Instructions For Form 8858 Sheet (Page 3 of 4) in pdf

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U.S. person has a P.O. box, show the box

The FDE’s position in the chain of

Schedule C-1

number instead.

ownership.

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Complete a separate Schedule C-1 for

The tax classification of all entities in

Foreign Addresses. Enter the

each recipient that has a functional

the chain of ownership (see Form 8832

information in the following order: city,

currency that is different than the

instructions for tax classification rules and

province or state, and country. Follow the

functional currency of the FDE. See

related definitions).

country’s practice for entering the postal

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section 987(3) for rules relating to branch

The country under whose law each

code, if any. Do not abbreviate the

remittances.

entity is organized.

country name.

For these purposes, the rules of

Schedule F

Identifying Numbers

section 958(a) (relating to “direct and

Use Schedule F to report a summary

Use the following instruction to complete

indirect ownership”) apply.

balance sheet for the FDE computed and

lines 1b, 3c, 4c, and the entry space at

Each filer of Form 8858 that is required

translated into U.S. dollars in accordance

the top of page 1 of the form for the filer’s

to file an organizational chart with respect

with U.S. GAAP.

identifying number. The identifying

to more than one FDE may satisfy this

number of an individual is his or her social

Special rule for DASTM. If the FDE

requirement by filing a single

security number (SSN). The identifying

uses DASTM, Schedule F should be

organizational chart that includes the

number of all others is their employer

prepared and translated into U.S. dollars

required information with respect to all

identification number (EIN).

according to Regulations section

FDEs.

1.985-3(d), rather than U.S. GAAP.

If a U.S. corporation is the U.S.

person filing Form 8858 and is a member

Schedule C

Schedule G

of a consolidated group, see Person

Use Schedule C to report a summary

Filing This Return on page 2.

Question 3

income statement for the FDE computed

Functional Currency

If the tax owner of the FDE is claiming a

in the FDE’s functional currency in

section 165 loss with respect to worthless

Use the following instruction to complete

accordance with U.S. generally accepted

stock or with respect to certain

lines 1i, 3e, and 4d.

accounting principles (GAAP). Enter in

obligations, see Regulations section

the U.S. dollar column each line item

Enter the entity’s functional currency.

1.6011-4 for information relating to a

functional currency amount translated into

See sections 985 and 989, and

disclosure statement that must be

dollars using U.S. GAAP translation rules.

Regulations sections 1.985-1(a) through

attached to Form 8858 if certain

If the FDE does not maintain U.S. GAAP

requirements are met.

income statements in U.S. dollars, you

determining the functional currency of a

can use the average exchange rate as

Question 4

qualified business unit (QBU) and the

determined under section 989(b). The

If the FDE is not owned directly or

definition of a QBU.

rate used should be the rate stated on

indirectly by a domestic corporation or the

line 7, Schedule H. If you choose to use

Hyperinflationary exception. An entity

FDE did not incur an NOL for the year,

the average exchange rate rather than

that otherwise would be required to use a

please write “N/A” across the “Yes/No”

the U.S. GAAP translation rules, check

hyperinflationary currency as its functional

entry spaces for line 4 to indicate that the

the box above line 1 on Schedule C.

currency must use the U.S. dollar as its

question is not applicable. Otherwise, if

functional currency and compute income

Special rules for DASTM. If the FDE

you are checking the “Yes” box, you may

or loss or earnings and profits using the

uses DASTM, the functional currency

need to attach an elective relief

U.S. dollar approximate separate

column should reflect local

agreement and/or an annual certification

transactions method of accounting

hyperinflationary currency amounts

as provided in Regulations sections

(DASTM) under the special rules of

computed in accordance with U.S. GAAP.

1.1503-2(g)(2) or 1.1503(d)-6(d) or (g) .

Regulations section 1.985-3. See

The U.S. dollar column should reflect

Regulations section 1.985-1(b)(2).

such amounts translated into dollars

Schedule H

under U.S. GAAP translation rules.

Line 1h — Principal Business

Use Schedule H to report the FDE’s

Differences between this U.S. dollar

Activity

current earnings and profits (E&P) (if the

GAAP column and the U.S. dollar income

tax owner is a CFC) or taxable income (if

Enter a brief description of the FDE’s

or loss figured for tax purposes under

the tax owner is a U.S. person or a CFP).

principal business activity.

Regulations section 1.985-3(c) should be

Generally, enter the amounts on lines 1

accounted for on Schedule H. See

through 6 in functional currency.

Schedule H, Special rules for DASTM,

Line 3b

Special rules for DASTM. If the FDE

below.

If the tax owner is a CFC, enter the

uses DASTM, enter on line 1 the dollar

Line 7. Include on line 7, adjustments for

annual accounting period covered by

GAAP income or (loss) from line 8 of

extraordinary items, prior period

Form 5471 (as described in Regulations

Schedule C. Enter on lines 2 and 3 the

adjustments, and the provision for

section 1.6038-2(e)). If the tax owner is a

adjustments made in figuring current E&P

income, war profits, and excess profits

CFP, enter the annual accounting period

or taxable income for U.S. tax purposes.

taxes deducted in accordance with U.S.

covered by Form 8865 (as described in

Report these amounts in U.S. dollars.

GAAP. The terms “extraordinary items”

Regulations section 1.6038-3(f)).

Enter on line 5 the DASTM gain or loss

and “prior period adjustments” have the

figured under Regulations section

Line 5

same meaning given to them by U.S.

1.985-3(d).

GAAP (see Opinion No. 30 of the

You must attach an organizational chart

Lines 2 and 3. Certain adjustments

Accounting Principles Board and

that includes the following information

must be made to the FDE’s line 1 net

Statement No. 16 of the Financial

with respect to the chain of ownership

book income or (loss) to determine its

Accounting Standards Board).

between the tax owner and the FDE and

current E&P or taxable income. The

the chain of ownership between the FDE

Important: Differences between this

adjustments may include those needed to

and all entities in which the FDE has a

functional currency amount and the

conform the foreign book income to U.S.

10% or more direct or indirect interest:

amount of taxes that reduce E&P (in the

GAAP and to U.S. tax accounting

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The name and percentage of

case of an FDE of a CFC) or are

principles. If the FDE’s books are

ownership of all entities in the chain of

deductible in computing U.S. taxable

maintained in functional currency in

ownership, including partnerships and

income (in the case of an FDE of a U.S.

accordance with U.S. GAAP, enter on line

entities disregarded as separate from

person or a CFP) should be accounted for

1 the functional currency GAAP income or

their owners.

on line 2 or 3 of Schedule H.

(loss) from line 8 of Schedule C, rather

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Instructions For Form 8858 Sheet Page 3

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