Instructions for Form 8993

Instructions for Form 8993

(Rev. December 2025)

Section 250 Deduction for Foreign-Derived Intangible Income (FDII) and Global

Intangible Low-Taxed Income (GILTI)

Section references are to the Internal Revenue Code

unless otherwise noted.

Future Developments

For the latest information about developments related to

Form 8993 and its instructions, such as legislation

enacted after they were published, go to IRS.gov/

Form8993.

What’s New

Public Law 119-21, commonly known as the One Big

Beautiful Bill Act, amended section 250 in part by adding

to the list of gross income items that are excluded in

determining Deduction Eligible Income (DEI). The added

exclusion relates to income and gain from the sale or other

disposition of intangible property (as defined in section

367(d)(4)), and any other property of a type that is subject

to depreciation, amortization, or depletion by the seller.

These amendments apply to sales or other dispositions

occurring after June 16, 2025.

Important Reminders

Final section 250 regulations. Changes were

previously made throughout these instructions based on

the final section 250 regulations (T.D. 9901, 85 FR 43042,

July 15, 2020).

Domestic corporation’s deduction. For tax years

beginning on or after January 1, 2018, and before January

1, 2026, section 250 generally allows a deduction equal to

the sum of 37.5% of the corporation’s FDII plus 50% of its

GILTI (thereafter, these deductions are reduced to 33.34%

and 40%, respectively).

Deduction limitation. If the sum of FDII and GILTI

exceeds taxable income, the deduction under section 250

is limited to taxable income.

Continuous use revision. Use these instructions for tax

year 2025 and subsequent years until a superseding

revision is issued.

General Instructions

Purpose of Form

Public Law 115-97 (Tax Cuts and Jobs Act of 2017)

enacted section 250 for the allowance of a deduction for

the eligible percentage of FDII and GILTI.

See Form 8992, U.S. Shareholder Calculation of Global

Intangible Low-Taxed Income (GILTI), and its instructions

for more information on GILTI.

Use Form 8993 to figure the amount of the eligible

deduction for FDII and GILTI under section 250.

Nov 7, 2025

Who Must File

All domestic corporations (and U.S. individual

shareholders of controlled foreign corporations (CFCs)

making a section 962 election (962 electing individual))

must use Form 8993 to determine the allowable deduction

under section 250.

The deduction is allowed only to domestic corporations

(not including real estate investment trusts (REITs),

regulated investment companies (RICs), and S

corporations) and section 962 electing individuals. For the

treatment of a domestic corporation that is a partner in a

partnership, see Regulations sections 1.250(b)-1(e) and

1.250(b)-3(e).

When and Where To File

Attach Form 8993 to your income tax return and file both

by the due date (including extensions) for that return.

Definitions and Overview

Steps for Computing the Deduction Under

Section 250

1. Deduction Eligible Income (DEI) is determined.

2. Deemed Tangible Income Return (DTIR) is

determined.

3. Deemed Intangible Income (DII) is determined.

4. Foreign-Derived Deduction Eligible Income (FDDEI) is

determined.

5. Foreign-Derived Ratio (FDR) is determined.

6. FDII is determined.

7. If there is excess FDII and GILTI over taxable income,

the FDII reduction and the GILTI reduction are

determined.

8. The eligible deduction under section 250 is

determined.

FDDEI

FDDEI means, with respect to a taxpayer for its tax year,

any deduction eligible income of the taxpayer that is

derived in connection with:

1. Property that is sold by the taxpayer to any person

who is a foreign person and that the taxpayer

establishes to the satisfaction of the Secretary is for a

foreign use (see Regulations section 1.250(b)-4); or

2. Services provided by the taxpayer that the taxpayer

establishes to the satisfaction of the Secretary are

provided to any person, or with respect to property,

located outside the United States (see Regulations

section 1.250(b)-5).

Instructions for Form 8993 (Rev. 12-2025) Catalog Number 71352N

Department of the Treasury Internal Revenue Service www.irs.gov

Special rules for determining foreign use apply to

transactions that involve property or services provided to

related parties (see section 250(b)(5)(C) and Regulations

section 1.250(b)-6).

Sale

The terms “sold,” “sells,” and “sale” include any lease,

license, exchange, or other disposition of property.

For purposes of the exclusions described in items 7

and 8 of the instructions for Part I, line 2, later, sale or

other disposition does not include any lease or license.

Foreign Use

“Foreign use” is defined to mean “any use, consumption,

or disposition which is not within the United States.” See

Regulations section 1.250(b)-4(d). For the latest guidance

about foreign use, go to IRS.gov/Form8993.

Qualified Business Asset Investment (QBAI)

A domestic corporation’s QBAI is the average of the

aggregate of its adjusted bases, determined as of the

close of each quarter of the tax year, in specified tangible

property used in its trade or business and of a type with

respect to which a deduction is allowable under section

167. See Regulations section 1.250(b)-2.

Information From Partnership

A domestic corporate partner of a partnership takes into

account its distributive share of a partnership’s gross DEI,

gross FDDEI, deductions, and its share of partnership

QBAI, in order to calculate the partner’s FDII. See

Regulations section 1.250(b)-1(e)(1). The above

partnership information should have been reported to the

partners on Schedule K-3 (Form 1065).

For partners in a partnership, attach a statement to

Form 8993 listing each partnership’s name; employer

identification number (EIN); the partner’s share of the

partnership’s QBAI reported on line 7b; and other FDDEI

items reported on lines 9b, 10b, 13, and 17.

Documentation

For special substantiation requirements under the

Regulations, see sections 1.250(b)-3(f), 1.250(b)-4(d)(3),

and 1.250(b)-5(e)(4).

Section 250 Deduction Limitation

If the sum of FDII and GILTI exceeds taxable income, the

deduction under section 250 is subject to limitation. See

the instructions for lines 26 and 27, later, for additional

information.

Corrections to Form 8993

If you file a Form 8993 that you later determine is

incomplete or incorrect, file a corrected Form 8993 with an

amended tax return, using the amended return

instructions for the return with which you originally filed

Form 8993. Enter “Corrected” at the top of the corrected

Form 8993.

Computer-Generated Form 8993

Generally, all computer-generated forms must receive

prior approval from the IRS and are subject to an annual

2

review. Requests for approval may be submitted

electronically to substituteforms@irs.gov, or requests may

be mailed to: Internal Revenue Service, Attention:

Substitute Forms Program, C:DC:TS:CAR:MP:P:TP:TP,

ATSC, 4800 Buford Highway, Mail Stop: 061-N,

Chamblee, GA 30341.

Specific Instructions

Part I. Determining DEI and DII

DEI means, with respect to any domestic corporation, the

excess (if any) of the gross income of the corporation, less

exclusions, over deductions (including taxes) properly

allocable to such gross income.

Line 1. Gross Income

For purposes of this form, gross income includes all

income from whatever source derived. Enter the amount

from Form 1120, line 11.

Line 2. Exclusions

Exclude the following items to the extent included on

line 1.

1. Any amount included in the gross income of such

corporation under section 951(a)(1). Include the

section 78 gross-up with respect to the inclusion

under section 951(a)(1).

2. Any amount included in the gross income of such

corporation under section 951A. Section 951A

defines GILTI. Include the section 78 gross-up with

respect to the inclusion under section 951A.

3. Any financial services income (as defined under

section 904(d)(2)(D)) of such corporation.

4. Any dividend received from a CFC with respect to

which the corporation is a U.S. shareholder, as

defined under section 951(b).

5. Any domestic oil and gas extraction income. The term

“domestic oil and gas extraction income” means

income described in section 907(c)(1), determined by

substituting “within the United States” for “without the

United States.”

6. Any foreign branch income (as defined in section

904(d)(2)(J)).

7. Any income and gain from the sale or other

disposition (including pursuant to the deemed sale or

other deemed disposition or a transaction subject to

section 367(d)) of intangible property (as defined in

section 367(d)(4)) occurring after June 16, 2025.

8. Any income and gain from the sale or other

disposition (including pursuant to the deemed sale or

other deemed disposition or a transaction subject to

section 367(d)) of any other property of a type that is

subject to depreciation, amortization, or depletion by

the seller, occurring after June 16, 2025.

Note: For purposes of the exclusions described in items 7

and 8, above, sale or other disposition does not include

any lease or license.

Instructions for Form 8993 (Rev. 12-2025)

Line 5. Deductions Properly Allocable to the

Amount on Line 4

Allocable deductions include all deductions (including

taxes) properly allocable to gross DEI on line 4. See

Regulations section 1.250(b)-1(d)(2) for more details.

Deductions properly allocable to gross DEI are

determined without regard to sections 163(j), 170(b)(2),

172, 246(b), and 250.

Include the partner’s share of the partnership’s

deductions properly allocable to the amount on line 4. Do

not duplicate expenses already included on line 1.

partnership, trust, or estate; or a commodity described in

section 475(e)(2)(A) that is not a physical commodity or a

commodity described in section 475(e)(2)(B) through (D).

Each place where intangible property is listed refers to

amounts connected to the sale, license, exchange, or

other disposition of intangible property to a foreign person

and, as established to the satisfaction of the Secretary, is

for a foreign use as defined in Regulations sections

1.250(b)-3 and 1.250(b)-4(d)(2).

Line 6. DEI

Each place where services are listed refers to amounts

connected to services that, as established to the

satisfaction of the Secretary, are provided to any person,

or with respect to property, located outside the United

States as defined in Regulations section 1.250(b)-5.

Line 7. Deemed Tangible Income Return (10% of

QBAI)

If a transaction includes both a sales component and a

service component, the transaction is classified as either

a sale or as a service according to the overall predominant

character of the transaction. See Regulations section

1.250(b)-3(d).

Subtract line 5 from line 4. If the result is zero or negative,

enter zero on line 6. Your FDII deduction under section

250 is zero. Enter zero on lines 21 and 28.

The DTIR with respect to a domestic corporation is the

corporation’s QBAI for the year multiplied by 10%. In

addition, for purposes of determining a domestic

corporate partner’s DTIR, a domestic corporation’s QBAI

is increased by its share of the partnership’s adjusted

basis in partnership specified tangible property. See

Regulations section 1.250(b)-2(g).

For purposes of determining a domestic corporation’s

deductions that are properly allocable to gross FDDEI, the

corporation’s deductions are allocated and apportioned to

gross FDDEI under the rules of sections 1.861-8 through

1.861-14T and 1.861-17 by treating section 250(b) as an

operative section described in section 1.861-8(f). See

Regulations section 1.250(b)-1(d)(2).

First, compute QBAI (defined earlier). See Regulations

section 1.250(b)-2. “Specified tangible property” means

any tangible property used in the production of the gross

income included in DEI. If such property was used in the

production of DEI and income that is not DEI (such as

dual-use property), the property is treated as specified

tangible property in the same proportion that the amount

of the gross income included in DEI produced with respect

to the property bears to the total amount of gross income

produced with respect to the property. If specified tangible

property is only partially depreciable, then only the

depreciable portion is QBAI. The adjusted basis is

determined by using the alternative depreciation system

under section 168(g) and allocating depreciation

deductions with respect to such property ratably to each

day during the period in the tax year to which such

depreciation relates. Then, multiply QBAI by 10% (0.10)

and enter this result on Form 8993, line 7a. Multiply a

partner’s share of the partnership’s QBAI by 10% (0.10)

and enter this result on Form 8993, line 7b.

Enter the amount of foreign-derived gross receipts from all

sales of intangible property.

Line 8. DII

Column C. Services

DII is the excess (if any) of the corporation’s DEI over its

DTIR. If the result is zero or negative, enter zero on line 8.

Your FDII deduction under section 250 is zero. Enter zero

on lines 21 and 28.

Part II. Determining FDDEI

Each place where general property is listed refers to

amounts connected to the sale, lease, exchange, or other

disposition of general property to a foreign person and, as

established to the satisfaction of the Secretary, is for a

foreign use as defined in Regulations sections 1.250(b)-3

and 1.250(b)-4(d)(1) and (2). The term “general property”

means any property other than intangible property; a

security (as defined in section 475(c)(2)); an interest in a

Instructions for Form 8993 (Rev. 12-2025)

The partnership should determine and report the

partner’s share of each item necessary to compute FDII in

accordance with the partner’s distributive share of the

underlying item of income, gain, deduction, and loss of the

partnership.

Line 9a. Gross Receipts

“Foreign-derived gross receipts” means gross receipts

that are used to compute gross FDDEI as defined in

Regulations section 1.250(b)-1.

Column A. General Property

Enter the amount of foreign-derived gross receipts from all

sales of general property.

Column B. Intangible Property

Enter the amount of foreign-derived gross receipts from all

services.

Note: Do not include any amounts provided in items 7

and 8 for Part I, line 2. See page 2 of these instructions.

Line 9b. Gross Receipts From Partnerships

Enter the amount, if any, of the partner’s share of the

partnership’s foreign-derived gross receipts.

Column A. General Property

Enter the amount, if any, of the partner’s share of the

partnership’s foreign-derived gross receipts from all sales

of general property.

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Column B. Intangible Property

Enter the amount, if any, of the partner’s share of the

partnership’s foreign-derived gross receipts from all sales

of intangible property.

Column C. Services

Enter the amount, if any, of the partner’s share of the

partnership’s foreign-derived gross receipts from all

services.

Line 10a. Cost of Goods Sold

Enter the amount of cost of goods sold attributable to the

amount(s) on line 9a.

For purposes of this form, when figuring FDDEI, cost of

goods sold includes the:

1. Cost of goods sold to customers, and

2. Adjusted basis of non-inventory property sold or

otherwise disposed of in the trade or business.

In making that determination, attribute costs of goods

sold to gross receipts using a reasonable method in

accordance with Regulations section 1.250(b)-1(d)(1).

Cost of goods sold must be attributed to gross receipts

with respect to gross DEI or gross FDDEI regardless of

whether certain costs included in cost of goods sold can

be associated with activities undertaken in an earlier tax

year (including a year before the effective date of section

250).

Line 10b. Cost of Goods Sold From Partnerships

Enter the amount, if any, of the partner’s share of the

partnership’s cost of goods sold attributable to the amount

on line 9b.

Line 12. Allocable Deductions

Enter the amount of the deductions that are allocated and

apportioned to gross FDDEI on line 11. See Regulations

section 1.250(b)-1(d)(2) for more details. Report interest

and research and experimental (R&E) deductions on lines

14 and 15, respectively. Deductions are determined

without regard to sections 163(j),170(b)(2), 172, 246(b),

and 250.

Column A. General Property

Enter the amount of the deductions that are allocated and

apportioned to gross FDDEI from all sales of general

property.

Column B. Intangible Property

Enter the amount of the deductions that are allocated and

apportioned to gross FDDEI from all sales of intangible

property.

Column C. Services

Enter the amount of the deductions that are allocated and

apportioned to gross FDDEI from all services.

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Line 13. Allocable Deductions From

Partnerships

Enter the amount, if any, of the partner’s share of the

partnership’s deductions that are allocated and

apportioned to gross FDDEI on line 11.

Column A. General Property

Enter the amount, if any, of the partner’s share of the

partnership’s deductions that are allocated and

apportioned to gross FDDEI from all sales of general

property.

Column B. Intangible Property

Enter the amount, if any, of the partner’s share of the

partnership’s deductions that are allocated and

apportioned to gross FDDEI from all sales of intangible

property.

Column C. Services

Enter the amount, if any, of the partner’s share of the

partnership’s deductions that are allocated and

apportioned to gross FDDEI from all services.

Line 14. Interest Deductions

The term “interest” refers to the gross amount of interest

expense incurred by a taxpayer in a given year. For

purposes of determining properly allocable interest

deductions, the corporation’s interest expense deduction

is determined without regard to section 163(j), and

includes any expense under section 163 (including

original issue discount), and interest equivalents. See

Regulations section 1.250(b)-1(d)(2)(ii). See Temporary

Regulations section 1.861-9T(b) for the definition of

interest equivalents and Regulations section 1.861-9T(c)

for sections that disallow, suspend, or require the

capitalization of interest deductions.

Interest deductions are apportioned to gross DEI and

gross FDDEI based ordinarily on the tax book value of the

taxpayer’s assets. See Regulations section 1.250(b)-1(d)

(2)(i). A taxpayer may elect to use the alternative tax book

value method. See Regulations sections 1.861-9(g)(1)(ii)

and 1.861-9(i). When reporting the asset that is the basis

of stock in nonaffiliated 10%-owned corporations, adjust

such amount for earnings and profits. See Regulations

section 1.861-12(c)(2)(i)(A). See Regulations sections

1.861-10 and 1.861-10T for exceptions to the general rule

of fungibility (such as qualified nonrecourse indebtedness,

integrated financial transactions, and excess related party

indebtedness).

The total interest deductions for the members of the

corporation’s affiliated group are allocated and

apportioned to the statutory and residual groupings under

proposed, final, and Temporary Regulations sections

1.861-8 through 1.861-14.

The amount reported on this line should include interest

paid or accrued by the taxpayer and the taxpayer’s share

of interest expense incurred by a partnership. With

respect to corporate partners with an interest in the

partnership of 10% or more, interest expense, including

the partner’s distributive share of partnership interest

expense, is apportioned by reference to the partner’s

assets, including the partner’s pro rata share of

Instructions for Form 8993 (Rev. 12-2025)

Part III. Determining FDII and/or GILTI

Deduction

partnership assets. See Regulations section 1.861-9(e)

(2). A corporate partner with a less-than-10% interest in a

partnership shall directly allocate its distributive share of

the partnership’s interest expense to its distributive share

of partnership gross income and be apportioned in

accordance with the partner’s relative distributive share of

gross FDDEI. See Regulations section 1.861-9(e)(4). The

above partnership information should have been reported

to the partners on Schedule K-3 (Form 1065).

FDR is determined by computing the ratio of FDDEI over

DEI. See Definitions and Overview, earlier, for the

discussion of FDDEI. Divide the amount on line 19 by the

amount on line 6. The resulting ratio must not exceed 1.

Line 15. Research and Experimental Deductions

Line 22. GILTI Inclusion

R&E expenses deducted under section 174 are definitely

related to gross intangible income reasonably connected

with relevant broad product categories of the taxpayer and

are allocable to all items of gross intangible income as a

class related to such product categories. Gross intangible

income is all gross income attributable to intangible

property including sales, services, and royalties (including

section 367(d) inclusions), but does not include dividends

or other inclusions with respect to stock such as sections

951, 951A, and 1293. See Regulations section

1.861-17(b)(2). The product categories are generally

determined by reference to the three-digit Standard

Industrial Classification (SIC) code. See Regulations

section 1.861-17(b)(3). R&E expenses are apportioned in

the same proportions that the amounts of the taxpayer’s

gross receipts (including those of certain controlled and

uncontrolled parties) from certain sales, leases, licenses,

and services that are related to gross intangible income in

the statutory or residual grouping bear to the total amount

of gross receipts in the class. See Regulations section

1.861-17(d). The exclusive apportionment rule in

Regulations section 1.861-17(c) does not apply for

purposes of apportioning R&E to determine the deduction

for FDII.

The amount reported on this line should include R&E

deductions of the taxpayer and the taxpayer’s share of

R&E deductions incurred by a partnership. This requires

that the partnership report to its partners the gross

receipts related to certain income within the statutory and

residual groupings within a SIC code and the partner’s

distributive share of the partnership’s R&E deductions, if

any, connected with the SIC codes. See section

1.861-17(f). The above partnership information should

have been reported to the partners on Schedule K-3

(Form 1065).

Line 16. Other Apportioned Deductions

Enter all other apportioned deductions that relate to gross

FDDEI that are not otherwise included on lines 12, 14, and

15. If a deduction does not bear a definite relationship to a

class of gross income constituting less than all of gross

income, it shall ordinarily be treated as definitely related

and allocable to all of the taxpayer’s gross income,

including gross DEI and gross FDDEI, except where

otherwise directed in the regulations.

Line 17. Other Apportioned Deductions From

Partnerships

Enter all other apportioned deductions that relate to gross

FDDEI from partnerships that are not otherwise included

on lines 13, 14, and 15.

Instructions for Form 8993 (Rev. 12-2025)

Line 20. Foreign-Derived Ratio

Enter the amount of GILTI reported on Form 8992, Part II,

line 5. Attach Form 8992 to your income tax return.

Line 24. Taxable Income

Enter the taxable income of the domestic corporation

(determined without regard to section 250).

Line 25. Excess FDII and GILTI Over Taxable

Income

Subtract the taxable income amount reported on line 24

from the total FDII and GILTI on line 23.

If the result reported on line 25 is zero or negative, your

taxable income is greater than the sum of FDII and GILTI,

and your deduction under section 250 is not limited.

If the result reported on line 25 is a positive number,

your taxable income is less than the sum of your FDII and

GILTI, and your deduction under section 250 is limited to

taxable income. Refer to the instructions for lines 26 and

27, later, to determine the amount by which you need to

reduce FDII and GILTI.

Line 26. FDII Reduction

The reduction in FDII for which a deduction is allowed

equals such excess multiplied by a percentage equal to

the corporation’s FDII divided by the sum of its FDII and

GILTI.

Use the Line 26 Worksheet to compute the FDII

reduction.

Line 26 Worksheet

Line A

Enter the amount from line 25.

If zero or less, enter -0- on line

E of this worksheet and stop.

Line B

Enter the amount from line 21.

Line C

Enter the amount from line 23.

Line D

Divide line B by line C.

Line E

Multiply line A by line D. Enter

this line E amount on Form

8993, line 26.

Line 27. GILTI Reduction

The reduction in GILTI is determined by the excess

amount less the FDII reduction.

Use the Line 27 Worksheet to compute the FDII

reduction.

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Line 27 Worksheet

Line F

Enter the amount from line 25.

If zero or less, enter zero on

line H of this worksheet and

stop.

Line G

Enter the amount from line E of

the Line 26 Worksheet.

Line H

Subtract line G from line F.

Enter this line H amount on

Form 8993, line 27.

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.

Line 28. FDII Deduction

The time needed to complete and file this form will vary

depending on individual circumstances. The estimated

burden for business taxpayers filing this form is approved

under OMB control number 1545-0123 and is included in

the estimates shown in the instructions for their business

income tax return.

Line 29. GILTI Deduction

If you have comments concerning the accuracy of

these time estimates or suggestions for making this form

simpler, we would be happy to hear from you. See the

instructions for the tax return with which this form is filed.

To figure the FDII deduction, subtract the amount from

line 26 (FDII reduction), from the amount on line 21 (FDII).

Then, multiply the resulting amount by 37.5% (0.375) to

obtain the FDII deduction and enter it on line 28.

To figure the GILTI deduction, subtract the amount from

line 27 (GILTI reduction), from the amount on line 22

(GILTI inclusion). Then, add any amount received by the

corporation (or 962 electing individual) that is treated as a

dividend under section 78 which is attributable to GILTI,

from Form 1118, Schedule A, column 3(b). Lastly, multiply

that amount by 50% (0.50).

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Instructions for Form 8993 (Rev. 12-2025)