Part III—Other Deductions

Report in Schedule H, Part III information pertaining to the allocation and apportionment of deductions other than research and experimental deductions (reported in Schedule H, Part I) and other than deductions allocated and apportioned based on assets (reported in Schedule H, Part II).

Column (a). Complete this column to apportion officers’ compensation expense in accordance with the rules of Regulations section 1.861-8(b)(3).

Columns (b) and (c). Complete these columns to apportion amortization deductions and depletion deductions, respectively, in accordance with the rules of Regulations section 1.861-8(b)(2) and Temporary Regulations section 1.861-8T(c)(1), for example.

Column (d). Complete this column to apportion product liability damages in accordance with the rules of Regulations section 1.861-8(e)(5)(ii).

Column (e). Complete this column to apportion deductions other than those reported on Schedule H, Part I; Schedule H, Part II; or Schedule H, Part III, columns (a) through (d). See final and temporary Regulations sections 1.861-8 and 1.861-14.

Column (f). Column (f) is a totals column. It requests total deductions allocated and apportioned to section 245A dividends. This is the sum of any amounts entered in columns (a) through (e) on lines 2a(1), 2b(1), 2c(1), 2d(1), 2e(1), and 2f(1). The total is entered on line 3 and is also included on Schedule B, Part II, line 8b as a negative number.

Note: This is the adjustment required by section 904(b) (4) to worldwide taxable income to eliminate the expenses properly allocated or apportioned to stock or dividend income for which a dividends received deduction is

allowed in section 245A. As such, it includes both foreign source amounts (that is, the amounts from the applicable statutory groupings on lines 3a(1), 3b(1), 3c(1), 3d(1), and 3e(1)) and U.S. source amounts (that is, the amount from the residual grouping on line 3f(1)).

Column (g). With respect to each applicable statutory grouping, column (g) requests the sum of any amounts entered in columns (a) through (e) for lines 2a(2), 2b(2), 2c(2), 2d(2), and 2e(2). These are amounts other than section 245A dividends.

Note: Unlike column (f), this column (g) does not request a total. Instead, for each applicable statutory grouping, the column (g) total for each applicable line is carried over to column 14 of the corresponding Schedule A. For example, if the taxpayer enters “PAS” on Schedule H, Part III, line 2a, the taxpayer takes the total on line 2a(2), column (g) and includes it in column 14 of the Schedule A being completed for the Passive Category.