ron 91705 Computation of Possessions Corporation

OMB No. 1545-0217
(Rev. March 1984) Tax Credit Allowed Under Section 936
Department of the Treasury Expires 3/31/87
Internal Revenue Service > Attach to your tax return
For calendar year 19 ____or other tax year beginning __._...............-., 119 _...,andending....._........-.2. 2... 119... :
Name Employer identification number

GREAT Gross Income in Applicable Period

Tax year (Use a separate line for each tax year Name of U.S. possession in which trade or Periods in which trade or business was actively
ending with or within your applicable period. Start business was actively conducted conducted ina U.S. possession (Dates are
with the earliest such tax year. See instruction B.) Inclusive)

Beginning Ending From— To—
@ (b) © @) (e)

Gross income during periods shown in columns (d) and (e)
Gross income from the active conduct of a trade or business in a U.S. possession] Gross qualified All other gross income

From sources in U.S. Fromall other sources | From sources in Possession source | From sources in U.S _| Fromall other sources | From sources in the
possessions ‘outside the U.S. the U.S. investment income possessions ‘outside the U.S. US.

{fy (g) (hy 10} @ (kK) 0)

(Totals:

1 Total gross income in applicable period (add totals of columns (f) through (1)
2 Gross income in applicable period from sources in U.S. possessions (add total of columns , (, and @).
3 Divide line 2 by line 1 (if less than 80%, do not complete Parts II and Ill).

4 Gross income from the active conduct of a trade or business in a U.S. possession (total of fealumns (0, 8), and i) ).
5 Divide line 4 by line 1 (if less than 55%, do not complete Parts II and Ill). . .

GEMGMI Computing the Possessions Corporation Tax Credit

6 Qualified gross income in current year:
(a) From sources outside the U.S. from the active conduct of a trade or business ina U.S.
possession (see instructions). . . 6(a)
(b) From sources outside the U.S. from the sale or exchange of substantially all assets
used in a possessions trade or business. . . . re
(c) Gross qualified possession source investment income . . ...... . « (6(C)
(d) Amounts received inthe U.S. . . . . See ee es (SCA)
(e) Intangible property income subject to section 936(h(2) . cee ee es [6€0)
(f) Other intangible property income (see instructions). . . .. .. 2... . (OL
(g) Add lines 6(a), 6(b), and 6(c) « sore
(h) Add lines 6(d), 6(e), and 6(f) . ee
(i) Subtract line 6(h) from 6g) 6. [6ci) |
7 Applicable deductions (attach schedule):
(a) Cost sharingamount (see instructions) . . 2... . 2... ew ee {7
(b) Definitely allocable deductions (see instructions) . 2... 1 1 ee ee 7(b)
(c) Ratable part of deductions not definitely allocable . . 2. 2. 1. 1. ee ee ee 7)
(d) Total (add lines 7(a), 7(b)and7(c)) . . . . |)
8 Qualified taxable income before loss adjustments ine 6(i) less line 7). if loss, “do not complete below . . (8
9 Loss adjustments (attach schedule):
(a) Current year losses from non-qualified sources (see instructions) . . . ... . 9(a)
(b) Recapture of prior year overall foreign losses (see instructions) . ... . . . {9(b)
(c) Net capital loss or short-term capital loss adjustment (see instructions) . . . . . [9(¢) UY,
(d) Total (add lines 9(a), 9(b), and 9(c)) . . . . 1)
10 Qualified taxable income (subtract line 9(d) from line 8). an a i
11 Total taxable income from all sources (enter taxable income from your tax return) re a 2
12 Adjustments to taxable income from all sources (seeinstructions) . 2... ee eee ee 12
13 Subtractline12fromlinell 2 6 2. ee ee ee ee LS
14 Divide line 10 byline13 . . . . see eee LMM
15 Total U.S. income tax against which section 936 credit is allowed (see instruction o) rere)
16 Section 936 credit (multiply line 14 by line 15). Enter hereandonyourtaxreturn.. . . . . . . . m | C16

For Paperwork Reduction Act Notice, see instructions on back. Form 5735 (3-84)

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Schedule P (Form 5735) (3-84)

Page 2

To be completed for profit split method only.

1 Adjustment to research deduction. Enter line 4(b) minus line 4(c) of Part II, butnotlessthan zero . |

2 Enter line 5 of Part tl
3 Enter line 8 of Part Il

4 Combined taxable income to be allocated below to Us s. affiliates (Enter line 1 plus line 2 minus line 3).

Bw [ye

Schedule of affiliates’ shares of combined taxable income reported on line 4 of Part Ill.

(a) Name of affiliate

(©) Amount of share. Enter here and
include on line 10, page 1, Form

(b) Identifying number
1120 of the appropriate affiliate

To be completed for cost sharing method only.

Schedule of affiliates’ shares of cost sharing amount and marketing intangible income

(a) Name of affiliate

(b) Identifying number

(c) Share of cost sharing amount.
Enter hereand reduce line 26, page
1, Form 1120 of the appropriate
affiliate by this amount,

(d) Share of marketing intangible

income. Enter here and include on

line 10, page 1, Form 1120f the
appropriate affiliate.

Instructions

(Section references are to the Internal Revenue Code, unless
otherwise noted.)

Purpose of Schedule.—Schedule P must be attached to
Form 5735 by a possessions corporation which has elected
to use either the cost sharing method or the profit split
method of computing taxable income under section
936(h)(5).

Specific Instructions

Aseparate Schedule P must be filed for each product to
which the cost sharing method or profit split method under
section 936(h)(5) applies. If you have elected a different
method for export sales than for domestic sales of the
Possession product, two Schedules P must be filed for that
product. All taxpayers must complete Part |. Complete Parts
ll and Ill if the profit split method applies to the product.
Complete Part IV if the cost sharing method applies to the
product.

Part |

Line 1.—Enter the amount of product area research
expenditures incurred by the possessions corporation and all
other members, including foreign persons, of the affiliated
group within the meaning of section 482. Product area
research includes expenditures deductible under section
174; qualified research expenses within the meaning of
section 44F(b); and certain other expenditures. See
proposed regulations section 1.936-6(a)(1).

Line 2.—Enter the total sales or other dispositions of the
possession product by the affiliated group to persons who are
not members of the affiliated group. See proposed regula-
tions section 1.936-6(a)(2).

Line 3.—Enter the total sales or other dispositions of all
products in the product area by the affiliated group to
persons who are not members of the affiliated group.

Line 6.—Enter the amount of product area research
expenditures paid or accrued solely by the possessions
corporation. However, do not include amounts paid or
accrued to or on behalf of related persons and amounts paid
or accrued under any cost sharing arrangement with a
related person.

Part Il

Use this Part to compute the combined taxable income of
the possessions corporation and its U.S. affiliates derived
from the possession product.

Line 1.—Enter the combined gross receipts from the sale or
other disposition of the possession product by the
possessions corporation and its U.S. affiliates to unrelated
persons or foreign affiliates.

Line 2.—Enter the sum of the costs of goods sold of the
possessions corporation and of its U.S. affiliates which are
attributable to the possession product.

Line 4.—Enter the sum of the expenses incurred by the
possessions corporation and by its U.S. affiliates which are
allocable or apportionable to the possession product.

Note: The share of combined taxable income of the
possessions corporation entered on line 8 of Part II should be
reported on line 10, page 1, Form 1120 of the possessions
corporation. The shares of combined taxable income of the
U.S. affiliates entered in column (c) of Part Ill should be
reported on line 10, page 1, Form 1120 of each affiliate.
Gross receipts, costs of goods sold, and expenses of the
possessions corporation and its affiliates which are included
in Part II should not be reported on any Form 1120 filed by
the possessions corporation or its affiliates.

Part Ill

The amount on line 4 will be allocated to the members of the
affiliated group in accordance with proposed regulations
section 1.936-6(b)(1). The total of column (c) should equal
the amount entered on line 4, Part Ill.

Part IV

Enter in column (c), Part IV the share of the cost sharing
amount (computed in line 7 of Part |) which is allocated to
each of the members of the affiliated group in accordance
with proposed regulations section 1.936-6(a)(5). Also use
column (qd), Part IV to enter the share of marketing intangible
income which is allocated to each of the members of the
affiliated group in accordance with proposed regulations
section 1.936-6(a)(5).