IRS Form 1120-F

Practical overview

Form 1120-F is one of the more complex international filings. A protective return is often filed to preserve treaty-exempt status and the ability to claim deductions on a net basis later. The branch profits tax and branch interest tax are additional layers that practitioners often overlook. Filing the form does not by itself create U.S. effectively-connected status, but missing it can forfeit deductions.

Practical steps

• Determine whether the foreign corporation has a U.S. trade or business or treaty-based filing obligation.
• Decide whether to file a protective return or a substantive return.
• Attach Form 8833 for any treaty-based return position.
• Compute effectively-connected income and any branch profits tax.
• File by the 16th day of the 4th month after year-end if no U.S. office, or the 15th day of the 3rd month if a U.S. office exists.

Due-date notes

Penalty snapshot

Failure-to-file penalty applies; loss of deductions can apply for late or missing returns under Section 882(c)(2).