U. S. Business Income Tax Return

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Instructions for Form 8993
(Rev. December 2025)

Section 250 Deduction for Foreign-Derived Intangible Income (FDII) and Global
Intangible Low-Taxed Income (GILTI)
Section references are to the Internal Revenue Code
unless otherwise noted.

Future Developments
For the latest information about developments related to
Form 8993 and its instructions, such as legislation
enacted after they were published, go to IRS.gov/
Form8993.

Public Law 119-21, commonly known as the One Big
Beautiful Bill Act, amended section 250 in part by adding
to the list of gross income items that are excluded in
determining Deduction Eligible Income (DEI). The added
exclusion relates to income and gain from the sale or other
disposition of intangible property (as defined in section
367(d)(4)), and any other property of a type that is subject
to depreciation, amortization, or depletion by the seller.
These amendments apply to sales or other dispositions
occurring after June 16, 2025.

Important Reminders
Final section 250 regulations. Changes were
previously made throughout these instructions based on
the final section 250 regulations (T.D. 9901, 85 FR 43042,
July 15, 2020).
Domestic corporation’s deduction. For tax years
beginning on or after January 1, 2018, and before January
1, 2026, section 250 generally allows a deduction equal to
the sum of 37.5% of the corporation’s FDII plus 50% of its
GILTI (thereafter, these deductions are reduced to 33.34%
and 40%, respectively).
Deduction limitation. If the sum of FDII and GILTI
exceeds taxable income, the deduction under section 250
is limited to taxable income.
Continuous use revision. Use these instructions for tax
year 2025 and subsequent years until a superseding
revision is issued.

General Instructions
Purpose of Form

Public Law 115-97 (Tax Cuts and Jobs Act of 2017)
enacted section 250 for the allowance of a deduction for
the eligible percentage of FDII and GILTI.
See Form 8992, U.S. Shareholder Calculation of Global
Intangible Low-Taxed Income (GILTI), and its instructions
for more information on GILTI.
Use Form 8993 to figure the amount of the eligible
deduction for FDII and GILTI under section 250.

Nov 7, 2025

All domestic corporations (and U.S. individual
shareholders of controlled foreign corporations (CFCs)
making a section 962 election (962 electing individual))
must use Form 8993 to determine the allowable deduction
under section 250.
The deduction is allowed only to domestic corporations
(not including real estate investment trusts (REITs),
regulated investment companies (RICs), and S
corporations) and section 962 electing individuals. For the
treatment of a domestic corporation that is a partner in a
partnership, see Regulations sections 1.250(b)-1(e) and
1.250(b)-3(e).

When and Where To File

Attach Form 8993 to your income tax return and file both
by the due date (including extensions) for that return.

Definitions and Overview
Steps for Computing the Deduction Under
Section 250
1. Deduction Eligible Income (DEI) is determined.
2. Deemed Tangible Income Return (DTIR) is
determined.
3. Deemed Intangible Income (DII) is determined.
4. Foreign-Derived Deduction Eligible Income (FDDEI) is
determined.
5. Foreign-Derived Ratio (FDR) is determined.
6. FDII is determined.
7. If there is excess FDII and GILTI over taxable income,
the FDII reduction and the GILTI reduction are
determined.
8. The eligible deduction under section 250 is
determined.

FDDEI

FDDEI means, with respect to a taxpayer for its tax year,
any deduction eligible income of the taxpayer that is
derived in connection with:
1. Property that is sold by the taxpayer to any person
who is a foreign person and that the taxpayer
establishes to the satisfaction of the Secretary is for a
foreign use (see Regulations section 1.250(b)-4); or
2. Services provided by the taxpayer that the taxpayer
establishes to the satisfaction of the Secretary are
provided to any person, or with respect to property,
located outside the United States (see Regulations
section 1.250(b)-5).

Instructions for Form 8993 (Rev. 12-2025) Catalog Number 71352N
Department of the Treasury Internal Revenue Service www.irs.gov

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What’s New

Who Must File

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Special rules for determining foreign use apply to
transactions that involve property or services provided to
related parties (see section 250(b)(5)(C) and Regulations
section 1.250(b)-6).

Sale

The terms “sold,” “sells,” and “sale” include any lease,
license, exchange, or other disposition of property.
For purposes of the exclusions described in items 7
and 8 of the instructions for Part I, line 2, later, sale or
other disposition does not include any lease or license.

Foreign Use

“Foreign use” is defined to mean “any use, consumption,
or disposition which is not within the United States.” See
Regulations section 1.250(b)-4(d). For the latest guidance
about foreign use, go to IRS.gov/Form8993.

Information From Partnership

A domestic corporate partner of a partnership takes into
account its distributive share of a partnership’s gross DEI,
gross FDDEI, deductions, and its share of partnership
QBAI, in order to calculate the partner’s FDII. See
Regulations section 1.250(b)-1(e)(1). The above
partnership information should have been reported to the
partners on Schedule K-3 (Form 1065).

For partners in a partnership, attach a statement to
Form 8993 listing each partnership’s name; employer
identification number (EIN); the partner’s share of the
partnership’s QBAI reported on line 7b; and other FDDEI
items reported on lines 9b, 10b, 13, and 17.

Documentation

For special substantiation requirements under the
Regulations, see sections 1.250(b)-3(f), 1.250(b)-4(d)(3),
and 1.250(b)-5(e)(4).

Section 250 Deduction Limitation

If the sum of FDII and GILTI exceeds taxable income, the
deduction under section 250 is subject to limitation. See
the instructions for lines 26 and 27, later, for additional
information.

Corrections to Form 8993

If you file a Form 8993 that you later determine is
incomplete or incorrect, file a corrected Form 8993 with an
amended tax return, using the amended return
instructions for the return with which you originally filed
Form 8993. Enter “Corrected” at the top of the corrected
Form 8993.

Computer-Generated Form 8993

Generally, all computer-generated forms must receive
prior approval from the IRS and are subject to an annual

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Specific Instructions
Part I. Determining DEI and DII

DEI means, with respect to any domestic corporation, the
excess (if any) of the gross income of the corporation, less
exclusions, over deductions (including taxes) properly
allocable to such gross income.

Line 1. Gross Income

For purposes of this form, gross income includes all
income from whatever source derived. Enter the amount
from Form 1120, line 11.

Line 2. Exclusions

Exclude the following items to the extent included on
line 1.
1. Any amount included in the gross income of such
corporation under section 951(a)(1). Include the
section 78 gross-up with respect to the inclusion
under section 951(a)(1).
2. Any amount included in the gross income of such
corporation under section 951A. Section 951A
defines GILTI. Include the section 78 gross-up with
respect to the inclusion under section 951A.
3. Any financial services income (as defined under
section 904(d)(2)(D)) of such corporation.
4. Any dividend received from a CFC with respect to
which the corporation is a U.S. shareholder, as
defined under section 951(b).
5. Any domestic oil and gas extraction income. The term
“domestic oil and gas extraction income” means
income described in section 907(c)(1), determined by
substituting “within the United States” for “without the
United States.”
6. Any foreign branch income (as defined in section
904(d)(2)(J)).
7. Any income and gain from the sale or other
disposition (including pursuant to the deemed sale or
other deemed disposition or a transaction subject to
section 367(d)) of intangible property (as defined in
section 367(d)(4)) occurring after June 16, 2025.
8. Any income and gain from the sale or other
disposition (including pursuant to the deemed sale or
other deemed disposition or a transaction subject to
section 367(d)) of any other property of a type that is
subject to depreciation, amortization, or depletion by
the seller, occurring after June 16, 2025.

Note: For purposes of the exclusions described in items 7
and 8, above, sale or other disposition does not include
any lease or license.
Instructions for Form 8993 (Rev. 12-2025)

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Qualified Business Asset Investment (QBAI)

A domestic corporation’s QBAI is the average of the
aggregate of its adjusted bases, determined as of the
close of each quarter of the tax year, in specified tangible
property used in its trade or business and of a type with
respect to which a deduction is allowable under section
167. See Regulations section 1.250(b)-2.

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Line 5. Deductions Properly Allocable to the
Amount on Line 4

Allocable deductions include all deductions (including
taxes) properly allocable to gross DEI on line 4. See
Regulations section 1.250(b)-1(d)(2) for more details.
Deductions properly allocable to gross DEI are
determined without regard to sections 163(j), 170(b)(2),
172, 246(b), and 250.
Include the partner’s share of the partnership’s
deductions properly allocable to the amount on line 4. Do
not duplicate expenses already included on line 1.

Each place where intangible property is listed refers to
amounts connected to the sale, license, exchange, or
other disposition of intangible property to a foreign person
and, as established to the satisfaction of the Secretary, is
for a foreign use as defined in Regulations sections
1.250(b)-3 and 1.250(b)-4(d)(2).

Line 6. DEI

Each place where services are listed refers to amounts
connected to services that, as established to the
satisfaction of the Secretary, are provided to any person,
or with respect to property, located outside the United
States as defined in Regulations section 1.250(b)-5.

Line 7. Deemed Tangible Income Return (10% of
QBAI)

If a transaction includes both a sales component and a
service component, the transaction is classified as either
a sale or as a service according to the overall predominant
character of the transaction. See Regulations section
1.250(b)-3(d).

Subtract line 5 from line 4. If the result is zero or negative,
enter zero on line 6. Your FDII deduction under section
250 is zero. Enter zero on lines 21 and 28.

The DTIR with respect to a domestic corporation is the
corporation’s QBAI for the year multiplied by 10%. In
addition, for purposes of determining a domestic
corporate partner’s DTIR, a domestic corporation’s QBAI
is increased by its share of the partnership’s adjusted
basis in partnership specified tangible property. See
Regulations section 1.250(b)-2(g).

For purposes of determining a domestic corporation’s
deductions that are properly allocable to gross FDDEI, the
corporation’s deductions are allocated and apportioned to
gross FDDEI under the rules of sections 1.861-8 through
1.861-14T and 1.861-17 by treating section 250(b) as an
operative section described in section 1.861-8(f). See
Regulations section 1.250(b)-1(d)(2).

First, compute QBAI (defined earlier). See Regulations
section 1.250(b)-2. “Specified tangible property” means
any tangible property used in the production of the gross
income included in DEI. If such property was used in the
production of DEI and income that is not DEI (such as
dual-use property), the property is treated as specified
tangible property in the same proportion that the amount
of the gross income included in DEI produced with respect
to the property bears to the total amount of gross income
produced with respect to the property. If specified tangible
property is only partially depreciable, then only the
depreciable portion is QBAI. The adjusted basis is
determined by using the alternative depreciation system
under section 168(g) and allocating depreciation
deductions with respect to such property ratably to each
day during the period in the tax year to which such
depreciation relates. Then, multiply QBAI by 10% (0.10)
and enter this result on Form 8993, line 7a. Multiply a
partner’s share of the partnership’s QBAI by 10% (0.10)
and enter this result on Form 8993, line 7b.

Enter the amount of foreign-derived gross receipts from all
sales of intangible property.

Line 8. DII

Column C. Services

DII is the excess (if any) of the corporation’s DEI over its
DTIR. If the result is zero or negative, enter zero on line 8.
Your FDII deduction under section 250 is zero. Enter zero
on lines 21 and 28.

Part II. Determining FDDEI

Each place where general property is listed refers to
amounts connected to the sale, lease, exchange, or other
disposition of general property to a foreign person and, as
established to the satisfaction of the Secretary, is for a
foreign use as defined in Regulations sections 1.250(b)-3
and 1.250(b)-4(d)(1) and (2). The term “general property”
means any property other than intangible property; a
security (as defined in section 475(c)(2)); an interest in a

Instructions for Form 8993 (Rev. 12-2025)

The partnership should determine and report the
partner’s share of each item necessary to compute FDII in
accordance with the partner’s distributive share of the
underlying item of income, gain, deduction, and loss of the
partnership.

Line 9a. Gross Receipts

“Foreign-derived gross receipts” means gross receipts
that are used to compute gross FDDEI as defined in
Regulations section 1.250(b)-1.

Column A. General Property

Enter the amount of foreign-derived gross receipts from all
sales of general property.

Column B. Intangible Property

Enter the amount of foreign-derived gross receipts from all
services.
Note: Do not include any amounts provided in items 7
and 8 for Part I, line 2. See page 2 of these instructions.

Line 9b. Gross Receipts From Partnerships

Enter the amount, if any, of the partner’s share of the
partnership’s foreign-derived gross receipts.

Column A. General Property

Enter the amount, if any, of the partner’s share of the
partnership’s foreign-derived gross receipts from all sales
of general property.
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partnership, trust, or estate; or a commodity described in
section 475(e)(2)(A) that is not a physical commodity or a
commodity described in section 475(e)(2)(B) through (D).

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Column B. Intangible Property

Enter the amount, if any, of the partner’s share of the
partnership’s foreign-derived gross receipts from all sales
of intangible property.

Column C. Services

Enter the amount, if any, of the partner’s share of the
partnership’s foreign-derived gross receipts from all
services.

Line 10a. Cost of Goods Sold

Enter the amount of cost of goods sold attributable to the
amount(s) on line 9a.
For purposes of this form, when figuring FDDEI, cost of
goods sold includes the:
1. Cost of goods sold to customers, and
2. Adjusted basis of non-inventory property sold or
otherwise disposed of in the trade or business.

Cost of goods sold must be attributed to gross receipts
with respect to gross DEI or gross FDDEI regardless of
whether certain costs included in cost of goods sold can
be associated with activities undertaken in an earlier tax
year (including a year before the effective date of section
250).

Line 10b. Cost of Goods Sold From Partnerships
Enter the amount, if any, of the partner’s share of the
partnership’s cost of goods sold attributable to the amount
on line 9b.

Line 12. Allocable Deductions

Enter the amount of the deductions that are allocated and
apportioned to gross FDDEI on line 11. See Regulations
section 1.250(b)-1(d)(2) for more details. Report interest
and research and experimental (R&E) deductions on lines
14 and 15, respectively. Deductions are determined
without regard to sections 163(j),170(b)(2), 172, 246(b),
and 250.

Column A. General Property

Enter the amount of the deductions that are allocated and
apportioned to gross FDDEI from all sales of general
property.

Column B. Intangible Property

Enter the amount of the deductions that are allocated and
apportioned to gross FDDEI from all sales of intangible
property.

Column C. Services

Enter the amount of the deductions that are allocated and
apportioned to gross FDDEI from all services.

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Enter the amount, if any, of the partner’s share of the
partnership’s deductions that are allocated and
apportioned to gross FDDEI on line 11.

Column A. General Property

Enter the amount, if any, of the partner’s share of the
partnership’s deductions that are allocated and
apportioned to gross FDDEI from all sales of general
property.

Column B. Intangible Property

Enter the amount, if any, of the partner’s share of the
partnership’s deductions that are allocated and
apportioned to gross FDDEI from all sales of intangible
property.

Column C. Services

Enter the amount, if any, of the partner’s share of the
partnership’s deductions that are allocated and
apportioned to gross FDDEI from all services.

Line 14. Interest Deductions

The term “interest” refers to the gross amount of interest
expense incurred by a taxpayer in a given year. For
purposes of determining properly allocable interest
deductions, the corporation’s interest expense deduction
is determined without regard to section 163(j), and
includes any expense under section 163 (including
original issue discount), and interest equivalents. See
Regulations section 1.250(b)-1(d)(2)(ii). See Temporary
Regulations section 1.861-9T(b) for the definition of
interest equivalents and Regulations section 1.861-9T(c)
for sections that disallow, suspend, or require the
capitalization of interest deductions.
Interest deductions are apportioned to gross DEI and
gross FDDEI based ordinarily on the tax book value of the
taxpayer’s assets. See Regulations section 1.250(b)-1(d)
(2)(i). A taxpayer may elect to use the alternative tax book
value method. See Regulations sections 1.861-9(g)(1)(ii)
and 1.861-9(i). When reporting the asset that is the basis
of stock in nonaffiliated 10%-owned corporations, adjust
such amount for earnings and profits. See Regulations
section 1.861-12(c)(2)(i)(A). See Regulations sections
1.861-10 and 1.861-10T for exceptions to the general rule
of fungibility (such as qualified nonrecourse indebtedness,
integrated financial transactions, and excess related party
indebtedness).
The total interest deductions for the members of the
corporation’s affiliated group are allocated and
apportioned to the statutory and residual groupings under
proposed, final, and Temporary Regulations sections
1.861-8 through 1.861-14.
The amount reported on this line should include interest
paid or accrued by the taxpayer and the taxpayer’s share
of interest expense incurred by a partnership. With
respect to corporate partners with an interest in the
partnership of 10% or more, interest expense, including
the partner’s distributive share of partnership interest
expense, is apportioned by reference to the partner’s
assets, including the partner’s pro rata share of
Instructions for Form 8993 (Rev. 12-2025)

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In making that determination, attribute costs of goods
sold to gross receipts using a reasonable method in
accordance with Regulations section 1.250(b)-1(d)(1).

Line 13. Allocable Deductions From
Partnerships

Part III. Determining FDII and/or GILTI
Deduction

partnership assets. See Regulations section 1.861-9(e)
(2). A corporate partner with a less-than-10% interest in a
partnership shall directly allocate its distributive share of
the partnership’s interest expense to its distributive share
of partnership gross income and be apportioned in
accordance with the partner’s relative distributive share of
gross FDDEI. See Regulations section 1.861-9(e)(4). The
above partnership information should have been reported
to the partners on Schedule K-3 (Form 1065).

FDR is determined by computing the ratio of FDDEI over
DEI. See Definitions and Overview, earlier, for the
discussion of FDDEI. Divide the amount on line 19 by the
amount on line 6. The resulting ratio must not exceed 1.

Line 15. Research and Experimental Deductions

Line 22. GILTI Inclusion

R&E expenses deducted under section 174 are definitely
related to gross intangible income reasonably connected
with relevant broad product categories of the taxpayer and
are allocable to all items of gross intangible income as a
class related to such product categories. Gross intangible
income is all gross income attributable to intangible
property including sales, services, and royalties (including
section 367(d) inclusions), but does not include dividends
or other inclusions with respect to stock such as sections
951, 951A, and 1293. See Regulations section
1.861-17(b)(2). The product categories are generally
determined by reference to the three-digit Standard
Industrial Classification (SIC) code. See Regulations
section 1.861-17(b)(3). R&E expenses are apportioned in
the same proportions that the amounts of the taxpayer’s
gross receipts (including those of certain controlled and
uncontrolled parties) from certain sales, leases, licenses,
and services that are related to gross intangible income in
the statutory or residual grouping bear to the total amount
of gross receipts in the class. See Regulations section
1.861-17(d). The exclusive apportionment rule in
Regulations section 1.861-17(c) does not apply for
purposes of apportioning R&E to determine the deduction
for FDII.
The amount reported on this line should include R&E
deductions of the taxpayer and the taxpayer’s share of
R&E deductions incurred by a partnership. This requires
that the partnership report to its partners the gross
receipts related to certain income within the statutory and
residual groupings within a SIC code and the partner’s
distributive share of the partnership’s R&E deductions, if
any, connected with the SIC codes. See section
1.861-17(f). The above partnership information should
have been reported to the partners on Schedule K-3
(Form 1065).

Line 16. Other Apportioned Deductions

Enter all other apportioned deductions that relate to gross
FDDEI that are not otherwise included on lines 12, 14, and
15. If a deduction does not bear a definite relationship to a
class of gross income constituting less than all of gross
income, it shall ordinarily be treated as definitely related
and allocable to all of the taxpayer’s gross income,
including gross DEI and gross FDDEI, except where
otherwise directed in the regulations.

Line 17. Other Apportioned Deductions From
Partnerships

Enter all other apportioned deductions that relate to gross
FDDEI from partnerships that are not otherwise included
on lines 13, 14, and 15.
Instructions for Form 8993 (Rev. 12-2025)

Line 20. Foreign-Derived Ratio

Enter the amount of GILTI reported on Form 8992, Part II,
line 5. Attach Form 8992 to your income tax return.

Line 24. Taxable Income

Enter the taxable income of the domestic corporation
(determined without regard to section 250).

Line 25. Excess FDII and GILTI Over Taxable
Income

Subtract the taxable income amount reported on line 24
from the total FDII and GILTI on line 23.
If the result reported on line 25 is zero or negative, your
taxable income is greater than the sum of FDII and GILTI,
and your deduction under section 250 is not limited.
If the result reported on line 25 is a positive number,
your taxable income is less than the sum of your FDII and
GILTI, and your deduction under section 250 is limited to
taxable income. Refer to the instructions for lines 26 and
27, later, to determine the amount by which you need to
reduce FDII and GILTI.

Line 26. FDII Reduction

The reduction in FDII for which a deduction is allowed
equals such excess multiplied by a percentage equal to
the corporation’s FDII divided by the sum of its FDII and
GILTI.
Use the Line 26 Worksheet to compute the FDII
reduction.

Line 26 Worksheet
Line A

Enter the amount from line 25.
If zero or less, enter -0- on line
E of this worksheet and stop.

Line B

Enter the amount from line 21.

Line C

Enter the amount from line 23.

Line D

Divide line B by line C.

Line E

Multiply line A by line D. Enter
this line E amount on Form
8993, line 26.

Line 27. GILTI Reduction

The reduction in GILTI is determined by the excess
amount less the FDII reduction.
Use the Line 27 Worksheet to compute the FDII
reduction.
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Line 27 Worksheet
Line F

Enter the amount from line 25.
If zero or less, enter zero on
line H of this worksheet and
stop.

Line G

Enter the amount from line E of
the Line 26 Worksheet.

Line H

Subtract line G from line F.
Enter this line H amount on
Form 8993, line 27.

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.

Line 29. GILTI Deduction

If you have comments concerning the accuracy of
these time estimates or suggestions for making this form
simpler, we would be happy to hear from you. See the
instructions for the tax return with which this form is filed.

To figure the GILTI deduction, subtract the amount from
line 27 (GILTI reduction), from the amount on line 22
(GILTI inclusion). Then, add any amount received by the
corporation (or 962 electing individual) that is treated as a
dividend under section 78 which is attributable to GILTI,
from Form 1118, Schedule A, column 3(b). Lastly, multiply
that amount by 50% (0.50).

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Instructions for Form 8993 (Rev. 12-2025)

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Line 28. FDII Deduction

To figure the FDII deduction, subtract the amount from
line 26 (FDII reduction), from the amount on line 21 (FDII).
Then, multiply the resulting amount by 37.5% (0.375) to
obtain the FDII deduction and enter it on line 28.

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information on this form to carry out the Internal Revenue
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