Report on these lines the largest outstanding balances during the year of gross amounts borrowed from, and gross amounts loaned to, the related parties described in columns (b) through (f). If the information required in a given section exceeds the space provided within that section, do not write See attached in the section and then attach all of the information on additional sheets. See Regulations section 1.245A-5(e) for rules for calculating an extraordinary reduction amount. If PTEP were distributed, include on Form 5471, Schedule I, line 6, any foreign currency gain or loss on the distribution that is recognized under section 986(c). Indicate the regarded entity owner's name in parentheses after the FDE's name. Sum of the amounts from lines 13g, 14d, 15d, 16d, 18d, and 19d. Is the U.S. person filing this return relying on any exception(s), exclusion(s), or other provision(s) not listed above to reduce or exclude any amounts reported or reportable as subpart F income (of or with respect to the CFC)? On pages 2 and 3, Schedule E-1 former line 11 is now line 10 and clarifies that only columns (d) and (e)(i) through (e)(x) may have entries on line 10. See Regulations section 1.385-1(d)(1) and 1.385-3(d). On pages 2 and 3, Schedule E-1, line 14 (taxes related to hovering deficits offset of undistributed post-transaction E&P) of the previous revision has been deleted. See Regulations section 1.960-1(d)(2)(ii)(C). Form 5471 is an important IRS tool for assessing the scope of a taxpayer's foreign holdings and operations. See Regulations section 1.986(c)-1(c). A $10,000 penalty is imposed for each annual accounting period of each foreign corporation for failure to furnish the information required by section 6038(a) within the time prescribed. The time needed to complete and file this form will vary depending on individual circumstances. Column (d): Amount of E&P distribution in foreign corporation's functional currency. Subtract line 5 from line 4 and enter the result on line 6. E&P described in section 959(c)(3) is generally E&P of the foreign corporation that has not been included in gross income of a U.S. shareholder under section 951(a)(1) or section 951A. Specified tangible property means any tangible property used in the production of tested income. Proc. Persons With Respect to Certain Foreign Corporations) is a required disclosure for certain U.S. citizens and residents who are officers, directors, or shareholders in certain foreign corporations. The attached statement must include a totals line that ties into the amounts reported in each column of line 29. For purposes of Category 1 filers, an SFC (as defined in section 965) is: A CFC (see Category 5 Filers, later, for definition), or. No penalty will be imposed with respect to any portion of an underpayment if the taxpayer can demonstrate that the failure to comply was due to reasonable cause with respect to such portion of the underpayment and the taxpayer acted in good faith with respect to such portion of the underpayment. Compute the current section 956 inclusion (potentially increasing or reclassifying the previously taxed accounts). To adhere to the reporting requirements of Secs. During Year 2, CFC3 distributes $40 to CFC2. Pre-1987 U.S. dollar PTEP should be translated into the foreign corporation's functional currency using the rules of Notice 88-70 and added to post-1986 amounts in the appropriate PTEP group. Part I Taxes for Which a Foreign Tax Credit Is Allowed, Item H Person(s) on Whose Behalf This Information Return Is Filed, Treasury Inspector General for Tax Administration, The identifying information on page 1 of Form 5471 above Schedule A; see, Schedule E-1 (included with separate Schedule E), 1. The filer is a U.S. shareholder that only owns stock, within the meaning of section 958(b), in the foreign corporation. Persons With Respect to Certain Foreign Corporations . You are generally required to file However, see the instructions for Schedule J, later, for changes that affect how the schedule is completed. Line 1 of Schedule E, Part I, Section 1, is completed in relevant part as follows. This is the fifth of a series of articles designed to provide a basic overview of the Form 5471. 2019-40 for more details. Qualified business asset investment (QBAI). Enter the amount of any dividend income received by the CFC from a related person as defined in section 954(d)(3). Proc. Enter the amount of the dividends received by the shareholder from the foreign corporation that is an extraordinary disposition amount. Otherwise, check No. Apply Regulations section 1.385-3(b)(3)(iii)(E) to determine when a debt instrument is treated as issued for purposes of Regulations section 1.385-3(b)(3)(iii). The amount reported in column (xii) may not be the same as the sum of the amounts in columns (viii) through (x) if columns (viii) through (x) include taxes that are not creditable, including taxes paid or accrued to sanctioned countries, foreign taxes disallowed under sections 901(k), (m), and (l), and taxes paid or accrued to the United States. Category 4: A U.S. person who had control (defined below) of a foreign corporation for an uninterrupted period of at least 30 days during the annual accounting period. 92-70 for Dormant Foreign Corporation.. Do not include column (d) amounts in the total reported in column (f). Proc. The items reported on line 1(a)(1), gross income of $50 and $20 of foreign tax, are not included in the totals reported on line 1(a). No changes have been made to this schedule. Income tax expense (benefit) includes current and deferred income tax expense (benefit). In general, a hybrid deduction is a deduction or other tax benefit allowed to the CFC (or a related person) under a foreign tax law for an amount paid, accrued, or distributed with respect to an instrument of the CFC that is stock for U.S. tax purposes. This line of column (d) accounts for foreign income taxes that are suspended in the current tax year. Report on these lines loan guarantee fees received (line 13) and loan guarantee fees paid (line 28). If the foreign corporation is the owner of a qualified business unit(s) (QBU) with a different functional currency, translate the E&P of the QBU(s) to the foreign corporations functional currency. The additional penalty is limited to a maximum of $50,000 for each failure. If applicable for lines 5c(iii)(A), 5c(iii)(B), 5c(iii)(C), and 5c(iii)(D), also enter the country code for the sanctioned country using the two-letter codes (from the list at, Enter the line 5c functional currency amount translated into U.S. dollars at the average exchange rate for the foreign corporation's tax year. If the foreign corporation applied more than one RAB share during the tax year in determining its share of intangible development costs (IDCs), enter the RAB share that was applied to IDCs incurred at the end of the year. "field, "48.Shareholders pro rata share of export trade income that applies to line 47 amount. If a U.S. shareholder wholly owns the CFC, Schedule P should include the same information reported on Schedule J, Part I, column (e). This line is only applicable if a U.S. person appropriately amended a prior year return and there were intervening years between the amended year return and the current year return for which an amended return was not filed. (i) Country Code (ii) Is required to file Form 5471 solely because of constructive ownership from a nonresident alien. A separate Schedule I must be filed by or for each Category 4, 5a, or 5b U.S. shareholder of the foreign corporation with respect to which reporting is furnished on this Form 5471. Lines 4 and 19. Also see Regulations section 1.960-3(c)(2) for additional information regarding the ten PTEP groups. See Regulations section 1.960-1(d)(2)(ii)(B)(2). Translate the amount on line 18 from functional currency to U.S. dollars at the year-end spot rate (as provided in section 989(b)). 2021. Such tax is also reported as a negative number on line 10, column (e)(x), of Schedule E1 of CFC2s Form 5471. These codes are available at or In other words, are any amounts excluded from line 3 of Worksheet A by reason of disregarding a branch or similar establishment (including a disregarded entity) of the CFC as separate from the CFC? "field, "58.Dividends paid to any other person with respect to your stock during the tax year"field, "59.Divide the number of days in the tax year you did not own such stock by the number of days in the tax year and multiply the result by line 56. Exceeded guidance. "field, "60.Enter the smaller of line 58 or line 59. The corporate U.S. shareholder should include the line 5c amount on Form 1120, Schedule C, line 14, column (a), or the comparable line of other corporate income tax returns. Amounts reported as positive numbers on line 8 of column (e)(viii) should only be reported with respect to negative amounts on line 8 of column (a). For line 4(1), $300 of gross income is reported in column (ii) and $105 of foreign tax is reported in column (x). Reference ID number of foreign corporation. In item 1g, enter a brief description of the company's business activity. If the foreign corporation uses DASTM, enter on line 1 the dollar GAAP income or (loss) from line 22 of Schedule C. Enter on lines 2a through 4 the adjustments made in figuring current E&P for U.S. tax purposes. This factor is a fraction determined on Schedule A (Form 5713). Page Last Reviewed or Updated: 20-Apr-2022, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation. See section 965 and the regulations thereunder for exceptions. An official website of the United States Government. Subtract line 54 from line 53. Enter the name of the payor entity in column (a). However, do not enter a date for which information was reported on Section E. Instead, enter the date (if any) of any reorganization prior to that date (if it is within the last 4 years). Translate the taxes entered in column (j) into dollars at the average exchange rate for the tax year to which the tax relates unless one of the exceptions below applies. CFC1, in turn, wholly owns the only class of stock of CFC2, a foreign corporation. 960 deemed paid taxes. Schedule J contains information about the CFC's Earnings and Profits (E&P). However, see the instructions for, New lines 13 and 28 were added for reporting loan guarantee fees received (line 13) and loan guarantee fees paid (line 28). Regulations sections 1.6038-2(h) and 1.6046-1(g) require that certain amounts be reported in U.S. dollars and/or in the foreign corporation's functional currency. With respect to a CFC, Regulations section 1.954-1(c)(1)(iii)(A)(2) identifies as a single item of income all foreign base company income (other than foreign personal holding company income) that falls within both a single separate category (typically, general category income) and a single category of foreign base company income described in each of Regulations sections 1.954-1(c)(1)(iii)(A)(2)(i) through (v). "field, "55.Other subpart F income subtotal. If there is an income tax expense amount on line 21a or 21b, subtract that amount from the line 19 net income or (loss) amount in arriving at line 22 current year net income or (loss) per the books. Use the December 2020 revision of the schedule. Use line 3 to report tested income in the tested income group of the CFC (a tested income group). Instructions for Form 5471, Information Return of U.S. As a result, previous line 5a is now line 5. Report the total of the amounts listed in column (l) on this line 5. If the sum of foreign base company income (determined without regard to section 954(b)(5)) and gross insurance income for the tax year exceeds 70% of gross income for income tax purposes, the entire gross income for the tax year must (subject to the high-tax exception described below, the section 952(b) exclusion, and the deductions to be taken into account under section 954(b)(5)) be treated as foreign base company income or insurance income, whichever is appropriate.
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