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Form 1120-FS: 1120-F (Schedule S)
IRS Form 1120-F (Schedule S) is used by foreign corporations to claim an exclusion from gross income under section 883. It reports information required by the regulations, and a qualified foreign country must be entered on Line 1a.
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IRS Form 1120-FS - 1120-F (Schedule S)
IRS Form 1120-F (Schedule S) is used by foreign corporations to claim an exclusion from gross income under section 883. It reports information required by the regulations, and a qualified foreign country must be entered on Line 1a.
Risk Radar
Scan points- 1Failing to use a qualified foreign country's equivalent exemption invalidates the claim of exclusion under Section 883.
- 2Entering a country that does not grant an 'equivalent exemption' on Line 1a/1b.
- 3Selecting the wrong stock ownership test box on Line 2h (e.g., using CFC when publicly-traded).
- 4Failing to complete Part II if the corporation is publicly traded and answers 'Yes' to line 9.
- 5Not attaching a statement for non-primary classes of stock in Part II, even if line 9 is 'Yes'.
Plain English
This form allows certain foreign companies that operate ships or aircraft internationally to reduce their taxable income. By filing Form 1120-F (Schedule S), these corporations report details about their operations and qualify for an exemption from gross income under IRS Section 883.
Submission Date
- Filing date: 2022-12-30 22:10:16
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when a qualified foreign corporation engaged in the international operation of ships or aircraft claims an exclusion from gross income under section 883.
- Do not use Schedule S (Form 1120-F) if the corporation is not engaged in the international operation of ships or aircraft, or if it does not qualify for the § 883 exclusion.
- Check Form 1120-F instead when filing the primary income tax return to which this schedule attaches.
Form selector
Use this form or another form?
Entity is a foreign corporation operating ships/aircraft
Used to claim exclusion under section 883 and provide required reporting.
✓ Check Line 1a for the organizing country.
Corporation has closely held stock meeting exceptions
Required to check 'Yes' on Line 9 and complete Lines 10a/10b to substantiate the exception.
✓ Verify documentation from qualified shareholders per Reg. § 1.883-4(d).
Corporation is related to a partnership under section 267(b)(10)
The corporation must consider the partnership interest owned directly and through application of section 267(e)(3) when determining ownership.
✓ Confirm this relationship applies before completing Line 8.
Investment company is a shareholder in the closely-held block
An investment company, as defined in Reg. § 1.883-2(d)(3)(iii)(B), shall not be treated as a 5% shareholder for these rules.
✓ Ensure this classification is accounted for when completing Line 8.
Deadline or filing window
The filing trigger is the corporation's tax year; the deadline follows the general filing requirements set by Form 1120-F instructions. No specific extension date is provided in this excerpt, but the form must accompany the main return.
Checklist
What you need before filling it out
Purpose
To claim exclusion from gross income under section 883 and provide reporting information. · Instructions p.1
Filer Requirement
Qualified foreign corporations engaged in the international operation of ships or aircraft. · Instructions p.1
Line 1a Entry
Name of the qualified foreign country where the corporation was organized. · Form p.1
Close Holding (L9/10)
If one or more 5% shareholders own $ge$ 50% vote/value of stock. · Instructions p.2
Qualified Shareholder Definition
A person owning at least 5% of total vote and value of outstanding shares. · Instructions p.3
Line 10a (i) Data
Number of days during the tax year stock was closely held (excluding exception). · Form p.2
Before you submit
- 1Ensure Schedule S (Form 1120-F) is attached to the corporation's main Form 1120-F return.
- 2Verify that Line 1a lists the name of the qualified foreign country where the corporation was organized.
- 3Confirm that exactly one box on Line 1b indicates the type of equivalent exemption granted by the foreign country.
- 4Check the appropriate box on Line 9 to indicate if closely-held stock rules apply (Yes/No).
- 5If 'Yes' is checked on Line 9, ensure Lines 10a and 10b are completed to substantiate the exception.
- 6For each relevant class of stock, confirm that Line 10a(ii) reflects the total percentage owned by 5% shareholders during closely-held days.
- 7Verify that the total number of qualified shareholders on Line 10b(i) accurately reflects all applicable owners.
How to file this form
- 1Complete Part I of Schedule S (Form 1120-F), entering the corporation's name and EIN, and identifying the qualifying foreign country on Line 1a.
- 2Select and document the type of equivalent exemption granted by the foreign country using the boxes on Line 1b and providing details on Line 1c.
- 3Determine if closely-held stock rules apply; check Line 9 accordingly, and complete Lines 10a and 10b as necessary to substantiate that status.
- 4Attach Schedule S (Form 1120-F) to the corporation's Form 1120-F income tax return and file it according to the instructions for Form 1120-F.
Known limitations
- 1The exclusion applies to income derived from the international operation of ships or aircraft that meets specific criteria for qualified income.
- 2A foreign country may be a qualified foreign country for one category of qualified income but not for another such category.
- 3Certain exemptions provided by foreign countries do not satisfy the equivalent exemption requirements, including reduced tax rates or time-limited exemptions.
- 4Activities like ship or aircraft management, freight forwarding, and acting as a ship's agent do not constitute operation of ships or aircraft.
- 5If an aircraft is leased under a wet lease, space, slot, or block-seat charter, it must be used to carry passengers or cargo for hire to qualify.
- 6For the 'regularly traded test,' the denominator must include the value of all outstanding shares, including bearer shares.
Field map
Compact field-by-field guide
Entity Info
2 items
Full legal name of the corporation and its Employer Identification Number.
Current mailing address and date of incorporation.
Income
3 items
Total revenue from business operations before deducting costs.
Direct costs attributable to producing goods sold by the corporation.
Gross receipts minus cost of goods sold and returns/allowances.
Deductions
1 items
Sum of all business expenses including compensation, rent, interest, taxes, and depreciation.
Tax
2 items
Total income minus total deductions.
Tax calculated on taxable income using the applicable corporate tax rate, minus any credits.
Signatures
1 items
An authorized corporate officer must sign and date the return.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current edition of Schedule S (Form 1120-F) is dated December 2022; for the latest information, filers should consult IRS.gov/Form1120F.
What changed or needs a fresh check
- Edition date — confirm the revision date reads December 2022.
- Form number — confirm the form identifier is Schedule S (Form 1120-F).
- Mailing address — Not stated in the official source (verify on agency site).
- Signature — Not specified as a requirement on the excerpted pages, but it must be signed before sending.
- Line 1a entry — confirm the name of the qualified foreign country is entered correctly.
Quick Facts
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After you file
- 1Attach Schedule S (Form 1120-F) to the foreign corporation's Form 1120-F income tax return.
- 2Keep a copy of the completed form for records.
- 3The instructions advise consulting IRS.gov/Form1120F for the latest information about developments related to the form.
- 4Confirm that the revision date on the form reads December 2022.
Sources
- SRCInstructions p.1 — Schedule S (Form 1120-F) is used by foreign corporations to claim an exclusion from gross income under section 883.
- SRCInstructions p.1 — Qualified foreign corporations must complete Schedule S (Form 1120-F).
- SRCInstructions p.1 — Qualified income must be derived from the international operation of ships or aircraft and be subject to an equivalent exemption granted by a qualified foreign country.
- SRCInstructions p.1 — A qualified foreign corporation must satisfy one of the stock ownership tests described in the instructions for Parts II, III, and IV.
- SRCInstructions p.2 — Examples of exemptions that do not qualify as 'equivalent' include reduced tax rate or time limited exemption.
- SRCForm p.1 — Line 1a requires entering the name of the qualified foreign country where the corporation was organized.
- SRCForm p.1 — Line 1b requires checking the type of equivalent exemption granted by the foreign country.
- SRCInstructions p.4 — The denominator on Schedule S (Form 1120-F) is the total value of all outstanding shares, including bearer shares.
Common confusion points
What makes income 'qualified' for exclusion?
It must be properly includible in lines 2a through 2h of Schedule S AND subject to an equivalent exemption granted by the qualified foreign country.
→ Check both criteria are met before claiming the exclusion.
How do I know if my foreign country is a 'qualified foreign country'?
It must grant an equivalent exemption AND it must be a foreign country or U.S. possession that grants this exemption for the category of income.
→ Ensure you meet the definition and stock ownership tests mentioned in the instructions.
What counts as an 'equivalent exemption' that DOES NOT qualify?
Examples include inbound/outbound freight tax, territorial tax systems, or exemptions within specific categories of income.
→ Review Regulations section 1.883-1(h) for a complete list.
When do I need to fill out Line 10 on Schedule S (Form 1120-F)?
If the answer to question 9 ('Do one or more 5% shareholders own in the aggregate 50% or more...?') is 'Yes'.
→ Skip line 10 only if you answered 'No' to question 9.
What does 'international operation of ships or aircraft' exclude?
It excludes activities like non-vessel operating common carrier operations, ship brokering, and travel agent activities.
→ Verify the specific activity against the list provided in the instructions.
Where do I find definitions for terms used on Schedule S (Form 1120-F)?
Definitions are found within the instruction booklet itself, such as 'qualified foreign country' and 'equivalent exemption'.
→ Refer to the general instructions section of the form package.
Workflow map
Related forms and next steps
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⚠ If something goes wrong
- Go to IRS.gov/Form1120F to find the latest instructions if you are unsure about a specific filing requirement.
Questions about IRS Form 1120-FS
What is IRS Form 1120-FS used for?
This form allows certain foreign companies that operate ships or aircraft internationally to reduce their taxable income. By filing Form 1120-F (Schedule S), these corporations report details about their operations and qualify for an exemption from gross income under IRS Section 883.
Who must file IRS Form 1120-FS?
Qualified foreign corporations engaged in the international operation of ships or aircraft that are claiming an exclusion of gross income under section 883 must complete Schedule S (Form 1120-F).
What information does IRS Form 1120-FS require?
Part I identifies the qualified foreign country and type of equivalent exemption. Part II details the Stock Ownership Test for Publicly-Traded Corporations, while Part III covers the test for Controlled Foreign Corporations.
When is IRS Form 1120-FS due?
The form must be attached to the foreign corporation's Form 1120-F income tax return; the time and place of filing are determined by the instructions for Form 1120-F.
Where do I file IRS Form 1120-FS?
The form is filed as an attachment to the main Form 1120-F, following the specific time, place, and manner detailed in the Instructions for Form 1120-F.
How do I complete IRS Form 1120-FS?
First, complete Part I by entering the foreign country name (Line 1a) and exemption type (Line 1b). Next, select which stock ownership test applies on Line 2h and complete Parts II or III accordingly. If applicable, check box Line 4 and fill out the required details in Part IV.
What happens if IRS Form 1120-FS is filed incorrectly?
The source does not specify a direct penalty amount, but filing incorrectly means failing to claim the required exclusion from gross income under section 883.
What makes income 'qualified' for exclusion?
It must be properly includible in lines 2a through 2h of Schedule S AND subject to an equivalent exemption granted by the qualified foreign country. Check both criteria are met before claiming the exclusion.
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