This column is used to report current-year tax imposed solely by reason of the receipt of a disregarded payment that is a reattribution payment. Shareholder's Pro Rata Share of Earnings of a C.F.C. The foreign corporation divides 30,255,400 Yen by 108.8593 to determine the U.S. dollar amount to enter in column (l) of Schedule E, Part I, Section 1, line 1. Reflect differences between the income tax expense (benefit) reported for book purposes and the income taxes deducted or added to E&P. The following entries should be made on the 2021 Form 5471, Schedule E, General Category, Part I, Section 1, for CFC1. Instead, complete all entry spaces in the section and attach the remaining information on additional sheets. Report on line 2 earnings invested in U.S. property (Worksheet B). See Regulations section 1.960-1(d)(2)(ii). Instead, if the foreign entity does not have an EIN, the taxpayer must enter a reference ID number that uniquely identifies the foreign entity. Also enter foreign income taxes disallowed under section 901(l), which generally applies to certain taxes paid on gain and income other than dividends if the minimum holding period is not met with respect to the underlying property, or if the corporation is obligated to make related payments with respect to positions in similar or related property. If the total of all lines 6 of all separate Schedules I-1 (Form 5471) for the CFC is a negative number, enter the amount as a positive number on line 37b. as needed. CFC2 pays withholding tax of $4 on the distribution from CFC3. Do not include an account receivable or payable balance arising in connection with the provision of services or the sale or processing of property if the amount of such balance does not, at any time during the tax year, exceed what is ordinary and necessary to carry on the trade or business. Complete a separate Schedule Q for foreign source income in each separate category and U.S. source income in each separate category. Attach a statement that includes an explanation and the dollar amount of each such adjustment, along with a total that equals the amount entered on line 1b. List the date of any reorganization of the foreign corporation that occurred during the last 4 years while any U.S. person held 10% or more in value or vote (directly or indirectly) of the corporation's stock. Enter the amount of the CFCs taxable income or loss from sources outside the United States and its possessions from the following. Schedules Q and R have been added to its numerous schedules to accommodate recent legislative changes. Form 5471 (Schedule I-1) Global Intangible Low-Taxed Income (GILTI) 2018 Form 5471 (Schedule H) Current Earnings and Profits 2018 Form 5471 (Schedule E) Income, War Profits, and Excess Profits Taxes Paid or Accrued 2018 Inst 5471: Instructions for Form 5471, Information Return of U.S. Every U.S. person described in Category 4 must file Schedule M to report the transactions that occurred during the foreign corporation's annual accounting period ending with or within the U.S. person's tax year. Section 267A disallows a deduction for certain interest or royalty paid or accrued pursuant to a hybrid arrangement, to the extent that, under the foreign tax law, there is not a corresponding income inclusion (including long-term deferral). Certain transactions for which the corporation (or a related party) has contractual protection against disallowance of the tax benefits. See section 986(a). Column (xii). See the instructions for lines 1 and 4. For purposes of this Schedule P, include in each separate category of income, foreign source and U.S. source income. These balances should equal the amounts reported as the ending balances in the prior year Schedule J. In addition, lines 1b, 1c, and 2 have been shaded in columns (a), (b), (c), and (d), and a pre-printed zero has been inserted on line 16 of columns (a), (b), and (c). Check Yes if the foreign corporation received any intangible property in a prior year or the current tax year in an exchange under section 351 or section 361 from a U.S. transferor that is required to report a section 367(d) annual income inclusion for the tax year. Check the Yes box on line 17a if there was an extraordinary reduction with respect to any controlling section 245A shareholder of the foreign corporation, as defined in Regulations section 1.245A-5(i)(2), during the tax year of the foreign corporation. For example, if the CFC is an upper-tier CFC all the stock of which is owned by the filer, then line 9 must reflect the sum of the filers hybrid deduction accounts with respect to shares of stock of the upper-tier CFC; if instead the CFC is a lower-tier CFC all the stock of which is owned by the filer through an upper-tier CFC, then line 9 must reflect the sum of the upper-tier CFCs hybrid deduction accounts with respect to shares of stock of the lower-tier CFC. These headings must comport to those used on the Schedule M (Form 5471) to which this statement is attached. See Category 5 Filers, later, for definition. To determine the appropriate code, see, Complete a separate Schedule P for each applicable separate category of income. See Regulations section 1.951A-1(d)(1). Use column (d) to report taxes suspended under section 909. Complete lines 19a and 19b only if the filer is a domestic corporation. Deductions of the CFC, including for current-year taxes, are allocated and apportioned to the income groups to determine net income (or loss) in each income group and to identify the current year foreign income taxes that relate to the income in each income group for section 960 purposes. See Regulations section 1.986(c)-1(c). Using the list of activities and codes below, determine from which activity the company derives the largest percentage of its total receipts. If the company purchases raw materials and supplies them to a subcontractor to produce the finished product, but retains title to the product, the company is considered a manufacturer and must use one of the manufacturing codes (311110-339900). Line 2g has been modified to update the references to Schedule E, due to changes made to that schedule. See the Instructions for Form 8886 for details on these and other penalties. U.S. shareholders should compute their pro rata share of the income on Form 5471, Schedule I, lines 1a through 1h, 2, and 4. Instructions for Form 5471, Information Return of U.S. If for any reason a reference ID number falls out of use (for example, the foreign corporation no longer exists due to disposition or liquidation), the reference ID number used for that foreign corporation cannot be used again for another foreign corporation for purposes of Form 5471 reporting. Property that does not produce any income. PTEP attributable to inclusions under previous section 951(a)(1)(C) and subpart F income inclusions reclassified as investments in excess passive assets. Audited separate-entity financial statements of the foreign corporation that are prepared on the basis of the generally accepted accounting principles of the jurisdiction in which the foreign corporation is organized (local-country GAAP). Income described in section 952(a)(5) (line 22). Complete Item B to indicate the category or categories that describe the person filing this return. During the tax year, did the CFC derive, in the conduct of a banking business, interest that is export financing interest? In general, in the case of a domestic corporation that is a U.S. shareholder with respect to a CFC, a dividend received by the domestic corporation from the CFC is a hybrid dividend to the extent of the sum of the U.S. shareholders hybrid deduction accounts with respect to shares of stock of the CFC. Persons With Respect to Certain Foreign Corporations On line 3, the phrase (total of lines 2a-2e) has been replaced with (combine lines 2a through 2e) to reflect the fact that negative amounts can be entered on lines 2a through 2e. Do not report the exchange rate as the number of U.S. dollars that equal one unit of foreign currency. Enter the total asset amount of derivatives on line 3 and total amount of liability on line 17 reported in accordance with ASC 815 (Derivatives and Hedging). Proc. Complete a separate Schedule E for each applicable separate category of income. See Regulations section 1.861-20(d)(3)(v)(C). The foreign tax is denominated in an inflationary currency. "As we enter Q4 FY 23, we are seeing . For these purposes, a CFCs gross tested income is its gross income less total exclusions (Schedule I1, line 4). See sections 962(a)(1) and 951A(f)(1)(A). Enter the amount of the CFCs income or loss described in section 952(b), which is generally income or loss from sources within the United States that is effectively connected to the conduct of a trade or business by the CFC in the United States and not reduced or exempt from tax pursuant to an income tax treaty with the United States. Part IAccumulated E&P of Controlled Foreign Corporation, Specific Instructions Related to Lines 1 Through 13, Section AGeneral Shareholder Information, Reference ID Number of Foreign Corporation, Instructions for Form 5471 - Additional Material, Agriculture, Forestry, Fishing and Hunting, Support Activities for Agriculture and Forestry, Beverage and Tobacco Product Manufacturing, Petroleum and Coal Products Manufacturing, Plastics and Rubber Products Manufacturing, Nonmetallic Mineral Product Manufacturing, Computer and Electronic Product Manufacturing, Electrical Equipment, Appliance, and Component Manufacturing, Furniture and Related Product Manufacturing, Wholesale Electronic Markets and Agents and Brokers, Building Material and Garden Equipment and Supplies Dealers, Sporting Goods, Hobby, Book, and Music Stores, Transit and Ground Passenger Transportation, Motion Picture and Sound Recording Industries, Activities Related to Credit Intermediation, Securities, Commodity Contracts, and Other Financial Investments and Related Activities, Insurance Carriers and Related Activities, Funds, Trusts, and Other Financial Vehicles, Professional, Scientific, and Technical Services, Accounting, Tax Preparation, Bookkeeping, and Payroll Services, Architectural, Engineering, and Related Services, Computer Systems Design and Related Services, Other Professional, Scientific, and Technical Services, Management of Companies (Holding Companies), Administrative and Support and Waste Management and Remediation Services, Waste Management and Remediation Services, Performing Arts, Spectator Sports, and Related Industries, Museums, Historical Sites, and Similar Institutions, Amusement, Gambling, and Recreation Industries, Religious, Grantmaking, Civic, Professional, and Similar Organizations, Unrelated section 958(a) U.S. shareholder. For a corporate U.S. shareholder, include the gain or (loss) as Other income on Form 1120, line 10, or on the comparable line of other corporate tax returns. Certain filers may be able to use alternative information (as defined in section 3.01 of Rev. The U.S. shareholders U.S. dollar basis is used by the U.S. shareholder to determine the amount of foreign currency gain or loss on the PTEP that the U.S. shareholder is required to recognize under section 986(c). For purposes of Category 1 and Category 5 filers, a related constructive U.S. shareholder is a U.S. shareholder with respect to a foreign-controlled corporation who: Does not own, within the meaning of section 958(a), stock of the foreign-controlled corporation; and. Check the Yes box if during the tax year the reporting corporation had any loans to or from the related party to which the safe haven rate rules of Regulations section 1.482-2(a)(2)(iii)(B) are applicable, and for which the reporting corporation used a rate of interest within the safe-haven range of Regulations section 1.482-2(a)(2)(iii)(B)(1) (100% to 130% of the AFR for the relevant term). "field, "67.Translate the amount on line 66 from functional currency to U.S. dollars at the average exchange rate. If there is an income tax expense amount on line 21a or 21b, subtract that amount from the line 19 net income or (loss) amount in arriving at line 22 current year net income or (loss) per the books. Certain transactions resulting in a loss of at least $10 million in any single year or $20 million in any combination of years. The above rules apply with respect to amounts received for services under a particular contract only if at some time during the tax year 25% or more in value of the outstanding stock of the corporation is owned, directly or indirectly, by or for the individual who has performed, is to perform, or may be designated (by name or by description) as the one to perform, such services. For amounts included in Other Comprehensive Income (OCI), see the instructions for Lines 23 and 24. As such, the exchange rate must be reported as the units of foreign currency that equal one U.S. dollar, rounded to at least four places. As such, the exchange rate must be reported as the units of foreign currency that equal one U.S. dollar, rounded to at least four places. 2019-40 for definitions of terms. Sum of the amounts from lines 13g, 14d, 15d, 16d, 18d, and 19d. When translating amounts from functional currency to U.S. dollars, you must use the method specified in these instructions. Because columns (b) and (c) are new this year, the prior year ending balances in columns (b) and (c) will not carry forward to new columns (b) and (c). This example can also be found in the Schedule Q, Form 5471 instructions. If such property was used in the production of tested income and income that is not tested income (that is, dual-use property), the property is treated as specified tangible property in the same proportion that the amount of tested income determined before allocable deductions (that is, line 4) produced with respect to the property bears to the total amount of gross income produced with respect to the property. If this is the case, you do not have to also report these assets on Form 8938, Statement of Specified Foreign Financial Assets. A domestic corporation is deemed to pay foreign income taxes with respect to distributions of previously taxed E&P. Do not include in column (e)(vi) E&P reported in column (e)(vii). If non-cash distributions were made, attach a statement and show both the tax bases and fair market values. The total of all amounts entered in Schedule R (Form 5471), column (d) must equal the amount on line 9, column (f) of the Schedule J (Form 5471) that is filed with code TOTAL entered on line a of that Schedule J. Check the box at the top of Part I if the person filing Form 5471 does not have all U.S. shareholders information necessary to complete any one of the previously taxed E&P amounts required to be included in column (e). Check the box if taxes were paid on U.S. source income. Also, new lines 14 and 29 were added for reporting other amounts received (line 14) and other amounts paid (line 29). This schedule is also used to report the PTEP of the U.S. shareholder of a specified foreign corporation ("SFC") that is only treated as a CFC for limited purposes under Internal Revenue Code Section 965 (e) (2). Enter the payor entitys EIN or reference ID number in column (b). A separate Schedule Q is required for foreign oil and gas extraction income (FOGEI) and foreign oil related income (FORI). Subtract line 5 from line 4 and enter the result on line 6. Regulations sections 1.6038-2(h) and 1.6046-1(g) require that certain amounts be reported in U.S. dollars and/or in the foreign corporation's functional currency. However, in the case of a consolidated return, enter the name of the U.S. parent in the field for Name of person filing Form 5471.. Enter the CFCs qualified interest expense, as defined in Regulations section 1.951A4(b)(1)(iii). There is an election in effect under section 986(a)(1)(D) to translate foreign taxes using the exchange rate in effect on the date of payment. 374, for rules for computing section 986(c) gain or (loss) and Regulations section 1.986(c)-1(a) and (b) for rules for computing section 986(c) gain or (loss) recognized with respect to distributions of PTEP within the reclassified section 965(a) PTEP group and the section 965(a) PTEP group. Each single item of foreign base company income (as defined in Regulations section 1.954-1(c)(1)(iii)) is a separate subpart F income group. The amounts entered on line 5a may be negative or positive. Changes to the Instructions for Form 5471 and separate schedules. (Add lines 1a through 1d. Use line 4 to report the information required in columns (i) through (xiv) that is in a section 904 category but that is not of a type that is included in one of the subpart F income groups or a tested income group and is therefore assigned to the residual income group. See Regulations section 1.6046-1(f)(3) for exceptions. 2019-40. Category 2: A person who owns at least 10% or more of the foreign corporation. "field, "42.Section 954(c) subpart F Foreign Base Company Services Income subtotal. Proc. Line 4. For details, see section 108(i) and Rev. For purposes of this Schedule J, include in each separate category of income, foreign source and U.S. source income. See section 959(c). The amount reported on line 8 will not necessarily equal the tested income reported on Schedule I-1. See specific instructions for Item FAlternative Information Under Rev.