Instructions For Form 1118 - Foreign Tax Credit - Corporations

1.861-9T(g)(2) for the definition of

deductible under section 163 (including

the amount on line 3b, column (a)(ii) by

average for these purposes.

original issue discount), and interest

the amount on line 2, column (a)(ii); and

equivalents. See Temporary Regulations

(b) multiply the result by the amount on

Line 1b. Enter the assets included on

section 1.861-9T for the definition of

line 2, column (b)(iv).

line 1a that are characterized as excess

interest equivalents and a list of the

related party indebtedness. See

sections that disallow or suspend interest

Temporary Regulations section

Column (c)

deductions or require the capitalization of

1.861-10T(e) for an exception to the

Complete this column to apportion all

interest deductions.

general rule of fungibility for excess

other deductions not definitely allocable

Line 1b. Enter the interest deductions

related party indebtedness.

(other than interest deductions and R&D

associated with the assets on line 1b of

Line 1c. Enter all other assets that

deductions). See Regulations sections

columns (a)(i) and (a)(ii), respectively,

attract specifically allocable interest

1.861-8 and 1.861-14 and Temporary

that attract specifically allocable interest

deductions. See Temporary Regulations

Regulations sections 1.861-8T and

deductions under Temporary Regulations

section 1.861-10T for other exceptions to

1.861-14T.

section 1.861-10T(e).

the general rule of fungibility (such as

Note. These interest deductions will be

qualified nonrecourse indebtedness and

Line 1a. Enter the total other deductions.

divided among the statutory groupings

integrated financial transactions).

Examples include: stewardship expenses;

and will appear as a definitely allocable

legal and accounting expenses; and other

Line 1d. Enter the total of the exempt

deduction in Schedule A, column 9(d).

expenses related to certain supportive

assets and assets without directly

Line 1c. Enter the interest deductions

functions such as overhead, general and

identifiable yield that are to be excluded

associated with the assets on line 1c of

administrative, advertising, and

from the interest apportionment formula

columns (a)(i) and (a)(ii), respectively,

marketing. Deductions for charitable

(Temporary Regulations sections

that attract specifically allocable interest

contributions made on or after July 28,

1.861-8T(d)(2) and 1.861-9T(g)(3)).

deductions.

2004, generally are definitely related and

Lines 3a through 3d. The assets on line

Lines 3a through 3d. To figure the

allocable to all gross income and

2 are characterized as assets in one of

apportioned solely to domestic source

amount of interest deductions to

the statutory groupings or as belonging to

income.

apportion to each statutory grouping,

the residual grouping. Enter the value of

divide the assets apportioned to the

the assets in each of the statutory

grouping by the total assets apportioned

Lines 3a through 3d. Enter the

groupings on line 3a through 3d. See

and multiply the result by the interest

amounts apportioned to each statutory

Temporary Regulations sections

deductions to be apportioned.

grouping.

1.861-9T(g)(3), 1.861-12T(g)(2), and

Example 1. To figure the amount to

1.861-12T(h)(2) for the rules for

enter on line 3a, column (b)(iii): (a) divide

characterizing the assets.

the amount entered on line 3a, column

Schedules I, J, and K

Columns (b)(iii) and (b)(iv)

(a)(i), by the amount on line 2, column

(a)(i); and (b) multiply the result by the

Line 1a. Enter the total interest

See the separate instructions for

amount on line 2, column (b)(iii).

deductions for the members of the

Schedule I, Schedule J, and Schedule K

Example 2. To figure the amount to

corporation’s affiliated group. These

to see if the corporation must file these

include any expense that is currently

enter on line 3b, column (b)(iv): (a) divide

schedules.

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United

States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to

figure and collect the right amount of tax.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the

form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their

contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are

confidential, as required by section 6103.

The time needed to complete and file this form and related schedules will vary depending on individual circumstances. The

estimated average times are:

Learning about the law

Preparing and sending

Form

Recordkeeping

or the form

the form to the IRS

1118

71 hr., 16 min.

17 hr., 44 min.

20 hr., 53 min.

Sch. I (Form 1118)

9 hr., 19 min.

1 hr.

1 hr., 11 min.

Sch. J (Form 1118)

22 hr., 43 min.

1 hr., 23 min.

1 hr., 49 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form and related

schedules simpler, we would be happy to hear from you. See the instructions for the tax return with which this form is filed.

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Instructions For Form 1118 - Foreign Tax Credit - Corporations - 2011 Page 10

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