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Form 8873: Extraterritorial Income Exclusion
IRS Form 8873 is the Extraterritorial Income Exclusion form that lets a taxpayer calculate the amount of extraterritorial income excluded from gross income and attach it to the tax return. Grouping redeterminations are allowed up to one year after the due date of the timely filed return.
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IRS Form 8873 - Extraterritorial Income Exclusion
IRS Form 8873 is the Extraterritorial Income Exclusion form that lets a taxpayer calculate the amount of extraterritorial income excluded from gross income and attach it to the tax return. Grouping redeterminations are allowed up to one year after the due date of the timely filed return.
Risk Radar
Scan points- 1Omitting required attachment for elected transactions can eliminate the exclusion.
- 2Failing to check box on line 1 when electing under section 942(a)(3).
- 3Not attaching the statement that lists transactions omitted for the line 1 election.
- 4Grouping sales and leases together in column (b) of Part II, which is prohibited.
- 5Reporting foreign sale and leasing income in column (b) of Part II based on groups, which is not allowed.
Plain English
Form 8873 tells the IRS how much of a taxpayer's foreign trade income can be excluded from taxable income. It requires the taxpayer to list elected transactions, deductions, and optionally use marginal costing.
Submission Date
- Filing date: 2017-09-16 08:03:18
- 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 you need to figure the amount of extraterritorial income excluded from gross income and attach it to your income tax return. (Instructions p.1)
- Check Form 5713 instead when your extraterritorial income exclusion may be reduced due to participation in an international boycott. (Instructions p.4)
Form selector
Use this form or another form?
Multiple foreign trade transactions
Allows aggregation on a tabular schedule instead of filing separate forms
✓ Verify box (1)(b) of line 5c is checked
International boycott involvement
Boycott factor can reduce the exclusion and requires additional schedules
✓ Verify Schedule C line 6c amount is entered on line 50
Corporate filer using Form 1120
Other deductions line must include the exclusion amount from Form 8873
✓ Verify line 26 of the 2017 Form 1120 reflects the amount
Deadline or filing window
Not stated in the official source.
Checklist
What you need before filling it out
Box (1)(b) of line 5c
Check box indicating aggregate reporting · Form 8873 top portion
Box (1)(c) of line 5c
Check box indicating tabular schedule reporting · Form 8873 top portion
Line 19, column (b) deductions
Statement of deductions allocable to line 16 · Attached statement to Form 8873
Line 50
Amount from Schedule C (Form 5713) line 6c · Schedule C of Form 5713
Other deductions line of Form 1120
Amount from Form 8873 to include · Form 1120 line 26 (2017)
Before you submit
- 1Enter your name and identifying number at the top of Form 8873.
- 2Check the appropriate box on line 5c for the chosen reporting method.
- 3Attach the required tabular schedule or supporting statement as instructed.
- 4Enter deductions on line 19 columns (a) and (b) per the instructions.
- 5If applicable, enter the greatest of lines 33, 36, 38, or 44 on line 45.
- 6If involved in an international boycott, calculate the reduction using Form 5713 and enter the amount on line 50.
- 7For corporate filers, ensure the amount is reflected on Form 1120 line 26.
How to file this form
- 1Complete your name and identifying number on Form 8873.
- 2Select the reporting method and check the corresponding box on line 5c.
- 3Fill required lines (e.g., line 19, line 45, line 50) and attach any schedules or statements.
- 4Attach Form 8873 to your income tax return and file the return.
Known limitations
- 1The foreign economic process requirements do not apply to taxpayers whose foreign trading gross receipts are $5 million or less. (Instructions p.2)
- 2Grouping election cannot be used together with aggregate reporting. (Instructions p.4)
- 3Grouping cannot be applied to foreign sale and leasing income transactions. (Instructions p.4)
- 4Deductions entered in line 19 column (b) must exclude general and administrative expenses. (Instructions p.4)
- 5For tax years of less than 12 months, the $5 million gross receipts test is annualized. (Instructions p.2)
Field map
Compact field-by-field guide
Entity Info
1 items
Name and taxpayer ID of the entity claiming the credit.
Credit Info
1 items
Type of credit or incentive being claimed.
Calculation
2 items
The base amount used to calculate the credit.
Calculated credit amount after applying formulas and limitations.
Certification
1 items
Detailed breakdown supporting the credit calculation.
Signatures
1 items
Sign and date the form.
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Fillable formOpen in Editor->Form 8873 is the September 2017 revision, to be used with the December 2010 form. The only change noted is an updated Paperwork Reduction Act notice for the OMB control number. (Instructions p.1)
What changed or needs a fresh check
- Edition date — confirm the revision is September 2017 (Rev. September 2017). (Instructions p.1)
- 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
- 1Retain a copy of the completed Form 8873 and all attached schedules.
- 2Keep the records for at least three years from the filing date.
- 3Expect the IRS to acknowledge receipt with the tax return processing notice.
- 4If the IRS issues a notice of deficiency, review the attached statements for accuracy.
- 5Amend the return using Form 1120X if a mistake is discovered on Form 8873.
- 6Update the supporting statement if new transactions occur within the one‑year redetermination period.
Sources
- SRCInstructions p.1 — revision is September 2017 and includes a Paperwork Reduction Act notice update.
- SRCInstructions p.1 — purpose: figure extraterritorial income exclusion and attach to tax return.
- SRCInstructions p.2 — $5 million gross receipts exception applies to foreign trading gross receipts.
- SRCInstructions p.3 — aggregate reporting option uses box (1)(b) of line 5c.
- SRCInstructions p.4 — supporting statement must be maintained but not filed with Form 8873.
- SRCInstructions p.4 — tabular schedule option uses box (1)(c) of line 5c.
- SRCInstructions p.4 — grouping election uses box (2) of line 5c and applies to product lines.
- SRCInstructions p.4 — grouping redeterminations allowed until one year after the later of the due date of the timely filed return (including extensions).
- SRCInstructions p.4 — line 19 columns (a) and (b) require specific deduction entries and exclude G&A expenses from column (b).
- SRCInstructions p.4 — line 45 may use the greatest of lines 33, 36, 38, or 44.
- SRCInstructions p.4 — line 50 references Form 5713 and its Schedule C line 6c for boycott reductions.
- SRCInstructions p.4 — for Form 1120 filers, include the amount on the Other deductions line (line 26 of the 2017 Form 1120).
Common confusion points
Do I need to file Form 8873 if my gross receipts are under $5 million?
The $5 million gross receipts exception may exempt you from the foreign economic process requirements.
→ Verify total foreign trading gross receipts do not exceed $5 million (annualized if <12 months).
Can I both aggregate and group transactions?
Grouping is not permitted when aggregate reporting is elected.
→ Ensure only one election (aggregate or grouping) is selected on line 5c.
Should I include general and administrative expenses in line 19 column (b)?
Instructions specifically exclude G&A expenses from column (b).
→ Exclude G&A expenses from the amount entered in column (b).
Which box on line 5c should I check for a tabular schedule?
Box (1)(c) is for a tabular schedule; box (1)(b) is for aggregate reporting.
→ Check box (1)(c) when attaching a tabular schedule of transactions.
Do I need to file Form 5713 for any boycott involvement?
International boycott participation triggers a reduction and requires Form 5713.
→ Complete Form 5713 and attach Schedule C line 6c amount to Form 8873 line 50.
How do I determine the amount for line 45?
Line 45 may use the greatest of lines 33, 36, 38, or 44.
→ Compare lines 33, 36, 38, and 44 and enter the highest value on line 45.
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- Form 1120X – file to amend the return with corrected Form 8873 information.
Questions about IRS Form 8873
What is IRS Form 8873 used for?
Form 8873 tells the IRS how much of a taxpayer's foreign trade income can be excluded from taxable income. It requires the taxpayer to list elected transactions, deductions, and optionally use marginal costing.
Who must file IRS Form 8873?
The taxpayer files IRS Form 8873 when electing to exclude extraterritorial income under the Code.
What information does IRS Form 8873 require?
The form collects election choices in Part I (lines 1‑2), allocable deductions on line 19, marginal costing data in Part III, and the final exclusion amount on line 45 and any boycott adjustment on line 50.
How do I complete IRS Form 8873?
Enter the taxpayer’s name and identifying number at the top, check the appropriate boxes in Part I, complete the deduction entries on line 19, fill Part III if using marginal costing, then calculate the exclusion on line 45 and any boycott reduction on line 50. Attach any required statements or schedules, then attach Form 8873 to the income tax return.
What happens if IRS Form 8873 is filed incorrectly?
If required statements or schedules are omitted, the extraterritorial income exclusion may be reduced or denied, decreasing the taxpayer’s tax benefit.
Do I need to file Form 8873 if my gross receipts are under $5 million?
The $5 million gross receipts exception may exempt you from the foreign economic process requirements. Verify total foreign trading gross receipts do not exceed $5 million (annualized if <12 months).
Can I both aggregate and group transactions?
Grouping is not permitted when aggregate reporting is elected. Ensure only one election (aggregate or grouping) is selected on line 5c.
Should I include general and administrative expenses in line 19 column (b)?
Instructions specifically exclude G&A expenses from column (b). Exclude G&A expenses from the amount entered in column (b).
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