• Instructions for Form 8991 - Introductory Material
    • Time to come Developments
    • Background
    • Reminders
      • Corrected Form 8991.
      • Reporting requirements and penalties.
  • Full general Instructions
    • Purpose of Form
    • Definitions
      • Applicable taxpayer.
      • Base erosion minimum revenue enhancement amount.
      • Base erosion payment.
      • Related political party.
      • Base of operations erosion tax do good.
      • Base erosion percentage.
      • Modified taxable income.
      • Applicable section 38 credits.
      • Aggregation rules.
    • Who Must File
    • When To File
  • Specific Instructions
    • Note.
    • Part I—Applicable Taxpayer
      • Average Annual Gross Receipts for the three-Taxation-Twelvemonth Menstruation Ending With the Preceding Tax Year
        • Line 1a.
        • Line 1b.
        • Line 1c.
        • Line 1f.
        • Line 1g.
      • Base of operations Erosion Percentage for the Taxation Year
        • Line 2a.
        • Line 2b.
        • Line 2c.
        • Line second.
        • Line 2f.
        • Line 2g.
        • Line 2h.
        • Line 2i.
        • Line 2j.
        • Line 2k.
        • Line 2l.
        • Line 2p.
    • Part II—Modified Taxable Income
      • Line 3a.
      • Line 3b.
      • Line 3c.
      • Line 3d.
    • Part III—Regular Taxation Liability Adjusted for Purposes of Computing Base Erosion Minimum Tax Amount
      • Line 4a.
        • Consolidated groups.
      • Line 4c.
    • Role Iv—Computation of Base of operations Erosion Minimum Revenue enhancement Corporeality
      • Line 5b.
      • Line 5e.
    • Schedule A—Base Erosion Payments and Base Erosion Tax Benefits
      • Ballot to employ financial statements for interest expense.
      • Consolidated groups.
      • Columns (a-ane) and (a-two).
      • Columns (b-1) and (b-ii).
      • Line 1 and line 2.
      • Line 3, columns (a-1) and (b-1).
      • Line 3, columns (a-two) and (b-2).
      • Line 4, columns (a-1) and (b-ane).
      • Line four, columns (a-two) and (b-2).
      • Line 5a, columns (a-1) and (b-ane).
      • Line 5a, columns (a-2) and (b-two).
      • Line 5b.
      • Line vi, columns (a-ane) and (b-1).
      • Line 6, columns (a-2) and (b-two).
      • Line 7, columns (a-1) and (b-1).
      • Line 7, columns (a-2) and (b-2).
      • Line 8, columns (a-i) and (b-1).
      • Line eight, columns (a-2) and (b-2).
      • Line 9a, columns (a-1) and (b-1).
      • Line 9a, columns (a-two) and (b-2).
      • Line 9b.
      • Line 10, columns (a-1) and (b-1).
      • Line 10, columns (a-two) and (b-2).
      • Line 11, columns (a-1) and (b-one).
      • Line eleven, columns (a-2) and (b-two).
      • Attach a statement for line eleven.
      • Line 12.
      • Line thirteen.
      • Line xiv.
      • Line 15.
      • Instructions for Worksheet for Schedule A, Line xiv, Columns (a-2) and (b-ii)
        • General
        • Cavalcade A.
        • Column B.
        • Column C.
        • Cavalcade D.
        • Column East.
    • Schedule B—Waiver of Deductions
      • Column (a).
      • Column (b).
      • Column (c).
      • Column (d).
      • Column (e).
      • Cavalcade (f).
      • Column (g).
      • Column (h).
      • Cavalcade (i).
      • Line xiv.
    • Schedule C—Credits Reducing Regular Tax Liability in Calculating Base of operations Erosion Minimum Tax Amount (BEMTA)
      • Part I—Credits Immune Against Regular Revenue enhancement
        • Line 1.
        • Line 2.
        • Line 3.
        • Line v.
      • Part II—Applicable Section 38 Credits
        • Line eight.
        • Line 9.
        • Line x.
        • Line 11.
      • Role Three—BEMTA Determined Without Adjustment for Applicable Section 38 Credits
        • Line fifteen.
        • Line xvi.
  • Instructions for Form 8991 - Notices
    • Paperwork Reduction Act Find.

Instructions for Class 8991 (12/2020)

Taxation on Base Erosion Payments of Taxpayers With Substantial Gross Receipts

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

Revised: 12/2020

Instructions for Form 8991 - Introductory Cloth

Future Developments

For the latest information nigh developments related to Class 8991, its schedules, and its instructions, such as legislation enacted or guidance published later on the form and instructions were issued, get to IRS.gov/Form8991.

Background

The Tax Cuts and Jobs Human action of 2017 (P.Fifty. 115-97) added new section 59A (Tax on Base of operations Erosion Payments of Taxpayers with Substantial Gross Receipts), which applies to large corporations that have the ability to reduce U.Due south. revenue enhancement liabilities by making deductible payments to foreign related parties. The Base of operations Erosion and Anti-Abuse Tax (Trounce) of section 59A is generally levied on sure large corporations that accept deductions with respect to amounts paid or accrued to foreign related parties that are greater than 3% of their total deductions (2% in the case of certain banks or registered securities dealers), a determination referred to as the base erosion percent exam. Large corporations are those with gross receipts of $500 one thousand thousand or more, equally calculated under the regulations of section 59A, a determination referred to as the gross receipts test. The BEAT operates equally a minimum tax, so a taxpayer is but subject to boosted revenue enhancement under the Trounce if the BEAT taxation charge per unit multiplied by the taxpayer'south modified taxable income exceeds the taxpayer's regular taxation liability adjusted for sure credits.

On Dec 21, 2018, the Section of the Treasury ("Treasury Department") and the IRS published proposed regulations nether sections 59A, 383, 1502, 6038A, and 6655 in the Federal Register (83 FR 65956) (the "2018 proposed regulations"). Taxpayers may apply the 2018 proposed regulations in their entirety for all revenue enhancement years ending on or earlier December 6, 2019.

On Dec six, 2019, the Treasury Department and the IRS published last regulations (the "concluding regulations") under sections 59A, 383, 1502, and 6038A, and proposed regulations which propose other regulations under sections 59A and 6031 (the "2019 proposed regulations").

On October 9, 2020, the Treasury Department and the IRS published concluding regulations (the "2020 final regulations") providing additional guidance under sections 59A, 1502, and 6031.

Reminders

Corrected Form 8991.

If you file a Grade 8991 that you later decide is incomplete or incorrect, file a corrected Form 8991 with an amended tax return, using the amended return instructions for the return with which yous originally filed Form 8991. Write "Corrected" at the superlative of the form and attach a statement identifying the changes.

Reporting requirements and penalties.

P.L. 115-97 also expanded the information reporting requirements nether section 6038A and increased the amount of the penalty for failure to furnish information or maintain records under section 6038A(d)(1) and (2) from $10,000 to $25,000. See Form 5472 and its instructions for farther details.

General Instructions

Purpose of Form

Use Course 8991 to determine a taxpayer'southward base erosion minimum tax corporeality for the year.

Use Schedule A to make up one's mind the amount of base erosion payments and base of operations erosion tax benefits for purposes of:

  • Determining the taxpayer'south base of operations erosion pct, and

  • Determining the applicable taxpayer'south modified taxable income.

Use Schedule B to report the amount of deductions being waived for the tax twelvemonth.

Utilise Schedule C to determine the credits that reduce regular revenue enhancement liability in computing the base erosion minimum tax amount.

Definitions

Applicable taxpayer.

An applicative taxpayer is, with respect to whatsoever revenue enhancement twelvemonth, a taxpayer which meets all of the following criteria.

  • The taxpayer is a corporation other than a regulated investment company (RIC), a existent estate investment trust (REIT), or an S corporation.

  • The taxpayer has boilerplate annual gross receipts for the 3-tax-year catamenia catastrophe with the preceding tax yr that are at least $500 one thousand thousand (the "gross receipts test").

  • The taxpayer has a base of operations erosion percentage for the taxation year of 3% or higher; 2% or higher for a taxpayer who is a member of an affiliated group which includes a bank or a registered securities dealer every bit defined in Regulations department 1.59A-1(b)(15) (the "base of operations erosion pct test").

See Regulations section i.59A-2 for more information on how to determine whether a taxpayer is an applicable taxpayer.

Base erosion minimum tax amount.

The base of operations erosion minimum tax corporeality for the revenue enhancement yr is the excess of 10% (5% in the instance of a revenue enhancement year beginning in 2018) of the modified taxable income of the applicable taxpayer for the taxation yr over the applicable taxpayer's regular tax liability nether section 26(b), reduced (simply not beneath cypher) by the excess, if any, of:

  1. The credits immune nether affiliate i of subtitle A of the Code ("chapter i") against the applicative taxpayer'southward regular tax liability over

  2. The sum of:

    1. The credit allowed under section 38 which is properly allocable to the research credit determined nether section 41(a), plus

    2. The portion of the applicative section 38 credits not in excess of 80% of the bottom of the amount of the applicable section 38 credits or the base of operations erosion minimum tax amount determined without taking the applicative section 38 credits into account, plus

    3. Whatsoever credits allowed under sections 33, 37, and 53.

If the applicable taxpayer is a member of an affiliated group under department 1504(a)(1) which includes a bank (as defined in section 581) or a registered securities dealer under section 15(a) of the Securities Substitution Act of 1934, the tax charge per unit in effect for the tax year for the base erosion minimum tax corporeality is increased by an additional 1%.

Run across Regulations section 1.59A-5 for more than information on how to compute the base of operations erosion minimum tax corporeality.

Base erosion payment.

A base erosion payment is whatsoever amount paid or accrued by a taxpayer to a foreign person (as defined in Regulations section one.59A-1(b)(ten)) that is a related party (as defined in Regulations section ane.59A-i(b)(12)) with respect to which a deduction is allowable under affiliate 1.

The amount paid or accrued, and the identity of the payor and recipient of the amount paid or accrued, is determined under general revenue enhancement principles.

An amount paid or accrued includes an amount paid or accrued using any form of consideration, such as cash, holding, stock, a partnership interest, or the assumption of a liability.

Base of operations erosion payments are more often than not determined on a gross basis, unless the Lawmaking or regulations expressly permit netting of amounts in determining payments.

For purposes of determining whether a taxpayer has made a base erosion payment, the taxpayer must care for a payment to or from a partnership as made to or from each partner. See Regulations section i.59A-7 for more information on how the Shell applies to partners.

Base erosion payments also include the following.

  • Amounts paid or accrued by a taxpayer to a foreign related political party in connexion with the conquering of depreciable or amortizable property.

  • Premiums or other consideration paid or accrued past a taxpayer to a strange related party for reinsurance payments which are taken into account nether department 803(a)(1)(B) or section 832(b)(4)(A).

  • Any corporeality paid or accrued by a taxpayer to a related party that is a surrogate foreign corporation (if that corporation starting time became a surrogate foreign corporation after November 9, 2017), or a foreign person which is a fellow member of the same expanded affiliated group as the surrogate foreign corporation (collectively, "expatriated entities"), which results in a reduction to gross receipts. Meet section 59A(d)(four) for more information.

Come across Regulations section ane.59A-3 for more than information on the definition of a base erosion payment.

Base erosion payments do non include the following types of payments fabricated to a foreign person that is a related party.

  • Amounts resulting in a reduction to make up one's mind gross income, such as cost of appurtenances sold.

  • Amounts paid or accrued for services if such services are services that meet the requirements for eligibility for use of the services cost method under section 482 (determined without regard to the requirement that the services non contribute significantly to the fundamental risks of business success or failure), merely just to the extent of the total services cost of those services. The marker-upwards component paid or accrued to a foreign related party is a base erosion payment.

  • Qualified derivative payments. A qualified derivative payment is a payment made by a taxpayer pursuant to a derivative with respect to which the taxpayer (a) recognizes proceeds or loss every bit if the derivative were sold for its fair market value on the final business organisation day of the taxation year and whatever additional times required by the taxpayer'southward method of accounting, (b) treats the recognized gain or loss as ordinary, and (c) treats the graphic symbol of all payments made with respect to the derivative as ordinary. A qualified derivative payment will not exist excluded from being characterized as a base erosion payment if the payment is properly allocable to a non-derivative component of a contract or if the payment would be treated as a base erosion payment if it were not made pursuant to a derivative, such as an interest, royalty, or services payment.

  • Effectively connected income and income taken into account in U.S. taxable income nether an income tax treaty.

    1. Amounts paid or accrued that are subject to U.Southward. federal income revenue enhancement equally income that is effectively connected to a U.Due south. trade or business if the taxpayer receives a withholding certificate with respect to the income.

    2. If the strange related party determines its taxable income applying the business profits provisions of an income tax treaty, amounts paid or accrued to the foreign related party that are taken into business relationship in determining its taxable income.

  • Exchange loss from section 988 transactions.

  • Certain deductions for amounts paid or accrued with respect to sure full loss arresting chapters securities (TLAC) securities and certain foreign TLAC securities.

  • Amounts transferred in connexion with sure specified nonrecognition transactions. See Regulations section 1.59A-3(b)(3)(8) for more data.

  • Amounts paid by the taxpayer to a regulated strange insurance company under a reinsurance contract for reinsurance losses incurred or claims payments that are ultimately paid by the foreign insurance company to an unrelated party.

See Regulations department i.59A-3(b)(3)(i)–(9) for further data on whether a payment or accrual is not a base erosion payment.

Related party.

A related political party is:

  • Whatsoever 25% owner of the taxpayer (as defined in Regulations section 1.59A-i(b)(17)(ii)(A)),

  • Whatever person who is related (within the meaning of section 267(b) or 707(b)(1)) to the taxpayer or any 25% owner of the taxpayer, or

  • Any other person who is related to the taxpayer inside the significant of Regulations section i.59A-1(b)(17)(iii).

Section 318, with certain modifications, applies in determining whether a person is a related political party. Run across Regulations section ane.59A-1(b)(17)(3) for additional rules relating to the modification of section 318 for use in determining a person's relatedness.

Base of operations erosion tax do good.

Generally, a base erosion revenue enhancement benefit is whatever deduction that is allowed under chapter one for the revenue enhancement yr for any base erosion payment. Base erosion tax benefits also include any deductions immune for the revenue enhancement year for depreciation or amortization with respect to the holding acquired with a base of operations erosion payment (that are paid or accrued in tax years beginning after 2017). Base erosion tax benefits also include certain reductions in the gross amount of premiums and other consideration on insurance and annuity contracts, or any deduction from the amount of gross premiums written on insurance contracts during the revenue enhancement year for premiums paid for reinsurance, and payments to certain expatriated entities (as defined nether Base of operations erosion payment , earlier) that cause a reduction in gross receipts in computing gross income of the taxpayer for the tax year.

Meet the instructions for Schedule A for special rules applicable in determining the amount of the base erosion tax benefit when taxes take been imposed by section 871 or 881 and withheld under section 1441 or 1442 on a base erosion payment; or when the taxpayer has made an interest payment that gives rise to a base of operations erosion tax benefit and section 163(j) applies for the tax year.

Base erosion percent.

The base erosion percentage is the per centum determined past dividing:

  1. The aggregate amount of base erosion tax benefits of the taxpayer for the taxation year (numerator) past

  2. The amass amount of the taxpayer'due south allowed deductions and base erosion tax benefits (denominator). The denominator excludes the following deductions.

    1. Any deduction allowed under sections 172, 245A, or 250.

    2. Whatsoever deduction for amounts paid or accrued for services to which the exception under Regulations section 1.59A-3(b)(3)(i) for the department 482 services cost method applies.

    3. Any deduction for qualified derivative payments which are not treated every bit base of operations erosion payments as a consequence of Regulations section one.59A-three(b)(3)(ii).

    4. Substitution loss from section 988 transactions that is non a base of operations erosion payment as a outcome of the exception under Regulations section 1.59A-3(b)(three)(iv).

    5. Whatsoever deduction for amounts paid or accrued to foreign related parties with respect to TLAC securities and foreign TLAC securities that are not treated as base erosion payments as a result of Regulations section 1.59A-3(b)(iii)(v).

    6. Whatever reinsurance losses incurred or claims payments that are not treated every bit base erosion payments every bit a result of the exception nether Regulations section 1.59A-3(b)(iii)(9).

    7. Any deduction non allowed in determining taxable income.

See Regulations department 1.59A-2(e)(iii) for farther information on how to compute the base erosion per centum.

Modified taxable income.

Modified taxable income is the applicable taxpayer's taxable income plus whatsoever base erosion tax do good with respect to any base of operations erosion payment and the base erosion per centum of any net operating loss deduction allowed under department 172 for the tax year.

Run into Regulations section ane.59A-4(b) for further information on the computation of modified taxable income.

Applicable section 38 credits.

Applicable section 38 credits are the credits immune under section 38 for the tax year that are properly allocable to:

  • The low-income housing credit adamant under department 42(a);

  • The renewable electricity production credit determined under section 45(a); and

  • The investment credit determined under department 46, but only to the extent properly allocable to the free energy credit determined under department 48.

Encounter too the instructions for Schedule C, later.

Assemblage rules.

When applying the gross receipts exam and base of operations erosion pct test, a taxpayer that is a member of an aggregate group determines its gross receipts and base erosion per centum as if information technology were 1 person, on the ground of its aggregate group. A taxpayer is a fellow member of an aggregate group if it belongs to a controlled group of corporations. The term "controlled group of corporations" has the pregnant given by department 1563(a) except that:

  1. "More than 50%" is substituted for "at least eighty%" each place it appears in section 1563(a), and

  2. The determination of the controlled grouping of corporations is made without regard to sections 1563(a)(4) and (e)(iii)(C).

Foreign corporations are excluded from an aggregate grouping except to the extent the foreign corporation has income effectively connected with the conduct of a trade or business in the United States or income taken into account in determining internet taxable income using an income tax treaty.

An aggregate group is adamant for each taxpayer. A taxpayer that is a member of an aggregate group determines its gross receipts and base erosion per centum on the basis of its aggregate grouping by taking into account the gross receipts, base erosion payments, base erosion tax benefits, and deductions of the members of the aggregate group for the revenue enhancement years that end with or within the taxpayer's tax yr.

Run into Regulations section one.59A-ii(c) for further information on how to apply the aggregation rules.

Who Must File

Any corporation, other than a RIC, a REIT, or an Due south corporation, that has aggregate gross receipts of at least $500 meg in one or more than of the 3 preceding revenue enhancement years catastrophe with the preceding tax year must file Form 8991.

Encounter Course 8991, Part I, lines 1a through 1g, and Specific Instructions , subsequently, to determine whether the corporation has gross receipts of at least $500 meg in 1 or more of the iii preceding taxation years.

Run into also questions/items and related instructions in the post-obit forms.

  • Question 22, Schedule 1000, Form 1120.

  • Item DD, Class 1120-F.

  • Question 14, Schedule M, Form 1120-L.

  • Question fifteen, Schedule I, Class 1120-PC.

  • Question sixteen, Schedule K, Course 1120-C.

When To File

Adhere Form 8991 to your income tax render (or, if applicable, exempt organisation business income taxation return) and file past the due date (including extensions) for that return.

Specific Instructions

Note.

Consummate every applicative entry space on Form 8991. Do not enter "Encounter Attached" or "Available Upon Request" instead of completing the entry spaces. If more than infinite is needed on the forms or schedules, attach separate sheets using the aforementioned size and format as the printed forms.

If at that place are supporting statements and attachments, accommodate them in the aforementioned order as the schedules or forms they support and adhere them last. Prove the totals on the printed forms. Enter the filer'due south proper name and EIN on each supporting statement or zipper.

Part I—Applicative Taxpayer

Average Annual Gross Receipts for the 3-Tax-Year Period Ending With the Preceding Taxation Year

A taxpayer that falls within the definition of Who Must File , before, and is filing Form 8991 should complete lines 1a through 1g to decide their average annual gross receipts for the 3-tax-year period catastrophe with the preceding tax yr.

For purposes of determining boilerplate annual gross receipts, a foreign corporation's gross receipts are included only when such gross receipts are taken into account when determining the foreign corporation's income effectively connected with a U.Southward. trade or concern ("ECI"). If the foreign corporation is subject to taxation on a net basis pursuant to a U.South. income tax treaty, simply gross receipts that are attributable to transactions taken into account in determining the foreign corporation's net taxable income are included in the gross receipts decision.

Line 1a.

Enter in cavalcade (a) your gross receipts for the first preceding tax year. Enter in column (b) your gross receipts for the second preceding tax twelvemonth. Enter in column (c) your gross receipts for the third preceding tax yr.

Only include the gross receipts of the filer on line 1a. Do non include on this line the gross receipts of all other persons treated as 1 person under the aggregation rules of Regulations section 1.59A-2(c) which should be reported on line 1c. See the instructions for line 1c below.

Line 1b.

Enter in cavalcade (a) gross receipts from partnerships for the first preceding revenue enhancement year. Enter in column (b) gross receipts from partnerships for the 2nd preceding tax year. Enter in column (c) gross receipts from partnerships for the third preceding revenue enhancement yr.

A filer may report gross receipts from Class 1065 (Sch. Grand-1), Partner'southward Share of Income, Deductions, Credits, etc., box twenty (tax years 2018 and 2019) and box sixteen (tax twelvemonth 2020), received from partnerships in which the applicable taxpayer holds partnership interests.

Line 1c.

Enter in column (a) gross receipts of all other persons treated equally 1 person under the aggregation rules of Regulations section i.59A-2(c) (the "aggregate gross receipts") for the first preceding tax year. Enter in column (b) the aggregate gross receipts for the second preceding tax year. Enter in cavalcade (c) the aggregate gross receipts for the third preceding tax year. Do not include on line 1c gross receipts that have already been included on line 1a.

Line 1f.

If the taxpayer was non in existence for the unabridged three-year period referenced in columns (a), (b), and (c), the taxpayer must determine a gross receipts average for the flow that it was in existence (which includes the current yr'south gross receipts). See Regulations section one.59A-2(d)(ii) for further information.

Line 1g.

If y'all check "No" on line 1g, you lot are not field of study to the section 59A tax on base erosion payments of taxpayers with substantial gross receipts. Do non consummate the remaining lines. Adhere Form 8991 to your tax render.

If you cheque "Yes" on line 1g, proceed to line 2a.

Base Erosion Percentage for the Tax Twelvemonth

Complete lines 2a through 2o to determine your base erosion percentage for the tax year. See the definition of Aggregation rules , earlier, for information on how to determine the base erosion percentage for an amass group. If the taxpayer is not a member of an aggregate group, the taxpayer should enter its ain amounts in lines 2a through 2o.

A taxpayer is bailiwick to the ii% base of operations erosion percentage threshold if it is a fellow member of an affiliated group (every bit divers in section 1504(a)(1)) that includes a bank (equally divers in section 581) or a registered securities dealer under department fifteen(a) of the Securities Exchange Act of 1934.

Line 2a.

Enter the corporeality of base of operations erosion revenue enhancement benefits from Schedule A, line 15, column (a-ii).

Line 2b.

Enter the amass corporeality of deductions allowed under affiliate 1 (sections one through 1400) for the taxation year. The corporeality entered should be the aggregate deductions allowed to all persons that are treated equally one person under the aggregation rules. Do not include amounts reported on line 2c (reinsurance payments) or amounts reported on line 2d (payments to expatriated entities).

Line 2c.

For reinsurance payments paid or accrued that are base erosion payments described in Regulations section 1.59A-3(b)(1)(iii), enter the aggregate amount of:

  • Any reduction under section 803(a)(ane)(B) in the gross corporeality of premiums and other consideration on insurance and annuity contracts for premiums and other consideration arising out of indemnity insurance, and

  • Whatsoever deduction nether department 832(b)(4)(A) from the amount of gross premiums written on insurance contracts during the taxation year for premiums paid for reinsurance.

Line second.

Enter the aggregate amount paid or accrued with respect to expatriated entities that results in a reduction of the gross receipts of the taxpayer.

Line 2f.

Enter the amount from Schedule A, line 5b.

Line 2g.

Enter the corporeality from Schedule A, line 9b.

Line 2h.

Enter the aggregate amount of deductions immune under sections 172, 245A, and 250.

Line 2i.

If an election is made to waive deductions in accordance with Regulations department i.59A-three(c)(half dozen)(i); check the "Yes" box on line 2i; complete Schedule B, Waiver of Deductions; and enter the corporeality from line xv of Schedule B. If the taxpayer is a member of an aggregate group, and another member of the aggregate group has likewise made the election to waive deductions equally described above, also include the corporeality of the fellow member's waived deductions in line 2i. See Schedule B—Waiver of Deductions , afterward.

Line 2j.

Enter the aggregate amount of deductions for commutation losses from section 988 transactions described in Regulations section 1.59A-2(e)(3)(two)(D).

Line 2k.

Enter the aggregate amount of deductions for TLAC securities and strange TLAC securities described in Regulations section ane.59A-ii(e)(iii)(ii)(E).

Line 2l.

Enter the aggregate amount of reinsurance losses incurred and claims payments described in Regulations section 1.59A-two(e)(3)(2)(F).

Line 2p.

If you check "No" for line 2p, you are not subject to the tax on base erosion payments of taxpayers with substantial gross receipts. Do not consummate the remaining lines. Attach Form 8991 and the completed Schedule A (and, if applicable, Schedule B) to your tax return.

If y'all check "Yes" for line 2p, go along to Part Ii.

Part Two—Modified Taxable Income

Run across Regulations section 1.59A-4 for farther details on how to determine modified taxable income.

Line 3a.

Enter the amount of taxable income after whatsoever net operating loss.

If the current twelvemonth reports a loss, without whatsoever net operating loss carryovers, the amount entered here may exist less than zero.

If the current yr reports taxable income and there is a net operating loss carryover that would reduce taxable income beneath zero, enter "-0-." Do not enter an amount less than zero.

Line 3b.

Enter the amount of base erosion tax benefits for the taxation year with respect to base erosion payments from Schedule A, line 15, cavalcade (b-ii).

Line 3c.

Enter the amount of net operating loss deduction to be added back to taxable income for purposes of determining modified taxable income. To calculate this corporeality, first make up one's mind the corporeality of net operating loss deduction immune nether section 172 that does not exceed taxable income before taking into business relationship the net operating loss deduction for all applicable tax years. 2d, multiply this net operating loss deduction past the base erosion pct for the tax year in which the net operating loss arose. If the net operating loss deduction is attributable to net operating losses that arose in more than one tax year, multiply the net operating loss attributable to each revenue enhancement year by the base erosion per centum for that tax year and determine the total amount by adding the effect from each tax year. For whatever tax year kickoff before 2018, the base erosion percentage is nada.

Line 3d.

Combine the amounts on lines 3a through 3c.

Role III—Regular Taxation Liability Adjusted for Purposes of Computing Base Erosion Minimum Tax Amount

Line 4a.

Enter the amount of regular taxation liability (as divers in section 26(b)) of the applicable taxpayer for the tax year.

Consolidated groups.

Affiliated groups of corporations filing consolidated returns, please review any additional information at IRS.gov/Form8991.

Line 4c.

Subtract line 4b from 4a. If zero or less, enter "-0-."

Part Four—Computation of Base of operations Erosion Minimum Taxation Amount

Line 5b.

Enter the applicable tax charge per unit for the revenue enhancement year. For tax years get-go during 2018, the applicative rate is v%. For tax years beginning and ending during 2019 through 2025, the applicative rate is 10%. For any tax year that includes January one, 2026, the applicable rate is 12.5%.

The rates in a higher place are increased by 1% if the applicative taxpayer is a fellow member of an affiliated grouping (as defined in section 1504(a)(1)) that includes either a bank (every bit defined in section 581), or a registered securities dealer under section 15(a) of the Securities Substitution Human activity of 1934.

Line 5e.

Subtract line 5d from line 5c. If null or less, enter "-0-." This is your base erosion minimum taxation corporeality. For an applicable taxpayer filing Form 1120, enter this amount on Schedule J, line 3. For an applicable taxpayer filing Course 1120-F, enter this corporeality on Department II, Schedule J, line 3. For an applicable taxpayer filing Grade 1120-L, enter this amount on Schedule K, line 3. For an applicable taxpayer filing Form 1120-PC, enter this corporeality on page i, line 6.

Schedule A—Base of operations Erosion Payments and Base of operations Erosion Tax Benefits

Schedule A is required to be fastened if a corporation has average annual gross receipts of $500 meg or more for the 3-tax-year flow ending with the preceding tax year. This schedule requires a taxpayer to report all amounts that are base erosion payments every bit defined in Regulations section i.59A-3(b) and base of operations erosion taxation benefits as defined in Regulations section 1.59A-3(c). This schedule besides requires a taxpayer to report any amounts that qualify for certain exceptions applicable to amounts that are not treated equally base erosion payments.

For lines 3 through 11, consummate columns (a-1), (a-ii), (b-1), and (b-2) for each type of payment made by the taxpayer (or, where applicable, fellow member of the taxpayer'due south aggregate group) to a foreign related party of the taxpayer during the tax year. For each type of payment reported on lines 3 through 11 of column (a-ane), check all applicable boxes in columns (c), (d), and (e) to indicate the type of related party who received the base erosion payment from the taxpayer.

Ballot to use financial statements for interest expense.

If the taxpayer is electing to use financial statements per Regulations department 1.59A-3(b)(4)(i)(D) for purposes of calculating interest expense allocable to a foreign corporation'southward effectively continued income, cheque the "Yes" box on the meridian of Schedule A. Otherwise, check "No".

Consolidated groups.

Affiliated groups of corporations filing consolidated returns, delight review whatsoever additional information at IRS.gov/Form8991.

Columns (a-1) and (a-two).

Columns (a-1) and (a-2) are used to determine the base erosion percentage, as divers in Regulations section 1.59A-2(due east). Enter in columns (a-1) and (a-2) the amount of aggregate base of operations erosion payments and aggregate base erosion revenue enhancement benefits, respectively, that correspond to each type of base erosion payment specified on lines 3 through 11. The aggregate base erosion payment entered in these lines should include only those base erosion payments paid or accrued in the current year. The aggregate base erosion taxation benefit entered in these lines should only include those base erosion revenue enhancement benefits allowed in the current yr, which may chronicle to a base of operations erosion payment paid or accrued in the current year or a prior yr. The amass base erosion tax benefits in column (a-2), lines 3 through 11, should be the amounts determined earlier applying the exception in Regulations department i.59A-three(c)(3) (base erosion revenue enhancement benefits disregarded if taxation withheld on base erosion payment).

Amass base erosion payments include the base of operations erosion payments of all persons treated as 1 person pursuant to the aggregation rules (see the definition of Assemblage rules , before). Similarly, aggregate base erosion revenue enhancement benefits include the base erosion tax benefits of all persons treated as 1 person pursuant to the assemblage rules.

However, if the taxpayer is not a member of an aggregate group, the taxpayer will enter in columns (a-1) and (a-2) the corporeality of its ain base erosion payments and base of operations erosion tax benefits, respectively, that stand for to each type of base erosion payment specified on lines 3 through 11, determined earlier applying the exception in Regulations section 1.59A-3(c)(iii).

Columns (b-1) and (b-2).

Columns (b-1) and (b-2) are used to determine modified taxable income, equally described in Regulations section 1.59A-four, of the applicative taxpayer. Enter in columns (b-1) and (b-2) the corporeality of base erosion payments and base of operations erosion tax benefits, respectively, that correspond to the type of base of operations erosion payments specified in lines three through 11. Enter in these columns the applicable taxpayer'south ain base erosion payments and base of operations erosion tax benefits, without applying the aggregation rules. The base erosion tax benefit in column (b-2), lines 3 through 11, should be an amount determined before applying the exception in Regulations section one.59A-3(c)(3) (tax benefits overlooked if taxation withheld on base of operations erosion payment).

Line 1 and line 2.

These lines are reserved and should not be used at this time.

Line iii, columns (a-1) and (b-1).

Enter the corporeality paid or accrued to a foreign related party in connection with the acquisition or creation of intangible property rights (patents, copyrights, trademarks, trade secrets, etc.) that is subject to the allowance for depreciation (or amortization in lieu of depreciation).

Line 3, columns (a-ii) and (b-2).

Enter the amount of deductions allowed under chapter 1 for the tax year for depreciation (or amortization in lieu of depreciation) with respect to intangible property rights caused in the current or prior years from a foreign related party.

Line 4, columns (a-1) and (b-i).

Enter the amount paid or accrued to a foreign related party for the use or right to employ tangible or intangible property resulting in rents, royalties, and/or license fees.

Line 4, columns (a-2) and (b-2).

Enter the corporeality of deductions allowed under chapter ane for the taxation year for amounts paid or accrued to a foreign related political party for the use or right to use tangible or intangible holding that results in rents, royalties, and/or license fees.

Line 5a, columns (a-ane) and (b-i).

Enter the amount paid or accrued to a foreign related political party every bit bounty or consideration for services, simply excluding whatsoever corporeality that falls within the exception in Regulations department 1.59A-3(b)(three)(i). Enter amounts paid or accrued in excess of the total services cost of the services eligible for the services toll method exception (or the mark-up component). Also enter amounts paid or accrued for services ineligible for the services cost method exception.

Line 5a, columns (a-2) and (b-2).

Enter the amount of deductions allowed nether chapter 1 for the revenue enhancement year for amounts paid or accrued to a foreign related party as compensation or consideration for services, but excluding any deduction for amounts paid or accrued that fall within the exception in Regulations department 1.59A-3(b)(three)(i). Enter amounts of deductions immune under chapter 1 for the tax year for amounts paid or accrued in backlog of the full services price of the services eligible for the services cost method exception (or the marking-upwards component). Also enter amounts of deductions for services ineligible for the services cost method exception.

Line 5b.

Enter the amount paid or accrued to a strange related party as bounty or consideration for services that are defined under the exception in Regulations section 1.59A-iii(b)(three)(i). Determine the amount of compensation or consideration eligible for this exception later on applying the aggregation rules.

Line 6, columns (a-1) and (b-one).

Enter the amount of all interest paid or accrued to a strange related party with respect to which a deduction is allowable in the tax year.

Line vi, columns (a-ii) and (b-2).

Enter the amount of deductible interest expense allowed under chapter 1 for the tax year with respect to amounts paid or accrued to a foreign related party. For purposes of completing line 6, columns (a-2) and (b-2), any reduction in the amount of involvement for which a deduction is allowed for the tax year under section 163(j) is treated as allocable first to interest paid or accrued to persons who are not related parties with respect to the taxpayer and and so to such related parties.

Line vii, columns (a-one) and (b-1).

Enter the amount paid or accrued to a foreign related party for the purchase of tangible personal property.

Line vii, columns (a-2) and (b-two).

Enter the amount of deductions allowed under chapter 1 for the tax year for amounts paid or accrued to a foreign related party for the purchase of tangible personal property.

Line 8, columns (a-i) and (b-1).

Enter the amount of any premiums or other consideration paid or accrued to a foreign related party for insurance and reinsurance that are taken into account nether section 803(a)(one)(B) (relating to return premiums and premiums or other consideration arising out of indemnity reinsurance that reduces life insurance gross income) or section 832(b)(4)(A) (relating to amounts deducted from gross premiums written on insurance contracts for return premiums and premiums paid for reinsurance). See Regulations department 1.59A-3(b)(1)(3).

Line 8, columns (a-two) and (b-ii).

Enter the amount of any reduction under department 803(a)(one)(B) in gross premiums and other consideration on insurance and annuity contracts for premiums and other consideration arising out of indemnity insurance paid to a foreign related political party, and the corporeality of any deduction under section 832(b)(4)(A) from the amount of gross premiums written on insurance contracts during the tax twelvemonth for premiums paid to a strange related political party for reinsurance.

Line 9a, columns (a-i) and (b-1).

Enter the amount paid or accrued to a foreign related party with respect to any derivative contract that is not a qualified derivative payment as defined in Regulations section 1.59A-6. Do non include any amount paid that is a qualified derivative payment.

Line 9a, columns (a-2) and (b-2).

Enter the amount of deductions allowed under chapter 1 for the tax year for amounts paid or accrued to a strange related party with respect to any payment that is not a qualified derivative payment. Practice non include any deductions allowed under chapter 1 for the taxation year if the deductible amount is a qualified derivative payment.

Line 9b.

Enter the amount paid to a foreign related party that is a qualified derivative payment excepted by Regulations department 1.59A-vi(b). Determine the corporeality of the qualified derivative payments after applying the aggregation rules. Generally, a qualified derivative payment is any payment made by the taxpayer pursuant to a derivative contract provided that the taxpayer recognizes gain or loss on the derivative contract as if information technology were sold for its fair market value on the concluding business 24-hour interval of the tax yr; treats the gain or loss every bit ordinary; and treats the character of all other items of income, deduction, proceeds, or loss with respect to a payment pursuant to the derivative as ordinary. A payment is non a qualified derivative payment if the payment would be treated as a base erosion payment if it were non made pursuant to a derivative (such as interest, royalty, or services income). With respect to a contract with both derivative and not-derivative components, a payment is not a qualified derivative payment if information technology is properly allocable to the non-derivative component.

A taxpayer meets the reporting requirement of Regulations sections 1.59A-6(b)(2) and 1.6038A-2(b)(7)(nine) by entering the amount on line 9b. For tax years starting time later June 7, 2021, a taxpayer volition also need to provide a representation that all payments satisfy the requirements of Regulations department 1.59A-6(b)(2) and meet the reporting requirement of Regulations sections ane.59A-6(b)(ii) and ane.6038A-2(b)(7)(ix).

Line x, columns (a-1) and (b-1).

Enter the corporeality paid or accrued to sure expatriated entities that results in a reduction of the gross receipts of the taxpayer. This corporeality includes payments to a surrogate foreign corporation that is a related party, but only if the entity first became a surrogate strange corporation subsequently November nine, 2017. The amount also includes payments to a foreign person that is a fellow member of the aforementioned expanded affiliated group, equally divers in section 7874(c)(1), as the surrogate foreign corporation. A surrogate foreign corporation is defined in department 7874(a)(2)(B), simply does not include a foreign corporation that is treated equally a domestic corporation nether department 7874(b).

Line 10, columns (a-ii) and (b-2).

Enter the amount of the reduction to gross receipts with respect to payments to expatriated entities that were used to compute gross income for the tax year.

Line 11, columns (a-ane) and (b-1).

Enter the full amount of any other base erosion payments that were paid or accrued to a foreign related party and for which a deduction is commanded under chapter 1. Only include those amounts that have not otherwise been included in Schedule A on lines three through 10.

Line xi, columns (a-2) and (b-2).

Enter the amount of deductions immune under chapter 1 for the tax year for other base erosion payments paid or accrued to a strange related party. Only include those amounts that have not otherwise been included in Schedule A on lines 3 through 10.

Attach a statement for line eleven.

For amounts reported on line 11, attach a argument describing the blazon and corporeality of other payments, using the aforementioned column headings as specified in Schedule A: "Amass Group'due south Base Erosion Payments," "Aggregate Group's Base of operations Erosion Tax Benefits," "Taxpayer's Base Erosion Payments," and "Taxpayer's Base of operations Erosion Taxation Benefits." For each type of payment, the zipper must identify the relationship of the recipients consistent with the categories and instructions for columns (c), (d), and (e) of Schedule A.

Line 12.

For columns (a-i), (a-2), (b-ane), and (b-2), add lines iii through 11 and enter the total corporeality.

Line xiii.

Enter the aggregate amount of base erosion tax benefits from columns (a-2) and (b-2) of lines iii through 11 on which tax is imposed under section 871(a) or section 881, and with respect to which tax has been deducted and withheld under section 1442 at a thirty% rate.

Line 14.

Worksheet for Schedule A, Line fourteen

A B C D E
Type of base of operations erosion payment Amount of base erosion tax benefit Treaty-reduced withholding rate Separate column C past 30% (0.xxx) (round to four decimal places) Multiply column B by column D
%
%
%
%
%
Add the amounts in column East and enter the total on the appropriate line on Schedule A, line xiv.

Complete the worksheet above to make up one's mind the portion of the base erosion tax benefits from lines 3 through xi on which tax is imposed under department 871 or section 881, and with respect to which tax has been deducted and withheld at a reduced withholding rate (but not exempt from taxation) pursuant to a U.S. income tax treaty. The amount to be entered on line 14 is the same proportion of such base erosion taxation benefits as the reduced rate of tax specified by the relevant treaty bears to the rate of tax imposed without regard to the treaty. Complete a dissever worksheet for cavalcade (a-2) amounts and cavalcade (b-ii) amounts on line 14, as necessary. Keep a copy of the completed worksheet for your records.

Line 15.

Subtract the sum of line 13 and line 14 from line 12, and enter the amount on line 15. Line xv, cavalcade (a-two), is the full amount of aggregate base erosion tax benefits for the taxation year that is used for purposes of determining the taxpayer's base erosion percentage. Line 15, column (b-ii), is the total amount of base erosion tax benefits for the tax yr that is used for purposes of determining the taxpayer's modified taxable income. Line 15, column (b-2), is besides the total corporeality of base erosion tax benefits for the tax year that is used for purposes of determining the taxpayer's base of operations erosion percentage when the taxpayer is not a fellow member of an amass group.

Instructions for Worksheet for Schedule A, Line fourteen, Columns (a-2) and (b-2)

Full general

Use a carve up row for each blazon of base erosion payment and each treaty-reduced withholding tax rate to which the corresponding base erosion revenue enhancement benefit is field of study.

Do non include a base erosion tax do good that is field of study to the 30% statutory withholding tax rate or a base of operations erosion tax do good that is exempt from tax pursuant to relevant income tax treaty provisions.

Do not combine the base erosion taxation benefits that are discipline to different withholding rates. Exercise non enter whatever blended withholding tax rates.

Column A.

Enter the type of base erosion payment that corresponds to the blazon of base erosion payment in Schedule A.

Column B.

Enter the corporeality of base erosion tax benefits that represent to the specific blazon of base erosion payment on which taxation is imposed under section 871 or department 881, and with respect to which taxation is deducted and withheld at a reduced withholding charge per unit pursuant to a U.Southward. income tax treaty.

Column C.

Enter the treaty-reduced withholding tax charge per unit to which the base erosion tax benefit is subject.

Column D.

Divide the revenue enhancement rate in column C by thirty% (0.30). Circular to four decimal places.

Cavalcade E.

Multiply the amount in cavalcade B by column D. The amount is the portion of base erosion revenue enhancement benefits with respect to the specific blazon of base erosion payment and the specific treaty-reduced rate of withholding that is not taken into account in computing modified taxable income. Add the amounts in cavalcade E and enter the full on Schedule A, line 14, column (a-2) or (b-2).

Schedule B—Waiver of Deductions

Schedule B is used to report all the deductions being waived for the tax year in accordance with Regulations section 1.59A-three(c)(6)(i). Columns (a) through (i) are to be completed for each detail or property of which a deduction related to such item or property is existence waived.

. This is an Image: caution.gif You should use Lines 1 through 13 to study but your ain deductions that you are electing to waive. If a fellow member or members of your amass group has also elected to waive any of its deductions, complete a separate attachment for each fellow member of the aggregate grouping that is waiving deductions which contains the proper name and EIN of the amass group member and the information shown in columns (a) through (i). Attach each attachment to Schedule B. Include the full corporeality of the deductions being claimed by all of your aggregate grouping members with respect to the items or property that their respective waiver elections chronicle to on line 14, cavalcade (h) and the total of all of the deductions being waived past the members on line fourteen, column (i). Come across instructions for line 14. .

Column (a).

Enter a brief description of the item or holding to which the deduction relates to; for instance, debt instrument, intangible property (such as patent, trademark, or license), personal property, real property, etc.

Column (b).

Enter the date on which, or the fourth dimension period which the waived deduction was paid or accrued.

Column (c).

Enter the provision of the Lawmaking (and regulations, equally applicative) that allows the deduction for the item or holding to which the election relates.

Cavalcade (d).

Enter the schedule and line number of the controlled group's federal income tax return where the deduction is reflected (or would have been reflected).

Column (e).

Enter the name of the foreign related political party that is or volition be the recipient of the payment that generates the deduction.

Cavalcade (f).

Enter the revenue enhancement identification number of the foreign related party payee that was entered in column (e). This can be an EIN, ITIN or FTIN (Foreign Revenue enhancement Identification Number).

Column (g).

Enter the state of organization of the foreign related party that was entered in column (due east).

Column (h).

For each detail or holding reported nether columns (a) through (g), enter the amount of the deduction claimed on the tax render (after the waiver indicated in column (i)).

Column (i).

For each item or property reported under columns (a) through (g), enter the amount of the deduction beingness waived.

Line fourteen.

If additional space is necessary, consummate and attach a split up worksheet with the same information as shown under columns (a) through (i) for each additional particular or belongings. Enter the total of deductions claimed for the tax twelvemonth on line 14, column (h) and the full of deductions waived on line 14, cavalcade (i).

Also include on this line the total of deductions being claimed (cavalcade (h)) and waived (column (i)) from other taxpayers that are members of your aggregate group, if applicative.

Schedule C—Credits Reducing Regular Tax Liability in Computing Base of operations Erosion Minimum Revenue enhancement Amount (BEMTA)

Office I—Credits Immune Confronting Regular Tax

Line one.

You must enter the total credits allowed against your regular tax liability in the revenue enhancement twelvemonth, except for credits allowed under sections 33, 37, and 53. Full credits include the sum of all credits shown on Form 1120 or other applicative render.

Line 2.

Enter the total amount of credit for increasing inquiry activities reported on line 1c, "Increasing research activities (Form 6765)," of all Parts III, Grade 3800, with box A, B, C, or D checked. This full equals the bachelor credit for increasing research activities in the tax year.

Line iii.

Enter only the portion of the available credit for increasing enquiry activities which was included on Form 3800, Role II, line 38, and used against regular tax liability. You must apply the general rules and the ordering rules for apply of general business organisation credits from the Instructions for Grade 3800. The Instructions for Course 3800 provide that credits reported on Course 3800 are treated as used on a showtime-in, first-out basis by offsetting the earliest earned credits first. Therefore, the order in which the credits are used in any tax year is:

  • Carryforwards to that year, the earliest ones start;

  • The general business credit earned in that yr; and

  • The carryback to that year.

If your full general business credits exceed your tax liability limit, the credits are used in the order as they are listed in section 38(b). Although full general business credits are aggregated on Form 3800, you should take a separate record of each credit.

Line 5.

Department 59A(b)(1)(B)(ii)(II) limits the allowable aligning for applicative department 38 credits to 80% of the bottom of applicable section 38 credits or the BEMTA computed without the adjustment for applicable section 38 credits computed in Part 3.

Part 2—Applicative Section 38 Credits

Line viii.

Enter the total corporeality of credit shown on line 1d, "Low-income housing (Class 8586, Part I but)," and line 4d, "Depression-income housing (Class 8586, Part II)," of all Parts 3, Form 3800, with box A, B, C, or D checked. This full equals the available credit for low-income housing in the tax year.

Line 9.

Enter the total amount of section 45 credit shown on Form 3800, lines 1f and 4e, "Renewable electricity, refined coal, and Indian coal production (Form 8835)," of all Parts 3, with box A, B, C, or D checked (other than any corporeality allocable to refined coal and Indian coal production). This total equals the available credit for renewable electricity production in the taxation twelvemonth.

Line ten.

Enter only the total amount of investment credit allocable to the section 48 energy credit shown on line 4a, "Investment (Form 3468, Part 3)" of all Parts 3, Form 3800, with box A, B, C, or D checked. The section 48 energy credit portion of the amount in Part III, line 4a, equals the sum of the amounts reported in Form 3468, Part III, Free energy credit, on lines 12a, 12b, 12c, 12d, 12g, 12j, 12m, 12p, 12s, 12v, 12x, 12y, 12z, 12aa, 12bb, 12cc, 12dd, 12ee, 12ff, and 12gg. This full equals the available investment credit properly allocable to the energy credit in the tax twelvemonth.

Line 11.

Enter but the portion of the available applicable credits which was included on Form 3800, Part II, line 38, and used against regular revenue enhancement liability. This represents the amount of applicable credits allowed in the current year. Refer to the ordering rules described in the earlier instructions for Schedule C, line 3.

Part Three—BEMTA Determined Without Aligning for Applicable Section 38 Credits

Line 15.

Subtract line xiv from line 13. If zero or less, enter "-0-."

Line 16.

You must compute the BEMTA without adjustment for applicable department 38 credits to allow computation of the limitation of applicable section 38 credits on lines 4 and v of Function I.

Instructions for Form 8991 - Notices

Paperwork Reduction Human action Notice.

Nosotros ask for the information on this form to conduct out the Internal Acquirement laws of the U.s.. You are required to requite us the information. We demand it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax.

You are non required to provide the information requested on a form that is subject to the Paperwork Reduction Human action unless the grade displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, equally required past section 6103.

The time needed to complete and file this grade will vary depending on individual circumstances. The estimated burden for business organisation taxpayers filing this form is approved under OMB control number 1545-0123 and is included in the estimates shown in the instructions for their business income tax return.