Free Form 1118 (Schedule I) (Rev. January 2006) - Federal

SCHEDULE I (Form 1118)
(Rev. January 2006)
Department of the Treasury Internal Revenue Service

Reduction of Oil and Gas Extraction Taxes
For calendar year 20 Attach to Form 1118 , or other tax year beginning , 20 , and ending , 20

OMB No. 1545-0122

Name of corporation

Employer identification number

Report all amounts in U.S. dollars. Complete a separate Schedule I for each applicable category of income.

Part I

Foreign Oil and Gas Extraction Income and Taxes
1. Name of foreign country (Use a separate line for each country.)

Gross Oil and Gas Extraction Income From Sources Outside the United States and its Possessions (See instructions.)
2. Gross income from extraction of minerals from oil or gas wells 3. Gross income from sale or exchange of assets used in extraction 4. Certain dividends from foreign corporations 5. Constructive distributions under section 951(a) 6. Other 7. Total (add columns 2 through 6)

A B C D E F

Totals (add lines A through F)
Deductions
8. Definitely allocable deductions 9. Ratable part of deductions not definitely allocable 10. Total (add columns 8 and 9) 11. Taxable income (column 7 minus column 10)

Oil and Gas Extraction Taxes (attach schedule)
12. Paid or accrued 13. Deemed paid 14. Total (add columns 12 and 13)

A B C D E F Totals
For Paperwork Reduction Act Notice, see the Instructions for Form 1118.
Cat. No. 10237L

Schedule I (Form 1118) (Rev. 1-2006)

Schedule I (Form 1118) (Rev. 1-2006)

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2

Part II
1 2 3 4 5 6

Reduction Under Section 907(a)

Foreign oil and gas extraction income. (See Line 1 in the instructions below.) Multiply line 1 by the highest rate of tax under section 11(b). (See Line 2 below.) Total taxes (from Part I, column 14, "Totals" line) Carryover or carryback of disallowed credits. (See section 907(f)--attach schedule.) Total taxes before reduction (add line 3 and line 4) Reduction (subtract line 2 from line 5; if zero or less, enter -0-). Enter here and on Schedule G, line B of the corresponding Form 1118

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

Who Must File
If the corporation claims a credit for any income taxes paid, accrued, or deemed paid during the tax year on foreign oil and gas extraction income, the amount of such taxes eligible for credit may be reduced. See section 907(a) and Regulations section 1.907(a)-1 for details. Complete Schedule I for each applicable category of income.

Method of Reporting
Report all amounts in U.S. dollars. If it is necessary to convert from foreign currency, attach a statement explaining how the rate was determined.

Specific Instructions
Note. A net extraction loss from a foreign country offsets extraction income from other foreign countries.

Part I
See section 907(c) and underlying regulations for rules on the income to include in Part I. Note. Do not include any dividend or interest income that is passive income. See the instructions for Form 1118 for the definition of passive income. Column 2. Enter gross income from sources outside the United States and its possessions from extraction (by the corporation or any other person) of minerals from oil or gas wells located outside the United States and its possessions. Column 3. Enter gross income from sources outside the United States and its possessions from the sale or exchange of assets used in the trade or business of extracting minerals from oil or gas wells located outside the United States and its possessions. Column 4. Enter dividends (including section 78 gross-up) from a foreign corporation in respect of which taxes are deemed paid under section 902 only if the dividends are paid out of foreign oil and gas extraction income of the distributing corporation and are not passive income. Dividends from foreign corporations in respect of which the corporation is not entitled to compute a deemed paid credit are passive income and are not included in Part I.

Column 5. Enter amounts taxable under section 951(a) (including section 78 gross-up) to the extent attributable to the controlled foreign corporation's foreign oil and gas extraction income. Column 6. Include the corporation's distributive share of partnership foreign oil and gas extraction income. Do not include in column 6 interest income paid by a foreign subsidiary, even if the interest is paid out of foreign oil and gas extraction income of the payor and is not passive income. See section 907(c)(3). Columns 12 and 13. Attach a schedule to show how the foreign taxes paid, accrued, or deemed paid with respect to foreign oil and gas extraction income were figured.

Part II
Line 1. Enter the total from Part I, column 11, minus any recapture of foreign oil and gas extraction losses by recharacterizing later extraction income, as described in section 907(c)(4). Line 2. At the time this schedule went to print, the highest rate of tax specified under section 11(b) was 35%.