Foreign Earned Income Exclusion Increased

For 2000, the maximum foreign earned income exclusion has increased from $74,000 to $76,000.

See Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, to see whether you meet the requirements to exclude your foreign earned income.

New Schedule N (Form 1120) for Foreign Operations

Corporations that file Form 1120, U.S. Corporation Income Tax Return, and certain other income tax returns may have to attach new Schedule N (Form 1120), Foreign Operations of U.S. Corporations, to their returns. The schedule must be attached if, at any time during the tax year, the corporation had assets in, or operated a business in, a foreign country or U.S. possession. For more information, see the instructions for Schedule N (Form 1120).

FSC Repeal and Extraterritorial Income Exclusion

The foreign sales corporation (FSC) rules have been repealed. However, certain FSCs with valid elections may continue to use the FSC rules until January 1, 2002.

Generally, for transactions after September 30, 2000, qualifying foreign trade income is excluded from taxable income. Individuals, corporations (including S corporations), partnerships, and other pass-through entities are entitled to the exclusion. The exclusion is figured on new Form 8873, Extraterritorial Income Exclusion.

For more information about the extraterritorial income exclusion, see the instructions for Form 8873.

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