Q:
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Who needs to file Form 5471?
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A:
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Form 5471 is required to be filed in the following scenarios:
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U.S. company who owns (directly, indirectly, or constructively) 10% or more of the total voting power/stock of a foreign corporation at any time during any tax year.
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U.S. company who is an officer or director of a foreign corporation in which any U.S. company or person has acquired 10% stock ownership.
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U.S. company who acquired additional stock to meet the 10% stock ownership requirement or disposed of stock in a foreign corporation to reduce their ownership below the 10% stock ownership requirement. The acquisition or disposition of stock detailed information need to be disclosed on Form 5471.
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Q:
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Which kinds of U.S. Company are subjected to file Form 5471?
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A:
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The U.S. company mentioned above includes the following types registered in U.S.:
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A domestic partnership,
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A domestic corporation, and
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An estate or trust that is not a foreign estate or trust.
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Q:
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What information is required to be disclosed on Form 5471?
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A:
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The identity information of the U.S. company and the foreign corporation is required for all the taxpayers. Some other schedules are required depends on how much ownership of the foreign corporation is held by the U.S. company.
For example, for U.S. company having more than 50% ownership (by voting power or total value of stocks) in a foreign corporation during the annual accounting period of the foreign corporation, the following information are necessary:
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Stock of the foreign corporation: including the total number of shares and the number of shares held by the U.S. shareholders and direct shareholders.
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Balance sheet and Income Statement of the foreign corporation presented with U.S. dollars.
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General information to describe the foreign corporation.
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The U.S. company’s pro rata share of income from the foreign corporation.
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Transactions between the foreign corporation and the U.S. company.
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Transactions between the foreign corporation and other controlled participants.
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Q:
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When is the due date to file Form 5471? Any penalties involved for failure to file Form 5471?
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A:
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Attach Form 5471 to the company’s income tax return and file both by the due date (including extensions) for that return. Failure to file information required on Form 5471 and schedule forms is subject to the following penalties:
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A $10,000 penalty is imposed for each annual accounting period of each foreign corporation.
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If the information is not filed within 90 days after the IRS has mailed a notice of the failure to the U.S. company, an additional $10,000 penalty (per foreign corporation) is charged for each 30-day period, or fraction thereof, during which the failure continues after the 90-day period has expired. The additional penalty is limited to a maximum of $50,000 for each failure.
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Criminal penalties may apply for serious situations.
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