Federal Tax Effect of the International Boycott Provisions

Tax Effect of the International Boycott Provisions
Form 5713 (Schedule C) (Rev. September 2018)
SCHEDULE C
(Form 5713)
(Rev. September 2018)
Department of the Treasury
Internal Revenue Service
Name

Tax Effect of the International Boycott Provisions
▶ Attach

to Form 5713.
instructions on page 2.
▶ Go to www.irs.gov/forms-pubs/about-schedule-c-form-5713 for the latest information.
▶ See

OMB No. 1545-0216

Identifying number

1

Method used to compute loss of tax benefits (check one):
a International boycott factor from Schedule A (Form 5713). See lines 2a, 3a, 4a, and 5a below . . . . . . . . . ▶
b Identification of specifically attributable taxes and income from Schedule B (Form 5713). See lines 2b, 3b, 4b, and 5b
below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ▶
2
Reduction of foreign tax credit (section 908(a)):
a International boycott factor. Complete if you checked box 1a above and answered “Yes” to the
question on line 7d, Form 5713.
(1) Foreign tax credit before adjustment from Form 1116 or 1118 (see instructions) . . . . . .
(2) International boycott factor from Schedule A (Form 5713), line 3 . . . . . . . . . . .
(3) Reduction of foreign tax credit. Multiply line 2a(1) by line 2a(2). Enter here and on Form 1116 or
1118 (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . .
(4) Adjusted foreign tax credit. Subtract line 2a(3) from line 2a(1) . . . . . . . . . . . .
b Specifically attributable taxes and income. Complete if you checked box 1b above and answered
“Yes” to the question on line 7d, Form 5713. Enter the amount from line o, column (4), Schedule B
(Form 5713) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter the appropriate part of this amount on Form 1116 or 1118 (see instructions).
3
Denial of deferral under subpart F (section 952(a)(3)):
a International boycott factor. Complete if you checked box 1a above and answered ‘‘Yes’’ to the
question on line 7b, Form 5713.
(1) Prorated share of total income of controlled foreign corporations (see instructions) . . . . .
(2)

(3)
(4)
(5)

Prorated share of income attributable to earnings and profits of controlled foreign corporations
included in income under sections 951(a)(1)(A), 951(a)(1)(B), 952(a)(1), 952(a)(2), 952(a)(4), 952(a)(5),
and 952(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtract line 3a(2) from line 3a(1) . . . . . . . . . . . . . . . . . . . . .
International boycott factor from Schedule A (Form 5713), line 3 . . . . . . . . . . .
Prorated share of subpart F international boycott income. Multiply line 3a(3) by line 3a(4). Enter
here and on line 22 of Worksheet A in the Form 5471 instructions . . . . . . . . . .

b Specifically attributable taxes and income. Complete if you checked box 1b above and answered
“Yes” to the question on line 7b, Form 5713. Enter the amount from line o, column (5), Schedule B
(Form 5713) here and on line 22 of Worksheet A in the Form 5471 instructions . . . . . . . .
4
Denial of IC-DISC benefits (section 995(b)(1)(F)(ii)):
a International boycott factor. Complete if you checked box 1a above and answered “Yes” to the
question on line 7c, Form 5713.
(1) Prorated share of section 995(b)(1)(F)(i) amount (see instructions) . . . . . . . . . . .
(2) International boycott factor from Schedule A (Form 5713), line 3 . . . . . . . . . . .
(3) Prorated share of IC-DISC international boycott income. Multiply line 4a(1) by line 4a(2). Enter this
amount here and the IC-DISC will include it on line 10, Part I, Schedule J, Form 1120-IC-DISC . .
b Specifically attributable taxes and income. Complete if you checked box 1b above and answered
“Yes” to the question on line 7c, Form 5713. Enter the amount from line o, column (6), Schedule B
(Form 5713) here and the IC-DISC will include it on line 10, Part I, Schedule J, Form 1120-IC-DISC .
5
Denial of exemption of foreign trade income (section 927(e)(2), as in effect before its repeal):
a International boycott factor. Complete if you checked box 1a above and answered “Yes” to the
question on line 7i, Form 5713.
(1) Add amounts from columns (a) and (b), line 10, Schedule B (Form 1120-FSC) . . . . . .
(2) International boycott factor from Schedule A (Form 5713), line 3 . . . . . . . . . . .
(3) Exempt foreign trade income of a FSC attributable to international boycott operations. Multiply
line 5a(1) by line 5a(2). Enter here and on line 2, Schedule F, Form 1120-FSC . . . . . . .
b Specifically attributable taxes and income. Complete if you checked box 1b above and answered
“Yes” to the question on line 7i, Form 5713. Enter the amount from line o, column (7), Schedule B
(Form 5713) here and on line 2, Schedule F, Form 1120-FSC . . . . . . . . . . . . . .
For Paperwork Reduction Act Notice, see Instructions for Form 5713.

Cat. No. 12070O

Schedule C (Form 5713) (Rev. 9-2018)

Schedule C (Form 5713) (Rev. 9-2018)

6

Page

2

Reduction of foreign trade income qualifying for the extraterritorial income exclusion. Complete if you
answered “Yes” to the question on line 7j, Form 5713.
a Enter amount from line 49 of Form 8873 . . . . . . . . . . . . . . . . . . . . .
b International boycott factor from Schedule A (Form 5713), line 3 . . . . . . . . . . . . .
c Reduction of qualifying foreign trade income. Multiply line 6a by 6b. Enter here and on Form 8873,
line 50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Future Developments

Other Requirements

For the latest information about
developments related to Schedule C
(Form 5713) and its instructions, such
as legislation enacted after they were
published, go to www.irs.gov/formspubs/about-schedule-c-form-5713.

• A person who applies the
international boycott factor to one
operation must apply the factor to all
that tax year’s operations under
section 908(a), 952(a)(3), 995(b)(1)(F)(ii),
or 927(e)(2).
• A person who identifies specifically
attributable taxes and income under
section 999(c)(2) must use that
method for all that tax year’s
operations under section 908(a),
952(a)(3), 995(b)(1)(F)(ii), or 927(e)(2).
• An IC-DISC whose tax year differs
from the common tax year of the
controlled group of which it is a
member does not need to amend its
return to show on Schedule J (Form
1120-IC-DISC) the amount of IC-DISC
benefits lost because of boycott
participation. Because the IC-DISC
benefits are lost at the shareholder
level, the shareholder must include in
income the prorated share of income
attributable to boycott operations
shown on line 4a(3).
• A person excluding extraterritorial
income must reduce qualifying foreign
trade income using the international
boycott factor computed on
Schedule A.

Instructions
Section references are to the Internal
Revenue Code unless otherwise
noted.

Purpose of Form
Schedule C (Form 5713) is used to
compute the loss of tax benefits
attributable to participation in or
cooperation with an international
boycott.

Who Must File
Complete Schedule C (Form 5713) if
you completed either Schedule A or
Schedule B of Form 5713.
Partnerships. Each partner must
complete a separate Schedule C
(Form 5713). Partnerships do not
complete Schedule C (Form 5713).
Controlled groups. Unless a
controlled group (described in section
993(a)(3)) files a consolidated return,
each member may independently
choose to either (a) apply the
international boycott factor under
section 999(c)(1) or (b) identify
specifically attributable taxes and
income under section 999(c)(2). Each
member must consistently use a
single method to figure the loss of tax
benefits.

Lines 2 through 6
Line 2a(1). Enter the foreign tax credit
before adjustment from Form 1116 or
1118. Enter the amount from line 30,
Part IV, of Form 1116 and/or the
amount from line 7, Part III, Schedule
B, of Form 1118.

Line 2a(3). Enter the reduction of
foreign tax credit from this line on
either Form 1116 or 1118. With respect
to Form 1116, enter the reduction on
line 32, Part IV, and with respect to
Form 1118, enter the reduction on line
8, Part III, Schedule B.
Line 2b. Enter the reduction of foreign
taxes available for credit from this line
on Form 1116 or 1118. With respect to
Form 1116, include this amount on line
12, Part III. With respect to Form 1118,
enter this amount on line C,
Schedule G.
Line 3a(1). Enter your share of the
income of the controlled foreign
corporation on line 3a(1).
Nonexempt foreign trade income of
a foreign sales corporation (FSC) that
was computed without regard to the
administrative pricing rules is subject
to the subpart F rules. Include your
share of these types of income on line
3a(1).
Line 4a(1). Enter your pro rata share
of section 995(b)(1)(F)(i) amount on
line 4a(1) as follows.
• Shareholder that is not a
C corporation. Enter your pro rata
share of line 8, Part I, Schedule J,
Form 1120-IC-DISC.
• Shareholder that is a
C corporation. Enter your pro rata
share of line 8, Part I, Schedule J,
Form 1120-IC-DISC, multiplied by
16/17.

Schedule C (Form 5713) (Rev. 9-2018)