The focus of this article is to provide some basic information on the IRS Form 5472, an Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business.
The purpose of Form 5472 is to provide information required by the IRS when “reportable transactions” occur during the tax year of a “reporting corporation”, with a foreign or domestic related party. In general, “reportable transactions” are defined to mean certain types of transactions listed in part IV of the form (such as sales, rents, royalties, interest), for which either monetary consideration was the sole consideration paid or received during the reporting corporation’s tax year, or if any part of the consideration paid or received was either not monetary consideration, or was less than full consideration.
“Reporting companies” that generally are required to file Form 5472 include both: 25% foreign-owned U.S. corporations and foreign corporations engaged in a trade or business within the United States. Broadly speaking, the 25% ownership requirement is meant to apply to a foreign person who owns either directly or indirectly 25% of a US corporation, but not to multiple foreign persons owning only 25% in the aggregate. However, the related party rules apply to determining ownership. In certain situations, filing of Form 5472 may not be necessary if applicable exceptions are met.
For those required to file, Form 5472 must be filed with the reporting corporation’s tax return. The IRS may consider a substantially incomplete Form 5472 to constitute a failure to file the Form. For each foreign or domestic related party with which a reporting corporation had a reportable transaction during its tax year, a separate Form 5472 must be filed. The IRS recently issued temporary and proposed regulations with the intent to remove a requirement under existing regulations mandating duplicate filing of the form.
Contact Sherayzen Law Office for Legal Help With Form 5472
If you have any legal or tax questions about Form 5472, contact Sherayzen Law Office for professional help. Our experienced international tax firm will help you determine your 5472 filing requirements as well as assist you in properly completing the form.