Form 5471 - Information Return of U.S. Persons With Respect to Certain Foreign Corporations
Form 5471 is in an information return that must be filed by U.S. citizens and U.S. residents who are officers, directors, or shareholders in certain foreign corporations.
Form 5471 Filing Requirements
Form 5471 is required to be filed in the following situations:
1. U.S. person becomes a director or officer of a foreign corporation
2. U.S. person acquires an ownership interest in a foreign corporation in excess of the prescribed limits
3. U.S. person disposes of stock in a foreign corporation that reduces his or her interest in the foreign corporation to less than the prescribed limits
4. U.S. person is in control of a foreign corporation for an uninterrupted period of at least 30 days in a year
5. U.S. person is a 10% or more shareholder in a foreign corporation that is a “controlled foreign corporation” for an uninterrupted period of at least 30 days in a year and that person owns that stock on the last day of the year.
Foreign base company services income – § 954(e)
i. The CFC is paid or reimbursed by a related person for performing such services;
ii. The CFC performs services which a related person is, or has been, obligated to perform;
iii. The CFC performs services with respect to property sold by a related person and the performance of such services constitutes a condition or a material term of such sale; or
iv. Substantial assistance contributing to the performance of such services has been furnished by a related person.
b. foreign base company oil related income – § 954(g)
Limitations and Special Rules
De minimis amount - § 954(b)(3)(A)
If FBCI is less than the lesser of 5% or $1 million, then no FBCI.
Full inclusion rule - § 954(b)(3)(B)
If FBCI exceeds 70% of gross income, then all of the CFC’s gross income will be FBCI.
Form 5471 Filing Deadline
The Form 5471 is attached to your individual income tax return and is to be filed by the due date (including extensions) for that return.
IRS Form 5471 Penalties
It’s an important form to file because if you fail to file the form and were required to file the form you can be subject to a substantial penalty $10,000 or more for each year.
Additional penalties of up to $50,000 are charged for instances of continued failure. Any person who fails to file or report all of the information required within the time prescribed will be subject to a reduction of 10% of the foreign taxes available for credit. Continued cases of failure are also subject to additional reductions. In addition, criminal penalties may also apply for failure to file the requisite information.
Form 5471 is in an information return that must be filed by U.S. citizens and U.S. residents who are officers, directors, or shareholders in certain foreign corporations.
Form 5471 Filing Requirements
Form 5471 is required to be filed in the following situations:
1. U.S. person becomes a director or officer of a foreign corporation
2. U.S. person acquires an ownership interest in a foreign corporation in excess of the prescribed limits
3. U.S. person disposes of stock in a foreign corporation that reduces his or her interest in the foreign corporation to less than the prescribed limits
4. U.S. person is in control of a foreign corporation for an uninterrupted period of at least 30 days in a year
5. U.S. person is a 10% or more shareholder in a foreign corporation that is a “controlled foreign corporation” for an uninterrupted period of at least 30 days in a year and that person owns that stock on the last day of the year.
Foreign base company services income – § 954(e)
i. The CFC is paid or reimbursed by a related person for performing such services;
ii. The CFC performs services which a related person is, or has been, obligated to perform;
iii. The CFC performs services with respect to property sold by a related person and the performance of such services constitutes a condition or a material term of such sale; or
iv. Substantial assistance contributing to the performance of such services has been furnished by a related person.
b. foreign base company oil related income – § 954(g)
Limitations and Special Rules
De minimis amount - § 954(b)(3)(A)
If FBCI is less than the lesser of 5% or $1 million, then no FBCI.
Full inclusion rule - § 954(b)(3)(B)
If FBCI exceeds 70% of gross income, then all of the CFC’s gross income will be FBCI.
Form 5471 Filing Deadline
The Form 5471 is attached to your individual income tax return and is to be filed by the due date (including extensions) for that return.
IRS Form 5471 Penalties
It’s an important form to file because if you fail to file the form and were required to file the form you can be subject to a substantial penalty $10,000 or more for each year.
Additional penalties of up to $50,000 are charged for instances of continued failure. Any person who fails to file or report all of the information required within the time prescribed will be subject to a reduction of 10% of the foreign taxes available for credit. Continued cases of failure are also subject to additional reductions. In addition, criminal penalties may also apply for failure to file the requisite information.