Instructions for Form 1120-F

2025

Instructions for Form 1120-F

U.S. Income Tax Return of a Foreign Corporation

Section references are to the Internal Revenue Code unless

otherwise noted.

Future Developments

For the latest information about developments related to Form

1120-F and its instructions, such as legislation enacted after they

were published, go to IRS.gov/Form1120F.

What’s New

Increase in penalty for failure to file. For tax returns required

to be filed in 2026, the minimum penalty for failure to file a return

that is more than 60 days late has increased to the smaller of the

tax due or $525. See Penalty for late filing of return, later.

Gain from the sale or exchange of qualified farmland property to qualified farmers. P.L. 119-21, commonly known as the

One Big Beautiful Bill Act, added new section 1062 regarding the

gain from the sale or exchange of qualified farmland property to

qualified farmers. Section 1062 allows taxpayers to elect to pay

the net income tax attributable to the gain from the sale or

exchange of qualified farmland property to qualified farmers in

four equal annual installments. This election is available for sales

and exchanges of qualified farmland property to a qualified

farmer in tax years beginning after July 4, 2025. For more

information, see section 1062 and new Form 1062, Deferral of

Tax on Gain From the Sale or Exchange of Qualified Farmland

Property to Qualified Farmers, when it is available.

To report the section 1062 applicable net tax liability and the

installment due in the first tax year, two lines were added on

Form 1120-F. Report the full amount of section 1062 applicable

net tax liability on Form 1120-F, page 1, line 5k. Report the first

installment due in tax year 2025 on Form 1120-F, page 1, line 4b.

For more information, see the instructions for line 5k and line 4b,

later.

Relief from additions to tax for underpayment of estimated

income tax by taxpayers making an election under section

1062. The IRS will waive a portion of the penalty imposed under

section 6655 for failure to make estimated tax payments

attributable to a qualified sale or exchange of qualified farmland

to qualified farmers for which an election under section 1062(a)

is properly made. Taxpayers that elect under section 1062 to

defer payment of tax may calculate required estimated tax

payments using the guidance in Notice 2026-3. See Notice

2026-3, 2026-02 I.R.B. 307, available at IRS.gov/irb/

2026-02_IRB#NOT-2026-3.

Extension of relief from additions to tax for underpayments

applicable to the corporate alternative minimum tax

(CAMT). For tax year 2025, the IRS will continue to waive the

penalty imposed under section 6655 for failure to make

estimated tax payments attributable to a CAMT liability. See

Notice 2025-27, 2025-26 I.R.B. 1611, available at IRS.gov/irb/

2025-26_IRB#NOT-2025-27. Also, see the instructions for line 6,

later.

Electronic payments. If the corporation has access to U.S.

banking services or electronic payment systems, it should use

direct deposit for any refunds and pay electronically for any

payments, whenever possible.

Jan 21, 2026

Direct deposit. Direct deposit fields have been added on

page 1 of Form 1120-F (see lines 9c, 9d, and 9e). If there is an

overpayment on line 8a, see the instructions for lines 8b, and 9a

through 9e, later.

Making a payment. If there is a balance due on line 7, go to

IRS.gov/Payments for information on how to make a payment.

See Payment of Tax Due and the instructions for line 7, later, for

more details.

Domestic research and experimental expenditures. P.L.

119-21, adds new section 174A to the Internal Revenue Code.

Section 174A(a) allows corporations to deduct amounts paid or

incurred for domestic research and experimental expenditures in

tax years beginning after December 31, 2024. Alternatively,

under section 174A(c), a corporation may elect to charge such

expenditures to a capital account and amortize such

expenditures ratably over a period of not less than 60 months,

beginning with the month in which the corporation first realizes

benefits from such expenditures. In addition, section 70302(f) of

P.L. 119-21 provides corporations with various transition options

that may be applied to recover unamortized amounts paid or

incurred in tax years beginning after December 31, 2021, and

before January 1, 2025, that were capitalized and amortized for

such tax years. See Rev. Proc. 2025-28 for information regarding

the transition options contained in section 70302(f) of P.L.

119-21, as well as the procedures to follow to begin applying

either section 174A(a) or (c) for the corporation’s first tax year

beginning after December 31, 2024.

Interim simplified method to determine applicable corporation status. Proposed Regulations section 1.59-2(g)(2)

provides that a corporation may choose to apply the safe harbor

method (simplified method) for purposes of determining whether

it is an applicable corporation under section 59(k). Section 3.03

of Notice 2025-27 provides an optional interim simplified method

for determining applicable corporation status. See the

instructions for item JJ, later. Also, see the Instructions for Form

4626.

Certain qualified sound recording productions. P.L. 119-21

amends section 181 to include qualified sound recording

production costs as an elective expense deduction. A

corporation can elect to deduct certain costs of qualified sound

recording productions that commence before January 1, 2026, in

tax years ending after July 4, 2025. Also, qualified sound

recording productions are eligible for the special depreciation

allowance under section 168(k) if they commence in tax years

ending after July 4, 2025. Qualified sound recording productions

acquired after January 19, 2025, are eligible for 100% special

allowance depreciation under the amendments to section 168(k)

by P.L. 119-21. Qualified sound recording productions acquired

before January 20, 2025, and commencing in tax years ending

after July 4, 2025, are also eligible for the special depreciation

allowance at the applicable phased down percentage rates

under section 168(k)(6). See sections 181 and 168(k).

Claim for credit or refund of amounts withheld on certain

borrow fees. On October 23, 2025, Notice 2025-63, 2025-46

I.R.B. 709, was released announcing that the Department of the

Treasury and the IRS intend to issue proposed regulations

providing that certain borrow fees, as defined in the notice, are

sourced based on the residence of the recipient. Notice 2025-63

Instructions for Form 1120-F (2025) Catalog Number 11475L

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

provides that taxpayers can rely on the sourcing rule described

in the notice with respect to securities lending transactions and

sale-repurchase transactions entered into before the forthcoming

proposed regulations are published. Taxpayers relying on Notice

2025-63 to claim a credit or refund for amounts withheld on

borrow fees must attach copies of the Form(s) 1042-S received

to support such claim, and attach a statement indicating reliance

on Notice 2025-63 as the reason for the claim and include the

amount of income that was subject to withholding for each

payment of a borrow fee associated with securities lending

transactions or sale-repurchase transactions.

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Photographs of missing children selected by the Center may

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You can help bring these children home by looking at the

photographs and calling 1-800-THE-LOST (1-800-843-5678) if

you recognize a child.

The Taxpayer Advocate Service

The Taxpayer Advocate Service (TAS) is an independent

organization within the IRS that helps taxpayers and protects

taxpayer rights. TAS’s job is to ensure that every taxpayer is

treated fairly and knows and understands their rights under the

Taxpayer Bill of Rights.

As a taxpayer, the corporation has rights that the IRS must

abide by in its dealings with the corporation. TAS can help the

corporation if:

• A problem is causing financial difficulty for the business;

• The business is facing an immediate threat of adverse action;

or

• The corporation has tried repeatedly to contact the IRS but no

one has responded, or the IRS hasn’t responded by the date

promised.

TAS has offices in every state, the District of Columbia, and

Puerto Rico. Local advocates’ numbers are in their local

directories and at TaxpayerAdvocate.IRS.gov. The corporation

can also call TAS at 877-777-4778.

TAS also works to resolve large-scale or systemic problems

that affect many taxpayers. If the corporation knows of one of

these broad issues, please report it to TAS through the Systemic

Advocacy Management System at IRS.gov/SAMS.

For more information, go to IRS.gov/Advocate.

How To Get Forms and Publications

Internet. Access IRS.gov 24 hours a day, 7 days a week, to:

• Download free forms, instructions, and publications;

• Order IRS products online;

• Research your tax questions online;

• Search publications online by topic or keyword;

• View Internal Revenue Bulletins (IRBs) published in recent

years; and

• Sign up to receive local and national tax news by email.

Tax forms and publications. The corporation can view, print,

or download all of the forms and publications it may need on

IRS.gov/FormsPubs. Or, the corporation can go to IRS.gov/

OrderForms to place an order and have forms mailed to it.

General Instructions

Purpose of Form

of a foreign corporation. Also, use Form 1120-F to claim any

refund that is due to transmit Form 8833, Treaty-Based Return

Position Disclosure Under Section 6114 or 7701(b); or to

calculate and pay a foreign corporation’s branch profits tax

liability and tax on excess interest, if any, under section 884.

Who Must File

Unless one of the exceptions under exceptions from filing below

applies or a special return is required (see Special Returns for

Certain Organizations, later), a foreign corporation must file

Form 1120-F if, during the tax year, the corporation:

• Was engaged in a trade or business in the United States,

whether or not it had U.S. source income from that trade or

business, and whether or not income from such trade or

business is exempt from U.S. tax under a tax treaty (see also

Protective Return Filers, later);

• Had income, gains, or losses treated as if they were effectively

connected with the conduct of a U.S. trade or business (see

Section II, later);

• Was not engaged in a trade or business in the United States,

but had income from any U.S. source, if its tax liability has not

been fully satisfied by the withholding of tax at source under

Chapter 3 of the Code; or

• Was, or had a branch that was, a qualified derivatives dealer

(QDD).

This form is also required to be filed by the following.

• A foreign corporation making a claim for the refund of an

overpayment of tax for the tax year. See Simplified Procedure for

Claiming a Refund of U.S. Tax Withheld at Source, later.

• A foreign corporation claiming the benefit of any deductions or

credits. See Other Filing Requirements, later.

• A foreign corporation making a claim that an income treaty

overruled or modified any provision of the Internal Revenue

Code with respect to income derived by the foreign corporation

at any time during the tax year, and such position is required to

be disclosed on Form 8833. See the instructions for Form 8833

for who must file Form 8833, and who is exempt from filing by

reason of a waiver provided under section 6114 and the

regulations thereunder. If Form 8833 is required, complete item

W(1) on page 2 of the form.

Others that must file Form 1120-F include the following.

• A Mexican or Canadian branch of a U.S. mutual life insurance

company. The branch must file Form 1120-F on the same basis

as a foreign corporation if the U.S. company elects to exclude

the branch’s income and expenses from its own gross income.

• A receiver, assignee, or trustee in dissolution or bankruptcy, if

that person has or holds title to virtually all of a foreign

corporation’s property or business. Form 1120-F is due whether

or not the property or business is being operated (see Who Must

Sign, later, for additional information).

• An agent in the United States, if the foreign corporation has no

office or place of business in the United States when the return is

due.

Treaty or Code exemption. If the corporation does not have

any gross income for the tax year because it is claiming a treaty

or Code exemption, it must still file Form 1120-F to show that the

income was exempted by treaty or Code. In this case, the

corporation should only complete the identifying information

(including items A through G) at the top of page 1 of Form

1120-F and a statement that indicates the nature and amount of

the exclusions claimed. In the case of a treaty exemption, the

corporation may complete item W(1) on page 2 of Form 1120-F,

which includes completing and attaching Form 8833, if required

in lieu of attaching a statement. In the case of a Code exemption

under section 883, the corporation must attach Schedule S

(Form 1120-F) in lieu of attaching a statement.

Use Form 1120-F to report the income, gains, losses,

deductions, and credits; and to figure the U.S. income tax liability

2

Instructions for Form 1120-F (2025)

Note: If the corporation does not have any gross income for the

tax year because it is claiming a treaty or Code exemption, and

there was withholding at source, the corporation must complete

the computation of tax due or overpayment section at the bottom

of page 1 of Form 1120-F (in addition to the information specified

in the previous paragraph) to claim a refund of the amounts

withheld.

Entities electing to be taxed as foreign corporations. A

foreign eligible entity that elected to be classified as a

corporation must file Form 1120-F under the same

circumstances as a per se corporation and an entity that defaults

into corporate status unless it is required to file a special return

listed under Special Returns for Certain Organizations, later. The

entity must also have filed Form 8832, Entity Classification

Election. A foreign corporation filing Form 1120-F for the year of

the election must attach a copy of Form 8832 to its Form 1120-F.

See Form 8832, later, for additional information.

Protective return. If a foreign corporation conducts limited

activities in the United States in a tax year that the foreign

corporation determines does not give rise to gross income that is

effectively connected with the conduct of a trade or business

within the United States, the foreign corporation should follow

the instructions for filing a protective return to safeguard its right

to receive the benefit of the deductions and credits attributable to

that gross income under Regulations section 1.882-4(a)(3)(vi) in

the event that it is subsequently determined that the original

determination was incorrect. A foreign corporation should also

file a protective return if it determines initially that it has no U.S.

tax liability under the provisions of an applicable income tax

treaty (for example, because its income is not attributable to a

permanent establishment in the United States). See Protective

Return Filers, later. A foreign corporation that does not file a

return will lose the right to take deductions and credits against

effectively connected income (ECI). See Other Filing

Requirements, later.

Qualified derivatives dealer. A foreign corporation that was, or

had a branch that was, a qualified derivatives dealer must file

Form 1120-F even if one of the exceptions under Exceptions

From Filing below applies.

Qualified opportunity fund. If a corporation intends to

self-certify as a qualified opportunity fund (QOF), a foreign

corporation organized in a U.S. terrritory must file Form 1120-F

and attach Form 8996, Qualified Opportunity Fund, even if the

corporation had no income or expenses to report. See Item II on

page 3 of Form 1120-F. Also, see the Instructions for Form 8996.

Qualified opportunity investment. If the foreign corporation

held a qualified investment in a QOF at any time during the year,

the corporation must file its return with Form 8997, Initial and

Annual Statement of Qualified Opportunity Fund (QOF)

Investments, attached. See the instructions for Form 8997.

Note: A foreign corporation that was, or held an investment in, a

QOF must meet the filing requirements indicated in the two

preceding paragraphs even if one of the exceptions under

Exceptions From Filing below applies.

Exceptions From Filing

A foreign corporation does not have to file Form 1120-F if any of

the following apply.

• It did not engage directly or indirectly in a U.S. trade or

business during the year, and its full U.S. tax was withheld at

source.

• Its only U.S. source income is exempt from U.S. taxation

under section 881(c) or (d).

• It is a beneficiary of an estate or trust engaged in a U.S. trade

or business, but would itself otherwise not need to file.

Instructions for Form 1120-F (2025)

Special Returns for Certain

Organizations

Instead of filing Form 1120-F, certain foreign organizations must

file special returns.

• Form 1120-L, U.S. Life Insurance Company Income Tax

Return, as a foreign life insurance company.

• Form 1120-PC, U.S. Property and Casualty Insurance

Company Income Tax Return, as a foreign nonlife insurance

company.

• Form 1120-FSC, U.S. Income Tax Return of a Foreign Sales

Corporation, if the corporation elected to be treated as an FSC

and the election is still in effect.

Consolidated returns. A foreign corporation, regardless of

whether it files a special return, may not belong to an affiliated

group of corporations that files a consolidated return. However, a

Canadian or Mexican corporation described in section 1504(d),

maintained solely for complying with the laws of Canada or

Mexico for title and operation of property, may elect to be treated

as a domestic corporation and thereby file as part of an affiliated

group.

Electronic Filing

Corporations can generally electronically file (e-file) Form

1120-F, related forms, schedules, and attachments; Form 7004

(automatic extension of time to file); and Forms 940, 941, and

944 (employment tax returns). If there is a balance due, the

corporation can authorize an electronic funds withdrawal while

e-filing. Form 1099 and other information returns can also be

electronically filed. The option to e-file does not, however, apply

to certain returns.

For returns filed on or after January 1, 2024, corporations are

required to e-file Form 1120-F if the corporation files 10 or more

returns of any type during the calendar year (including income

tax, employment tax, excise tax, and information returns). See

Regulations section 301.6011-5. However, these corporations

can request a waiver of the electronic filing requirements.

For more information on e-filing, see E-file for business and

self-employed taxpayers on IRS.gov.

Exclusions From Electronic Filing

Waivers. The IRS may waive the electronic filing rules if the

corporation demonstrates that a hardship would result if it were

required to file its return electronically. A corporation interested in

requesting a waiver of the mandatory electronic filing

requirement must file a written request, and request one in the

manner prescribed by the IRS. All written requests for waivers

should be mailed to:

Internal Revenue Service

Ogden Submission Processing Center

Attn: Form 1120-F e-file Waiver Request

Mail Stop 1057

Ogden, UT 84201

If using a delivery service, requests for waivers should be mailed

to:

Internal Revenue Service

Ogden Submission Processing Center

Attn: Form 1120-F e-file Waiver Request

Mail Stop 1057

1973 N. Rulon White Blvd.

Ogden, UT 84404

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Waiver requests can also be faxed to 877-477-0575. Contact the

e-Help Desk at 866-255-0654 for questions regarding the waiver

procedures or process.

Exemptions. The IRS may provide exemptions from the

requirements to electronically file. If using the technology

required to electronically file conflicts with your religious beliefs,

the corporation is exempt from the requirement. Clearly indicate

the exemption on the corporation’s return. Write “Religious

Exemption” at the top of page 1 of Form 1120-F. File the foreign

corporation’s return at the applicable IRS address. See Where

To File, later. For more information, see Notice 2024-18, 2024-5

I.R.B. 625, available at IRS.gov/irb/2024-05_IRB#NOT-2024-18.

Claim for Refund or Credit

If the corporation is filing Form 1120-F only as a claim for refund

or credit of tax paid or withheld at source, the simplified

procedure described below may be used. This simplified

procedure may not be used by a corporation that was a QDD or

had a branch that was a QDD.

Note: You cannot claim a refund based on a reduced rate of, or

exemption from, U.S tax withheld from a substitute dividend

payment made in connection with a securities lending or similar

transaction if the tax was withheld by a withholding agent other

than the withholding agent from which you received the payment

(amounts are reported in box 8 of Form 1042-S). See Notice

2010-46, 2010-24 I.R.B. 757, available at IRS.gov/irb/

2010-24_IRB#NOT-2010-46, for further information on

limitations on refunds and credits permitted in such cases.

Simplified Procedure for Claiming a Refund of

U.S. Tax Withheld at Source

To make a claim for a refund, complete Form 1120-F as follows.

Page 1. Enter the complete name, address, and employer

identification number (EIN) of the corporation. Check the

applicable box to indicate the type of filing. Provide all the

information required in items A through G.

Refund amount. Enter on page 1, lines 1 and 4a, the amount

from page 4, line 11. Enter on lines 5i and 5z the amount from

page 4, line 12. Enter the excess of line 5z over line 4a on lines

8a and 9b. This is the amount to be refunded to you.

Signature. An authorized officer of the corporation must sign

and date the return.

Pages 2 and 3. Additional information. Complete all items on

pages 2 and 3 of Form 1120-F that apply to the corporation.

Page 4. Section I. Enter in column (b) the gross amount of

each type of income received that is required to be reported in

Section I (see Section I, later, for details). Include income from

foreign sources that was subject to backup withholding. Do not

include income from which no U.S. tax was withheld. If the

corporation is subject to backup withholding on gross proceeds

from sales of securities or transactions in regulated futures

contracts, enter the gross proceeds on line 10.

Enter in columns (c) and (d), respectively, the correct rate and

amount of U.S. income tax liability for each type of income

reported in column (b). If the corporation is claiming a refund of

U.S. tax withheld in excess of the rate provided in a tax treaty

with the United States, enter the applicable treaty rate in column

(c) and figure the correct U.S. income tax liability on the gross

income reported in column (b).

Enter in column (e) the U.S. tax actually withheld at source

(and not refunded by the payer or the withholding agent) from

each type of income reported. This should be the amount

reported to you in box 10, Total withholding credit, of Form(s)

1042-S, which includes the total amount of federal tax withheld

at source less any amount that was repaid to you by the

4

withholding agent. If multiple rates of tax are applicable to a type

of income, attach a statement showing the gross amounts of

income, applicable rate, and amount of liability and withholding

imposed for the respective amounts at each tax rate (for

example, if a corporation receives subsidiary dividends subject

to tax at 5% and portfolio dividends subject to tax at 15%, a

statement must be attached for Section I, line 2a, to show the

amount of dividend and tax liability for each respective rate).

Enter on line 11 the total U.S. tax liability for the reported

income.

Enter on line 12 the total U.S. tax actually withheld from such

income.

Check the appropriate box on line 13. A fiscally transparent

entity is one that is not itself generally subject to income tax but

one whose tax attributes flow through to its owners.

Additional Documentation Required

The corporation must attach to Form 1120-F the following.

1. Proof of the withholding (for example, Form 1042-S).

2. A statement that describes the basis for the claim for

refund.

3. Any required tax certifications (for example, Form

W-8BEN-E).

4. Any additional documentation to support the claim.

Refund of backup withholding tax. If the corporation is

claiming a refund of backup withholding tax based on its status

as a non-U.S. resident, it must:

• Provide a copy of the Form 1099 that shows the amount of

reportable payment and backup withholding, and

• Attach a statement signed under penalties of perjury that the

corporation is exempt from backup withholding because it is not

a U.S. corporation or other U.S. resident (for example, Form

W-8BEN-E).

Refunds of U.S. withholding. If any of the following apply,

attach the information requested in addition to the additional

documentation described earlier.

• If you are claiming a refund of U.S. tax withheld under

chapter 4, you must provide a statement explaining the basis for

the claim and must provide the other information requested in

this section to establish a reduced rate, or exemption from, tax

under section 881. See Regulations section 1.1474-5 for the

requirements for claiming a credit or refund of tax withheld under

chapter 4.

• If claiming a refund of U.S. tax withheld from portfolio interest,

include a description of the relevant debt obligation, including the

name of the issuer, CUSIP number (if any), interest rate,

scheduled maturity date, and the date the debt was issued. Also,

include a statement, signed under penalties of perjury, that the

corporation is the beneficial owner of the interest income and not

a U.S. corporation or other U.S. resident (for example, Form

W-8BEN-E).

• If claiming a reduced rate of, or exemption from, tax based on

a tax treaty, provide a certificate of entitlement to treaty benefits

(for example, Form W-8BEN-E). A separate statement should be

provided that contains any additional representations necessary

to explain the basis for the claim. The corporation may complete

item W(1) on page 2 of the form (which includes completing and

attaching Form 8833, if required) in lieu of attaching a statement.

Note: To claim a reduced rate of, or exemption from, tax based

on a tax treaty, the corporation must generally be a resident of

the particular treaty country within the meaning of the treaty and

satisfy the limitation on benefits article, if any, in the treaty with

that country.

Instructions for Form 1120-F (2025)

• If claiming a refund for overwithholding on a distribution from a

U.S. corporation with respect to its stock because the

corporation has insufficient earnings and profits to support

ordinary dividend treatment, provide a statement that identifies

the distributing corporation and provides the basis for the claim.

• If claiming a refund for overwithholding on a distribution from a

mutual fund or a real estate investment trust (REIT) with respect

to its stock because the distribution was designated as long-term

capital gain or a return of capital, provide a statement that

identifies the mutual fund or REIT and provide the basis for the

claim.

• If claiming a refund for overwithholding on a distribution from a

U.S. corporation with respect to its stock because, in the foreign

corporation’s particular circumstances, the transaction qualifies

as a redemption of stock under section 302, provide a statement

that describes the transaction and presents the facts necessary

to establish that the payment was (a) a complete redemption, (b)

a disproportionate redemption, or (c) not essentially equivalent

to a dividend.

When To File

Foreign Corporation With an Office or Place of

Business in the United States

A foreign corporation that maintains an office or place of

business in the United States must generally file Form 1120-F by

the 15th day of the 4th month after the end of its tax year. A new

corporation filing a short-period return must generally file by the

15th day of the 4th month after the short period ends. A

corporation that has dissolved must generally file by the 15th day

of the 4th month after the date it dissolved.

However, a corporation with a fiscal tax year ending June 30

must file by the 15th day of the 3rd month after the end of its tax

year. A corporation with a short tax year ending anytime in June

will be treated as if the short year ended on June 30, and must

file by the 15th day of the 3rd month after the end of its tax year.

If the due date falls on a Saturday, Sunday, or legal holiday,

the corporation can file on the next business day.

Extension of time to file. The corporation must file Form 7004,

Application for Automatic Extension of Time To File Certain

Business Income Tax, Information, and Other Returns, by the

return due date specified in the previous two paragraphs to

request an extension of time to file. However, there is an

exception that applies under Regulations section 1.6081-5. See

the Instructions for Form 7004 for additional information.

Foreign Corporation With No Office or Place of

Business in the United States

A foreign corporation that does not maintain an office or place of

business in the United States must generally file Form 1120-F by

the 15th day of the 6th month after the end of its tax year.

If the due date falls on a Saturday, Sunday, or legal holiday,

the corporation can file on the next business day.

Extension of time to file. File Form 7004 by the 15th day of the

6th month after the end of the tax year to request an extension of

time to file. See the Instructions for Form 7004 for additional

information.

Other Filing Requirements

• If the due date of any filing falls on a Saturday, Sunday, or

legal holiday, the corporation may file on the next business day.

• Form 1120-F must be filed on a timely basis and in a true and

accurate manner in order for a foreign corporation to take

deductions and credits against its ECI. For these purposes,

Form 1120-F is generally considered to be timely filed if it is filed

no later than 18 months after the due date of the current year’s

Instructions for Form 1120-F (2025)

return. An exception may apply to foreign corporations that have

yet to file Form 1120-F for the preceding tax year. These filing

deadlines may be waived in limited situations based on the facts

and circumstances, where the foreign corporation establishes to

the satisfaction of the Commissioner that the foreign corporation

acted reasonably and in good faith in failing to file Form 1120-F.

See Regulations section 1.882-4(a)(3)(ii) for more information

about the waiver.

A foreign corporation is allowed the following deductions and

credits regardless of whether Form 1120-F is timely filed.

1. The charitable contributions deduction (page 5, Section II,

line 19).

2. The credit from Form 2439 (page 1, line 5f).

3. The credit for federal tax on fuels (page 1, line 5g).

4. U.S. income tax paid or withheld at source (page 1,

line 5i).

See Regulations section 1.882-4 for details.

Private Delivery Services

Corporations can use certain private delivery services (PDSs)

designated by the IRS to meet the “timely mailing as timely filing”

rule for tax returns. Go to IRS.gov/PDSStreetAddresses.

The PDS can tell you how to get written proof of the mailing

date.

For the IRS mailing address to use if you’re using a PDS, go

to IRS.gov/PDSStreetAddresses.

Private delivery services cannot deliver items to P.O. boxes.

You must use the U.S. Postal Service to mail any item to an IRS

P.O. box address.

Where To File

File Form 1120-F with the Internal Revenue Service Center, P.O.

Box 409101, Ogden, UT 84409.

Who Must Sign

The return must be signed and dated by:

• The president, vice president, treasurer, assistant treasurer,

chief accounting officer; or

• Any other corporate officer (such as tax officer) authorized to

sign.

If a return is filed on behalf of a corporation by a receiver,

trustee, or assignee, the fiduciary must sign the return, instead of

the corporate officer. Returns and forms signed by a receiver or

trustee in bankruptcy on behalf of a corporation must be

accompanied by a copy of the order or instructions of the court

authorizing signing of the return or form.

Paid Preparer Use Only section. If an employee of the

corporation completes Form 1120-F, the paid preparer section

should remain blank. Anyone who prepares Form 1120-F but

does not charge the corporation should not complete that

section. Generally, anyone who is paid to prepare the return

must sign and complete the section.

The paid preparer must complete the required preparer

information and:

• Sign the return in the space provided for the preparer’s

signature,

• Include their Preparer Tax Identification Number (PTIN), and

• Give a copy of the return to the taxpayer.

A paid preparer may sign original or amended returns by

rubber stamp, mechanical device, or computer software

program.

Paid Preparer Authorization

If the corporation wants to allow the IRS to discuss its 2025 tax

return with the paid preparer who signed it, check the “Yes” box

5

in the signature area of the return. This authorization applies only

to the individual whose signature appears in the “Paid Preparer

Use Only” section of the return. It does not apply to the firm, if

any, shown in that section.

If the “Yes” box is checked, the corporation is authorizing the

IRS to call the paid preparer to answer any questions that may

arise during the processing of its return. The corporation is also

authorizing the paid preparer to:

• Give the IRS any information that is missing from the return;

• Call the IRS for information about the processing of the return

or the status of any related refund or payment(s); and

• Respond to certain IRS notices about math errors, offsets,

and return preparation.

The corporation is not authorizing the paid preparer to receive

any refund check, bind the corporation to anything (including any

additional tax liability), or otherwise represent the corporation

before the IRS.

The authorization will automatically end no later than the due

date (excluding extensions) for filing the corporation’s 2026 tax

return. If the corporation wants to expand the paid preparer’s

authorization or revoke the authorization before it ends, see Pub.

947, Practice Before the IRS and Power of Attorney.

Other Forms, Schedules, and

Statements That May Be Required

Forms

A foreign corporation may have to file some of the following

forms and schedules. See the form or schedule for more

information.

For a list of additional forms the corporation may need to file

(most notably, forms pertaining to the reporting of various types

of income, and any related withholding, to U.S. persons, foreign

persons, and the IRS), see Pub. 542, Corporations.

Form 1094-C. Transmittal of Employer Health Coverage

Statements and Form 1095-C, Employer-Provided Health

Coverage Statement. Employers with 50 or more full-time

employees (including full-time equivalent employees) use Forms

1094-C and 1095-C to report the information required under

sections 6055 and 6056 about offers of health coverage and

enrollment in health coverage for their employees. Form 1094-C

must be used to report to the IRS summary information for each

employer and to transmit Forms 1095-C to the IRS. Form 1095-C

is used to report information about each employee. In addition,

Forms 1094-C and 1095-C are used in determining whether an

employer owes payments under the employer-shared

responsibility provisions under section 4980H. For more

information, see the Instructions for Forms 1094-C and 1095-C.

Also, for more information related to the Affordable Care Act, visit

IRS.gov/ACA.

Form 5472. Information Return of a 25% Foreign-Owned U.S.

Corporation or a Foreign Corporation Engaged in a U.S. Trade or

Business. This form is filed by or for a foreign corporation

engaged in a U.S. trade or business that had reportable

transactions with a related party. See the Instructions for Form

5472 for filing instructions and information for failure to file and

maintain records.

Form 8275. Disclosure Statement and Form 8275-R,

Regulation Disclosure Statement. Use these forms to disclose

items or positions taken on a tax return that are not otherwise

adequately disclosed on a tax return or that are contrary to

Treasury regulations (to avoid parts of the accuracy-related

penalty or certain preparer penalties).

Form 8300. Report of Cash Payments Over $10,000 Received

in a Trade or Business. Use this form to report the receipt of

6

more than $10,000 in cash or foreign currency in one transaction

or a series of related transactions.

Form 8832. Entity Classification Election. This form is filed by

an eligible entity to elect how it will be classified for federal tax

purposes. If the corporation filed Form 8832 to make an initial

classification election to be a corporation or to change its

classification to be a corporation effective during the current tax

year, the corporation must attach a copy of the Form 8832

to its Form 1120-F. If the corporation owns a direct or indirect

interest in an entity that is not required to file a return, but for

which a Form 8832 was filed to make a change in the

classification of the entity that is effective during the current tax

year, the corporation must attach a copy of the Form 8832

with respect to that entity to its Form 1120-F for the current

tax year. Examples of when the corporation must attach a copy

of the Form 8832 for an entity in which it has an interest include

the corporation’s ownership of:

• An entity that elected to be a disregarded entity,

• A foreign entity that elected to be a partnership but does not

itself have a Form 1065 filing requirement, and

• A foreign corporation that owns a foreign entity that elected to

be a disregarded entity.

The corporation does not need to attach the Form 8832 for an

entity in which it has an indirect interest if an entity in which it has

an interest is already attaching a copy of the Form 8832 with its

return. See Regulations section 301.7701-3(c)(1)(ii).

Form 8833. Treaty-Based Return Position Disclosure Under

Section 6114 or 7701(b). Use this form to make the treaty-based

return position disclosure required by section 6114.

Form 8848. Consent To Extend the Time To Assess the Branch

Profits Tax Under Regulations Sections 1.884-2(a) and (c). Use

this form to execute a waiver of period of limitations in regard to a

termination or incorporation of a U.S. trade or business or

liquidation or reorganization of a foreign corporation or its

domestic subsidiary. See the instructions for Section III, Part I, of

Form 1120-F.

Form 8886. Reportable Transaction Disclosure Statement. Use

this form to disclose information for each reportable transaction

in which the corporation participated. Form 8886 must be filed

for each tax year that the federal income tax liability of the

corporation is affected by its participation in the transaction. The

following are reportable transactions.

1. Any listed transaction, which is a transaction that is the

same as or substantially similar to one of the types of

transactions that the IRS has determined to be a tax avoidance

transaction and identified by notice, regulation, or other

published guidance as a listed transaction.

2. Any transaction offered under conditions of confidentiality

for which the corporation (or a related party) paid an advisor a

fee of at least $250,000.

3. Certain transactions for which the corporation (or a

related party) has contractual protection against disallowance of

the tax benefits.

4. Certain transactions resulting in a loss of at least $10

million in any single year or $20 million in any combination of

years.

5. Any transaction identified by the IRS by notice, regulation,

or other published guidance as a “transaction of interest.”

For more information, see Regulations section 1.6011-4.

Also, see the Instructions for Form 8886.

Penalties. The corporation may have to pay a penalty if it is

required to disclose a reportable transaction under section 6011

and fails to properly complete and file Form 8886. Penalties may

also apply under section 6707A if the corporation fails to file

Form 8886 with its corporate return, fails to provide a copy of

Instructions for Form 1120-F (2025)

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). Other penalties, such as an

accuracy-related penalty under section 6662A, may also apply.

See the Instructions for Form 8886 for details on these and other

penalties.

Reportable transactions by material advisors. Material

advisors to any reportable transaction must disclose certain

information about the reportable transaction by filing Form 8918

with the IRS. For details, see the Instructions for Form 8918.

Schedules

Schedule H, Deductions Allocated to Effectively Connected

Income Under Regulations Section 1.861-8. This schedule is

required to be attached to report certain deductions of the

corporation that are allocable to ECI. If the corporation has any

deductions reportable on Form 1120-F, Section II, lines 12

through 27, then Schedule H is required to be attached. See the

separate Instructions for Schedule H for details.

Note: Line 20 of Schedule H is reportable on Form 1120-F,

Section II, line 26.

Schedule I, Interest Expense Allocation Under Regulations

Section 1.882-5. This schedule is required to be attached to

report any interest expense allocable to ECI under Regulations

section 1.882-5. The schedule must be attached whether or not

such allocable interest is deductible against ECI in the current

year. See the separate Instructions for Schedule I (Form 1120-F)

for identification of elective allocation methods and computation

of the allocable and deductible amounts of interest expense.

Note: Line 25 of Schedule I is reportable on Form 1120-F,

Section II, line 18.

Schedule P, List of Foreign Partner Interests in Partnerships. This schedule is required to be attached to report all ECI

included in Schedules K-3 (Form 1065) the foreign corporation

receives for each of its directly held partnership interests.

Schedule P is also required to report the corporation’s adjusted

outside basis in its directly held partnership interest and the

amount of the outside basis of each such interest apportioned to

ECI under Regulations section 1.884-1(d)(3). See the separate

Instructions for Schedule P (Form 1120-F) for the reconciliation

of ECI and distributive share of expenses reported on Schedules

K-3 (Form 1065). Finally, Schedule P is required to report

information regarding a foreign corporate partner’s transfer of an

interest in a partnership and the calculation of gain or loss on the

transfer when the partnership directly or indirectly either is

engaged in the conduct of a trade or business within the United

States or holds any U.S. real property interests. Do not file

Schedule P if the corporation has no partnership interests that

give rise to ECI that is included in the income reported to the

corporation on Schedules K-3 (Form 1065) and there has not

been a transfer of an interest in a partnership that directly or

indirectly either is engaged in the conduct of a trade or business

within the United States or holds any U.S. real property interests.

Note: If the corporation has received Form 8805, Foreign

Partner’s Information Statement of Section 1446 Withholding

Tax, it will have ECI includible in its Schedule K-3 (Form 1065)

that is required to be reported on Schedule P.

Schedule S, Exclusion of Income From the International

Operation of Ships or Aircraft Under Section 883. This

schedule is required to be attached to claim a Code exemption

under section 883. This schedule incorporates the information

required under Regulations sections 1.883-1 through 1.883-4.

See the separate Instructions for Schedule S (Form 1120-F) for

details.

Instructions for Form 1120-F (2025)

Schedule V, List of Vessels or Aircraft, Operators, and Owners. This schedule is required to be attached if the corporation

is required to report gross transportation income in Section I,

line 9, column (b). See the separate Instructions for Schedule V

(Form 1120-F) for details.

Statements

Transfers to a corporation controlled by the transferor.

Every significant transferor (as defined in Regulations section

1.351-3(d)(1)) that receives stock of a corporation in exchange

for property in a nonrecognition event must include the

statement required by Regulations section 1.351-3(a) on or with

the transferor’s tax return for the tax year of the exchange. The

transferee corporation must include the statement required by

Regulations section 1.351-3(b) on or with its return for the tax

year of the exchange, unless all the required information is

included in any statement(s) provided by a significant transferor

that is attached to the same return for the same section 351

exchange. If the transferor or transferee corporation is a

controlled foreign corporation (CFC), each U.S. shareholder

(within the meaning of section 951(b)) must include the required

statement on or with its return.

Distributions under section 355. Every corporation that

makes a distribution of stock or securities of a controlled

corporation, as described in section 355 (or so much of section

356 as it relates to section 355), must include the statement

required by Regulations section 1.355-5(a) on or with its return

for the year of the distribution. A significant distributee (as

defined in Regulations section 1.355-5(c)) that receives stock or

securities of a controlled corporation must include the statement

required by Regulations section 1.355-5(b) on or with its return

for the year of receipt. If the distributing or distributee corporation

is a CFC, each U.S. shareholder (within the meaning of section

951(b)) must include the statement on or with its return.

Election to reduce basis under section 362(e)(2)(C). If

property is transferred to a corporation subject to section 362(e)

(2), the transferor and the transferee corporation may elect,

under section 362(e)(2)(C), to reduce the transferor’s basis in

the stock received instead of reducing the transferee

corporation’s basis in the property transferred. Once made, the

election is irrevocable. For more information, see section 362(e)

(2) and Regulations section 1.362-4. If an election is made, a

statement must be filed in accordance with Regulations section

1.362-4(d)(3).

Foreign corporation with income excluded from gross income. If the foreign corporation has income excluded from

gross income for the tax year, do not complete the Form 1120-F

schedules. Instead, attach a statement to the return showing the

types and amounts of income excluded from gross income. See

Treaty or Code exemption, earlier, for more information.

Election to reduce liabilities under Regulations section

1.884-1(e)(3). If a taxpayer has a dividend equivalent amount

that is subject to the branch profits tax under section 884(a), it

may elect to reduce its U.S. liabilities under the branch profits tax

regulations to treat its effectively connected earnings and profits

as reinvested rather than remitted. A taxpayer may elect to

reduce the amount of its liabilities by an amount that does not

exceed the lesser of the amount of U.S. liabilities or the amount

of U.S. liability reduction needed to reduce a dividend equivalent

amount to zero. The election is made by attaching a statement to

a timely filed tax return (including the extension due date)

indicating the amount of U.S. liabilities reduced for branch profits

tax purposes and the corresponding amount also reduced from

U.S.-connected liabilities for interest expense allocation

purposes. See Regulations section 1.884-1(e)(3).

7

Assembling the Return

To ensure that the corporation’s tax return is correctly processed,

attach all schedules and other forms after page 9 of Form

1120-F, in the following order.

1. Form 4626.

2. Schedule D (Form 1120).

3. Form 8949.

4. Form 8996.

5. Form 4136.

6. Form 8978.

7. Form 8941.

8. Form 3800.

9. Form 8997.

10. Form 4255.

11. Additional schedules in alphabetical order.

12. Additional forms in numerical order.

13. Supporting statements and attachments.

Complete every applicable entry space on Form 1120-F. Do

not enter “See Attached” or “Available Upon Request” instead of

completing the entry spaces. If more space is needed on the

forms or schedules, attach separate sheets using the same size

and format as the printed forms.

If there are supporting statements and attachments, arrange

them in the same order as the schedules or forms they support

and attach them last. Show the totals on the printed forms. Enter

the corporation’s name and EIN on each supporting statement or

attachment.

Note: If the corporation had tax withheld under chapter 3 or 4 of

the Internal Revenue Code and received a Form 1042-S, Foreign

Person’s U.S. Source Income Subject to Withholding; Form

8805, Foreign Partner’s Information Statement of Section 1446

Withholding Tax; or Form 8288-A, Statement of Withholding on

Certain Dispositions by Foreign Persons, showing the amount of

income tax withheld, attach such form(s) to Form 1120-F to

claim a withholding credit. The corporation should report the tax

withheld on Form 1120-F, page 1, line 5i. See the instructions for

line 5i.

Accounting Methods

In general, figure taxable income using the method of accounting

regularly used in keeping the corporation’s books and records. In

all cases, the method used must clearly show taxable income.

Permissible overall methods of accounting include cash, accrual,

or any other method authorized by the Internal Revenue Code.

Generally, the following rules apply. For more information, see

Pub. 538, Accounting Periods and Methods.

• A corporation cannot use the cash method of accounting

unless it is a small business taxpayer (defined later). A tax

shelter (defined in section 448(d)(3)) may never use the cash

method. See sections 448(a)(1) through (a)(3). However, see

Nonaccrual experience method for service providers in the

instructions for Section II, line 1a, later;

• Unless it is a small business taxpayer (defined below), a

corporation must use an accrual method for sales and

purchases of inventory items. See the instructions for Form

1125-A;

• A corporation engaged in farming must use an accrual

method. For exceptions, see section 447 and Pub. 225;

• Special rules apply to long-term contracts. See section 460.

• Dealers in securities must use the mark-to-market accounting

method. Dealers in commodities and traders in securities and

commodities may elect to use the mark-to-market accounting

method. See section 475.

8

Small business taxpayer. For tax years beginning in 2025, a

corporation qualifies as a small business taxpayer if it (a) has

average annual gross receipts of $31 million or less for the 3

prior tax years, and (b) is not a tax shelter (as defined in section

448(d)(3)).

A small business taxpayer can account for inventory by (a)

treating the inventory as non-incidental materials and supplies,

or (b) conforming to its treatment of inventory in an applicable

financial statement (as defined in section 451(b)(3)). If it does

not have an applicable financial statement, it can use the method

of accounting used in its books and records prepared according

to its accounting procedures.

Change in accounting method. Generally, the corporation

must get IRS consent to change either an overall method of

accounting or the accounting treatment of any material item for

income tax purposes. To obtain consent, the corporation must

generally file Form 3115, Application for Change in Accounting

Method, during the tax year for which the change is requested.

See the Instructions for Form 3115 and Pub. 538 for more

information and exceptions. Also, see the Instructions for Form

3115 for procedures that may apply for obtaining automatic

consent to change certain methods of accounting,

non-automatic change procedures, and reduced Form 3115

filing requirements.

Section 481(a) adjustment. If the corporation’s taxable

income for the current tax year is figured under a method of

accounting different from the method used in the preceding tax

year, the corporation may have to make an adjustment under

section 481(a) to prevent amounts of income or expense from

being duplicated or omitted. The section 481(a) adjustment

period is generally 1 year for a net negative adjustment and 4

years for a net positive adjustment. Also, see the Instructions for

Form 3115.

Exceptions to the general section 481(a) adjustment period

may apply. Also, in some cases, a corporation can elect to

modify the section 481(a) adjustment period. The corporation

may have to complete the appropriate lines of Form 3115 to

make an election. See the Instructions for Form 3115 for more

information and exceptions.

If the net section 481(a) adjustment is positive, report the

ratable portion on Form 1120-F, Section II, line 10, as other

income. If the net section 481(a) adjustment is negative, report

the ratable portion on line 27 of Section II as a deduction.

Accounting Period

A corporation must figure its taxable income on the basis of a tax

year. A tax year is the annual accounting period a corporation

uses to keep its records and report its income and expenses.

Generally, corporations may use a calendar year or a fiscal year.

Personal service corporations, however, must use a calendar

year unless they meet one of the exceptions discussed under

Personal Service Corporation, later. Furthermore, special rules

apply to specified foreign corporations. See Specified Foreign

Corporations below.

Change of tax year. Generally, a corporation, including a

personal service corporation, must get the consent of the IRS

before changing its tax year by filing Form 1128, Application To

Adopt, Change, or Retain a Tax Year. However, exceptions may

apply. See the Instructions for Form 1128 and Pub. 538 for more

information.

Specified Foreign Corporations

The annual accounting period of a specified foreign corporation

(defined below) is generally required to be the tax year of its

majority U.S. shareholder. If there is more than one majority

shareholder, the required tax year will be the tax year that results

in the least aggregate deferral of income to all U.S. shareholders

Instructions for Form 1120-F (2025)

of the foreign corporation. For more information, see section 898;

Rev. Proc. 2006-45, 2006-2 C.B. 851, available at IRS.gov/irb/

2006-45_IRB#RP-2006-45; and Rev. Proc. 2002-39, 2002-1

C.B. 1046, available at IRS.gov/pub/irs-irbs/irb02-22, as

modified by Notice 2002-72, 2002-2 C.B. 843, available at

IRS.gov/pub/irs-irbs/irb02-46.

Specified foreign corporation. A specified foreign corporation

(as defined in section 898) is any foreign corporation that is

treated as a controlled foreign corporation (CFC) under subpart

F (sections 951 through 964) and with respect to which more

than 50% of the total voting power or value of all classes of stock

of the corporation is treated as owned by a U.S. shareholder.

Rounding Off to Whole Dollars

The corporation may enter decimal points and cents when

completing its return. However, the corporation should round off

cents to whole dollars on its return, forms, and schedules to

make completing its return easier. The corporation must either

round off all amounts on its return to whole dollars or use cents

for all amounts. To round, drop amounts under 50 cents and

increase amounts from 50 to 99 cents to the next dollar. For

example, $8.40 rounds to $8 and $8.50 rounds to $9.

If two or more amounts must be added to figure the amount to

enter on a line, include cents when adding the amounts and

round off only the total.

Recordkeeping

Keep the corporation’s records for as long as they may be

needed for the administration of any provision of the Internal

Revenue Code. Usually, records that support an item of income,

deduction, or credit on the return must be kept for 3 years from

the date the return is due or filed, whichever is later. Keep

records that verify the corporation’s basis in property for as long

as they are needed to figure the basis of the original or

replacement property. QDDs should see the Qualified

Intermediary Agreement for additional requirements.

The corporation should keep copies of all filed returns. They

help in preparing future and amended returns and in the

calculation of earnings and profits.

Payment of Tax Due

The requirements for payment of tax depend on whether the

foreign corporation has an office or place of business in the

United States.

Foreign corporations that do not maintain an office or place

of business in the United States must generally pay any tax due

(page 1, line 7) in full no later than the 15th day of the 6th month

after the end of the tax year. However, see the instructions for

line 7, later. If the foreign corporation files Form 1120-F

electronically, it may pay the tax due by initiating an electronic

funds withdrawal (direct debit). It does so by checking the box on

Part II, line C, of Form 8453-CORP, E-file Declaration for

Corporations. If the foreign corporation does not file Form

1120-F electronically, or if it files Form 1120-F electronically and

does not choose the direct debit option, the foreign corporation

may use the Electronic Federal Tax Payment System (EFTPS) to

pay the tax due if it has a U.S. bank account. If the foreign

corporation does not have a U.S. bank account, it may arrange

for its financial institution to initiate a same-day payment on its

behalf or it can arrange for either a qualified intermediary, tax

professional, payroll service, or other trusted third party to make

a deposit on its behalf using a master account. In addition, the

foreign corporation still has the option to pay by check or money

order, payable to “United States Treasury.” To help ensure proper

crediting, write the corporation’s EIN, “Form 1120-F,” and the tax

period to which the payment applies on the check or money

order. Enclose the payment when the corporation files Form

1120-F.

Instructions for Form 1120-F (2025)

Foreign corporations that do maintain an office or place of

business in the United States must generally pay any tax due

(page 1, line 7) in full no later than the due date for filing Form

1120-F (not including extensions). See When To File, earlier, for

this due date. However, see Regulations section 1.6081-5 for an

exception. Also, see the instructions for line 7, later. If the foreign

corporation files Form 1120-F electronically, it may pay the tax

due by initiating an electronic funds withdrawal (direct debit). It

does so by checking the box on Part II, line C, of Form

8453-CORP. If the foreign corporation does not file Form 1120-F

electronically, or if it files Form 1120-F electronically and does

not choose the direct debit option, the tax may be paid as

follows. The foreign corporation may pay the tax using EFTPS or

it can arrange for its tax professional, financial institution, payroll

service, or other trusted third party to make deposits on its

behalf. In addition, the foreign corporation also has the option to

arrange for its financial institution to initiate a same-day payment.

Note: If the due date falls on a Saturday, Sunday, or legal

holiday, the payment is due on the next day that isn’t a Saturday,

Sunday, or legal holiday.

Electronic deposit requirement. Foreign corporations with an

office or place of business in the United States must use

electronic funds transfer (EFT) to make all federal tax deposits

(such as deposits of employment, excise, and corporate income

tax). An EFT can be made using EFTPS. However, if the

corporation does not want to use EFTPS, it can arrange for its

tax professional, financial institution, payroll service, or other

trusted third party to make deposits on its behalf. Also, it may

arrange for its financial institution to submit a same-day payment

(discussed below) on its behalf. EFTPS is a free service

provided by the Department of the Treasury. Services provided

by a tax professional, financial institution, payroll service, or

other third party may have a fee.

To get more information about EFTPS or to enroll in EFTPS,

visit EFTPS.gov or call 800-555-4477 (TTY/TDD 800-733-4829).

Depositing on time. EFTPS accepts same day payments of $1

million or less if the payment is submitted before 3:00 p.m.

Eastern time on a business day. If the corporation’s payment is

more than $1 million, the corporation must submit the deposit by

8:00 p.m. Eastern time the day before the date the deposit is

due. If the corporation uses a third party to make deposits on its

behalf, they may have different cutoff times.

Same-day wire payment option. If the corporation fails to

submit a deposit transaction on EFTPS timely, it can still make

the deposit on time by using the Federal Tax Collection Service

(FTCS). To use the same-day wire payment method, the

corporation will need to make arrangements with its financial

institution ahead of time regarding availability, deadlines, and

costs. Financial institutions may charge a fee for payments made

this way. To learn more about the information the corporation will

need to provide to its financial institution to make a same-day

wire payment, go to IRS.gov/SameDayWire.

Estimated Tax Payments

Generally, the following rules apply to a foreign corporation’s

payments of estimated tax.

• The corporation must make installment payments of

estimated tax if it expects its total tax for the year (less applicable

credits) to be $500 or more.

• The installments are due by the 15th day of the 4th, 6th, 9th,

and 12th months of the tax year. If any date falls on a Saturday,

Sunday, or legal holiday, the installment is due on the next

regular business day.

• If the foreign corporation maintains an office or place of

business in the United States, it must use electronic funds

transfer to make installment payments of estimated tax.

9

• If the foreign corporation does not maintain an office or place

of business in the United States, it may pay the estimated tax by

EFTPS, providing it has a U.S. bank account. The foreign

corporation may also arrange for its financial institution to submit

a same-day payment on its behalf or can arrange for its qualified

intermediary, tax professional, payroll service, or other trusted

third party to make a deposit on its behalf using a master

account. In addition, the foreign corporation still has the option to

pay the estimated tax due by check or money order.

• If, after the corporation figures and deposits estimated tax, it

finds that its tax liability for the year will be more or less than

originally estimated, it may have to refigure its required

installments. If earlier installments were underpaid, the

corporation may owe a penalty. See Estimated tax penalty

below.

• If the corporation overpaid estimated tax, it may be able to get

a quick refund by filing Form 4466, Corporation Application for

Quick Refund of Overpayment of Estimated Tax. See the

instructions for line 5c, later.

See section 6655 and Pub. 542, Corporations, for more

information on how to figure estimated taxes.

Estimated tax penalty. A corporation that does not make

estimated tax payments when due may be subject to an

underpayment penalty for the period of underpayment.

Generally, a corporation is subject to the penalty if its tax liability

is $500 or more and it did not timely pay at least the smaller of:

• Its tax liability for the current year, or

• Its prior year’s tax.

No estimated tax payments are required with respect to a

foreign corporation’s liability for the branch profits tax. See

Regulations section 1.884-1(a).

Use Form 2220, Underpayment of Estimated Tax by

Corporations, to see if the corporation owes a penalty and to

figure the amount of the penalty. If Form 2220 is completed,

enter the penalty on Form 1120-F, page 1, line 6. See the

instructions for line 6, estimated tax penalty, later. Also, see

Extension of relief from additions to tax for underpayments

applicable to the corporate alternative minimum tax (CAMT),

earlier.

Interest and Penalties

Interest. Interest is charged on taxes paid late even if an

extension of time to file is granted. Interest is also charged on

penalties imposed for failure to file, negligence, fraud, substantial

valuation misstatements, substantial understatements of tax,

and reportable transaction understatements from the due date

(including extensions) to the date of payment. The interest

charge is figured at a rate determined under section 6621.

Penalty for late filing of return. A corporation that does not

file its tax return by the due date, including extensions, may be

penalized 5% of the unpaid tax for each month or part of a month

the return is late, up to a maximum of 25% of the unpaid tax. The

minimum penalty for a tax return required to be filed in 2026 that

is more than 60 days late is the smaller of the tax due or $525.

The penalty will not be imposed if the corporation can show that

the failure to file on time was due to reasonable cause.

Caution: If you believe that reasonable cause exists, do not

attach an explanation when you file Form 1120-F. Instead, if the

corporation receives a penalty notice after the return is filed,

send an explanation to the IRS at that time and the IRS will

determine if the corporation meets reasonable-cause criteria.

Penalty for late payment of tax. A corporation that does not

pay the tax when due may generally be penalized 1/2 of 1% of the

unpaid tax for each month or part of a month the tax is not paid,

up to a maximum of 25% of the unpaid tax. The penalty will not

10

be imposed if the corporation can show that the failure to pay on

time was due to reasonable cause. See Caution above.

Trust fund recovery penalty. This penalty may apply if certain

excise, income, social security, and Medicare taxes that must be

collected or withheld are not collected or withheld, or these taxes

are not paid. These taxes are generally reported on:

• Form 720, Quarterly Federal Excise Tax Return;

• Form 941, Employer’s QUARTERLY Federal Tax Return;

• Form 943, Employer’s Annual Federal Tax Return for

Agricultural Employees;

• Form 944, Employer’s ANNUAL Federal Tax Return; or

• Form 945, Annual Return of Withheld Federal Income Tax.

The trust fund recovery penalty may be imposed on all

persons who are determined by the IRS to have been

responsible for collecting, accounting for, or paying over these

taxes, and who acted willfully in not doing so. The penalty is

equal to the full amount of the unpaid trust fund tax. See the

Instructions for Form 720 or Pub. 15 (Circular E), Employer’s Tax

Guide.

Other penalties. Other penalties may be imposed for

negligence, substantial understatement of tax, reportable

transaction understatements, and fraud. See sections 6662,

6662A, and 6663.

Special Rules for Foreign

Corporations

Source of Income Rules

The source of income is important in determining the extent to

which income is taxable to foreign corporations. Each type of

income has its own sourcing rules.

Interest Income

The source of interest income is usually determined by the

residence of the obligor.

For example, interest paid by an obligor who is a resident of

the United States is U.S. source income, and interest paid by an

obligor who is a resident of a country other than the United

States is foreign source income. Interest paid by a foreign

partnership that is predominantly engaged in the active conduct

of a trade or business outside the United States is treated as

U.S.-source income only if the interest is paid by a U.S. trade or

business conducted by the partnership or is allocable to income

that is treated as effectively connected with the conduct of a U.S.

trade or business. See section 861(a)(1)(B).

Exceptions. The following types of interest income are treated

as foreign source income.

• Interest income received from foreign branches of U.S. banks

and savings and loan associations.

• In the case of a foreign partnership that is predominantly

engaged in the active conduct of a trade or business outside the

United States, any interest not paid by a trade or business

engaged in by the partnership in the United States and not

allocable to income that is effectively connected (or treated as

effectively connected) with the conduct of a U.S. trade or

business.

The following types of interest income are treated as

domestic source income even though paid by a foreign

corporation.

• For a foreign corporation engaged in a U.S. trade or business,

interest paid by the U.S. trade or business (branch interest) is

treated as if paid by a domestic corporation to the actual

recipient of the interest. See section 884(f)(1)(A) and the

regulations thereunder. Interest paid from a U.S. trade or

Instructions for Form 1120-F (2025)

business is only treated as branch interest to the extent the

interest is allocable to ECI under the interest expense allocation

rules in Regulations section 1.882-5. Amounts paid but not

allocable to ECI are not branch interest. See Regulations section

1.884-4(b)(6).

• If the foreign corporation has allocable interest in excess of

branch interest (excess interest), the foreign corporation must

treat that interest as if paid by a wholly owned domestic

corporation to the foreign corporation. See section 884(f)(1)(B)

and the instructions for Section III, Part II, later.

Dividend Income

The source of dividend income is usually determined by the

residence of the payer. For example, dividends paid by a

corporation that was incorporated in the United States are

generally U.S. source income and dividends paid by a

corporation that was incorporated in a foreign country are

generally foreign source income.

Exceptions:

• Dividends paid by a U.S. corporation are foreign source

income:

1. If the U.S. corporation has made a valid election under

section 936 (or section 30A), relating to certain U.S. corporations

operating in a U.S. territory; or

2. To the extent the dividends are from qualified export

receipts described in section 993(a)(1) (other than interest and

gains described in section 995(b)(1)).

• Dividends paid by a foreign corporation are U.S. source

income:

1. If the dividend is treated under section 243(e) as a

distribution from the accumulated profits of a predecessor U.S.

corporation; or

2. To the extent the foreign corporation’s effectively

connected gross income for the testing period (defined below)

bears to all of the foreign corporation’s gross income for the

testing period, but only if 25% or more of the foreign

corporation’s gross income during the testing period was

effectively connected with the conduct of a U.S. trade or

business.

The testing period is generally the 3 tax years of the foreign

corporation payer preceding the tax year during which it declared

the dividend. If the foreign corporation existed for fewer than 3

years before the tax year of declaration, the testing period is the

term of the foreign corporation’s existence before the current

year. If the foreign corporation declared the dividend in its first

tax year, that year is the testing period. Regardless of source,

however, there is no tax imposed on any dividends paid by a

foreign corporation out of earnings and profits for a tax year in

which the foreign corporation was subject to the branch profits

tax (determined after application of any income tax treaty). See

Regulations section 1.1441-1(b)(4)(vii).

Dividend Equivalents

A dividend equivalent is generally treated as a dividend from

sources within the United States.

Rent and Royalty Income

The source of rent and royalty income for the use of property is

determined based on where the property is located.

Instructions for Form 1120-F (2025)

Income From the Sale or Exchange of Real Estate

Gain from the disposition of a U.S. real property interest (a

USRPI) is U.S. source. A USRPI includes, but is not limited to,

real property situated in the United States, an interest in real

property other than solely as a creditor (such as a contingent

interest in real property), and an interest in a United States real

property holding corporation (USRPHC). See section 897 and

the regulations thereunder.

Income From the Sale or Exchange of Personal

Property

Income from the sale of personal property by a foreign

corporation is generally treated as foreign source under section

865(a). However, special rules may apply to source such income

as follows.

• Income from the purchase and sale of inventory property is

generally sourced under section 861(a)(6) as U.S. source if the

property is purchased without the United States and sold within

the United States and under section 862(a)(6) as foreign source

if the property is purchased within the United States and sold

without the United States. See also U.S. source treatment of

inventory sales attributable to a U.S. office or fixed place of

business under section 865(e)(2).

• Income from the production and sale of inventory property is

generally sourced solely on place-of-production activities under

section 863(b).

• Income from the sale of depreciable property is generally

sourced as mixed U.S. and foreign source under section 865(c).

• Income from certain sales of intangibles is generally subject to

the source rules applicable to royalties, found in section 861(a)

(4). See section 865(d).

Foreign corporations with an office or fixed place of business in the United States. Income from the sale of personal

property attributable to an office or fixed place of business is

U.S. source income regardless of any of the above rules relating

to the source of income from the sale or exchange of personal

property, except that this source rule is not applicable for

purposes of defining an export trade corporation (see sections

865(e)(2)(A) and 971).

Exception. Income from the sale of inventory property is foreign

source income if the goods were sold for use, disposition, or

consumption outside the United States and a foreign office of the

corporation materially participated in the sale.

Income on Guarantees

With respect to guarantees issued after September 27, 2010:

• The following income is U.S. source: amounts received

directly or indirectly from (1) a noncorporate resident or domestic

corporation for the provision of a guarantee of any indebtedness

of such resident or corporation; or (2) any foreign person for the

provision of a guarantee of any indebtedness of such person, if

such amount is connected with income that is effectively

connected (or treated as effectively connected) with the conduct

of a trade or business in the United States. See section 861(a)

(9).

• The following income is foreign source: amounts received,

directly or indirectly, from a foreign person for the provision of a

guarantee of indebtedness of such person other than amounts

that are derived from sources within the United States as

provided in section 861(a)(9). See section 862(a)(9).

11

Other Special Rules

Basis of Property and Inventory Costs for Property

Imported by a Related Person

If property is imported into the United States by a related person

in a transaction and the property has a customs value, the basis

or inventory cost to the importer may not exceed the customs

value. See section 1059A.

Income of Foreign Governments and International

Organizations

Income of foreign governments and international organizations

from the following sources is generally not subject to tax or

withholding under chapter 3 or 4 of the Code.

• Investments in the United States in stocks, bonds, or other

domestic securities owned by such foreign government or

international organization.

• Interest on deposits in banks in the United States of money

belonging to such foreign government or international

organization.

• Investments in the United States in financial instruments held

(by a foreign government) in executing governmental financial or

monetary policy.

Exception. The income described in section 892(a)(2) that is

received directly or indirectly from commercial activities is

subject to both tax and withholding under chapter 3 or 4 of the

Code.

Specific Instructions

Period Covered

File the 2025 return for calendar year 2025 and fiscal years that

begin in 2025 and end in 2026. For a fiscal or short tax year

return, fill in the tax year space at the top of the form.

The 2025 Form 1120-F may also be used if:

• The corporation has a tax year of less than 12 months that

begins and ends in 2026, and

• The 2026 Form 1120-F is not available at the time the

corporation is required to file its return.

The corporation must show its 2026 tax year on the 2026

Form 1120-F and take into account any tax law changes that are

effective for tax years beginning after December 31, 2025.

Note: A return for a short year beginning and ending in 2025

should not be filed before the earlier of its extended due date or

January 15, 2026.

Address

Include the room, suite, or other unit number after the street

address. If the post office does not deliver mail to the street

address and the corporation has a P.O. box, show the box

number instead.

If the corporation receives its mail in care of a third party

(such as an accountant or an attorney), enter “C/O” on the street

address line followed by the third party’s name and street

address or P.O. box.

If the corporation has a foreign address, include the city or

town, state or province, country, and foreign postal code. Do not

abbreviate the country name. Follow the country’s practice for

entering the name of the state or province and postal code.

Employer Identification Number (EIN)

Enter the corporation’s EIN. If the corporation does not have an

EIN, it must apply for one. An EIN may be applied for:

12

• Online—Go to IRS.gov/EIN. The EIN is issued immediately

once the application information is validated.

• By faxing or mailing Form SS-4, Application for Employer

Identification Number.

While a corporation that was a QDD or had a branch that was

a QDD is generally required to use an EIN, if the only reason the

corporation is filing a Form 1120-F is because it or its branch

was a QDD, it may use its QI-EIN instead.

Corporations located in the United States or U.S. territories

can use the online application. Foreign corporations should call

267-941-1099 (not a toll-free number) for more information on

obtaining an EIN. See the Instructions for Form SS-4.

EIN applied for, but not received. If the corporation has not

received its EIN by the time the return is due, enter “Applied For”

and the date the corporation applied in the space for the EIN.

However, if the corporation is filing its return electronically, an

EIN is required at the time the return is filed.

For more information, see the Instructions for Form SS-4.

Initial Return, Name or Address

Change, Final Return, First

Post-Merger Return, Amended

Return, Schedule M-3 Attached,

Protective Return

Check all of the applicable box(es).

Name or address change. If the corporation has changed its

name or address since it last filed Form 1120-F (including a

change to an “in care of” address), check the box for “Name or

address change.”

Note: If a change in address or responsible party occurs after

the return is filed, use Form 8822-B, Change of Address or

Responsible Party—Business, to notify the IRS. See the

instructions for Form 8822-B for details.

First post-merger return. Check the “First post-merger return”

box if, due to a corporate merger, the foreign corporation has

acquired a new EIN. Check the “First post-merger return” box if

the foreign corporation has merged with a foreign or domestic

corporation with U.S. operations. Do not check the “First

post-merger return” box if the foreign corporation has merged

with another foreign corporation and the merger has no effect on

the filer’s U.S. operations.

Amended return. File an amended Form 1120-F only after the

corporation has filed its original return. Generally, an amended

Form 1120-F must be filed within 3 years after the date the

corporation filed its original return or within 2 years after the date

the corporation paid the tax (if filing a claim for a refund),

whichever is later. A return filed before the due date is

considered filed on the due date. An amended Form 1120-F

based on an NOL carryback, a capital loss carryback, or general

business credit carryback generally must be filed within 3 years

after the due date (including extensions) of the return for the tax

year of the NOL, capital loss, or unused credit.

An amended Form 1120-F based on a bad debt or worthless

security must be filed within 7 years after the due date of the

return for the tax year in which the debt or security became

worthless. See section 6511 for more details and other special

rules.

What to attach. If the corrected amount involves an item of

income, deduction, or credit that must be supported with a

schedule, statement, or form, attach the appropriate schedule,

statement, or form to the amended Form 1120-F. Include the

corporation’s name and employer identification number on any

attachments. Be sure to include the original amount, adjustment,

Instructions for Form 1120-F (2025)

and corrected amount. Also, indicate the Form 1120-F section,

part, schedule, and/or line to which the adjustment relates.

If the corporation’s return is being amended for a tax year in

which the corporation participated in a “reportable transaction,”

attach Form 8886, Reportable Transaction Disclosure

Statement. If a reportable transaction results in a loss or credit

carried back to a prior tax year, attach Form 8886 for the

carryback years.

Carryback claims. If an amended Form 1120-F is used as a

carryback claim, attach copies of Form 1120-F, page 1 and the

tax computation page, for both the year the loss or credit

originated and for the carryback year. Also, attach any other

forms, schedules, or statements that are necessary to support

the claim, including a statement that shows all adjustments

required to figure any NOL that was carried back. At the top of

each form or schedule attached, write “Copy Only—Do Not

Process.”

Schedule M-3 attached. A corporation with total assets

reportable on Form 1120-F, Schedule L, of $10 million or more

on the last day of the tax year must file Schedule M-3 (Form

1120-F), Net Income (Loss) Reconcilation for Foreign

Corporations With Reportable Assets of $10 Million or More,

instead of Schedule M-1. A foreign corporation filing Form

1120-F that is not required to file Schedule M-3 (Form 1120-F)

may voluntarily file Schedule M-3 (Form 1120-F) instead of

Schedule M-1.

Corporations that (a) are required to file Schedule M-3 (Form

1120-F) and have less than $50 million total assets at the end of

the tax year, or (b) are not required to file Schedule M-3 (Form

1120-F) and voluntarily file Schedule M-3 (Form 1120-F), must

either (i) complete Schedule M-3 (Form 1120-F) entirely, or (ii)

complete Schedule M-3 (Form 1120-F) through Part I, and

complete Schedule M-1, instead of completing Parts II and III of

Schedule M-3 (Form 1120-F). If the corporation chooses to

complete Schedule M-1 instead of completing Parts II and III of

Schedule M-3 (Form 1120-F), the amount on Schedule M-1,

line 1, must equal the amount on Schedule M-3 (Form 1120-F),

Part I, line 11. See the instructions for Schedule M-1 (Form

1120-F) and the Instructions for Schedule M-3 (Form 1120-F) for

more details.

If you are filing Schedule M-3, check the “Schedule M-3

attached” box at the top of page 1 of Form 1120-F.

Protective return filers. Check the “Protective return” box if

the foreign corporation is filing a protective return. See Protective

return, earlier, for information concerning who should file a

protective return.

If the corporation is filing a protective return, complete Form

1120-F as follows.

Page 1. Enter the complete name, address, and EIN of the

corporation. Check the “Protective return” box. Provide all the

information required in items A through G.

Note: If the corporation is filing Form 1120-F to claim a refund

for overwithholding reported in Section I on page 4, the return

may also assert protective return status for the right to claim

deductions and credits attributable to ECI by also checking the

“Protective return” box at the top of page 1.

Refund amount. Enter on page 1, lines 1 and 4a, the amount

from page 4, line 11. Enter on lines 5i and 5z the amount from

page 4, line 12. Enter the excess of line 5z over line 4a on lines

8a and 9b. This is the amount to be refunded to you.

Signature. An authorized officer of the corporation must sign

and date the return. If the protective return is being filed pursuant

to an income tax treaty exemption, attach a completed Form

8833 to the return.

Page 2. Provide all the information required in items N, O, Q,

T, V, W(1), W(2), X, Y, AA, BB, and any other applicable

Instructions for Form 1120-F (2025)

questions. With respect to item Y, it is not necessary for the

corporation to file Schedule P, even if the answer to item Y(1) is

“Yes.” However, a corporation that files a protective tax return

may voluntarily file Schedules I and P to preserve certain timely

elections.

Page 3. Complete all applicable portions of Section I, Income

From U.S. Sources Not Effectively Connected With the Conduct

of a Trade or Business in the United States.

Identifying Information Requested at

Top of Page 1 of Form 1120-F

Complete items A though G.

Item A. Enter the foreign corporation’s country of incorporation

or organization. If the corporation is incorporated or organized in

more than one country, list all countries.

Item B. Enter the foreign country or countries under whose

laws the income reported on Form 1120-F is also subject to tax.

This may include the country where the corporation is managed

and controlled, as well as the country or countries in which the

corporation is incorporated or organized.

Item F. See the list of Principal Business Activity Codes at the

end of these instructions. Using the list of codes and activities,

determine from which activity the corporation derives the highest

percentage of its total receipts. Enter on lines F(1), F(2), and

F(3) the principal business activity code number, the

corporation’s principal business activity, and a description of the

principal product or service of the corporation. For nonstore

retailers, select the PBA code by the primary product that your

establishment sells. For example, establishments primarily

selling prescription and non-prescription drugs, select PBA code

456110 Pharmacies & Drug Retailers.

Computation of Tax Due or

Overpayment

Line 4b. First Installment of Section 1062

Applicable Net Tax Liability

Complete and attach Form 1062, Schedule(s) A (Form 1062),

and a copy of the covenant if electing to defer the payment of net

income tax attributable to the gain from the sale or exchange of

qualified farmland property during this tax year under section

1062. Enter the amount from Form 1062, Part III, line 15. See the

Instructions for Form 1062 for more information. Also, see

section 1062.

Line 5b. Estimated Tax Payments

Enter any estimated tax payments the corporation made for the

current tax year.

Beneficiaries of trusts. If the corporation is the beneficiary of a

trust, and the trust makes a section 643(g) election to credit its

estimated tax payments to its beneficiaries, include the

corporation’s share of the payment in the total for line 5b. Enter

“T” and the amount of the payment on the dotted line next to the

entry space.

Line 5c. Refund Applied For on Form 4466

If the corporation overpaid estimated tax, it may be able to get a

quick refund by filing Form 4466. The overpayment must be at

least 10% of the corporation’s expected income tax liability and

at least $500. File Form 4466 after the end of the corporation’s

tax year, and no later than the due date for filing the corporation’s

tax return (not including extensions). Form 4466 must be filed

before the corporation files its tax return. See the instructions for

Form 4466.

13

Line 5d. Reserved for Future Use

This line is reserved for future use.

Line 5f. Credit for Tax Paid on Undistributed

Capital Gains

Enter any credit from Form 2439, Notice to Shareholder of

Undistributed Long-Term Capital Gains, for the corporation’s

share of the tax paid by a regulated investment company (RIC)

or a real estate investment trust (REIT) on undistributed

long-term capital gains included in the corporation’s income.

Attach Form 2439.

Line 5g. Credit for Federal Tax on Fuels

Enter the total income tax credit claimed on Form 4136, Credit

for Federal Tax Paid on Fuels. Attach Form 4136.

Credit for tax on ozone-depleting chemicals. Include on

line 5g any credit the corporation is claiming under section

4682(g)(2) for tax on ozone-depleting chemicals. Enter “ODC”

on the dotted line to the left of the entry space.

Line 5h. Reserved for Future Use

This line is reserved for future use.

Line 5i. U.S. Income Tax Paid or Withheld at

Source

Enter on line 5i U.S. income tax amounts paid or withheld at

source and reported on:

• Form 1042-S pertaining to amounts reported on page 4,

line 12 (income from U.S. sources not effectively connected with

the conduct of a trade or business in the United States). The

amount included on line 5i should be the total amount of federal

tax withheld reported to you on the applicable Form(s) 1042-S

less any amount that was repaid to you by the withholding agent.

See the instructions below the title of Section I on page 4 of the

form for information pertaining to when amounts should be

reported on line 12.

• Form 8805 pertaining to amounts reported on Form 1120-F,

page 5, Section II, that relate to ECI from a partnership under

section 1446.

• Form 1042-S pertaining to amounts reported on Form 1120-F,

page 5, Section II, that relate to ECI from a publicly traded

partnership under section 1446.

• Form 8288-A pertaining to amounts reported on Form 1120-F,

page 5, Section II, that relate to income from dispositions of U.S.

real property interests under section 1445 and income from

dispositions of interests in partnerships that are engaged in the

conduct of a trade or business in the United States under section

1446(f).

You must attach any Forms 8288-A, 8805, and 1042-S to

substantiate amounts withheld or paid that are reported on

line 5i.

Include on line 5i only amounts withheld under chapter 3 or 4

of the Code. Do not include other amounts, such as backup

withholding, on line 5i. Enter backup withholding on line 5z (see

below).

Line 5j. Elective Payment Election Amount From

Form 3800

Enter the total elective payment election amount from Form

3800, Part III, line 6, column (j). See the Instructions for Form

3800.

Line 5k. Section 1062 Applicable Net Tax

Liability From Form 1062

If the corporation is electing to defer the payment of net income

tax attributable to the gain from the sale or exchange of qualified

farmland property, complete and attach Form 1062 and

Schedule(s) A (Form 1062). Enter the amount from Form 1062,

Part III, line 14. See the Instructions for Form 1062 for more

information. Also, see section 1062.

Line 5z. Total Payments

Backup withholding. If the corporation had income tax

withheld from any payments it received due to backup

withholding, include the amount withheld in the total for line 5z.

Enter the amount withheld and the words “Backup Withholding”

in the blank space in the right-hand column between lines 4b

and 5z.

Line 6. Estimated Tax Penalty

Generally, the corporation does not have to file Form 2220

because the IRS can figure the penalty amount, if any, and bill

the corporation. However, even if the corporation does not owe

the penalty, it must complete and attach Form 2220 if:

• The annualized income or adjusted method is used, or

• The corporation is a large corporation (as defined in the

Instructions for Form 2220) computing its first required

installment based on the prior year’s tax.

If Form 2220 is attached, check the box on line 6, and enter

any penalty on this line.

If the corporation’s tax liability includes a CAMT liability, the

corporation must complete and attach Form 2220. The affected

corporation must also include an amount of estimated tax

penalty on Form 1120-F, page 1, line 6, even if that amount is

zero. Failure to follow these instructions could result in the

corporation receiving a penalty notice that will require an

abatement request to apply any penalty relief. See Notice

2025-27.

Line 7. Amount Owed

If the corporation cannot pay the full amount of tax owed, it can

apply for an installment agreement online. The corporation can

apply for an installment agreement online if:

• It cannot pay the full amount shown on line 7,

• The total amount owed is $25,000 or less, and

• The corporation can pay the liability in full in 24 months.

To apply using the Online Payment Agreement Application, go to

IRS.gov/OPA.

Under an installment agreement, the corporation can pay

what it owes in monthly installments. There are certain

conditions that must be met to enter into and maintain an

installment agreement, such as paying the liability within 24

months and making all required deposits and timely filing tax

returns during the length of the agreement.

If the installment agreement is accepted, the corporation will

be charged a fee and it will be subject to penalties and interest

on the amount of tax not paid by the due date of the return.

Line 8b

If there is an overpayment on line 8a, enter on line 8b the amount

of overpayment on line 8a resulting from tax deducted and

withheld under chapters 3 and 4. This amount is computed by

completing Schedule W on page 9 of Form 1120-F.

Line 9a. Credited to Estimated Tax

The corporation can elect to apply all or part of the corporation’s

overpayment to next year’s estimated taxes.

14

Instructions for Form 1120-F (2025)

Enter the amount of any overpayment from line 8a that should

be applied to next year’s estimated tax.

This election to apply some or all of the overpayment amount

to the corporation’s 2026 estimated tax cannot be changed at a

later date.

You can credit any or all of the line 8a overpayment to your

2026 estimated tax, even those amounts on line 8b resulting

from tax deducted and withheld under chapters 3 and 4.

Line 9b. Refunded

Enter the amount to be refunded to the corporation on line 9b. If

the corporation has access to U.S. banking services, it should

use direct deposit for any refunds, whenever possible.

The benefits of a direct deposit include a faster refund, the

added security of a paperless payment, and the savings of tax

dollars associated with the reduced processing costs.

Direct deposit of refund. If the corporation wants its refund

directly deposited into its checking or savings account at any

U.S. bank or other financial institution, complete lines 9c through

9e. See the instructions for lines 9c, 9d, and 9e, later.

The corporation is not eligible to request a direct deposit if:

• The receiving financial institution is a foreign bank or a foreign

branch of a U.S. bank, or

• The corporation has applied for an EIN but is filing its tax

return before receiving one.

Conditions resulting in a refund by check. If the IRS is

unable to process the request for a direct deposit, a refund by

check will be generated instead. Reasons for not processing a

request include the following.

• The name of the corporation on the tax return does not match

the name on the account.

• The financial institution rejects the direct deposit because of

an incorrect routing or account number.

• The corporation fails to indicate the type of account the

deposit is to be made to (that is, checking or savings).

Note: The IRS isn’t responsible for a lost refund if the

corporation enters the wrong account information. Check with

the corporation’s financial institution to get the correct routing

and account numbers and to make sure the direct deposit will be

accepted.

Note: Refunds of certain overpayments (for example, those

which pertain to tax withheld and reported on Forms 1042-S,

8805, and 8288-A) may require additional time to be processed.

Therefore, please allow up to 6 months for these refunds to be

issued.

Line 9c. Routing Number

The routing number must be nine digits. The first two digits must

be between 01 and 12 or 21 through 32. Ask the corporation’s

financial institution for the correct routing number to enter on

line 9c if:

• The routing number on a deposit slip is different from the

routing number on the corporation’s checks,

• The deposit is to a savings account that does not allow the

corporation to write checks, or

• The corporation’s checks state that they are payable through a

financial institution different from the one at which the

corporation has its checking account.

Line 9d. Type of Account

Check the appropriate box for the type of account. Don’t check

more than one box. The corporation must check the correct box

to ensure the deposit is accepted.

Instructions for Form 1120-F (2025)

Line 9e. Account Number

The account number can be up to 17 characters (both numbers

and letters). Include hyphens but omit spaces and special

symbols. Enter the number from left to right and leave any

unused boxes blank. Don’t include the check number.

If the direct deposit to the corporation’s account is different

from the amount it expected, the corporation will receive an

explanation in the mail about 2 weeks after the refund is

deposited.

Additional Information Requested on

Pages 2 and 3 of Form 1120-F

Complete items H through JJ.

Item K(1)

If the foreign corporation was not engaged in a U.S. trade or

business at any time during the tax year, or was engaged in a

U.S. trade or business but did not derive any gross income

effectively connected to such trade or business, answer “No” to

item K(1).

If the foreign corporation had gross income effectively

connected with or treated as effectively connected with the

conduct of a trade or business in the United States, answer “Yes”

to item K(1).

Item L

Skip item L (leave blank) if the foreign corporation is a resident of

a country that does not have an income tax treaty with the United

States. If the foreign corporation is a resident of a country that

has an income tax treaty with the United States:

• Answer “Yes” if the corporation had a permanent

establishment in the United States at any time during the tax

year or in any prior tax year to which income was attributable,

and enter the name of the country of residence of the foreign

corporation; or

• Answer “No” if the corporation does not have a permanent

establishment in the United States.

If the answer to item L is “No” and the answer to item K(1) is

“Yes,” complete item W(1) on page 2 of the form and attach a

completed Form 8833 to the return, including a statement

indicating the nature and amount (or reasonable estimate

thereof) of gross receipts of the foreign corporation exempt by

reason of not having a permanent establishment in the United

States.

Item M

See Form 5472, earlier.

Item O—Personal Service Corporation

A personal service corporation is a corporation whose principal

activity for the testing period is the performance of personal

services. The services must be substantially performed by

employee-owners.

Testing period. The testing period for a tax year is generally the

prior tax year unless the corporation has just been formed.

Performance of personal services. The term “performance of

personal services” includes any activity involving the

performance of personal services in the fields of health, law,

engineering, architecture, accounting, actuarial science,

performing arts, or consulting.

Accounting period. A personal service corporation must use a

calendar tax year unless:

• It elects to use a 52-53-week tax year that ends with reference

to the calendar year or tax year elected under section 444;

15

• It can establish a business purpose for a different tax year and

obtains the approval of the IRS (see the Instructions for Form

1128 and Pub. 538); or

• It elects under section 444 to have a tax year other than a

calendar year. To make the election, use Form 8716, Election To

Have a Tax Year Other Than a Required Tax Year.

If a corporation makes the section 444 election, its deduction

for certain amounts paid to employee-owners may be limited.

See Schedule H (Form 1120), Section 280H Limitations for a

Personal Service Corporation (PSC), to figure the maximum

deduction.

If a section 444 election is terminated and the termination

results in a short tax year, type or print at the top of the first page

of Form 1120-F for the short tax year “SECTION 444 ELECTION

TERMINATED.”

Other rules. For other rules that apply to personal service

corporations, see Passive activity limitations, later.

Item P

Enter any tax-exempt interest received or accrued. Include any

exempt-interest dividends received as a shareholder in a mutual

fund or other RIC. Also, if required, include the same amount on

Schedule M-1, line 7a, or Schedule M-3, Part II, line 4a.

• The business profits article of a treaty, if expenses are claimed

in determining the business profits of the foreign corporation,

notwithstanding an inconsistent provision of the Code.

• The gains article, if a treaty benefit is claimed relating to gain

or loss on the disposition of a U.S. real property interest.

• The branch profits tax article (or portion of the dividends

article relating to the branch profits tax) and tax on excess

interest.

• A waiver of insurance excise tax under section 4371 (if the

foreign corporation has not entered into a closing agreement

with the IRS and has not filed an annual Form 720).

• The interest, dividends, or royalty article, if a refund of

withholding tax is due.

Item W(2)

Check the “Yes” box if the foreign corporation is claiming tax

treaty benefits pursuant to a Competent Authority determination

or Advance Pricing Agreement that it qualifies for the treaty

benefits being claimed. You must attach a copy of the

Competent Authority determination letter or Advance Pricing

Agreement to the return.

Item Y(1)

Item R

For more information regarding a corporation’s distributive share

of income from a directly owned partnership interest that is ECI

or treated as ECI by the partnership or the corporation (partner),

see Who Must Complete Schedule P in the separate Instructions

for Schedule P (Form 1120-F).

If the corporation timely filed its return for the loss year without

making the election, it can make the election on an amended

return filed within 6 months of the due date of the loss year return

(excluding extensions). Attach the election to the amended

return and write “Filed pursuant to section 301.9100-2” on the

election statement. See the Instructions for Form 1139.

In general, if a foreign corporation owns, directly or indirectly, an

interest in a partnership that is engaged in a U.S. trade or

business, gain or loss on the transfer of all (or any portion of)

such interest is treated as effectively connected with the conduct

of such trade or business to the extent effectively connected gain

or loss would have flowed through the partnership to the foreign

corporation had the partnership sold all of its assets at fair

market value (FMV) as of the date of the sale or exchange. See

section 864(c)(8) for more details. Also, see Regulations

sections 1.864(c)(8)-1 and 1.864(c)(8)-2 for additional guidance

concerning gain or loss of foreign persons from the transfer of

certain partnership interests and the notification required to be

provided to certain partnerships on the transfer.

If the corporation has a net operating loss (NOL) for tax year

2025, it can elect to waive the entire carryback period for the

NOL and instead carry the NOL forward to future tax years. To

do so, check the box in item R and file Form 1120-F by its due

date, including extensions. Do not attach the statement

described in Temporary Regulations section 301.9100-12T.

Generally, once made, the election is irrevocable.

Item S

Enter the amount of the NOL carryover to the tax year from prior

years, even if some of the loss is used to offset income on this

return. The amount to enter is the total of all NOLs generated in

prior years but not used to offset income (either as a carryback

or carryover) to a tax year prior to 2025. Do not reduce the

amount by any NOL deduction reported on Section II, line 30a.

Item T

Check the “Yes” box for item T if the corporation is a subsidiary in

a parent-subsidiary controlled group. This applies even if the

corporation is a subsidiary member of one group and the parent

corporation of another. For a definition of a parent-subsidiary

controlled group, see the Instructions for Schedule O (Form

1120).

Note: If the corporation is an “excluded member” of a controlled

group (see definition in the Instructions for Schedule O (Form

1120)), it is still considered a member of a controlled group for

this purpose.

Item W(1)

If a foreign corporation claims that a treaty overrules or modifies

any provision of the Internal Revenue Code and thereby effects a

reduction of any tax with respect to an item reported on this Form

1120-F, check the “Yes” box. Check the “Yes” box, for example, if

a treaty benefit has been claimed based on the following.

• The nondiscrimination provision of a treaty.

16

Item Y(2)

Item Y(3)

If the corporation owned at least a 10% interest, directly or

indirectly, in any foreign partnership, attach a statement listing

the following information for each foreign partnership. For this

purpose, a foreign partnership includes an entity treated as a

foreign partnership under Regulations section 301.7701-2 or

301.7701-3.

• Name and EIN (if any) of the foreign partnership.

• Identify which, if any, of the following forms the foreign

partnership filed for its tax year ending with or within the

corporation’s tax year: Form 1042, 1065, or 8804.

• Name of partnership representative (if any).

• Beginning and ending dates of the foreign partnership’s tax

year.

In addition, report any ECI included on Schedule K-3 (Form

1065) reported by the foreign partnership to the corporation, and

the ECI apportionment of the corporation’s outside basis in the

foreign partnership, as required in Schedule P.

Item Z(2)

If the answer to item Z(2) is “Yes,” attach a statement explaining

whether the interbranch transactions are recognized under

Proposed Regulations section 1.863-3(h) (Global Dealing

Regulations) or some other proposed regulation. If interbranch

Instructions for Form 1120-F (2025)

transactions are recognized pursuant to a U.S. income tax treaty

other than one that, in its text or accompanying documents

(including an exchange of notes), allows for such recognition by

explicitly incorporating an arm’s-length method applying the

OECD Transfer Pricing Guidelines, then such treaty-based

position should be disclosed on Form 8275-R, in addition to the

treaty disclosure required on Form 8833.

Item AA

A corporation filing Form 1120-F must file Schedule UTP (Form

1120), Uncertain Tax Position Statement, with its 2025 income

tax return if:

• For 2025, the corporation’s total assets equal or exceed $10

million. The assets of a corporation filing a Form 1120-F equal or

exceed $10 million if the higher of the beginning or end of year

total worldwide assets of the corporation reported on Form

1120-F, Schedule L, line 17, would be at least $10 million if the

corporation were to prepare a Schedule L on a worldwide basis;

• The corporation or a related party issued audited financial

statements reporting all or a portion of the corporation’s

operations for all or a portion of the corporation’s tax year; and

• The corporation has one or more tax positions that must be

reported on Schedule UTP.

Attach Schedule UTP to the corporation’s income tax return.

Do not file it separately. A taxpayer that files a protective Form

1120-F must also file Schedule UTP if it satisfies the

requirements set forth above.

For details, see the Instructions for Schedule UTP.

applies to interest or royalties paid or accrued pursuant to a

hybrid arrangement (such as, for example, a payment pursuant

to a hybrid instrument or a payment to a reverse hybrid),

provided that the payment or accrual is to a related party (or

pursuant to a structured arrangement). In addition, pursuant to

an imported mismatch rule, section 267A generally applies to

interest or royalties paid or accrued pursuant to a non-hybrid

arrangement where the income attributable to that payment or

accrual is directly or indirectly offset by certain deductions

involving hybridity incurred by a related party or pursuant to a

structured arrangement. However, section 267A does not apply

if a de minimis exception is satisfied. See Regulations section

1.267A-1(c). For purposes of section 267A, interest and royalties

are defined broadly. For additional information about

arrangements subject to section 267A, see Regulations sections

1.267A-2 and 1.267A-4. Also, see the anti-avoidance rule under

Regulations section 1.267A-5(b)(6).

Extent to which deduction is disallowed. When section

267A applies to interest or royalties paid or accrued pursuant to

a hybrid arrangement, it generally disallows a deduction for the

amount to the extent that, under the foreign tax law, there is not a

corresponding income inclusion (including long-term deferral).

However, the deduction is not disallowed to the extent the

amount is directly or indirectly included in income in the United

States, such as if the amount is taken into account with respect

to a U.S. shareholder under section 951(a) or section 951A. For

additional information, see Regulations sections 1.267A-2

through 1.267A-4. For examples illustrating the application of

section 267A, see Regulations section 1.267A-6.

Item BB

Item FF

If the foreign corporation made any payment(s) in 2025 that

would require the foreign corporation to file any Forms 1042 and

1042-S, check the “Yes” box. See the Instructions for Form 1042

and the Instructions for Form 1042-S for information regarding

who is required to file Forms 1042 and 1042-S and what types of

payments are subject to reporting on Forms 1042 and 1042-S.

The limitation on business interest expense applies to every

taxpayer with a trade or business, unless the taxpayer meets

certain specified exceptions. A taxpayer may elect out of the

limitation for certain businesses otherwise subject to the

business interest expense limitation. See Item GG. Also, see the

Instructions for Form 8990.

Item CC

Certain real property trades or businesses and farming

businesses qualify to make an election not to limit business

interest expense. This is an irrevocable election. If you make this

election, you are required to use the alternative depreciation

system to depreciate any nonresidential real property, residential

rental property, and qualified improvement property for an

electing real property trade or business, and any property with a

recovery period of 10 years or more for an electing farming

business. See section 168(g)(1). Also, you are not entitled to the

special depreciation allowance for that property. For a taxpayer

with more than one qualifying business, the election is made with

respect to each business.

If the corporation or any branch of the corporation was a QDD,

check the “Yes” box, enter the QI-EIN, and attach a Schedule Q

(Form 1120-F) for each QDD. You must complete and attach

Schedule Q (Form 1120-F) even if the QDD has zero tax liability.

Item DD

If the corporation had gross receipts of at least $500 million in

any 1 of the 3 preceding tax years, complete and attach Form

8991. For this purpose, the corporation’s gross receipts include

the gross receipts of all persons aggregated with the

corporation, as specified in section 59A(e)(3). See the

Instructions for Form 8991 to determine if the corporation is

subject to the base erosion minimum tax.

Item EE

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). Report in item

EE the total amount of interest and royalty paid or accrued by a

U.S. taxable branch (which includes a U.S. permanent

establishment) of the foreign corporation for which a deduction is

disallowed under section 267A.

Payments to which section 267A applies. Interest or royalty

considered paid or accrued by a U.S. taxable branch of the

foreign corporation is subject to section 267A. See Regulations

section 1.267A-5(b)(3) for rules regarding U.S. taxable branch

payments, including interest or royalties considered paid or

accrued by a U.S. taxable branch. Section 267A generally

Instructions for Form 1120-F (2025)

Check “Yes” if the corporation has an election in effect to

exclude a real property trade or business or a farming business

from section 163(j). For more information, see section 163(j) and

the Instructions for Form 8990. Also, see the Instructions for

Schedule I (Form 1120-F).

Item GG

Generally, a taxpayer with a trade or business must file Form

8990 to claim a deduction for business interest. In addition, Form

8990 must be filed by any taxpayer that owns an interest in a

partnership with current-year, or prior-year carryover, excess

business interest expense allocated from the partnership.

Exclusions from filing. A taxpayer is not required to file

Form 8990 if the taxpayer is a “small business taxpayer” (defined

below) and does not have excess business interest expense

from a partnership. A taxpayer is also not required to file Form

8990 if the taxpayer only has business interest expense from

these excepted trades or businesses.

17

• An electing real property trade or business.

• An electing farming business.

• Certain utility businesses.

Small business taxpayer. A small business taxpayer is not

subject to the business interest expense limitation and is not

required to file Form 8990. A small business taxpayer is a

taxpayer that (a) is not a tax shelter (as defined in section 448(d)

(3), and (b) meets the gross receipts test of section 448(c)

discussed next.

Gross receipts test. For 2025, a taxpayer meets the gross

receipts test if the taxpayer has average annual gross receipts of

$31 million or less for the 3 prior tax years. A taxpayer’s average

annual gross receipts for the 3 prior tax years is determined by

adding the gross receipts for the 3 prior tax years and dividing

the total by 3. Gross receipts include the aggregate gross

receipts from all persons treated as a single employer, such as a

controlled group of corporations; commonly controlled

partnerships, or proprietorships; and affiliated service groups.

See section 448(c) and the Instructions for Form 8990 for

additional information.

Note: A foreign corporation is required to complete Schedule I

(Form 1120-F) to compute its interest expense deduction under

Regulations section 1.882-5. If the foreign corporation is required

to complete and file Form 8990, attach Form 8990 to Schedule I

(Form 1120-F), which is attached to Form 1120-F.

Item HH

If a foreign corporation is organized in a U.S. territory, it may be a

Qualified Opportunity Fund (QOF) only if it is organized for the

purpose of investing in qualified opportunity zone property that

relates to a trade or business operated in the U.S. territory in

which the corporation is organized. To certify as a QOF, the

corporation must file Form 1120-F and attach Form 8996, even if

the corporation had no income or expenses to report. If the

corporation is attaching Form 8996, check the “Yes” box for item

HH. On the line following the dollar sign, enter the amount from

Form 8996, line 15.

The penalty reported on this line from Form 8996, line 15, is

not due with the filing of this form. The IRS will send you a notice

regarding the penalty reported on line 15. This notice will include

instructions on the penalty, the reasonable cause relief process,

and payment instructions.

Item II

If the corporation is a member of a controlled group, check the

“Yes” box. Complete and attach Schedule O (Form 1120),

Consent Plan and Apportionment Schedule for a Controlled

Group. Component members of a controlled group must use

Schedule O to report the apportionment of certain tax benefits

between the members of the group. See Schedule O and the

Instructions for Schedule O for more information.

Item JJ

Check the appropriate boxes to indicate if the corporation is

required to file Form 4626. If the corporation does not meet the

requirements of a safe harbor method, as provided under

Proposed Regulations section 1.59-2(g)(2) or Notice 2025-27,

Form 4626 must be completed and attached to the corporation’s

return. See the Instructions for Form 4626.

Corporations that qualify for a corporate alternative minimum

tax (CAMT) safe harbor should indicate “Yes” to question JJ(3)

and are not required to file Form 4626. Corporations generally

qualify for the CAMT safe harbor if the corporation’s average

annual adjusted financial statement income (AFSI) for the 3

preceding tax years is less than $800 million. Special rules apply

to members of a controlled group treated as a single employer

18

with the corporation under section 52(a) or (b) or members of a

foreign-parented multinational group.

Section I—Income From U.S. Sources

Not Effectively Connected With the

Conduct of a Trade or Business in the

United States

Note: Complete Section I only if you derived U.S. source

income not effectively connected with the conduct of a trade or

business in the United States and either your withholding tax

liability was not correctly withheld at source or not correctly

reported on Form 1042-S, you have a QDD tax liability (see

section 3.09 of the Qualified Intermediary Agreement), or you

are claiming a credit or refund of an amount withheld at source.

You must attach any Forms 1042-S (and any supporting

documentation) related to amounts for which you are claiming a

credit or refund for overwithholding (see the instructions for

line 5i). The amount reported in column (e) is the amount that

was actually withheld at source (and not repaid to you by the

withholding agent), as reported to you in box 10 of the Form(s)

1042-S issued by the withholding agent(s). See Claim for Refund

or Credit, earlier, for additional documentation requirements.

Only report amounts on these lines if:

• The amount received is fixed or determinable, annual or

periodic (FDAP) (see definition below);

• The amount received is includible in the gross income of the

foreign corporation. Therefore, receipts that are excluded from

income (for example, interest income received on state and local

bonds that is excluded under section 103) would not be included

as income in Section I;

• The amount received is from U.S. sources (see Source of

Income Rules, earlier);

• The amount received is not effectively connected with the

conduct of a U.S. trade or business (see Section II, later);

• The amount received is not exempt (by Code) from taxation.

For example, interest on deposits that are exempted by section

881(d) would not be included as income in Section I. In addition,

certain portfolio interest is not taxable for obligations issued after

July 18, 1984. See section 881(c) for more details; or

• If you are a QDD, report all QDD tax liabilities (see Qualified

Intermediary Agreement), whether or not the amounts are

subject to withholding or correctly withheld.

Such income (except as indicated below) will generally be

subject to tax at a 30% rate. See section 881(a).

Amounts fixed or determinable, annual or periodic

include the following.

1. Interest (other than original issue discount (OID) as

defined in section 1273), dividends, rents, royalties, salaries,

wages, premiums, annuities, compensation, and other FDAP

gains, profits, and income.

Note: Item 1 above includes dividend equivalents described in

section 871(m); however, dividends and dividend equivalents

received in calendar years 2019 through 2024 by a QDD in its

equity derivatives dealer capacity are excluded.

2. Gains described in section 631(b) or (c), relating to

disposal of timber, coal, or domestic iron ore with a retained

economic interest.

3. On a sale or exchange of an OID obligation, the amount

of the OID accruing while the obligation was held by the foreign

corporation, unless this amount was taken into account on a

payment.

4. On a payment received on an OID obligation, the amount

of the OID accruing while the obligation was held by the foreign

corporation, if such OID was not previously taken into account

and if the tax imposed on the OID does not exceed the payment

Instructions for Form 1120-F (2025)

received less the tax imposed on any interest included in the

payment received. This rule applies to payments received for

OID obligations issued after March 31, 1972.

Certain OID is not taxable for OID obligations issued after

July 18, 1984. See section 881(c) for more details.

For rules that apply to other OID obligations, see Pub. 515.

5. Gains from the sale or exchange of patents, copyrights,

and other intangible property if the gains are from payments that

are contingent on the productivity, use, or disposition of the

property or interest sold or exchanged.

For more information, see section 881(a) and Regulations

section 1.881-2.

Note: For purposes of determining whether its income is taxable

under section 881(a), a corporation created or organized in

Guam, American Samoa, the Northern Mariana Islands, or the

U.S. Virgin Islands will not be treated as a foreign corporation if it

meets the rules of section 881(b). For dividends paid after

October 22, 2004, a corporation created or organized in Puerto

Rico will be taxed under section 881(a) at a rate of 10% with

respect to such dividends received during the tax year in the

circumstances outlined in section 881(b)(2).

Line 9. Gross Transportation Income

A 4% tax is imposed on a foreign corporation’s U.S. source gross

transportation income for the tax year. U.S. source gross

transportation income is generally any gross income that is

transportation income if such income is treated as from U.S.

sources.

Transportation income is any income from or connected with:

• The use (or hiring or leasing for use) of a vessel or aircraft; or

• The performance of services directly related to the use of a

vessel or aircraft. For this purpose, the term “vessel or aircraft”

includes any container used in connection with a vessel or

aircraft.

Generally, 50% of all transportation income that is attributable

to transportation that either begins or ends in the United States

is treated as from U.S. sources. See section 863(c)(2)(B) for a

special rule for personal service income.

Exceptions. U.S. source gross transportation income does not

include income that is:

• Effectively connected with the conduct of a U.S. trade or

business, or

• Taxable in a territory of the United States under the provisions

of the Internal Revenue Code as applied to that territory.

Transportation income of the corporation will not be treated as

ECI unless:

• The corporation has a fixed place of business in the United

States involved in the earning of transportation income; and

• Substantially all of the corporation’s U.S. source gross

transportation income (determined without regard to the rule that

such income does not include ECI) is attributable to regularly

scheduled transportation (or, in the case of income from the

leasing of a vessel or aircraft, is attributable to a fixed place of

business in the United States).

For more information, see section 887.

Enter the foreign corporation’s U.S. source gross

transportation income on line 9, column (b). Also, attach

Schedule V (Form 1120-F).

See Exclusion from gross income for certain income from

ships and aircraft, later.

Line 10. Other Items of Income

Include on line 10 all other income not reportable on lines 1

through 9. For any amounts received by a QDD in its equity

Instructions for Form 1120-F (2025)

derivatives dealer capacity, include a statement detailing each

type of income. In addition, if the foreign corporation received a

specified federal procurement payment (as defined in section

5000C(b)) that was not fully withheld upon at source, enter the

payment in Section I, line 10, column (b); enter a 2% rate of tax

in column (c); enter the tax liability in column (d); and enter any

withholding in column (e).

Increase or decrease in tax attributable to partner’s additional reporting year tax. If the taxpayer is a foreign corporate

partner and received a Form 8986 from a partnership that has

elected to have each reviewed partner take into account the

partner’s share of the adjustments, as finally determined, instead

of paying the imputed underpayment, the foreign corporate

partner (taxpayer) will have to complete Form 8978 to report

adjustments shown on the Form 8986 they received from the

partnership. The foreign corporate partner (taxpayer) must

complete a separate Form 8978 to report adjustments pertaining

to income that is effectively connected with the conduct of a

trade or business in the United States under section 882 (an

“ECI Form 8978”) and a separate Form 8978 to report

adjustments pertaining to income from U.S. sources not

effectively connected with the conduct of a trade or business in

the United States under section 881 (an “FDAP Form 8978”).

Include any increase or decrease in taxes due from the FDAP

Form 8978, line 14, that was not fully withheld upon at source, on

a separate line on Form 1120-F, Section I, line 10. Enter “From

Form 8978” in column (a) and skip (leave blank) columns (b) and

(c). Enter in column (d) the amount of the increase or decrease

from the FDAP Form 8978, line 14. Enter any withholding in

column (e). Attach the FDAP Form 8978 to Form 1120-F.

Note: The taxpayer will generally skip lines 3a, 3b, 4, 7, 9a, 9b,

and 10 of the FDAP Form 8978.

Line 13

Check the “Yes” box if you received an item of income during the

tax year with respect to which you are treated as fiscally

transparent under the laws where you are organized. In such a

case, you may not claim a reduced rate of tax under a treaty with

respect to that item. See Regulations section 1.894-1(d)(1).

If the item of income has been withheld upon, your interest

holders may, however, be able to claim treaty benefits, but only if

the tax jurisdiction in which your interest holders qualify for treaty

benefits treats you as fiscally transparent and the interest

holders are not fiscally transparent with respect to that item of

income. An interest holder claiming a benefit should file a

separate Form 1120-F, if appropriate. See Regulations section

1.894-1(d)(3) for the definition of “fiscally transparent” and

Regulations section 1.894-1(d)(5) for examples.

Section II—Income Effectively

Connected With the Conduct of a

Trade or Business in the United

States

Foreign Corporations Engaged in a U.S. Trade or

Business

These corporations are taxed on their ECI at the same 21% tax

rate that applies to domestic corporations. ECI can be U.S.

source or foreign source income as explained below.

U.S. Source Effectively Connected Income

U.S. source income derived by a foreign corporation engaged in

a U.S. trade or business other than FDAP and capital gains is

ECI. See Regulations section 1.864-4(b).

19

Note: For purposes of the preceding paragraph, U.S. source

income includes income with respect to activities related to the

exploration and exploitation of natural resources in continental

shelf areas (see section 638).

FDAP items are generally ECI (and are therefore includible in

Section II) if the asset-use test, the business-activities test, or

both tests (explained below) are met.

If neither test is met, FDAP items are generally not ECI (and

are therefore includible in Section I instead of Section II). For

more information, see section 864(c)(2) and Regulations section

1.864-4(c).

Finance business. See Regulations section 1.864-4(c)(5) for

special rules relating to banking, financing, or similar business

activities. Such rules apply to certain stocks and securities of a

banking, financing, or similar business in lieu of the asset-use

and business-activities tests.

Asset-use test. The FDAP items are from assets used in, or

held for use in, the conduct of U.S. trade or business. For

example, the following items are ECI.

• Income earned on a trade or note receivable acquired in the

conduct of the U.S. trade or business.

• Interest income earned from the temporary investment of

funds needed in the foreign corporation’s U.S. trade or business.

Business-activities test. The activities of the U.S. trade or

business were a material factor in the realization of the FDAP

items.

Foreign Source Effectively Connected Income

Foreign source income is generally not ECI. However, if the

foreign corporation has an office or other fixed place of business

in the United States, the following types of foreign source income

it receives from that U.S. office are ECI.

• Rents or royalties received for the use outside the United

States of intangible personal property described in section

862(a)(4) if derived from the active conduct of a U.S. trade or

business.

• Gains or losses on the sale or exchange of intangible personal

property located outside the United States or from any interest in

such property, if such gains or losses are derived in the active

conduct of the trade or business in the United States.

• Dividends, interest, amounts received for the provision of a

guarantee of indebtedness, issued after September 27, 2010, if

derived from the active conduct of a U.S. banking, financing, or

similar business or if the principal business of the foreign

corporation is trading in stocks or securities for its own account.

• Income from the sale or exchange of inventory outside the

United States through the U.S. office, unless the property is sold

or exchanged for use, consumption, or disposition outside the

United States and an office of the foreign corporation in a foreign

country materially participated in the sale.

• Any income or gain that is equivalent to any item of income or

gain listed above must be treated in the same manner as such

item for purposes of determining whether that income is foreign

source ECI.

See section 864(c)(5)(A) and Regulations section 1.864-7 for

the definition of “office” or other fixed place of business in the

United States. See sections 864(c)(5)(B) and (C) and

Regulations section 1.864-6 for special rules for determining

when foreign source income received by a foreign corporation is

from an office or other fixed place of business in the United

States.

Foreign insurance companies. Foreign source income of a

foreign insurance company that is attributable to its U.S. trade or

20

business is ECI. See section 864(c)(4)(C) and Regulations

section 1.864-5(c).

Excluded foreign source income. Foreign source income that

would otherwise be ECI under any of the above rules for foreign

source income is excluded if:

• It is foreign source dividends, interest, or royalties paid by a

foreign corporation in which the taxpayer owns or is considered

to own (within the meaning of section 958) more than 50% of the

total combined voting power of all classes of stock entitled to

vote; or

• The taxpayer is a CFC (as defined in section 957) and the

foreign source income is subpart F income (as defined in section

952).

For more information, see section 864(c)(4)(D) and

Regulations section 1.864-5(d).

Foreign Corporations Not Engaged in a U.S.

Trade or Business

If a foreign corporation is not engaged in a U.S. trade or business

during the tax year, it will complete Section II only if such

corporation:

• Had current-year income or gain from a sale or exchange of

property or from performing services (or any other transaction) in

any other tax year that would have been ECI in that other tax

year (see section 864(c)(6));

• Had current-year income or gain from a disposition of property

that is no longer used or held for use in conducting a U.S. trade

or business within the 10-year period before the disposition that

would have been ECI immediately before such cessation (see

section 864(c)(7));

• Elected to treat real property income as ECI (see below);

• Was created or organized and was conducting a banking

business in a U.S. territory, and received interest on U.S.

obligations that is not portfolio interest (see section 882(e)); or

• Had gain or loss from disposing of a U.S. real property interest

(see Disposition of U.S. Real Property Interest by a Foreign

Corporation, later).

Election To Treat Real Property Income as

Effectively Connected Income

A foreign corporation that derives, during the tax year, any

income from real property located in the United States, or from

any interest in such real property, may elect, for the tax year, to

treat all such income as ECI. See section 871(d). Income to

which this election applies includes:

• Gains from the sale or exchange of real property or an interest

therein;

• Rents or royalties from mines, wells, or other natural deposits;

and

• Gains described in section 631(b) or (c).

The election may be made whether or not the corporation is

engaged in a U.S. trade or business during the tax year for which

the election is made or whether or not the corporation has

income from real property that, for the tax year, is effectively

connected with the conduct of a U.S. trade or business.

To make the election, attach a statement that includes the

information required in Regulations section 1.871-10(d)(1)(ii) to

Form 1120-F for the first tax year for which the election is to

apply. Use Section II to figure the tax on this income.

Disposition of U.S. Real Property Interest by a

Foreign Corporation

A foreign corporation that disposes of a U.S. real property

interest (as defined in section 897(c)) must treat the gain or loss

from the disposition as ECI, even if the corporation is not

engaged in a U.S. trade or business. Figure this gain or loss on

Instructions for Form 1120-F (2025)

Schedule D (Form 1120), Capital Gains and Losses. Carry the

result to Section II, line 8, on page 5 of Form 1120-F.

A foreign corporation may elect to be treated as a domestic

corporation for purposes of sections 897 and 1445. See section

897(i).

See Temporary Regulations section 1.897-5T for the

applicability of section 897 to reorganizations and liquidations.

If the corporation had income tax withheld on Form 8288-A,

include the amount withheld on line 5i, page 1.

Income

Line 1. Gross Receipts or Sales

Line 1a. Enter gross income effectively connected with the

conduct of a U.S. trade or business (except for those income

items that must be reported on lines 4 through 10). Include on

line 1a effectively connected gross receipts or sales. If an

accrual method corporation has an applicable financial

statement (as defined in section 451(b)(3)), then the revenue

recognition rules in Regulations section 1.451-3 may apply.

Special rules apply to certain income, as discussed below.

Advance payments. In general, advance payments must be

included in income in the year of receipt. For exceptions to this

general rule for corporations that use the accrual method of

accounting, see the following.

• To report income from long-term contracts, see section 460.

• For rules that allow a limited deferral of advance payments

beyond the current tax year, see section 451(c). Also, see

Regulations sections 1.451-8(c), (d), and (e). For applicability

dates, see Regulations section 1.451-8(h).

• For information on adopting or changing to a permissible

method for reporting advance payments for services and certain

goods by an accrual method corporation, see the Instructions for

Form 3115.

Exclusion from gross income for certain income from

ships and aircraft. A foreign corporation engaged in the

international operation of ships or aircraft and organized in a

qualified foreign country may exclude qualified income from its

gross income, provided that the corporation can satisfy certain

ownership requirements. See Schedule S (Form 1120-F) and its

separate instructions for additional information.

Income from qualifying shipping activities (tonnage tax).

The corporation’s gross income does not include income from

qualifying shipping activities (as defined in section 1356) if the

corporation makes an election under section 1354 to be taxed on

its notional shipping income (as defined in section 1353) at the

highest corporate tax rate. If the election is made, the

corporation may generally not claim any loss, deduction, or

credit with respect to qualifying shipping activities. A corporation

making this election may also elect to defer gain on certain

dispositions of qualifying vessels under section 1359.

Use Form 8902, Alternative Tax on Qualifying Shipping

Activities, to figure the tax. Include the alternative tax from Form

8902, line 30, on Schedule J, line 8, and be sure to check the

“Form 8902” box on that line.

Installment sales. Generally, the installment method may not

be used for dealer dispositions of property. A “dealer disposition”

is any disposition of (a) personal property by a person who

regularly sells or otherwise disposes of personal property of the

same type on the installment plan, or (b) real property held for

sale to customers in the ordinary course of the taxpayer’s trade

or business.

The restrictions on using the installment method do not apply

to the following.

• Dispositions of property used or produced in the trade or

business of farming.

Instructions for Form 1120-F (2025)

• Certain dispositions of timeshares and residential lots

reported under the installment method for which the corporation

elects to pay interest under section 453(l)(3).

Enter on line 1a (and carry to line 3) the gross profit on

collections from these installment sales. Attach a statement

showing the following information for the current and the 3

preceding years: (a) gross sales, (b) cost of goods sold, (c)

gross profits, (d) percentage of gross profits to gross sales, (e)

amount collected, and (f) gross profit on the amount collected.

For sales of timeshares and residential lots reported under

the installment method, if the corporation elects to pay interest

under section 453(I)(3), the corporation’s income tax is

increased by the interest payable under section 453(l)(3). Report

this addition to the tax on Schedule J, line 8f. See the

instructions for Schedule J, line 8f, for information required on

the attachment.

Nonaccrual experience method for service providers.

Accrual method corporations are not required to accrue certain

amounts to be received from the performance of services that,

based on their experience, will not be collected, if:

• The services are in the fields of health, law, engineering,

architecture, accounting, actuarial science, performing arts, or

consulting; or

• The corporation meets the section 448(c) gross receipts test

for all prior years.

This provision does not apply to any amount if interest is

required to be paid on the amount or if there is any penalty for

failure to timely pay the amount. See Regulations section

1.448-3 for more information on the nonaccrual experience

method, including information on safe harbor methods.

For information on a book safe harbor method of accounting

for corporations that use the nonaccrual experience method of

accounting, see Rev. Proc. 2011-46, 2011-42 I.R.B. 518,

available at IRS.gov/irb/2011-42_IRB#RP-2011-46, or any

successor. Also, see the Instructions for Form 3115 for

procedures to obtain automatic consent to change to this

method or make certain changes within this method.

Corporations that qualify to use the nonaccrual experience

method should attach a statement to Form 1120-F showing total

gross receipts, the amount not accrued because of the

application of section 448(d)(5), and the net amount accrued.

Enter the net amount on line 1a.

Line 1b. Returns and allowances. Enter cash and credit

refunds the corporation made to customers for returned

merchandise, rebates, and other allowances made on gross

receipts or sales.

Line 2. Cost of Goods Sold

Complete and attach Form 1125-A, Cost of Goods Sold, if

applicable. Enter on Form 1120-F, line 2, the amount from Form

1125-A, line 8. See Form 1125-A and its instructions.

Line 4. Dividends

See the instructions for Schedule C, later. Complete Schedule C

and enter on line 4 the amount from Schedule C, line 13, column

(a).

Line 5. Interest

Enter taxable interest on U.S. obligations and on loans, notes,

mortgages, bonds, bank deposits, corporate bonds, tax refunds,

etc. Do not offset interest expense against interest income.

Special rules apply to interest income from certain

below-market-rate loans. See section 7872 for details.

21

Note: Report tax-exempt interest on Form 1120-F, page 2, item

P. Also, if required, include the same amount on Schedule M-1,

line 7a; or Schedule M-3, Part II, line 4a.

Line 6. Gross Rents

Enter the gross amount received for the rental of property.

Deduct expenses such as repairs, interest, taxes, and

depreciation on the proper lines for deductions. A rental activity

held by a closely held corporation or a personal service

corporation may be subject to the passive activity loss rules. See

Passive activity limitations, later.

Apportionment of Expenses

In general, expenses that are definitely related to a class of gross

income (including tax-exempt income) must be allocated to that

class of gross income. Expenses not definitely related to a class

of gross income should be allocated to all classes of income

based on the ratio of gross income in each class of income to

total gross income, or some other ratio that clearly relates to the

classes of income. See Regulations section 1.861-8 and

Temporary Regulations section 1.861-8T for more information.

Line 8. Capital Gain Net Income

Attach Schedule H (Form 1120-F) to show the definitely

related and indirect allocation and apportionment of expenses to

ECI. The amount on Schedule H, Part II, line 20, is reportable on

Form 1120-F, Section II, line 26.

Every effectively connected sale or exchange of a capital asset

must be reported in detail on Schedule D (Form 1120), even if

there is no gain or loss.

Note: The allocation and apportionment of bad debt deductions

is not included on Schedule H but is reported only on Form

1120-F, Section II, line 15.

Line 10. Other Income

Limitations on Deductions

Enter any other taxable income not reported on lines 1 through

9. List the type and amount of income on an attached statement.

If the corporation has only one item of other income, describe it

in parentheses on line 10.

Examples of other income to report on line 10 include the

following.

• Recoveries of bad debts deducted in prior years under the

specific charge-off method.

• Any amount includable in income from Form 6478, Biofuel

Producer Credit.

• Any amount includable in income from Form 8864, Biodiesel,

Renewable Diesel, or Sustainable Aviation Fuels Credit.

• Refunds of taxes deducted in prior years to the extent they

reduced the amount of tax imposed. See section 111 and the

related regulations. Do not offset current-year taxes against tax

refunds.

• Ordinary income from trade or business activities of a

partnership (from Schedule K-3 (Form 1065)). Do not offset

ordinary losses against ordinary income. Instead, include the

losses on Section II, line 27. Show the partnership’s name,

address, and EIN on Schedule P (Form 1120-F). If the amount

entered is from more than one partnership, identify the amount

from each partnership on Schedule P.

• The ratable portion of any net positive section 481(a)

adjustment. See Section 481(a) adjustment, earlier.

• Part or all of the proceeds received from certain

corporate-owned life insurance contracts issued after August 17,

2006. Corporations that own one or more employer-owned life

insurance contracts issued after this date must file Form 8925,

Report of Employer-Owned Life Insurance Contracts. See Form

8925.

• Net income from notional principal contracts.

• Interest and dividend equivalents (for example, confirmation

and acceptance letter of credit fees and other guarantee fees).

• Income from cancellation of debt (COD) from the repurchase

of a debt instrument for less than its adjusted issue price.

Deductions

Important. In computing the taxable income of a foreign

corporation engaged in a U.S. trade or business, deductions are

allowed only if they are connected with income effectively

connected with the conduct of a trade or business in the United

States. Charitable contributions, however, may be deducted

whether or not they are so connected. See section 882(c) and

Regulations section 1.882-4(b) for more information.

22

Uniform capitalization rules. The uniform capitalization rules

of section 263A require corporations to capitalize certain costs to

inventory or other property.

Corporations subject to the section 263A uniform

capitalization rules are required to capitalize:

1. Direct costs of assets produced or acquired for resale,

and

2. Certain indirect costs (including taxes) that are properly

allocable to property produced or property acquired for resale.

The corporation cannot deduct the costs required to be

capitalized under section 263A until it sells, uses, or otherwise

disposes of the property (to which the costs relate). The

corporation recovers these costs through depreciation,

amortization, or costs of goods sold.

A small business taxpayer (defined under Accounting

Methods, earlier) is not required to capitalize costs under section

263A. A small business taxpayer that wants to discontinue

capitalizing costs under section 263A must change its method of

accounting. See section 263A(i) and Regulations section

1.263A-1(j). Also, see the Instructions for Form 3115.

For more information on the uniform capitalization rules, see

Pub. 538. Also, see Regulations sections 1.263A-1 through

1.263A-3. See section 263A(d), Regulations section 1.263A-4,

and Pub. 225 for rules for property produced in a farming

business.

Transactions between related taxpayers. Generally, an

accrual basis taxpayer may only deduct business expenses and

interest owed to a related party in the year the payment is

included in the income of the related party. See sections 163(e)

(3) and 267(a)(2) for limitations on deductions for unpaid interest

and expenses. See the instructions for Schedule I (Form

1120-F), lines 24b and 24e, for limitations under these sections

of the interest expense allocable under Regulations section

1.882-5.

Limitations on business interest expense. Business interest

expense may be limited. See section 163(j) and Form 8990,

Limitation on Business Interest Expense Under Section 163(j).

Also, see the instructions for Schedule I (Form 1120-F), and the

instructions for item FF and item GG, earlier.

Section 291 limitations. Corporations may be required to

adjust deductions for depletion of iron ore and coal, intangible

drilling and exploration and development costs, certain

deductions for financial institutions, and the amortizable basis of

Instructions for Form 1120-F (2025)

pollution control facilities. See section 291 to determine the

amount of the adjustment.

Election to deduct business start-up and organizational

costs. A corporation can elect to deduct a limited amount of

start-up and organizational costs it paid or incurred. Any

remaining costs must generally be amortized over a 180-month

period. See sections 195 and 248 and the related regulations.

Time for making an election. The corporation generally

elects to deduct start-up or organizational costs by claiming the

deduction on its income tax return filed by the due date

(including extensions) for the tax year in which the active trade or

business begins. For more details, see the Instructions for Form

4562.

If the corporation timely filed its return for the year without

making an election, it can still make an election by filing an

amended return within 6 months of the due date of the return

(excluding extensions). Clearly indicate the election on the

amended return and enter “Filed pursuant to section

301.9100-2” at the top of the amended return. File the amended

return at the same address the corporation filed its original

return. The election applies when figuring taxable income for the

current tax year and all subsequent years.

The corporation can choose to forgo the elections above by

affirmatively electing to capitalize its start-up or organizational

costs on its income tax return filed by the due date (including

extensions) for the tax year in which the active trade or business

begins.

Note: The election to either amortize or capitalize start-up costs

is irrevocable and applies to all start-up costs that are related to

the trade or business.

Report the deductible amount of start-up and organizational

costs and any amortization on line 27. For amortization that

begins during the current tax year, complete and attach Form

4562, Depreciation and Amortization.

Passive activity limitations. Limitations on passive activity

losses and credits under section 469 apply to personal service

corporations (for definition, see Item O, earlier) and closely held

corporations (see definition below).

Generally, the two kinds of passive activities are:

• Trade or business activities in which the corporation did not

materially participate for the tax year; and

• Rental activities, regardless of its participation.

For exceptions, see Form 8810, Corporate Passive Activity

Loss and Credit Limitations.

Corporations subject to the passive activity limitations must

complete Form 8810 to compute their allowable passive activity

loss and credit. Before completing Form 8810, see Temporary

Regulations section 1.163-8T, which provides rules for allocating

interest expense among activities. If a passive activity is also

subject to the at-risk rules of section 465 or the tax-exempt use

loss rules of section 470, those rules apply before the passive

loss rules.

For more information, see section 469, the related

regulations, and Pub. 925, Passive Activity and At-Risk Rules.

Closely held corporations. A corporation is a closely held

corporation if:

• At any time during the last half of the tax year, more than 50%

in value of its outstanding stock is directly or indirectly owned by

or for not more than five individuals; and

• The corporation is not a personal service corporation.

Certain organizations are treated as individuals for purposes

of this test. See section 542(a)(2). For rules for determining

stock ownership, see section 544 (as modified by section 465(a)

(3)).

Instructions for Form 1120-F (2025)

Reducing certain expenses for which credits are allowable.

If the corporation claims certain credits, it may need to reduce

the otherwise allowable deductions for expenses used to figure

the credit. This applies to credits such as the following.

• Work opportunity credit (Form 5884).

• Credit for increasing research activities (Form 6765).

• Orphan drug credit (Form 8820).

• Disabled access credit (Form 8826).

• Empowerment zone employment credit (Form 8844).

• Credit for employer social security and Medicare taxes paid

on certain employee tips (Form 8846).

• Credit for small employer pension plan start-up costs (Form

8881).

• Credit for employer-provided childcare facilities and services

(Form 8882).

• Low sulfur diesel fuel production credit (Form 8896).

• Credit for employer differential wage payments (Form 8932).

• Credit for small employer health insurance premiums (Form

8941).

• Employer credit for paid family and medical leave (Form

8994).

If the corporation has any of the credits listed above, figure

the current-year credit before figuring the deduction for expenses

on which the credit is based. If the corporation capitalized any

costs on which it figured the credit, it may need to reduce the

amount capitalized by the credit attributable to these costs.

See the instructions for the form used to figure the applicable

credit for more details.

Limitations on deductions related to property leased to

tax-exempt entities. If a corporation leases property to a

governmental or other tax-exempt entity, the corporation cannot

claim deductions related to the property to the extent that they

exceed the corporation’s income from the lease payments. This

disallowed tax-exempt use loss may be carried over to the next

tax year and treated as a deduction with respect to the property

for that tax year. See section 470(d) for exceptions.

Contributions. See the instructions for line 19, later, for

limitations that apply to contributions.

Line 12. Compensation of Officers

Enter deductible officers’ compensation on line 12. Do not

include compensation deductible elsewhere on the return, such

as amounts included in cost of goods sold, elective contributions

to a section 401(k) cash or deferred arrangement, or amounts

contributed under a salary reduction SEP agreement or a

SIMPLE IRA plan.

If the corporation’s total receipts (line 1a, plus lines 4 through

10) are $500,000 or more, complete Form 1125-E,

Compensation of Officers. Enter on Form 1120-F, line 12, the

amount from Form 1125-E, line 4.

Line 13. Salaries and Wages

Enter the total salaries and wages paid for the tax year. Do not

include salaries and wages deductible elsewhere on the return,

such as amounts included in officers’ compensation, cost of

goods sold, elective contributions to a section 401(k) cash or

deferred arrangement, or amounts contributed under a salary

reduction SEP agreement or a SIMPLE IRA plan.

If the corporation provided taxable fringe benefits to its

employees, such as personal use of a car, do not deduct as

wages the amount allocated for depreciation and other expenses

claimed on lines 20 and 27.

23

If the corporation claims a credit for any wages paid or

incurred, it may need to reduce any corresponding deduction for

officers’ compensation and salaries and wages. See Reducing

certain expenses for which credits are allowable, earlier.

Line 14. Repairs and Maintenance

Enter the cost of repairs and maintenance not claimed

elsewhere on the return, such as labor and supplies, that are not

payments to produce or improve real or tangible personal

property. See Regulations section 1.263(a)-1. For example,

amounts are paid for improvements if they are for betterments to

the property, restorations of the property (such as the

replacements of major components or substantial structural

parts), or if they adapt the property to a new or different use.

Amounts paid to produce or improve property must be

capitalized. See Regulations sections 1.263(a)-2 and -3.

The corporation can deduct repair and maintenance

expenses only to the extent they relate to a trade or business

activity. See Regulations section 1.162-4. The corporation may

elect to capitalize certain repair and maintenance costs

consistent with its books and records. See Regulations section

1.263(a)-3(n) for information on how to make the election.

And the vehicle’s FMV on the first

day of the lease exceeded:

The lease term began:

Cars (excluding trucks and vans)

After 12/31/23 but before 1/1/26

$62,000

After 12/31/22 but before 1/1/24

$60,000

After 12/31/21 but before 1/1/23

$56,000

After 12/31/20 but before 1/1/22

$51,000

After 12/31/17 but before 1/1/21

$50,000

After 12/31/12 but before 1/1/18

$19,000

Trucks and vans

After 12/31/23 but before 1/1/26

$62,000

After 12/31/22 but before 1/1/24

$60,000

After 12/31/21 but before 1/1/23

$56,000

After 12/31/20 but before 1/1/22

$51,000

After 12/31/17 but before 1/1/21

$50,000

After 12/31/13 but before 1/1/18

$19,500

After 12/31/09 but before 1/1/14

$19,000

Line 15. Bad Debts

Enter the total debts that became worthless in whole or in part

during the tax year. A small bank or thrift institution using the

reserve method of section 585 should attach a statement

showing how it figured the current year’s provision. A corporation

that uses the cash method of accounting cannot claim a bad

debt deduction unless the amount was previously included in

income.

Specific charge-off method. Attach to the return a list of each

debtor and the amount of the bad debt deduction where the

amount of the loans charged off (or treated as charged off under

Regulations section 1.166-2) for that debtor total in excess of

$500,000 in the tax year.

Line 16. Rents

If the corporation rented or leased a vehicle, enter the total

annual rent or lease expense paid or incurred during the year.

Also, complete Part V of Form 4562. If the corporation leased a

vehicle for a term of 30 days or more, the deduction for vehicle

lease expense may have to be reduced by an amount includible

in income called the “inclusion amount.” The corporation may

have an inclusion amount if:

See Pub. 463, Travel, Gift, and Car Expenses, for instructions

on figuring the inclusion amount.

Note: The inclusion amount for lease terms beginning in 2026

will be published in the Internal Revenue Bulletin in early 2026.

Line 17. Taxes and Licenses

Enter taxes paid or accrued during the tax year, but do not

include the following.

• Federal income taxes.

• Foreign or U.S. territory income taxes if a foreign tax credit is

claimed.

• Taxes not imposed on the corporation.

• Taxes, including state or local sales taxes, that are paid or

incurred in connection with an acquisition or disposition of

property (these taxes must be treated as a part of the cost of the

acquired property or, in the case of a disposition, as a reduction

in the amount realized on the disposition).

• Taxes assessed against local benefits that increase the value

of the property assessed (such as for paving, etc.).

• Taxes deducted elsewhere on the return, such as those

reflected in cost of goods sold.

See section 164(d) for information on apportionment of taxes

on real property between seller and purchaser.

See section 906(b)(1) for rules concerning certain foreign

taxes imposed on income from U.S. sources that may not be

deducted or credited.

Line 18. Interest Expense From Schedule I, Line 25

Enter the interest expense from Schedule I (Form 1120-F),

line 25. Attach Schedule I to the Form 1120-F. See Schedule I

and its separate instructions for additional information relating to

the allocation of interest expense to ECI and the amount that

may be claimed as a deduction on Form 1120-F, Section II,

line 18.

Treaty-based interest expense allocation methods. The

three-step formula under Regulations section 1.882-5 provides

the exclusive rules for determining the interest expense

24

Instructions for Form 1120-F (2025)

attributable to the business profits of a permanent establishment

under a U.S. income tax treaty, other than treaties that expressly

permit attribution of business profits to a U.S. permanent

establishment under application of the OECD Transfer Pricing

Guidelines, by analogy.

Protective elections under section 1.882-5. A taxpayer

that files a protective tax return under Regulations section

1.882-4(a)(3)(vi) may voluntarily file Schedule I with the

protective return to preserve timely elections under Regulations

section 1.882-5(a)(7). If a taxpayer uses the provisions of an

applicable treaty to allocate interest expense rather than

Regulations section 1.882-5, it remains subject to t

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