•
Line 11, column (b). Include income
Are received from
See section 246(c)(4) and Regulations
less-than-20%-owned foreign
constructively received from controlled
section 1.246-5 for more details.
corporations, and
foreign corporations under subpart F. This
b. Dividends attributable to periods
•
Qualify for the 70% deduction under
amount should equal the total subpart F
totaling more than 366 days that the
section 245(a). To qualify for the 70%
income reported on Schedule I of Form
corporation received on any share of
deduction, the corporation must own at
5471, Information Return of U.S. Persons
preferred stock held for less than 91 days
least 10% of the stock of the foreign
With Respect to Certain Foreign
during the 181-day period that began 90
corporation by vote and value.
Corporations.
days before the ex-dividend date. When
counting the number of days the
Line 12, column (b). Include gross-up
Also include dividends received from a
corporation held the stock, you cannot
for taxes deemed paid under sections 902
less-than-20%-owned foreign sales
count certain days during which the
and 960.
corporation (FSC) that:
•
corporation’s risk of loss was diminished.
Are attributable to income treated as
Line 13, column (b). Include the
See section 246(c)(4) and Regulations
effectively connected with the conduct of
following.
section 1.246-5 for more details.
a trade or business within the United
1. Dividends (other than capital gain
Preferred dividends attributable to periods
States (excluding foreign trade income)
distributions reported on Schedule D
totaling less than 367 days are subject to
and
(Form 1120) and exempt-interest
•
the 46-day holding period rule above.
Qualify for the 70% deduction under
dividends) that are received from RICs
c. Dividends on any share of stock to
section 245(c)(1)(B).
and that are not subject to the 70%
the extent the corporation is under an
Line 7. Enter the U.S.-source portion of
deduction.
obligation (including a short sale) to make
2. Dividends from tax-exempt
dividends that:
related payments with respect to positions
•
organizations.
Are received from 20%-or-more-owned
in substantially similar or related property.
3. Dividends (other than capital gain
foreign corporations, and
•
5. Any other taxable dividend income
distributions) received from a REIT that,
Qualify for the 80% deduction under
not properly reported elsewhere on
for the tax year of the trust in which the
section 245(a).
Schedule C.
dividends are paid, qualifies under
Also include dividends received from
sections 856 through 860.
a 20%-or-more-owned FSC that:
Line 17. Dividends received on
4. Dividends not eligible for a
•
Are attributable to income treated as
debt-financed stock acquired after July
dividends-received deduction, which
effectively connected with the conduct of
18, 1984, are not entitled to the full 70%
include the following.
a trade or business within the United
a. Dividends received on any share of
or 80% dividends-received deduction.
States (excluding foreign trade income)
stock held for less than 46 days during
The 70% or 80% deduction is reduced by
and
the 91-day period beginning 45 days
a percentage that is related to the amount
•
Qualify for the 80% deduction provided
before the ex-dividend date. When
of debt incurred to acquire the stock. See
in section 245(c)(1)(B).
counting the number of days the
section 246A. Also, see section 245(a)
Line 8. Enter dividends received from
corporation held the stock, you cannot
before making this computation for an
wholly owned foreign subsidiaries that are
count certain days during which the
additional limitation that applies to
eligible for the 100% deduction under
corporation’s risk of loss was diminished.
dividends received from foreign
section 245(b).
In general, the deduction under
section 245(b) applies to dividends paid
out of the earnings and profits of a foreign
Worksheet for Schedule C, line 23
corporation for a tax year during which:
Keep for Your Records
•
All of its outstanding stock is directly or
indirectly owned by the domestic
1. Refigure the amount from Schedule A, line 35 or Schedule B, line
corporation receiving the dividends, and
19, whichever applies, without any domestic production activities
•
All of its gross income from all sources
deduction, any adjustment under section 1059, and without any
is effectively connected with the conduct
capital loss carryback to the tax year under section 1212(a)(1) . .
of a trade or business within the United
2. Enter the sum of the amounts from line 22, column (b) (without
States.
regard to wholly owned foreign subsidiary dividends) and line 9,
Also, include on line 8 dividends from
column (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FSCs that are attributable to foreign trade
3. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
income and that are eligible for the 100%
4. Multiply line 3 by 80% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
deduction provided in section
5. Add lines 16, 19, 21, and 22 (without regard to FSC dividends),
245(c)(1)(A).
column (b), and the portion of the deduction on line 17, column
Line 9. Enter only those dividends that
(b), that is attributable to dividends received from
qualify under section 243(b) for the 100%
20%-or-more-owned corporations . . . . . . . . . . . . . . . . . . . . . .
dividends-received deduction described in
6. Enter the smaller of line 4 or line 5. If line 5 is greater than line 4,
section 243(a)(3). Corporations taking this
stop here; enter the amount from line 6 on line 23, column (b),
deduction are subject to the provisions of
and do not complete the rest of this worksheet . . . . . . . . . . . . .
section 1561.
7. Enter the total amount of dividends received from
The 100% deduction does not apply to
20%-or-more-owned corporations that are included on lines 2, 3,
affiliated group members that are joining
5, 7, and 8 (without regard to FSC dividends), column (b) . . . . .
in the filing of a consolidated return.
8. Subtract line 7 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Line 10, column (b). Enter foreign
9. Multiply line 8 by 70% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
dividends not reportable on lines 3, 6, 7,
10. Subtract line 5 from line 23, column (b) (without regard to FSC
or 8 of column (b). Include on line 10 the
dividends) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
corporation’s share of distributions from a
11. Enter the smaller of line 9 or line 10 . . . . . . . . . . . . . . . . . . . . .
section 1291 fund from Form 8621, Part
12. Dividends-received deduction after limitation (section
IV, line 10a or 10e, to the extent that the
246(b)). Add lines 6 and 11. Enter the result here and on line 23,
amounts are taxed as dividends under
column (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
section 301. See the instructions for Form
8621.
-16-
Instructions for Form 1120-PC (2011)