Question:
Euro Corporation, a U.S. corporation, operates through a branch in Germany. During 2022, the branch reported taxable income of $1,000,000 and paid German income taxes of $300,000. In addition, Euro received $50,000 of dividends from its 5 percent investment in the stock of Maple Leaf Company, a Canadian corporation. The dividend was subject to a withholding tax of $5,000. Euro reported U.S. taxable income from its manufacturing operations of $950,000. Total taxable income was $2,000,000. Pre-credit U.S. taxes on the taxable income were $420,000. Included in the computation of Euro’s taxable income were “definitely allocable” expenses of $500,000, 50 percent of which were related to the German branch taxable income.
Complete pages 1 and 2 of Form 1118 for just the foreign branch income reported by Euro. You can use the fill-in form available on the IRS website, www.irs.gov.
Transcribed Image Text:
EXHIBIT 24-1
Form 1118
(Rav. December 2021)
Department of the Treasury
Internal Revenue Service
Nama of corporation
3D Corporation
Use a separate Form 1118 for each applicable category of Income (see instructions).
a Separate Category (Enter code-see instructions.).
A
B
C
Trob
A
B
C
Totals (add lines A through C)
A
b
If code 901] is entered on line a, enter the country code for the sanctioned country (see Instructions)
c If one of the RBT codes is entered on line a, enter the country code for the treaty country (see Instructions)
Schedule A
B
C
T
APOTE
Form 1118: Foreign Tax Credit-Corporations, Schedules A, B, and H for 3D Corporation
(cumulative facts from Examples 24-3, 24-8, and 24-9)
For calendar year 20
1. EIN or Reference ID Number
(see Instructions"
6. Gross Rants, Royaltis,
and License Foos
Income or (Loss) Before Adjustments (Report all amounts in U.S. dollars. See Specific Instructions.)
2. Foreign country or
U.S. Possession
Jantar two-latter code-
usa a separate line for
ach) (no Instructions
CN
Dividends
Received Deduction
(see Instructions)
(h) Curancy Loss
Foreign Tax Credit-Corporations
► Attach to the corporation's tax return.
►Go to www.irs.gov/Form1118 for instructions and the latest information.
or other tax yaar beginning
20
and onding
7. Salos
40,000
(b) Deduction Allowad Under
Section 250(a)(1)(A)-Foraign
Derived Intangible Income
Currency Loss Code
[Instruction)
40,000
8. Gross Income From
Performance of Services
(c) Deduction Allowed Under
Section 250(18)-Global
Intangible Low-Taxed Income
13. Alocable Deductions (continued)
Other Allocable
Deductions
(attach schedule
(Instructions)
3. Inclusions Under Sections 961(41) and 961A
instructions)
(P) Gross-up (action
jaj Exclude Gross-Up
9. Currency Gain
13. Allocablo Deductions
Gross Income or (Loss) From Sources Outside the United States
(Total Allocable
Deductions
(add columns 13)
through 15 and 13
(d) Depreciation, Deplation,
and Amortization
Rantal, Royalty, and Licensing Expansios
10,000
10. Currency Gain Code
(see instructions)
(0) Other Allocable
Expenses
14. Apportioned Shara
of Deductions
jantar amount from
applicable line of
Schedule H, Part 1,
column (b), and
Schedule H, Part
column (d
1,000
15. Not Operating
Loss Daduction
Employer identification number
Cat No. 10000F
4. Dividend
(soo instructions)
11. Other
atach schedule)
Expams Allocable
to Sales Income
10,000
10,000
OMB No. 1546-0123
Attachment
Sequence No. 118
16. Total Deductions
[add columns 130
through 16)
11,000
FB
5. Interest
12. Total
(add columns (a)
through 9 and 11)
40,000
40,000
(g) Expansus Allocatio
to Gross Income From
Performance of Services
17. Tutal income or Loss
Batore Adjustments
(subtract column 16
from column 12)
29,000
10,000
1,000
11,000
29,000
*For section 863(b) income, NOLS, income from RICs, high-taxed income, section 951A, and roattribution of income by reason of disregarded payments, use a single line (see instructions). Also, for
reporting branches that are QBUs, use a separate line for each such branch.
For Paperwork Reduction Act Notice, see separate instructions.
Form 1118 (Rav. 12-2021)