Form 5472 Filing Obligation Checker

1

Entity Type & Tax Classification

Tax Year

Entity Type

Form 5472 applies to: (1) U.S. corporations that are 25% foreign-owned - IRC §6038A; (2) foreign corporations engaged in a U.S. trade or business - IRC §6038C; (3) foreign-owned U.S. disregarded entities treated as corporations for reporting purposes - Treas. Reg. 1.6038A-1(c), as amended by TD 9796 (effective 2017 tax year).

2

Foreign Ownership Structure

25% Foreign Ownership Test: A U.S. corporation is a "reporting corporation" if at any time during the tax year a foreign person owned, directly or indirectly, at least 25% of its stock (by vote or by value). - IRC §6038A(a); Treas. Reg. 1.6038A-1(a).

Is the 25% foreign owner a single person, or is ownership spread across multiple foreign persons?

Does any foreign owner own the entity through a chain of ownership involving U.S. entities?

Constructive ownership and attribution rules apply under IRC §318 as modified by Treas. Reg. 1.6038A-1(d).

3

Reportable Transactions with Related Parties

Related party means any 25% foreign shareholder, any person related to a 25% foreign shareholder under IRC §267(b) or §707(b)(1), or any person related to the reporting corporation under those same sections. - IRC §6038A(d)(2); Treas. Reg. 1.6038A-1(f).

3B

Foreign-Owned Disregarded Entity - Additional Questions

Post-2016 Rule (TD 9796): A foreign-owned domestic disregarded entity is treated as a domestic corporation separate from its owner for purposes of IRC §6038A. It must file Form 5472 even if no reportable transactions occurred - the formation, dissolution, and existence of the entity itself constitute reportable transactions. Effective for tax years beginning after December 31, 2016.

Was the LLC/DE formed, dissolved, or had any change in ownership during the year?

Did the DE have any monetary transactions with its foreign owner during the year? (loans, contributions, distributions, payments)

For foreign-owned DEs, ALL transactions with the foreign owner - including capital contributions and distributions - are reportable transactions. Treas. Reg. 1.6038A-2(b)(3)(ix)-(x).

4

Filing Obligation Analysis

Analysis Summary

Entity type-

25% foreign ownership-

Reportable transactions identified-

Applicable rule-

?

Complete the steps above

Answer all questions to receive your Form 5472 filing obligation analysis.

Form 5472 - Key Facts

Authority: IRC §6038A (domestic corps); IRC §6038C (foreign corps); Treas. Reg. 1.6038A; TD 9796 (DEs)

Filed With: Corporate income tax return (Form 1120 or 1120-F); DEs file a pro-forma Form 1120 with Form 5472 attached

Due Date: Same as Form 1120 - April 15 for calendar-year filers; extendable to October 15

Penalty: $25,000 per Form 5472 per year for failure to file or maintain records; additional $25,000 per 90-day period after IRS notice - IRC §6038A(d)

Multiple Forms: A separate Form 5472 is required for each related party with whom reportable transactions occurred

Foreign-Owned DE - Special Rules

Effective: Tax years beginning after December 31, 2016 (TD 9796)

Filing: Foreign-owned domestic DEs file a pro-forma Form 1120 (with EIN) plus Form 5472 - even if the LLC had no income or no transactions

EIN Required: The DE must obtain its own EIN - it cannot use the owner's tax ID

Transactions: Formation, capitalization, distributions, loans, and all payments between the DE and its foreign owner are reportable - Treas. Reg. 1.6038A-2(b)(3)

Penalty: Same $25,000 per-form penalty applies - no exception for DEs with no activity