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Instructions for 
Form 1120-F - Introductory Material

Table of Contents

What's New

Source of Income Rules.   Section 217(a) of P.L. 111-226 repealed the rule that previously existed under Code section 861(a)(1)(A), which treated as foreign source all or a portion of any interest paid by a resident alien or domestic corporation that meets the 80% active foreign business income test.

New merchant card reporting requirements.   Beginning in 2011, the IRS requires that payment settlement entities (PSE) report the amount of merchant card and third party network payments to a payee on new Form 1099-K, Merchant Card and Third Party Network Payments. The foreign corporation may receive an information copy from its PSE for these payments. Payee foreign corporations must report all merchant card and third party network payments received (including those reported to them on Form 1099-K) on Form 1120-F, Section II, line 1a. See the instructions for Section II, line 1.

New Form 8822-B, Change of Address — Business.   New Form 8822-B has been created specifically for business use. Corporations use this form to notify the IRS of its new business address or location. See Address change on page 10.

New Form 1125-A, Cost of Goods Sold.   For tax years beginning in 2011, foreign corporations must use new Form 1125-A if they report a deduction for cost of goods sold. See the instructions for Section II, line 2.

New Form 1125-E, Compensation of Officers.    For tax years beginning in 2011, foreign corporations must use new Form 1125-E if they deduct an expense for compensation for officers and they have total receipts of $500,000 or more. See the instructions for Section II, line 12.

Expiring provisions.   Certain tax provisions will expire for certain amounts paid or incurred after December 31, 2011, including the following.

  • Certain film and television production expenses (see section 181).

    • The increased deduction for charitable contributions of qualified food inventory (see section 170(e)(3)(C)), and contributions of qualified book inventory to public schools (see section 170(e)(3)(D)).

Future developments.   The IRS has created a page on IRS.gov for information about Form 1120-F and its instructions, at 
www.irs.gov/form1120f . Information about any future developments affecting Form 1120-F (such as legislation enacted after Form 1120-F is released) will be posted on that page.

Photographs of Missing Children

The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in instructions on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

Unresolved Tax Issues

The Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. The service is free, confidential, tailored to meet your needs, and is available for businesses, as well as individuals.

The corporation can contact the TAS as follows:

  • Call the TAS toll-free line at 1-877-777-4778 or TTY/TDD 1-800-829-4059 to see if the corporation is eligible for assistance.

  • Call or write the corporation's local taxpayer advocate, whose phone number and address are listed in the local telephone directory and in Pub. 1546, Taxpayer Advocate Service – Your Voice at the IRS.

  • File Form 911, Request for Taxpayer Advocate Service Assistance, or ask an IRS employee to complete it on the corporation's behalf.

  • For more information, go to www.irs.gov/advocate.

How To Get Forms and Publications

Internet.   You can access the IRS website 24 hours a day, 7 days a week, at IRS.gov to:

  • Download forms, instructions, and publications;

  • Order IRS products online;

  • Research your tax questions online;

  • Search publications online by topic or keyword;

  • View Internal Revenue Bulletins (IRBs) published in the last few years; and

  • Sign up to receive local and national tax news by email.

IRS Tax Products DVD.   You can order Pub. 1796, IRS Tax Products DVD, and obtain the following:

  

  • Current-year forms, instructions, and publications.

  • Prior-year forms, instructions, and publications.

  • Tax Map: an electronic research tool and finding aid.

  • Tax law frequently asked questions (FAQs).

  • Tax Topics from the IRS telephone response system.

  • Internal Revenue Code – Title 26 of the U.S. Code.

  • Fill-in, print, and save features for most tax forms.

  • Internal Revenue Bulletins.

  • Toll-free and email technical support.

  • Two releases during the year. 
    – The first release will ship early in January. 
    – The final release will ship early in March.

  Buy the DVD from the National Technical Information Service (NTIS) at www.irs.gov/cdorders for $30 (no handling fee) or call 1-877-233-6767 toll-free to buy the DVD for $30 (plus a $6 handling fee).

By phone and in person.   You can order current year and prior year forms and publications by calling 1-800-TAX-FORM (1-800-829-3676). You can also get most forms and publications at your local IRS office.

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