SCHEDULE C Tax Effect of the International Boycott Provisions

(Form 5713)
(Rev. January 1986) > Attach to Form 5713.
Department of the Treasury > For Paperwork Reduction Act Notice, see page 1 of Instructions for Form 5713.

Internal Revenue Service

OMB No. 1545:0216

Expires 10-31-88

Name

‘Taxpayer identifying number

1 Method used in computing loss of tax benefits under sections 908(a), 952(a)(3), 995(b)(1)(F)(ii) and 927(e)(2) (check one):

a
b

International boycott factor from Schedule A (Form 5713). See items 2a, 3a, 4a, and 5a below .

Identification of specifically attributable taxes and income from Schedule B (Form 5713). See items 2b, 3b, 4b, ‘and 5b below

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oO

2 Reduction of foreign tax credit (section 908(a)):

International boycott factor. Complete if you checked box 1(a) above and answered ‘‘Yes’’ to foreign tax

credit question on line 7d, Form 5713—

(1) Foreign tax credit before adjustment (line 6, Part III, Schedule B, Form 1118 (Rev. Oct. 1985)
(corporations); or line 5, Part IV, Form 1116 (1985) (individuals)) .

(2) International boycott factor (from Schedule A (Form 5713), line 3).

(3) Reduction of foreign tax credit (multiply line 2a(1) by line 2a(2)). Enter here and on line 7, Part Il,
Schedule B, Form 1118 (corporations); enter here and on line 6, Part IV, Form 1116 (individuals),

(4) Adjusted foreign tax credit (subtract line 2a(3) from line 2a(1)). . . . woe
Specifically identifying income and taxes. Complete if you checked box 1b above and answered Yes" to
foreign tax credit question on line 7d, Form 5713. Enter the amount from line 15, column (4), Schedule
B (Form 5713)

Enter the appropriate part of this ‘amount 0 on line 3, ‘Part I, Schedule B, of all applicable Form(s). 118
(corporations); or on line 4, Part Ill, of all applicable Form(s) 1116 (individuals).

3 Denial of deferral under subpart F (section 952(a)(3)):

International boycott factor. Complete if you checked box 1a above and answered “Yes” to controlled
foreign corporation question on line 7b, Form 5713—
(1) Prorated share of total income of controlled foreign corporations (See instructions.) .
(2) Prorated share of income attributable to earnings and profits of controlled foreign corporations
included in income under sections SS1EKDA. S5LAXANAND, 91AVANB) 952(a)(1),
952(a)(2), 952(a)(4), and 952(b)

(3) Subtract line 3a(2) from line 3a(1) .

(4) International boycott factor (from Schedule A (Form 5713), line 3).

(5) Prorated share of subpart F international boycott income (multiply line 3a(3) by. line 3a(d)). ‘Enter
here and on line 5, Worksheet A, contained in the Instructions for Form 5471

Specifically identifying taxes and income. Complete if you checked box 1b above and answered: “Yes” to

controlled foreign corporation question on line 7b, Form 5713. Enter the amount from line 15, column

(5), Schedule B (Form 5713). Also enter this amount on line 5, Worksheet A, contained in the

Instructions for Form 5471. os ee ee ee ee

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4 Denial of IC-DISC benefits (section 995(b)(1)(F)(ii)):

International boycott factor. Complete if you checked box 1a above and answered ‘‘Yes"’ to IC-DISC
question on line 7c, Form 5713—
(1) Prorated share of section 995(b)(1)(F)(i) amount (see instructions). .

(2) international boycott factor (from Schedule A (Form 5713), line 3) . we

(3) Prorated share of IC-DISC international boycott income (multiply line 4a(1) by line 4a(2)), (See
instructions.) . .

Specifically identifying taxes and ir income. >. Complete if you checked box 1b above and answered yes” to

IC-DISC question on line 7c, Form 5713. Enter amount from line 15, column (6), Schedule B (Form

5713). Also enter this amount on the appropriate line of Schedule J, Form 1120-IC-DISC .

.

Schedule C (Form 5713) (Rev. 1-86)


‘Schedule C (Form 5713) (Rev. 1-86)

Page 2

5 Denial of exemption of foreign trade income (section 927(e)(2)):

a__ International boycott factor. Complete if you checked box la above and answered “Yes” to FSC question

on line 7i, Form 5713.

(41) Add amount from columns (a) and (b), line 10, Schedule B (Form 1120-FSC).
(2) \nternational boycott factor (from Schedule A (Form 5713), line 3) .

(3) Exempt foreign trade income of a FSC attributable to international boycott operations out i line

5a(1) by line 5a(2). Enter here and on line 1, Schedule F (Form 1120-FSC) .

b Specifically attributable taxes and income. Complete if you checked box 1b above and answered “Yes” to
question on line 7i, Form 5713. Enter amount from line 15, column (7), Schedule B (Form 5713). Also

enter this amount on line 1, Schedule F (Form 1120-FSC) .

Instructions

(Section references are to the Internal
Revenue Code.)

You do not need to complete
Schedule C (Form 5713) fora
partnership or an IC-DISC. You must
complete it, however, if you area
partner or an IC-DISC shareholder.
Controlled Groups. —Unless a
controlled group (described in section
993(a)(3)) files a consolidated return,
each member may choose
independently either to apply the
international boycott factor under
section 999(c)(1) or to identify
specifically attributable taxes and
income under section 999(c)(2). Each
member must consistently use a single

method to figure the loss of tax benefits.

For example, a member that chooses
to use the international boycott factor
must apply it to determine its loss of the
section 902 indirect foreign tax credit on
a dividend that another member of the
controlled group paid to it, even if the

other member determines its own loss of
tax benefits by identifying specifically
attributable taxes and income.

Thus, a person who applies the
international boycott factor to one
operation must apply the factor to all
that tax year’s operations under section
908(a), 952(a)(3), 995(b)(1)(F)(ii) or
927(e)(2).

A person who identifies specifically
attributable taxes and income under
section 999(c)(2) must use that
method for all that tax year’s
operations under section 908(a),
927(e)(2), 952(a)(3), or 995(b)(1)(F).

An IC-DISC whose tax year differs
from the common taxable year of the
controlled group of which it is a
member does not need to amend its
return to show on Schedule J (Form
1120-IC-DISC) the amount of IC-DISC
benefits lost because of boycott
participation. Since the IC-DISC
benefits are lost at the shareholder
level, the shareholder must include in

income the prorated share of income
attributable to boycott operations
shown on line 4a(3).
Line 3a(1).—Enter your share of the
income of the controlled foreign
corporation on line 3a(1).

Non-exempt foreign trade income of
a foreign sales corporation (FSC) that
was computed without regard to the
administrative pricing rules is subject to
the subpart F rules. Enter your share of
these types of income on line 3a(1).
Line 4a(1).—Prorated share of section
995(b)(1)(F)(i) amount.—A
noncorporate shareholder enters its
share of the earnings and profits of the
IC-DISC reduced by its share of the
distributions under sections
995(b)(1)(A), (B), (C), (D), and (E) on
line 4a(1). A corporate shareholder
takes its share of the earnings and
profits of the IC-DISC and reduces it by
the distributions under sections
995(b)(1)(A), (B), (C), (D), and (E). It
multiplies this amount by 16/17 and
enters the result on line 4a(1).