Form 5471 Schedule I-1: GILTI Lines, Form 8992, and Penalties

Form 5471 Schedule I-1 is the CFC-level worksheet where you compute the four figures that drive the Global Intangible Low-Taxed Income calculation: tested income or tested loss, qualified business asset investment (QBAI), tested interest expense, and tested interest income.¹ Those four numbers move from Schedule I-1 to Form 8992, which is where the U.S. shareholder’s actual income inclusion gets computed.² The walkthrough below moves line by line in the order the form is completed.

A terminology point before the mechanics. The One Big Beautiful Bill Act (Pub. L. 119-21), signed July 4, 2025, renamed “global intangible low-taxed income” to “net CFC tested income” in the Internal Revenue Code.³ The IRS forms and instructions still use “GILTI” as of the December 2025 revision. Same concept, two labels.

Who Files Schedule I-1

Schedule I-1 is required for Category 4, Category 5a, and Category 5b filers of Form 5471.⁴ Category 4 covers any U.S. person who controlled the foreign corporation at any time during the year, where control means more than 50% of voting power or of stock value. Category 5a covers a U.S. shareholder owning 10% or more of the CFC by vote or value. Category 5b covers a 10%-or-more shareholder who is required to include amounts in gross income under Section 951A.

A separate Schedule I-1 is filed for each person in these categories. One boundary matters: if the CFC’s entire income consists of items that are excluded from tested income anyway — Subpart F income, effectively connected income, or income covered by the high-tax exclusion — Schedule I-1 may not need to be completed, even though the underlying Form 5471 is still required.⁵

When It’s Due

Form 5471 and every schedule attached to it, including Schedule I-1, are filed with your income tax return and follow the same due date, extensions included.⁵ Calendar-year individuals file by April 15 (October 15 on extension); calendar-year C corporations file by March 15 (September 15 on extension). There’s no separate submission channel.

Line 1 Through Line 4: Gross Income and Exclusions

Amounts start in the CFC’s functional currency and get translated to U.S. dollars at the appropriate exchange rate.⁶

Line 1 is the CFC’s total gross income for the tax year. It can be negative if cost of goods sold exceeds gross receipts.⁵

Lines 2a through 2e subtract the categories Section 951A carves out of tested income.³

Line 2a: U.S. effectively connected income or loss connected to a U.S. trade or business that isn’t reduced or exempt by treaty.
Line 2b: Subpart F income already captured under the Subpart F regime, computed after the Section 954(b)(4) high-tax exception but before the earnings and profits limitation.
Line 2c: Income excluded by the Section 954(b)(4) high-tax exception, including amounts excluded under the GILTI high-tax exclusion regulations.
Line 2d: Dividends from related persons under Section 954(d)(3), to the extent not already on Line 2b or 2c.
Line 2e: Foreign oil and gas extraction income from wells located outside the United States.

Line 3 totals Lines 2a through 2e; the sum can be positive or negative. Line 4 subtracts Line 3 from Line 1, producing gross tested income — the pool that the rest of the schedule works from.⁵

Line 5 and Line 6: Deductions and the Tested Income Number

Line 5 reports all deductions, including taxes, properly allocable to the gross tested income on Line 4. These are the interest, depreciation, foreign tax, and similar expenses that relate to producing the income left after the Line 2 exclusions. Deductions still get reported here even if the CFC has no gross tested income, so long as they would be allocable if it did.⁵

Line 6 is Line 4 minus Line 5. A positive result is tested income; a negative result is a tested loss. This is the number that carries the most weight on the schedule, and it’s the one that flows through to the shareholder-level computation.³

Line 7 Through Line 10: Taxes, QBAI, and Interest

Line 7 reports foreign income taxes properly attributable to the CFC’s tested income group. If Line 6 shows a tested loss, enter zero — only tested income CFCs report taxes on this line.⁵

Line 8 reports the CFC’s Qualified Business Asset Investment. QBAI equals the average of the CFC’s adjusted bases, measured at the close of each quarter, in specified tangible property, meaning depreciable property used in a trade or business to produce tested income.⁷ A tested-loss CFC has zero QBAI. At the shareholder level, QBAI offsets tested income, so a CFC with more tangible property produces a smaller inclusion.

Line 9 breaks out tested interest expense across several sublines to isolate the tested interest expense component. Line 10 does the same for tested interest income. Both figures feed the net deemed tangible income return adjustment on Form 8992.²

Where the Numbers Land on Form 8992

Schedule I-1 stops at the CFC level. The shareholder-level math happens on Form 8992 and its Schedule A, and four values move across:²

Tested income or tested loss from Line 6 goes to Schedule A, Column (c).
QBAI from Line 8 goes to Schedule A, Column (g), as the shareholder’s pro rata share.
Tested interest income from Line 10c goes to Schedule A, Column (i).
Tested interest expense from Line 9d goes to Schedule A, Column (j).

Form 8992 then aggregates across all of the shareholder’s CFCs and computes net CFC tested income: total pro rata share of tested income minus total pro rata share of tested losses.³ Foreign tax credits attributable to the inclusion are claimed on Form 1116 by individuals and Form 1118 by corporations.⁸

What It Costs to Get This Wrong

Section 6038 imposes a $10,000 penalty for each failure to file a complete and correct Form 5471 by the due date, applied per form and per year, so multiple CFCs multiply the exposure. If the IRS issues a notice and the filing still doesn’t come in within 90 days, a continuation penalty of $10,000 applies for each additional 30-day period or fraction of one, capped at $50,000, for a maximum combined exposure of $60,000 per form per year.⁹

Section 6038(c) adds a 10% reduction in foreign tax credits under Sections 901 and 960. If the failure continues more than 90 days after the IRS mails its notice, another 5% reduction applies for each additional three-month period.⁵ For shareholders relying on those credits to absorb the GILTI inclusion, the credit haircut often outweighs the flat penalties.

1
Internal Revenue Service. About Form 5471
2
Internal Revenue Service. Instructions for Form 8992
3
Office of the Law Revision Counsel. 26 USC 951A – Net CFC Tested Income
4
Internal Revenue Service. Instructions for Form 5471 (12/2025)
5
Internal Revenue Service. Instructions for Form 5471
6
Internal Revenue Service. Yearly Average Currency Exchange Rates
7
eCFR. 26 CFR 1.951A-3 – Qualified Business Asset Investment
8
Internal Revenue Service. About Form 8992, U.S. Shareholder Calculation of Global Intangible Low-Taxed Income (GILTI)
9
Internal Revenue Service. International Information Reporting Penalties