Where on the form 1120 do u report the income from foreign disregarded entity that flows up to the us domestic parent?

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Other income and attach form 8858

likehelpful

If in a loss, make sure to consider dual consolidated loss certifications

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I think Income/deductions of a foreign disregarded entity would retain their characters since these are deemed earned/incurred directly by the tax owner of the disregarded entity. So technically, each item of income and deduciton should be reported in appropriate line of Form 1120 dependng on the character of income/deductions. Practically speaking though, I would put the net profit/loss in other income line. It’s not worth the time.

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This.

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By the way how sure are u about the other income line? No offense but you are an associate so want to confirm you have the experience. Thanks 😀

funny

This is correct. You treat like any other domestic entity and show each item of income or loss on its respective line of the 1120 and M-3. You calculate book/tax differences the same way and include the DRE’s activity in attribute limitations like contributions and 163j.

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I think it’s combined, why would it be other income? Caveat: I’m a lawyer, never did a 1120

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I feel like this should be in the instructions, but I am guessing you checked that before coming to fishbowl.

Also don’t forget any FTC considerations if the tax payer is taking the FTC. You’ll have branch basket FTCs. There’s also some transition rules where PY FTCs can be moved to the branch basket I believe.

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U rock

I'm about 90% sure; it's been a while since I prepped a return. The associate is at a law firm lol. I was a senior associate in an accounting firm prior to getting an LLM and moving to a law firm.

But you can look for yourself. Where else on the forms would it go? It's either that or report it combined with the rest of the income items.

It keeps its character.

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