Information Statement of Section 1446 Withholding
Tax, it will have ECI includible in its Schedule K-3 (Form 1065)
that is required to be reported on Schedule P.
Schedule S, Exclusion of Income From the International
Operation of Ships or Aircraft Under Section 883. This
schedule is required to be attached to claim a Code exemption
under section 883. This schedule incorporates the information
required under Regulations sections 1.883-1 through 1.883-4.
See the separate Instructions for Schedule S (Form 1120-F) for
details.
Schedule V, List of Vessels or Aircraft, Operators, and Owners. This schedule is required to be attached if the corporation
is required to report gross transportation income in Section I,
line 9, column (b). See the separate Instructions for Schedule V
(Form 1120-F) for details.

Statements
Transfers to a corporation controlled by the transferor.
Every significant transferor (as defined in Regulations section
1.351-3(d)(1)) that receives stock of a corporation in exchange
for property in a nonrecognition event must include the
statement required by Regulations section 1.351-3(a) on or with
the transferor's tax return for the tax year of the exchange. The
transferee corporation must include the statement required by
Regulations section 1.351-3(b) on or with its return for the tax
year of the exchange, unless all the required information is
included in any statement(s) provided by a significant transferor
that is attached to the same return for the same section 351
exchange. If the transferor or transferee corporation is a
controlled foreign corporation (CFC), each U.S. shareholder
(within the meaning of section 951(b)) must include the required
statement on or with its return.
Distributions under section 355. Every corporation that
makes a distribution of stock or securities of a controlled
corporation, as described in section 355 (or so much of section
356 as relates to section 355), must include the statement
required by Regulations section 1.355-5(a) on or with its return
for the year of the distribution. A significant distributee (as
defined in Regulations section 1.355-5(c)) that receives stock or
securities of a controlled corporation must include the statement
required by Regulations section 1.355-5(b) on or with its return
for the year of the receipt. If the distributing or distributee
corporation is a CFC, each U.S. shareholder (within the meaning
of section 951(b)) must include the statement on or with its
return.
Election to reduce basis under section 362(e)(2)(C). If
property is transferred to a corporation subject to section 362(e)
(2), the transferor and the transferee corporation may elect,
under section 362(e)(2)(C), to reduce the transferor's basis in
the stock received instead of reducing the transferee
corporation's basis in the property transferred. Once made, the
election is irrevocable. For more information, see section 362(e)
(2) and Regulations section 1.362-4. If an election is made, a
statement must be filed in accordance with Regulations section
1.362-4(d)(3).

Instructions for Form 1120-F (2024)

Foreign corporation with income excluded from gross income. If the foreign corporation has income excluded from
gross income for the tax year, do not complete the Form 1120-F
schedules. Instead, attach a statement to the return showing the
types and amounts of income excluded from gross income. See
Treaty or Code exemption, earlier, for more information.
Election to reduce liabilities under Regulations section
1.884-1(e)(3). If a taxpayer has a dividend equivalent amount
that is subject to the branch profits tax under section 884(a), it
may elect to reduce its U.S. liabilities under the branch profits tax
regulations to treat its effectively connected earnings and profits
as reinvested rather than remitted. A taxpayer may elect to
reduce the amount of its liabilities by an amount that does not
exceed the lesser of the amount of U.S. liabilities or the amount
of U.S. liability reduction needed to reduce a dividend equivalent
amount to zero. The election is made by attaching a statement to
a timely filed tax return (including the extension due date)
indicating the amount of U.S. liabilities reduced for branch profits
tax purposes and the corresponding amount also reduced from
U.S.-connected liabilities for interest expense allocation
purposes. See Regulations section 1.884-1(e)(3).

Assembling the Return

To ensure that the corporation's tax return is correctly processed,
attach all schedules and other forms after page 9 of Form
1120-F, in the following order.
1. Form 4626.
2. Schedule D (Form 1120).
3. Form 8949.
4. Form 8996.
5. Form 4136.
6. Form 8978.
7. Form 8941.
8. Form 3800.
9. Form 8997.
10. Form 4255.
11. Additional schedules in alphabetical order.
12. Additional forms in numerical order.
13. Supporting statements and attachments.
Complete every applicable entry space on Form 1120-F. 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 support
and attach them last. Show the totals on the printed forms. Enter
the corporation's name and EIN on each supporting statement or
attachment.

Note. If the corporation had tax withheld under Chapter 3 or 4 of
the Internal Revenue Code and received a Form 1042-S, Foreign
Person's U.S. Source Income Subject to Withholding, Form
8805, Foreign Partner's Information Statement of Section 1446
Withholding Tax, or Form 8288-A, Statement of Withholding on
Dispositions by Foreign Persons of U.S. Real Property Interests,
showing the amount of income tax withheld, attach such form(s)
to Form 1120-F to claim a withholding credit. The corporation
should report the tax withheld on Form 1120-F, page 1, line 5i.
See the instructions for Line 5i.

Accounting Methods

In general, figure taxable income using the method of accounting
regularly used in keeping the corporation's books and records. In
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all cases, the method used must clearly show taxable income.
Permissible overall methods of accounting include cash, accrual,
or any other method authorized by the Internal Revenue Code.
Generally, the following rules apply. For more information, see
Pub. 538, Accounting Periods and Methods.
• A corporation cannot use the cash method of accounting
unless it is a small business taxpayer (defined later). A tax
shelter (defined in section 448(d)(3)) may never use the cash
method. See sections 448(a)(1) through (a)(3). However, see
Nonaccrual experience method for service providers in the
instructions for Section II, line 1a, later.
• Unless it is a small business taxpayer (defined below), a
corporation must use an accrual method for sales and
purchases of inventory items. See the instructions for Form
1125-A.
• A corporation engaged in farming must use an accrual
method. For exceptions, see section 447 and Pub. 225.
• Special rules apply to long-term contracts. See section 460.
• Dealers in securities must use the mark-to-market accounting
method. Dealers in commodities and traders in securities and
commodities may elect to use the mark-to-market accounting
method. See section 475.
Small business taxpayer. For tax years beginning in 2024, a
corporation qualifies as a small business taxpayer if (a) it has
average annual gross receipts of $30 million or less for the 3
prior tax years, and (b) is not a tax shelter (as defined in section
448(d)(3)).
A small business taxpayer can account for inventory by (a)
treating the inventory as non-incidental materials and supplies,
or (b) conforming to its treatment of inventory in an applicable
financial statement (as defined in section 451(b)(3)). If it does
not have an applicable financial statement, it can use the method
of accounting used in its books and records prepared according
to its accounting procedures.
Change in accounting method. Generally, the corporation
must get IRS consent to change either an overall method of
accounting or the accounting treatment of any material item for
income tax purposes. To obtain consent, the corporation must
generally file Form 3115, Application for Change in Accounting
Method, during the tax year for which the change is requested.
See the Instructions for Form 3115 and Pub. 538 for more
information and exceptions. Also see the Instructions for Form
3115 for procedures that may apply for obtaining automatic
consent to change certain methods of accounting,
non-automatic change procedures, and reduced Form 3115
filing requirements.
Section 481(a) adjustment. If the corporation's taxable
income for the current tax year is figured under a method of
accounting different from the method used in the preceding tax
year, the corporation may have to make an adjustment under
section 481(a) to prevent amounts of income or expense from
being duplicated or omitted. The section 481(a) adjustment
period is generally 1 year for a net negative adjustment and 4
years for a net positive adjustment. Also, see the Instructions for
Form 3115.
Exceptions to the general section 481(a) adjustment period
may apply. Also, in some cases, a corporation can elect to
modify the section 481(a) adjustment period. The corporation
may have to complete the appropriate lines of Form 3115 to
make an election. See the Instructions for Form 3115 for more
information and exceptions.
If the net section 481(a) adjustment is positive, report the
ratable portion on Form 1120-F, Section II, line 10, as other
income. If the net section 481(a) adjustment is negative, report
the ratable portion on line 27 of Section II as a deduction.

8

Accounting Period

A corporation must figure its taxable income on the basis of a tax
year. A tax year is the annual accounting period a corporation
uses to keep its records and report its income and expenses.
Generally, corporations may use a calendar year or a fiscal year.
Personal service corporations, however, must use a calendar
year unless they meet one of the exceptions discussed under
Personal Service Corporation, later. Furthermore, special rules
apply to specified foreign corporations. See Specified Foreign
Corporations below.
Change of tax year. Generally, a corporation, including a
personal service corporation, must get the consent of the IRS
before changing its tax year by filing Form 1128, Application To
Adopt, Change, or Retain a Tax Year. However, exceptions may
apply. See the Instructions for Form 1128 and Pub. 538 for more
information.

Specified Foreign Corporations

The annual accounting period of a specified foreign corporation
(defined below) is generally required to be the tax year of its
majority U.S. shareholder. If there is more than one majority
shareholder, the required tax year will be the tax year that results
in the least aggregate deferral of income to all U.S. shareholders
of the foreign corporation. For more information, see section 898;
Rev. Proc. 2006-45, 2006-2 C.B. 851, available at IRS.gov/irb/
2006-45_IRB#RP-2006-45; and Rev. Proc. 2002-39, 2002-1
C.B. 1046, available at IRS.gov/pub/irs-irbs/irb02-22, as
modified by Notice 2002-72, 2002-2 C.B. 843, available at
IRS.gov/pub/irs-irbs/irb02-46.
Specified foreign corporation. A specified foreign corporation
(as defined in section 898) is any foreign corporation that is
treated as a controlled foreign corporation (CFC) under subpart
F (sections 951 through 964) and with respect to which more
than 50% of the total voting power or value of all classes of stock
of the corporation is treated as owned by a U.S. shareholder.

Rounding Off to Whole Dollars

The corporation may enter decimal points and cents when
completing its return. However, the corporation should round off
cents to whole dollars on its return, forms, and schedules to
make completing its return easier. The corporation must either
round off all amounts on its return to whole dollars or use cents
for all amounts. To round, drop amounts under 50 cents and
increase amounts from 50 to 99 cents to the next dollar. For
example, $8.40 rounds to $8 and $8.50 rounds to $9.
If two or more amounts must be added to figure the amount to
enter on a line, include cents when adding the amounts and
round off only the total.

Recordkeeping

Keep the corporation's records for as long as they may be
needed for the administration of any provision of the Internal
Revenue Code. Usually, records that support an item of income,
deduction, or credit on the return must be kept for 3 years from
the date the return is due or filed, whichever is later. Keep
records that verify the corporation's basis in property for as long
as they are needed to figure the basis of the original or
replacement property. QDDs should see the Qualified
Intermediary Agreement for additional requirements.
The corporation should keep copies of all filed returns. They
help in preparing future and amended returns and in the
calculation of earnings and profits.

Payment of Tax Due

The requirements for payment of tax depend on whether the
foreign corporation has an office or place of business in the
United States.
Instructions for Form 1120-F (2024)

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Foreign corporations that do not maintain an office or place
of business in the United States must generally pay any tax due
(page 1, line 7) in full no later than the 15th day of the 6th month
after the end of the tax year. However, see the instructions for
line 7, later. If the foreign corporation files Form 1120-F
electronically, it may pay the tax due by initiating an electronic
funds withdrawal (direct debit). It does so by checking the box on
Part II, line C, of Form 8453-CORP, E-file Declaration for
Corporations. If the foreign corporation does not file Form
1120-F electronically, or if it files Form 1120-F electronically and
does not choose the direct debit option, the foreign corporation
may use the Electronic Federal Tax Payment System (EFTPS) to
pay the tax due if it has a U.S. bank account. If the foreign
corporation does not have a U.S. bank account, it may arrange
for its financial institution to initiate a same-day payment on its
behalf or it can arrange for either a qualified intermediary, tax
professional, payroll service, or other trusted third party to make
a deposit on its behalf using a master account. In addition, the
foreign corporation still has the option to pay by check or money
order, payable to “United States Treasury.” To help ensure proper
crediting, write the corporation's EIN, “Form 1120-F,” and the tax
period to which the payment applies on the check or money
order. Enclose the payment when the corporation files Form
1120-F.
Foreign corporations that do maintain an office or place of
business in the United States must generally pay any tax due
(page 1, line 7) in full no later than the due date for filing Form
1120-F (not including extensions). See When To File, earlier, for
this due date. However, see Regulations section 1.6081-5 for an
exception. Also, see the instructions for line 7, later. If the foreign
corporation files Form 1120-F electronically, it may pay the tax
due by initiating an electronic funds withdrawal (direct debit). It
does so by checking the box on Part II, line C, of Form
8453-CORP. If the foreign corporation does not file Form 1120-F
electronically, or if it files Form 1120-F electronically and does
not choose the direct debit option, the tax may be paid as
follows. The foreign corporation may pay the tax using EFTPS or
it can arrange for its tax professional, financial institution, payroll
service, or other trusted third party to make deposits on its
behalf. In addition, the foreign corporation also has the option to
arrange for its financial institution to initiate a same-day payment.
Note. If the due date falls on a Saturday, Sunday, or legal
holiday, the payment is due on the next day that isn't a Saturday,
Sunday, or legal holiday.
Electronic deposit requirement. Foreign corporations with an
office or place of business in the United States must use
electronic funds transfer to make all federal tax deposits (such as
deposits of employment, excise, and corporate income tax).
Generally, electronic funds transfers are made using EFTPS.
However, if the corporation does not want to use EFTPS, it can
arrange for its tax professional, financial institution, payroll
service, or other trusted third party to make deposits on its
behalf. Also, it may arrange for its financial institution to submit a
same-day payment (discussed below) on its behalf. EFTPS is a
free service provided by the Department of the Treasury.
Services provided by a tax professional, financial institution,
payroll service, or other third party may have a fee.
To get more information about EFTPS or to enroll in EFTPS,
visit EFTPS.gov or call 800-555-4477 (TTY/TDD 800-733-4829).
Depositing on time. For any deposit made by EFTPS to be on
time, the corporation must submit the deposit by 8 p.m. Eastern
time the day before the date the deposit is due. If the corporation
uses a third party to make deposits on its behalf, they may have
different cutoff times.
Same-day wire payment option. If the corporation fails to
submit a deposit transaction on EFTPS by 8 p.m. Eastern time
the day before the date a deposit is due, it can still make the
Instructions for Form 1120-F (2024)

deposit on time by using the Federal Tax Collection Service
(FTCS). To use the same-day wire payment method, the
corporation will need to make arrangements with its financial
institution ahead of time regarding availability, deadlines, and
costs. Financial institutions may charge a fee for payments made
this way. To learn more about the information the corporation will
need to provide to its financial institution to make a same-day
wire payment, go to IRS.gov/SameDayWire.

Estimated Tax Payments

Generally, the following rules apply to a foreign corporation's
payments of estimated tax.
• The corporation must make installment payments of
estimated tax if it expects its total tax for the year (less applicable
credits) to be $500 or more.
• The installments are due by the 15th day of the 4th, 6th, 9th,
and 12th months of the tax year. If any date falls on a Saturday,
Sunday, or legal holiday, the installment is due on the next
regular business day.
• If the foreign corporation maintains an office or place of
business in the United States, it must use electronic funds
transfer to make installment payments of estimated tax.
• If the foreign corporation does not maintain an office or place
of business in the United States, it may pay the estimated tax by
EFTPS, providing it has a U.S. bank account. The foreign
corporation may also arrange for its financial institution to submit
a same-day payment on its behalf or can arrange for its qualified
intermediary, tax professional, payroll service, or other trusted
third party to make a deposit on its behalf using a master
account. In addition, the foreign corporation still has the option to
pay the estimated tax due by check or money order.
• If, after the corporation figures and deposits estimated tax, it
finds that its tax liability for the year will be more or less than
originally estimated, it may have to refigure its required
installments. If earlier installments were underpaid, the
corporation may owe a penalty. See Estimated tax penalty
below.
• If the corporation overpaid estimated tax, it may be able to get
a quick refund by filing Form 4466, Corporation Application for
Quick Refund of Overpayment of Estimated Tax. See the
instructions for line 5c, later.
See section 6655 and Pub. 542, Corporations, for more
information on how to figure estimated taxes.
Estimated tax penalty. A corporation that does not make
estimated tax payments when due may be subject to an
underpayment penalty for the period of underpayment.
Generally, a corporation is subject to the penalty if its tax liability
is $500 or more and it did not timely pay at least the smaller of:
• Its tax liability for the current year, or
• Its prior year's tax.
No estimated tax payments are required with respect to a
foreign corporation's liability for the branch profits tax. See
Regulations section 1.884-1(a).
Use Form 2220, Underpayment of Estimated Tax by
Corporations, to see if the corporation owes a penalty and to
figure the amount of the penalty. If Form 2220 is completed,
enter the penalty on Form 1120-F, page 1, line 6. See the
instructions for line 6, estimated tax penalty, later. Also see Relief
from additions to tax for underpayments applicable to the new
corporate alternative minimum tax , earlier.

Interest and Penalties
Interest. Interest is charged on taxes paid late even if an
extension of time to file is granted. Interest is also charged on
penalties imposed for failure to file, negligence, fraud, substantial
valuation misstatements, substantial understatements of tax,
and reportable transaction understatements from the due date
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(including extensions) to the date of payment. The interest
charge is figured at a rate determined under section 6621.
Penalty for late filing of return. A corporation that does not
file its tax return by the due date, including extensions, may be
penalized 5% of the unpaid tax for each month or part of a month
the return is late, up to a maximum of 25% of the unpaid tax. The
minimum penalty for a tax return required to be filed in 2025 that
is more than 60 days late is the smaller of the tax due or $510.
The penalty will not be imposed if the corporation can show that
the failure to file on time was due to reasonable cause.
If you believe that reasonable cause exists, do not
attach an explanation when you file Form 1120-F.
CAUTION Instead, if the corporation receives a penalty notice after
the return is filed, send an explanation to the IRS at that time and
the IRS will determine if the corporation meets reasonable-cause
criteria.

!

Penalty for late payment of tax. A corporation that does not
pay the tax when due may generally be penalized 1/2 of 1% of the
unpaid tax for each month or part of a month the tax is not paid,
up to a maximum of 25% of the unpaid tax. The penalty will not
be imposed if the corporation can show that the failure to pay on
time was due to reasonable cause. See Caution above.
Trust fund recovery penalty. This penalty may apply if certain
excise, income, social security, and Medicare taxes that must be
collected or withheld are not collected or withheld, or these taxes
are not paid. These taxes are generally reported on:
• Form 720, Quarterly Federal Excise Tax Return;
• Form 941, Employer's QUARTERLY Federal Tax Return;
• Form 943, Employer's Annual Federal Tax Return for
Agricultural Employees;
• Form 944, Employer's ANNUAL Federal Tax Return; or
• Form 945, Annual Return of Withheld Federal Income Tax.
The trust fund recovery penalty may be imposed on all
persons who are determined by the IRS to have been
responsible for collecting, accounting for, or paying over these
taxes, and who acted willfully in not doing so. The penalty is
equal to the full amount of the unpaid trust fund tax. See the
Instructions for Form 720 or Pub. 15 (Circular E), Employer's Tax
Guide, for details, including the definition of “responsible
persons.”
Note. The trust fund recovery penalty will not apply to any
amount of trust fund taxes an employer holds back in anticipation
of the credit for qualified sick and family leave wages or the
employee retention credit that they are entitled to. See Pub. 15 or
Pub. 51 for more information.
Other penalties. Other penalties may be imposed for
negligence, substantial understatement of tax, reportable
transaction understatements, and fraud. See sections 6662,
6662A, and 6663.

Special Rules for Foreign
Corporations
Source of Income Rules

The source of income is important in determining the extent to
which income is taxable to foreign corporations. Each type of
income has its own sourcing rules.

Interest Income
The source of interest income is usually determined by the
residence of the obligor.

10

For example, interest paid by an obligor who is a resident of
the United States is U.S. source income, and interest paid by an
obligor who is a resident of a country other than the United
States is foreign source income. Interest paid by a foreign
partnership that is predominantly engaged in the active conduct
of a trade or business outside the United States is treated as
U.S.-source income only if the interest is paid by a U.S. trade or
business conducted by the partnership or is allocable to income
that is treated as effectively connected with the conduct of a U.S.
trade or business. See section 861(a)(1)(B).
Exceptions. The following types of interest income are treated
as foreign source income.
• Interest income received from foreign branches of U.S. banks
and savings and loan associations.
• In the case of a foreign partnership that is predominantly
engaged in the active conduct of a trade or business outside the
United States, any interest not paid by a trade or business
engaged in by the partnership in the United States and not
allocable to income that is effectively connected (or treated as
effectively connected) with the conduct of a U.S. trade or
business.
The following types of interest income are treated as
domestic source income even though paid by a foreign
corporation.
• For a foreign corporation engaged in a U.S. trade or business,
interest paid by the U.S. trade or business (branch interest) is
treated as if paid by a domestic corporation to the actual
recipient of the interest. See section 884(f)(1)(A) and the
regulations thereunder. Interest paid from a U.S. trade or
business is only treated as branch interest to the extent the
interest is allocable to ECI under the interest expense allocation
rules in Regulations section 1.882-5. Amounts paid but not
allocable to ECI are not branch interest. See Regulations section
1.884-4(b)(6).
• If the foreign corporation has allocable interest in excess of
branch interest (excess interest), the foreign corporation must
treat that interest as if paid by a wholly owned domestic
corporation to the foreign corporation. See section 884(f)(1)(B)
and the instructions for Section III, Part II, later.

Dividend Income
The source of dividend income is usually determined by the
residence of the payer. For example, dividends paid by a
corporation that was incorporated in the United States are
generally U.S. source income and dividends paid by a
corporation that was incorporated in a foreign country are
generally foreign source income.
Exceptions:
• Dividends paid by a U.S. corporation are foreign source
income:
1. If the U.S. corporation has made a valid election under
section 936 (or section 30A), relating to certain U.S. corporations
operating in a U.S. territory; or
2. To the extent the dividends are from qualified export
receipts described in section 993(a)(1) (other than interest and
gains described in section 995(b)(1)).
• Dividends paid by a foreign corporation are U.S. source
income:
1. If the dividend is treated under section 243(e) as a
distribution from the accumulated profits of a predecessor U.S.
corporation; or
2. To the extent the foreign corporation's effectively
connected gross income for the testing period (defined below)
bears to all of the foreign corporation's gross income for the
testing period, but only if 25% or more of the foreign
corporation's gross income during the testing period was
Instructions for Form 1120-F (2024)

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effectively connected with the conduct of a U.S. trade or
business.
The testing period is generally the 3 tax years of the foreign
corporation payer preceding the tax year during which it declared
the dividend. If the foreign corporation existed for fewer than 3
years before the tax year of declaration, the testing period is the
term of the foreign corporation's existence before the current
year. If the foreign corporation declared the dividend in its first
tax year, that year is the testing period. Regardless of source,
however, there is no tax imposed on any dividends paid by a
foreign corporation out of earnings and profits for a tax year in
which the foreign corporation was subject to the branch profits
tax (determined after application of any income tax treaty). See
Regulations section 1.1441-1(b)(4)(vii).

Dividend Equivalents
A dividend equivalent is generally treated as a dividend from
sources within the United States.

Rent and Royalty Income
The source of rent and royalty income for the use of property is
determined based on where the property is located.

Income From the Sale or Exchange of Real Estate
Gain from the disposition of a U.S. real property interest (a
USRPI) is U.S. source. A USRPI includes, but is not limited to,
real property situated in the United States, an interest in real
property other than solely as a creditor (such as a contingent
interest in real property), and an interest in a United States real
property holding corporation (USRPHC). See section 897 and
the regulations thereunder.

Income From the Sale or Exchange of Personal
Property
Income from the sale of personal property by a foreign
corporation is generally treated as foreign source under section
865(a). However, special rules may apply to source such income
as follows.
• Income from the purchase and sale of inventory property is
generally sourced under section 861(a)(6) as U.S. source if the
property is purchased without the United States and sold within
the United States and under section 862(a)(6) as foreign source
if the property is purchased within the United States and sold
without the United States. See also U.S. source treatment of
inventory sales attributable to a U.S. office or fixed place of
business under section 865(e)(2).
• Income from the production and sale of inventory property is
generally sourced solely on place-of-production activities under
section 863(b).
• Income from the sale of depreciable property is generally
sourced as mixed U.S. and foreign source under section 865(c).
• Income from certain sales of intangibles is generally subject to
the source rules applicable to royalties, found in section 861(a)
(4). See section 865(d).
Foreign corporations with an office or fixed place of business in the United States. Income from the sale of personal
property attributable to an office or fixed place of business is
U.S. source income regardless of any of the above rules relating
to the source of income from the sale or exchange of personal
property, except that this source rule is not applicable for
purposes of defining an export trade corporation (see sections
865(e)(2)(A) and 971).
Instructions for Form 1120-F (2024)

Exception. Income from the sale of inventory property is foreign
source income if the goods were sold for use, disposition, or
consumption outside the United States and a foreign office of the
corporation materially participated in the sale.

Income on Guarantees
With respect to guarantees issued after September 27, 2010:
• The following income is U.S. source: Amounts received
directly or indirectly from (1) a noncorporate resident or domestic
corporation for the provision of a guarantee of any indebtedness
of such resident or corporation, or (2) any foreign person for the
provision of a guarantee of any indebtedness of such person, if
such amount is connected with income that is effectively
connected (or treated as effectively connected) with the conduct
of a trade or business in the United States. See section 861(a)
(9).
• The following income is foreign source: Amounts received,
directly or indirectly, from a foreign person for the provision of a
guarantee of indebtedness of such person other than amounts
that are derived from sources within the United States as
provided in section 861(a)(9). See section 862(a)(9).

Other Special Rules
Basis of Property and Inventory Costs for Property
Imported by a Related Person
If property is imported into the United States by a related person
in a transaction and the property has a customs value, the basis
or inventory cost to the importer may not exceed the customs
value. See section 1059A.

Income of Foreign Governments and International
Organizations
Income of foreign governments and international organizations
from the following sources is generally not subject to tax or
withholding under Chapter 3 or 4 of the Code.
• Investments in the United States in stocks, bonds, or other
domestic securities owned by such foreign government or
international organization.
• Interest on deposits in banks in the United States of money
belonging to such foreign government or international
organization.
• Investments in the United States in financial instruments held
(by a foreign government) in executing governmental financial or
monetary policy.
Exception. The income described in section 892(a)(2) that is
received directly or indirectly from commercial activities is
subject to both tax and withholding under Chapter 3 or 4 of the
Code.

Specific Instructions
Period Covered

File the 2024 return for calendar year 2024 and fiscal years that
begin in 2024 and end in 2024. For a fiscal or short tax year
return, fill in the tax year space at the top of the form.
The 2024 Form 1120-F may also be used if:

• The corporation has a tax year of less than 12 months that

begins and ends in 2025, and
• The 2025 Form 1120-F is not available at the time the
corporation is required to file its return.

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The corporation must show its 2025 tax year on the 2024
Form 1120-F and take into account any tax law changes that are
effective for tax years beginning after December 31, 2024
Note. A return for a short year beginning and ending in 2024
should not be filed before the earlier of its extended due date or
January 15, 2025.
.

Address

Include the room, suite, or other unit number after the street
address. If the post office does not deliver mail to the street
address and the corporation has a P.O. box, show the box
number instead.
If the corporation receives its mail in care of a third party
(such as an accountant or an attorney), enter “C/O” on the street
address line followed by the third party's name and street
address or P.O. box.
If the corporation has a foreign address, include the city or
town, state or province, country, and foreign postal code. Do not
abbreviate the country name. Follow the country's practice for
entering the name of the state or province and postal code.

Employer Identification Number (EIN)
Enter the corporation's EIN. If the corporation does not have an
EIN, it must apply for one. An EIN may be applied for:
• Online—Go to IRS.gov/EIN. The EIN is issued immediately
once the application information is validated.
• By faxing or mailing Form SS-4, Application for Employer
Identification Number.

While a corporation that was a QDD or had a branch that was
a QDD is generally required to use an EIN, if the only reason the
corporation is filing a Form 1120-F is because it or its branch
was a QDD, it may use its QI-EIN instead.
Corporations located in the United States or U.S.
territories can use the online application. Foreign
CAUTION corporations should call 267-941-1099 (not a toll-free
number) for more information on obtaining an EIN. See the
Instructions for Form SS-4.

!

EIN applied for, but not received. If the corporation has not
received its EIN by the time the return is due, enter “Applied For”
and the date the corporation applied in the space for the EIN.
However, if the corporation is filing its return electronically, an
EIN is required at the time the return is filed.
For more information, see the Instructions for Form SS-4.

Initial Return, Name or Address
Change, Final Return, First
Post-Merger Return, Amended
Return, Schedule M-3 Attached,
Protective Return

Check all of the applicable box(es).

Name or address change. If the corporation has changed its
name or address since it last filed Form 1120-F (including a
change to an “in care of” address), check the box for “Name or
address change.”
Note. If a change in address or responsible party occurs after
the return is filed, use Form 8822-B, Change of Address or
Responsible Party — Business, to notify the IRS. See the
instructions for Form 8822-B for details.
First post-merger return. Check the “First post-merger return”
box if, due to a corporate merger, the foreign corporation has
12

acquired a new EIN. Check the “First post-merger return” box if
the foreign corporation has merged with a foreign or domestic
corporation with U.S. operations. Do not check the “First
post-merger return” box if the foreign corporation has merged
with another foreign corporation and the merger has no effect on
the filer's U.S. operations.
Amended Return. File an amended Form 1120-F only after
the corporation has filed its original return. Generally, an
amended Form 1120F must be filed within 3 years after the date
the corporation filed its original return or within 2 years after the
date the corporation paid the tax (if filing a claim for a refund),
whichever is later. A return filed before the due date is
considered filed on the due date. An amended Form 1120-F
based on an NOL carryback, a capital loss carryback, or general
business credit carryback generally must be filed within 3 years
after the due date (including extensions) of the return for the tax
year of the NOL, capital loss, or unused credit.
An amended Form 1120-F based on a bad debt or worthless
security must be filed within 7 years after the due date of the
return for the tax year in which the debt or security became
worthless. See section 6511 for more details and other special
rules.
What To Attach. If the corrected amount involves an item of
income, deduction, or credit that must be supported with a
schedule, statement, or form, attach the appropriate schedule,
statement, or form to the amended Form 1120-F. Include the
corporation’s name and employer identification number on any
attachments. Be sure to include the original amount, adjustment,
and corrected amount. Also indicate the Form 1120-F section,
part, schedule, and/or line to which the adjustment relates.
In addition, if the corporation requests that the IRS
electronically deposit a refund of $1 million or more, attach Form
8302, Electronic Deposit of Tax Refund of $1 Million or More.
If the corporation’s return is being amended for a tax year in
which the corporation participated in a “reportable transaction,”
attach Form 8886, Reportable Transaction Disclosure
Statement. If a reportable transaction results in a loss or credit
carried back to a prior tax year, attach Form 8886 for the
carryback years.
Carryback Claims. If an amended Form 1120-F is used as a
carryback claim, attach copies of Form 1120-F, page 1 and the
tax computation page, for both the year the loss or credit
originated and for the carryback year. Also, attach any other
forms, schedules, or statements that are necessary to support
the claim, including a statement that shows all adjustments
required to figure any NOL that was carried back. At the top of
each form or schedule attached, write “Copy Only—Do Not
Process.”
Schedule M-3 attached. A corporation with total assets
reportable on Form 1120-F, Schedule L, of $10 million or more
on the last day of the tax year must file Schedule M-3 (Form
1120-F), Net Income (Loss) Reconcilation for Foreign
Corporations With Reportable Assets of $10 Million or More,
instead of Schedule M-1. A foreign corporation filing Form
1120-F that is not required to file Schedule M-3 (Form 1120-F)
may voluntarily file Schedule M-3 (Form 1120-F) instead of
Schedule M-1.
Corporations that (a) are required to file Schedule M-3 (Form
1120-F) and have less than $50 million total assets at the end of
the tax year, or (b) are not required to file Schedule M-3 (Form
1120-F) and voluntarily file Schedule M-3 (Form 1120-F), must
either (i) complete Schedule M-3 (Form 1120-F) entirely, or (ii)
complete Schedule M-3 (Form 1120-F) through Part I, and
complete Schedule M-1, instead of completing Parts II and III of
Schedule M-3 (Form 1120-F). If the corporation chooses to
complete Schedule M-1 instead of completing Parts II and III of
Schedule M-3 (Form 1120-F), the amount on Schedule M-1,
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line 1, must equal the amount on Schedule M-3 (Form 1120-F),
Part I, line 11. See the instructions for Schedule M-1 (Form
1120-F) and the Instructions for Schedule M-3 (Form 1120-F) for
more details.
If you are filing Schedule M-3, check the “Schedule M-3
attached” box at the top of page 1 of Form 1120-F.
Protective return filers. Check the "Protective return" box if
the foreign corporation is filing a protective return. See Protective
return, earlier, for information concerning who should file a
protective return.
If the corporation is filing a protective return, complete Form
1120-F as follows.
Page 1. Enter the complete name, address, and EIN of the
corporation. Check the “Protective return” box. Provide all the
information required in items A through G.
Note. If the corporation is filing Form 1120-F to claim a refund
for overwithholding reported in Section I on page 4, the return
may also assert protective return status for the right to claim
deductions and credits attributable to ECI by also checking the
“Protective return” box at the top of page 1.
Refund amount. Enter on lines 1 and 4, page 1, the amount
from line 11, page 4. Enter on lines 5i and 5z the amount from
line 12, page 4. Enter the excess of line 5z over line 4 on lines 8a
and 9. This is the amount to be refunded to you.
Signature. An authorized officer of the corporation must sign
and date the return. If the protective return is being filed pursuant
to an income tax treaty exemption, attach a completed Form
8833 to the return.
Page 2. Provide all the information required in items N, O, Q,
T, V, W(1), W(2), X, Y, AA, BB, and any other applicable
questions. With respect to item Y, it is not necessary for the
corporation to file Schedule P, even if the answer to item Y(1) is
“Yes.” However, a corporation that files a protective tax return
may voluntarily file Schedules I and P to preserve certain timely
elections.
Page 3. Complete all applicable portions of Section I, Income
From U.S. Sources Not Effectively Connected With the Conduct
of a Trade or Business in the United States.

Identifying Information Requested at
Top of Page 1 of Form

Complete items A though G.

Item A. Enter the foreign corporation’s country of incorporation
or organization. If the corporation is incorporated or organized in
more than one country, list all countries.
Item B. Enter the foreign country or countries under whose
laws the income reported on Form 1120-F is also subject to tax.
This may include the country where the corporation is managed
and controlled, as well as the country or countries in which the
corporation is incorporated or organized.
Item F. See the list of Principal Business Activity Codes at the
end of these instructions. Using the list of codes and activities,
determine from which activity the corporation derives the highest
percentage of its total receipts. Enter on lines F(1), F(2), and
F(3) the principal business activity code number, the
corporation's principal business activity, and a description of the
principal product or service of the corporation. For nonstore
retailers, select the PBA code by the primary product that your
establishment sells. For example, establishments primarily
selling prescription and non-prescription drugs, select PBA code
456110 Pharmacies & Drug Retailers.

Instructions for Form 1120-F (2024)

Computation of Tax Due or
Overpayment
Line 5b. Estimated Tax Payments

Enter any estimated tax payments the corporation made for the
current tax year.
Beneficiaries of trusts. If the corporation is the beneficiary of a
trust, and the trust makes a section 643(g) election to credit its
estimated tax payments to its beneficiaries, include the
corporation's share of the payment in the total for line 5b. Enter
“T” and the amount of the payment on the dotted line next to the
entry space.

Line 5c. Refund Applied For on Form 4466

If the corporation overpaid estimated tax, it may be able to get a
quick refund by filing Form 4466. The overpayment must be at
least 10% of the corporation's expected income tax liability and
at least $500. File Form 4466 after the end of the corporation's
tax year, and no later than the due date for filing the corporation's
tax return (not including extensions). Form 4466 must be filed
before the corporation files its tax return. See the instructions for
Form 4466.

Line 5d. Reserved for Future Use
This line is reserved for future use.

Line 5f. Credit for Tax Paid on Undistributed
Capital Gains

Enter any credit from Form 2439, Notice to Shareholder of
Undistributed Long-Term Capital Gains, for the corporation's
share of the tax paid by a regulated investment company (RIC)
or a real estate investment trust (REIT) on undistributed
long-term capital gains included in the corporation's income.
Attach Form 2439.

Line 5g. Credit for Federal Tax on Fuels

Enter the total income tax credit claimed on Form 4136, Credit
for Federal Tax Paid on Fuels. Attach Form 4136.
Credit for tax on ozone-depleting chemicals. Include on
line 5g any credit the corporation is claiming under section
4682(g)(2) for tax on ozone-depleting chemicals. Enter “ODC”
on the dotted line to the left of the entry space.

Line 5h. Reserved for Future Use

This line is reserved for future use.

Line 5i. U.S. Income Tax Paid or Withheld at
Source

Enter on line 5i U.S. income tax amounts paid or withheld at
source and reported on:
• Form 1042-S pertaining to amounts reported on page 4,
line 12 (income from U.S. sources not effectively connected with
the conduct of a trade or business in the United States). The
amount included on line 5i should be the total amount of federal
tax withheld reported to you on the applicable Form(s) 1042-S
less any amount that was repaid to you by the withholding agent.
See the instructions below the title of Section I on page 4 of the
form for information pertaining to when amounts should be
reported on line 12.
• Form 8805 pertaining to amounts reported on Form 1120-F,
page 5, Section II, that relate to ECI from a partnership under
section 1446.
• Form 1042-S pertaining to amounts reported on Form 1120-F,
page 5, Section II, that relate to ECI from a publicly traded
partnership under section 1446.
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• Form 8288-A pertaining to amounts reported on Form 1120-F,
page 5, Section II, that relate to income from dispositions of U.S.
real property interests under section 1445 and income from
dispositions of interests in partnerships that are engaged in the
conduct of a trade or business in the United States under section
1446(f).
You must attach any Forms 8288-A, 8805, and 1042-S to
substantiate amounts withheld or paid that are reported on
line 5i.
Include on line 5i only amounts withheld under
Chapter 3 or 4 of the Code. Do not include other
CAUTION amounts, such as backup withholding, on line 5i. Enter
backup withholding on line 5z (see below).

!

Line 5j. Elective Payment Election Amount from
Form 3800
Enter the total elective payment election amount from Form
3800, Part III, line 6, column (j). See the Instructions for Form
3800.

Line 5z. Total Payments
Backup withholding. If the corporation had income tax
withheld from any payments it received due to backup
withholding, include the amount withheld in the total for line 5z.
Enter the amount withheld and the words “Backup Withholding”
in the blank space in the right-hand column between lines 4 and
5z.

Line 6. Estimated Tax Penalty

Generally, the corporation does not have to file Form 2220
because the IRS can figure the penalty amount, if any, and bill
the corporation. However, even if the corporation does not owe
the penalty, it must complete and attach Form 2220 if:
• The annualized income or adjusted method is used, or
• The corporation is a large corporation (as defined in the
Instructions for Form 2220) computing its first required
installment based on the prior year's tax.
If Form 2220 is attached, check the box on line 6, and enter
any penalty on this line.
If the corporation's tax liability includes a CAMT liability,
the corporation must complete and attach Form 2220.
CAUTION The affected corporation must also include an amount of
estimated tax penalty on Form 1120-F, page 1, line 6, even if that
amount is zero. Failure to follow these instructions could result in
the corporation receiving a penalty notice that will require an
abatement request to apply any penalty relief. See Notice
2024-66.

!

Line 7. Amount Owed

If the corporation cannot pay the full amount of tax owed, it can
apply for an installment agreement online. The corporation can
apply for an installment agreement online if:
• It cannot pay the full amount shown on line 7,
• The total amount owed is $25,000 or less, and
• The corporation can pay the liability in full in 24 months.
To apply using the Online Payment Agreement Application, go to
IRS.gov/OPA.
Under an installment agreement, the corporation can pay
what it owes in monthly installments. There are certain
conditions that must be met to enter into and maintain an
installment agreement, such as paying the liability within 24
months and making all required deposits and timely filing tax
returns during the length of the agreement.

14

If the installment agreement is accepted, the corporation will
be charged a fee and it will be subject to penalties and interest
on the amount of tax not paid by the due date of the return.

Line 8b

Enter on line 8b the amount of overpayment on line 8a resulting
from tax deducted and withheld under Chapters 3 and 4. This
amount is computed by completing Schedule W on page 9 of
Form 1120-F.

Line 9

Enter the portion of line 8a you want credited to your 2025
estimated tax and the portion of line 8a you want refunded.
Note. The election to apply some or all of the overpayment
amount to the corporation's 2025 estimated tax cannot be
changed at a later date.
Note. You can credit any or all of the line 8a overpayment to
your 2025 estimated tax, even those amounts on line 8b
resulting from tax deducted and withheld under Chapters 3 and
4.
Note. Refunds of certain overpayments (for example, those
which pertain to tax withheld and reported on Forms 1042-S,
8805, and 8288-A) may require additional time to be processed.
Therefore, please allow up to 6 months for these refunds to be
issued.
Electronic deposit of refund. If the corporation has a refund of
$1 million or more and wants it electronically deposited into its
checking or savings account at any U.S. bank or other financial
institution instead of having a check sent to the corporation,
complete Form 8302 and attach it to Form 1120-F.

Additional Information Requested on
Pages 2 and 3 of Form
Complete items H through JJ.

Item K(1)

If the foreign corporation was not engaged in a U.S. trade or
business at any time during the tax year, or was engaged in a
U.S. trade or business but did not derive any gross income
effectively connected to such trade or business, answer “No” to
item K(1).
If the foreign corporation had gross income effectively
connected with or treated as effectively connected with the
conduct of a trade or business in the United States, answer “Yes”
to item K(1).

Item L

Skip item L (leave blank) if the foreign corporation is a resident of
a country that does not have an income tax treaty with the United
States. If the foreign corporation is a resident of a country that
has an income tax treaty with the United States:
• Answer “Yes” if the corporation had a permanent
establishment in the United States at any time during the tax
year or in any prior tax year to which income was attributable,
and enter the name of the country of residence of the foreign
corporation.
• Answer “No” if the corporation does not have a permanent
establishment in the United States.
If the answer to item L is “No” and the answer to item K(1) is
“Yes,” complete item W(1) on page 2 of the form and attach a
completed Form 8833 to the return, including a statement
indicating the nature and amount (or reasonable estimate
thereof) of gross receipts of the foreign corporation exempt by
Instructions for Form 1120-F (2024)

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reason of not having a permanent establishment in the United
States.

Item M

See Form 5472, earlier.

Item O—Personal Service Corporation

A personal service corporation is a corporation whose principal
activity for the testing period is the performance of personal
services. The services must be substantially performed by
employee-owners.

Testing period. The testing period for a tax year is generally the
prior tax year unless the corporation has just been formed.
Performance of personal services. The term “performance of
personal services” includes any activity involving the
performance of personal services in the fields of health, law,
engineering, architecture, accounting, actuarial science,
performing arts, or consulting.
Accounting period. A personal service corporation must use a
calendar tax year unless:
• It elects to use a 52-53-week tax year that ends with reference
to the calendar year or tax year elected under section 444;
• It can establish a business purpose for a different tax year and
obtains the approval of the IRS (see the Instructions for Form
1128 and Pub. 538); or
• It elects under section 444 to have a tax year other than a
calendar year. To make the election, use Form 8716, Election To
Have a Tax Year Other Than a Required Tax Year.
If a corporation makes the section 444 election, its deduction
for certain amounts paid to employee-owners may be limited.
See Schedule H (Form 1120), Section 280H Limitations for a
Personal Service Corporation (PSC), to figure the maximum
deduction.
If a section 444 election is terminated and the termination
results in a short tax year, type or print at the top of the first page
of Form 1120-F for the short tax year “SECTION 444 ELECTION
TERMINATED.”
Other rules. For other rules that apply to personal service
corporations, see Passive activity limitations, later.

Item P

Enter any tax-exempt interest received or accrued. Include any
exempt-interest dividends received as a shareholder in a mutual
fund or other RIC. Also, if required, include the same amount on
Schedule M-1, line 7a, or Schedule M-3, Part II, line 4a.

Item R

If the corporation has a net operating loss (NOL) for tax year
2024, it can elect to waive the entire carryback period for the
NOL and instead carry the NOL forward to future tax years. To
do so, check the box in item R and file Form 1120-F by its due
date, including extensions. Do not attach the statement
described in Temporary Regulations section 301.9100-12T.
Generally, once made, the election is irrevocable.
If the corporation timely filed its return for the loss year without
making the election, it can make the election on an amended
return filed within 6 months of the due date of the loss year return
(excluding extensions). Attach the election to the amended
return and write "Filed pursuant to section 301.9100-2" on the
election statement. See the Instructions for Form 1139.

Item S

Enter the amount of the NOL carryover to the tax year from prior
years, even if some of the loss is used to offset income on this
return. The amount to enter is the total of all NOLs generated in
Instructions for Form 1120-F (2024)

prior years but not used to offset income (either as a carryback
or carryover) to a tax year prior to 2024. Do not reduce the
amount by any NOL deduction reported on Section II, line 30a.

Item T

Check the “Yes” box for item T if the corporation is a subsidiary in
a parent-subsidiary controlled group. This applies even if the
corporation is a subsidiary member of one group and the parent
corporation of another. For a definition of a parent-subsidiary
controlled group, see the Instructions for Schedule O (Form
1120).
Note. If the corporation is an “excluded member” of a controlled
group (see definition in the Instructions for Schedule O (Form
1120)), it is still considered a member of a controlled group for
this purpose.

Item W(1)

If a foreign corporation claims that a treaty overrules or modifies
any provision of the Internal Revenue Code and thereby effects a
reduction of any tax with respect to an item reported on this Form
1120-F, check the “Yes” box. Check the “Yes” box, for example, if
a treaty benefit has been claimed based on:
• The nondiscrimination provision of a treaty.
• The business profits article of a treaty, if expenses are claimed
in determining the business profits of the foreign corporation,
notwithstanding an inconsistent provision of the Code.
• The gains article, if a treaty benefit is claimed relating to gain
or loss on the disposition of a U.S. real property interest.
• The branch profits tax article (or portion of the dividends
article relating to the branch profits tax) and tax on excess
interest.
• A waiver of insurance excise tax under section 4371 (if the
foreign corporation has not entered into a closing agreement
with the IRS and has not filed an annual Form 720).
• The interest, dividends, or royalty article, if a refund of
withholding tax is due.

Item W(2)

Check the "Yes" box if the foreign corporation is claiming tax
treaty benefits pursuant to a Competent Authority determination
or Advance Pricing Agreement that it qualifies for the treaty
benefits being claimed. You must attach a copy of the
Competent Authority determination letter or Advance Pricing
Agreement to the return.

Item Y(1)

For more information regarding a corporation's distributive share
of income from a directly owned partnership interest that is ECI
or treated as ECI by the partnership or the corporation (partner),
see Who Must Complete Schedule P in the separate Instructions
for Schedule P (Form 1120-F).

Item Y(2)

In general, if a foreign corporation owns, directly or indirectly, an
interest in a partnership that is engaged in a U.S. trade or
business, gain or loss on the transfer of all (or any portion of)
such interest is treated as effectively connected with the conduct
of such trade or business to the extent effectively connected gain
or loss would have flowed through the partnership to the foreign
corporation had the partnership sold all of its assets at fair
market value (FMV) as of the date of the sale or exchange. See
section 864(c)(8) for more details. Also, see Regulations
sections 1.864(c)(8)-1 and 1.864(c)(8)-2 for additional guidance
concerning gain or loss of foreign persons from the transfer of
certain partnership interests and the notification required to be
provided to certain partnerships on the transfer.

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Item Y(3)

If the corporation owned at least a 10% interest, directly or
indirectly, in any foreign partnership, attach a statement listing
the following information for each foreign partnership. For this
purpose, a foreign partnership includes an entity treated as a
foreign partnership under Regulations section 301.7701-2 or
301.7701-3.
• Name and EIN (if any) of the foreign partnership.
• Identify which, if any, of the following forms the foreign
partnership filed for its tax year ending with or within the
corporation's tax year: Form 1042, 1065, or 8804.
• Name of partnership representative (if any).
• Beginning and ending dates of the foreign partnership's tax
year.
In addition, report any ECI included on Schedule K-3 (Form
1065) reported by the foreign partnership to the corporation, and
the ECI apportionment of the corporation's outside basis in the
foreign partnership, as required in Schedule P.

Item Z(2)

If the answer to item Z(2) is “Yes,” attach a statement explaining
whether the interbranch transactions are recognized under
Proposed Regulations section 1.863-3(h) (Global Dealing
Regulations) or some other proposed regulation. If interbranch
transactions are recognized pursuant to a U.S. income tax treaty
other than one that, in its text or accompanying documents
(including an exchange of notes), allows for such recognition by
explicitly incorporating an arm's-length method applying the
OECD Transfer Pricing Guidelines, then such treaty-based
position should be disclosed on Form 8275-R, in addition to the
treaty disclosure required on Form 8833.

Item AA

A corporation filing Form 1120-F must file Schedule UTP (Form
1120), Uncertain Tax Position Statement, with its 2024 income
tax return if:
• For 2024, the corporation's total assets equal or exceed $10
million. The assets of a corporation filing a Form 1120-F equal or
exceed $10 million if the higher of the beginning or end of year
total worldwide assets of the corporation reported on Form
1120-F, Schedule L, line 17, would be at least $10 million if the
corporation were to prepare a Schedule L on a worldwide basis;
• The corporation or a related party issued audited financial
statements reporting all or a portion of the corporation's
operations for all or a portion of the corporation's tax year; and
• The corporation has one or more tax positions that must be
reported on Schedule UTP.
Attach Schedule UTP to the corporation's income tax return.
Do not file it separately. A taxpayer that files a protective Form
1120-F must also file Schedule UTP if it satisfies the
requirements set forth above.
For details, see the Instructions for Schedule UTP.

Item BB

If the foreign corporation made any payment(s) in 2024 that
would require the foreign corporation to file any Forms 1042 and
1042-S, check the “Yes” box. See the Instructions for Form 1042
and the Instructions for Form 1042-S for information regarding
who is required to file Forms 1042 and 1042-S and what types of
payments are subject to reporting on Forms 1042 and 1042-S.

Item CC

If the corporation or any branch of the corporation was a QDD,
check the “Yes” box, enter the QI-EIN, and attach a Schedule Q
(Form 1120-F) for each QDD. You must complete and attach
Schedule Q (Form 1120-F) even if the QDD has zero tax liability.
16

Item DD

If the corporation had gross receipts of at least $500 million in
any 1 of the 3 preceding tax years, complete and attach Form
8991. For this purpose, the corporation's gross receipts include
the gross receipts of all persons aggregated with the
corporation, as specified in section 59A(e)(3). See the
Instructions for Form 8991 to determine if the corporation is
subject to the base erosion minimum tax.

Item EE

Section 267A disallows a deduction for certain interest or royalty
paid or accrued pursuant to a hybrid arrangement, to the extent
that, under the foreign tax law, there is not a corresponding
income inclusion (including long-term deferral). Report in Item
EE the total amount of interest and royalty paid or accrued by a
U.S. taxable branch (which includes a U.S. permanent
establishment) of the foreign corporation for which a deduction is
disallowed under section 267A.
Payments to which section 267A applies. Interest or royalty
considered paid or accrued by a U.S. taxable branch of the
foreign corporation is subject to section 267A. See Regulations
section 1.267A-5(b)(3) for rules regarding U.S. taxable branch
payments, including interest or royalties considered paid or
accrued by a U.S. taxable branch. Section 267A generally
applies to interest or royalties paid or accrued pursuant to a
hybrid arrangement (such as, for example, a payment pursuant
to a hybrid instrument, or a payment to a reverse hybrid),
provided that the payment or accrual is to a related party (or
pursuant to a structured arrangement). In addition, pursuant to
an imported mismatch rule, section 267A generally applies to
interest or royalties paid or accrued pursuant to a non-hybrid
arrangement where the income attributable to that payment or
accrual is directly or indirectly offset by certain deductions
involving hybridity incurred by a related party or pursuant to a
structured arrangement. However, section 267A does not apply
if a de minimis exception is satisfied. See Regulations section
1.267A-1(c). For purposes of section 267A, interest and royalties
are defined broadly. For additional information about
arrangements subject to section 267A, see Regulations sections
1.267A-2 and 1.267A-4. Also, see the anti-avoidance rule under
Regulations section 1.267A-5(b)(6).
Extent to which deduction is disallowed. When section
267A applies to interest or royalties paid or accrued pursuant to
a hybrid arrangement, it generally disallows a deduction for the
amount to the extent that, under the foreign tax law, there is not a
corresponding income inclusion (including long-term deferral).
However, the deduction is not disallowed to the extent the
amount is directly or indirectly included in income in the United
States, such as if the amount is taken into account with respect
to a U.S. shareholder under section 951(a) or section 951A. For
additional information, see Regulations sections 1.267A-2
through 1.267A-4. For examples illustrating the application of
section 267A, see Regulations section 1.267A-6.

Item FF

The limitation on business interest expense applies to every
taxpayer with a trade or business, unless the taxpayer meets
certain specified exceptions. A taxpayer may elect out of the
limitation for certain businesses otherwise subject to the
business interest expense limitation. See Item GG. Also, see the
Instructions for Form 8990.
Certain real property trades or businesses and farming
businesses qualify to make an election not to limit business
interest expense. This is an irrevocable election. If you make this
election, you are required to use the alternative depreciation
system to depreciate any nonresidential real property, residential
rental property, and qualified improvement property for an
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electing real property trade or business, and any property with a
recovery period of 10 years or more for an electing farming
business. See section 168(g)(1)(F). Also, you are not entitled to
the special depreciation allowance for that property. For a
taxpayer with more than one qualifying business, the election is
made with respect to each business.
Check "Yes" if the corporation has an election in effect to
exclude a real property trade or business or a farming business
from section 163(j). For more information, see section 163(j) and
the Instructions for Form 8990. Also, see the Instructions for
Schedule I (Form 1120-F).

Item GG

Generally, a taxpayer with a trade or business must file Form
8990 to claim a deduction for business interest. In addition, Form
8990 must be filed by any taxpayer that owns an interest in a
partnership with current-year, or prior-year carryover, excess
business interest expense allocated from the partnership.
Exclusions from filing. A taxpayer is not required to file
Form 8990 if the taxpayer is a small business taxpayer (defined
below) and does not have excess business interest expense
from a partnership. A taxpayer is also not required to file Form
8990 if the taxpayer only has business interest expense from
these excepted trades or businesses:
• An electing real property trade or business,
• An electing farming business, or
• Certain utility businesses.
Small business taxpayer. A small business taxpayer is not
subject to the business interest expense limitation and is not
required to file Form 8990. A small business taxpayer is a
taxpayer that (a) is not a tax shelter (as defined in section 448(d)
(3), and (b) meets the gross receipts test of section 448(c)
discussed next.
Gross receipts test. For 2024, a taxpayer meets the gross
receipts test if the taxpayer has average annual gross receipts of
$30 million or less for the 3 prior tax years. A taxpayer’s average
annual gross receipts for the 3 prior tax years is determined by
adding the gross receipts for the 3 prior tax years and dividing
the total by 3. Gross receipts include the aggregate gross
receipts from all persons treated as a single employer, such as a
controlled group of corporations, commonly controlled
partnerships, or proprietorships, and affiliated service groups.
See section 448(c) and the Instructions for Form 8990 for
additional information.
Note. A foreign corporation is required to complete Schedule I
(Form 1120-F) to compute its interest expense deduction under
Regulations section 1.882-5. If the foreign corporation is required
to complete and file Form 8990, attach Form 8990 to Schedule I
(Form 1120-F), which is attached to Form 1120-F.

Item HH

If a foreign corporation is organized in a U.S. territory, it may be a
Qualified Opportunity Fund (QOF) only if it is organized for the
purpose of investing in qualified opportunity zone property that
relates to a trade or business operated in the U.S. territory in
which the corporation is organized. To certify as a QOF, the
corporation must file Form 1120-F and attach Form 8996, even if
the corporation had no income or expenses to report. If the
corporation is attaching Form 8996, check the “Yes” box for Item
HH. On the line following the dollar sign, enter the amount from
Form 8996, line 15.
The penalty reported on this line from Form 8996, line 15, is
not due with the filing of this form. The IRS will send you a notice
regarding the penalty reported on line 15. This notice will include
instructions on the penalty, the reasonable cause relief process,
and payment instructions.
Instructions for Form 1120-F (2024)

Item II

If the corporation is a member of a controlled group, check the
"Yes" box. Complete and attach Schedule O (Form 1120),
Consent Plan and Apportionment Schedule for a Controlled
Group. Component members of a controlled group must use
Schedule O to report the apportionment of certain tax benefits
between the members of the group. See Schedule O and the
Instructions for Schedule O for more information.

Item JJ

Check the appropriate boxes to indicate if the corporation is
required to file Form 4626. If the corporation does not meet the
requirements of the safe harbor method, as provided under
section 59(k)(3)(A), Form 4626 must be completed and attached
to the corporation's return. See the Instructions for Form 4626.

Section I—Income From U.S. Sources
Not Effectively Connected With the
Conduct of a Trade or Business in the
United States

Note. Complete Section I only if you derived U.S. source
income not effectively connected with the conduct of a trade or
business in the United States and either your withholding tax
liability was not correctly withheld at source or not correctly
reported on Form 1042-S, you have a QDD tax liability (see
section 3.09 of the Qualified Intermediary Agreement), or you
are claiming a credit or refund of an amount withheld at source.
You must attach any Forms 1042-S (and any supporting
documentation) related to amounts for which you are claiming a
credit or refund for overwithholding (see the instructions for
line 5i). The amount reported in column (e) is the amount that
was actually withheld at source (and not repaid to you by the
withholding agent), as reported to you in box 10 of the Form(s)
1042-S issued by the withholding agent(s). See Claim for Refund
or Credit, earlier, for additional documentation requirements.
Only report amounts on these lines if:
• The amount received is fixed or determinable, annual or
periodic (FDAP) (see definition below).
• The amount received is includible in the gross income of the
foreign corporation. Therefore, receipts that are excluded from
income (for example, interest income received on state and local
bonds that is excluded under section 103) would not be included
as income in Section I.
• The amount received is from U.S. sources (see Source of
Income Rules, earlier).
• The amount received is not effectively connected with the
conduct of a U.S. trade or business (see Section II, later).
• The amount received is not exempt (by Code) from taxation.
For example, interest on deposits that are exempted by section
881(d) would not be included as income in Section I. In addition,
certain portfolio interest is not taxable for obligations issued after
July 18, 1984. See section 881(c) for more details.
• If you are a QDD, report all QDD tax liabilities (see Qualified
Intermediary Agreement), whether or not the amounts are
subject to withholding or correctly withheld.
Such income (except as indicated below) will generally be
subject to tax at a 30% rate. See section 881(a).
Amounts fixed or determinable, annual or periodic
include the following.
1. Interest (other than original issue discount (OID) as
defined in section 1273), dividends, rents, royalties, salaries,
wages, premiums, annuities, compensation, and other FDAP
gains, profits, and income.
Note. Item 1 above includes dividend equivalents described in
section 871(m); however, dividends and dividend equivalents
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received in calendar years 2019 through 2024 by a QDD in its
equity derivatives dealer capacity are excluded.
2. Gains described in section 631(b) or (c), relating to
disposal of timber, coal, or domestic iron ore with a retained
economic interest.
3. On a sale or exchange of an OID obligation, the amount
of the OID accruing while the obligation was held by the foreign
corporation, unless this amount was taken into account on a
payment.
4. On a payment received on an OID obligation, the amount
of the OID accruing while the obligation was held by the foreign
corporation, if such OID was not previously taken into account
and if the tax imposed on the OID does not exceed the payment
received less the tax imposed on any interest included in the
payment received. This rule applies to payments received for
OID obligations issued after March 31, 1972.
Certain OID is not taxable for OID obligations issued after
July 18, 1984. See section 881(c) for more details.
For rules that apply to other OID obligations, see Pub. 515.
5. Gains from the sale or exchange of patents, copyrights,
and other intangible property if the gains are from payments that
are contingent on the productivity, use, or disposition of the
property or interest sold or exchanged.
For more information, see section 881(a) and Regulations
section 1.881-2.
Note. For purposes of determining whether its income is taxable
under section 881(a), a corporation created or organized in
Guam, American Samoa, the Northern Mariana Islands, or the
U.S. Virgin Islands will not be treated as a foreign corporation if it
meets the rules of section 881(b). For dividends paid after
October 22, 2004, a corporation created or organized in Puerto
Rico will be taxed under section 881(a) at a rate of 10% with
respect to such dividends received during the tax year in the
circumstances outlined in section 881(b)(2).

Line 9. Gross Transportation Income

A 4% tax is imposed on a foreign corporation's U.S. source gross
transportation income for the tax year. U.S. source gross
transportation income is generally any gross income that is
transportation income if such income is treated as from U.S.
sources.
Transportation income is any income from or connected with:

• The use (or hiring or leasing for use) of a vessel or aircraft, or
• The performance of services directly related to the use of a

vessel or aircraft. For this purpose, the term “vessel or aircraft”
includes any container used in connection with a vessel or
aircraft.

Generally, 50% of all transportation income that is attributable
to transportation that either begins or ends in the United States
is treated as from U.S. sources. See section 863(c)(2)(B) for a
special rule for personal service income.
Exceptions. U.S. source gross transportation income does not
include income that is:
• Effectively connected with the conduct of a U.S. trade or
business, or
• Taxable in a territory of the United States under the provisions
of the Internal Revenue Code as applied to that territory.
Transportation income of the corporation will not be treated as
ECI unless:
• The corporation has a fixed place of business in the United
States involved in the earning of transportation income, and
• Substantially all of the corporation's U.S. source gross
transportation income (determined without regard to the rule that
such income does not include ECI) is attributable to regularly
18

scheduled transportation (or, in the case of income from the
leasing of a vessel or aircraft, is attributable to a fixed place of
business in the United States).
For more information, see section 887.
Enter the foreign corporation's U.S. source gross
transportation income on line 9, column (b). Also, attach
Schedule V (Form 1120-F).
See Exclusion from gross income for certain income from
ships and aircraft, later.

Line 10. Other Items of Income

Include on line 10 all other income not reportable on lines 1
through 9. For any amounts received by a QDD in its equity
derivatives dealer capacity, include a statement detailing each
type of income. In addition, if the foreign corporation received a
specified federal procurement payment (as defined in section
5000C(b)) that was not fully withheld upon at source, enter the
payment in Section I, line 10, column (b); enter a 2% rate of tax
in column (c); enter the tax liability in column (d); and enter any
withholding in column (e).
Increase or decrease in tax attributable to partner's additional reporting year tax. If the taxpayer is a foreign corporate
partner and received a Form 8986 from a partnership that has
elected to have each reviewed partner take into account the
partner's share of the adjustments, as finally determined, instead
of paying the imputed underpayment, the foreign corporate
partner (taxpayer) will have to complete Form 8978 to report
adjustments shown on the Form 8986 they received from the
partnership. The foreign corporate partner (taxpayer) must
complete a separate Form 8978 to report adjustments pertaining
to income that is effectively connected with the conduct of a
trade or business in the United States under section 882 (an
“ECI Form 8978”) and a separate Form 8978 to report
adjustments pertaining to income from U.S. sources not
effectively connected with the conduct of a trade or business in
the United States under section 881 (an “FDAP Form 8978”).
Include any increase or decrease in taxes due from the FDAP
Form 8978, line 14, that was not fully withheld upon at source, on
a separate line on Form 1120-F, Section I, line 10. Enter “From
Form 8978” in column (a) and skip (leave blank) columns (b) and
(c). Enter in column (d) the amount of the increase or decrease
from the FDAP Form 8978, line 14. Enter any withholding in
column (e). Attach the FDAP Form 8978 to Form 1120-F.
Note. The taxpayer will generally skip lines 3a, 3b, 4, 7, 9a, 9b,
and 10 of the FDAP Form 8978.

Line 13

Check the “Yes” box if you received an item of income during the
tax year with respect to which you are treated as fiscally
transparent under the laws where you are organized. In such a
case, you may not claim a reduced rate of tax under a treaty with
respect to that item. See Regulations section 1.894-1(d)(1).
If the item of income has been withheld upon, your interest
holders may, however, be able to claim treaty benefits, but only if
the tax jurisdiction in which your interest holders qualify for treaty
benefits treats you as fiscally transparent and the interest
holders are not fiscally transparent with respect to that item of
income. An interest holder claiming a benefit should file a
separate Form 1120-F, if appropriate. See Regulations section
1.894-1(d)(3) for the definition of “fiscally transparent” and
Regulations section 1.894-1(d)(5) for examples.

Instructions for Form 1120-F (2024)

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Section II—Income Effectively
Connected With the Conduct of a
Trade or Business in the United
States
Foreign Corporations Engaged in a U.S. Trade or
Business
These corporations are taxed on their ECI at the same 21% tax
rate that applies to domestic corporations. ECI can be U.S.
source or foreign source income as explained below.

U.S. Source Effectively Connected Income
U.S. source income derived by a foreign corporation engaged in
a U.S. trade or business other than FDAP and capital gains is
ECI. See Regulations section 1.864-4(b).
Note. For purposes of the preceding paragraph, U.S. source
income includes income with respect to activities related to the
exploration and exploitation of natural resources in continental
shelf areas (see section 638).
FDAP items are generally ECI (and are therefore includible in
Section II) if the asset-use test, the business-activities test, or
both tests (explained below) are met.
If neither test is met, FDAP items are generally not ECI (and
are therefore includible in Section I instead of Section II). For
more information, see section 864(c)(2) and Regulations section
1.864-4(c).
Finance business. See Regulations section 1.864-4(c)(5) for
special rules relating to banking, financing, or similar business
activities. Such rules apply to certain stocks and securities of a
banking, financing, or similar business in lieu of the asset-use
and business-activities tests.
Asset-use test. The FDAP items are from assets used in, or
held for use in, the conduct of U.S. trade or business. For
example, the following items are ECI.
• Income earned on a trade or note receivable acquired in the
conduct of the U.S. trade or business.
• Interest income earned from the temporary investment of
funds needed in the foreign corporation's U.S. trade or business.
Business-activities test. The activities of the U.S. trade or
business were a material factor in the realization of the FDAP
items.

Foreign Source Effectively Connected Income
Foreign source income is generally not ECI. However, if the
foreign corporation has an office or other fixed place of business
in the United States, the following types of foreign source income
it receives from that U.S. office are ECI.
• Rents or royalties received for the use outside the United
States of intangible personal property described in section
862(a)(4) if derived from the active conduct of a U.S. trade or
business.
• Gains or losses on the sale or exchange of intangible personal
property located outside the United States or from any interest in
such property, if such gains or losses are derived in the active
conduct of the trade or business in the United States.
• Dividends, interest, amounts received for the provision of a
guarantee of indebtedness, issued after September 27, 2010, if
derived from the active conduct of a U.S. banking, financing, or
similar business or if the principal business of the foreign
corporation is trading in stocks or securities for its own account.
Instructions for Form 1120-F (2024)

• Income from the sale or exchange of inventory outside the
United States through the U.S. office, unless the property is sold
or exchanged for use, consumption, or disposition outside the
United States and an office of the foreign corporation in a foreign
country materially participated in the sale.
• Any income or gain that is equivalent to any item of income or
gain listed above must be treated in the same manner as such
item for purposes of determining whether that income is foreign
source ECI.
See section 864(c)(5)(A) and Regulations section 1.864-7 for
the definition of “office” or other fixed place of business in the
United States. See sections 864(c)(5)(B) and (C) and
Regulations section 1.864-6 for special rules for determining
when foreign source income received by a foreign corporation is
from an office or other fixed place of business in the United
States.
Foreign insurance companies. Foreign source income of a
foreign insurance company that is attributable to its U.S. trade or
business is ECI. See section 864(c)(4)(C) and Regulations
section 1.864-5(c).
Excluded foreign source income. Foreign source income that
would otherwise be ECI under any of the above rules for foreign
source income is excluded if:
• It is foreign source dividends, interest, or royalties paid by a
foreign corporation in which the taxpayer owns or is considered
to own (within the meaning of section 958) more than 50% of the
total combined voting power of all classes of stock entitled to
vote; or
• The taxpayer is a CFC (as defined in section 957) and the
foreign source income is subpart F income (as defined in section
952).
For more information, see section 864(c)(4)(D) and
Regulations section 1.864-5(d).

Foreign Corporations Not Engaged in a U.S.
Trade or Business

If a foreign corporation is not engaged in a U.S. trade or business
during the tax year, it will complete Section II only if such
corporation:
• Had current year income or gain from a sale or exchange of
property or from performing services (or any other transaction) in
any other tax year that would have been ECI in that other tax
year (see section 864(c)(6));
• Had current year income or gain from a disposition of property
that is no longer used or held for use in conducting a U.S. trade
or business within the 10-year period before the disposition that
would have been ECI immediately before such cessation (see
section 864(c)(7));
• Elected to treat real property income as ECI (see below);
• Was created or organized and was conducting a banking
business in a U.S. territory, and received interest on U.S.
obligations that is not portfolio interest (see section 882(e)); or
• Had gain or loss from disposing of a U.S. real property interest
(see Disposition of U.S. Real Property Interest by a Foreign
Corporation, later).

Election To Treat Real Property Income as
Effectively Connected Income

A foreign corporation that derives, during the tax year, any
income from real property located in the United States, or from
any interest in such real property, may elect, for the tax year, to
treat all such income as ECI. See section 871(d). Income to
which this election applies includes:
• Gains from the sale or exchange of real property or an interest
therein;

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• Rents or royalties from mines, wells, or other natural deposits;
and
• Gains described in section 631(b) or (c).
The election may be made whether or not the corporation is
engaged in a U.S. trade or business during the tax year for which
the election is made or whether or not the corporation has
income from real property that, for the tax year, is effectively
connected with the conduct of a U.S. trade or business.
To make the election, attach a statement that includes the
information required in Regulations section 1.871-10(d)(1)(ii) to
Form 1120-F for the first tax year for which the election is to
apply. Use Section II to figure the tax on this income.

Disposition of U.S. Real Property Interest by a
Foreign Corporation

A foreign corporation that disposes of a U.S. real property
interest (as defined in section 897(c)) must treat the gain or loss
from the disposition as ECI, even if the corporation is not
engaged in a U.S. trade or business. Figure this gain or loss on
Schedule D (Form 1120), Capital Gains and Losses. Carry the
result to Section II, line 8, on page 5 of Form 1120-F.
A foreign corporation may elect to be treated as a domestic
corporation for purposes of sections 897 and 1445. See section
897(i).
See Temporary Regulations section 1.897-5T for the
applicability of section 897 to reorganizations and liquidations.
If the corporation had income tax withheld on Form 8288-A,
include the amount withheld on line 5i, page 1.

Income
Line 1. Gross Receipts or Sales
Line 1a. Enter gross income effectively connected with the
conduct of a U.S. trade or business (except for those income
items that must be reported on lines 4 through 10). Include on
line 1a effectively connected gross receipts or sales. If an
accrual method corporation has an applicable financial
statement (as defined in section 451(b)(3)), then the revenue
recognition rules in Regulations section 1.451-3 may apply.
Special rules apply to certain income, as discussed below.
Advance payments. In general, advance payments must be
included in income in the year of receipt. For exceptions to this
general rule for corporations that use the accrual method of
accounting, see the following.
• To report income from long-term contracts, see section 460.
• For rules that allow a limited deferral of advance payments
beyond the current tax year, see section 451(c). Also, see
Regulations sections 1.451-8(c), (d), and (e). For applicability
dates, see Regulations section 1.451-8(h).
• For information on adopting or changing to a permissible
method for reporting advance payments for services and certain
goods by an accrual method corporation, see the Instructions for
Form 3115.
Exclusion from gross income for certain income from
ships and aircraft. A foreign corporation engaged in the
international operation of ships or aircraft and organized in a
qualified foreign country may exclude qualified income from its
gross income, provided that the corporation can satisfy certain
ownership requirements. See Schedule S (Form 1120-F) and its
separate instructions for additional information.
Income from qualifying shipping activities (tonnage tax).
The corporation's gross income does not include income from
qualifying shipping activities (as defined in section 1356) if the
corporation makes an election under section 1354 to be taxed on
its notional shipping income (as defined in section 1353) at the
highest corporate tax rate. If the election is made, the
20

corporation may generally not claim any loss, deduction, or
credit with respect to qualifying shipping activities. A corporation
making this election may also elect to defer gain on certain
dispositions of qualifying vessels under section 1359.
Use Form 8902, Alternative Tax on Qualifying Shipping
Activities, to figure the tax. Include the alternative tax from Form
8902, line 30, on Schedule J, line 8, and be sure to check the
“Form 8902” box on that line.
Installment sales. Generally, the installment method may not
be used for dealer dispositions of property. A “dealer disposition”
is any disposition of (a) personal property by a person who
regularly sells or otherwise disposes of personal property of the
same type on the installment plan, or (b) real property held for
sale to customers in the ordinary course of the taxpayer's trade
or business.
The restrictions on using the installment method do not apply
to the following.
• Dispositions of property used or produced in the trade or
business of farming.
• Certain dispositions of timeshares and residential lots
reported under the installment method for which the corporation
elects to pay interest under section 453(l)(3).
Enter on line 1a (and carry to line 3) the gross profit on
collections from these installment sales. Attach a statement
showing the following information for the current and the 3
preceding years: (a) gross sales, (b) cost of goods sold, (c)
gross profits, (d) percentage of gross profits to gross sales, (e)
amount collected, and (f) gross profit on the amount collected.
For sales of timeshares and residential lots reported under
the installment method, if the corporation elects to pay interest
under section 453(I)(3), the corporation's income tax is
increased by the interest payable under section 453(l)(3). Report
this addition to the tax on Schedule J, line 8, and be sure to
check the “Other” box.
Nonaccrual experience method for service providers.
Accrual method corporations are not required to accrue certain
amounts to be received from the performance of services that,
based on their experience, will not be collected, if:
• The services are in the fields of health, law, engineering,
architecture, accounting, actuarial science, performing arts or
consulting; or
• The corporation meets the section 448(c) gross receipts test
for all prior years.
This provision does not apply to any amount if interest is
required to be paid on the amount or if there is any penalty for
failure to timely pay the amount. See Regulations section
1.448-3 for more information on the nonaccrual experience
method, including information on safe harbor methods.
For information on a book safe harbor method of accounting
for corporations that use the nonaccrual experience method of
accounting, see Rev. Proc. 2011-46, 2011-42 I.R.B. 518,
available at IRS.gov/irb/2011-42_IRB#RP-2011-46, or any
successor. Also, see the Instructions for Form 3115 for
procedures to obtain automatic consent to change to this
method or make certain changes within this method.
Corporations that qualify to use the nonaccrual experience
method should attach a statement showing total gross receipts,
the amount not accrued because of the application of section
448(d)(5), and the net amount accrued. Enter the net amount on
line 1a.
Line 1b. Returns and Allowances. Enter cash and credit
refunds the corporation made to customers for returned
merchandise, rebates, and other allowances made on gross
receipts or sales.

Instructions for Form 1120-F (2024)

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Line 2. Cost of Goods Sold
Complete and attach Form 1125-A, Cost of Goods Sold, if
applicable. Enter on Form 1120-F, line 2, the amount from Form
1125-A, line 8. See Form 1125-A and its instructions.

Line 4. Dividends
See the instructions for Schedule C, later. Complete Schedule C
and enter on line 4 the amount from Schedule C, line 13, column
(a).

Line 5. Interest
Enter taxable interest on U.S. obligations and on loans, notes,
mortgages, bonds, bank deposits, corporate bonds, tax refunds,
etc. Do not offset interest expense against interest income.
Special rules apply to interest income from certain
below-market-rate loans. See section 7872 for details.
Note. Report tax-exempt interest on Form 1120-F, page 2, item
P. Also, if required, include the same amount on Schedule M-1,
line 7a, or Schedule M-3, Part II, line 4a.

Line 6. Gross Rents
Enter the gross amount received for the rental of property.
Deduct expenses such as repairs, interest, taxes, and
depreciation on the proper lines for deductions. A rental activity
held by a closely held corporation or a personal service
corporation may be subject to the passive activity loss rules. See
Passive activity limitations, later.

• Part or all of the proceeds received from certain
corporate-owned life insurance contracts issued after August 17,
2006. Corporations that own one or more employer-owned life
insurance contracts issued after this date must file Form 8925,
Report of Employer-Owned Life Insurance Contracts. See Form
8925.
• Net income from notional principal contracts.
• Interest and dividend equivalents (for example, confirmation
and acceptance letter of credit fees and other guarantee fees).
• Income from cancellation of debt (COD) from the repurchase
of a debt instrument for less than its adjusted issue price.

Deductions

Important. In computing the taxable income of a foreign
corporation engaged in a U.S. trade or business, deductions are
allowed only if they are connected with income effectively
connected with the conduct of a trade or business in the United
States. Charitable contributions, however, may be deducted
whether or not they are so connected. See section 882(c) and
Regulations section 1.882-4(b) for more information.

Apportionment of Expenses
In general, expenses that are definitely related to a class of gross
income (including tax-exempt income) must be allocated to that
class of gross income. Expenses not definitely related to a class
of gross income should be allocated to all classes of income
based on the ratio of gross income in each class of income to
total gross income, or some other ratio that clearly relates to the
classes of income. See Regulations section 1.861-8 and
Temporary Regulations section 1.861-8T for more information.

Line 8. Capital Gain Net Income

Attach Schedule H (Form 1120-F) to show the definitely
related and indirect allocation and apportionment of expenses to
ECI. The amount on Schedule H, Part II, line 20, is reportable on
Form 1120-F, Section II, line 26.

Every effectively connected sale or exchange of a capital asset
must be reported in detail on Schedule D (Form 1120), even if
there is no gain or loss.

Note. The allocation and apportionment of bad debt deductions
is not included on Schedule H but is reported only on Form
1120-F, Section II, line 15.

Line 10. Other Income

Limitations on Deductions

Enter any other taxable income not reported on lines 1 through
9. List the type and amount of income on an attached statement.
If the corporation has only one item of other income, describe it
in parentheses on line 10.
Examples of other income to report on line 10 include the
following.
• Recoveries of bad debts deducted in prior years under the
specific charge-off method.
• Any amount includable in income from Form 6478, Biofuel
Producer Credit.
• Any amount includable in income from Form 8864, Biodiesel,
Renewable Diesel, or Sustainable Aviation Fuels Credit.
• Refunds of taxes deducted in prior years to the extent they
reduced the amount of tax imposed. See section 111 and the
related regulations. Do not offset current-year taxes against tax
refunds.
• Ordinary income from trade or business activities of a
partnership (from Schedule K-3 (Form 1065)). Do not offset
ordinary losses against ordinary income. Instead, include the
losses on Section II, line 27. Show the partnership's name,
address, and EIN on Schedule P (Form 1120-F). If the amount
entered is from more than one partnership, identify the amount
from each partnership on Schedule P.
• The ratable portion of any net positive section 481(a)
adjustment. See Section 481(a) adjustment, earlier.
Instructions for Form 1120-F (2024)

Uniform capitalization rules. The uniform capitalization rules
of section 263A require corporations to capitalize certain costs to
inventory or other property.
Corporations subject to the section 263A uniform
capitalization rules are required to capitalize:
1. Direct costs of assets produced or acquired for resale,
and
2. Certain indirect costs (including taxes) that are properly
allocable to property produced or property acquired for resale.
The corporation cannot deduct the costs required to be
capitalized under section 263A until it sells, uses, or otherwise
disposes of the property (to which the costs relate). The
corporation recovers these costs through depreciation,
amortization, or costs of goods sold.
A small business taxpayer (defined in Accounting Methods,
earlier) is not required to capitalize costs under section 263A. A
small business taxpayer that wants to discontinue capitalizing
costs under section 263A must change its method of accounting.
See section 263A(i) and Regulations section 1.263A-1(j). Also,
see the Instructions for Form 3115.
For more information on the uniform capitalization rules, see
Pub. 538. Also, see Regulations sections 1.263A-1 through
1.263A-3. See section 263A(d), Regulations section 1.263A-4,

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and Pub. 225 for rules for property produced in a farming
business.
Transactions between related taxpayers. Generally, an
accrual basis taxpayer may only deduct business expenses and
interest owed to a related party in the year the payment is
included in the income of the related party. See sections 163(e)
(3) and 267(a)(2) for limitations on deductions for unpaid interest
and expenses. See the instructions for Schedule I (Form
1120-F), lines 24b and 24e, for limitations under these sections
of the interest expense allocable under Regulations section
1.882-5.
Limitations on business interest expense. Business interest
expense may be limited. See section 163(j) and Form 8990.
Also, see the instructions for Schedule I (Form 1120-F), and the
instructions for item FF and item GG, earlier.
Section 291 limitations. Corporations may be required to
adjust deductions for depletion of iron ore and coal, intangible
drilling and exploration and development costs, certain
deductions for financial institutions, and the amortizable basis of
pollution control facilities. See section 291 to determine the
amount of the adjustment.
Election to deduct business start-up and organizational
costs. A corporation can elect to deduct a limited amount of
start-up and organizational costs it paid or incurred. Any
remaining costs must generally be amortized over a 180-month
period. See sections 195 and 248 and the related regulations.
Time for making an election. The corporation generally
elects to deduct start-up or organizational costs by claiming the
deduction on its income tax return filed by the due date
(including extensions) for the tax year in which the active trade or
business begins. For more details, see the Instructions for Form
4562.
If the corporation timely filed its return for the year without
making an election, it can still make an election by filing an
amended return within 6 months of the due date of the return
(excluding extensions). Clearly indicate the election on the
amended return and enter “Filed pursuant to section
301.9100-2” at the top of the amended return. File the amended
return at the same address the corporation filed its original
return. The election applies when figuring taxable income for the
current tax year and all subsequent years.
The corporation can choose to forgo the elections above by
affirmatively electing to capitalize its start-up or organizational
costs on its income tax return filed by the due date (including
extensions) for the tax year in which the active trade or business
begins.
Note. The election to either amortize or capitalize start-up costs
is irrevocable and applies to all start-up costs that are related to
the trade or business.
Report the deductible amount of start-up and organizational
costs and any amortization on line 27. For amortization that
begins during the current tax year, complete and attach Form
4562, Depreciation and Amortization.
Passive activity limitations. Limitations on passive activity
losses and credits under section 469 apply to personal service
corporations (for definition, see Item O—Personal Service
Corporation, earlier) and closely held corporations (see definition
below).
Generally, the two kinds of passive activities are:
• Trade or business activities in which the corporation did not
materially participate for the tax year; and
• Rental activities, regardless of its participation.
For exceptions, see Form 8810, Corporate Passive Activity
Loss and Credit Limitations.
22

Corporations subject to the passive activity limitations must
complete Form 8810 to compute their allowable passive activity
loss and credit. Before completing Form 8810, see Temporary
Regulations section 1.163-8T, which provides rules for allocating
interest expense among activities. If a passive activity is also
subject to the at-risk rules of section 465 or the tax-exempt use
loss rules of section 470, those rules apply before the passive
loss rules.
For more information, see section 469, the related
regulations, and Pub. 925, Passive Activity and At-Risk Rules.
Closely held corporations. A corporation is a closely held
corporation if:
• At any time during the last half of the tax year, more than 50%
in value of its outstanding stock is directly or indirectly owned by
or for not more than five individuals; and
• The corporation is not a personal service corporation.
Certain organizations are treated as individuals for purposes
of this test. See section 542(a)(2). For rules for determining
stock ownership, see section 544 (as modified by section 465(a)
(3)).
Reducing certain expenses for which credits are allowable.
If the corporation claims certain credits, it may need to reduce
the otherwise allowable deductions for expenses used to figure
the credit. This applies to credits such as the following.
• Work opportunity credit (Form 5884).
• Credit for increasing research activities (Form 6765).
• Orphan drug credit (Form 8820).
• Disabled access credit (Form 8826).
• Empowerment zone employment credit (Form 8844).
• Credit for employer social security and Medicare taxes paid
on certain employee tips (Form 8846).
• Credit for small employer pension plan start-up costs (Form
8881).
• Credit for employer-provided childcare facilities and services
(Form 8882).
• Low sulfur diesel fuel production credit (Form 8896).
• Credit for employer differential wage payments (Form 8932).
• Credit for small employer health insurance premiums (Form
8941).
• Employer credit for paid family and medical leave (Form
8994).
If the corporation has any of the credits listed above, figure
the current-year credit before figuring the deduction for expenses
on which the credit is based. If the corporation capitalized any
costs on which it figured the credit, it may need to reduce the
amount capitalized by the credit attributable to these costs.
See the instructions for the form used to figure the applicable
credit for more details.
Limitations on deductions related to property leased to
tax-exempt entities. If a corporation leases property to a
governmental or other tax-exempt entity, the corporation cannot
claim deductions related to the property to the extent that they
exceed the corporation's income from the lease payments. This
disallowed tax-exempt use loss may be carried over to the next
tax year and treated as a deduction with respect to the property
for that tax year. See section 470(d) for exceptions.
Contributions. See the instructions for line 19, later, for
limitations that apply to contributions.

Line 12. Compensation of Officers
Enter deductible officers' compensation on line 12. Do not
include compensation deductible elsewhere on the return, such
as amounts included in cost of goods sold, elective contributions
to a section 401(k) cash or deferred arrangement, or amounts
contributed under a salary reduction SEP agreement or a
SIMPLE IRA plan.
Instructions for Form 1120-F (2024)

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If the corporation's total receipts (line 1a, plus lines 4 through
10) are $500,000 or more, complete Form 1125-E,
Compensation of Officers. Enter on Form 1120-F, line 12, the
amount from Form 1125-E, line 4.

Line 13. Salaries and Wages

in income called the “inclusion amount.” The corporation may
have an inclusion amount if:
The lease term began:

And the vehicle's FMV on the first
day of the lease exceeded:

Cars (excluding trucks and vans)

Enter the total salaries and wages paid for the tax year. Do not
include salaries and wages deductible elsewhere on the return,
such as amounts included in officers' compensation, cost of
goods sold, elective contributions to a section 401(k) cash or
deferred arrangement, or amounts contributed under a salary
reduction SEP agreement or a SIMPLE IRA plan.

After 12/31/23 but before 1/1/25

$62,000

After 12/31/22 but before 1/1/24

$60,000

After 12/31/21 but before 1/1/23

$56,000

After 12/31/20 but before 1/1/22

$51,000

After 12/31/17 but before 1/1/21

$50,000

If the corporation provided taxable fringe benefits to its
employees, such as personal use of a car, do not deduct as
wages the amount allocated for depreciation and other expenses
claimed on lines 20 and 27.

After 12/31/12 but before 1/1/18

$19,000

After 12/31/23 but before 1/1/25

$62,000

If the corporation claims a credit for any wages paid or
incurred, it may need to reduce any corresponding
CAUTION deduction for officers' compensation and salaries and
wages. See Reducing certain expenses for which credits are
allowable, earlier.

After 12/31/22 but before 1/1/24

$60,000

After 12/31/21 but before 1/1/23

$56,000

!

Line 14. Repairs and Maintenance
Enter the cost of repairs and maintenance not claimed
elsewhere on the return, such as labor and supplies, that are not
payments to produce or improve real or tangible personal
property. See Regulations section 1.263(a)-1. For example,
amounts are paid for improvements if they are for betterments to
the property, restorations of the property (such as the
replacements of major components or substantial structural
parts), or if they adapt the property to a new or different use.
Amounts paid to produce or improve property must be
capitalized. See Regulations sections 1.263(a)-2 and -3.
The corporation can deduct repair and maintenance
expenses only to the extent they relate to a trade or business
activity. See Regulations section 1.162-4. The corporation may
elect to capitalize certain repair and maintenance costs
consistent with its books and records. See Regulations section
1.263(a)-3(n) for information on how to make the election.

Line 15. Bad Debts
Enter the total debts that became worthless in whole or in part
during the tax year. A small bank or thrift institution using the
reserve method of section 585 should attach a statement
showing how it figured the current year's provision. A corporation
that uses the cash method of accounting cannot claim a bad
debt deduction unless the amount was previously included in
income.
Specific charge-off method. Attach to the return a list of each
debtor and the amount of the bad debt deduction where the
amount of the loans charged off (or treated as charged off under
Regulations section 1.166-2) for that debtor total in excess of
$500,000 in the tax year.

Line 16. Rents
If the corporation rented or leased a vehicle, enter the total
annual rent or lease expense paid or incurred during the year.
Also, complete Part V of Form 4562. If the corporation leased a
vehicle for a term of 30 days or more, the deduction for vehicle
lease expense may have to be reduced by an amount includible
Instructions for Form 1120-F (2024)

Trucks and vans

After 12/31/20 but before 1/1/22

$51,000

After 12/31/17 but before 1/1/21

$50,000

After 12/31/13 but before 1/1/18

$19,500

After 12/31/09 but before 1/1/14

$19,000

See Pub. 463, Travel, Gift, and Car Expenses, for instructions
on figuring the inclusion amount.
Note. The inclusion amount for lease terms beginning in 2025
will be published in the Internal Revenue Bulletin in early 2025.

Line 17. Taxes and Licenses
Enter taxes paid or accrued during the tax year, but do not
include the following.
• Federal income taxes.
• Foreign or U.S. territory income taxes if a foreign tax credit is
claimed.
• Taxes not imposed on the corporation.
• Taxes, including state or local sales taxes, that are paid or
incurred in connection with an acquisition or disposition of
property (these taxes must be treated as a part of the cost of the
acquired property or, in the case of a disposition, as a reduction
in the amount realized on the disposition).
• Taxes assessed against local benefits that increase the value
of the property assessed (such as for paving, etc.).
• Taxes deducted elsewhere on the return, such as those
reflected in cost of goods sold.
See section 164(d) for information on apportionment of taxes
on real property between seller and purchaser.
See section 906(b)(1) for rules concerning certain foreign
taxes imposed on income from U.S. sources that may not be
deducted or credited.

Line 18. Interest Expense From Schedule I, Line 25
Enter the interest expense from Schedule I (Form 1120-F),
line 25. Attach Schedule I to the Form 1120-F. See Schedule I
and its separate instructions for additional information relating to
the allocation of interest expense to ECI and the amount that
may be claimed as a deduction on Form 1120-F, Section II,
line 18.
23

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Treaty-based interest expense allocation methods. The
three-step formula under Regulations section 1.882-5 provides
the exclusive rules for determining the interest expense
attributable to the business profits of a permanent establishment
under a U.S. income tax treaty, other than treaties that expressly
permit attribution of business profits to a U.S. permanent
establishment under application of the OECD Transfer Pricing
Guidelines, by analogy.
Protective elections under section 1.882-5. A taxpayer
that files a protective tax return under Regulations section
1.882-4(a)(3)(vi) may voluntarily file Schedule I with the
protective return to preserve timely elections under Regulations
section 1.882-5(a)(7). If a taxpayer uses the provisions of an
applicable treaty to allocate interest expense rather than
Regulations section 1.882-5, it remains subject to the time,
place, and manner provisions of Regulations section 1.882-5(a)
(7) for making its interest expense allocation elections for any
subsequent year that it chooses to use the three-step allocation
formula of the regulations instead of the treaty. Protective interest
expense allocation elections under Regulations section
1.882-5(a)(7) may be made for a year in which a treaty method is
used in lieu of the rules of Regulations section 1.882-5 by
completing and filing Schedule I on a timely filed income tax
return for any year that the election would be required to be
made under the rules of Regulations section 1.882-5. If a
corporation uses an applicable treaty, rather than the rules of
Regulations section 1.882-5, to allocate interest expense and
does not file Schedule I, then the taxpayer has forfeited its right
to make the Regulations section 1.882-5 method elections for
such applicable year or years. In this case, under certain
circumstances, the Director of Field Operations may make any or
all of the binding elections provided under Regulations section
1.882-5 in accordance with Regulations section 1.882-5(a)(7)(ii)
(and may make the binding partnership basis apportionments
election under Regulations section 1.884-1(d)(3)(v)) on behalf of
the corporation.

Line 19. Charitable Contributions
Note. This deduction is allowed for all contributions, whether or
not connected with income that is effectively connected with the
conduct of a trade or business in the United States. See section
882(c)(1)(B).
Enter contributions or gifts actually paid within the tax year to
or for the use of charitable and governmental organizations
described in section 170(c) and any unused contributions
carried over from prior years. Special rules and limits apply to
contributions to organizations conducting lobbying activities. See
section 170(f)(9).
Corporations reporting taxable income on the accrual method
may elect to treat as paid during the tax year any contributions
paid by the due date for filing Form 1120-F (not including
extensions), if the contributions were authorized by the board of
directors during the tax year. Attach a declaration to the return
stating that the resolution authorizing the contributions was
adopted by the board of directors during the tax year. The
declaration must include the date the resolution was adopted.
See section 170(a)(2)(B).
Limitation on deduction. Generally, the total amount claimed
may not exceed 10% of taxable income (line 31) computed
without regard to the following.
• Any deduction for contributions.
• The special deductions on line 30b.
• The limitation under section 249 on the deduction for bond
premium.
• Any NOL carryback to the tax year under section 172.
24

• Any capital loss carryback to the tax year under section
1212(a)(1).
Carryover. Charitable contributions over the 10% limitation
cannot be deducted for the tax year but can be carried over to
the next 5 tax years. See the exception below for farmers and
ranchers.
Special rules apply if the corporation has an NOL carryover to
the tax year. In figuring the charitable contributions deduction for
the current tax year, the 10% limit is applied using the
corporation’s taxable income after taking into account any
deduction for the NOL.
To figure the amount of any remaining NOL carryover to later
years, taxable income must be modified (see section 172(b)). To
the extent that contributions are used to reduce taxable income
for this purpose and increase an NOL carryover, a contributions
carryover is not allowed. See section 170(d)(2)(B).
Suspension of 10% limitation for farmers and ranchers. A
qualified farmer or rancher (as defined in section 170(b)(1)(E)(v))
that does not have publicly traded stock may deduct
contributions of qualified conservation property without regard to
the general 10% limit.
The total amount of the contribution claimed for the qualified
conservation property cannot exceed 100% of the excess of the
corporation's taxable income (as computed above, substituting
"100%" for "10%") over all other allowable charitable
contributions. Any excess qualified conservation contributions
can be carried over to the next 15 years, subject to the 100%
limitation. See sections 170(b)(2)(B) and (C).
Cash contributions. For contributions of cash, check, or other
monetary gifts (regardless of the amount), the corporation must
maintain a bank record, or a receipt, letter, or other written
communication from the donee organization indicating the name
of the organization, the date of the contribution, and the amount
of the contribution.
Contributions of $250 or more. A corporation can deduct a
contribution of $250 or more only if it gets a written
acknowledgment from the donee organization that shows the
amount of cash contributed, describes any property contributed
(but not its value), and either gives a description and a good faith
estimate of the value of any goods or services provided in return
for the contribution or states that no goods or services were
provided in return for the contribution. The acknowledgment
must be obtained by the due date (including extensions) of the
corporation's return, or, if earlier, the date the return is filed. Do
not attach the acknowledgment to the tax return, but keep it with
the corporation's records.
Contributions of property other than cash. If a corporation
(other than a closely held or personal service corporation)
contributes property other than cash and claims a deduction of
more than $500 for the property, it must attach a statement to the
return describing the kind of property contributed and the
method used to determine its FMV. Closely held corporations
and personal service corporations must complete Form 8283,
Noncash Charitable Contributions, and attach it to their returns.
All other corporations must generally complete and attach Form
8283 to their returns for contributions of property (other than
money) if the total claimed deduction for all property contributed
was more than $5,000. Special rules apply to the contribution of
certain property. See the Instructions for Form 8283.
Qualified conservation contributions. Special rules apply
to qualified conservation contributions, including contributions of
certain easements on buildings located in a registered historic
district. See section 170(h) and Pub. 526, Charitable
Contributions.

Instructions for Form 1120-F (2024)

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Other special rules. The corporation must reduce its
deduction for contributions of certain ordinary income and
capital gain property. See section 170(e).
A larger deduction is allowed for certain contributions
including:
• Inventory and other property to certain organizations for use in
the care of the ill, needy, or infants (see section 170(e)(3)),
including qualified contributions of “apparently wholesome food”;
and
• Scientific equipment used for research to institutions of higher
learning or to certain scientific research organizations (other than
by personal holding companies and service organizations). See
section 170(e)(4).
For more information on charitable contributions, including
substantiation and recordkeeping requirements, see section 170
and the related regulations, and Pub. 526. For other special rules
that apply to corporations, see Pub. 542.

Note. Form 5500 and Form 5500-SF must be filed electronically
under the computerized ERISA Filing Acceptance System
(EFAST2). For more information, see the EFAST2 website at
EFAST.dol.gov.
Form 5500-EZ, Annual Return of A One-Participant (Owners/
Partners and Their Spouses) Retirement Plan or A Foreign Plan.
File this form for a plan that only covers the owner (or the owner
and spouse) or a foreign plan that is required to file an annual
return and does not file the annual return electronically on Form
5500-SF. See the Instructions for Form 5500-EZ.

Line 24. Employee Benefit Programs
Enter contributions to employee benefit programs not claimed
elsewhere on the return (for example, insurance or health and
welfare programs) that are not an incidental part of a pension,
profit-sharing, etc., plan included on line 23.

Line 20. Depreciation

Line 26. Deductions Allocated and Apportioned to
ECI From Schedule H, Line 20

Include on line 20 depreciation and the cost of certain property
that the corporation elected to expense under section 179. Enter
the amount from Form 4562, but include on line 20 only amounts
not claimed on Form 1125-A or elsewhere on the return. See
Form 4562 and the Instructions for Form 4562.

Enter the total home office deductions allocated and apportioned
to ECI from Schedule H (Form 1120-F), line 20. See Schedule H
and its separate instructions for additional information. Attach
Schedule H to the Form 1120-F.

Line 21. Depletion
If the corporation has an economic interest in mineral property or
standing timber, it can take a deduction for depletion. More than
one person can have an economic interest in the same mineral
deposit or timber. In the case of leased property, the depletion
deduction is divided between the lessor and the lessee.
See sections 613 and 613A for percentage depletion rates
applicable to natural deposits. Also, see section 291 for the
limitation on the depletion deduction for iron ore and coal
(including lignite).
Attach Form T (Timber), Forest Activities Schedule, if a
deduction for depletion of timber is claimed.
Foreign intangible drilling costs and foreign exploration and
development costs must either be added to the corporation's
basis for cost depletion purposes or be deducted ratably over a
10-year period. See sections 263(i), 616, and 617 for details.

Line 23. Pension, Profit-Sharing, etc., Plans
Enter the deduction for contributions to qualified pension,
profit-sharing, or other funded deferred compensation plans.
Employers who maintain such a plan must generally file one of
the forms listed below unless exempt from filing under
regulations or other applicable guidance, even if the plan is not a
qualified plan under the Internal Revenue Code. The filing
requirement applies even if the corporation does not claim a
deduction for the current tax year. There are penalties for failure
to file these forms on time and for overstating the pension plan
deduction. See sections 6652(e) and 6662(f). Also, see the
instructions for the applicable form.
Form 5500, Annual Return/Report of Employee Benefit Plan.
Form 5500-SF, Short Form Annual Return/Report of Small
Employee Benefit Plan. File this form instead of Form 5500
generally if there were under 100 participants at the beginning of
the plan year.
Instructions for Form 1120-F (2024)

Deductions definitely related and indirectly allocated and
apportioned to ECI that are not includible on Form 1120-F,
Section II, lines 12 through 14, 16 and 17, 19 through 25, and 27
are reported on Schedule H, line 20, and on Form 1120-F,
line 26. Deductions that are includible on Form 1120-F,
Section II, lines 12 through 14, 16 and 17, 19 through 24, and 27
are those derived from set(s) of books and records required to
be reported on Form 1120-F, Schedule L.
Note. The books and records of a U.S. office where a trade or
business is carried on do not necessarily constitute all of the
books and records required to be reported on Schedule L. See
the instructions for Schedule L, later. Deductions that are
reported on Form 1120-F, Section II, lines 12 through 14, 16 and
17, 19 through 24, and 27 are also reconciled to ECI on
Schedule H (Form 1120-F), Part IV, lines 38 through 41.

Line 27. Other Deductions
Attach a statement, listing by type and amount, all allowable
deductions that are not deductible elsewhere on Form 1120-F.
Enter the total on line 27.
Examples of other deductions include the following.

• Amortization. See Part VI of Form 4562.
• Certain costs of a qualified film, television, or live theatrical

production commencing before January 1, 2026 (after
December 31, 2015, and before January 1, 2026, for a live
theatrical production). This deduction does not apply to any
portion of the aggregate cost of the production above $15
million. There is a higher allowance for production in certain
areas. See section 181 and the related regulations.
Note. Certain film, television, or live theatrical productions
acquired and placed in service after September 27, 2017 (for
which a deduction would have been allowable under section 181
without regard to the dollar limitation), are qualified property
eligible for the special depreciation allowance under section
168(k). See the Instructions for Form 4562.
• Certain business start-up and organizational costs (discussed
earlier under Limitations on Deductions).
• Reforestation costs. The corporation may elect to deduct up to
$10,000 of qualifying reforestation expenses for each qualified
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timber property. The corporation may elect to amortize over 84
months any amount not deducted. See the Instructions for Form
T (Timber), Forest Activities Schedule.
• Insurance premiums.
• Legal and professional fees.
• Supplies used and consumed in the business.
• Travel, meals, and entertainment expenses. Special rules
apply (discussed later).
• Utilities.
• Ordinary losses from trade or business activities of a
partnership (from Schedule K-3 (Form 1065)). Do not offset
ordinary income against ordinary losses. Instead, include the
income on line 10. Show the partnership's name, address, and
EIN on Schedule P (Form 1120-F). If the amount is from more
than one partnership, identify the amount from each partnership
on Schedule P.
• Any net negative section 481(a) adjustment. See Section
481(a) adjustment, earlier.
• Dividends paid in cash on stock held by an employee stock
ownership plan. However, a deduction may be taken for these
dividends only if, according to the plan, the dividends are:
1. Paid in cash directly to the plan participants or
beneficiaries;
2. Paid to the plan, which distributes them in cash to the
plan participants or their beneficiaries no later than 90 days after
the end of the plan year in which the dividends are paid;
3. At the election of such participants or their beneficiaries
(a) payable as provided under (1) or (2) above, or (b) paid to the
plan and reinvested in qualifying employer securities; or
4. Used to make payments on a loan described in section
404(a)(9).
See section 404(k) for more details and the limitation on
certain dividends.
Do not deduct expenses such as the following.

• Amounts paid or incurred to, or at the direction of, a

government or governmental entity for the violation, or
investigation or inquiry into the potential violation, of a law.
However, see Fines or similar penalties, later.
• Any amount that is allocable to a class of exempt income. See
section 265(b) for exceptions.
• Lobbying expenses. However, see exceptions (discussed
later).
• Amounts paid or incurred for any settlement, payout, or
attorney fees related to sexual harassment or sexual abuse, if
such payments are subject to a nondisclosure agreement. See
section 162(q).
Travel, meals, and entertainment. Subject to limitations and
restrictions discussed below, a corporation may deduct ordinary
and necessary travel, meal, and non-entertainment expenses
paid or incurred in its trade or business. Generally, entertainment
expenses, membership dues, and facilities used in connection
with these activities cannot be deducted. In addition, no
deduction is generally allowed for qualified transportation fringe
benefits. Special rules apply to deductions for gifts, luxury water
travel, and convention expenses. See section 274 and Pub. 463
for details.
Travel. The corporation cannot deduct travel expenses of any
individual accompanying a corporate officer or employee,
including a spouse or dependent of the officer or employee,
unless:
• That individual is an employee of the corporation, and
• That individual’s travel is for a bona fide business purpose and
would otherwise be deductible by that individual.
Meals. Generally, the corporation can deduct only 50% of the
amount otherwise allowable for non-entertainment related meal
expenses paid or incurred in its trade or business.
26

Meals not separately stated from entertainment are generally
not deductible. In addition (subject to exceptions under section
274(k)(2)):
• Meals must not be lavish or extravagant, and
• An employee of the corporation must be present at the meal.
See section 274(n)(3) for a special rule that applies to
expenses for meals consumed by individuals subject to the
hours of service limits of the Department of Transportation.
Qualified transportation fringes (QTFs). Generally, no
deduction is allowed under section 274(a)(4) for QTFs provided
by employers to their employees. QTFs are defined in section
132(f)(1) and include:
• Transportation in a commuter highway vehicle between the
employee’s residence and place of employment,
• Any transit pass, and
• Qualified parking.
See section 274 and Pub. 15-B, Employers Tax Guide to
Fringe Benefits, for details.
Membership dues. The corporation can deduct amounts
paid or incurred for membership dues in civic or public service
organizations, professional organizations (such as bar and
medical associations), business leagues, trade associations,
chambers of commerce, boards of trade, and real estate boards.
However, no deduction is allowed if a principal purpose of the
organization is to entertain or provide entertainment facilities for
members or their guests. In addition, corporations cannot deduct
membership dues in any club organized for business, pleasure,
recreation, or other social purpose. This includes country clubs,
golf and athletic clubs, airline and hotel clubs, and clubs
operated to provide meals under conditions favorable to
business discussion.
Entertainment facilities. Generally, the corporation cannot
deduct an expense paid or incurred for a facility (such as a yacht
or hunting lodge) used for an activity usually considered
entertainment, amusement, or recreation.
Amounts treated as compensation. Generally, the
corporation may be able to deduct otherwise nondeductible
entertainment, amusement, or recreation expenses if the
amounts are treated as compensation to the recipient and
reported on Form W-2 for an employee or on Form 1099-NEC for
an independent contractor.
However, if the recipient is an officer, director, beneficial
owner (directly or indirectly), or other “specified individual”(as
defined in section 274(e)(2)(B) and Regulations section
1.274-9(b)), special rules apply.
Fines or similar penalties. Generally, no deduction is allowed
for fines or similar penalties paid or incurred to, or at the direction
of, a government or governmental entity for violating any law, or
for the investigation or inquiry into the potential violation of a law,
except:
• Amounts that constitute restitution or remediation of property,
• Amounts paid to come into compliance with the law,
• Amounts paid or incurred as the result of orders or
agreements in which no government or governmental entity is a
party, and
• Amounts paid or incurred for taxes due.
No deduction is allowed unless the amounts are specifically
identified in the order or agreement and the corporation
establishes that the amounts were paid for that purpose. Also,
any amount paid or incurred as reimbursement to the
government for the costs of any investigation or litigation are not
eligible for the exceptions and are nondeductible. See section
162(f).
Lobbying expenses. Generally, lobbying expenses are not
deductible. These expenses include:
• Amounts paid or incurred in connection with influencing
federal, state, or local legislation; or
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• Amounts paid or incurred in connection with any
communication with certain federal executive branch officials in
an attempt to influence the official actions or positions of the
officials. See Regulations section 1.162-29 for the definition of
“influencing legislation.”
Dues and other similar amounts paid to certain tax-exempt
organizations may not be deductible.
If certain in-house lobbying expenditures do not exceed
$2,000, they are deductible.
Line 29. Taxable Income Before NOL Deduction
and Special Deductions
At-risk rules. Generally, special at-risk rules under section 465
apply to closely held corporations (see Passive activity
limitations, earlier) engaged in any activity as a trade or business
or for the production of income. These corporations may have to
adjust the amount on line 29 (see below).
The at-risk rules do not apply to:
• Holding real property placed in service by the taxpayer before
1987;
• Equipment leasing under sections 465(c)(4), (5), and (6); or
• Any qualifying business of a qualified corporation under
section 465(c)(7).
However, the at-risk rules do apply to the holding of mineral
property.
If the at-risk rules apply, adjust the amount on this line for any
section 465(d) losses. These losses are limited to the amount for
which the corporation is at risk for each separate activity at the
close of the tax year. If the corporation is involved in one or more
activities, any of which incurs a loss for the year, report the
losses for each activity separately. Attach Form 6198, At-Risk
Limitations, showing the amount at risk and gross income and
deductions for the activities with the losses.
If the corporation sells or otherwise disposes of an asset or its
interest (either total or partial) in an activity to which the at-risk
rules apply, determine the net profit or loss from the activity by
combining the gain or loss on the sale or disposition with the
profit or loss from the activity. If the corporation has a net loss, it
may be limited because of the at-risk rules.
Treat any loss from an activity not allowed for the tax year as a
deduction allocable to the activity in the next tax year.

Line 30a. Net Operating Loss Deduction
A corporation may use the NOL incurred in one tax year to
reduce its taxable income in another tax year. Enter on line 30a
the total NOL carryovers from other tax years, but do not enter
more than the corporation's taxable income (after special
deductions). Attach a statement showing the computation of the
NOL deduction. Also, complete item S on page 2 of the form.
The following special rules apply.

• If an ownership change (described in section 382(g)) occurs,

the amount of the taxable income of a loss corporation that may
be offset by the pre-change NOL carryovers may be limited. See
section 382 and the related regulations. A loss corporation must
include the information statement as provided in Regulations
section 1.382-11(a) with its income tax return for each tax year
that it is a loss corporation in which an ownership shift, equity
structure shift, or other transaction described in Temporary
Regulations section 1.382-2T(a)(2)(i) occurs. If the corporation
makes the closing-of-the-books election, see Regulations
section 1.382-6(b).
The limitations under section 382 do not apply to certain
ownership changes after February 17, 2009, made pursuant to a
Instructions for Form 1120-F (2024)

restructuring plan under the Emergency Economic Stabilization
Act of 2008. See section 382(n).
For guidance in applying section 382 to loss corporations
whose instruments were acquired by Treasury under certain
programs under the Emergency Economic Stabilization Act of
2008, see Notice 2010-2, 2010-2 I.R.B. 251, available at
IRS.gov/irb/2010-02_IRB#NOT-2010-2.
• If a corporation acquires control of another corporation (or
acquires its assets in a reorganization), the amount of
pre-acquisition losses that may offset recognized built-in gain
may be limited (see section 384).
• If a corporation elects the alternative tax on qualifying
shipping activities under section 1354, no deduction is allowed
for an NOL attributable to the qualifying shipping activities to the
extent that the loss is carried forward from a tax year preceding
the first tax year for which the alternative tax election was made.
See section 1358(b)(2).
For more details on the NOL deduction, see section 172 and
the Instructions for Form 1139.

Line 30b. Special Deductions
See the instructions for Schedule C, later.

Line 31. Taxable Income or (Loss)
Net operating loss (NOL). If line 31 is zero or less, the
corporation may have an NOL that may be carried back or
forward as a deduction to other tax years.
Only farming losses and losses of an insurance company
(other than a life insurance company) can be carried back. The
carryback period for these losses is 2 years. For NOLs that can
be carried back, the corporation can elect to waive the carryback
period and instead carry the NOL forward to future tax years.
See the instructions for Item R, earlier, for information on
making the election to waive the carryback period. See the
Instructions for Form 1139 for other special rules and elections.
The NOL deduction for tax year 2024 cannot exceed the
aggregate amount of NOLs arising in tax years beginning before
January 1, 2018, carried to such year plus the lesser of:
1. The aggregate amount of NOLs arising in tax years
beginning after December 31, 2017, carried to such tax year; or
2. 80% of the excess, if any, of taxable income determined
without any NOL deduction or section 199A deduction, over any
NOL carryover to the tax year from tax years beginning before
January 1, 2018.
An exception applies for NOLs of insurance companies other
than life insurance companies. The 80% taxable income limit
does not apply to these entities. See sections 172(b) and (f).

Schedule C—Dividends and Special Deductions

For purposes of the 20% ownership test on lines 1 through 7, the
percentage of stock owned by the corporation is based on voting
power and value of the stock.

Line 1, Column (a)
Enter dividends (except those received on certain debt-financed
stock acquired after July 18, 1984—see section 246A) that:
• Are received from less-than-20%-owned domestic
corporations subject to income tax, and
• Qualify for the 50% deduction under section 243(a)(1).
Also, include on line 1 the following.
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Keep for Your Records

Worksheet for Schedule C, Line 8
1. Refigure Section II, line 29, without any adjustment under section 1059, and without any capital loss carryback to
the tax year under section 1212(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.

2. Multiply line 1 by 65% (0.65) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.

3. Add lines 2, 5, and 7, column (c), and the part of the deduction on line 3, column (c), that is attributable to
dividends from 20%-or-more-owned corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.

4. Enter the smaller of line 2 or line 3. If line 3 is greater than line 2, stop here; enter the amount from line 4 on line 8,
column (c), and do not complete the rest of this worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.

5. Enter the total amount of dividends from 20%-or-more-owned corporations that are included on lines 2, 3, 5, and
7, column (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.

6. Subtract line 5 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.

7. Multiply line 6 by 50% (0.50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.

8. Subtract line 3 above from line 8, column (c)

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

8.

9. Enter the smaller of line 7 or line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9.

10. Dividends-received deduction after limitation (section 246(b)). Add lines 4 and 9. Enter the result here and
on line 8, column (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10.

• Taxable distributions from an IC-DISC or former DISC that are
designated as eligible for the 50% deduction and certain
dividends of Federal Home Loan Banks. See section 246(a)(2).
• Dividends (except those received on certain debt-financed
stock acquired after July 18, 1984) from a RIC. The amount of
dividends eligible for the dividends-received deduction under
section 243 is limited by section 854(b). The corporation should
receive a notice from the RIC specifying the amount of dividends
that qualify for the deduction.

to the amount of debt incurred to acquire the stock. See section
246A. Also, see section 245(a) before making this computation
for an additional limitation that applies to certain dividends
received from foreign corporations. Attach a statement to Form
1120-F showing how the amount on line 3, column (c), was
computed.

Report so-called dividends or earnings received from mutual
savings banks, etc., as interest. Do not treat them as dividends.

Enter dividends received on preferred stock of a
less-than-20%-owned public utility that is subject to income tax
and is allowed the 23.3% deduction provided in sections 244
and 247 (as affected by P.L.113-295, Div. A, section 221(a)(41)
(A), Dec. 19, 2014, 128 Stat. 4043) for dividends paid.

Line 2, Column (a)

Line 4, Column (a)

Enter on line 2:
• Dividends (except those received on certain debt-financed
stock acquired after July 18, 1984) that are received from
20%-or-more-owned domestic corporations subject to income
tax and that are subject to the 65% deduction under section
243(c), and
• Taxable distributions from an IC-DISC or former DISC that are
considered eligible for the 65% deduction.

Enter dividends received on preferred stock of a
20%-or-more-owned public utility that is subject to income tax
and is allowed the 26.7% deduction provided in sections 244
and 247 (as affected by P.L.113-295, Div. A, section 221(a)(41)
(A), Dec. 19, 2014, 128 Stat. 4043) for dividends paid.

Line 3, Column (a)

Line 6, Column (a)

Enter the following.
• Dividends received on certain debt-financed stock acquired
after July 18, 1984, from domestic and foreign corporations
subject to income tax that would otherwise be subject to the
dividends-received deduction under section 243(a)(1), 243(c), or
245(a). Generally, debt-financed stock is stock that the
corporation acquired by incurring a debt (for example, it
borrowed money to buy the stock).
• Dividends received from a RIC on debt-financed stock. The
amount of dividends eligible for the dividends-received
deduction is limited by section 854(b). The corporation should
receive a notice from the RIC specifying the amount of dividends
that qualify for the deduction.

Enter the U.S.-source portion of dividends that:
• Are received from less-than-20%-owned foreign corporations,
and
• Qualify for the 50% deduction under section 245(a). To qualify
for the 50% deduction, the corporation must own at least 10% of
the stock of the foreign corporation by vote and value.

Line 3, Columns (b) and (c)

Line 8, Column (c)

Dividends received on certain debt-financed stock acquired after
July 18, 1984, are not entitled to the full 50% or 65%
dividends-received deduction under section 243 or 245(a). The
50% or 65% deduction is reduced by a percentage that is related
28

Line 5, Column (a)

Line 7, Column (a)
Enter the U.S.-source portion of dividends that are received from
20%-or-more-owned foreign corporations and that qualify for the
65% deduction under sections 243 and 245(a).

Limitation on dividends-received deduction. Generally,
line 8, column (c), cannot exceed the amount from the
Worksheet for Schedule C, Line 8. However, in a year in which
an NOL occurs, the limitation in section 246(b)(1) does not apply
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even if the loss is created by the dividends-received deduction.
See sections 172(d) and 246(b).

Line 9, Column (a)
Enter the foreign dividends not reportable on line 3, 6, or 7 of
column (a).

Line 12, Column (c)
Section 247 (as affected by P.L.113-295, Div. A, section 221(a)
(41)(A), Dec. 19, 2014, 128 Stat. 4043) allows public utilities a
deduction of 40% of the smaller of:
• Dividends paid on their preferred stock during the tax year, or
• Taxable income computed without regard to this deduction.

Attach a statement identifying the amount of each dividend
reported on line 9 and the provision pursuant to which a
deduction is not allowed with respect to such dividend.

In a year in which an NOL occurs, compute the deduction
without regard to section 247(a)(1)(B).

Line 10, Column (a)

Schedule J—Tax Computation
Line 1. Income Tax

Enter taxable distributions from an IC-DISC or former DISC that
are designated as not eligible for a dividends-received
deduction.
No deduction is allowed under section 243 for a dividend from
an IC-DISC or former DISC (as defined in section 992(a)) to the
extent the dividend:
• Is paid out of the corporation's accumulated IC-DISC income
or previously taxed income, or
• Is a deemed distribution under section 995(b)(1).

Line 11, Column (a)
Include the following.
• Dividends (other than capital gain distributions reported on
Schedule D (Form 1120), Capital Gains and Losses, and
exempt-interest dividends) that are received from RICs and that
are not subject to the 50% deduction.
• Dividends from tax-exempt organizations.
• Dividends (other than capital gain distributions) received from
a REIT that qualifies, for the tax year of the trust in which the
dividends are paid, under sections 856 through 860.
• Dividends not eligible for a dividendsreceived deduction, which include the following.
1. Dividends received on any share of stock held for less
than 46 days during the 91-day period beginning 45 days before
the ex-dividend date. When counting the number of days the
corporation held the stock, you cannot count certain days during
which the corporation's risk of loss was diminished. See section
246(c)(4) and Regulations section 1.246-5 for more details.
2. Dividends received on any share of preferred stock that
are attributable to periods totaling more than 366 days if such
stock was held for less than 91 days during the 181-day period
that began 90 days before the ex-dividend date. When counting
the number of days the corporation held the stock, you cannot
count certain days during which the corporation's risk of loss was
diminished. See section 246(c)(4) and Regulations section
1.246-5 for more details. Preferred dividends attributable to
periods totaling less than 367 days are subject to the 46-day
holding period rule discussed above.
3. Dividends on any share of stock to the extent the
corporation is under an obligation (including a short sale) to
make related payments with respect to positions in substantially
similar or related property.
• Any other taxable dividend income not properly reported
elsewhere on Schedule C.
If patronage dividends or per-unit retain allocations are
included on line 11, identify the total of these amounts in a
statement and attach it to Form 1120-F.

Multiply taxable income (Form 1120-F, page 5, Section II,
line 31) by 21% (0.21). Enter this amount on line 1.
Increase in tax attributable to partner’s additional reporting
year tax. If the taxpayer is a foreign corporate partner and
received a Form 8986 from a partnership that has elected to
have each reviewed year partner take into account the partner's
share of the adjustments, as finally determined, instead of
paying the imputed underpayment, the foreign corporate partner
(taxpayer) will have to complete Form 8978 to report
adjustments shown on the Form 8986 they received from the
partnership. The foreign corporate partner (taxpayer) must
complete a separate Form 8978 to report adjustments pertaining
to income that is effectively connected with the conduct of a
trade or business in the United States under section 882 (an
“ECI Form 8978”) and a separate Form 8978 to report
adjustments pertaining to income from U.S. sources not
effectively connected with the conduct of a trade or business in
the United States under section 881 (an “FDAP Form 8978”).
Include any increase in taxes due from the ECI Form 8978,
line 14, in the total for Form 1120-F, Section II, Schedule J, line 1.
On the dotted line next to line 1, enter “FROM FORM 8978” and
the amount. Attach the ECI Form 8978 to Form 1120-F. If the ECI
Form 8978, line 14, shows a decrease in tax, see the instructions
for Schedule J, line 6.
Additional tax under section 197(f). A corporation that elects
to recognize gain and pay tax on the sale of a section 197
intangible under the related person exception to the
anti-churning rules should include any additional tax due in the
total for line 1. On the dotted line next to line 1, enter “Section
197” and the amount. See section 197(f)(9)(B)(ii).

Line 2a. Base Erosion Minimum Tax Amount
If the corporation had gross receipts of at least $500 million in
any 1 of the 3 tax years preceding the current tax year, complete
and attach Form 8991, Base Erosion Minimum Tax. Enter on
line 2a the amount from Form 8991, Part IV, line 5e. See section
59A and the Instructions for Form 8991. Also, see the
instructions for Item DD, earlier.

Line 2b. Amount from Form 4255, Part I, line 3,
column (q)
Enter on line 2b the tax that can be reduced by nonrefundable
credits from Form 4255, Part I, line 3, column (q), if applicable.
See the Instructions for Form 4255.

Line 2c. Other Chapter 1 tax
Enter on line 2c any other Chapter 1 tax that can be offset or
reduced by nonrefundable credits such as the foreign tax credit
or general business credit.

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Line 3. Corporate Alternative Minimum Tax
Enter on line 3 the amount from Form 4626, Part II, line 13, if
applicable. See the Instructions for Form 4626.

Line 5a. Foreign Tax Credit
A foreign corporation engaged in a U.S. trade or business during
the tax year may take a credit for income, war profits, and excess
profits taxes paid, accrued, or deemed paid to any foreign
country or U.S. territory for income effectively connected with the
conduct of a trade or business in the United States. See section
906 and Form 1118, Foreign Tax Credit—Corporations.

Line 5b. General Business Credit
Use Form 3800 to claim any of the general business credits.
Include on line 5b the allowable credit from Form 3800, Part II,
line 38. See the Instructions for Form 3800.
Also include on line 5b the amount of any qualified electric
vehicle passive activity credits from prior years allowed for the
current tax year from Form 8834, Qualified Electric Vehicle
Credit, line 7. Attach Form 8834.

Line 5c. Credit for Prior Year Minimum Tax
Enter any allowable credit from Form 8827, Credit for Prior Year
Minimum Tax—Corporations, line 11. Complete and attach Form
8827.

Line 5d. Bond Credits From Form 8912
Enter the allowable credits from Form 8912, Credit to Holders of
Tax Credit Bonds, line 12.

Line 6. Total Credits
Add lines 5a through 5d. Enter the total on line 6.
Decrease attributable to partner’s additional reporting year
tax. If the taxpayer is a foreign corporate partner and received a
Form 8986 from a partnership that has elected to have each
reviewed year partner take into account the partner's share of
the adjustments, as finally determined, instead of paying the
imputed underpayment, the foreign corporate partner (taxpayer)
will have to complete Form 8978 to report adjustments shown on
the Form 8986 they received from the partnership. The foreign
corporate partner (taxpayer) must complete a separate Form
8978 to report adjustments pertaining to income that is
effectively connected with the conduct of a trade or business in
the United States under section 882 (an “ECI Form 8978”) and a
separate Form 8978 to report adjustments pertaining to income
from U.S. sources not effectively connected with the conduct of a
trade or business in the United States under section 881 (an
“FDAP Form 8978”). Include any decrease in taxes due
(negative amount) from the ECI Form 8978, line 14, in the total
for Form 1120-F, Section II, Schedule J, line 6. On the dotted line
next to line 6, enter “FROM FORM 8978” and the amount. Attach
the ECI Form 8978 to Form 1120-F. If the ECI Form 8978,
line 14, shows an increase in tax, see the instructions for
Schedule J, line 1.

Line 8. Other Taxes
Include any of the following taxes and interest.
Line 8a. Amount from Form 4255, Part I, line 3, column (r).
Enter on line 8a the tax that cannot be reduced by nonrefundable
30

credits from Form 4255, Part I, line 3, column (r), if applicable.
See the Instructions for Form 4255.
Line 8b. Recapture of low-income housing credit. If the
corporation disposed of property (or there was a reduction in the
qualified basis of the property) for which it took the low-income
housing credit, and the corporation did not follow the procedures
that would have prevented recapture of the credit, it may owe a
tax. See Form 8611, Recapture of Low-Income Housing Credit.
Line 8c. Interest due under the look-back method for completed long-term contracts. If the corporation used the
percentage-of-completion method under section 460(b) for
certain long-term contracts, figure any interest due or to be
refunded using the look-back method described in section
460(b)(2). Use Form 8697, Interest Computation Under the
Look-Back Method for Completed Long-Term Contracts, to
figure any interest due or to be refunded. See the Instructions for
Form 8697. Include any interest on line 8c.
Line 8d. Interest due under the look-back method—income
forecast method. If the corporation used the income forecast
method to depreciate property, it must figure any interest due or
to be refunded using the look-back method described in section
167(g)(2). Use Form 8866 to figure any interest due or to be
refunded. See the Instructions for Form 8866. Include any
interest due on line 8d.
Line 8e. Alternative tax on qualifying shipping activities.
Enter any alternative tax on qualifying shipping activities from
Form 8902.
Line 8f. Other. Include on line 8f additional taxes and interest
such as the following. Attach a statement showing the
computation of each item included in the total for line 8f and
identify the applicable Code section and the type of tax or
interest.
• Recapture of Indian employment credit. Generally, if an
employer terminates the employment of a qualified employee
less than 1 year after the date of initial employment, any Indian
employment credit allowed for a prior tax year because of wages
paid or incurred to that employee must be recaptured. For
details, see Form 8845 and section 45A.
• Recapture of new markets credit (see Form 8874, New
Markets Credit, and Form 8874-B, Notice of Recapture Event for
New Markets Credit).
• Recapture of employer-provided childcare facilities and
services credit (see Form 8882).
• Interest on deferred tax attributable to certain nondealer
installment obligations (section 453A(c)) and dealer installment
obligations (section 453(l)).
• Interest due on deferred gain (section 1260(b)).
• Recapture of section 45Q carbon oxide sequestration credit
(see Form 8933, Part Ill, line 22).

Section III—Branch Profits Tax and
Tax on Excess Interest
Part I—Branch Profits Tax

Section 884(a) imposes a 30% branch profits tax on the after-tax
earnings of a foreign corporation's U.S. trade or business (that is,
effectively connected earnings and profits (ECEP)) that are not
reinvested in a U.S. trade or business by the close of the tax
year, or are disinvested in a later tax year. Changes in the value
of the equity of the foreign corporation's U.S. trade or business
(that is, U.S. net equity) are used as a measure of whether
earnings have been reinvested in, or disinvested from, a U.S.
trade or business. An increase in U.S. net equity during the tax
year is generally treated as a reinvestment of earnings for the
current tax year. A decrease in U.S. net equity is generally

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treated as a disinvestment of prior year's earnings that have not
previously been subject to the branch profits tax.

Lines 4a and 4b. U.S. Net Equity

The amount subject to the branch profits tax for the tax year is
the dividend equivalent amount. See Regulations section
1.884-1(b).

U.S. net equity is U.S. assets reduced by U.S. liabilities. U.S.
net equity may be less than zero. See Temporary Regulations
section 1.884-2T for specific rules regarding the computation of
the foreign corporation's U.S. net equity due to a reorganization,
liquidation, or incorporation.

Other entities subject to the branch profits tax.
• A foreign corporate partner of a partnership engaged in a U.S.
trade or business is subject to the branch profits tax on its ECEP
attributable to its distributive share of ECI.
• A foreign government is subject to both the branch profits tax
and the branch-level interest tax. However, no branch profits tax
or branch-level interest tax will be imposed on ECEP and interest
accrued prior to September 11, 1992. See Regulations section
1.884-0.

Line 2
Attach a statement showing the following adjustments (based on
the principles of section 312) to the corporation's line 1
effectively connected taxable income (ECTI) (before the NOL
deduction and special deductions) to get ECEP.
• Positive adjustments for certain ECI items that are excluded
from ECTI but that must be included in computing ECEP (such
as tax-exempt interest income).
• Positive adjustments for certain items deducted in computing
ECTI but that may not be deducted in computing ECEP. Include
adjustments for certain deductions claimed in computing ECTI,
such as:
1. Excess of percentage depletion over cost depletion,
2. Excess of accelerated depreciation over straight line
depreciation (but only if 20% or more of the foreign corporation's
gross income from all sources is U.S. source), and
3. Capital loss carrybacks and carryovers.
• Negative adjustments for certain deductible items (that are
allocable to ECI) that may not be deducted in computing ECTI
but that must be deducted in computing ECEP (for example,
federal income taxes, capital losses in excess of capital gains,
and interest and expenses that are not deductible under section
265).
Note. Do not reduce ECEP by any dividends or other
distributions made by the foreign corporation to its shareholders
during the year.
See Temporary Regulations section 1.884-2T for any
adjustments to ECEP due to a reorganization, liquidation, or
incorporation.
Exceptions. Do not include the following types of income when
computing ECEP.
• Income from the operation of ships or aircraft exempt from
taxation under section 883(a)(1) or (2).
• FSC income and distributions treated as ECI under section
921(d) or 926(b), as in effect before their repeal, that are not
otherwise ECI.
• Gain on the disposition of an interest in a domestic
corporation that is a U.S. real property interest under section
897(c)(1)(A)(ii) if the gain is not otherwise ECI.
• Related person insurance company income that a taxpayer
elects to treat as ECI under section 953(c)(3)(C) if the income is
not otherwise ECI.
• Income that is exempt from tax under section 892.
• Interest income derived by a possession bank from U.S.
obligations if the interest is treated as ECI under section 882(e)
and is not otherwise ECI.
Note. Deductions and other adjustments attributable (under the
principles of Regulations section 1.861-8) to the types of income
not includible in ECEP listed above do not reduce ECEP.
Instructions for Form 1120-F (2024)

U.S. assets. In general, property is a U.S. asset if all income
from its use and all gain from its disposition (if used or sold on
the last day of the tax year) are or would be ECI. The amount of
property taken into account as a U.S. asset is the adjusted basis
(for purposes of computing earnings and profits) of the property.
Special rules exist for specific types of property, such as
depreciable property, inventory, and installment obligations.
Special rules also exist to determine the amount of a partnership
interest that is treated as a U.S. asset. See Regulations section
1.884-1(d).
U.S. liabilities. In general, U.S. liabilities are U.S.-connected
liabilities of a foreign corporation (determined under Regulations
section 1.882-5), computed as of the end of the tax year, rather
than as an average, as required under Regulations section
1.882-5. Special rules may apply to foreign insurance
companies. For more details, see Regulations section
1.884-1(e).
If the corporation is electing to reduce liabilities under
Regulations section 1.884-1(e)(3), attach a statement that it is
making the election and indicate the amount of the reduction of
U.S. liabilities and the corresponding reduction in interest
expense. The aggregate amount of the corporation's liability
reduction elections is also required to be reported on Schedule I
(Form 1120-F), line 7b.
Reporting requirements. In the statements required for lines
4a and 4b, report U.S. assets according to the categories of U.S.
assets in Regulations section 1.884-1(d). For U.S. liabilities,
show the formula used to calculate the U.S. liabilities figure.

Line 6. Branch Profits Tax
Qualification for treaty benefits. In general, a foreign
corporation must be a qualified resident (see definition later) in
the tax year in which it has a dividend equivalent amount to
obtain treaty benefits for the branch profits tax. It must also meet
the requirements of any limitation on benefits article in the treaty.
However, a foreign corporation is not required to be a qualified
resident if it meets the requirements of a limitation on benefits
article of an income tax treaty that entered into force after
December 31, 1986. Treaties other than income tax treaties do
not exempt a foreign corporation from the branch profits tax.
Foreign corporations that meet the requirements of the
limitation on benefits article of an income tax treaty that
entered into force after December 31, 1986. Most limitation
on benefits articles of treaties that entered into force after
December 31, 1986, include a series of objective tests including
ownership tests (generally describing the circumstances under
which individuals, publicly traded corporations, subsidiaries of
publicly traded corporations, etc., will be treated as qualified
residents under a treaty), a base erosion test, and a trade or
business test. These tests are self-executing. A person that does
not meet these objective tests may still be granted benefits
under the treaty (and may be treated as a qualified resident for
branch profits tax purposes) at the discretion of the Competent
Authority. See Rev. Proc. 2015-40, 2015-35 I.R.B. 236, available
at IRS.gov/irb/2015-35_IRB#RP-2015-40, or its successor.
Foreign corporations that do not meet the requirements of
a limitation on benefits article of an income tax treaty that
entered into force after December 31, 1986. A foreign
corporation that does not meet the requirements of a limitation
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on benefits article of an income tax treaty that entered into force
after December 31, 1986, is a qualified resident of a country if
it meets one of the three tests explained in the regulations under
section 1.884-5. See these regulations for details on these tests
and certain circumstances in which a foreign corporation that
does not meet these tests may request a ruling to be treated as a
qualified resident.
Rate of tax. If treaty benefits apply, the rate of tax is the rate on
branch profits specified in the treaty. If the treaty does not specify
a rate for branch profits, the rate of tax is the rate specified in the
treaty for dividends paid by a wholly owned domestic corporation
to the foreign corporation. See Regulations section 1.884-1(g)
for applicable rates of tax. Benefits other than a rate reduction
may be available under certain treaties, such as the Canadian
income tax treaty.
Note. Many treaties listed in Regulations section 1.884-1(g)(3)
and (g)(4) are no longer in force and have been replaced by
more recently ratified treaty agreements. The corporation should
use the applicable rate of tax specified in the treaty agreement
currently in force with the United States.
Effect of complete termination. If the foreign corporation has
completely terminated its U.S. trade or business (within the
meaning of Temporary Regulations section 1.884-2T(a)) during
the tax year, enter zero on line 6, and complete line 11 at the
bottom of page 7 of Form 1120-F.
In general, a foreign corporation has terminated its U.S. trade
or business if it no longer has any U.S. assets, except those
retained to pay off liabilities. The foreign corporation (or a related
corporation) may not use assets from the terminated U.S. trade
or business or the proceeds from their sale in a U.S. trade or
business within 3 years after the complete termination. The
foreign corporation must also attach Form 8848 extending the
period for assessment for the year of complete termination to a
date not earlier than the close of the sixth year following the
close of that tax year.
Effect of complete liquidation or reorganization. If a foreign
corporation transfers its U.S. assets in a liquidation or
reorganization described in section 381(a), see Temporary
Regulations section 1.884-2T(c). If the transferee is a domestic
corporation, the foreign corporation must also file Form 8848.
See Temporary Regulations section 1.884-2T(c) and
Regulations section 1.884-2(c)(2)(iii).
Effect of incorporation under section 351. If a foreign
corporation transfers all or a part of its U.S. assets to a domestic
corporation in a transaction that qualifies under section 351, see
Temporary Regulations section 1.884-2T(d) for the rules for
determining the foreign corporation's branch profits tax liability in
the year of the transfer, and other rules applicable to the
domestic transferee corporation. If a foreign corporation
transfers its U.S. assets to another foreign corporation, the
foreign corporation must compute its branch profits tax liability
under Regulations section 1.884-1.
Coordination with withholding tax. If a foreign corporation is
subject to the branch profits tax in a tax year, it will not be subject
to withholding at source (section 871(a), 881(a), 1441, or 1442)
on dividends paid out of earnings and profits for the tax year.

Part II—Tax on Excess Interest

If a foreign corporation is engaged in a U.S. trade or business,
has effectively connected gross income, or has U.S. assets for
purposes of Regulations section 1.882-5, it is subject to the tax
on excess interest.
Excess interest is the interest apportioned to ECI of the
foreign corporation (including capitalized and nondeductible
interest) under Regulations section 1.882-5, less branch interest.
Branch interest is the interest paid by the U.S. trade or business
32

of the foreign corporation (including capitalized and other
nondeductible interest).
Important. See the instructions for Line 10. Tax on Excess
Interest, later, to determine if the foreign corporation is exempt
from the tax on excess interest. If it is exempt from the tax, and
not simply subject to a reduced rate of tax, do not complete Part
II of Section III. However, be sure to complete item W(1) on
page 2 of Form 1120-F.

Line 7a

Enter the amount of interest expense deduction allocable to ECI
under Regulations section 1.882-5, from Section II, line 18.

Lines 7b and 7c

Lines 7b and 7c reconcile the deduction claimed in Section II,
line 18, with the amount of interest expense allocable to ECI
under Regulations section 1.882-5. Amounts that increase or
decrease the amount allocable to ECI are reported on line 7b
from Schedule I (Form 1120-F), line 24g. Line 7c reconciles to
the amount of interest expense reported on Schedule I (Form
1120-F), line 23. Lines 7b and 7c are completed as follows.
Line 7b. Enter the inverse of the amount reported on
Schedule I (Form 1120-F), line 24g. For example, if line 24g is
negative, enter as a positive number. If line 24g is positive, enter
as a negative number. This is the total amount of interest
expense included in the amount allocable under Regulations
section 1.882-5 that is deferred, capitalized, and disallowed
under other sections after application of the interest expense
allocation rules.
Line 7c. Combine lines 7a and 7b. The combined amount is
the amount of interest expense allocable to ECI for the year
under Regulations section 1.882-5. The amount on line 7c must
equal the amount on Schedule I (Form 1120-F), line 23.

Line 8. Branch Interest
Foreign banks. Enter from Schedule I (Form 1120-F) the sum
of line 9, column (c), and line 22, which is the amount of interest
expense included on books that give rise to U.S. booked
liabilities and that is directly allocable to ECI under Regulations
section 1.882-5(a)(1)(ii). The sum of these two amounts is the
amount of book interest expense paid or accrued on U.S.
booked liabilities defined in Regulations section 1.882-5(d)(2).
Definition of branch interest. The term “branch interest”
means interest that is:
1. Paid by a foreign corporation with respect to a liability that
is (a) a U.S. booked liability within the meaning of Regulations
section 1.882-5(d)(2) (other than a U.S. booked liability of a
partner within the meaning of Regulations section 1.882-5(d)(2)
(vii)), or (b) described in Regulations section 1.884-1(e)(2)
(relating to insurance liabilities on U.S. business and liabilities
giving rise to interest expense that is directly allocated to income
from a U.S. asset); or
2. In the case of a foreign corporation other than a bank (as
defined in section 585(a)(2)(B) without regard to the second
sentence thereof), a liability specifically identified as a liability of
a U.S. trade or business of the foreign corporation on or before
the earlier of the date on which the first payment of interest is
made with respect to the liability or the due date (including
extensions) of the foreign corporation's income tax return for the
tax year provided that (a) the amount of such interest does not
exceed 85% of the amount of interest of the foreign corporation
that would be excess interest before taking into account interest
treated as branch interest; (b) certain recipient notification
requirements are satisfied; and (c) the liability was not incurred in
the ordinary course of a foreign business or secured by foreign
assets, or is not a U.S. booked liability, or is not an insurance
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liability on a U.S. business, or is not a liability giving rise to
interest expense that is directly allocated to income from a U.S.
asset. See Regulations section 1.884-4(b).

Schedule L—Balance Sheets per
Books

All other foreign corporations. In general, branch interest of
foreign corporations (other than banks) includes:
1. Interest on liabilities shown on the books and records of
the U.S. trade or business for purposes of Regulations section
1.882-5(d)(2),
2. Interest on liabilities that are secured predominantly by
U.S. assets or that cause certain nondeductible interest (such as
capitalized interest) related to U.S. assets, and
3. Interest on liabilities identified as liabilities of the U.S.
trade or business on or before the earlier of the date on which
the first interest payment is made or the due date (including
extensions) of the foreign corporation's income tax return for the
tax year.

Balance Sheet per Books

However, a liability may not be identified under 3 above if the
liability is incurred in the ordinary course of the foreign
corporation's trade or business, or if the liability is secured
predominantly by assets that are not U.S. assets. The interest on
liabilities identified in 3 above that will be treated as interest paid
by the U.S. trade or business is capped at 85% of the interest of
the foreign corporation that would be excess interest before
considering interest on liabilities identified in 3 above. See
Regulations section 1.884-4.
Interbranch interest. Any interest paid for interbranch liabilities
is disregarded in computing branch interest of any corporation.
80% rule. If 80% or more of a foreign corporation's assets are
U.S. assets, the foreign corporation's branch interest will
generally equal the interest reported on line 7c. However, any
interest included on line 7c that has accrued but has not been
paid will not be treated as branch interest on line 8 unless an
election is made under Regulations section 1.884-4(c)(1) to treat
such interest as paid in that year for all purposes of the Code.
If this 80% rule applies, check the box on line 8.
Note. Branch interest of a foreign corporation is treated as if
paid by a domestic corporation. A foreign corporation is thus
required to withhold on interest paid by its U.S. trade or business
to foreign persons (unless the interest is exempt from
withholding under a treaty or the Code) and is required to file
Forms 1042 and 1042-S for the payments.
Special treaty shopping rules apply if the recipient of the
interest paid by the U.S. trade or business is a foreign
corporation.

Line 9b

A foreign bank may treat a percentage of its excess interest as if
it were interest on deposits and thus exempt from tax. Multiply
the amount on line 9a by the greater of 85% (0.85) or the ratio of
the foreign bank's worldwide interest-bearing deposits to its
worldwide interest-bearing liabilities as of the close of the tax
year.

Line 10. Tax on Excess Interest

The rate of tax on excess interest is the same rate that would
apply to interest paid to the foreign corporation by a wholly
owned domestic corporation. The tax on excess interest is not
prohibited by any provision in any treaty to which the United
States is a party. The corporation may qualify for treaty benefits if
it meets certain requirements. See Line 6. Branch Profits Tax,
earlier. The corporation is exempt from the tax on excess interest
if the rate of tax that would apply to interest paid to the foreign
corporation by a wholly owned domestic corporation is zero and
the foreign corporation qualifies for treaty benefits.
Instructions for Form 1120-F (2024)

The balance sheet assets, liabilities, and equity amounts
required to be reported on Schedule L are either the worldwide
assets, liabilities, and equity of the corporation, or, at the
taxpayer's election, the set(s) of books that contains assets
located in the United States and other assets used in the trade or
business conducted in the United States. See Regulations
section 1.6012-2(g)(1)(iii). If a corporation (including a foreign
bank) chooses worldwide reporting on Schedule L, the profit and
loss results from the same set(s) of books must be used to report
the adjusted worldwide net income (loss) results in Part I, line 11,
of Schedule M-3 (Form 1120-F).
Set(s) of books based on Regulations section 1.882-5(d)
(2). If the corporation chooses to limit the Schedule L reporting
to the books that give rise to ECI from assets located in the
United States and other assets used in the trade or business
conducted in the United States, the total assets, liabilities, and
equity on the set(s) of books that contain these characteristics
must be reported on Schedule L. These are the total assets,
liabilities, and equity amounts reflected on the same set(s) of
books that gives rise to U.S. ECI and U.S. booked liabilities (as
defined in Regulations sections 1.882-5(d)(2)(ii)(A) (foreign
corporations other than banks) and 1.882-5(d)(2)(iii) (foreign
banking corporations)).
The set(s) of books required to be reported on Schedule L by
a foreign bank are the same set(s) of books the foreign bank
must use to derive the net book income on Schedule M-3 (Form
1120-F), Part I, line 11. The total assets and liabilities required to
be reported include the interbranch assets and liabilities and the
noneffectively connected assets reflected on such books. The
set(s) of books that gives rise to U.S. booked liabilities under
Regulations section 1.882-5(d)(2) will generally be the set(s) of
books maintained within the United States by the corporation's
U.S. trade or business. However, one or more sets of books
required to be reported on Schedule L do not have to be
maintained within the United States so long as the totality of the
books reflects a substantial ECI activity that gives rise to
inclusion of the books' third-party liabilities as U.S. booked
liabilities under Regulations section 1.882-5(d)(2). This
determination is made under the facts and circumstances
pertaining to materiality of the ECI activities reflected on the
set(s) of books in accordance with the requirements of the
interest expense allocation regulations. See Regulations section
1.882-5(d)(6), example 5. This standard is used to determine
U.S. booked liability qualification regardless of whether the
foreign corporation uses the Adjusted U.S. Booked Liabilities
Method or the Separate Currency Pools Method to allocate
interest expense under Regulations section 1.882-5.
A Schedule L set of books does not include a book whose
only assets are those that give rise to ECI under section 864(c)
(6) or (c)(7). A set of books that has only ECI assets under
section 864(c)(6) and (c)(7) is not a set of books that gives rise
to U.S. booked liabilities under the applicable test for a bank or a
corporation other than a bank in Regulations section 1.882-5(d)
(2). Books and records of this type are generally books
maintained in a foreign location that include assets either
originated through the material activities of the U.S. trade or
business or assets formerly held in connection with a U.S. trade
or business that are no longer held or used for that purpose.
Transferred assets from a set of books of the U.S. trade or
business will generally reflect assets described in section 864(c)
(6) or (c)(7). See Regulations section 1.884-1(d)(2)(xi), example
5. Securities that are attributable to a U.S. office of a banking,
financing, or similar business that are transferred to a foreign
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location of a continuing U.S. banking office remain attributable to
such U.S. office under Regulations section 1.864-4(c)(5)(iii) and
do not constitute assets described in section 864(c)(6) or (c)(7).
However, a foreign set of books and records that reflects
securities of a banking, financing, or similar business that gives
rise to ECI may or may not constitute books that give rise to U.S.
booked liabilities under the facts and circumstances. Generally, a
relatively small number of securities reflected on the books and
records of the home office of a foreign bank that reflects
predominantly noneffectively connected assets of the same type
will not cause the foreign book to give rise to U.S. booked
liabilities under Regulations section 1.882-5(d)(2)(iii).
If the foreign corporation has more than one set of books and
records that give rise to U.S. booked liabilities under Regulations
section 1.882-5(d)(2), it must report the combined amounts
shown on all such books and records on Schedule L. For
example, the books and records of a foreign insurance company
required to file Form 1120-F include, but are not limited to,
amounts reported on statements (for example, NAIC statements)
filed with a domestic state insurance authority. If a foreign bank
maintains a consolidation of two or more sets of books that
collectively give rise to U.S. booked liabilities, the corporation
may report the financial consolidation of such set of books on
Schedule L. See Regulations section 1.882-5(d)(6), example 5.
However, if the foreign corporation has a set of books from a
disregarded entity that is not included in a U.S. trade or business
consolidation and such other set of books gives rise to U.S.
booked liabilities under Regulations section 1.882-5(d)(2), then
such set of books must be included in the consolidation of books
reported on Schedule L. Combined books reported on
Schedule L must be adjusted to eliminate transactions recorded
between the reportable books. However, amounts recorded
between the set(s) of books and other divisions of the foreign
corporation or disregarded entities whose books do not give rise
to U.S. booked liabilities are not eliminated unless the taxpayer
chooses worldwide reporting under the general rule in
Regulations section 1.6012-2(g)(1)(iii).
Line 1. Cash. Corporations other than banks include
certificates of deposit as cash on line 1. Foreign banks include
certificates of deposit as current or non-current assets, as the
case may be, in their appropriate interbranch, U.S. asset, or
non-U.S. asset categories.
Line 5. Tax-exempt securities. Include:
• State and local government obligations, the interest on which
is excludable from gross income under section 103(a); and
• Stock in a mutual fund or other RIC that distributed
exempt-interest dividends during the tax year of the corporation.
Line 6. Current assets. On line 6a, enter all current interbranch
assets (in accordance with the corporation's accounting
practices) reflected on the combined sets of books that are
transacted with other books of the corporation that are not
reportable on Schedule L (including books of disregarded
entities, if applicable). On line 6b, enter the current non-U.S.
assets on the sets of books reportable on Schedule L. Non-U.S.
assets are third-party assets (whether with related or unrelated
parties) that give rise only to noneffectively connected income.
On line 6c, enter the current U.S. assets on the Schedule L
reportable books. U.S. assets are assets that give rise to ECI
and constitute U.S. assets in whole or in part under Regulations
section 1.884-1(d). Enter assets held for trading or dealing to
customers in the applicable category on line 6. Attach a
statement to indicate the amount for each category of current
assets included in line 6, such as money market deposits of
banks, trading assets held for the taxpayer's own account, and
dealing assets held for customers including amounts recorded
on the books of a global dealing operation that are allocated
between ECI and non-ECI under Proposed Regulations section
1.863-3(h) and Proposed Regulations section 1.864-4(c)(2)(iv).
34

Line 9. Other loans and investments. On line 9a, enter the
amount of other non-U.S. asset loans and investments to third
parties (whether related or unrelated parties). Non-U.S. assets in
this category are loans and investments that give rise to
noneffectively connected income. If a taxpayer has investments
that give rise to ECI in part and non-ECI in part, enter the
proportionate amount of the investment asset that gives rise to
non-ECI on line 9a. Do not include interbranch amounts on
line 9a. On line 9b, report the U.S. asset loans and investments
to third parties (whether related or unrelated parties). U.S. asset
loans and investments are assets that give rise to ECI. If an
investment asset gives rise to ECI in part and non-ECI in part,
enter the proportionate amount of the investment asset that
gives rise to ECI on line 9b. See Regulations section 1.884-1(d)
(2)(vii). Attach a statement indicating the amount for each
category of loans and investment assets held by the corporation
that give rise to non-ECI (line 9a) and ECI (line 9b) (for example,
loans to customers, securities described in Regulations section
1.864-4(c)(5)(ii)(b)(3)).
Line 15. Other non-current interbranch assets. Include on
line 15 non-current interbranch amounts on the Schedule L
books recorded with other non-Schedule L books of the
corporation (including disregarded entities whose books are not
reportable on Schedule L). Non-current assets are determined in
accordance with the accounting practices of the corporation on
its books and records.
Line 16. Other non-current, third-party assets. Report on
line 16a, other non-current, non-U.S. assets on the Schedule L
books with third parties (whether related or unrelated parties).
Non-U.S. assets are those that give rise to noneffectively
connected income. Attach a statement to indicate the amount for
each category of non-U.S. assets (for example, foreign-related
party assets that give rise to non-ECI under section 864(c)(4)
(D)). Report on line 16b other non-current U.S. assets on the
Schedule L books with third parties (whether related or unrelated
parties). U.S. assets are those that give rise to ECI in
accordance with Regulations section 1.884-1(d). Attach a
statement indicating the amount for each category of assets that
give rise to ECI.
Line 19. Mortgages, notes, bonds payable in less than 1
year. Enter on line 19a interbranch liabilities on the Schedule L
books that are payable in less than one year to books of the
corporation that are not reportable on Schedule L (including
books of disregarded entities that are not reportable on
Schedule L). Report only interbranch liabilities that accrue or pay
interest on the Schedule L books and records to other books of
the corporation in accordance with the corporation's internal
accounting practices. Attach a statement indicating the amount
for each category of interbranch liabilities (for example, money
market deposit liabilities, other short-term liabilities, etc.). On
line 19b, enter liabilities on the Schedule L books that are
payable in less than one year to third parties (whether related or
unrelated). Attach a statement indicating the amount for each
category of liability owed to third parties (for example, money
market deposit liabilities, other short-term borrowings, Vostro
accounts, etc.).
Line 22. Mortgages, notes, bonds payable in 1 year or
more. Enter on line 22a interbranch liabilities on the Schedule L
books that are payable in one year or more to books of the
corporation that are not reportable on Schedule L (including
books of disregarded entities that are not reportable on
Schedule L). Report only interbranch liabilities that accrue or pay
interest on the Schedule L books and records to other books of
the corporation in accordance with the corporation's internal
accounting practices. Attach a statement indicating the amounts
for each category of liability (for example, long-term interbranch
borrowings). Enter on line 22b liabilities on the Schedule L books
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that are payable in one year or more to third parties (whether
related or unrelated parties). Attach a statement indicating the
amounts for each category of liability (for example, long-term
certificates of deposit, other long-term borrowings, etc.).
Line 24. Other liabilities. Enter on line 24a other interbranch
liability amounts on the Schedule L books owed to other books
of the corporation (including to books of disregarded entities) not
reportable on Schedule L, including amounts that do not give
rise to interest accruals or payments in accordance with the
corporation's internal accounting practices. Attach a statement
indicating the amount for each category of interbranch liability
reported on line 24a. Enter on line 24b other liability amounts on
the Schedule L books owed to third parties (whether related or
unrelated parties) including amounts that do not give rise to
interest accruals or payments in accordance with the
corporation's accounting practices. Attach a statement indicating
the amount for each category of third-party liability reported on
line 24b.
Line 29. Adjustments to shareholders' equity. Some
examples of adjustments to report on this line include:
• Unrealized gains and losses on securities held “available for
sale.”
• Foreign currency translation adjustments.
• The excess of additional pension liability over unrecognized
prior service cost.
• Guarantees of employee stock (ESOP) debt.
• Compensation related to employee stock award plans.
If the total adjustment to be entered on line 29 is a negative
amount, enter the amount in parentheses.
Adaptation of Schedule L for treaty-based reporting. The
set(s) of books reported on Schedule L for treaty-based
reporting purposes will generally be the same set(s) of books
reported on Schedule L, as described below. However, certain
books that give rise to ECI might not necessarily give rise to
treaty-based reporting. For example, the assets on a set of
books could still be attributed to a U.S. office for ECI reporting
purposes even when transferred away from the U.S. permanent
establishment for treaty reporting purposes (see, for example,
Regulations section 1.864-4(c)(5)(iii)) if under the facts and
circumstances, such assets also constitute a set of books that
give rise to U.S. booked liabilities under Regulations section
1.882-5(d)(2). Under such circumstances, the set of books
would remain reportable on Schedule L for Code-based
reporting purposes, but for treaty-based reporting purposes,
such transfer may effect attribution to another part of the
corporate enterprise under a functional and factual analysis and
no longer be reportable on Schedule L as part of the U.S.
permanent establishment after the transfer is made. Additionally,
a set of books having no ECI or U.S. booked liabilities under
Regulations section 1.882-5(d)(2) might still constitute a set of
books of the U.S. permanent establishment because the items
recorded thereon are primarily attributable to the U.S. permanent
establishment under the application by analogy of the OECD
Transfer Pricing Guidelines as authorized by the relevant treaty
(for example, see Article 7 (Business Profits) and the
accompanying Exchange of Notes). In such cases, the set(s) of
books that must be reported on Schedule L are those of the U.S.
permanent establishment as determined under the OECD
Transfer Pricing Guidelines.

• A corporation with total assets of $10 million or more on the
last day of the tax year that are reportable on Schedule L must
file Schedule M-3 (Form 1120-F) instead of Schedule M-1.
• A corporation filing Form 1120-F that is not required to file
Schedule M-3 may voluntarily file Schedule M-3 instead of
Schedule M-1. See the Instructions for Schedule M-3 (Form
1120-F) for more information.
• Corporations that (a) are required to file Schedule M-3 (Form
1120-F) and have less than $50 million total assets at the end of
the tax year, or (b) are not required to file Schedule M-3 (Form
1120-F) and voluntarily file Schedule M-3 (Form 1120-F), must
either (i) complete Schedule M-3 (Form 1120-F) entirely, or (ii)
complete Schedule M-3 (Form 1120-F) through Part I, and
complete Schedule M-1 instead of completing Parts II and III of
Schedule M-3 (Form 1120-F). If the corporation chooses to
complete Schedule M-1 instead of completing Parts II and III of
Schedule M-3, the amount on Schedule M-1, line 1, must equal
the amount on Schedule M-3, Part I, line 11. See the Instructions
for Schedule M-3 (Form 1120-F) for more information.
• If Schedule M-3 is not required, the foreign corporation must
report on line 1 of Schedule M-1 the net income (loss) per the
set of books taken into account on Schedule L.
• The foreign corporation must report on line 1 of Schedule M-2
the balance of unappropriated retained earnings per the set(s) of
books taken into account on Schedule L.
Note. If Schedule M-3 is filed in lieu of Schedule M-1, the
corporation is still required to file Schedule M-2.
Do not file Schedules M-1 and M-2 (Form 1120-F) if total
assets at the end of the tax year (line 17, column (d), of
Schedule L) are less than $25,000.

Schedule W

Complete Schedule W to determine the portion of the foreign
corporation's overpayment (on Form 1120-F, page 1, line 8a)
resulting from tax deducted and withheld under Chapter 3 or 4.

Line 3. The amount to be entered on Schedule W, line 3, may
be computed using the general guidelines set forth in the
following table.
a. Tax on ECI per the tax return. Enter the amount from
Form 1120-F, page 1, line 2 . . . . . . . . . . . . . .

a.

b. To properly reflect the overpayment described in
section 6611(e)(4), refigure the taxable income on
Form 1120-F, Section II, line 31, by excluding from
Section II, lines 8 through 10, any amount from the
disposition of a U.S. real property interest, any
partnership ECTI allocable to the corporation under the
rules of Regulations section 1.1446-2, and for
transactions occurring after December 31, 2018, any
amount from the disposition of an interest (that is not
publicly traded) in a partnership that is engaged in the
conduct of a trade or business in the United States
b.
(attach explanation of amounts excluded) . . . . . .
c. Refigured tax on ECI. Using the refigured taxable
income from line b, refigure the tax for Schedule II of
Form 1120-F on Schedule J and enter the refigured tax
from Schedule J, line 9, here . . . . . . . . . . . . .

c.

d. Subtract line c from line a. Enter the result here and on
Schedule W, line 3 . . . . . . . . . . . . . . . . . . .

d.

Schedules M-1 and M-3

In completing Schedules M-1 and M-3, the following apply.

Instructions for Form 1120-F (2024)

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Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United
States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to
figure and collect the right amount of tax.
You are 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 Internal Revenue Code section 6103.
The estimated burden for taxpayers filing this form is approved under OMB control number 1545-0123.
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 send us comments through IRS.gov/FormsComments. Or you can write to the Internal Revenue
Service, Tax Forms and Publications Division, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send the tax
form to this address. Instead, see Where To File, earlier, near the beginning of the instructions.

36

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Form 1120-F

Principal Business Activity Codes

This list of principal business activities and their
associated codes is designed to classify an enterprise
by the type of activity in which it is engaged to facilitate
the administration of the Internal Revenue Code. These
principal business activity codes are based on the North
American Industry Classification System.

Agriculture, Forestry, Fishing,
and Hunting
Crop Production
111100 Oilseed & Grain Farming
111210 Vegetable & Melon Farming
(including potatoes & yams)
111300 Fruit & Tree Nut Farming
111400 Greenhouse, Nursery, &
Floriculture Production
111900 Other Crop Farming (including
tobacco, cotton, sugarcane, hay,
peanut, sugar beet & all other
crop farming)
Animal Production
112111 Beef Cattle Ranching & Farming
112112 Cattle Feedlots
112120 Dairy Cattle & Milk Production
112210 Hog & Pig Farming
112300 Poultry & Egg Production
112400 Sheep & Goat Farming
112510 Aquaculture (including shellfish &
finfish farms & hatcheries)
112900 Other Animal Production
Forestry and Logging
113110 Timber Tract Operations
113210 Forest Nurseries & Gathering of
Forest Products
113310 Logging
Fishing, Hunting and Trapping
114110 Fishing
114210 Hunting & Trapping
Support Activities for Agriculture and
Forestry
115110 Support Activities for Crop
Production (including cotton
ginning, soil preparation,
planting, & cultivating)
115210 Support Activities for Animal
Production (including farriers)
115310 Support Activities For Forestry

Mining
211120
211130
212110
212200
212310
212320
212390
213110

Crude Petroleum Extraction
Natural Gas Extraction
Coal Mining
Metal Ore Mining
Stone Mining & Quarrying
Sand, Gravel, Clay, & Ceramic &
Refractory Minerals Mining &
Quarrying
Other Nonmetallic Mineral
Mining & Quarrying
Support Activities for Mining

Utilities
221100
221210
221300
221500

Electric Power Generation,
Transmission & Distribution
Natural Gas Distribution
Water, Sewage & Other Systems
Combination Gas & Electric

Construction
Construction of Buildings
236110 Residential Building Construction
236200 Nonresidential Building
Construction
Heavy and Civil Engineering
Construction
237100 Utility System Construction
237210 Land Subdivision
237310 Highway, Street, & Bridge
Construction
237990 Other Heavy & Civil Engineering
Construction
Specialty Trade Contractors
238100 Foundation, Structure, & Building
Exterior Contractors (including
framing carpentry, masonry,
glass, roofing, & siding)
238210 Electrical Contractors
238220 Plumbing, Heating, &
Air-Conditioning Contractors

238290
238300

238900

Using the list of activities and codes below,
determine from which activity the company derives the
largest percentage of its “total receipts.” Total receipts is
defined as the sum of gross receipts or sales (page 5,
line 1a) plus all other income (page 5, lines 4 through
10). If the company purchases raw materials and
supplies them to a subcontractor to produce the finished
product, but retains title to the product, the company is
considered a manufacturer and must use one of the
manufacturing codes (311110-339900).
Other Building Equipment
Contractors
Building Finishing Contractors
(including drywall, insulation,
painting, wallcovering, flooring,
tile, & finished carpentry)
Other Specialty Trade
Contractors (including site
preparation)

Manufacturing
Food Manufacturing
311110 Animal Food Mfg
311200 Grain & Oilseed Milling
311300 Sugar & Confectionery Product
Mfg
311400 Fruit & Vegetable Preserving &
Specialty Food Mfg
311500 Dairy Product Mfg
311610 Animal Slaughtering &
Processing
311710 Seafood Product Preparation &
Packaging
311800 Bakeries, Tortilla & Dry Pasta Mfg
311900 Other Food Mfg (including
coffee, tea, flavorings &
seasonings)
Beverage and Tobacco Product
Manufacturing
312110 Soft Drink & Ice Mfg
312120 Breweries
312130 Wineries
312140 Distilleries
312200 Tobacco Manufacturing
Textile Mills and Textile Product Mills
313000 Textile Mills
314000 Textile Product Mills
Apparel Manufacturing
315100 Apparel Knitting Mills
315210 Cut & Sew Apparel Contractors
315250 Cut & Sew Apparel Mfg (except
Contractors)
315990 Apparel Accessories & Other
Apparel Mfg
Leather and Allied Product
Manufacturing
316110 Leather & Hide Tanning &
Finishing
316210 Footwear Mfg (including rubber &
plastics)
316990 Other Leather & Allied Product
Mfg
Wood Product Manufacturing
321110 Sawmills & Wood Preservation
321210 Veneer, Plywood, & Engineered
Wood Product Mfg
321900 Other Wood Product Mfg
Paper Manufacturing
322100 Pulp, Paper, & Paperboard Mills
322200 Converted Paper Product Mfg
Printing and Related Support Activities
323100 Printing & Related Support
Activities
Petroleum and Coal Products
Manufacturing
324110 Petroleum Refineries (including
integrated)
324120 Asphalt Paving, Roofing, &
Saturated Materials Mfg
324190 Other Petroleum & Coal Products
Mfg
Chemical Manufacturing
325100 Basic Chemical Mfg
325200 Resin, Synthetic Rubber, &
Artificial & Synthetic Fibers &
Filaments Mfg
325300 Pesticide, Fertilizer, & Other
Agricultural Chemical Mfg
325410 Pharmaceutical & Medicine Mfg
325500 Paint, Coating, & Adhesive Mfg
325600 Soap, Cleaning Compound, &
Toilet Preparation Mfg
325900 Other Chemical Product &
Preparation Mfg

Once the principal business activity is determined,
entries must be made on page 1, items F(1), F(2), and
F(3). For item F(1), enter the six-digit code selected
from the list below. For item F(2), enter the company's
business activity. For item F(3), enter a brief description
of the principal product or service of the company.

Plastics and Rubber Products
Manufacturing
326100 Plastics Product Mfg
326200 Rubber Product Mfg
Nonmetallic Mineral Product
Manufacturing
327100 Clay Product & Refractory Mfg
327210 Glass & Glass Product Mfg
327300 Cement & Concrete Product Mfg
327400 Lime & Gypsum Product Mfg
327900 Other Nonmetallic Mineral
Product Mfg
Primary Metal Manufacturing
331110 Iron & Steel Mills & Ferroalloy
Mfg
331200 Steel Product Mfg from
Purchased Steel
331310 Alumina & Aluminum Production
& Processing
331400 Nonferrous Metal (except
Aluminum) Production &
Processing
331500 Foundries
Fabricated Metal Product
Manufacturing
332110 Forging & Stamping
332210 Cutlery & Handtool Mfg
332300 Architectural & Structural Metals
Mfg
332400 Boiler, Tank, & Shipping
Container Mfg
332510 Hardware Mfg
332610 Spring & Wire Product Mfg
332700 Machine Shops; Turned Product;
& Screw, Nut, & Bolt Mfg
332810 Coating, Engraving, Heat
Treating, & Allied Activities
332900 Other Fabricated Metal Product
Mfg
Machinery Manufacturing
333100 Agriculture, Construction, &
Mining Machinery Mfg
333200 Industrial Machinery Mfg
333310 Commercial & Service Industry
Machinery Mfg
333410 Ventilation, Heating,
Air-Conditioning, & Commercial
Refrigeration Equipment Mfg
333510 Metalworking Machinery Mfg
333610 Engine, Turbine & Power
Transmission Equipment Mfg
333900 Other General Purpose
Machinery Mfg
Computer and Electronic Product
Manufacturing
334110 Computer & Peripheral
Equipment Mfg
334200 Communications Equipment Mfg
334310 Audio & Video Equipment Mfg
334410 Semiconductor & Other
Electronic Component Mfg
334500 Navigational, Measuring,
Electromedical, & Control
Instruments Mfg
334610 Manufacturing & Reproducing
Magnetic & Optical Media
Electrical Equipment, Appliance, and
Component Manufacturing
335100 Electric Lighting Equipment Mfg
335200 Major Household Appliance Mfg
335310 Electrical Equipment Mfg
335900 Other Electrical Equipment &
Component Mfg
Transportation Equipment
Manufacturing
336100 Motor Vehicle Mfg
336210 Motor Vehicle Body & Trailer Mfg
336300 Motor Vehicle Parts Mfg
336410 Aerospace Product & Parts Mfg
336510 Railroad Rolling Stock Mfg
336610 Ship & Boat Building
336990 Other Transportation Equipment
Mfg

Furniture and Related Product
Manufacturing
337000 Furniture & Related Product
Manufacturing
Miscellaneous Manufacturing
339110 Medical Equipment & Supplies
Mfg
339900 Other Miscellaneous
Manufacturing

Wholesale Trade
Merchant Wholesalers, Durable Goods
423100 Motor Vehicle & Motor Vehicle
Parts & Supplies
423200 Furniture & Home Furnishings
423300 Lumber & Other Construction
Materials
423400 Professional & Commercial
Equipment & Supplies
423500 Metal & Mineral (except
Petroleum)
423600 Household Appliances &
Electrical & Electronic Goods
423700 Hardware, & Plumbing & Heating
Equipment & Supplies
423800 Machinery, Equipment, &
Supplies
423910 Sporting & Recreational Goods &
Supplies
423920 Toy & Hobby Goods & Supplies
423930 Recyclable Materials
423940 Jewelry, Watch, Precious Stone,
& Precious Metals
423990 Other Miscellaneous Durable
Goods
Merchant Wholesalers, Nondurable
Goods
424100 Paper & Paper Products
424210 Drugs & Druggists' Sundries
424300 Apparel, Piece Goods, & Notions
424400 Grocery & Related Products
424500 Farm Product Raw Materials
424600 Chemical & Allied Products
424700 Petroleum & Petroleum Products
424800 Beer, Wine, & Distilled Alcoholic
Beverages
424910 Farm Supplies
424920 Book, Periodical, & Newspapers
424930 Flower, Nursery Stock, & Florists'
Supplies
424940 Tobacco Products & Electronic
Cigarettes
424950 Paint, Varnish, & Supplies
424990 Other Miscellaneous Nondurable
Goods
Wholesale Electronic Markets and
Agents and Brokers
425120 Wholesale Trade Agents &
Brokers

Retail Trade
Motor Vehicle and Parts Dealers
441110 New Car Dealers
441120 Used Car Dealers
441210 Recreational Vehicle Dealers
441222 Boat Dealers
441227 Motorcycle, ATV, & All Other
Motor Vehicle Dealers
441300 Automotive Parts, Accessories, &
Tire Retailers
Furniture and Home Furnishings
Retailers
449110 Furniture Retailers
449121 Floor Covering Retailers
449122 Window Treatment Retailers
449129 All Other Home Furnishings
Retailers
Electronics and Appliance Retailers
449210 Electronics & Appliance Retailers
(including computers)
Building Material and Garden
Equipment and Supplies Dealers
444110 Home Centers
444120 Paint & Wallpaper Retailers

37

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Form 1120-F (Continued)
444140
444190
444200

Hardware Retailers
Other Building Material Dealers
Lawn & Garden Equipment &
Supplies Retailers
Food and Beverage Retailers
445110 Supermarkets & Other Grocery
Retailers (except Convenience)
445131 Convenience Retailers
445132 Vending Machine Operators
445230 Fruit & Vegetable Retailers
445240 Meat Retailers
445250 Fish & Seafood Retailers
445291 Baked Goods Retailers
445292 Confectionery & Nut Retailers
445298 All Other Specialty Food
Retailers
445320 Beer, Wine, & Liquor Retailers
Health and Personal Care Retailers
456110 Pharmacies & Drug Retailers
456120 Cosmetics, Beauty Supplies, &
Perfume Retailers
456130 Optical Goods Retailers
456190 Other Health & Personal Care
Retailers
Gasoline Stations & Fuel Dealers
457100 Gasoline Stations (including
convenience stores with gas)
457210 Fuel Dealers (including Heating
Oil & Liquefied Petroleum)
Clothing and Accessories Retailers
458110 Clothing & Clothing Accessories
Retailers
458210 Shoe Retailers
458310 Jewelry Retailers
458320 Luggage & Leather Goods
Retailers
Sporting Goods, Hobby, Book, Musical
Instrument and Miscellaneous Retailers
459110 Sporting Goods Retailers
459120 Hobby, Toy, & Game Retailers
459130 Sewing, Needlework, & Piece
Goods Retailers
459140 Musical Instrument & Supplies
Retailers
459210 Book Retailers & News Dealers
(including newsstands)
459310 Florists
459410 Office Supplies & Stationery
Retailers
459420 Gift, Novelty, & Souvenir
Retailers
459510 Used Merchandise Retailers
459910 Pet & Pet Supplies Retailers
459920 Art Dealers
459930 Manufactured (Mobile) Home
Dealers
459990 All Other Miscellaneous Retailers
(including tobacco, candle, &
trophy retailers)
General Merchandise Retailers
455110 Department Stores
455210 Warehouse Clubs, Supercenters,
& Other General Merch. Retailers
Nonstore Retailers
Nonstore retailers sell all types of
merchandise using such
methods as Internet, mail-order
catalogs, interactive television, or
direct sales. These types of
Retailers should select the PBA
associated with their primary line
of products sold. For example,
establishments primarily selling
prescription and non-prescription
drugs, select PBA code 456110
Pharmacies & Drug Retailers

Transportation and
Warehousing
Air, Rail, and Water Transportation
481000 Air Transportation
482110 Rail Transportation
483000 Water Transportation
Truck Transportation
484110 General Freight Trucking, Local
484120 General Freight Trucking,
Long-distance
484200 Specialized Freight Trucking
Transit and Ground Passenger
Transportation
485110 Urban Transit Systems
485210 Interurban & Rural Bus
Transportation
485310 Taxi & Ridesharing Services

38

485320
485410

Limousine Service
School & Employee Bus
Transportation
485510 Charter Bus Industry
485990 Other Transit & Ground
Passenger Transportation
Pipeline Transportation
486000 Pipeline Transportation
Scenic & Sightseeing Transportation
487000 Scenic & Sightseeing
Transportation
Support Activities for Transportation
488100 Support Activities for Air
Transportation
488210 Support Activities for Rail
Transportation
488300 Support Activities for Water
Transportation
488410 Motor Vehicle Towing
488490 Other Support Activities for Road
Transportation
488510 Freight Transportation
Arrangement
488990 Other Support Activities for
Transportation
Couriers and Messengers
492110 Couriers
492210 Local Messengers & Local
Delivery
Warehousing and Storage
493100 Warehousing & Storage (except
lessors of miniwarehouses &
self-storage units)

Information
Motion Picture and Sound Recording
Industries
512100 Motion Picture & Video Industries
(except video rental)
512200 Sound Recording Industries
Publishing Industries
513110 Newspaper Publishers
513120 Periodical Publishers
513130 Book Publishers
513140 Directory & Mailing List
Publishers
513190 Other Publishers
513210 Software Publishers
Broadcasting, Content Providers, and
Telecommunications
516100 Radio & Television Broadcasting
Stations
516210 Media Streaming, Social
Networks, & Other Content
Providers
517000 Telecommunications (including
Wired, Wireless, Satellite, Cable
& Other Program Distribution,
Resellers, Agents, Other
Telecommunications, & Internet
Service Providers)
Data Processing, Web Search Portals, &
Other Information Services
518210 Computing Infrastructure
Providers, Data Processing, Web
Hosting, & Related Services
519200 Web Search, Rentals, Libraries,
Archives, & Other Info. Services

Finance and Insurance
Depository Credit Intermediation
522110 Commercial Banking
522130 Credit Unions
522180 Savings Institutions & Other
Depository Credit Intermediation
Nondepository Credit Intermediation
522210 Credit Card Issuing
522220 Sales Financing
522291 Consumer Lending
522292 Real Estate Credit (including
mortgage bankers & originators)
522299 Intl. Secondary Market, & Other
Nondepos. Credit Intermediation
Activities Related to Credit
Intermediation
522300 Activities Related to Credit
Intermediation (including loan
brokers, check clearing, & money
transmitting)
Securities, Commodity Contracts, and
Other Financial Investments and
Related Activities
523150 Investment Banking & Securities
Intermediation
523160 Commodity Contracts
Intermediation

523210

Securities & Commodity
Exchanges
Other Financial Investment
Activities (including portfolio
management & investment
advice)
Insurance Carriers and Related
Activities
524110 Direct Life, Health, and Medical
Insurance Carriers
524120 Direct Insurance (except Life,
Health, and Medical) Carriers
524210 Insurance Agencies &
Brokerages
524290 Other Insurance Related
Activities (including third-party
administration of insurance &
pension funds)
Funds, Trusts, and Other Financial
Vehicles
525100 Insurance & Employee Benefit
Funds
525910 Open-End Investment Funds
(Form 1120-RIC)
525920 Trusts, Estates, & Agency
Accounts
525990 Other Financial Vehicles
(including mortgage REITs &
closed-end investment funds)
523900

Real Estate and Rental and
Leasing
Real Estate
531110 Lessors of Residential Buildings
& Dwellings (including equity
REITs)
531120 Lessors of Nonresidential
Buildings (except
Miniwarehouses) (including
equity REITs)
531130 Lessors of Miniwarehouses &
Self-Storage Units (including
equity REITs)
531190 Lessors of Other Real Estate
Property (including equity REITs)
531210 Offices of Real Estate Agents &
Brokers
531310 Real Estate Property Managers
531320 Offices of Real Estate Appraisers
531390 Other Activities Related to Real
Estate
Rental and Leasing Services
532100 Automotive Equipment Rental &
Leasing
532210 Consumer Electronics &
Appliances Rental
532281 Formal Wear & Costume Rental
532282 Video Tape & Disc Rental
532283 Home Health Equipment Rental
532284 Recreational Goods Rental
532289 All Other Consumer Goods
Rental
532310 General Rental Centers
532400 Commercial & Industrial
Machinery & Equipment Rental &
Leasing
Lessors of Nonfinancial Intangible
Assets (except copyrighted works)
533110 Lessors of Nonfinancial
Intangible Assets (except
copyrighted works)

Professional, Scientific, and
Technical Services
Legal Services
541110 Offices of Lawyers
541190 Other Legal Services
Accounting, Tax Preparation,
Bookkeeping, and Payroll Services
541211 Offices of Certified Public
Accountants
541213 Tax Preparation Services
541214 Payroll Services
541219 Other Accounting Services
Architectural, Engineering, and Related
Services
541310 Architectural Services
541320 Landscape Architecture Services
541330 Engineering Services
541340 Drafting Services
541350 Building Inspection Services
541360 Geophysical Surveying &
Mapping Services
541370 Surveying & Mapping (except
Geophysical) Services

541380 Testing Laboratories
Specialized Design Services
541400 Specialized Design Services
(including interior, industrial,
graphic, & fashion design)
Computer Systems Design and Related
Services
541511 Custom Computer Programming
Services
541512 Computer Systems Design
Services
541513 Computer Facilities Management
Services
541519 Other Computer Related
Services
Other Professional, Scientific, and
Technical Services
541600 Management, Scientific, &
Technical Consulting Services
541700 Scientific Research &
Development Services
541800 Advertising, Public Relations, &
Related Services
541910 Marketing Research & Public
Opinion Polling
541920 Photographic Services
541930 Translation & Interpretation
Services
541940 Veterinary Services
541990 All Other Professional, Scientific,
& Technical Services

Management of Companies
(Holding Companies)
551111
551112

Offices of Bank Holding
Companies
Offices of Other Holding
Companies

Administrative and Support and
Waste Management and
Remediation Services
Administrative and Support Services
561110 Office Administrative Services
561210 Facilities Support Services
561300 Employment Services
561410 Document Preparation Services
561420 Telephone Call Centers
561430 Business Service Centers
(including private mail centers &
copy shops)
561440 Collection Agencies
561450 Credit Bureaus
561490 Other Business Support
Services (including repossession
services, court reporting, &
stenotype services)
561500 Travel Arrangement &
Reservation Services
561600 Investigation & Security Services
561710 Exterminating & Pest Control
Services
561720 Janitorial Services
561730 Landscaping Services
561740 Carpet & Upholstery Cleaning
Services
561790 Other Services to Buildings &
Dwellings
561900 Other Support Services
(including packaging & labeling
services, & convention & trade
show organizers)
Waste Management and Remediation
Services
562000 Waste Management &
Remediation Services

Educational Services
611000

Educational Services (including
schools, colleges, & universities)

Health Care and Social
Assistance
Offices of Physicians and Dentists
621111 Offices of Physicians (except
mental health specialists)
621112 Offices of Physicians, Mental
Health Specialists
621210 Offices of Dentists
Offices of Other Health Practitioners
621310 Offices of Chiropractors
621320 Offices of Optometrists
621330 Offices of Mental Health
Practitioners (except Physicians)

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Form 1120-F (Continued)
621340

Offices of Physical, Occupational
& Speech Therapists, &
Audiologists
621391 Offices of Podiatrists
621399 Offices of All Other
Miscellaneous Health
Practitioners
Outpatient Care Centers
621410 Family Planning Centers
621420 Outpatient Mental Health &
Substance Abuse Centers
621491 HMO Medical Centers
621492 Kidney Dialysis Centers
621493 Freestanding Ambulatory
Surgical & Emergency Centers
621498 All Other Outpatient Care
Centers
Medical and Diagnostic Laboratories
621510 Medical & Diagnostic
Laboratories
Home Health Care Services
621610 Home Health Care Services
Other Ambulatory Health Care Services
621900 Other Ambulatory Health Care
Services (including ambulance
services & blood & organ banks)
Hospitals
622000 Hospitals
Nursing and Residential Care Facilities
623000 Nursing & Residential Care
Facilities
Social Assistance
624100 Individual & Family Services
624200 Community Food & Housing, &
Emergency & Other Relief
Services

624310
624410

Vocational Rehabilitation
Services
Children Services

Arts, Entertainment, and
Recreation
Performing Arts, Spectator Sports, and
Related Industries
711100 Performing Arts Companies
711210 Spectator Sports (including
sports clubs & racetracks)
711300 Promoters of Performing Arts,
Sports, & Similar Events
711410 Agents & Managers for Artists,
Athletes, Entertainers, & Other
Public Figures
711510 Independent Artists, Writers, &
Performers
Museums, Historical Sites, and Similar
Institutions
712100 Museums, Historical Sites, &
Similar Institutions
Amusement, Gambling, and Recreation
Industries
713100 Amusement Parks & Arcades
713200 Gambling Industries
713900 Other Amusement & Recreation
Industries (including golf
courses, skiing facilities,
marinas, fitness centers, &
bowling centers)

Accommodation and Food
Services
Accommodation
721110 Hotels (except Casino Hotels) &
Motels

721120
721191
721199

Casino Hotels
Bed & Breakfast Inns
All Other Traveler
Accommodation
721210 RV (Recreational Vehicle) Parks
& Recreational Camps
721310 Rooming & Boarding Houses,
Dormitories, & Workers’ Camps
Food Services and Drinking Places
722300 Special Food Services (including
food service contractors &
caterers)
722410 Drinking Places (Alcoholic
Beverages)
722511 Full-Service Restaurants
722513 Limited-Service Restaurants
722514 Cafeterias Grill Buffets & Buffets
722515 Snack & Non-alcoholic Beverage
Bars

Other Services
Repair and Maintenance
811110 Automotive Mechanical &
Electrical Repair & Maintenance
811120 Automotive Body, Paint, Interior,
& Glass Repair
811190 Other Automotive Repair &
Maintenance (including oil
change & lubrication shops & car
washes)
811210 Electronic & Precision Equipment
Repair & Maintenance
811310 Commercial & Industrial
Machinery & Equipment (except
Automotive & Electronic) Repair
& Maintenance

811410

Home & Garden Equipment &
Appliance Repair & Maintenance
Reupholstery & Furniture Repair
Footwear & Leather Goods
Repair
811490 Other Personal & Household
Goods Repair & Maintenance
Personal and Laundry Services
812111 Barber Shops
812112 Beauty Salons
812113 Nail Salons
812190 Other Personal Care Services
(including diet & weight reducing
centers)
812210 Funeral Homes & Funeral
Services
812220 Cemeteries & Crematories
812310 Coin-Operated Laundries &
Drycleaners
812320 Drycleaning & Laundry Services
(except Coin-Operated)
812330 Linen & Uniform Supply
812910 Pet Care (except Veterinary)
Services
812920 Photofinishing
812930 Parking Lots & Garages
812990 All Other Personal Services
Religious, Grantmaking, Civic,
Professional, and Similar Organizations
813000 Religious, Grantmaking, Civic,
Professional, & Similar
Organizations (including
condominium & homeowners
associations)
Other
999000 Unclassified Establishments
(unable to classify)
811420
811430

39