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Form 1120-FS: 1120-F (Schedule S)
IRS Form 1120-F Schedule S is used by qualified foreign corporations engaged in international ship or aircraft operations to claim an exclusion from gross income under IRC §883. The schedule must be attached to the corporation’s Form 1120‑F and is issued in the December 2022 revision.
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IRS Form 1120-FS - 1120-F (Schedule S)
IRS Form 1120-F Schedule S is used by qualified foreign corporations engaged in international ship or aircraft operations to claim an exclusion from gross income under IRC §883. The schedule must be attached to the corporation’s Form 1120‑F and is issued in the December 2022 revision.
Risk Radar
Scan points- 1Failing to attach Schedule S to Form 1120‑F results in a rejected return.
- 2Not attaching Schedule S to the foreign corporation’s Form 1120‑F.
- 3Leaving line 1a (qualified foreign country) blank.
- 4Omitting the type of equivalent exemption on line 1b.
- 5Not checking the appropriate stock ownership test box (publicly‑traded, CFC, or qualified shareholder).
Plain English
This schedule lets a foreign company that runs ships or planes abroad exclude certain earnings from U.S. tax. The company fills in details about its country of organization, the type of exemption it receives, and information about its stock ownership.
Submission Date
- Filing date: 2022-12-30 22:10:16
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when a qualified foreign corporation is engaged in the international operation of ships or aircraft and is claiming an exclusion of gross income under section 883.
- Do not use it when the corporation is not a qualified foreign corporation, is not engaged in international operation of ships or aircraft, or is claiming an exemption that does not meet the equivalent exemption requirements.
- Check Form 1120-F instead when filing the corporation’s overall income tax return without claiming the section 883 exclusion.
Form selector
Use this form or another form?
Corporation not engaged in international ship or aircraft operation
Schedule S is not required because the activity does not meet the definition of qualified operation
✓ Verify the corporation’s activity before attaching Schedule S
Exemption does not meet equivalent exemption requirements
Schedule S cannot be used for reduced‑tax‑rate or time‑limited exemptions
✓ Confirm exemption type on line 1b
Reporting other foreign income not covered by Section 883
Schedule S only reports qualified income under Section 883
✓ Use the main return for other income
Deadline or filing window
Not stated in the official source.
Checklist
What you need before filling it out
Line 1a – Qualified foreign country
Name of the foreign country where corporation organized · Entered on Schedule S line 1a
Line 1b – Type of equivalent exemption
Selection of Domestic law, Exchange of notes, or Income tax convention · Chosen on Schedule S line 1b
Line 1c – Authority for exemption
Citation of treaty article, law, or agreement · Entered on Schedule S line 1c
Line 8 – Stock class description
Description of each class of stock used for the regularly traded test · Entered on Schedule S line 8
Line 9 – 5% shareholder ownership test
Determination of whether 5% shareholders own ≥50% of vote/value for >½ year · Answered Yes/No on Schedule S line 9
Before you submit
- 1Enter the corporation’s name exactly as it appears on Form 1120-F.
- 2Enter the correct employer identification number.
- 3Enter the qualified foreign country on line 1a.
- 4Check only one box for the type of equivalent exemption on line 1b.
- 5Provide the authority for the exemption on line 1c.
- 6Describe each stock class on line 8 as required.
- 7Answer the 5% shareholder question on line 9 accurately.
- 8Sign the Schedule S where indicated.
- 9Attach the completed Schedule S to the corporation’s Form 1120-F before mailing.
How to file this form
- 1Complete Schedule S with all required information; keep the completed sheet as proof of preparation.
- 2Attach Schedule S to the corporation’s Form 1120-F; the combined package serves as proof of filing.
- 3Mail the combined return to the address specified in the Form 1120-F instructions; retain the mailing receipt as proof of filing.
- 4Obtain the IRS acknowledgment of receipt or acceptance; use the acknowledgment as proof of filing.
Known limitations
- 1Activities such as ship or aircraft management, acting as a ship’s agent, or freight forwarding are not considered qualified operations.
- 2Exemptions that are reduced tax rates, time‑limited, inbound/outbound freight taxes, or territorial tax systems do not satisfy the equivalent exemption requirement.
- 3Corporations that fail the stock ownership tests described in Parts II‑IV are ineligible to use Schedule S.
Field map
Compact field-by-field guide
Entity Info
2 items
Full legal name of the corporation and its Employer Identification Number.
Current mailing address and date of incorporation.
Income
3 items
Total revenue from business operations before deducting costs.
Direct costs attributable to producing goods sold by the corporation.
Gross receipts minus cost of goods sold and returns/allowances.
Deductions
1 items
Sum of all business expenses including compensation, rent, interest, taxes, and depreciation.
Tax
2 items
Total income minus total deductions.
Tax calculated on taxable income using the applicable corporate tax rate, minus any credits.
Signatures
1 items
An authorized corporate officer must sign and date the return.
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Fillable formOpen in Editor->The schedule is the December 2022 revision (Rev. December 2022) and the instructions direct users to www.irs.gov/Form1120F for the latest information.
What changed or needs a fresh check
- Edition date — confirm the revision reads 12/2022
- Fee — Not stated in the official source
- Mailing address — Not stated in the official source
- Signature — Not stated in the official source
Quick Facts
Downloads
After you file
- 1Keep a copy of the filed Schedule S and Form 1120-F for at least three years.
- 2Store the documents in a secure location accessible for audit.
- 3Expect an IRS acknowledgment or processing notice within 60 days.
- 4If an error is discovered, file an amended return using Form 1120-F with a corrected Schedule S.
- 5Monitor the corporation’s tax account for any adjustments or notices.
Sources
- SRCInstructions p.1 — revision date is December 2022.
- SRCForm p.1 — revision date is December 2022.
- SRCInstructions p.1 — Schedule S is used by qualified foreign corporations to claim an exclusion under section 883.
- SRCInstructions p.1 — Who must file: qualified foreign corporations engaged in international operation of ships or aircraft.
- SRCForm p.1 — line 1b requires checking one (and only one) box for type of equivalent exemption.
- SRCInstructions p.2 — Certain exemptions (reduced tax rate, time‑limited, etc.) do not satisfy equivalent exemption requirements.
- SRCForm p.1 — line 9 asks whether 5% shareholders own ≥50% of vote/value for more than half the tax year.
- SRCInstructions p.4 — denominator is total value of all outstanding shares, including bearer shares.
Common confusion points
Can my U.S. corporation use Schedule S?
The form is for qualified foreign corporations; U.S. corporations are only eligible if the foreign country grants an equivalent exemption.
→ Confirm the corporation is organized in a qualified foreign country and meets the stock ownership test.
What counts as ‘international operation’ of an aircraft?
Only leasing under wet lease, space, slot, block‑seat charter, or dry lease where the aircraft carries passengers or cargo for hire qualifies.
→ Verify the lease type and usage meet the definition in Regulations 1.883‑1(e)(5).
Do I need to report non‑qualified income on Schedule S?
Schedule S only reports qualified income under Section 883; other income belongs on Form 1120-F.
→ Separate qualified and non‑qualified income on the appropriate forms.
Can I select more than one exemption type on line 1b?
The instructions require checking one and only one box.
→ Ensure only one exemption type is selected.
How is the 5% shareholder test calculated?
It requires aggregating vote and value ownership of 5% shareholders for more than half the tax year.
→ Calculate aggregate ownership and days accurately.
What if my exemption is a reduced tax rate?
Reduced tax rates are listed as non‑qualifying exemptions.
→ Do not use Schedule S; report on Form 1120-F instead.
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- Form 1120-F — file a corrected return with revised Schedule S.
Questions about IRS Form 1120-FS
What is IRS Form 1120-FS used for?
This schedule lets a foreign company that runs ships or planes abroad exclude certain earnings from U.S. tax. The company fills in details about its country of organization, the type of exemption it receives, and information about its stock ownership.
Who must file IRS Form 1120-FS?
Qualified foreign corporations that operate ships or aircraft internationally and are claiming a gross‑income exclusion under section 883 must file IRS Form 1120‑F Schedule S.
What information does IRS Form 1120-FS require?
The schedule reports the foreign country of incorporation (line 1a), the type of equivalent exemption (line 1b), and, when applicable, stock‑ownership test results in Parts II and III, including bearer‑share status.
Where do I file IRS Form 1120-FS?
Attach Schedule S to the foreign corporation’s Form 1120‑F and file it according to the filing instructions for Form 1120‑F.
How do I complete IRS Form 1120-FS?
Begin by entering the qualified foreign country’s name on line 1a and the type of equivalent exemption on line 1b in Part I. If the corporation meets the publicly‑traded stock test, complete Part II; if it meets the controlled‑foreign‑corporation test, complete Part III. Check the box on line 4 if any shares are issued in bearer form and provide required details on lines 10a‑10b for each class of stock. Finally, attach the completed Schedule S to Form 1120‑F before filing.
Can my U.S. corporation use Schedule S?
The form is for qualified foreign corporations; U.S. corporations are only eligible if the foreign country grants an equivalent exemption. Confirm the corporation is organized in a qualified foreign country and meets the stock ownership test.
What counts as ‘international operation’ of an aircraft?
Only leasing under wet lease, space, slot, block‑seat charter, or dry lease where the aircraft carries passengers or cargo for hire qualifies. Verify the lease type and usage meet the definition in Regulations 1.883‑1(e)(5).
Do I need to report non‑qualified income on Schedule S?
Schedule S only reports qualified income under Section 883; other income belongs on Form 1120-F. Separate qualified and non‑qualified income on the appropriate forms.
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