Lines 1 through 3.

On these lines, the corporation computes its adjusted foreign tax carryover from the prior tax year which is available for credit in the current tax year. The line 3 total is included on Form 1118, Schedule B, Part II, line 5.

Line 4.

If the corporation has a current year excess limitation (defined below), some or all of the line 3 adjusted foreign tax carryover amount will be utilized in the current tax year. This activity is shown on line 4 of the Schedule K (Form 1118).

Lines 5 through 8.

If the corporation has current year excess foreign taxes (defined below), none of the line 3 adjusted foreign tax carryover amount will be utilized in the current tax year. If the corporation has any remaining carryover from the 10th preceding tax year, this carryover amount will expire unused. This activity is shown on line 5 of the Schedule K (Form 1118). Furthermore, the corporation will generate a foreign tax carryover in the current tax year which can be carried back to the prior tax year and/or carried forward to future tax years (see Carryback and Carryforward of Excess Foreign Taxes in the instructions for Form 1118 for details). This activity is shown on lines 6 through 8 of the Schedule K (Form 1118).

Excess foreign taxes.

If the corporation's current year foreign taxes available for credit (the sum of Schedule B, Part II, lines 1 through 4) exceed its foreign tax credit limitation (Schedule B, Part II, line 11), the corporation has excess foreign taxes.

Important:

All information reported on Schedule K (Form 1118) must be in English. All amounts must be stated in U.S. dollars.

Codes at top of page 1.

On line a, enter the same separate category code as that shown on the Form 1118 to which this Schedule K is attached.

If applicable, on line b or line c, enter the same country code as that shown on the Form 1118 to which this Schedule K is attached.

Line 1. Foreign tax carryover from the prior tax year.

Enter on line 1 the amounts from the appropriate columns of line 8 of the prior year Schedule K (Form 1118). For example, enter on line 1, column (i) of the current year Schedule K the amount from line 8, column (ii) of the prior year Schedule K. Enter on line 1, column (ii) of the current year Schedule K the amount from line 8, column (iii) of the prior year Schedule K. Enter on line 1, column (iii) of the current year Schedule K the amount from line 8, column (iv) of the prior year Schedule K.

Line 2. Adjustments to line 1.

Report on lines 2a, 2b, 2c, 2d, etc. any adjustments resulting from events that occurred between the filing of the prior year tax return and the filing of the current year tax return.

Example. In the 2018 tax year, Corporation A has excess foreign taxes of $100 (i.e., the sum of lines 1 through 4 of Form 1118, Schedule B, Part II exceeds Form 1118, Schedule B, Part II, line 11 by $100) entered on Schedule K (Form 1118), line 6. Corporation A enters $20 on line 7 as the estimated amount of line 6 to be carried back to the 2017 tax year. Corporation A enters $80 on line 8 as the carryover amount for following years. The actual carryback amount to the 2017 tax year is later determined to be $15. In the 2019 tax year, Corporation A enters $80 on line 1, column (xii) as the carryover from the 2018 tax year, corresponding to the amount entered on line 8, column (xiii) of the Schedule K filed for the 2018 tax year. Because the estimated carryback amount of $20 from the 2018 tax year to the 2017 tax year (entered on line 7 of the Schedule K filed for the 2018 tax year) exceeds the actual carryback of $15, on the Schedule K for the 2019 tax year, Corporation A enters the $5 excess ($20 - $15) on line 2a as a positive number. Assuming no other adjustments are needed, the total carryover amount from 2018 entered on line 3, column (xii) of the 2019 Schedule K will be $85 ($80 + $5).

Line 3. Adjusted foreign tax carryover from prior tax year.

Combine lines 1 and 2. The total amount in line 3, column (xiv) is the adjusted carryover amount from the prior tax year. It is included on Schedule B, Part II, line 5 (and, if filing an amended return, combined with carrybacks into the current tax year) to determine the total amount of foreign taxes that are available for credit in the current tax year.

Line 4. Foreign tax carryover utilized in current tax year.

With respect to a given separate limitation, line 4 is completed only if the corporation has a current year excess limitation (defined above).

Enter in each column the foreign tax carryover utilized in the current tax year. Starting with column (i), the amount to be entered on line 4 of a given column will be the amount on line 3 of that column, but only to the extent that it does not exceed:

Line 5. Foreign tax carryover expired unused in current tax year.

Line 5 is completed only with respect to the 10th preceding tax year (and the "Subtotal" and "Totals" columns). For the 10th preceding tax year (column (i)), combine lines 3 and 4 and enter the result on line 5, column (i).

Line 6. Foreign tax carryover generated in current tax year.

With respect to a given separate limitation, line 6 is completed only if the corporation has current year excess foreign taxes (defined on page 1). Enter in column (xiii) (the current tax year column) the amount of the corporation's unused foreign tax for the current tax year (i.e., the amount by which the sum of lines 1 through 4 of Form 1118, Schedule B, Part II, exceeds the amount on Form 1118, Schedule B, Part II, line 11). Also enter the same amount in the "Totals" column (column (xiv)).

Line 7. Actual or estimated amount of line 6 carried back to the prior tax year.

Enter the amount of line 6 carried back to the first preceding tax year. If, at the time the corporation files its current year income tax return, the actual amount is not available, an estimated or tentative amount may be entered on line 7. If an estimated amount is entered on line 7 and this amount differs from the actual carryback amount, the difference will be entered on line 2a of the subsequent year Schedule K (Form 1118).

Lines 2 through 5.

Use the instructions for lines 4 through 7 of the Schedule K above to complete lines 2 through 5, respectively, of the Line 1 Reconciliation Worksheet.