Form 8991 is the IRS form large corporations use to work out the base erosion and anti-abuse tax (BEAT) under section 59A. Any corporation other than a RIC, REIT or S corporation that has, or belongs to an aggregate group with, gross receipts of at least $500 million in 1 or more of the 3 preceding tax years must file it, even if no BEAT is due.
Every figure here comes from the IRS Instructions for Form 8991 (Rev. December 2025) and the December 2024 Form 8991, as of October 2026.
Filing the form versus owing the tax
This is the distinction the instructions draw and most summaries blur. The filing trigger is $500 million of gross receipts in any one of the last 3 years. Owing BEAT needs more: the corporation has to be an applicable taxpayer, and that's two tests, not one.
| Test | What it measures | Where it bites |
|---|---|---|
| Gross receipts test | Average annual gross receipts for the 3 years ending with the preceding year | At least $500 million |
| Base erosion test | Base erosion percentage for the year | 3% or higher; 2% or higher if the group includes a bank or registered securities dealer |
So a corporation can cross $500 million in a single year, file Form 8991, and still owe nothing because its 3-year average or its base erosion percentage isn't high enough. That's a common outcome, and it's why the filing duty shouldn't be read as a tax bill.
What counts as a base erosion payment
Base erosion payments are generally amounts paid or accrued to a foreign related party that are deductible, worked out on a gross basis. The instructions list several extra types:
- Payments to a foreign related party to acquire depreciable or amortizable property.
- Certain reinsurance premiums paid to a foreign related party.
- Payments to a surrogate foreign corporation or a member of its expanded affiliated group that reduce gross receipts.
- Expenditures to a foreign related party charged to capital under section 174.
Some payments aren't base erosion payments, including amounts that reduce gross income such as cost of goods sold, and services that qualify for the section 482 services cost method exception.
The BEAT rate by tax year
| Tax years beginning in | Applicable rate |
|---|---|
| 2018 | 5% |
| 2019 through 2025 | 10% |
| 2026 or later | 10.5% |
Each rate goes up by 1% if the taxpayer is in an affiliated group that includes a bank or a registered securities dealer. The 2026 change comes from the One Big Beautiful Bill Act (P.L. 119-21), whose amendments to section 59A apply to tax years beginning after 2025.
How the minimum tax is worked out
- Schedule A totals base erosion payments and base erosion tax benefits.
- Those feed the base erosion percentage and the modified taxable income.
- Schedule B reports any deductions being waived for the year.
- Schedule C works out the credits that reduce regular tax liability.
- Part IV multiplies modified taxable income by the applicable rate and subtracts the adjusted regular tax liability. A result of zero or less means no BEAT.
- The base erosion minimum tax amount goes on the return: for a Form 1120 filer, Schedule J, line 1f.
Because BEAT works as a minimum tax, it doesn't add anything unless the rate times modified taxable income is more than regular tax liability adjusted for certain credits. The research credit gets favourable treatment in that adjustment.
Partnerships, cost sharing and the newest regulations
Payments to or from a partnership are treated as made to or from each partner, so routing a payment through a partnership doesn't take it outside BEAT, and you can't net payments unless the Code or regulations say so. Schedule A has a new line 2 for payments related to cost-sharing transactions under Regulations section 1.482-7(b)(1)(i). Any form of consideration counts as an amount paid, including property, stock, a partnership interest or the assumption of a liability.
On December 18, 2025, Treasury and the IRS published final regulations on qualified derivative payments for securities lending transactions, following proposed rules from January 14, 2025. Consolidated groups get extra guidance at IRS.gov/Form8991.
Penalties and corrections
The Tax Cuts and Jobs Act raised the penalty under section 6038A(d)(1) and (2) for failing to furnish information or keep records from $10,000 to $25,000, which ties into Form 5472 reporting. If a filed Form 8991 turns out to be wrong, file a corrected one with an amended return, write Corrected at the top and attach a statement of the changes.
The form also links to other returns: question 22 of Schedule K on Form 1120 and item DD on Form 1120-F ask about the same gross receipts threshold.
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The verdict
If any year in the last 3 crossed $500 million, you'll need to file Form 8991, but don't assume the tax applies until you've worked through both tests. The rate rising to 10.5% for years beginning in 2026 makes the base erosion percentage worth modelling now, especially for groups with large payments to foreign affiliates.
Frequently asked questions
What is Form 8991?
It's the IRS form for the tax on base erosion payments of taxpayers with substantial gross receipts, known as BEAT, under section 59A.
Who must file Form 8991?
Any corporation other than a RIC, REIT or S corporation that has, or is in an aggregate group with, gross receipts of at least $500 million in 1 or more of the 3 preceding tax years.
What is the BEAT rate for 2026?
For tax years beginning during 2026 or later the rate is 10.5%, plus 1% for groups that include a bank or registered securities dealer.
What is the base erosion percentage threshold?
3% or higher, or 2% or higher if the affiliated group includes a bank or a registered securities dealer.
Where does the BEAT amount go on Form 1120?
On Schedule J, line 1f.
Can a corporation file Form 8991 and owe nothing?
Yes. Filing is triggered by $500 million in any one of 3 years, but the tax only applies if the 3-year average and base erosion tests are both met and the minimum tax exceeds regular tax.
Do S corporations file Form 8991?
No. RICs, REITs and S corporations are outside the BEAT rules and don't file Form 8991.
Is cost of goods sold a base erosion payment?
No. Amounts that reduce gross income, such as cost of goods sold, aren't base erosion payments.
What if I find a mistake on a filed Form 8991?
File a corrected Form 8991 with an amended return, write Corrected at the top and attach a statement identifying the changes.
