SCHEDULE H 

(Form 1120-F)

Department of the Treasury 

Internal Revenue Service 

Deductions Allocated to Effectively Connected 

Income Under Regulations Section 1.861-8

▶ Attach to Form 1120-F.

▶ Go to www.irs.gov/Form1120F for instructions and the latest information.

OMB No. 1545-0123

2018

Name of corporation Employer identification number

Part I Home Office Deductible Expenses Definitely Related Solely to ECI or Non-ECI

Note: Enter all amounts on lines 1a through 13 in only U.S. dollars or in only functional currency. If U.S. dollars, check box 

Otherwise, specify currency ▶

. 

1a Total expenses on the books of the home office . . . . . . . . . . 1a

b Check the applicable box below to indicate the accounting convention used to 

compute the amount on line 1a:

U.S. GAAP Home Country GAAP

IFRS Other (specify) ▶

 2 Adjustments for U.S. tax principles (attach statement – see instructions) . . 2

 3 Total deductible expenses on the books of the home office. Combine lines 1a and 2 . . . . . . 3

 4 Interest expense included on line 3 . . . . . . . . . . . . . . 4

 5 Bad debt expense included on line 3 . . . . . . . . . . . . . . 5

 6 Total of interest expense and bad debt expense. Add lines 4 and 5 . . . . . . . . . . . . 6

7 Remaining deductible expenses to be allocated and apportioned between ECI and non-ECI. Subtract line 6 from line 3 7

8 Deductible expenses definitely related solely to non-ECI from subsidiaries . 8

9 Deductible expenses definitely related solely to other non-ECI booked in the home country 9

10 Deductible expenses definitely related solely to other non-ECI booked in other 

countries (including the United States) . . . . . . . . . . . . . 10

11 Deductible expenses definitely related solely to ECI . . . . . . . . . 11

 12 Total deductible expenses definitely related solely to ECI or non-ECI. Add lines 8 through 11 . . . 12

Part II Home Office Deductible Expenses Allocated and Apportioned to ECI

Note: Enter the amounts on lines 15 through 20 in U.S. dollars.

13 Remaining deductible expenses on the books of the home office not definitely related solely to ECI or 

non-ECI. Subtract line 12 from line 7 . . . . . . . . . . . . . . . . . . . . . . 13

14 Average exchange rate used to convert amounts to U.S. dollars (see instructions) . . . . . . . 14

15 Enter the amount from line 13. If line 13 is stated in functional currency, divide line 13 by line 14 . . 15

16 Remaining home office deductible expenses on line 15 allocated and apportioned under Regulations

section 1.861-8 to ECI (attach computation) . . . . . . . . . . . . . . . . . . . 16

17 Enter the amount from line 11. If line 11 is stated in functional currency, divide line 11 by line 14 . . 17

18 Total home office deductible expenses allocated and apportioned to ECI. Add lines 16 and 17 . . . 18

19 Total deductible expenses from other non-U.S. locations allocated and apportioned to ECI . . . . 19

20 Total deductible expenses allocated and apportioned to ECI. Add lines 18 and 19 and enter the

amount here and on Form 1120-F, Section II, line 26 . . . . . . . . . . . . . . . . 20

Part III Allocation and Apportionment Methods and Financial Records Used to Complete Parts I and II

Note: Enter the amounts in Part III, lines 21a, 21b, 22a, and 22b in U.S. dollars.

• If one or more methods used are different than in prior year, check box . . . . . . . . . . . . . . . . . .

• If any amount on line 20 is recorded as an interbranch amount on books and records used to prepare Form 1120-F, 

Schedule L, include the amount on Part IV, line 35 and check this box . . . . . . . . . . . . . . . . . .

21 Gross income ratio:

a Gross ECI . . . . . . . . . . . . . . . . . . . . . . 21a

b Worldwide gross income . . . . . . . . . . . . . . . . . . 21b

c Divide line 21a by line 21b . . . . . . . . . . . . . . . . . . . . . . . . . 21c %

22 Asset ratio:

a Average U.S. assets from Schedule I, line 5, column (d) . . . . . . . 22a

b Worldwide assets (if applicable, from Schedule I, line 6b) . . . . . . . 22b

c Divide line 22a by line 22b . . . . . . . . . . . . . . . . . . . . . . . . . 22c %

23 Number of personnel ratio:

a Personnel of U.S. trade or business . . . . . . . . . . . . . . 23a

b Worldwide personnel . . . . . . . . . . . . . . . . . . . 23b

c Divide line 23a by line 23b . . . . . . . . . . . . . . . . . . . . . . . . . 23c %

24 Did the corporation use any ratio-based methods (other than those indicated on lines 21 through 23 above) in

Parts I and II? If “Yes,” attach statement (see instructions) . . . . . . . . . . . . . . . . . .

Yes No

25 Did the corporation use any other methods (e.g., time-spent analysis or estimates) in Parts I and II? If “Yes,”

attach statement (see instructions). . . . . . . . . . . . . . . . . . . . . . . . . .

For Paperwork Reduction Act Notice, see the Instructions for Form 1120-F. Cat. No. 49679V Schedule H (Form 1120-F) 2018
Schedule H (Form 1120-F) 2018 Page 2 

Part III Allocation and Apportionment Methods and Financial Records Used to Complete 

Parts I and II (continued)

Note: Indicate whether the corporation used any of the following financial and other records in Parts I and II 

to identify deductible expenses allocated and apportioned to ECI.

Yes No

26a Published or other non-public audited financial statements . . . . . . . . . . . . . . . . . .

b Non-audited financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . .

27 Home office management or other departmental cost accounting reports . . . . . . . . . . . . . .

28 Other (e.g., home country regulatory reports or written, contemporaneous functional analyses) (attach statement) 

Part IV Allocation and Apportionment of Expenses on Books and Records Used to Prepare Form 1120-F, Schedule L 

Note: Enter all amounts in Part IV in U.S. dollars.

29 Total expenses per books and records used to prepare Form 1120-F, 

Schedule L . . . . . . . . . . . . . . . . . . . . . . 29

30 Adjustments for U.S. tax principles (attach statement – see instructions) . . 30

31 Total deductible expenses. Combine lines 29 and 30 . . . . . . . . . . . . . . . . 31

32a Third-party interest expense included on line 31 . . . . . . . . . . 32a

b Interbranch interest expense included on line 31 . . . . . . . . . . 32b

33 Bad debt expense included on line 31 . . . . . . . . . . . . . 33

34 Other third-party deductible expenses not allocated or apportioned to ECI and 

non-ECI under Regulations section 1.861-8 included on line 31 (attach

statement). . . . . . . . . . . . . . . . . . . . . . . 34

35 Interbranch expenses per books and records included on line 31 and not 

included on line 32b (attach statement) . . . . . . . . . . . . . 35

36 Add lines 32a through 35 . . . . . . . . . . . . . . . . . . . . . . . . . 36

37 Deductible expenses on books and records allocated and apportioned to ECI or non-ECI under 

Regulations section 1.861-8. Subtract line 36 from line 31 . . . . . . . . . . . . . . . 37

Reconciliation of allocation and apportionment of deductible 

expenses to ECI and non-ECI on books and records under 

Regulations section 1.861-8 (from line 37)

(a) 

ECI Amounts

(b) 

Non-ECI Amounts

(c) 

Total: Add columns 

(a) and (b)

38a Derivative transaction deductible expenses definitely related to 

ECI or non-ECI under Regulations section 1.861-8 (from line 37) 38a

b Other deductible expenses definitely related to ECI or non-ECI 

(from line 37) . . . . . . . . . . . . . . . . . . 38b

39 Total deductible expenses definitely related to ECI or non-ECI. 

Add lines 38a and 38b . . . . . . . . . . . . . . 39

40 Other deductible expenses on books and records not definitely 

related to ECI or non-ECI that are allocated and apportioned to 

ECI and non-ECI (from line 37) . . . . . . . . . . . . 40

41 Total deductible expenses on books and records allocated and 

apportioned to ECI and non-ECI. Add lines 39 and 40. Column (c) 

must equal line 37 . . . . . . . . . . . . . . . . 41

Note: Line 41, column (a) is the total of the deductions reported on Form 1120-F, Section II, lines 12, 13, 14, 16, 17, 19 through 

24, and 27.

Schedule H (Form 1120-F) 2018