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Investment type income. (Enter on lines

Are received from

the amount of dividends that qualify for

8 through 12 of Schedule F.)

less-than-20%-owned domestic

the deduction.

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Income from property that is

corporations subject to income tax and

Line 3, Columns (b) and (c)

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subsidized, deemed in short supply, or

Qualify for the 70% deduction under

Dividends received on debt-financed

destined for use in the United States.

section 243(a)(1).

stock acquired after July 18, 1984, are not

(Enter on lines 13 and 14 of Schedule F.)

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Also include on line 1 dividends

entitled to the full 70% or 80%

Amounts from transactions that did not

(except those received on debt-financed

dividends-received deduction. The 70%

meet the foreign economic process

stock acquired after July 18, 1984) from a

or 80% deduction is reduced by a

requirements. (Enter on line 15 of

regulated investment company (RIC). The

percentage that is related to the amount

Schedule F.)

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amount of dividends eligible for the

of debt incurred to acquire the stock. See

Other nonforeign trade income. (Enter

dividends-received deduction under

section 246A. Also, see section 245(a)

on line 16 of Schedule F.)

section 243 is limited by section 854(b).

before making this computation for an

For more details, see sections 924(f)

The FSC should receive a notice from the

additional limitation that applies to

and 927(a)(2) and (3).

RIC specifying the amount of dividends

dividends received from foreign

that qualify for the deduction.

corporations. Attach a schedule to Form

Line 9. Complete the worksheet below to

1120-FSC showing how the amount on

figure the total dividends to report on line

Report so-called dividends or earnings

line 3, column (c), was figured.

9. Attach the completed worksheet to

received from mutual savings banks, etc.,

Form 1120-FSC.

Line 4, Column (a)

as interest. Do not treat them as

Line 18. Enter the deductions allocated

dividends.

Enter dividends received on the preferred

or apportioned to line 17 income. Attach

stock of a less-than-20%-owned public

to Form 1120-FSC a schedule listing

Line 2, Column (a)

utility that is subject to income tax and is

each type of deduction. Show deductions

Enter dividends (except those received on

allowed the deduction provided in section

related to cost of goods sold separately.

debt-financed stock acquired after July

247 for dividends paid.

See the instructions for Schedule A on

18, 1984) that are received from

Line 5, Column (a)

page 8 before completing this line.

20%-or-more-owned domestic

Enter dividends received on preferred

corporations subject to income tax and

Passive activity limitations. Section

stock of a 20%-or-more-owned public

that are subject to the 80% deduction

469 generally limits the deduction of

utility that is subject to income tax and is

under section 243(c).

passive activity losses for closely held

allowed the deduction provided in section

FSCs and FSCs that are personal service

247 for dividends paid.

Line 3, Column (a)

corporations. See section 469 and the

Instructions for Form 8810 for details.

Enter dividends that are:

Line 6, Column (a)

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Received on debt-financed stock

Enter the U.S.-source portion of dividends

Instructions for Dividends

acquired after July 18, 1984, from

that:

and Dividends-Received

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domestic and foreign corporations subject

Are received from

Deduction Worksheet

to income tax that would otherwise be

less-than-20%-owned foreign

subject to the dividends-received

For purposes of the 20% ownership test

corporations and

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deduction under section 243(a)(1),

on lines 1 through 7, the percentage of

Qualify for the 70% deduction under

243(c), or 245(a). Generally,

stock owned by the FSC is based on

section 245(a). To qualify for the 70%

debt-financed stock is stock that the FSC

voting power and the value of the stock.

deduction, the FSC must own at least

acquired by incurring a debt (e.g., it

Preferred stock described in section

10% of the stock of the foreign

borrowed money to buy the stock).

1504(a)(4) is not taken into account.

corporation by vote and value.

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Received from a RIC on debt-financed

Line 1, Column (a)

Line 7, Column (a)

stock. The amount of dividends eligible

Enter dividends (except those received on

for the dividends-received deduction is

Enter the U.S.-source portion of dividends

debt-financed stock acquired after July

limited by section 854(b). The FSC should

that are received from

18, 1984 — see section 246A) that:

receive a notice from the RIC specifying

20%-or-more-owned foreign corporations

Dividends and Dividends-Received Deduction Worksheet

(a) Dividends

(b) %

received

deduction: (a)

(b)

(See instructions that begin above)

Dividends from less-than-20%-owned domestic corporations that are subject to

the 70% deduction (other than debt-financed stock)

Dividends from 20%-or-more-owned domestic corporations that are subject to

the 80% deduction (other than debt-financed stock)

See Inst.

Dividends on debt-financed stock of domestic and foreign corporations (section 246A)

Dividends on certain preferred stock of less-than-20%-owned public utilities

Dividends on certain preferred stock of 20%-or-more-owned public utilities

Dividends from less-than-20%-owned foreign corporations that are subject to

the 70% deduction

Dividends from 20%-or-more-owned foreign corporations that are subject to the

80% deduction

Total dividends-received deduction. Add lines 1 through 7. See instructions for

limitation. Enter here and on line 19b, Schedule B

Other dividends from foreign corporations not included on lines 3, 6, or 7

Foreign dividend gross up (section 78)

Other dividends

Total dividends. Add lines 1 through 11. Enter here and on line 9, Schedule F

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Instructions For Form 1120-Fsc - U.s. Income Tax Return Of A Foreign Sales Corporation - 2003 Page 11

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