- Instructions for Form 8993 - Introductory Material
- General Instructions
- Specific Instructions
- Part I. Determining Deduction Eligible Income (DEI)
- Part II. Determining Deemed Intangible Income (DII)
- Part III. Determining Foreign-Derived Ratio
- Line 1a. DEI Derived from Sales, Leases, Exchanges, or Other Dispositions (but Not Licenses) of Property to a Foreign Person for a Foreign Use
- Line 1b. DEI Derived from a License of Property to a Foreign Person for a Foreign Use
- Line 1c. DEI Derived from Services Provided to a Person or with Respect to Property Located Outside of the United States
- Line 4. Foreign Derived Ratio
- Part IV. Determining FDII and/or GILTI Deduction
- Instructions for Form 8993 - Notices
Instructions for Form 8993 (01/2020)
Section 250 Deduction for Foreign-Derived Intangible Income (FDII) and Global Intangible Low-Taxed Income (GILTI)
For the latest information about developments related to Form 8993 and its instructions, such as legislation enacted after they were published, go to IRS.gov/Form8993.
Additional guidance may be issued subsequent to this publication. Please review any additional information on the website mentioned above prior to completing Form 8993.
Domestic corporation’s deduction.
For tax years 2018–2025, certain domestic corporations are allowed a deduction equal to 37.5% of FDII and 50% of GILTI.
If the sum of FDII and GILTI exceeds taxable income, the deduction under section 250 is limited to taxable income.
Public Law 115-97 (Tax Cuts and Jobs Act of 2017) enacted section 250 for the allowance of a deduction for the eligible percentage of Foreign-Derived Intangible Income (FDII) and Global Intangible Low-Taxed Income (GILTI).
See Form 8992, U.S. Shareholder Calculation of Global Intangible Low-Taxed Income (GILTI), and its instructions for more information on GILTI.
Use Form 8993 to figure the amount of the eligible deduction for FDII and GILTI under section 250.
All domestic corporations (and U.S. individual shareholders of controlled foreign corporations (CFCs) making a section 962 election (962 electing individual)) must use Form 8993 to determine the allowable deduction under section 250.
The deduction is allowed only to domestic corporations (not including real estate investment trusts (REITs), regulated investment companies (RICs) and S corporations) and section 962 electing individuals. For the treatment of a domestic corporation that is a partner in a partnership, see Proposed Regulations section 1.250(b)-1(e).
Attach Form 8993 to your income tax return and file both by the due date (including extensions) for that return.
Deduction Eligible Income (DEI) is determined.
Deemed Tangible Income Return (DTIR) is determined.
Deemed Intangible Income (DII) is determined.
Foreign-Derived Deduction Eligible Income (FDDEI) is determined.
Foreign-Derived Ratio (FDR) is determined.
Foreign-Derived Intangible Income (FDII) is determined.
The FDII reduction and the GILTI reduction are determined.
The eligible deduction under section 250 is determined.
FDDEI means, with respect to a taxpayer for its tax year, any deduction eligible income of the taxpayer that is derived in connection with:
Property that is sold by the taxpayer to any person who is a foreign person and that the taxpayer establishes to the satisfaction of the Secretary is for a foreign use (see Proposed Regulations section 1.250(b)-4), or
Services provided by the taxpayer that the taxpayer establishes to the satisfaction of the Secretary are provided to any person, or with respect to property, located outside the United States (see Proposed Regulations section 1.250(b)-5).
Special rules for determining foreign use apply to transactions that involve property or services provided to related parties (see section 250(b)(5)(C) and Proposed Regulations section 1.250(b)-6).
The terms "sold," "sells," and "sale" include any lease, license, exchange, or other disposition of property.
“Foreign use” is defined to mean “any use, consumption, or disposition which is not within the United States.” See Proposed Regulations sections 1.250(b)-4(d) and (e). For the latest guidance about foreign use, go to IRS.gov/Form8993.
For documentation requirements, see Proposed Regulations sections 1.250(b)-4(c)(2), (d)(3), and (e)(3), and 1.250(b)-5(d)(3) and (e)(3). Also see Proposed Regulations section 1.250-1(b) for information about the applicability date of the Proposed Regulations and a special transition rule.
If the sum of FDII and GILTI exceeds taxable income, the deduction under section 250 is subject to limitation.
See the instructions for Part IV, lines 6 and 7, below for additional information.
If you file a Form 8993 that you later determine is incomplete or incorrect, file a corrected Form 8993 with an amended tax return, using the amended return instructions for the return with which you originally filed Form 8993. Write "Corrected" at the top of the corrected Form 8993.
Generally, all computer-generated forms must receive prior approval from the IRS and are subject to an annual review. Requests for approval may be submitted electronically to email@example.com, or requests may be mailed to: Internal Revenue Service, Attention: Substitute Forms Program, SE:W:CAR:MP:P:TP, 1111 Constitution Ave. NW, Room 6554, Washington, DC 20224.
DEI means, with respect to any domestic corporation, the excess (if any) of the gross income of the corporation, less exclusions, over deductions (including taxes) properly allocable to such gross income.
For purposes of this form, gross income includes all income from whatever source derived.
The following items of income are excluded from gross income.
Any amount included in the gross income of such corporation under section 951(a)(1).
Any amount included in the gross income of such corporation under section 951A.
Any financial services income (as defined under section 904(d)(2)(D)) of such corporation.
Any dividend received from a controlled foreign corporation (CFC) with respect to which the corporation is a U.S. shareholder as defined under section 951(b).
Any domestic oil and gas extraction income. The term "domestic oil and gas extraction income" means income described in section 907(c)(1) determined by substituting "within the United States" for "without the United States."
Any foreign branch income (as defined in section 904(d)(2)(J)).
DII is the excess (if any) of the corporation’s deduction eligible income over 10% of its qualified business asset investment.
A domestic corporation’s Qualified Business Asset Investment (QBAI) is the average of the aggregate of its adjusted bases, determined as of the close of each quarter of the tax year, in specified tangible property used in its trade or business and of a type with respect to which a deduction is allowable under section 167. See Proposed Regulations section 1.250(b)-2.
Specified tangible property means any tangible property used in the production of the gross income included in deduction eligible income. If such property was used in the production of deduction eligible income and income that is not deduction eligible income (such as dual-use property), the property is treated as specified tangible property in the same proportion that the amount of the gross income included in deduction eligible income produced with respect to the property bears to the total amount of gross income produced with respect to the property.
The Foreign-Derived Ratio (FDR) is determined by computing the ratio of FDDEI over DEI. See Definitions and Overview for discussion of FDDEI.
Include DEI derived from the sale, lease, exchange, or other disposition (other than license) of property to any person who is a foreign person which is established to the satisfaction of the Secretary is for a foreign use (as described under Definitions and Overview).
Include DEI derived from the license of property to any person who is a foreign person and which is established to the satisfaction of the Secretary is for a foreign use (as described under Definitions and Overview).
Include DEI derived from services that are established to the satisfaction of the Secretary are provided to any person, or with respect to property, located outside the United States.
Enter the amount of GILTI reported on Form 8992, Part II, line 5.
Additional guidance may be issued after the publication of these instructions. Please review any additional information on IRS.gov/Form8993 prior to completing Form 8993.
Enter the taxable income of the domestic corporation (determined without regard to section 250).
Subtract the taxable income amount reported on line 4 from the total FDII and GILTI on line 3c.
If the result reported on line 5 is zero or negative, your taxable income is greater than the sum of FDII and GILTI and your deduction under section 250 is not limited.
If the result reported on line 5 is a positive number, your taxable income is greater than the sum of your FDII and GILTI, and your deduction under section 250 is limited to taxable income. Refer to the instructions for Part IV, line 6 and 7, to determine the amount by which you need to reduce FDII and GILTI.
The reduction in FDII for which a deduction is allowed equals such excess multiplied by a percentage equal to the corporation’s FDII divided by the sum of its FDII and GILTI.
Use the Part IV, Line 6 Worksheet to compute the FDII reduction.
|Line A||Enter the amount from Part IV, line 5. If zero or less, enter -0- on line E of this worksheet and stop.|
|Line B||Enter the amount from Part IV, line 3a.|
|Line C||Enter the amount from Part IV, line 3c.|
|Line D||Divide line B by line C.|
|Line E||Multiply line A by line D. Enter this line E amount on Form 8993, Part IV, line 6.|
The reduction in GILTI is determined by the excess amount less the FDII reduction.
Use the Part IV, Line 7 Worksheet to compute the FDII reduction.
|Line F||Enter the amount from Part IV, line 5. If zero or less, enter zero on line H of this worksheet and stop.|
|Line G||Enter the amount from line E in the worksheet above, as reported on Part IV, line 6, of Form 8993.|
|Line H||Subtract line G from line F. Enter this line H amount on Form 8993, Part IV, line 7.|
To figure the FDII deduction, subtract the amount from Part IV, line 6 (FDII reduction), from the amount on Part IV, line 3a (FDII).
Then multiply the resulting amount by 37.5% to obtain the FDII deduction and enter it on line 8.
To figure the GILTI deduction, subtract the amount from Part IV, line 7 (GILTI reduction), from the amount on Part IV, line 3b (GILTI inclusion). Then, add any amount received by the corporation (or 962 electing individual) that is treated as a dividend under section 78 which is attributable to GILTI, from Form 1118, Schedule A, column 3(b). Lastly, multiply that amount by 50%.
Enter the sum of lines 8 and 9 on Form 1120, Schedule C, line 22, or on the comparable schedules of other corporate returns.
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