| Instructions for Form 1116 |
2003 Tax Year |
Specific Instructions
This is archived information that pertains only to the 2003 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
Part I—Taxable Income or Loss From Sources Outside the United States
Part I must be completed by all filers unless specifically indicated otherwise in these instructions.
Line l—Foreign Country or U.S. Possession
Generally, if you received income from, or paid taxes to, more than one foreign country or U.S. possession, report information
on a
country-by-country basis on Form 1116, Parts I and II. Use a separate column in Part I and a separate line in Part II for
each country or possession.
If you paid taxes to more than three countries or possessions, attach additional sheets following the format of Parts I and
II.
Line 1—Foreign Gross Income
Include income in the category checked above Part I that is taxable by the United States and is from sources within the country
entered on line
l. You must include income even if it is not taxable by that foreign country. Identify the type of income on the dotted line
next to line
1. Do not include any earned income excluded on Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned
Income Exclusion.
Example.
If you received dividends (passive income) and wages (general limitation income) from foreign sources, you must complete two
Forms 1116. On one
Form 1116, check box a (passive income), enter the dividends on line 1, and write “Dividends” on the dotted line. On the other Form
1116, check box j (general limitation income), enter on line 1 wages not excluded on Form 2555 or Form 2555-EZ, and write
“Wages” on the dotted line. Complete Parts I, II, and III of each Form 1116. Then, complete the summary Part IV on one Form 1116.
If you are filing a Form 1116 that includes foreign source qualified dividends or foreign source capital gains or losses,
see Foreign
Qualified Dividends and Capital Gains (Losses) starting on page 6.
Lines 2 Through 5—Deductions and Losses
You must reduce your foreign gross income on line 1 by entering on lines 2 through 5:
- Any of your deductions that definitely relate to that foreign income and
- A ratable share of your other deductions that do not definitely relate to either that foreign income or to your U.S. source
income.
Do not include:
- Deductions and losses related to exempt or excluded income, such as foreign earned income you have excluded on Form 2555 or
Form 2555-EZ.
- The deduction for personal exemptions.
Special rules apply to the allocation of research and experimental expenditures. See Regulations section 1.861-17.
If the law of a U.S. state to which you pay income taxes does not specifically exempt foreign source income from tax, you
may be required to make a
special allocation of state taxes you paid. See Pub. 514 for more information.
Itemized deduction limit.
If you must reduce the total amount of your itemized deductions on line 28 of Schedule A (Form 1040) because your
adjusted gross income was more
than $139,500 ($69,750 if married filing separately), you must reduce each of the itemized deductions that are subject to
the reduction by the
reduction percentage before you complete lines 2, 3a, and 4a.
Use the Itemized Deductions Worksheet in the Instructions for Schedule A (Form 1040) to figure the reduction percentage. Divide the
amount on line 9 of the worksheet (the overall reduction) by the amount on line 3 of the worksheet (total itemized deductions
subject to the
reduction). This is your reduction percentage. Apply this percentage (expressed as a decimal rounded to at least four places)
to each itemized
deduction subject to the reduction to determine the amount to enter on the appropriate line of Form 1116.
Note:
You do not need to make this computation if the entire amount of your itemized deductions is entered on any one of the following lines:
line 2, line 3a, or line 4a. Just enter your reduced itemized deductions on that line.
Example.
You are single and have an adjusted gross income of $199,500. Your itemized deductions subject to the overall reduction (line
3 of the worksheet)
total $20,000. This amount includes a deduction for gifts to charity of $12,000. The other $8,000 ($20,000 – $12,000) of itemized
deductions are
definitely related to the income on Form 1116, line 1.
The amount of the overall reduction on line 9 of the worksheet is $1,800. To figure the amount of the charitable deduction
to include in the total
for line 3a of Form 1116, divide the amount on line 9 ($1,800) by the amount on line 3 ($20,000). This is your reduction percentage
(9%). You must
reduce your $12,000 deduction by $1,080 (9% x $12,000). The reduced deduction of $10,920 ($12,000 – $1,080) is the amount
to enter on line 3a of
Form 1116. Make a similar computation to figure the amount of definitely related itemized deductions ($7,280) to enter on
line 2.
Before you complete line 2, read Itemized deduction limit starting on page 9.
Enter your deductions that definitely relate to the gross income from foreign sources shown on line 1. For example, if you
are an employee
reporting foreign earned income on line 1, include on line 2 expenses such as those incurred to move to a new principal place
of work outside the
United States or supplies you bought for your job outside the United States.
Do not include any interest expense on line 2. See lines 4a and 4b for special rules for interest expense.
Worksheet for Home Mortgage Interest
—Line 4a
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(Keep for Your Records)
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| Note: Before you complete this worksheet, read the
instructions for line 4a above. |
| 1. |
Enter gross foreign source income* of the type shown on Form 1116. Do not enter
income excluded on Form 2555 or Form 2555-EZ
|
1. |
|
| 2. |
Enter gross income from all sources. Do not enter income excluded on Form 2555 or
Form 2555-EZ
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2. |
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| 3. |
Divide line 1 by line 2 and enter the result as a decimal (rounded to at least four
places)
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3. |
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| 4. |
Enter deductible home mortgage interest (from lines 10 through 12 of Schedule A (Form
1040))**
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4. |
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| 5. |
Multiply line 4 by line 3. Enter the result here and on the appropriate Form 1116,
line 4a
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5. |
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| *If you have to report income from more than one country on Form 1116, complete a
separate worksheet for each country. Use only the income from that country on line 1 of the worksheet.
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| **If you were required to reduce the amount of your itemized deductions on Schedule A,
enter the reduced amount of home mortgage interest on line 4 of the worksheet.
|
Some deductions do not definitely relate to either your foreign source income or your U.S. source income. Enter on lines 3a
and 3b any deductions
(other than interest expense) that:
- Are not shown on line 2 and
- Are not definitely related to your U.S. source income.
Line 3a.
Before you complete line 3a, read Itemized deduction limit starting on page 9.
Enter the following itemized deductions (from Schedule A (Form 1040)) on line 3a.
- Medical expenses (line 4)
- Real estate taxes (line 6)
- Gifts to charity (line 18)
If you do not itemize deductions, enter your standard deduction on
line 3a.
Line 3b.
Enter on line 3b any other deductions that do not definitely relate to any specific type of income (for example, the
deduction for alimony paid
from Form 1040, line 32a).
For lines 3d and 3e, gross income means income without regard to deductions and losses.
Line 3d.
Enter your gross foreign source income from the category you checked above Part I of this
Form 1116. Include any foreign earned income you have excluded on Form 2555 or Form 2555-EZ.
If you had income from more than one country, you must enter income from only one country in each column.
Line 3e.
Enter on line 3e in each column your gross income from all sources and all categories, both U.S. and foreign. This figure
includes, but is not limited to, foreign earned income you have excluded on Form 2555 or Form 2555-EZ; tax-exempt interest
from Form 1040, line 8b;
and the nontaxable portion of U.S. social security benefits included on Form 1040, line 20a.
If you are a nonresident alien, include on both lines 3d and 3e your income that is not effectively connected with
a trade or business in the
United States.
Divide line 3d by line 3e and round off the result to at least four decimal places (for example, if your result is 0.8756782,
round off to 0.8757,
not to 0.876 or 0.88). Enter the result, but do not enter more than “1.”
If your gross foreign source income (including income excluded on Form 2555 or Form 2555-EZ) does not exceed $5,000, you may
allocate all of your
interest expense to U.S. source income. Otherwise, deductible home mortgage interest (including points) is apportioned using
a gross income method.
Use the worksheet
below to figure the amount to enter on line 4a. Before you complete the
worksheet, read Itemized deduction limit starting on page 9.
Other interest expense includes investment interest, interest incurred in a trade or business, and passive activity interest.
If you are a U.S.
citizen, resident alien, or a domestic estate, and your gross foreign source income (including any income excluded on Form
2555 or Form 2555-EZ) does
not exceed $5,000, you may allocate all of your interest expense to U.S. source income. Otherwise, each type of interest expense
is apportioned
separately using an “asset method.” See Pub. 514 for more information.
Example.
You have investment interest expense of $2,000. Your assets of $100,000 consist of stock generating U.S. source income (adjusted
basis, $40,000)
and stock generating foreign source income (adjusted basis, $60,000). You apportion 40% ($40,000/$100,000) of $2,000, or $800
of your investment
interest, to U.S. source income and 60% ($60,000/$100,000) of $2,000, or $1,200, to foreign source income. In this example,
you will enter the $1,200
apportioned to foreign source income on line 4b. You would not enter the $800 apportioned to U.S. source income on any line
of Part I of Form 1116.
If you have capital losses from foreign sources, see Foreign Qualified Dividends and Capital Gains (Losses) on page 6 for information on
adjustments you may be required to make.
Part II—Foreign Taxes Paid or Accrued
See page 2 for descriptions of foreign taxes that are eligible for the foreign tax credit and foreign taxes that are not
eligible for the foreign tax credit.
You may take a foreign tax credit in the tax year you paid or accrued the foreign taxes, depending on your method of accounting.
If you report on
the cash basis, you may choose to take the credit for accrued taxes by checking the “accrued” box in Part II. But once you choose to do this, you
must credit foreign taxes in the year they accrue on all future returns.
Generally, you must enter in Part II the amount of foreign taxes, in both the foreign currency denomination(s) and as converted
into U.S. dollars,
that relate to the category of income checked above Part I. Taxes are related to the income if the income is included in the
foreign tax base on which
the tax is imposed. If the foreign tax you paid or accrued relates to more than one category of income, apportion the tax
among the categories. The
apportionment is based on the ratio of net foreign taxable income in each category to the total net income subject to the
foreign tax. See Pub. 514
for an example.
However, if foreign tax paid on passive income is reported to you in U.S. dollars on a Form 1099-DIV, 1099-INT, or similar statement,
you do not have to convert the amount shown into foreign currency. This rule applies whether or not you can make the election
to claim the foreign tax
credit without filing Form 1116 (as explained on page 1). Enter “1099 taxes” in Part II, column (o), and complete columns (t) through (x) for
each foreign country indicated in
Part I.
Note:
If you are taking a credit for additional taxes paid or accrued as the result of an audit by a foreign taxing authority or
you are filing an
amended return reflecting a foreign tax refund, attach a statement to Form 1116 identifying these taxes.
Part III—Figuring the Credit
You may carry back 2 years and then forward 5 years any foreign tax you paid or accrued to any foreign country or U.S. possession
(reduced as
described below) on income in a separate category that is more than the limitation. First, apply the excess to the earliest
year to which it may be
carried. Then, apply it to the next earliest year, and so on. The 7-year carryback-carryforward period may not be extended
even if you are unable to
take a credit in one of the intervening years.
You cannot carry a credit back to a tax year for which you claimed a deduction, rather than a credit, for foreign taxes paid
or accrued. However,
you must reduce the amount of any carryback or carryforward by the amount that you would have used had you chosen to claim a credit rather
than a deduction in that year. Similarly, the 7-year period is not extended if you are unable to use a carryback or carryforward
because you elected
to claim the foreign tax credit without filing a Form 1116 (as explained on page 1).
File Form 1040X or other amended return and a revised Form 1116 for each earlier tax year to which you are carrying back excess
foreign taxes.
Special rules apply to the carryback and carryforward of foreign taxes paid or accrued on foreign oil and gas extraction income.
See section
907(f).
See Pub. 514 for more information on carryback and carryforward provisions, including examples.
You may have to reduce the foreign taxes you paid or accrued by the following items.
- Taxes on income excluded on Form 2555 or Form 2555-EZ. Reduce taxes paid or accrued by the taxes allocable to any foreign earned
income excluded on Form 2555 or Form 2555-EZ. If only part of your foreign earned income is excluded, you must determine the
amount of tax allocable
to excluded income. To do so, multiply the foreign taxes paid or accrued on foreign earned income received or accrued during
the tax year by the
following fraction.
Numerator: Foreign earned income and housing amounts you excluded for the tax year minus otherwise deductible expenses (not
including the foreign housing deduction) allocable to that income.
Denominator: Your total foreign earned income received or accrued during the tax year minus deductible expenses (including
the foreign housing deduction) allocable to that income. However, if the foreign jurisdiction charges tax on foreign earned
income and some other
income (for example, earned income from U.S. sources or a type of income not subject to U.S. tax) and the taxes on the other
income cannot be
segregated, the denominator is the total amount of income subject to foreign tax minus deductible expenses allocable to that
income.
See Pub. 514 for a comprehensive example.
- Taxes on income from Puerto Rico exempt from U.S. tax. The reduction applies if you have income from Puerto Rican sources that is
not taxable on your U.S. tax return. To figure the credit, reduce your foreign taxes paid or accrued by the taxes allocable
to the exempt income. See
Pub. 570 for more information.
- Taxes on income from Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands excluded from U.S. tax. If you are
a bona fide resident of American Samoa, reduce taxes paid or accrued by any taxes attributable to excluded income from sources
in Guam, American
Samoa, or the Commonwealth of the Northern Mariana Islands. For more information, see Pub. 570.
- Taxes on foreign-oil related income. Reduce taxes paid or accrued by foreign taxes paid or accrued on foreign-oil-related income,
but only to the extent the tax imposed by the foreign country on the oil-related income is considered to be materially greater
than the tax generally
imposed by that country on other kinds of income. See Regulations section 1.907(b)-1. The amount of tax not allowed as a credit
under this rule is
allowed as a business expense deduction.
- Taxes on foreign oil and gas extraction income. Reduce taxes paid or accrued by taxes imposed on foreign oil and gas extraction
income. The amount of the reduction is the amount by which your foreign oil and gas extraction taxes exceed the amount of
your foreign oil and gas
extraction income for the year multiplied by a fraction equal to your pre-credit U.S. tax liability (for example, Form 1040,
line 41) divided by your
worldwide income. You may be entitled to carry over to other years taxes reduced under this rule. See section 907(f).
- Taxes on foreign mineral income. Reduce taxes paid or accrued on mineral income from a foreign country or U.S. possession if you
took a deduction for percentage depletion under section 613 for any part of the mineral income.
- Reduction for failure to file Form 5471. U.S. shareholders who control a foreign corporation must file Form 5471,
Information Return of U.S. Persons With Respect To Certain Foreign Corporations. If you do not file Form 5471 and furnish
all of the information
required by the due date of your tax return, reduce by 10% all foreign taxes that you otherwise may take into account for
the foreign tax credit. You
may have to make additional reductions if the failure continues. See section 6038(c) for details and exceptions.
Note:
The reduction in foreign taxes is reduced by any dollar penalty imposed under section 6038(b).
- Reduction for failure to file Form 8865. U.S. partners who control a foreign partnership must file Form 8865, Return
of U.S. Persons With Respect to Certain Foreign Partnerships. If you do not file Form 8865 and furnish all of the information
required by the due date
of your tax return, reduce by 10% all foreign taxes that you otherwise may take into account for the foreign tax credit. You
may have to make
additional reductions if the failure continues. See section 6038(c) for details and exceptions.
Note:
The reduction in foreign taxes is reduced by any dollar penalty imposed under section 6038(b).
- Reduction of taxes or credit due to international boycott operations. In general, if you agree to participate in, or cooperate
with, an international boycott, you must file Form 5713, International Boycott Report, and attach all supporting schedules. In addition,
you must reduce either the total taxes available for credit or the credit otherwise allowable by your foreign taxes resulting
from boycott activities.
If you can figure the taxes specifically attributable to boycott operations, enter the amount on line 12. If you cannot figure
the amount of taxes
specifically attributable to boycott operations, multiply the credit otherwise allowable by the international boycott factor
(figured on Schedule
A (Form 5713), International Boycott Factor) and enter the result on line 32 of Part IV. Attach a statement showing in detail how you figured
the reduction.
For more information, see
Form 5713 and its instructions.
The amount on line 14 is your taxable income (or loss), before adjustments, from sources outside the United States. If the
amount on line 14 is
zero or a loss, you generally have no foreign tax credit for the category of income checked above Part I of this
Form 1116. However, you must complete line 15 and continue with the form even if line 14 is zero or a loss.
You are required to increase or decrease the amount on line 14 by the following adjustments. The adjustments must be made in the order
listed. If you have more than one adjustment, enter the net adjustment on line 15 and attach a detailed statement showing your computation.
See
Pub. 514 for more details on each of these adjustments.
The adjustments are:
- Allocation of losses from other categories. This adjustment applies only if you are completing more than one Form 1116. If you
have a loss on line 14 of one
Form 1116 and you have income on line 14 of one or more other Forms 1116, you must reduce the foreign income by a pro rata share of the
loss before you use any remaining loss to reduce U.S. source income.
If the loss reduces foreign source income, you must recharacterize the income you receive in the loss category in later years.
See
Recharacterization of income beginning on this page. In situations where the loss to be allocated exceeds foreign income in other
categories, the excess reduces U.S. source income and for later years you must follow the rules described under Recapture of prior year overall
foreign loss on this page.
Example.
For 2003, you completed three Forms 1116. The first had a loss from general limitation income of $2,000 on line 14, the second
had income of $4,000
from passive sources on line 14, and the third had income of $1,000 from high withholding tax interest on line 14. You must
allocate the $2,000 loss
between the passive income and the high withholding tax interest in the same proportion as each category's income bears to
the total foreign income.
The amount of the loss that would reduce passive income would be 80% ($4,000/$5,000) of the $2,000 loss or $1,600. Include
the $1,600 (in
parentheses) on line 15 of the passive income Form 1116. Assuming you have no other line 15 adjustments, enter $2,400 ($4,000
- $1,600) on line
16 of that form.
The amount of the loss that would reduce high withholding tax interest would be 20% ($1,000/$5,000) of the $2,000 loss or
$400. Include the $400
(in parentheses) on line 15 of the high withholding tax interest Form 1116. Assuming you have no other line 15 adjustments,
enter $600 ($1,000 -
$400) on line 16 of that form.
In this case, all of the $2,000 loss was allocated between the foreign source passive income and the high withholding tax
interest categories, and
no reduction was made to U.S. source income.
If you receive general limitation income in a later year, you must recharacterize all or part of that income as passive income
and high withholding
tax interest in that later year. See the example under Recharacterization of income on this page.
- Recapture of prior year overall foreign loss. If you had an overall foreign loss in a prior year that offset U.S. source income,
a part of your foreign income (in the same category as the loss) is treated as U.S. source income in each following tax year.
The part that is treated
as U.S. source income is the smallest of:
- The amount of overall foreign loss not recaptured in earlier years,
- 50% (or more, if you choose) of your taxable income from foreign sources, or
- The amount from line 14, less any adjustment for allocation of losses from other categories, as described under Allocation of losses
from other categories on this page.
Reduce the income on line 14 by including (in parentheses) on line 15 the smallest of a, b, or c above. This is
the amount of the recapture. Be sure to attach your computation. If you elect to recapture more of an overall foreign loss
than is required
(b above), show in your computation the percentage of taxable income recaptured and the dollar amount of the recapture.
Dispositions of certain property. If you recognized foreign source gain in the same category as the overall foreign loss on a
disposition of property that was used predominantly in a foreign trade or business and that generated foreign source income
in the same category as
the overall foreign loss, then the gain on the disposition may be subject to recapture as U.S. source income to the extent
of 100% of your foreign
source taxable income. See section 904(f)(3).
Reduce line 14 by including (in parentheses) on line 15 the smallest of (a) the amount of the gain not recaptured under the preceding
paragraph, (b) the remaining amount of the overall foreign loss not recaptured in earlier years or in the current year under the preceding
paragraph, or (c) the amount from line 14, less any adjustment for allocation of losses from other categories and any adjustment under the
preceding paragraph. See Pub. 514 if you disposed of property described above and you recognized foreign source gain in a
different category than the
overall foreign loss, you recognized U.S. source gain, or you did not recognize gain.
Attach a statement to Form 1116 showing the balance in each separate limitation overall foreign loss account. See Regulations
section 1.904(f)-1(b)
for more information.
3. Recharacterization of income. If, in a prior tax year, you reduced your foreign taxable income in the category checked above Part I
by a pro rata share of a loss from another category, you must recharacterize in 2003 all or part of any income you receive
in 2003 in that loss
category. You recharacterize the income by:
- Increasing the amount on line 14 (adjusted by any of the other adjustments previously mentioned in these line 15 instructions) of
the Form 1116 for each of the other categories previously reduced by including on line 15 any recharacterized income and
- Decreasing the amount on line 14 (adjusted by any of the other adjustments previously mentioned in these line 15 instructions) of
the Form 1116 for the loss category by including on line 15 the amount of recharacterized income as a negative number (in
parentheses).
Also include on line 15 income that must be recharacterized in 2003 as income in the category checked above Part I because
of a foreign loss
allocation that reduced U.S. source income in prior tax years.
Example.
Using the facts in the example under Allocation of losses from other categories on page 14, in the next year (2004), you have $5,000 of
general limitation income, $3,000 of passive income, and $500 of high withholding tax interest. Because $1,600 of the general
limitation loss was used
to reduce your passive income in 2003, $1,600 of your 2004 general limitation income must be recharacterized as passive income.
Similarly, $400 of the
general limitation income must be recharacterized as high withholding tax interest. On your 2004 Form 1116 for passive income,
you would include
$1,600 on line 15. On your 2004 Form 1116 for high withholding tax interest, you would include $400 on line 15. On your 2004
Form 1116 for general
limitation income, you would include ($2,000) on line 15.
Note:
Recharacterizing income from a separate category does not result in recharacterizing any tax.
4. Allocation of U.S. losses. If you have a net loss from U.S. sources in 2003, proportionately allocate that loss among the separate
categories of your foreign income. Reduce the income on line 14 (adjusted by any of the other adjustments previously mentioned in these
line 15 instructions) by including (in parentheses) on line 15 the allocable portion of any U.S. loss. A U.S. loss includes
a rental loss on property
located in the United States. A U.S. loss does not include any U.S. net capital loss to the extent the U.S. net capital loss
has already reduced
foreign capital gains under Adjustments to foreign capital gains and losses on page 7. A U.S. net capital loss reduced foreign capital
gains to the extent of any amount entered on line 4 of Worksheet A on page 8 or on line 4 of the Line 2 Worksheet on page 10.
If you have qualified dividends or capital gains, you may be required to make adjustments to those qualified dividends and
gains before you take
those amounts into account on line 17. You may use the instructions in this section to determine those adjustments. If you
choose not to use the rules
outlined in this section, see sections 1(h)(11)(C)(iv) and 904(b)(2) to determine the adjustments you must make.
Individuals Who Completed a Qualified Dividends and Capital Gain Tax Worksheet
If you completed the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for your tax return, you must
use the Worksheet
for Line 17
on this page to figure the amount to enter on line 17 if:
- Line 7 of your Qualified Dividends and Capital Gain Tax Worksheet is equal to or more than line 8 of that worksheet
and
- Line 27 of your Qualified Dividends and Capital Gain Tax Worksheet is less than line 28 of that worksheet.
If you do not need to complete the Worksheet for Line 17, enter on
line 17 of Form 1116 your taxable income without the deduction for your exemption (for example, the amount from Form 1040,
line 38).
If you do need to complete the Worksheet for Line 17, do the following.
Lines 2 through 5.
Skip these lines.
Line 6.
Enter the amount from
line 24 of the Qualified Dividends and Capital Gain Tax Worksheet.
Line 8.
Enter the amount from line 22 of the Qualified Dividends and Capital Gain Tax Worksheet.
Complete all other lines as instructed on the worksheet.
Estates and Trusts That Completed a Qualified Dividends Tax Worksheet
If you completed the Qualified Dividends Tax Worksheet in the instructions for Form 1041, you must use the Worksheet for Line 17
on this page to figure the amount to enter on line 17 if:
- Line 5 of your Qualified Dividends Tax Worksheet is equal to or more than line 6 of that worksheet and
- Line 15 of your Qualified Dividends Tax Worksheet is less than line 16 of that worksheet.
If you do not need to complete the Worksheet for Line 17, enter on
line 17 of Form 1116 the estate's or trust's taxable income without the deduction for its exemption.
If you do need to complete the Worksheet for Line 17, do the following.
Lines 2 through 7.
Skip these lines.
Line 8.
Enter the amount from line 12 of the Qualified Dividends Tax Worksheet.
Complete all other lines as instructed on the worksheet.
Taxpayers Who Completed Schedule D
If you have any qualified dividends, or lines 16 and 17a of your Schedule D (Form 1040) (lines 13 and 16a of your Schedule
D (Form 1041)) are both
gains, you must use the Worksheet for Line 17 on page 15 to figure the amount of tax to enter on line 17 of Form 1116 if either
of the following applies to you.
- You figured your tax using Part IV of Schedule D (Form 1040), line 27 is equal to or greater than line 28, and line 51 is less
than line 52. (For estates and trusts, if you completed Part V of Schedule D (Form 1041), line 24 is equal to or greater than
line 25 and
line 48 is less than line 49.)
- You figured your tax using the Schedule D Tax Worksheet (in the Schedule D (Form 1040) instructions or in the Form 1041 instructions),
line
17 is equal to or greater than line 15 and line 49 is less than line 50.
If you do not need to complete the Worksheet for Line 17, enter on line 17 of Form 1116 your taxable income without the deduction
for your
exemption (for example, the amount from Form 1040, line 38).
If you do need to complete the Worksheet for Line 17, do the following.
Line 2.
Enter the amount (if any) from line 46 of the Schedule D Tax Worksheet.
Line 4.
Enter the amount (if any) from line 43 of the Schedule D Tax Worksheet.
Line 6.
Enter the amount (if any) from line 37 of the Schedule D Tax Worksheet or line 48 of Schedule D (Form 1040) (line 45 of Schedule D (Form
1041)).
Line 8.
Enter the amount (if any) from line 35 of the Schedule D Tax Worksheet or line 46 of Schedule D (Form 1040) (line
43 of Schedule D (Form 1041)).
Complete all other lines as instructed on the worksheet.
Worksheet for Line 17 (Worldwide Qualified Dividends and Capital Gains)
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(Keep for Your Records)
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| Caution: See the instructions for Line
17 beginning on this page before starting this worksheet. |
| 1. |
Individuals: Enter the amount from Form 1040, line 38. If you are
a nonresident alien, enter the amount from Form 1040NR, line 36.
Estates and trusts: Enter taxable income without the deduction for your exemption
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1. |
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| 2. |
Enter your worldwide 28% gains (see instructions) |
2. |
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| 3. |
Multiply line 2 by 0.2000 |
3. |
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| 4. |
Enter your worldwide 25% gains (see instructions) |
4. |
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| 5. |
Multiply line 4 by 0.2857 |
5. |
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| 6. |
Enter your worldwide 20% gains (see instructions) |
6. |
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| 7. |
Multiply line 6 by 0.4286 |
7. |
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| 8. |
Enter your worldwide 15% gains and qualified dividends (see instructions) |
8. |
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| 9. |
Multiply line 8 by 0.5714 |
9. |
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| 10. |
Add lines 3, 5, 7, and 9 |
10. |
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| 11. |
Subtract line 10 from line 1. Enter the result here and on Form
1116, line 17
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11. |
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If you are completing line 19 for separate category g (lump-sum distributions), enter the amount from line 5 of the Worksheet for
Lump-Sum Distributions on page 4.
Do not complete line 19 for separate category h (section 901(j) income). See page 4.
For all other applicable categories, complete line 19 as follows.
Form 1040 filers:
Enter the amount from Form 1040, line 41, less any tax included on line 41 from Form 4972.
Form 1040NR filers:
Enter the amount from Form 1040NR, line 39, less any tax included on line 39 from Form 4972.
Form 1041 filers:
Enter the amount from Form 1041, Schedule G, line 1a.
The maximum foreign tax credit you may claim in the current year is generally limited to the allocated amount of U.S. tax
imposed on the foreign
income, or the actual amount of foreign tax paid or accrued on the foreign income (after reductions required on line 12),
whichever is
less. However, see Foreign Taxes Eligible for a Credit on page 2 for additional information.
If the amount on line 20 is smaller than the amount on line 13, see
Pub. 514 for more information on carryback and carryforward provisions, including examples.
Part IV—Summary of Credits From Separate Parts III
Complete lines 22 through 29 in
Part IV only if you must complete more than one Form 1116 because you have more than one of the categories of income listed
above Part I.
Complete Part IV on only one Form 1116 to summarize the credits you figured on all of your Forms 1116. However, if you completed a Form
1116 for category g (lump-sum distributions) or h (section 901(j) income), do not use Part IV of that Form 1116 as
your summary. Enter the credits from line 21 of all of your Forms 1116 on lines 22 through 29 of the Form 1116 you are using
to summarize your
credits. File the other Forms 1116 as attachments.
Enter the smaller of line 19 or line 30.
Note:
Generally, line 30 will exceed line 19 only if you have U.S. capital gains or qualified dividends that are subject to the
capital gain rate
differential (figured in the Worksheet for Line 17 on page 15).
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