form 5471 schedule q example
These instructions clarify that this relief is extended to similarly situated Category 1 filers. Form 5471 (Schedule E) Income, War Profits, and Excess Profits Taxes Paid or Accrued. In addition to the separate category codes referred to above, if you have more than one of the categories of income referred to above, you must complete and file a separate Schedule Q using code TOTAL that aggregates all amounts listed for each line and column in all other Schedules Q. field, "33.Enter the sum of the portion of lines 16e, 18e, 19e, 20, 21, and 22 that is U.S. source income effectively connected with a U.S. trade or business (section 952(b))" field, "34.Exclusions under section 959(b) that apply to line 16e, 18e, 19e, 20, 21, and 22 amounts" field, "35.Other subpart F income. The amended Form 5471 should include an attachment with a schedule that looks like the current version of Schedule E, Part I, Section 1, with the following entries for the general category of income. A U.S. shareholder who is a Category 1 filer (defined previously) and who is an unrelated section 958(a) U.S. shareholder with respect to a foreign-controlled corporation (defined below) may complete Form 5471 for that foreign-controlled corporation and complete only the information required of a Category 1b filer. If the shareholder acquired the stock in more than one transaction, use a separate line to report each transaction. For example: Enter the deductions (including taxes) properly allocable to the amount on line 4 (or to which such deductions would be allocable if there were such gross income). The additional penalty is limited to a maximum of $50,000. Line 9. See section 989(b). Enter the total amount of the lower-tier foreign corporations PTEP group taxes with respect to the PTEP group within the annual PTEP account identified in column (d) and column (e). The reference ID number that is entered in Item 1b(2) must be alphanumeric (defined later) and no special characters or spaces are permitted. Report the opening balance, current year additions and subtractions, and the closing balance in the foreign corporation's E&P described in section 959(c)(3). For the tax year, enter the total amount of IDCs for the CSA on line 7a. Report the direct shareholders of the foreign corporation. These codes are available at www.iso.org/iso-4217-currency-codes.html or www.currency-iso.org/en/home/tables/table-a1.html. These changes to columns (a) through (d) take into account that post-TCJA, taxes paid or accrued by a CFC are only relevant for foreign tax credit purposes if they are current year taxes. This line 14 was deleted to comport with the clarification in proposed Regulations section 1.367(b)-7(g) concerning hovering deficits (REG10165720 (November 12, 2020)). However, the foreign corporations reference ID number should also be entered on Form 8858 if the foreign corporation is listed as a tax owner of a foreign disregarded entity (FDE) or foreign branch (FB) on Form 8858. C3.ai, Inc. ("C3 AI," "C3," or the "Company") (NYSE: AI), the Enterprise AI application software company, today announced financial results for its fiscal third quarter ended January 31, 2023. Instead, include the amounts in the total for line 4. Schedules E and E-1 are required for an. 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. Also use this schedule to report the E&P of specified foreign corporations that are only treated as CFCs for limited purposes under section 965(e)(2). Enter the amount of the dividends received by the shareholder from the foreign corporation that is an extraordinary reduction amount. Certain transactions for which the corporation (or a related party) has contractual protection against disallowance of the tax benefits. If the sum of foreign base company income (determined without regard to section 954(b)(5)) and gross insurance income for the tax year exceeds 70% of gross income for income tax purposes, the entire gross income for the tax year must (subject to the high-tax exception described below, the section 952(b) exclusion, and the deductions to be taken into account under section 954(b)(5)) be treated as foreign base company income or insurance income, whichever is appropriate. A U.S. person has control of a foreign corporation if, at any time during that person's tax year, it owns stock possessing: More than 50% of the total combined voting power of all classes of stock of the foreign corporation entitled to vote, or. 2, 2023-- C3.ai, Inc. ("C3 AI," "C3," or the "Company") (NYSE: AI), the Enterprise AI application software company, today announced financial results for its fiscal third quarter ended January 31, 2023 . Complete a separate Schedule Q for each applicable separate category of income. Column (a) of the attached statement should provide a description of the type of other amount paid during the annual accounting period. See Unrelated section 958(a) U.S. shareholder, later, for instructions pertaining to when Form 5471 may be completed as a Category 1b filer. Domestic Corporation, a U.S. shareholder, wholly owns the only class of stock of CFC1, a foreign corporation. 12-2022) Page: 4 (viii) Current Year Tax on Reattributed Income From Disregarded Payments (ix) Current Year Tax on All Other Disregarded Payments (x) Other Current Year Taxes (xi) Net Income (column (ii) less columns (iii) through (x)) (xii) Foreign Taxes for Which Credit Allowed Rev. Column (e)(viii) is PTEP attributable to section 951A inclusions (section 959(c)(2) amounts). The purchase represented 10% ownership of the foreign corporation. "field, "46.Section 954(c) subpart F Foreign Personal Holding Company Income subtotal. The total value of the stock of the corporation. 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. Step 2: Now, you can start filling out the form step by step. QBAI is the average of the CFC's aggregate adjusted bases, as of the close of each quarter of its taxable year, in specified tangible property used in its trade or business in the production of tested income, and for which a deduction is allowable under section 167. See the instructions for Form 8858, line 3c(2), for more information. See Regulations section 1.245A(e)-1(d) for additional information about hybrid deduction accounts. This factor is a fraction determined on Schedule A (Form 5713). See section 962(b) and Regulations section 1.962-2(b). 851, available at IRS.gov/irb/2006-45_IRB#2006-45, as modified by Rev. Schedule Q (Form 5471), CFC Income by CFC Income Groups, is used to report the CFC's income in each CFC income group to the U.S. shareholders of the CFC so that the U.S. shareholders can use it to properly complete Form 1118 (Foreign Tax Credit - Corporations) to compute the high-tax exception, high-tax kickout, and Code Sec. Enter the amount of any dividend income received by the CFC from a related person as defined in section 954(d)(3). If there is a difference between last years ending balance on Schedule J and the amount that should be last years ending balance, taking into account modifications in Schedule J, include the difference on line 1b and attach an explanation for the difference. However, if a CFCs cost of goods sold exceeds its gross income, a negative amount is permitted on line 1. Report asset values for each QBU or tested unit as well as the aggregate amount of assets in each group. under lines 1a through 1i) or tested income under the GILTI high-tax exclusion (those amounts are reported on lines 3(1), 3(2), etc.). Proc. (i) Country Code (ii) If so, did the foreign corporation derive any item of income, gain, deduction, or loss (other than any item described in section 954(c)(1)(A), (E), or (G)) from any transaction entered into in the ordinary course of its trade or business as a regular dealer? Penalties may also apply under section 6707A if the U.S. shareholder fails to file Form 8886 with its income tax return, fails to provide a copy of Form 8886 to the Office of Tax Shelter Analysis (OTSA), or files a form that fails to include all the information required (or includes incorrect information). As a result of the changes indicated in the previous paragraph, a preprinted zero has been inserted on line 1a of columns (a), (b), and (c) of Schedule E-1, given that only current year taxes are relevant. 1221. Line 22. Report actual distributions as negative numbers. No changes have been made to this schedule. See section 951A(c)(2)(A)(ii) and Regulations section 1.951A-2(c)(3). See the instructions for Schedule C, Line 21, earlier. All amounts should be reported in U.S. dollars. The different rules are applicable for individuals, as well as corporations, estates, and trusts. Enter the total of any illegal bribes, kickbacks, or other payments (within the meaning of section 162(c)) paid by or on behalf of the corporation, directly or indirectly, to an official, employee, or agent of a government. Related person insurance income is any insurance income (within the meaning of section 953(a)) attributable to a policy of insurance or reinsurance for which the person insured (directly or indirectly) is a U.S. shareholder (as defined in section 953(c)(1)(A)) in a CFC (as defined in section 953(c)(1)(B)), or a related person (as defined in section 953(c)(6)) to such a shareholder. Exception for certain income subject to high foreign taxes. No statement is required to be attached to tax returns for persons claiming the constructive ownership exception. Warehouse Clubs and Supercenters, All Other Miscellaneous Store Retailers (including tobacco, candle, & trophy shops), Fuel Dealers (including Heating Oil and Liquefied Petroleum), Other Direct Selling Establishments (including door-to-door retailing, frozen food plan providers, party plan merchandisers, & coffee-break service providers), Other Transit & Ground Passenger Transportation, Support Activities for Air Transportation, Support Activities for Rail Transportation, Support Activities for Water Transportation, Other Support Activities for Road Transportation, Other Support Activities for Transportation, Warehousing & Storage (except lessors of mini-warehouses & self-storage units), Motion Picture & Video Industries (except video rental), Telecommunications (including paging, cellular, satellite, cable & other program distribution, resellers, & other telecommunications, and Internet service providers), Data Processing, Hosting, & Related Services, Other Information Services (including news syndicates & libraries, Internet publishing & broadcasting), Real Estate Credit (including mortgage bankers & originators), All Other Nondepository Credit Intermediation, Activities Related to Credit Intermediation (including loan brokers, check clearing, & money transmitting), Other Financial Investment Activities (including portfolio management & investment advice), Direct Life, Health, & Medical Insurance & Reinsurance Carriers, Direct Insurance & Reinsurance (except Life, Health & Medical) Carriers, Other Insurance Related Activities (including third-party administration of insurance and pension funds), Open-End Investment Funds (Form 1120-RIC, U.S. Income Tax Return for Regulated Investment Companies), Other Financial Vehicles (including mortgage REITs and closed-end investment funds)Offices of Bank Holding Companies and Offices of Other Holding Companies are located under, Lessors of Residential Buildings & Dwellings (including equity REITs), Lessors of Nonresidential Buildings (except Mini-warehouses) (including equity REITs), Lessors of Mini-warehouses & Self-Storage Units (including equity REITs), Lessors of Other Real Estate Property (including equity REITs), Commercial & Industrial Machinery & Equipment Rental & Leasing, Lessors of Nonfinancial Intangible Assets (except copyrighted works), Surveying & Mapping (except Geophysical) Services, Specialized Design Services (including interior, industrial, graphic, & fashion design), Management, Scientific, & Technical Consulting Services, Scientific Research & Development Services, Marketing Research & Public Opinion Polling, All Other Professional, Scientific, & Technical Services, Business Service Centers (including private mail centers & copy shops), Other Business Support Services (including repossession services, court reporting, & stenotype services), Travel Arrangement & Reservation Services, Other Support Services (including packaging & labeling services, & convention & trade show organizers), Educational Services (including schools, colleges, & universities), Offices of Physicians (except mental health specialists), Offices of Physicians, Mental Health Specialists, Offices of Mental Health Practitioners (except Physicians), Offices of Physical, Occupational & Speech Therapists, & Audiologists, Offices of All Other Miscellaneous Health Practitioners, Outpatient Mental Health & Substance Abuse Centers, Freestanding Ambulatory Surgical & Emergency Centers, Other Ambulatory Health Care Services (including ambulance services & blood & organ banks), Community Food & Housing, & Emergency & Other Relief Services, Spectator Sports (including sports clubs & racetracks), Promoters of Performing Arts, Sports, & Similar Events, Agents & Managers for Artists, Athletes, Entertainers, & Other Public Figures, Independent Artists, Writers, & Performers, Museums, Historical Sites, & Similar Institutions, Other Amusement & Recreation Industries (including golf courses, skiing facilities, marinas, fitness centers, & bowling centers), RV (Recreational Vehicle) Parks & Recreational Camps, Rooming & Boarding Houses, Dormitories & Workers Camps, Special Food Services (including food service contractors & caterers), Automotive Mechanical & Electrical Repair & Maintenance, Automotive Body, Paint, Interior, & Glass Repair, Other Automotive Repair & Maintenance (including oil change & lubrication shops & car washes), Electronic & Precision Equipment Repair & Maintenance, Commercial & Industrial Machinery & Equipment (except Automotive & Electronic) Repair & Maintenance, Home & Garden Equipment & Appliance Repair & Maintenance, Other Personal & Household Goods Repair & Maintenance, Other Personal Care Services (including diet & weight reducing centers), Drycleaning & Laundry Services (except Coin-Operated), Religious, Grantmaking, Civic, Professional, & Similar Organizations (including condominium and homeowners associations), Electronic Federal Tax Payment System (EFTPS), Instructions for Form 5471 - Introductory Material, Filing Requirements for Categories of Filers, Computer-Generated Form 5471 and Schedules, Item EExcepted Specified Foreign Financial Assets, Item FAlternative Information Under Rev. Such differences include, for example, deferred income tax expenses, uncertain tax positions, intraperiod allocations, adjustments made after closing the financial statements (post-closing adjustments) and not reflected in income tax expense (benefit), and the adjustment for a foreign tax redetermination that required a redetermination of the U.S. tax liability. When translating amounts from functional currency to U.S. dollars, you must use the method specified in these instructions. A corporate distribution to a shareholder is generally treated as a distribution of earnings and profits. For more information, see section 6046 and Regulations section 1.6046-1. 2019-40 for more details. Include corporate information such as the dormant corporation's annual accounting period (below the title of the form) and Items 1a, 1b, 1c, and 1d. Any transaction identified by the IRS by notice, regulation, or other published guidance as a transaction of interest. See Notice 2009-55, 2009-31 I.R.B. Any tested loss under section 951A(c)(2)(B)(ii). However, see the instructions for Schedule J, later, for changes that affect how the schedule is completed. The transferor and transferee in certain section 351 transactions may make a joint election under section 362(e)(2)(C) to limit the transferor's basis in the stock received instead of the transferee's basis in the transferred property. Schedule I-1 is now completed once. Check the box if taxes were paid on U.S. source income. "field, "60.Enter the smaller of line 58 or line 59. PTEP attributable to section 1248 amounts from the gain on the sale of a foreign corporation stock by a CFC. The schedules of Form 5471 are used to satisfy the reporting requirements of the Internal Revenue Code. The panel . Specified tangible property means any tangible property used in the production of tested income. On pages 2 and 3, Schedule E-1 now requests all amounts to be entered in U.S. dollars. Subtract line 15b from line 15a" field, "15d.Net foreign base company sales income excluded under high-tax exception" field, "15e.Subtract line 15d from line 15c" field, "16.Adjusted net foreign base company services income:", "16b.Expenses allocated and apportioned to line 4 under section 954(b)(5)" field, "16c.Net foreign base company services income. The corporate U.S. shareholder should include the line 5a amount on Form 1120, Schedule C, line 13, column (a), or the comparable line of other corporate income tax returns. See Specific instructions related to lines 1 through 13, below, for additional information pertaining to reporting amounts in column (d). See Unrelated section 958(a) U.S. shareholder, below, for instructions pertaining to when Form 5471 may be completed as a Category 5b filer. For more information, see the Instructions for Form 8938, generally, and in particular, Duplicative Reporting and the specific instructions for Part IV, Excepted Specified Foreign Financial Assets. If the filer is required to complete Schedule J (Form 5471) with respect to more than one category of income, the total of all amounts entered in Schedule R (Form 5471), column (d) should equal the amount entered 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. See Regulations section 1.960-1. 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. Enter foreign currency translation adjustments before the income tax expense (benefit) is allocated. Any person who fails to file or report all of the information requested by section 6046 is subject to a $10,000 penalty for each such failure for each reportable transaction. (a) Name of shareholder for whom acquisition information is reported. On pages 2 and 3, Schedule E-1 combines former lines 9 and 10 on one line 9 to report both taxes deemed paid with respect to inclusions under sections 951(a)(1) and 951A and clarifies that amounts may only be reported in columns (a) and (b) with respect to line 9. For each Category 4, 5a, or 5b filer that is required to file a Schedule I, send a copy of their separate Schedule I to them to assist them in completing their tax return. Taxes paid, accrued, or deemed paid with respect to section 951A PTEP that is in the section 951A category are reported on the Schedule E completed for the general category. See Regulations section 1.385-3(g)(3) and 1.385-3(b)(3)(viii). You are generally required to file The foreign corporation is a related party to the U.S. filer within the meaning of section 59A(g); and. See section 989(b). Attach a statement detailing the nature and amount of any adjustments not accounted for in the E&P determined before reduction for distributions and inclusions (that is, adjustments other than those listed on lines 2a through 5b). Use Schedule E-1 to report the cumulative balance of foreign income taxes paid or accrued by a CFC by separate category of income. CFC1, in turn, wholly owns the only class of stock of CFC2, a foreign corporation. See Regulations section 1.245A-5(e)(3)(i) for further guidance regarding the election to close the tax year. 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. In general, tested income will be in a single tested income group within the general category. See sections 986(a) and 905(c). A negative $4 will be recorded on line 11, column (e)(x), and a positive $4 will be recorded on line 11, column (e)(iii). Therefore, the revised tax liability is $2. box, show the box number instead. If PTEP were distributed, include on Form 5471, Schedule I, line 6, any foreign currency gain or loss on the distribution that is recognized under section 986(c). See also section 1293(f) for inclusions with respect to a passive foreign investment company. Column (ix). To determine the appropriate code, see, If code 901j is entered on line a, enter on line b the country code for the sanctioned country using the two-letter codes (from the list at, If one of the RBT codes is entered on line a, enter on line c the country code for the treaty country using the two-letter codes (from the list at, Except for columns (a), (b), and (c), which are new this year, if the balance on line 18 of prior year Schedule E-1 was adjusted after the filing of the original prior year Form 5471, such adjustments should be reflected on line 1b. Instructions for Form 5471, Information Return of U.S. U.S. property is measured on a quarterly average basis. Is related (using principles of section 954(d)(3)) to the foreign-controlled corporation. Persons With Respect to Certain Foreign Corporations. If the foreign corporation uses the DASTM under Regulations section 1.985-3, the functional currency column should reflect local hyperinflationary currency amounts computed in accordance with U.S. GAAP. If possible, include a reasonable present value estimate for any PCTs that are priced using a method that does not involve the calculation of a present value. 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. Consistent with the reporting requirement on Form 1118, enter the two-letter code (from the list at. field, "37.Current E&P limitation computation:" field, "37b.Tested loss (enter as a positive numbersee instructions)"field, "37c.Total of line 37a and line 37b"field, "38.Enter the smaller of line 36 or line 37c" field, "39.If the amount on line 37c is less than the amount on line 36, allocate the subpart F income remaining (after having been limited) to lines 40, 41, 42, and 43 below in the manner prescribed by Regulations section 1.952-1(e). 1167 is available at IRS.gov/Pub. List these additional adjustments on a separate statement. 2019-40). Columns (e)(i) and (e)(ii) are PTEP originally attributable to inclusions under section 965(a) and E&P treated as PTEP under section 965(b)(4)(A), respectively, and reclassified as investments in U.S. property (section 959(c)(1)(A) amounts). For purposes of the preceding sentence, if a CFC is a shareholder or partner of a corporation or partnership, the CFC is treated as owning directly its proportionate share of any such capital or profits interest held directly or indirectly by such corporation or partnership. See Corrections to Form 5471, earlier. Enter the PTEP distribution with respect to the PTEP group within the annual PTEP account identified in column (d) and column (e) in the functional currency of the distributing lower-tier foreign corporation. Report such amounts as negative numbers. Foreign taxes for which credit is allowed (U.S. dollars). The shareholder does not own a direct interest in the foreign corporation. A CFC that would not be a CFC if the determination were made without applying subparagraphs (A), (B), and (C) of section 318(a)(3) so as to consider a U.S. person as owning stock that is owned by a foreign person (for purposes of Category 5 filers). Unrelated section 958(a) U.S. shareholder. Form 8886, Reportable Transaction Disclosure Statement, must be filed for each tax year indicated in Regulations section 1.6011-4(c)(3)(i)(G). Complete a separate Schedule Q for foreign source income in each separate category and U.S. source income in each separate category. Provide the total amount (as measured by issue price in the case of an instrument treated as stock upon issuance, or adjusted issue price in the case of an instrument deemed exchanged for stock) of the debt instrument issuances addressed by line 19a. If an amount reported on line 3(1), 3(2), etc., is excluded from gross income under the GILTI high-tax exclusion, do not include it in the total amount for line 3. If previously taxed E&P (PTEP) were distributed, enter the amount of foreign currency gain or (loss) recognized on the distribution, computed under section 986(c). The U.S. filer made or accrued a base erosion payment to, or has a base erosion tax benefit with respect to, the foreign corporation. "field, "47.Shareholders pro rata share of line 41. Earnings and profits described in section 959(c)(1)(A) with respect to the U.S. shareholder after reductions (if any) for current year distributions that affect the U.S. shareholders section 959(c)(1) E&P account" field, "6. Form 5471, Information Return of U.S. Corporation A owns 51% of the voting stock in Corporation B. Do not include foreign income taxes that are disallowed and are reported on Schedule E, Part III. The name, address, and identifying number of the taxpayer on the return with which the information was or will be filed. Use the December 2020 revision of the schedule. The form and schedules are used to satisfy the reporting requirements of sections 6038 and 6046, and the related regulations. If the corporation does not itself incur intangible development costs, then it should only report cost sharing transaction payments made on line 20. Such taxes may include, but are not limited to, certain taxes on the purchase or sale of oil and gas (section 901(f)), certain taxes used to provide subsidies (section 901(i)), and taxes for which no credit is allowed because of the boycott provisions of section 908. The line 4 result can be positive or negative. Separate-entity records used by the foreign corporation for internal management controls or regulatory or other similar purposes. In other words, is line 36 of Worksheet A greater than line 37c? E&P takes into account foreign income taxes paid or accrued by the foreign corporation. For line 4(1), $300 of gross income is reported in column (ii) and $105 of foreign tax is reported in column (x). A separate Schedule P should not be completed for the section 951A category. The fourth quarter of the tax year" field, "2. Because a CFC cannot earn section 951A category income or foreign branch category income at the CFC level, there is no tested income group within either section 904 category. If the failure continues 90 days or more after the date the IRS mails notice of the failure to the U.S. person, an additional 5% reduction is made for each 3-month period, or fraction thereof, during which the failure continues after the 90-day period has expired. For more information, see sections 245A, 951, 952, and 964(e). Subtract line 15 from line 14." For tax years beginning after December 31, 2004, in the case of any sale by a CFC of an interest in a partnership with respect to which the CFC is a 25% owner (defined below), such CFC is treated for purposes of computing its foreign personal holding company income as selling the proportionate share of the assets of the partnership attributable to such interest. A foreign corporation may qualify as an expatriated foreign subsidiary under Regulations section 1.7874-12(a)(9) if such foreign corporation is a CFC with respect to which an expatriated entity, as defined in Regulations section 1.7874-12(a)(8) is a U.S. shareholder. 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. A U.S. person described in Category 1, 3, 4, or 5 (shareholder) does not have to file Form 5471 if all of the following conditions are met. A U.S. person has acquired stock in a foreign corporation when that person has an unqualified right to receive the stock, even though the stock is not actually issued. Enter the sum of the amounts reported on lines 4(1), 4(2), etc., plus the sum of amounts excluded from subpart F income under the subpart F high-tax exception and tested income under the GILTI high-tax exclusion, in the appropriate column on line 4. (b) During the tax year, did the CFC derive income (either directly or through a branch or similar establishment, for example, disregarded entity) in connection with the purchase or sale from, to, or on behalf of a related party (for example, purchase or sales commission income)?
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