Form 8858 (Rev. September 2020) Filing Checklist
Purpose
IRS Form 8858 reports annual financial, ownership, and operational information for U.S. persons with a foreign disregarded entity or foreign branch. The September 2020 revision reflects international tax provisions under the Tax Cuts and Jobs Act, including section 987 remittance treatment, dual consolidated loss rules, and section 59A base erosion reporting.
The form supports U.S. international tax reporting requirements under Sections 6011 and 6031, as well as related tax laws, by aligning foreign operations with U.S. tax purposes. It is filed with U.S. tax returns such as Form 1040, Form 1120, Form 1065, Form 5471, or Form 8865, ensuring accurate reporting to the Internal Revenue Service.
Filing Steps
Step 1: Confirm Filing Status and Currency
Confirm the filer qualifies as a U.S. person with a foreign disregarded entity or foreign branch for tax purposes. Verify functional foreign currency under section 989, determine whether section 989(b) average exchange rate applies, or confirm a DASTM election for qualified business units.
Step 2: Complete Identifying Information
Enter the foreign entity name, address, foreign country, principal business activity location, and U.S. identification number. Provide tax owner and direct owner details when they differ, including the functional currency and foreign law classification.
Step 3: Attach Organizational Chart
Attach an organizational chart showing the ownership chain between the tax owner and the foreign disregarded entity or foreign branch. Include all foreign subsidiaries or foreign entities with ten percent or greater ownership interests and relevant tax classifications.
Step 4: Complete Schedule C Income Statements
Complete Schedule C reporting income statements in functional foreign currency and U.S. dollars using U.S. GAAP translation or approved exchange rates. Report gross receipts, rental property income, services income, foreign currency gains or losses, and deductible expenses excluding foreign income taxes.
Step 5: Complete Schedule C-1 Section 987 Reporting
Report section 987 remittances in both the functional currency of the foreign business entity and the recipient. Disclose recognized or deferred section 987 gain or loss and note any accounting method changes for foreign branches or disregarded entities.
Step 6: Prepare Schedule F Balance Sheet
Complete Schedule F reporting beginning and ending balance sheet amounts in U.S. dollars only. Translate all assets, liabilities, and equity from functional currency using U.S. GAAP exchange rates.
Step 7: Complete Schedule G Other Information
Answer Schedule G questions covering ownership interests, foreign partnership holdings, foreign taxes, and section 59A base erosion payments. Report dollar amounts for base erosion payments and related tax benefits involving foreign associated persons.
Step 8: Report Dual Consolidated Loss Information
Complete the dual consolidated loss portion of Schedule G if the tax owner is a U.S. corporation. Identify separate units, report losses taken into U.S. taxable income, and disclose triggering events requiring recapture.
Step 9: Complete Schedule H Earnings and Profits
Report current year earnings and profits or taxable income on Schedule H. Convert amounts to U.S. dollars using the applicable exchange rate under section 989(b) and disclose the rate used.
Step 10: Complete Schedule I for the Transferred Loss Amount.
Complete Schedule I if foreign branch assets were transferred to a foreign corporation during the tax year. Report transferred loss amounts included in gross income under section 91.
Step 11: Complete Schedule J Foreign Taxes
Complete Schedule J for each foreign country reporting foreign income taxes paid or accrued. Translate amounts using appropriate exchange rates and allocate taxes to the correct foreign tax credit categories.
Step 12: Finalize and File
Sign, date, and attach Form 8858 to the applicable U.S. tax return. Include all required schedules, statements, and supporting documentation to meet international tax compliance standards.
Year-Specific 2020 Instructions & Changes
Section 987 Remittance Reporting Updates: The 2020 revision updates Schedule C-1 to reference the final regulation section 1.987-12 for Section 987 remittance and deferred gain or loss reporting. Although finalized in 2019, applicability was deferred beyond 2020, allowing reasonable reporting methods consistent with international tax compliance.
Section 59A BEAT dollar disclosures: Schedule G requires separate dollar reporting of base erosion payments and base erosion tax benefits involving related foreign persons for 2020 tax years. This change expands reporting requirements for U.S. taxpayers with foreign operations that meet the applicable threshold tests under tax laws.
Dual Consolidated Loss Recapture Emphasis: Schedule G lines 10 through 13 expand disclosures for U.S. corporation tax owners under Section 1.1503(d). Filers must identify triggering events under regulation section 1.1503(d)-6(e) and explain recapture treatment related to foreign branches or a foreign disregarded entity treated as a separate unit.
Section 91: Loss Inclusion Reporting: Schedule I applies when a domestic corporation transfers substantially all of its foreign branch assets to a specified foreign corporation during 2020. The filer reports the transferred loss amount included in gross income under section 91, reflecting the Tax Cuts and Jobs Act restructuring rules.
DASTM and exchange rate clarification: Schedule C instructions clarify DASTM treatment and the use of section 989(b) average exchange rate methods, distinguishing them from standard U.S. GAAP translation. Filers must document exchange rates used for translated income statements and related schedules on Form 8858.
Mandatory organizational chart and currency codes: The 2020 revision makes organizational chart attachments mandatory and expands identification requirements for the foreign entity ownership chain. ISO 4217 alphabet codes are required for all functional foreign currency entries, improving consistency across IRS Form 8858 filings.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
