Schedule B

Part I—Foreign Taxes Paid, Accrued, and Deemed Paid Report only foreign income taxes paid, accrued, or deemed paid for the separate category for which this Form 1118 is being completed. Report all amounts in U.S. dollars. If the corporation must convert from foreign currency, attach a schedule showing the amounts in foreign currency and the exchange rate used.

For corporations claiming the credit on the accrual basis, the exchange rate for translating foreign income taxes into U.S. dollars will generally be an average exchange rate for the tax year to which the taxes relate.

However, the exchange rate on the date of payment must be used if the foreign income taxes (a) are paid more than 24 months after the close of the tax year to which they relate, or (b) are paid in a tax year prior to the tax year to which they relate. In addition, corporations may elect to use the exchange rate on the date of payment. Corporations may elect to use the payment date exchange rates for all creditable foreign income taxes or only those taxes that are attributable to QBUs with U.S. dollar functional currencies. The election is made by attaching a statement to a timely filed (including extensions) Form 1118 that indicates the corporation is making the election under section 986(a)(1)(D). Once made, the election applies for all subsequent tax years and is revocable only with the consent of the IRS. See section 986(a)(1)(D).

Caution: The information entered on each line of Schedule B, Part I, must pertain to an identifying number and/or country code specified on the corresponding line of Schedule A, column 1(a) and/or column 2. If foreign tax was paid to more than one country on the same income, enter the letter corresponding to that income on multiple lines. For example, if the taxpayer entered on Schedule A, line A, foreign source sales income and paid tax to both Country A and Country B on such income, the filer would complete two lines A on Schedule B with the tax paid to Country A on one line and the tax paid to Country B on the other line.

Column 1. Claim the foreign tax credit for the tax year in which the taxes were paid or accrued, depending on the method of accounting used.

Note: For any given tax year, the corporation can use the cash method or the accrual method, but not both. If a credit for taxes accrued is claimed, show both the date accrued and the date paid.

If the cash method of accounting is used, an election under section 905(a) may be made to claim the credit based on accrued taxes.

To make this election, check the “Accrued” box in column 1. Once made, the election is binding on all subsequent tax years in which a foreign tax credit is claimed. Also, the credits for foreign taxes, regardless of whether they are claimed on the accrual or cash basis, are subject to the redetermination provisions of section 905(c). See Foreign Tax Credit Redeterminations , earlier, for details.

Column 2(a). Include foreign income taxes withheld at source on dividends from a first-tier foreign corporation. After December 31, 2017, such taxes are not creditable to the extent the distribution is a dividend eligible for a dividends received deduction under section 245A. However, continue to report the taxes in this column 2(a) and reverse the taxes on Schedule G.

Column 2(b)(1). Include foreign income taxes withheld at source on PTEP distributions from a first-tier foreign corporation. See sections 901 and 903. Do not include foreign income taxes withheld at source on PTEP distributions from a lower-tier foreign corporation to an upper-tier foreign corporation and then deemed paid by the domestic corporation under section 960(b)(1) on a distribution from the upper-tier foreign corporation to the

Instructions for Form 1118 (Rev. 12-2025) 13

domestic corporation. These amounts are reported on Schedule E.

Note: With respect to taxes attributable to section 965(a) PTEP, section 965(b) PTEP, or section 951A PTEP, do not reduce the taxes by the foreign tax credit disallowance under sections 965(g) and 960(d)(4), as applicable. The disallowance is taken into account in Schedule E, Part I, columns 15 and 16 and Schedule G.

Column 2(b)(2). Enter the PTEP group code associated with the column 2(a) line amount. The PTEP group codes are detailed below under the instructions for Schedule E, Part I, column 5.

Column 2(c). Include foreign income taxes withheld on branch distributions or transfers as determined under section 987. See sections 901 and 903.

Column 2(f). Include foreign income taxes withheld at source on income not specifically reportable in columns 2(a) through 2(e). For example, some countries withhold at source on sales of stock of their resident companies and such foreign income tax paid or accrued by the domestic corporate seller would be reported in column 2(f).

Column 2(g). Include foreign income taxes paid or accrued on the portion of sales income sourced to a foreign country. This does not include taxes withheld at source reported in column (f).

Column 3. Enter in column 3 the total of the taxes deemed paid that corresponds with the identifying number specified on the corresponding line of Schedule A, column 1(a), with respect to the following amounts.

• The taxes deemed paid under section 960(a) as reported in Schedule C, column 10.

• The taxes deemed paid under section 960(b) as reported in Schedule E, Part I, column 11.

Enter on the Schedule B, Part I line, that corresponds with the Schedule A line with “951A” in column 2 the tax deemed paid under section 960(d) equal to the total amount reported in Schedule D, Part II, column 4.

Part II—Separate Foreign Tax Credit

Line 1b. If the corporation had a foreign tax credit splitting event in a prior tax year that resulted in a suspension of foreign taxes under section 909, enter the amount of those taxes attributable to related income taken into account in the current tax year. The amount of taxes suspended in a prior tax year should have appeared on Schedule G, line E, on your Form 1118 for that prior tax year. See the regulations under section 909 for rules for determining when related income is taken into account and the amount of previously suspended taxes that are attributable to that related income.

Line 4. If the corporation is reclassifying high-taxed income from passive category income, enter the related tax adjustment on line 4. Indicate whether the adjustment is positive or (negative).

Line 5. Enter the total amount of foreign income taxes carried forward or back to the current year. The amount of foreign income taxes carried forward to the current tax year is the amount from Schedule K (Form 1118), line 3,

column (xiv), plus the amount from Schedule I (Form 1118), Part III, line 3. Attach Schedule I (Form 1118) and Schedule K (Form 1118) to Form 1118.

Line 7. If the corporation has a current-year overall domestic loss or recapture of an overall domestic loss account, or, in any of its separate categories, a current-year separate limitation loss, an overall foreign loss, recapture of an overall foreign loss, or current-year separate limitation income in a category in which it has a beginning balance of income that must be recharacterized, adjustments must be made. See the separate Instructions for Schedule J (Form 1118) to determine if that schedule must be filed.

Line 8b. Enter as a positive amount taxable income that should not be taken into account in computing the foreign tax credit limitation. These adjustments will decrease the net worldwide income reported on line 8c (see the line 8c instructions, later).

Enter as a negative amount adjustments that increase the net worldwide taxable income reported on line 8c (see the line 8c instructions, later). For example, the net worldwide taxable income you report on line 8c should not include expenses allocated and apportioned to dividends for which a dividends received deduction is allowed under section 245A (see section 904(b)(4)). Because the line 8a amount (taxable income from your tax return) includes these expenses, a positive adjustment is needed to back out these expenses (thus increasing the net worldwide taxable income reported on line 8c). As such, include as a negative adjustment on line 8b these expense amounts from Schedule H, Part II, lines 5 and 6.

Line 8c. If the negative adjustments included on line 8b (such as those amounts coming in from Schedule H, Part II, lines 5 and 6) exceed any positive adjustments that are also included on line 8b, the net line 8b adjustment will be negative. When this net negative amount on line 8b is subtracted from a positive taxable income amount on line 8a, the result will be a positive line 8c amount that is larger than the positive amount on line 8a.

Line 9. Divide line 7 by line 8c to determine the limitation fraction. Enter the fraction on line 9 as a decimal with the same number of places as the number of digits to the left of the decimal in adjusted taxable income on line 8c. For example, if adjusted taxable income on line 8c is $100,000, compute the limitation fraction to 6 decimal places.

Line 12. The limitation may be increased under section 960(c) for any tax year that the domestic corporation receives a PTEP distribution. Enter on line 12 the increase described in section 960(c)(1).

If the line 12 amount exceeds the domestic corporation’s U.S. income tax liability, the excess is deemed an overpayment and can be claimed on the domestic corporation’s income tax return as a refundable credit (Form 1120, Schedule J, line 20z, or the corresponding line of other corporate income tax returns). See section 960(c)(5).

14 Instructions for Form 1118 (Rev. 12-2025)

Part III—Summary of Separate Credits Complete Part III only once. Enter on lines 1 through 6 the separate foreign tax credits from Part II, line 14, for each applicable separate category.

Note: Complete Part III only on the Form 1118 with the largest amount entered on Part II, line 14.

Line 9. If the corporation participates in or cooperates with an international boycott, the foreign tax credit may be reduced. Complete Form 5713, International Boycott Report. If the corporation chooses to apply the international boycott factor to calculate the reduction in the credit, enter the amount from line 2a(3) of Schedule C (Form 5713) on line 9.