SCHEDULE C Tax Effect of the International Boycott Provisions

(Form 5713) OMB No. 1545-0216
(Rev. January 1985) > Attach to Form 5713. exes 7-31.87
Department of the Treasury > For Paperwork Reduction Act Notice, see page 1 of Instructions for Form 5713. rewes 731
Internal Revenue Service

Name Taxpayer identifying number

1 Method used in computing loss of tax benefits under sections 908(a), 952(a)(3) and 995(b)(1)(F) (check one):
(a) International boycott factor from Schedule A (Form 5713). See items 2(a), 3(a), and 4(a) below . . . rr i
(b) Identification of specifically attributable taxes and income from Schedule B (Form 5713). See items 2(b), 3(b), and 4(b) below. » [J

2 Reduction of foreign tax credit (section 908(a)):
(a) International boycott factor. Complete if you checked box 1(a) above and answered ‘‘Yes,"’ to foreign tax , ]/ _
credit question on line 7(d), Form 5713— UL,
(1) Foreign tax credit before adjustment (line 6, Part Ill, Schedule B, Form 1118 (Rev. Jan. 1984)
(corporations); or line 5, Part IV, Form 1116 (1984) (individuals)). . . . . 2. . ee

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

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

(4) Adjusted foreign tax credit (subtract line 2(a)(3) from line 2(a)(1)) . . .
(b) Specifically identifying income and taxes. Complete if you checked box 1(b) above and answered “Yes, "
to foreign tax credit question on line 7(d), 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) 1118
(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)):
(a) International boycott factor. Complete if you checked box 1(a) above and answered ‘‘Yes,”’ to controlled
foreign corporation question on line 7(b), Form 5713—
(1) Prorated share of total income of controlled foreign corporations (line 9, Schedule H, Form 5471)
(2) Prorated share of income attributable to earnings and profits of controlled foreign corporations
included in income under sections 951(a)(1)(A)(ii), 951(a)(1{A)(iii), 951(a)(1)(B), 952(a)(1),
952(a)(2), 952(a)(4), and 952(b)

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

(4) International boycott factor (from Schedule A (Form 5713), line 3). .
(5) Prorated share of Subpart F international boycott income (multiply line 3(@)(3) by line 30aX(4)). Enter

here and on line 5, Worksheet A, contained in the Instructions forForm5471 . . . . ~ pb

(b) Specifically identifying taxes and income. Complete if you checked box 1(b) above and answered “Yes, ”
to controlled foreign corporation question on line 7(b), 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. eee ee ee ee oe . :

4 Denial of DISC benefits (section 995(b)(1)(F)): yy
(a) International boycott factor. Complete if you checked box 1(a) above and answered ‘‘Yes,"’ to DISC |
question on line 7(c), Form 5713—- Mi

(1) Prorated share of section 995(b)(1)(F)(i) amount. es

(2) International boycott factor (from Schedule A (Form 5713), line 3).
(3) Prorated share of DISC international boycott income (multiply line Atay) by line 4(a\(2)). (See
instructions.) . .
(b) Specifically identifying taxes and ir income. e. Complete if you checked box 1(b) above and answered “Yes, "
to DISC question on line 7(c), 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-DISC :

Schedule C (Form 5713) (Rev. 1-85)


Instructions

(Section references are to the Internal Revenue Code.)

You do not need to complete Schedule
C (Form 5713) for a partnership or
DISC. You must complete it, however, if
you are a partner or 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), or 995(b)(1)(F).

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),
952(a)(3), or 995(b)(1)(F).

A 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-DISC) the amount of DISC
benefits lost because of boycott
participation. Since the 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
A(a)(3).