Enjoy our head attorney’s deep dive into the murky waters of Form 5471. Phil explains attribution rules, filing categories, filing exceptions, and more. Join our newsletter to receive each article straight to your inbox.
Today, Let’s ask a “Why?” question and make sense of why IRC §951A exists. TCJA’s impact: a myriad of details and confusion IRC §951A arrived in late 2017 and caught everyone’s attention. A new tax! Everything in CFC-land became vastly more complicated. The Tax Cuts and Jobs Act promised a new, modern, efficient “territorial” tax…
This is Episode 3 of a series where we track $1,000 of subpart F income by a lower-tier CFC subsidiary, with cash distributions all the way up the stack to the U.S. shareholder–and see what happens. Catching up on this series In our previous two episodes, we traced $1,000 of dividend income (aka subpart F…
What happens when a subsidiary CFC pays a dividend to its parent CFC? Does that create subpart F income for the U.S. shareholder of the parent CFC? I am tracing $1,000 of generic dividend income received (from Nestlé) by Foreign Subsidiary as it is distributed upstream to eventually land in U.S. Citizen’s pocket. The end…
How much income is reported on this shareholder’s Form 1040? Why? Why does Subpart F income jump directly from the bottom-level controlled foreign corporation to the United States shareholder’s Form 1040? Doesn’t it make more sense to pass the income item up the holding structure from subsidiary to parent to shareholder? And what about cash?…
Hello and welcome to Installment 5 of a 5 part series to help you figure out whether a U.S. shareholder is a Category 5a, 5b, or 5c filer of For 5471. The series so far Completed installments: This installment: Monthly Standard Operating Procedures Coming Soon This is an SOP. Standard Operating Procedure. Everyone I know…
If you have determined that you are required to file Form 5471 and know which categories apply to you, do not despair. Several filing exceptions exist that either eliminate or reduce your compliance obligations. We review the exceptions that apply to each category of the filer to see if you have an escape from the…
Hello and welcome to Installment 4 of a 5 part series to help you figure out whether a U.S. shareholder is a Category 5a, 5b, or 5c filer of Form 5471. The series so far Completed installments: This installment: Future installments: The Category 5 flowchart Here is the handy-dandy flowchart for figuring out the answers…
The Series Completed installments Installment 1: Why? And Your Checklist. If you understand how the IRS tried to fix what Congress broke, the whole exercise of figuring out which (sub)category applies will be a bit easier. Installment 2: Foreign-Controlled CFCs. Is your foreign corporation a “foreign-controlled CFC” or a “U.S.-controlled CFC” and why does this…
There are five (or nine, depending on how you count) categories into which you might fall as a Form 5471 filer. More than one category might apply to you. Each category has a different demand for information and for which schedules to attach to Form 5471. You will want to know all of the categories…
Hello and welcome to the second installment in the series that will explain, in gruesome and tedious detail, how to figure out the Category 5 filing requirements. The Series Completed installment: This installment: Future installments: The Category 5 flowchart Because I know you love flowcharts, here is a flowchart you can use to determine whether…
Figuring out Categories 5a/5b/5c, in five installments I want to help you figure out which box to check (or not!) in Item B of Form 5471— Category 5a, 5b, or 5c. In the interests of keeping my newsletters relatively brief, I’m going to break it up the lengthy analysis into five separate installments. Future installments…
Form 5471 applies to U.S. persons who own stock of foreign corporations. In this session, we look at the rules for determining stock ownership. Stock may be owned directly, indirectly, or constructively. The attribution rules create most of the complexity, and three different sets of attribution rules apply for Form 5471 purposes. Presented by Phil…
This is a lengthy discussion of a common fact pattern: When does a U.S. citizen spouse have a Form 5471 filing requirement, merely by being married to a nonresident alien who owns foreign corporation stock? That’s what we’re going to find out today. Efficiency And it hasn’t escaped me that the more ahem efficiency-minded reader…
Are you required to file Form 5471? This session is an overview of the rules that determine whether you are required to file Form 5471 and for which category. We cover what it means to be a United States shareholder when a corporation is a controlled foreign corporation and how you compute how much stock…
Form 5471 is hard because, among other reasons, you have to figure out the meaning of the word “own.” There’s your understanding of the word. You certainly know what it means to own something. And then there’s the Federal government’s belief about what it means to “own” something for tax purposes. Uncle Sam’s view of…