U. S. Business Income Tax Return

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Instructions for Form 8991
(Rev. December 2025)

(Use with the December 2024 revision of Form 8991.)
Tax on Base Erosion Payments of Taxpayers With Substantial Gross Receipts
Section references are to the Internal Revenue Code
unless otherwise noted.

Future Developments
For the latest information about developments related to
Form 8991, its schedules, and its instructions, such as
legislation enacted or guidance published after the form
and instructions were issued, go to IRS.gov/Form8991.
The Tax Cuts and Jobs Act of 2017 (P.L. 115-97) added
new section 59A (Tax on Base Erosion Payments of
Taxpayers with Substantial Gross Receipts), which
applies to large corporations that have the ability to reduce
U.S. tax liabilities by making deductible payments to
foreign related parties. The Base Erosion and Anti-Abuse
Tax (BEAT) of section 59A is generally levied on certain
large corporations whose aggregate group satisfies the
“base erosion test” under Regulations section 1.59A-2(e),
generally by having deductions with respect to amounts
paid or accrued to foreign related parties that are 3% or
higher of their total deductions (2% if any member of the
aggregate group is a member of an affiliated group that
includes a bank or registered security dealer). Large
corporations are those whose aggregate group satisfies
the “gross receipts test” of Regulations section
1.59A-2(d), generally by having gross receipts of $500
million or more. The BEAT operates as a minimum tax, so
a taxpayer is only subject to additional tax under the BEAT
if the BEAT tax rate multiplied by the taxpayer’s modified
taxable income exceeds the taxpayer’s regular tax liability
adjusted for certain credits.

On December 6, 2019, the Treasury Department and
the IRS published final regulations (the “final regulations”)
under sections 59A, 383, 1502, and 6038A, and proposed
regulations that propose other regulations under sections
59A and 6031 (“the 2019 proposed regulations”).
On October 9, 2020, the Treasury Department and the
IRS published final regulations (the “2020 final
regulations”) providing additional guidance under sections
59A, 1502, and 6031.
On January 14, 2025, the Treasury Department and the
IRS published proposed regulations (the “2025 proposed
regulations”) providing additional guidance regarding the
BEAT rules for qualified derivative payments on securities
lending transactions under Regulations sections
1.59A-3(b)(2), 1.59A-6(b)(3), and 1.6038A-2(b)(7)(ix).
On July 4, 2025, the One Big Beautiful Bill Act (P.L.
119-21) was enacted, which included amendments to
section 59A. Those amendments are effective for tax
years beginning after 2025.
Nov 4, 2025

Schedule A, line 2. A new line 2 has been added to
include payments related to cost-sharing transactions
payments as defined in Regulations section 1.482-7(b)(1)
(i). See Line 2 under Schedule A, for more information.
Corrected Form 8991. If you file a Form 8991 that you
later determine is incomplete or incorrect, file a corrected
Form 8991 with an amended tax return, using the
amended return instructions for the return with which you
originally filed Form 8991. Write “Corrected” at the top of
the form and attach a statement identifying the changes.
Reporting requirements and penalties. P.L. 115-97
also expanded the information reporting requirements
under section 6038A and increased the amount of the
penalty for failure to furnish information or maintain
records under section 6038A(d)(1) and (2) from $10,000
to $25,000. See Form 5472, Information Return of a 25%
Foreign-Owned U.S. Corporation or a Foreign Corporation
Engaged in a U.S. Trade or Business, and its instructions
for further details.
Expenditures charged to capital account. Any
expenditure made by a taxpayer to a foreign related party
that is charged to a capital account under section 174 is a
base erosion payment. The base erosion tax benefit with
respect to that expenditure is the amount of allowed
amortization or deduction for the tax year.

General Instructions
Purpose of Form

Use Form 8991 to determine a taxpayer’s base erosion
minimum tax amount for the year.

Use Schedule A to determine the amount of base
erosion payments and base erosion tax benefits for
purposes of:
• Determining the taxpayer’s base erosion percentage,
and
• Determining the applicable taxpayer’s modified taxable
income.
Use Schedule B to report the amount of deductions
being waived for the tax year.
Use Schedule C to determine the credits that reduce
regular tax liability in computing the base erosion
minimum tax amount.

Definitions
Applicable taxpayer. An applicable taxpayer is, with
respect to any tax year, a taxpayer who meets all of the
following criteria.

Instructions for Form 8991 (Rev. 12-2025) Catalog Number 71330Z
Department of the Treasury Internal Revenue Service www.irs.gov

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Background

Reminders

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Base erosion minimum tax amount. The base erosion
minimum tax amount for the tax year is the excess of 10%
(10.5% for tax years beginning after 2025) of the modified
taxable income of the applicable taxpayer for the tax year
over the applicable taxpayer’s regular tax liability under
section 26(b), reduced (but not below zero) by the excess,
if any, of:
1. The credits allowed under chapter 1 of subtitle A of
the Code (“chapter 1”) against the applicable taxpayer’s
regular tax liability over
2. The sum of:
a. The credit allowed under section 38 that is properly
allocable to the research credit determined under section
41(a), plus
b. The portion of the applicable section 38 credits not
in excess of 80% of the lesser of the amount of the
applicable section 38 credits or the base erosion minimum
tax amount determined without taking the applicable
section 38 credits into account, plus
c. Any credits allowed under sections 33, 37, and 53.
If the applicable taxpayer is a member of an affiliated
group under section 1504(a)(1) that includes a bank (as
defined in section 581) or a registered securities dealer
(as defined in Regulations section 1.59A-1(b)(15)), the tax
rate in effect for the tax year for the base erosion minimum
tax amount is increased by an additional 1%.
See Regulations section 1.59A-5 for more information
on how to compute the base erosion minimum tax
amount.
Base erosion payment. A base erosion payment is any
amount paid or accrued by a taxpayer to a foreign person
(as defined in Regulations section 1.59A-1(b)(10)) that is
a related party (as defined in Regulations section
1.59A-1(b)(12)) with respect to which a deduction is
allowable under chapter 1.
The amount paid or accrued, and the identity of the
payor and recipient of the amount paid or accrued, is
determined under general tax principles.
An amount paid or accrued includes an amount paid or
accrued using any form of consideration, such as cash,
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property, stock, a partnership interest, or the assumption
of a liability.
Base erosion payments are generally determined on a
gross basis, unless the Code or regulations expressly
permit netting of amounts in determining payments.
For purposes of determining whether a taxpayer has
made a base erosion payment, the taxpayer must treat a
payment to or from a partnership as made to or from each
partner. See Regulations section 1.59A-7 for more
information on how the BEAT applies to partners.
Base erosion payments also include the following.
• Amounts paid or accrued by a taxpayer to a foreign
related party in connection with the acquisition of
depreciable or amortizable property.
• Premiums or other consideration paid or accrued by a
taxpayer to a foreign related party for reinsurance
payments that are taken into account under section 803(a)
(1)(B) or section 832(b)(4)(A).
• Any amount paid or accrued by a taxpayer to a related
party that is a surrogate foreign corporation (if that
corporation first became a surrogate foreign corporation
after November 9, 2017), or a foreign person that is a
member of the same expanded affiliated group as the
surrogate foreign corporation (collectively, “expatriated
entities”), which results in a reduction to gross receipts.
See section 59A(d)(4) for more information.
See Regulations section 1.59A-3 for more information
on the definition of a base erosion payment.
Base erosion payments do not include the following
types of payments made to a foreign person that is a
related party.
• Amounts resulting in a reduction to determine gross
income, such as cost of goods sold.
• Amounts paid or accrued for services if such services
are services that meet the requirements for eligibility for
use of the services cost method under section 482
(determined without regard to the requirement that the
services not contribute significantly to the fundamental
risks of business success or failure), but only to the extent
of the total services cost of those services. The mark-up
component paid or accrued to a foreign related party is a
base erosion payment.
• Qualified derivative payments. A qualified derivative
payment is a payment made by a taxpayer pursuant to a
derivative with respect to which the taxpayer (a)
recognizes gain or loss as if the derivative were sold for its
fair market value on the last business day of the tax year
and any additional times required by the taxpayer’s
method of accounting, (b) treats the recognized gain or
loss as ordinary, and (c) treats the character of all
payments made with respect to the derivative as ordinary.
A payment is not a qualified derivative payment if the
payment is properly allocable to a non-derivative
component of a contract or if the payment would be
treated as a base erosion payment if it were not made
pursuant to a derivative, such as an interest, royalty, or
services payment.
• Effectively connected income and income taken into
account in U.S. taxable income under an income tax
treaty.
1. Amounts paid or accrued that are subject to U.S.
federal income taxation as income that is effectively
Instructions for Form 8991 (Rev. 12-2025)

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• The taxpayer is a corporation other than a regulated
investment company (RIC), a real estate investment trust
(REIT), or an S corporation.
• The taxpayer’s aggregate group (or if the taxpayer does
not have an aggregate group, the taxpayer) satisfies the
gross receipts test, generally by having average annual
gross receipts for the 3-tax-year period ending with the
preceding tax year that are at least $500 million.
• The taxpayer’s aggregate group (or if the taxpayer does
not have an aggregate group, the taxpayer) satisfies the
base erosion test, generally by having a base erosion
percentage for the tax year of 3% or higher; 2% or higher
for a taxpayer who is a member of an affiliated group that
includes a bank (as defined in section 581) or a registered
securities dealer as defined in Regulations section
1.59A-1(b)(15).
See Regulations section 1.59A-2 for more information
on how to determine whether a taxpayer is an applicable
taxpayer.

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Related party. A related party is:
• Any 25% owner of the taxpayer (as defined in
Regulations section 1.59A-1(b)(17)(ii)),
• Any person who is related (within the meaning of
section 267(b) or 707(b)(1)) to the taxpayer or any 25%
owner of the taxpayer, or
• A controlled taxpayer within the meaning of section
1.482-1(i)(5) together with, or with respect to, the
taxpayer.
Section 318, with certain modifications, applies in
determining whether a person is a related party. See
Regulations section 1.59A-1(b)(17)(iii) for additional rules
relating to the modification of section 318 for use in
determining a person’s relatedness.
Base erosion tax benefit. Generally, a base erosion tax
benefit is any deduction that is allowed under chapter 1 for
the tax year for any base erosion payment. Base erosion
tax benefits also include any deductions allowed for the
tax year for depreciation or amortization with respect to
the property acquired with a base erosion payment (that
are paid or accrued in tax years beginning after 2017).
Base erosion tax benefits also include certain reductions
in the gross amount of premiums and other consideration
on insurance and annuity contracts, or any deduction from
the amount of gross premiums written on insurance
contracts during the tax year for premiums paid for
reinsurance, and payments to certain expatriated entities
(as defined under Base erosion payment, earlier) that
cause a reduction in gross receipts in computing gross
income of the taxpayer for the tax year.
See the instructions for Schedule A, later, for special
rules applicable in determining the amount of the base
erosion tax benefit when taxes have been imposed by
section 871 or 881 and withheld under section 1441 or
1442 on a base erosion payment; or when the taxpayer
has made an interest payment that gives rise to a base
erosion tax benefit and section 163(j) applies for the tax
year.
Instructions for Form 8991 (Rev. 12-2025)

Base erosion percentage. The base erosion
percentage of the taxpayer’s aggregate group (or if the
taxpayer does not have an aggregate group, the taxpayer)
is determined by dividing:
1. The aggregate amount of base erosion tax benefits
for the tax year (numerator) by
2. The aggregate amount of allowed deductions and
base erosion tax benefits (denominator). The denominator
excludes the following deductions.
a. Any deduction allowed under sections 172, 245A,
or 250.
b. Any deduction for amounts paid or accrued for
services to which the exception under Regulations section
1.59A-3(b)(3)(i) for the section 482 services cost method
applies.
c. Any deduction for qualified derivative payments that
are not treated as base erosion payments as a result of
Regulations section 1.59A-3(b)(3)(ii).
d. Exchange loss from section 988 transactions that is
not a base erosion payment as a result of the exception
under Regulations section 1.59A-3(b)(3)(iv).
e. Any deduction for amounts paid or accrued to
foreign related parties with respect to TLAC securities and
foreign TLAC securities that are not treated as base
erosion payments as a result of Regulations section
1.59A-3(b)(3)(v).
f. Any reinsurance losses incurred or claims payments
that are not treated as base erosion payments as a result
of the exception under Regulations section 1.59A-3(b)(3)
(ix).
g. Any deduction not allowed in determining taxable
income.
See Regulations section 1.59A-2(e)(3) for further
information on how to compute the base erosion
percentage.
Modified taxable income. Modified taxable income is
the applicable taxpayer’s taxable income plus any base
erosion tax benefit with respect to any base erosion
payment and the base erosion percentage of any net
operating loss deduction allowed under section 172 for
the tax year.
See Regulations section 1.59A-4(b) for further
information on the computation of modified taxable
income.
Applicable section 38 credits. Applicable section 38
credits are the credits allowed under section 38 for the tax
year that are properly allocable to:
• The low-income housing credit determined under
section 42(a);
• The renewable electricity production credit determined
under section 45(a); and
• The investment credit determined under section 46, but
only to the extent properly allocable to the energy credit
determined under section 48.
See also the instructions for Schedule C, later.
Aggregation rules. When applying the gross receipts
test and base erosion percentage test, a taxpayer that is a
member of an aggregate group determines its gross
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connected to a U.S. trade or business if the taxpayer
receives a withholding certificate with respect to the
income.
2. If the foreign related party determines its taxable
income applying the business profits provisions of an
income tax treaty, amounts paid or accrued to the foreign
related party that are taken into account in determining its
taxable income.
• Exchange loss from section 988 transactions.
• Certain deductions for amounts paid or accrued with
respect to certain total loss absorbing capacity (TLAC)
securities and certain foreign TLAC securities.
• Amounts transferred in connection with certain
specified nonrecognition transactions. See Regulations
section 1.59A-3(b)(3)(viii) for more information.
• Amounts paid by the taxpayer to a regulated foreign
insurance company under a reinsurance contract for
reinsurance losses incurred or claims payments that are
ultimately paid by the foreign insurance company to an
unrelated party.
See Regulations section 1.59A-3(b)(3)(i)–(ix) for further
information on whether a payment or accrual is not a base
erosion payment.

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Foreign corporations are excluded from an aggregate
group except to the extent the foreign corporation has
income effectively connected with the conduct of a trade
or business in the United States or income taken into
account in determining net taxable income using an
income tax treaty.
An aggregate group is determined for each taxpayer. A
taxpayer that is a member of an aggregate group
determines its gross receipts and base erosion
percentage on the basis of its aggregate group by taking
into account the gross receipts, base erosion payments,
base erosion tax benefits, and deductions of the members
of the aggregate group for the tax years that end with or
within the taxpayer’s tax year.
See Regulations section 1.59A-2(c) for further
information on how to apply the aggregation rules.

Who Must File

Any corporation, other than a RIC, a REIT, or an S
corporation, that has (or is a member of an aggregate
group that has) annual gross receipts of at least $500
million in 1 or more of the 3 preceding tax years ending
with the preceding tax year must file Form 8991.
See Form 8991, Part I, lines 1a through 1g, and
Specific Instructions, later, to determine whether the
corporation has gross receipts of at least $500 million in 1
or more of the 3 preceding tax years.
See also questions/items and related instructions in the
following forms.
• Question 22, Schedule K, Form 1120.
• Item DD, Form 1120-F.
• Question 14, Schedule M, Form 1120-L.
• Question 15, Schedule I, Form 1120-PC.
• Question 16, Schedule K, Form 1120-C.

When To File

Attach Form 8991 to your income tax return (or, if
applicable, exempt organization business income tax
return) and file by the due date (including extensions) for
that return.

Specific Instructions
Note: Complete every applicable entry space on Form
8991. Do not enter “See Attached” or “Available Upon
Request” instead of completing the entry spaces. If more
space is needed on the forms or schedules, attach
separate sheets using the same size and format as the
printed forms.
4

If there are supporting statements and attachments,
arrange them in the same order as the schedules or forms
they support and attach them last. Show the totals on the
printed forms. Enter the filer’s name and employer
identification number (EIN) on each supporting statement
or attachment.

Part I—Applicable Taxpayer
Determination
Average Annual Gross Receipts for the
3-Tax-Year Period Ending With the Preceding
Tax Year

A taxpayer that falls within the definition of Who Must File,
earlier, and is filing Form 8991 should complete lines 1a
through 1g to determine their average annual gross
receipts for the 3-tax-year period ending with the
preceding tax year.
For purposes of determining average annual gross
receipts, a foreign corporation’s gross receipts are
included only when such gross receipts are taken into
account when determining the foreign corporation’s
income effectively connected with a U.S. trade or business
(“ECI”). If the foreign corporation is subject to tax on a net
basis pursuant to a U.S. income tax treaty, only gross
receipts that are attributable to transactions taken into
account in determining the foreign corporation’s net
taxable income are included in the gross receipts
determination.
Line 1a. Enter in column (a) your gross receipts for the
first preceding tax year. Enter in column (b) your gross
receipts for the second preceding tax year. Enter in
column (c) your gross receipts for the third preceding tax
year.
Only include the gross receipts of the filer on line 1a.
Do not include on this line the gross receipts of all other
persons treated as one person under the aggregation
rules of Regulations section 1.59A-2(c), which should be
reported on line 1c. See the instructions for line 1c, later.
Line 1b. Enter in column (a) gross receipts from
partnerships for the first preceding tax year. Enter in
column (b) gross receipts from partnerships for the
second preceding tax year. Enter in column (c) gross
receipts from partnerships for the third preceding tax year.
A filer must report total ECI gross receipts from
Schedule K-3 (Form 1065), Part IX, Section 1, lines 2–4,
column (b), received from partnerships in which the
taxpayer holds partnership interests.
Line 1c. Enter in column (a) gross receipts of all other
persons treated as one person under the aggregation
rules of Regulations section 1.59A-2(c) (the “aggregate
gross receipts”) for the first preceding tax year. Enter in
column (b) the aggregate gross receipts for the second
preceding tax year. Enter in column (c) the aggregate
gross receipts for the third preceding tax year. Do not
include on line 1c gross receipts that have already been
included on line 1a.
Line 1f. If the taxpayer was not in existence for the entire
3-year period referenced in columns (a), (b), and (c), the
taxpayer must determine a gross receipts average for the
Instructions for Form 8991 (Rev. 12-2025)

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receipts and base erosion percentage as if it were one
person, on the basis of its aggregate group. A taxpayer is
a member of an aggregate group if it belongs to a
controlled group of corporations. The term “controlled
group of corporations” has the meaning given by section
1563(a) except that:
1. “More than 50%” is substituted for “at least 80%”
each place it appears in section 1563(a), and
2. The determination of the controlled group of
corporations is made without regard to sections 1563(a)
(4) and (e)(3)(C).

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period that it was in existence (which includes the current
year’s gross receipts). See Regulations section
1.59A-2(d)(2) for further information.
Line 1g. If you check “No” on line 1g, you are not subject
to the section 59A tax on base erosion payments of
taxpayers with substantial gross receipts. Do not complete
the remaining lines. Attach Form 8991 to your tax return.
If you check “Yes” on line 1g, continue to line 2a.

Base Erosion Percentage for the Tax Year

Complete lines 2a through 2o to determine your base
erosion percentage for the tax year. See the definition of
aggregation rules, earlier, for information on how to
determine the base erosion percentage for an aggregate
group. If the taxpayer is not a member of an aggregate
group, the taxpayer should enter its own amounts in lines
2a through 2o.

Line 2a. Enter the amount of base erosion tax benefits
from Schedule A, line 15, column (a-2).
Line 2b. Enter the aggregate amount of deductions
allowed under chapter 1 (sections 1 through 1400) for the
tax year. The amount entered should be the aggregate
deductions allowed to all persons that are treated as one
person under the aggregation rules. Do not include
amounts reported on line 2c (reinsurance payments) or
amounts reported on line 2d (payments to expatriated
entities).
Line 2c. For reinsurance payments paid or accrued that
are base erosion payments described in Regulations
section 1.59A-3(b)(1)(iii), enter the aggregate amount of:
• Any reduction under section 803(a)(1)(B) in the gross
amount of premiums and other consideration on
insurance and annuity contracts for premiums and other
consideration arising out of indemnity insurance, and
• Any deduction under section 832(b)(4)(A) from the
amount of gross premiums written on insurance contracts
during the tax year for premiums paid for reinsurance.
Line 2d. Enter the aggregate amount paid or accrued
with respect to expatriated entities that results in a
reduction of the gross receipts of the taxpayer.
Line 2f. Enter the amount from Schedule A, line 5b.
Line 2g. Enter the amount from Schedule A, line 9b.
Line 2h. Enter the aggregate amount of deductions
allowed under sections 172, 245A, and 250.
Line 2i. If an election is made to waive deductions in
accordance with Regulations section 1.59A-3(c)(6)(i),
check the “Yes” box on line 2i; complete Schedule B,
Waiver of Deductions; and enter the amount from line 15
of Schedule B. If the taxpayer is a member of an
aggregate group, and another member of the aggregate
group has also made the election to waive deductions as
described above, also include the amount of the
Instructions for Form 8991 (Rev. 12-2025)

Line 2j. Enter the aggregate amount of deductions for
exchange losses from section 988 transactions described
in Regulations section 1.59A-2(e)(3)(ii)(D).
Line 2k. Enter the aggregate amount of deductions for
TLAC securities and foreign TLAC securities described in
Regulations section 1.59A-2(e)(3)(ii)(E).
Line 2l. Enter the aggregate amount of reinsurance
losses incurred and claims payments described in
Regulations section 1.59A-2(e)(3)(ii)(F).
Line 2p. If you check “No” for line 2p, you are not subject
to the tax on base erosion payments of taxpayers with
substantial gross receipts. Skip Parts II–IV. Complete Part
V and Schedule A. Complete Schedule B if necessary. Do
not complete Schedule C. Attach Form 8991 and the
completed Schedule A (and, if applicable, Schedule B) to
your tax return.
If you check “Yes” for line 2p, continue to Part II.

Part II—Modified Taxable Income
(MTI)

See Regulations section 1.59A-4 for further details on how
to determine modified taxable income.
Line 3a. Enter the amount of taxable income after any net
operating loss and special deductions.
If the current year reports a loss, without any net
operating loss carryovers, the amount entered here may
be less than zero.
If the current year reports taxable income and there is a
net operating loss carryover that would reduce taxable
income below zero, enter “-0-.” Do not enter an amount
less than zero.
Line 3b. Enter the amount of base erosion tax benefits for
the tax year with respect to base erosion payments from
Schedule A, line 15, column (b-2).
Line 3c. Enter the amount of net operating loss
deduction to be added back to taxable income for
purposes of determining modified taxable income. To
calculate this amount, first determine the amount of net
operating loss deduction allowed under section 172 that
does not exceed taxable income before taking into
account the net operating loss deduction for all applicable
tax years. Second, multiply this net operating loss
deduction by the base erosion percentage for the tax year
in which the net operating loss arose. If the net operating
loss deduction is attributable to net operating losses that
arose in more than 1 tax year, multiply the net operating
loss attributable to each tax year by the base erosion
percentage for that tax year and determine the total
amount by adding the result from each tax year. For any
tax year beginning before 2018, the base erosion
percentage is zero.
Line 3d. Combine the amounts on lines 3a through 3c.

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A taxpayer is subject to the 2% base erosion
percentage threshold if it or any member of its aggregate
group is a member of an affiliated group (as defined in
section 1504(a)(1)) that includes a bank (as defined in
section 581) or a registered securities dealer (as defined
in Regulations section 1.59A-1(b)(15)).

member’s waived deductions in line 2i. See Schedule B,
later.

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Part III—Regular Tax Liability
Adjusted for Purposes of Computing
Base Erosion Minimum Tax Amount

Line 4a. Enter the amount of regular tax liability (as
defined in section 26(b)) of the applicable taxpayer for the
tax year.
Consolidated groups. Affiliated groups of
corporations filing consolidated returns, please review any
additional information at IRS.gov/Form8991.
Line 4c. Subtract line 4b from line 4a. If zero or less,
enter “-0-.”

Line 5b. Enter the applicable tax rate for the tax year. For
tax years beginning during 2018, the applicable rate is
5%. For tax years beginning during 2019 through 2025,
the applicable rate is 10%. For tax years beginning during
2026 or later, the applicable rate is 10.5%.
The rates above are increased by 1% if the applicable
taxpayer is a member of an affiliated group (as defined in
section 1504(a)(1)) that includes either a bank (as defined
in section 581), or a registered securities dealer (as
defined in Regulations section 1.59A-1(b)(15)).
Line 5e. Subtract line 5d from line 5c. If zero or less,
enter “-0-.” This is your base erosion minimum tax amount.
Enter this amount on your applicable tax return. For
example, for an applicable taxpayer filing Form 1120,
enter this amount on Schedule J, line 1f.

Part V—Additional Questions
Line 6. If the taxpayer is electing to use financial
statements per Regulations section 1.59A-3(b)(4)(i)(D) for
purposes of calculating interest expense allocable to a
foreign corporation’s effectively connected income, check
“Yes”; otherwise, check “No.”
Line 7. Indicate if in the current year, the taxpayer
capitalized to inventory, or included in cost of goods sold
(COGS), any cost incurred for any payment to a related
foreign party that the taxpayer treated as a deduction in
any prior tax year starting on or after January 1, 2018. If
the answer is yes, check “Yes” and complete line 8.
Line 8, column (i). Indicate the amount capitalized or
included in COGS for the current year.
Line 8, column (ii). Indicate a detailed description of the
item(s) capitalized or included in COGS such as
sales-based royalties, production-based royalties,
trademarks, trade names, section 482 adjustments,
transportation costs, etc.
Line 8, column (iii). Indicate the line item(s) where the
deduction was claimed on a prior year return, for example,
line 26, 27, or other line(s) on Form 1120-F, Form 1120,
etc.
Line 8, column (iv). If an accounting method change
was filed on Form 3115 regarding items in column (i),
indicate the tax year in which the filing(s) was made. If no
Form 3115 was filed, indicate in an attachment the
6

Schedule A—Base Erosion Payments
and Base Erosion Tax Benefits

Schedule A is required to be attached if a corporation has
average annual gross receipts of $500 million or more for
the 3-tax-year period ending with the preceding tax year.
This schedule requires a taxpayer to report all amounts
that are base erosion payments as defined in Regulations
section 1.59A-3(b) and base erosion tax benefits as
defined in Regulations section 1.59A-3(c). This schedule
also requires a taxpayer to report any amounts that qualify
for certain exceptions applicable to amounts that are not
treated as base erosion payments.
For lines 2 through 11, complete columns (a-1), (a-2),
(b-1), and (b-2) for each type of payment made by the
taxpayer (or, where applicable, member of the taxpayer’s
aggregate group) to a foreign related party of the taxpayer
during the tax year. For each type of payment reported on
lines 2 through 11 of column (a-1), check all applicable
boxes in columns (c), (d), and (e) to indicate the type of
related party who received the base erosion payment from
the taxpayer.
Consolidated groups. Affiliated groups of corporations
filing consolidated returns, please review any additional
information at IRS.gov/Form8991.

Columns (a-1) and (a-2). Columns (a-1) and (a-2) are
used to determine the base erosion percentage, as
defined in Regulations section 1.59A-2(e). Enter in
columns (a-1) and (a-2) the amount of aggregate base
erosion payments and aggregate base erosion tax
benefits, respectively, that correspond to each type of
base erosion payment specified on lines 2 through 11.
The aggregate base erosion payment entered in these
lines should include only those base erosion payments
paid or accrued in the current year. The aggregate base
erosion tax benefit entered in these lines should only
include those base erosion tax benefits allowed in the
current year, which may relate to a base erosion payment
paid or accrued in the current year or a prior year. The
aggregate base erosion tax benefits in column (a-2), lines
2 through 11, should be the amounts determined before
applying the exception in Regulations section 1.59A-3(c)
(3) (base erosion tax benefits disregarded if tax withheld
on base erosion payment).
Aggregate base erosion payments include the base
erosion payments of all persons treated as one person
pursuant to the aggregation rules (see the definition of
aggregation rules, earlier). Similarly, aggregate base
erosion tax benefits include the base erosion tax benefits
of all persons treated as one person pursuant to the
aggregation rules.
However, if the taxpayer is not a member of an
aggregate group, the taxpayer will enter in columns (a-1)
and (a-2) the amount of its own base erosion payments
and base erosion tax benefits, respectively, that
correspond to each type of base erosion payment
specified on lines 2 through 11, determined before
applying the exception in Regulations section 1.59A-3(c)
(3).
Instructions for Form 8991 (Rev. 12-2025)

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Part IV—Computation of Base
Erosion Minimum Tax Amount

reason(s) why. Attach additional sheets, if necessary, to
report multiple row items starting with d, e, etc.

TREASURY/IRS AND OMB USE ONLY DRAFT
Columns (b-1) and (b-2). Columns (b-1) and (b-2) are
used to determine modified taxable income, as described
in Regulations section 1.59A-4, of the applicable taxpayer.
Enter in columns (b-1) and (b-2) the amount of base
erosion payments and base erosion tax benefits,
respectively, that correspond to the type of base erosion
payments specified in lines 2 through 11. Enter in these
columns the applicable taxpayer’s own base erosion
payments and base erosion tax benefits, without applying
the aggregation rules. The base erosion tax benefit in
column (b-2), lines 2 through 11, should be an amount
determined before applying the exception in Regulations
section 1.59A-3(c)(3) (tax benefits disregarded if tax
withheld on base erosion payment).
Line 1. This line is reserved and should not be used at
this time.

Line 3, columns (a-1) and (b-1). Enter the amount paid
or accrued to a foreign related party in connection with the
acquisition or creation of intangible property rights
(patents, copyrights, trademarks, trade secrets, etc.) that
is subject to the allowance for depreciation (or
amortization in lieu of depreciation).
Line 3, columns (a-2) and (b-2). Enter the amount of
deductions allowed under chapter 1 for the tax year for
depreciation (or amortization in lieu of depreciation) with
respect to intangible property rights acquired in the
current or prior years from a foreign related party.
Line 4, columns (a-1) and (b-1). Enter the amount paid
or accrued to a foreign related party for the use or right to
use tangible or intangible property resulting in rents,
royalties, and/or license fees.
Line 4, columns (a-2) and (b-2). Enter the amount of
deductions allowed under chapter 1 for the tax year for
amounts paid or accrued to a foreign related party for the
use or right to use tangible or intangible property that
results in rents, royalties, and/or license fees.
Line 5a, columns (a-1) and (b-1). Enter the amount
paid or accrued to a foreign related party as
compensation or consideration for services, but excluding
any amount that falls within the exception in Regulations
section 1.59A-3(b)(3)(i). Enter amounts paid or accrued in
excess of the total services cost of the services eligible for
the services cost method exception (or the mark-up
component). Also, enter amounts paid or accrued for
services ineligible for the services cost method exception.
Line 5a, columns (a-2) and (b-2). Enter the amount of
deductions allowed under chapter 1 for the tax year for
amounts paid or accrued to a foreign related party as
compensation or consideration for services, but excluding
any deduction for amounts paid or accrued that fall within
the exception in Regulations section 1.59A-3(b)(3)(i).
Enter amounts of deductions allowed under chapter 1 for
the tax year for amounts paid or accrued in excess of the
total services cost of the services eligible for the services
cost method exception (or the mark-up component). Also,
Instructions for Form 8991 (Rev. 12-2025)

Line 5b. Enter the amount paid or accrued to a foreign
related party as compensation or consideration for
services that are defined under the exception in
Regulations section 1.59A-3(b)(3)(i). Determine the
amount of compensation or consideration eligible for this
exception after applying the aggregation rules.
Line 6, columns (a-1) and (b-1). Enter the amount of all
interest paid or accrued to a foreign related party with
respect to which a deduction is allowable in the tax year.
Line 6, columns (a-2) and (b-2). Enter the amount of
deductible interest expense allowed under chapter 1 for
the tax year with respect to amounts paid or accrued to a
foreign related party. For purposes of completing line 6,
columns (a-2) and (b-2), any reduction in the amount of
interest for which a deduction is allowed for the tax year
under section 163(j) is treated as allocable first to interest
paid or accrued to persons who are not related parties
with respect to the taxpayer and then to such related
parties.
Line 7, columns (a-1) and (b-1). Enter the amount paid
or accrued to a foreign related party for the purchase of
tangible personal property.
Line 7, columns (a-2) and (b-2). Enter the amount of
deductions allowed under chapter 1 for the tax year for
amounts paid or accrued to a foreign related party for the
purchase of tangible personal property.
Line 8, columns (a-1) and (b-1). Enter the amount of
any premiums or other consideration paid or accrued to a
foreign related party for insurance and reinsurance that
are taken into account under section 803(a)(1)(B) (relating
to return premiums and premiums or other consideration
arising out of indemnity reinsurance that reduces life
insurance gross income) or section 832(b)(4)(A) (relating
to amounts deducted from gross premiums written on
insurance contracts for return premiums and premiums
paid for reinsurance). See Regulations section 1.59A-3(b)
(1)(iii).
Line 8, columns (a-2) and (b-2). Enter the amount of
any reduction under section 803(a)(1)(B) in gross
premiums and other consideration on insurance and
annuity contracts for premiums and other consideration
arising out of indemnity insurance paid to a foreign related
party, and the amount of any deduction under section
832(b)(4)(A) from the amount of gross premiums written
on insurance contracts during the tax year for premiums
paid to a foreign related party for reinsurance.
Line 9a, columns (a-1) and (b-1). Enter the amount
paid or accrued to a foreign related party with respect to
any derivative contract that is not a qualified derivative
payment as defined in Regulations section 1.59A-6. Do
not include any amount paid that is a qualified derivative
payment.
Line 9a, columns (a-2) and (b-2). Enter the amount of
deductions allowed under chapter 1 for the tax year for
amounts paid or accrued to a foreign related party with
respect to any payment that is not a qualified derivative
payment. Do not include any deductions allowed under
7

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Line 2. Enter the amount paid or accrued as cost-sharing
transaction payments to a foreign related party as defined
in Regulations section 1.482-7(b)(1)(i) for the tax year. Do
not report any negative amounts here for base erosion
payments.

enter amounts of deductions for services ineligible for the
services cost method exception.

TREASURY/IRS AND OMB USE ONLY DRAFT
Line 9b. Enter the amount paid to a foreign related party
that is a qualified derivative payment excepted by
Regulations section 1.59A-6(b). Determine the amount of
the qualified derivative payments after applying the
aggregation rules. Generally, a qualified derivative
payment is any payment made by the taxpayer pursuant to
a derivative contract provided that the taxpayer recognizes
gain or loss on the derivative contract as if it were sold for
its fair market value on the last business day of the tax
year; treats the gain or loss as ordinary; and treats the
character of all other items of income, deduction, gain, or
loss with respect to a payment pursuant to the derivative
as ordinary. A payment is not a qualified derivative
payment if the payment would be treated as a base
erosion payment if it were not made pursuant to a
derivative (such as interest, royalty, or services income).
With respect to a contract with both derivative and
non-derivative components, a payment is not a qualified
derivative payment if it is properly allocable to the
non-derivative component.
A taxpayer meets the reporting requirement of
Regulations sections 1.59A-6(b)(2) and 1.6038A-2(b)(7)
(ix) by entering the amount on line 9b. Pursuant to Notice
2024-43, for tax years beginning on or after 2027, a
taxpayer will also need to provide a representation that all
payments satisfy the requirements of Regulations section
1.59A-6(b)(2) and meet the reporting requirement of
Regulations sections 1.59A-6(b)(2) and 1.6038A-2(b)(7)
(ix).
Line 10, columns (a-1) and (b-1). Enter the amount
paid or accrued to certain expatriated entities that results
in a reduction of the gross receipts of the taxpayer. This
amount includes payments to a surrogate foreign
corporation that is a related party, but only if the entity first
became a surrogate foreign corporation after November 9,
2017. The amount also includes payments to a foreign
person that is a member of the same expanded affiliated
group, as defined in section 7874(c)(1), as the surrogate
foreign corporation. A surrogate foreign corporation is
defined in section 7874(a)(2)(B), but it does not include a
foreign corporation that is treated as a domestic
corporation under section 7874(b).
Line 10, columns (a-2) and (b-2). Enter the amount of
the reduction to gross receipts with respect to payments to
expatriated entities that were used to compute gross
income for the tax year.
Line 11, columns (a-1) and (b-1). Enter the total
amount of any other base erosion payments that were
paid or accrued to a foreign related party and for which a
deduction is allowable under chapter 1. Only include
those amounts that have not otherwise been included in
Schedule A on lines 2 through 10.

Attach a statement for line 11. For amounts reported
on line 11, attach a statement describing the type and
amount of other payments, using the same column
headings as specified in Schedule A: “Aggregate Group’s
Base Erosion Payments,” “Aggregate Group’s Base
Erosion Tax Benefits,” “Taxpayer’s Base Erosion
Payments,” and “Taxpayer’s Base Erosion Tax Benefits.”
For each type of payment, the attachment must identify
the relationship of the recipients consistent with the
categories and instructions for columns (c), (d), and (e) of
Schedule A.
Line 12. For columns (a-1), (a-2), (b-1), and (b-2), add
lines 2 through 11 and enter the total amount.
Line 13. Enter the aggregate amount of base erosion tax
benefits from columns (a-2) and (b-2) of lines 2 through 11
on which either (1) tax is imposed under section 871(a) or
section 881, and with respect to which tax has been
deducted and withheld under section 1442 (or section
1441) at a 30% rate; or (2) tax is imposed under section
884(f) at a 30% rate and the tax is reported and paid
under Regulations section 1.884-4(a)(2)(iv).
Line 14. Complete the Worksheet for Schedule A,
Line 14, to determine the portion of the base erosion tax
benefits from lines 2 through 11 on which, pursuant to a
U.S. income tax treaty, tax is either (1) imposed under
section 871 or section 881 at a reduced withholding rate,
or (2) imposed under section 884(f) and paid and reported
at a reduced rate. The amount to be entered on line 14 is
the same proportion of such base erosion tax benefits as
the reduced rate of tax specified by the relevant treaty
bears to the rate of tax imposed without regard to the
treaty. Complete a separate worksheet for column (a-2)
amounts and column (b-2) amounts on line 14, as
necessary. Keep a copy of the completed worksheet for
your records.
Line 15. Subtract the sum of line 13 and line 14 from
line 12, and enter the amount on line 15. Line 15, column
(a-2), is the total amount of aggregate base erosion tax
benefits for the tax year that is used for purposes of
determining the taxpayer’s base erosion percentage.
Line 15, column (b-2), is the total amount of base erosion
tax benefits for the tax year that is used for purposes of
determining the taxpayer’s modified taxable income.
Line 15, column (b-2), is also the total amount of base
erosion tax benefits for the tax year that is used for
purposes of determining the taxpayer’s base erosion
percentage when the taxpayer is not a member of an
aggregate group.

Line 11, columns (a-2) and (b-2). Enter the amount of
deductions allowed under chapter 1 for the tax year for
other base erosion payments paid or accrued to a foreign
related party. Only include those amounts that have not
otherwise been included in Schedule A on lines 2 through
10.
8

Instructions for Form 8991 (Rev. 12-2025)

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chapter 1 for the tax year if the deductible amount is a
qualified derivative payment.

TREASURY/IRS AND OMB USE ONLY DRAFT
Instructions for Worksheet for Schedule A,
Line 14

separate attachment for each member of the aggregate
group that is waiving deductions that contains the name
and EIN of the aggregate group member and the
information shown in columns (a) through (i). Attach each
attachment to Schedule B. Include the total amount of the
deductions being claimed by all of your aggregate group
members with respect to the items or property that their
respective waiver elections relate to on line 14, column
(h), and the total of all of the deductions being waived by
the members on line 14, column (i). See the instructions
for line 14, later.

Use a separate row for each type of base erosion payment
and each treaty-reduced withholding tax rate to which the
corresponding base erosion tax benefit is subject.
Do not include a base erosion tax benefit that is subject
to the 30% statutory withholding tax rate or a base erosion
tax benefit that is exempt from tax pursuant to relevant
income tax treaty provisions.
Do not combine the base erosion tax benefits that are
subject to different withholding rates. Do not enter any
blended withholding tax rates.

Column (a). Enter a brief description of the item or
property to which the deduction relates to; for example,
debt instrument, intangible property (such as patent,
trademark, or license), personal property, real property,
etc.

Column A. Enter the type of base erosion payment that
corresponds to the type of base erosion payment in
Schedule A.

Column (b). Enter the date on which, or the time period
for which, the waived deduction was paid or accrued.
Column (c). Enter the provision of the Code (and
regulations, as applicable) that allows the deduction for
the item or property to which the election relates.
Column (d). Enter the schedule and line number of the
controlled group’s federal income tax return where the
deduction is reflected (or would have been reflected).

Column C. Enter the treaty-reduced withholding tax rate
to which the base erosion tax benefit is subject.
Column D. Divide the tax rate in column C by 30% (0.30).
Round to four decimal places.

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Column B. Enter the amount of base erosion tax benefits
that correspond to the specific type of base erosion
payment on which tax is imposed under section 871 or
section 881, and with respect to which tax is deducted
and withheld at a reduced withholding rate pursuant to a
U.S. income tax treaty.

Column (e). Enter the name of the foreign related party
that is or will be the recipient of the payment that
generates the deduction.

Column E. Multiply the amount in column B by column D.
The amount is the portion of base erosion tax benefits with
respect to the specific type of base erosion payment and
the specific treaty-reduced rate of withholding that is not
taken into account in computing modified taxable income.
Add the amounts in column E and enter the total on
Schedule A, line 14, column (a-2) or (b-2).

Column (f). Enter the tax identification number of the
foreign related party payee that was entered in column (e).
This can be an EIN, individual taxpayer identification
number (ITIN), or foreign tax identification number (FTIN).
Column (g). Enter the country of organization of the
foreign related party that was entered in column (e).

Schedule B—Waiver of Deductions

Column (h). For each item or property reported under
columns (a) through (g), enter the amount of the
deduction claimed on the tax return (after the waiver
indicated in column (i)).

Schedule B is used to report all the deductions being
waived for the tax year in accordance with Regulations
section 1.59A-3(c)(6)(i). Columns (a) through (i) are to be
completed for each item or property of which a deduction
related to such item or property is being waived.

Column (i). For each item or property reported under
columns (a) through (g), enter the amount of the
deduction being waived.

Caution: You should use lines 1 through 13 to report only
your own deductions that you are electing to waive. If a
member or members of your aggregate group has also
elected to waive any of its deductions, complete a

Line 14. If additional space is necessary, complete and
attach a separate worksheet with the same information as

Worksheet for Schedule A, Line 14
A

B

C

D

E

Type of base erosion
payment

Amount of base erosion tax
benefit

Treaty-reduced withholding
rate

Divide column C by 30%
(0.30) (round to four
decimal places)

Multiply column B by
column D

%
%
%
%
%
Add the amounts in column E and enter the total on the appropriate line on Schedule A, line 14.

Instructions for Form 8991 (Rev. 12-2025)

9

TREASURY/IRS AND OMB USE ONLY DRAFT
shown under columns (a) through (i) for each additional
item or property. Enter the total of deductions claimed for
the tax year on line 14, column (h), and the total of
deductions waived on line 14, column (i).
Also, include on this line the total of deductions being
claimed (column (h)) and waived (column (i)) from other
taxpayers that are members of your aggregate group, if
applicable.

Line 5. Section 59A(b)(1)(B)(ii)(II) limits the allowable
adjustment for applicable section 38 credits to 80% of the
lesser of applicable section 38 credits or the BEMTA
computed without the adjustment for applicable section 38
credits computed in Part III.

Schedule C—Credits Reducing
Regular Tax Liability in Computing
Base Erosion Minimum Tax Amount
(BEMTA)

Part II—Applicable Section 38 Credits

Part I—Credits Allowed Against Regular Tax

Line 9. Enter the total amount of section 45 credit shown
on Form 3800, Part III, line 1f, column (g); Part III, line 4e,
column (g); Part IV, line 1f, column (g); and Part IV, line 4e,
column (g). This total equals the available credit for
renewable electricity production in the tax year.

Line 1. You must enter the total credits allowed against
your regular tax liability in the tax year, except for credits
allowed under sections 33, 37, and 53. Total credits
include the sum of all credits shown on Form 1120 or
other applicable return.
Line 2. Enter the total amount of credit for increasing
research activities reported on Form 3800, Part III, line 1c,
column (g), plus Part IV, line 1c, column (g). This total
equals the available credit for increasing research
activities in the tax year.
Line 3. Enter only that portion of the available credit for
increasing research activities that was included on Form
3800, Part II, Section D, line 38, and used against regular
tax liability. You must apply the general rules and the
ordering rules for use of general business credits from the
Instructions for Form 3800. The Instructions for Form 3800
provide that credits reported on Form 3800 are treated as
used on a first-in, first-out basis by offsetting the earliest
earned credits first. Therefore, the order in which the
credits are used in any tax year is:
• Carryforwards to that year, the earliest ones first;
• The general business credit earned in that year; and
• The carryback to that year.
If your general business credits exceed your tax liability
limit, the credits are used in the order as they are listed in
section 38(b). Although general business credits are

Line 8. Enter the total amount of low-income housing
credit shown on Form 3800, Part III, line 4d, column (g);
and Part IV, line 2b, column (g), and line 4d, column (g).
This total equals the available credit for low-income
housing in the tax year.

Line 10. Enter only the total amount of investment credit
allocable to the section 48 energy credit shown on Form
3800, Part III, line 4a, column (g); and Part IV, line 4a,
column (g). This total equals the available investment
credit properly allocable to the energy credit in the tax
year.
Line 11. Enter only that portion of the available applicable
credits that was included on Form 3800, Part II, Section D,
line 38, and used against regular tax liability. This
represents the amount of applicable credits allowed
against regular tax liability in the current year. Refer to the
ordering rules described in the earlier instructions for
Schedule C, line 3.

Part III—BEMTA Determined Without Adjustment
for Applicable Section 38 Credits
Line 15. Subtract line 14 from line 13. If zero or less,
enter “-0-.”
Line 16. You must compute the BEMTA without
adjustment for applicable section 38 credits to allow
computation of the limitation of applicable section 38
credits on lines 4 and 5 of Part I.

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the
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returns and return information are confidential, as required by section 6103.
The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden
for business taxpayers filing this form is approved under OMB control number 1545-0123 and is included in the estimates
shown in the instructions for their business income tax return.

10

Instructions for Form 8991 (Rev. 12-2025)

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aggregated on Form 3800, you should have a separate
record of each credit.