IRS Form 5471 is a reporting requirement for 'certain' US persons who are shareholders in 'certain' foreign corporations. In true IRS fashion, they muddle the definition with their use of the word 'certain' – but in our last article we make sense of the categories.
Form 5471 Schedules
There are 12 different schedules that you may need to fill out; you determine which schedules you need to complete based on your filing category. The Form 5471 schedules are:
- A – Stock of the Foreign Corporation
- B – US Shareholders of Foreign Corporations
- C – Income Statement
- E – Income, War Profits, and Excess Profits Taxes Paid or Accrued
- F – Balance Sheet
- G – Other information
- H – Current earnings and profits
- I – Summary of Shareholder’s Income From Foreign Corporation
- J – Accumulated earnings and profits of Controlled Foreign Corporations
- M – Transactions between controlled foreign corporation and shareholders or other related persons
- O – Organization or reorganization of foreign corporation, and acquisitions and dispositions of its stock (Part I to be completed by US officers and directors, Part II to be completed by US shareholders)
Schedules A through I are located directly on Form 5471. Schedules J, M, and O are separate schedules that need to be filled out and attached. We aren't quite sure why D, K, L and N were left off.
Filing requirements
Now that you know what the schedules are, how do you know which to file? The IRS made a table to explain and it's pretty straight forward (as far as the IRS goes):
- A category 2 filer fills out Schedules G and O (Part I)
- A category 3 filer fills out Schedules A,B, C, D, F, G and O (Part II)
- A category 4 filer fills out Schedules A, B, C, E, F, G, H, I, J, and M
- A category 5 filer fills out Schedules G,H, I and J
What about category 1? Don't worry, you aren't a category 1 filer. How do I know this? Because the Category 1 Form 5471 filing requirement has been repealed by section 413(c)(26) of the American Jobs Creation Act of 2004, which repealed 26 USC section 6035.
It's also important to note that if you are described in more than one filing category, you should not duplicate information. However, you must complete all items that apply. For instance, if you are described in both categories 4 and 5, you would only have to fill out one Form 5471, and would have to also complete Schedule M.
Multiple filers of same information
One person may file Form 5471 and the applicable schedules for other people who have the same filing requirements. If you and one or more other persons are required to furnish information for the same foreign corporation for the same period, a joint information return that contains the required information may be filed with your tax return or with the tax return of any one of the other persons.
As an example, if you're described in Category 5 you may file a joint Form 5471 with a Category 4 or another Category 5 filer. However, for Category 3 filers, the required information may only be filed by another person having an equal or greater interest (measured in terms of value or voting power of the stock of the foreign corporation). The person that files Form 5471 must complete Item E on page 1 of the form. All persons identified in Item E must attach a statement to their income tax return that includes the information described in the instructions for Item E.
Filing accurately and on time is of the utmost importance when it comes to the IRS; they can impose high penalties for non-compliance. If you're concerned about your filing requirements, contact us. We can help. Call us at 888-727-8796 or email info@irsmedic.com.
