2023

Instructions for

Form 1120-F

U.S. Income Tax Return of a Foreign Corporation

Department of the Treasury

Internal Revenue Service

Section references are to the Internal Revenue 

Code unless otherwise noted.

Contents Page

Photographs of Missing Children .... 1

The Taxpayer Advocate Service ..... 1

How To Get Forms and 

Publications ............... 2

General Instructions ............. 2

Purpose of Form ............ 2

Who Must File ............. 2

Special Returns for Certain 

Organizations ............ 3

Claim for Refund or Credit ...... 3

Paid Preparer Authorization ..... 5

Other Forms, Schedules, 

and Statements That May 

Be Required ............. 5

Assembling the Return ........ 7

Accounting Methods ......... 7

Accounting Period ........... 8

Rounding Off to Whole 

Dollars ................ 8

Recordkeeping ............. 8

Payment of Tax Due .......... 8

Estimated Tax Payments ....... 9

Interest and Penalties ......... 9

Special Rules for Foreign 

Corporations ........... 10

Specific Instructions ............ 11

Period Covered ............ 11

Address ................ 11

Employer Identification 

Number (EIN) ........... 11

Computation of Tax Due or 

Overpayment ........... 12

Section I—Income From 

U.S. Sources Not 

Effectively Connected 

With the Conduct of a 

Trade or Business in the 

United States ........... 16

Section II—Income 

Effectively Connected 

With the Conduct of a 

Trade or Business in the 

United States ........... 17

Income ................. 18

Deductions .............. 20

Schedule C—Dividends and 

Special Deductions ....... 26

Schedule J—Tax 

Computation ........... 27

Section III—Branch Profits 

Tax and Tax on Excess 

Interest ............... 29

Schedule L—Balance 

Sheets per Books ........ 31

Schedules M-1 and M-3 ...... 33

Contents Page

Schedule W .............. 33

Future Developments

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

Increase in penalty for failure to file. 

For tax returns required to be filed in 2024, 

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 

$485. See Penalty for late filing of return, 

later.

Electronically filed returns. The 

electronic-filing threshold for corporate 

returns required to be filed on or after 

January 1, 2024, has decreased to 10 or 

more returns. See Electronic Filing, later.

Elective payment election. Applicable 

entities and electing taxpayers can elect to 

treat certain credits as elective payments. 

Resulting overpayment may result in 

refunds. See the instructions for Form 

1120-F, page 1, line 5j, on page 13 of 

these instructions. Also, see the 

Instructions for Form 3800.

Expiration of 100% business meal expense deduction. The temporary 100% 

business meal expenses deduction for 

food and beverages provided by a 

restaurant does not apply to amounts paid 

or incurred after 2022.

Corporate alternative minimum tax 

(CAMT). For tax years beginning after 

2022, certain corporations must determine 

whether they are subject to the new CAMT 

and calculate CAMT if applicable. See the 

instructions for Schedule J, line 3. Also, 

see the instructions for new Item JJ.

Relief from additions to tax for underpayments applicable to the new corporate alternative minimum tax. For tax 

year 2023, the IRS will waive the penalty 

for failure to make estimated tax payments 

for taxes attributable to a CAMT liability. 

Affected corporations must still file the 

2023 Form 2220, even if they owe no 

estimated tax penalty. However, affected 

corporations may exclude the CAMT tax 

liability when calculating the required 

annual payment on Form 2220. Affected 

foreign corporations 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 affected foreign 

corporations receiving a penalty notice 

that will require an abatement request to 

apply the relief provided by Notice 

2023-42. See Notice 2023-42, 2023-26 

I.R.B. 1085, available at IRS.gov/irb/

2023-26_IRB#NOT-2023-42. Also, see the 

instructions for Form 1120-F, page 1, 

line 6, on page 13 of these instructions.

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 

Internal Revenue Service 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 

Feb 1, 2024 Cat. No. 11475L
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.

How To Get Forms and 

Publications

Internet. You can access the IRS website 

24 hours a day, 7 days a week, at IRS.gov 

to:

• Download 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. Otherwise, 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); or

• 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.

• 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 

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 

2 Instructions for Form 1120-F (2023)
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, 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:

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 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.

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 

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 

Instructions for Form 1120-F (2023) 3
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 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.

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 

4 Instructions for Form 1120-F (2023)
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.

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 

CAUTION

!

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 

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 rubber 

stamp, mechanical device, or 

computer software program.

Paid Preparer 

Authorization

If the corporation wants to allow the IRS to 

discuss its 2023 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 

2024 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.

TIP

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. 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.

Instructions for Form 1120-F (2023) 5
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 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 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.

6 Instructions for Form 1120-F (2023)
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).

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. Additional schedules in 

alphabetical order.

11. Additional forms in numerical order.

12. 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, Form 8805, or Form 8288-A 

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 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 2023, a corporation qualifies 

as a small business taxpayer if (a) it has 

average annual gross receipts of $29 

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 

Instructions for Form 1120-F (2023) 7
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.

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.

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 

8 Instructions for Form 1120-F (2023)
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 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 (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 2024 that is more 

than 60 days late is the smaller of the tax 

due or $485. 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. 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.

CAUTION

!

Instructions for Form 1120-F (2023) 9
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; Pub. 15 (Circular E), Employer's Tax 

Guide; or Pub. 51 (Circular A), Agricultural 

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.

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 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 

10 Instructions for Form 1120-F (2023)
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).

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 2023 return for calendar year 2023 

and fiscal years that begin in 2023 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 2023 Form 1120-F may also be 

used if:

• The corporation has a tax year of less 

than 12 months that begins and ends in 

2024, and

• The 2024 Form 1120-F is not available 

at the time the corporation is required to 

file its return.

The corporation must show its 2024 tax 

year on the 2023 Form 1120-F and take 

into account any tax law changes that are 

effective for tax years beginning after 

December 31, 2023.

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 

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 

CAUTION

!

Instructions for Form 1120-F (2023) 11
has 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.

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, 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.

Computation of Tax Due or 

Overpayment

Line 5b. Estimated Tax 

Payments

Enter any estimated tax payments the 

corporation made for the 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 

on the dotted line next to the entry space.

Line 5c. 2023 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 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 

12 Instructions for Form 1120-F (2023)
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.

• 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 

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 (i). 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.

CAUTION

!

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. 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 2023-42.

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.

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 2024 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 2024 estimated tax cannot 

be changed at a later date.

Note. You can credit any or all of the 

line 8a overpayment to your 2024 

estimated tax, even those amounts on 

line 8b resulting from tax deducted and 

withheld under Chapters 3 and 4.

CAUTION

!

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 reason of not 

having a permanent establishment in the 

United States.

Item M

See Form 5472, earlier.

Instructions for Form 1120-F (2023) 13
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 2023, 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 prior years but not 

used to offset income (either as a 

carryback or carryover) to a tax year prior 

to 2023. 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.

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).

14 Instructions for Form 1120-F (2023)
• 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 2023 income 

tax return if:

• For 2023, 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 2023 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.

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 

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 

Instructions for Form 1120-F (2023) 15
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 2023, a 

taxpayer meets the gross receipts test if 

the taxpayer has average annual gross 

receipts of $29 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 separately 

send to you a notice setting forth the due 

date for the penalty payment and where 

that payment should be sent.

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) and 

Notice 2023-7 for the current year, 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 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 

16 Instructions for Form 1120-F (2023)
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 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.

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).

Instructions for Form 1120-F (2023) 17
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.

• 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;

• 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 

18 Instructions for Form 1120-F (2023)
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 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.

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.

Line 8. Capital Gain Net Income

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.

Line 10. Other Income

Enter any other taxable income not 

reported on lines 1 through 9. List the type 

and amount of income on an attached 

Instructions for Form 1120-F (2023) 19
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.

• 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.

• Any payroll tax credit taken by an 

employer on its 2023 employment tax 

returns (Forms 941, 943, and 944) for 

qualified paid sick and qualified paid 

family leave under FFCRA and ARP (both 

the nonrefundable and refundable 

portions). The corporation must include 

the full amount of the credit for qualified 

sick and family leave wages in gross 

income for the tax year that includes the 

last day of any calendar quarter in which 

the credit is allowed.

Note. A credit is available only if the 

leave was taken after March 31, 2020, and 

before October 1, 2021, and only after the 

qualified leave wages were paid, which 

might, under certain circumstances, not 

occur until a quarter after September 30, 

2021, including quarters in 2022.

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.

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.

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.

Limitations on Deductions

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, 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 

20 Instructions for Form 1120-F (2023)
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.

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.

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

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.

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.

If the corporation claims a credit 

for any wages paid or incurred, it 

may need to reduce any 

corresponding deduction for officers' 

compensation and salaries and wages. 

See Reducing certain expenses for which 

credits are allowable, earlier.

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.

CAUTION

!

Instructions for Form 1120-F (2023) 21
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 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)

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

After 12/31/12 but before 1/1/18 $19,000

Trucks and vans

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

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 2024 will be published 

in the Internal Revenue Bulletin in early 

2024.

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.

Do not reduce the corporation's 

deduction for social security and 

Medicare taxes by the 

nonrefundable and refundable portions of 

any FFCRA and ARP credits for qualified 

sick and family leave wages claimed on its 

employment tax returns. Instead, report 

this amount as income on Section II, 

line 10.

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.

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.

CAUTION

!

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 

22 Instructions for Form 1120-F (2023)
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.

• 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.

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.

Line 20. Depreciation

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.

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.

Instructions for Form 1120-F (2023) 23
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.

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 26. Deductions Allocated and 

Apportioned to ECI From 

Schedule H, Line 20

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.

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, lines 16 and 17, lines 19 

through 24, and line 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 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.

24 Instructions for Form 1120-F (2023)
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.

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

• 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).

Instructions for Form 1120-F (2023) 25
The limitations under section 382 do 

not apply to certain ownership changes 

after February 17, 2009, made pursuant to 

a 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 2023 

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.

• 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.

Report so-called dividends or earnings 

received from mutual savings banks, etc., 

as interest. Do not treat them as 

dividends.

Line 2, 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.

Line 3, 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.

Line 3, Columns (b) and (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 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.

Line 4, Column (a)

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 5, Column (a)

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 6, Column (a)

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.

26 Instructions for Form 1120-F (2023)
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).

Line 8, Column (c)

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, this limitation does not apply, 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).

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.

Line 10, Column (a)

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.

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.

In a year in which an NOL occurs, 

compute the deduction without regard to 

section 247(a)(1)(B).

Schedule J—Tax Computation

Line 1. Income Tax

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 

Worksheet for Schedule C, Line 8 Keep for Your Records

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.

Instructions for Form 1120-F (2023) 27
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 2. 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. Enter on 

line 2 the base erosion minimum tax 

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 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. 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. Recapture of investment credit. If the corporation disposed of 

investment credit property or changed its 

use before the end of the 5-year recapture 

period under section 50(a), enter the 

increase in tax from Form 4255, Recapture 

of Investment Credit. 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.

28 Instructions for Form 1120-F (2023)
• 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 treated as a disinvestment of 

prior year's earnings that have not 

previously been subject to the branch 

profits tax.

The amount subject to the branch 

profits tax for the tax year is the dividend 

equivalent amount. See Regulations 

section 1.884-1(b).

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.

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

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.

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. 

Instructions for Form 1120-F (2023) 29
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 

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 6 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 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 

30 Instructions for Form 1120-F (2023)
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 

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).

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.

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.

Schedule L—Balance 

Sheets per Books

Balance Sheet per Books

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 

Instructions for Form 1120-F (2023) 31
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 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).

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 

32 Instructions for Form 1120-F (2023)
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 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.

Schedules M-1 and M-3

In completing Schedules M-1 and M-3, the 

following apply.

• 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.

Instructions for Form 1120-F (2023) 33
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 

(attach explanation of amounts 

excluded) ............ b.

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.

34 Instructions for Form 1120-F (2023)
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.

Instructions for Form 1120-F (2023) 35
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.

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).

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.

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 Crude Petroleum Extraction

211130 Natural Gas Extraction

212110 Coal Mining

212200 Metal Ore Mining

212310 Stone Mining & Quarrying

212320 Sand, Gravel, Clay, & Ceramic & 

Refractory Minerals Mining & 

Quarrying

212390 Other Nonmetallic Mineral 

Mining & Quarrying

213110 Support Activities for Mining

Utilities

221100 Electric Power Generation, 

Transmission & Distribution

221210 Natural Gas Distribution

221300 Water, Sewage & Other Systems

221500 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 Other Building Equipment 

Contractors

238300 Building Finishing Contractors 

(including drywall, insulation, 

painting, wallcovering, flooring, 

tile, & finished carpentry)

238900 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

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

444140 Hardware Retailers

444190 Other Building Material Dealers

444200 Lawn & Garden Equipment & 

Supplies Retailers

36
Form 1120-F (Continued)

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

485320 Limousine Service

485410 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

523900 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)

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 Offices of Bank Holding 

Companies

551112 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)

621340 Offices of Physical, Occupational 

& Speech Therapists, & 

Audiologists

621391 Offices of Podiatrists

621399 Offices of All Other 

Miscellaneous Health 

Practitioners

37
Form 1120-F (Continued)

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 Vocational Rehabilitation 

Services

624410 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 Casino Hotels

721191 Bed & Breakfast Inns

721199 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

811420 Reupholstery & Furniture Repair

811430 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)

38