1118 Schedule i Reduction of Foreign Oil and Gas Taxes

Reduction of Foreign Oil and Gas Taxes

SCHEDULE I
(Form 1118)
(Rev. December 2018)
Department of the Treasury
Internal Revenue Service
Name of corporation

▶

For calendar year 20

▶ Attach to Form 1118.
Go to www.irs.gov/Form1118 for the latest information.

, or other tax year beginning

, 20

, and ending

, 20
Employer identification number

Use a separate Schedule I (Form 1118) for each applicable category of income (see instructions).
a Separate Category (Enter code—see instructions.) . . . . . . . . . . . . . . . . .
b If code 901j is entered on line a, enter the country code for the sanctioned country (see instructions)
c If code RBT is entered on line a, enter the country code for the treaty country (see instructions) . .
Report all amounts in U.S. dollars.

Part I

OMB No. 1545-0123

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

▶
▶
▶

Combined Foreign Oil and Gas Income and Taxes

1(a). EIN or
Reference ID
number
(see instructions)*

1(b). Name of
foreign country
(Use a separate line for each country.)

Gross Foreign Oil and Gas Income From Sources Outside the United States and Its Possessions (see instructions)
2. Gross foreign oil and
gas extraction income

3. Gross foreign oil
related income

4. Certain dividends
from foreign
corporations

5. Inclusions under
sections 951(a)(1) and
951A

6. Other

7. Total
(add columns 2
through 6)

A
B
C
D
E
F
Totals (add lines A through F) . . . . . . . . ▶
* For section 863(b) income, use a single line (see instructions).
Deductions
8. Allocable deductions

9. Apportioned
deductions

10. Total
(add columns 8 and 9)

11. Taxable income
(column 7 minus
column 10)

Foreign Oil and Gas Taxes (attach schedule)
12. Paid or accrued

13. Deemed paid

14. Total
(add columns 12 and 13)

A
B
C
D
E
F
Totals

For Paperwork Reduction Act Notice, see the Instructions for Form 1118.

Cat. No. 10237L

Schedule I (Form 1118) (Rev. 12-2018)

Page 2

Schedule I (Form 1118) (Rev. 12-2018)

Part II
1
2
3
4

Combined foreign oil and gas income. (See the instructions for Part II, line 1, below.) . . . . .
Multiply line 1 by the highest rate of tax under section 11(b). (See the instructions for Part II, line 2, below.)
Total taxes (from Part I, column 14, “Totals” line) . . . . . . . . . . . . . . . . .
Reduction (subtract line 2 from line 3; if zero or less, enter -0-). Enter here and on Schedule G,
line B, of the corresponding Form 1118 . . . . . . . . . . . . . . . . . . . .

Part III
1
2
3

Reduction Under Section 907(a)

Foreign Oil and Gas Taxes Available for Use in the Current Tax Year

Excess section 907(a) limitation. Subtract Schedule I, Part II, line 3, from line 2. If zero or less,
enter -0- and do not complete the remainder of Part III . . . . . . . . . . . . . . .
Enter the sum of any carryover of foreign oil and gas tax to the current year. Attach a schedule
showing the computation in detail . . . . . . . . . . . . . . . . . . . . . .
Enter the smaller of lines 1 and 2 here and include on Schedule B, Part II, line 5 . . . . . . .

General Instructions
Section references are to the Internal Revenue Code unless
otherwise noted.

Who Must File
If the corporation claims a credit for any income taxes paid, accrued,
or deemed paid during the tax year on combined foreign oil and gas
income, the amount of such taxes eligible for credit may be reduced.
See section 907(a) and Regulations section 1.907(a)-1 for details.

Method of Reporting
Report all amounts in U.S. dollars. If it is necessary to convert from
foreign currency, attach a statement explaining how the rate was
determined.

Specific Instructions
Codes at top of page 1. On line a, enter the same separate category
code as that shown on the Form 1118 to which this Schedule I is
attached. If applicable, on line b or c, enter the same country code as
that shown on the Form 1118 to which this Schedule I is attached.

Part I
See section 907(c) and underlying regulations for rules on the
income to include in Part I.
Note: Do not include any dividend or interest income that is passive
income. See the Instructions for Form 1118 for the definition of
passive income.
Column 1(a). For information pertaining to the entry of EINs and
reference ID numbers, see Identifying Numbers in the separate
instructions for Form 1118. For section 863(b) income, leave column
1(a) blank.
Column 1(b). Enter the two-letter codes (from the list at
www.irs.gov/CountryCodes) of all foreign countries and U.S.
possessions within which income is sourced and/or to which taxes
were paid, accrued, or deemed paid. For section 863(b) income,
enter “863(b)” instead of a two-letter code.
Column 2. Enter gross income from sources outside the United
States and its possessions from the following.
• The extraction (by the corporation or any other person) of minerals
from oil or gas wells located outside the United States and its
possessions.
• The sale or exchange of assets used in the trade or business of
extracting minerals from oil or gas wells located outside the United
States and its possessions.
See section 907(c)(1).
Column 3. Enter gross income from sources outside the United
States and its possessions from the following.
• The processing of minerals extracted (by the corporation or any
other person) from oil or gas wells into their primary products.
• The transportation of such minerals or primary products.
• The distribution or sale of such minerals or primary products.
• The disposition of assets used in the trade or business described
in the three previous bulleted items.
• The performance of any other related service.
See section 907(c)(2).

Column 4. With respect to dividends from foreign corporations with
tax years beginning on or before December 31, 2017, enter
dividends (including section 78 gross-up) from a foreign corporation
on which taxes are deemed paid under section 902 only if the
dividends are paid out of foreign oil and gas extraction income or
foreign oil related income of the distributing corporation and are not
passive income. Dividends from foreign corporations for which the
corporation is not entitled to compute a deemed paid credit are
passive income and are not included in Part I. With respect to
dividends from foreign corporations with tax years beginning after
December 31, 2017, column 4 is not applicable.
Column 5. Enter amounts taxable under section 951(a) or 951A
(including section 78 gross-up) that are attributable to the controlled
foreign corporation’s combined foreign oil and gas income.
Column 6. Include the corporation’s distributive share of partnership
combined foreign oil and gas income. With respect to foreign
corporations with tax years beginning on or before December 31,
2017, also include in column 6 interest income paid by a foreign
corporation during such year on which taxes are deemed paid under
section 902, to the extent it is paid out of foreign oil related income.
With respect to foreign corporations with tax years beginning after
December 31, 2017, include in column 6 interest income paid by a
foreign corporation to the extent the category of income of such
interest is determined under section 904(d)(3). Do not include
interest income paid by a foreign subsidiary out of foreign oil and
gas extraction income of the payor, even if it is not passive income.
See section 907(c)(3).
Columns 8 and 9. Enter the deductions allocated and apportioned
to foreign oil and gas income in the separate category. See the
regulations under section 861.
Column 11. For each country, subtract column 10 from column 7
and enter the result in column 11. When totaling the column 11
amounts, note that a taxable loss from a foreign country offsets
taxable income from other countries.
Columns 12 and 13. Attach a schedule to show how the foreign
taxes paid, accrued, or deemed paid with respect to combined
foreign oil and gas income were figured.

Part II
Line 1. Enter the total from Part I, column 11, minus any recapture
described in section 907(c)(4).
Line 2. At the time this schedule went to print, the highest rate of
tax specified under section 11(b) was 21%.

Part III
Line 2. Enter the sum of any carryover of foreign oil and gas tax to the
current year. Attach a schedule showing the computation in detail.
Corporations are encouraged to attach a schedule that is similar to
Schedule K (Form 1118), which is used to report a running balance of
the corporation’s section 904(c) carryovers. If this approach is taken,
the amount to be entered on line 2 is the amount that corresponds to
Schedule K (Form 1118), line 3, column (xiv). Please note that special
rules apply to the carryback and carryover of foreign taxes paid or
accrued on combined foreign oil and gas income and related taxes.
For example, in applying foreign tax carryovers from prior tax years, in
the case of any tax year that is an unused credit year (as defined in
section 907(f)) under each of sections 907(f) and 904(c), the provisions
of section 907(f) are to be applied before section 904(c). See section
907(f) and Regulations section 1.907(f)-1 for additional information.