The foreign corporation is a related party to the U.S. filer within the meaning of section 59A(g); and. The U.S. shareholder has previously taxed E&P related to section 965 that is reportable on Schedule P (Form 5471). On lines (1), (2), etc., under line 3, enter the name of each tested unit of the CFC (including the CFC tested unit itself) and enter for each tested unit the information required in columns (ii) through (xiv), based on the tentative gross tested income attributable to each tested unit (without regard to any amounts excluded under the GILTI high-tax exclusion in Regulations section 1.951A-2(c)(7) (GILTI high-tax exclusion)). See Part I Taxes for Which a Foreign Tax Credit Is Allowed, earlier, for instructions regarding these columns. Rule of thumb - always inquire about underlying partnerships and corporations when investing more than 10% in a foreign entity. See the instructions for lines 1 through 4. File this summary return in the manner described in When and Where To File, earlier. But, regardless of the specific method required, all exchange rates must be reported using a divide-by convention rounded to at least four places. If the information required in a given section exceeds the space provided within that section, do not write See attached in the section and then attach all of the information on additional sheets. Note that an amount determined under section 956(a) is not considered subpart F income. See the instructions for Line 6 for foreign currency translation. 1167. The amount reported in column (x), line 4, is the sum of the amounts reported in column (x) on lines 1(a)(1), 3(1), and 4(1), which equals $210 ($35 + $70 + $105). Proc. The Bank generally underwrites commercial real estate loans to a maximum 75% advance against either the appraised value of the property, or its purchase price (for loans to fund the acquisition of real estate), whichever is less. An actual distribution is first out of PTEP, if any, and then out of the section 959(c)(3) balance. CFC2 pays withholding tax of $4 on the distribution from CFC3. Any liability of the corporation the shareholder assumes in connection with the distribution. Also, if a U.S. shareholder is required to file Schedule A (Form 8992) or Schedule B (Form 8992) with respect to the CFC, the reference ID number on Form 5471 and the reference ID number used on Schedule A (Form 8992) or Schedule B (Form 8992) for that CFC must be the same. Section 960(b)(1). Enter on line 5b the DASTM gain or loss figured under Regulations section 1.985-3(d). See Regulations section 1.6046-1(i) for rules on determining when U.S. persons constructively own stock of a foreign corporation and therefore are subject to the section 6046 filing requirements. Domestic Corporation reports on CFC2s Form 5471, Schedule J, line 4, column (e)(x), as a positive number, the $40 PTEP distribution. Do not include any adjustments required to be reported on line 7 or 12. CFC1, in turn, wholly owns the only class of stock of CFC2, a foreign corporation. Proc. Number of quarter-ends the foreign corporation was a C.F.C. In other words, are any amounts described in section 954(c)(2)(B) excluded from line 1a of Worksheet A? Add lines 14h, 15e, 16e, 17c, and 18e", "20.Adjusted net insurance income (other than related person insurance income):", "20a.Enter amount from line 7 (other than related person insurance income)" field, "20b.Expenses allocated and apportioned to the amount from line 7 under section 953" field, "20c.Net insurance income. Enter the amount, if any, of the CFCs gross income or loss taken into account in determining the CFCs subpart F income (as defined in section 952). Consistent with the reporting requirement on Form 1118, enter the two-letter code (from the list at IRS.gov/CountryCodes) of each foreign country and U.S. possession within which income is sourced and/or to which taxes were paid or accrued. Attach Form 5471 to your income tax return (or, if applicable, partnership or exempt organization return) and file both by the due date (including extensions) for that return. (b) During the tax year, did the CFC derive income (either directly or through a branch or similar establishment, for example, disregarded entity) in connection with the purchase or sale from, to, or on behalf of a related party (for example, purchase or sales commission income)? If the foreign corporation is a CFC and the filer is a domestic corporation, enter on line 9 the sum of the hybrid deduction accounts with respect to each share of stock of the CFC that the domestic corporation owns directly or indirectly (within the meaning of section 958(a)(2), and determined by treating a domestic partnership as foreign). Check the Yes box on line 17b if any controlling section 245A shareholder (as defined in Regulations section 1.245A-5(i)(2)) made an election to close the tax year of the foreign corporation such that no amount is treated as an extraordinary reduction amount or tiered extraordinary reduction amount as to any U.S. shareholder of the foreign corporation. Enter the appropriate code on line a (at the top of page 1 of Schedule P). See Regulations section 1.9601(d)(2)(ii). The name, address, identifying number, and number of shares subscribed to by each subscriber to the foreign corporation's stock. Such taxes are also reported on Schedule E, Part III, column (g). An amount equal to the total hovering deficits reported on line 5b of columns (a), (b), and (c) is included as a negative number in column (d) of line 5b. A separate Schedule I must be filed for each person described in Category 4, 5a, or 5b. Sum of the amounts from lines 13b, 13d, 13e, 14b, 15b, and 16b. Enter the total asset amount of derivatives on line 3 and total amount of liability on line 17 reported in accordance with ASC 815 (Derivatives and Hedging). Proc. The corporate U.S. shareholder should include the line 5c amount on Form 1120, Schedule C, line 14, column (a), or the comparable line of other corporate income tax returns. Form 5471 and Schedule J, M, or O who agrees to have another person file the form and schedules for him or her may be subject to the above penalties if the other person does not file a correct and proper form and schedule. In Part I, Section 1, list income, war profits, and excess profits taxes (income taxes) paid or accrued to each foreign country or U.S. possession for the foreign corporations foreign tax year(s) that end with or within its U.S. tax year. A person that is both a category 3 and category 5 filer because it is treated as a U.S. shareholder under section 953(c)(1)(A) with respect to the foreign corporation must complete Schedule B, Part 1 for U.S. persons that owned (on the last day of the foreign corporations taxable year), directly or indirectly through foreign entities, any of the foreign corporation's outstanding stock. Adjusted net related person insurance income. When translating amounts from functional currency to U.S. dollars, you must use the method specified in these instructions. "field, "64.Amount of line 61 that applies to section 954(c) subpart F Foreign Base Company Sales Income. Enter the amount, if any, of the CFCs gross income excluded from foreign base company income (as defined in section 954) and insurance income (as defined in section 953) by reason of section 954(b)(4), the high-tax exception (include amounts excluded from tested income under Regulations section 1.951A-2(c)(7). The amount reported on line 8 will not necessarily equal the tested income reported on Schedule I-1. "field, "50.Shareholders pro rata share of line 42. Because Mr. Jackson has reduced his holding in the foreign corporation, he is required to complete Form 5471 and Schedule O. If applicable for lines 5c(iii)(A), 5c(iii)(B), 5c(iii)(C), and 5c(iii)(D), also enter the country code for the sanctioned country using the two-letter codes (from the list at IRS.gov/CountryCodes). PTEP attributable to section 1248 amounts from the gain on the sale of a foreign corporation stock by a CFC. In other words, are any amounts described in section 954(c)(1)(C)(i), (ii), or (iii) excluded from line 1c of Worksheet A? For example: In the case of a merger or acquisition, a Form 5471 filer must use a reference ID number that correlates the previous reference ID number with the new reference ID number assigned to the foreign corporation; or. Include payments in lieu of dividends that are made as required under section 1058. Form 5471, Schedule I-1, captures CFC income inclusions by U.S. shareholders under Section 951A. Except for information contained on Schedule O, report information for the tax year of the foreign corporation that ends with or within your tax year. Proc. It has a total of 12 schedules built into it and allows the government to detect hidden irregularities. Read the information for each category carefully to determine which schedules, statements, and/or information apply. This includes completing Item H on page 1 of the form. Subtract line 18d from line 18c" field, "19.Adjusted net foreign base company income. A Category 1, 4, or 5 filer does not have to file Form 5471 if the shareholder: Does not own a direct or indirect interest in the foreign corporation, and. Category 4: A U.S. person who had control (defined below) of a foreign corporation for an uninterrupted period of at least 30 days during the annual accounting period. Check the Yes box on line 17a if there was an extraordinary reduction with respect to any controlling section 245A shareholder of the foreign corporation, as defined in Regulations section 1.245A-5(i)(2), during the tax year of the foreign corporation. . Certain current year deficits of a member of the same chain of corporations may be considered in determining subpart F income. Subtract line 15 from line 14." Taxes paid or accrued with respect to distributions of PTEP by the U.S. shareholder, while not reported on the Form 5471, are subject to different rules regarding creditability and foreign currency gain or loss. Check the Yes box on line 6a if the filer of this Form 5471 is claiming a deduction under section 250 with respect to foreign-derived intangible income (FDII), and enter the amounts requested on lines 6b, 6c, and 6d. See Regulations section 1.9601(d)(2). Negative amounts are hovering deficits reported in column (d) of line 5a. However, if a passive foreign investment company (as defined in section 1297) with respect to the shareholder is not a CFC, then such corporation is not a section 965 SFC. Use line 3 to report tested income in the tested income group of the CFC (a tested income group). The amounts reported on line 1(a)(1) would not be included in the total for line 1(a), but the amount reported on line 1(a)(2) would be included in the total reported on line 1(a). Section 5 of Rev. See Regulations section 1.986(c)-1(c). Line 11. This is the annual PTEP account. The amounts reclassified are reported as negative numbers in columns (a) through (c) and positive numbers in column (e)(iii), as applicable. The functional currency of all corporations is the U.S. dollar. In addition, F is 90% owned by foreign corporation W. Mr. Lyons does not own any of the stock of corporation W. Mr. Lyons completes and files Form 5471 and Schedule O for the corporations in which he is a 10% or more shareholder. Enter the balances for each column at the beginning of the tax year. An official website of the United States Government. The above rules apply with respect to amounts received for services under a particular contract only if at some time during the tax year 25% or more in value of the outstanding stock of the corporation is owned, directly or indirectly, by or for the individual who has performed, is to perform, or may be designated (by name or by description) as the one to perform, such services. An additional 10% or more (in value or voting power) of the outstanding stock of the foreign corporation. These categories are for a U.S. shareholder of a foreign corporation that is a section 965 specified foreign corporation (SFC) (defined below) at any time during any tax year of the foreign corporation, and who owned that stock on the last day in that year on which it was an SFC, taking into account the regulations under section 965. Category 1a, 3, and 5a filers should list all direct owners of the SFC or CFC through which such filer indirectly owns the SFC or CFC as described in section 958(a)(2). As indicated above, the length of a given reference ID number is limited to 50 characters and each number must be alphanumeric and no special characters are permitted. Beginning and ending dates of the foreign partnership's tax year. The income of a CFC derived from any foreign country during any period during which section 901(j) applies to such foreign country will be deemed to be income to the U.S. shareholders of such CFC. Category 1a, 1c, 3, 4, 5a, and 5c filers must complete Part II. A separate Schedule P must be completed by each Category 1, 4, or 5 U.S. shareholder of the foreign corporation with respect to which reporting is furnished on this Form 5471. Part IAccumulated E&P of Controlled Foreign Corporation, Specific Instructions Related to Lines 1 Through 13, Section AGeneral Shareholder Information, Reference ID Number of Foreign Corporation, Instructions for Form 5471 - Additional Material, Agriculture, Forestry, Fishing and Hunting, Support Activities for Agriculture and Forestry, Beverage and Tobacco Product Manufacturing, Petroleum and Coal Products Manufacturing, Plastics and Rubber Products Manufacturing, Nonmetallic Mineral Product Manufacturing, Computer and Electronic Product Manufacturing, Electrical Equipment, Appliance, and Component Manufacturing, Furniture and Related Product Manufacturing, Wholesale Electronic Markets and Agents and Brokers, Building Material and Garden Equipment and Supplies Dealers, Sporting Goods, Hobby, Book, and Music Stores, Transit and Ground Passenger Transportation, Motion Picture and Sound Recording Industries, Activities Related to Credit Intermediation, Securities, Commodity Contracts, and Other Financial Investments and Related Activities, Insurance Carriers and Related Activities, Funds, Trusts, and Other Financial Vehicles, Professional, Scientific, and Technical Services, Accounting, Tax Preparation, Bookkeeping, and Payroll Services, Architectural, Engineering, and Related Services, Computer Systems Design and Related Services, Other Professional, Scientific, and Technical Services, Management of Companies (Holding Companies), Administrative and Support and Waste Management and Remediation Services, Waste Management and Remediation Services, Performing Arts, Spectator Sports, and Related Industries, Museums, Historical Sites, and Similar Institutions, Amusement, Gambling, and Recreation Industries, Religious, Grantmaking, Civic, Professional, and Similar Organizations, Unrelated section 958(a) U.S. shareholder. Do not include adjustments required to be reported on line 1b or line 6. If applicable, use the reference ID number shown on Form 5471, page 1, item 1b(2). Category 1b, 1c, 5b, and 5c filers are not required to file Schedule J for foreign-controlled corporations. Name of person filing Form 5471 Street address City State (if U.S. address) ZIP code (if U.S. address) Region (if foreign address) ZIP code (if foreign address) Country (if foreign address) Identifying number Annual tax year beginning Annual tax year ending Mark any applicable Category filer checkboxes. If the subpart F income of any CFC for any tax year was reduced because of the current E&P limitation, any excess of the E&P of the CFC for any subsequent tax year over the subpart F income of the CFC for the tax year must be recharacterized as subpart F income. Deductions of the CFC, including for current-year taxes, are allocated and apportioned to the income groups to determine net income (or loss) in each income group and to identify the current year foreign income taxes that relate to the income in each income group for section 960 purposes. On line 4(1), both columns (xii) and (xiv) should be blank in all cases. The corporate U.S. shareholder should include the line 5b amount on Form 1120, Schedule C, line 14, column (a), or the comparable line of other corporate income tax returns. For example, if you are the sole owner of a CFC (that is, you are described in Categories 4 and 5a), complete all six pages of Form 5471 and separate Schedules E, G-1, H, I-1, J, M, P, Q, and R. Complete a separate Form 5471 and all applicable schedules for each applicable foreign corporation. Because reference ID numbers are established by or on behalf of the U.S. person filing Form 5471, there is no need to apply to the IRS to request a reference ID number or for permission to use these numbers. See Example 2 for reporting on line 10 with respect to taxes on distributions from CFC3 to CFC2. Schedule I is completed alongside W. Enter the line 5c functional currency amount translated into U.S. dollars at the average exchange rate for the foreign corporation's tax year. No changes have been made to Schedule O (Form 5471). The corporation is required to complete line 5 only if the corporation itself incurred intangible development costs. Enter on lines 5c(i), 5c(ii), 5c(iii)(A), 5c(iii)(B), 5c(iii)(C), and 5c(iii)(D), as applicable, the portion of the line 5c current year E&P amount with respect to each applicable category of income. Any other current-year tax is allocated and apportioned among the section 904 categories under the rules of Regulations section 1.904-6(a) based on the portion of the foreign taxable income (as characterized under federal income tax principles) that is assigned to a particular section 904 category. See the instructions for, An estate or trust that is not a foreign estate or trust, as defined in, The person that files Form 5471 must complete Form 5471 in the manner described in the instructions for, Shareholders are not required to file the information checked in the chart, later, for a foreign insurance company that has elected (under section 953(d)) to be treated as a domestic corporation and has filed a U.S. income tax return for its tax year under that provision. Shareholder's Pro Rata Share of Subpart F Income of a C.F.C. Only earnings of a CFC not distributed or otherwise previously taxed are subject to these rules. Report on line 9 the sum of tiered hybrid dividends received by the foreign corporation during its tax year. Filers are permitted to enter both an EIN and a reference ID number. See the instructions for lines 1 through 4. Line 6. .Do not attach the statement described above to Form 5471.. Also, on line 15, report any other reductions to the three income groups in columns (a), (b), and (c) necessary to achieve a zero balance on line 16. Instructions for Form 5471, Information Return of U.S. sections 471 (incorporating the provisions of section 263A) and 472 and the related regulations. The adjusted issue price of a debt instrument is the issue price increased by the amount of original issue discount previously includible in gross income of any holder and decreased by payments other than payments of stated interest. PTEP attributable to subpart F income inclusions (not described in any other column) and reclassified as investments in U.S. property. Section references are to the Internal Revenue Code unless otherwise noted. See Unrelated section 958(a) U.S. shareholder, below, for instructions pertaining to when Form 5471 may be completed as a Category 5b filer. Category 2 and Category 3 filers who are shareholders, officers, and directors of an FSC (as defined in section 922, as in effect before its repeal) must file Form 5471 and a separate Schedule O to report changes in the ownership of the FSC. Instead, if the foreign entity does not have an EIN, the taxpayer must enter a reference ID number that uniquely identifies the foreign entity. from investment in U.S. property and to translate the amount from functional currency to U.S. dollars. "field, "52.Section 954(c) subpart F Foreign Base Company Services Income subtotal. (Add lines 1a through 1d. The only foreign taxes of the distributing foreign corporation that may be treated as deemed paid under section 960(b) are foreign taxes paid, accrued, or deemed paid by the distributing foreign corporation with respect to the receipt of a PTEP distribution from another lower-tier foreign corporation below the distributing foreign corporation. If there are multiple reasons for differences, include the explanation and amount of each such difference on the attachment. The form and schedules are used to satisfy the filing requirements of sections 6038 and 6046, and the related regulations, as well as to report amounts related to section 965. If a CFC has related person insurance income, the U.S. shareholders pro rata share is to be determined under the rules of section 953(c)(5). Proc. Any other current year foreign tax is allocated to the CFC income group to which the items of foreign gross income are assigned under the rules of Regulations section 1.861-20. Adjustments to foreign income taxes paid or accrued in a prior year should not be reflected on Schedule E in the year of adjustment. 2009-37, 2009-36 I.R.B. This line of column (d) accounts for foreign income taxes that are suspended in the current tax year. Subtract line 15b from line 15a" field, "15d.Net foreign base company sales income excluded under high-tax exception" field, "15e.Subtract line 15d from line 15c" field, "16.Adjusted net foreign base company services income:", "16b.Expenses allocated and apportioned to line 4 under section 954(b)(5)" field, "16c.Net foreign base company services income. On pages 2 and 3, Schedule E-1 former line 11 is now line 10 and clarifies that only columns (d) and (e)(i) through (e)(x) may have entries on line 10. See the instructions for, Enter the amount of interest income included on line 4. under lines 1a through 1i) or tested income under the GILTI high-tax exclusion (those amounts are reported on lines 3(1), 3(2), etc.). Generally, all computer-generated forms must receive prior approval from the IRS and are subject to an annual review. The identifying number of all others is their employer identification number (EIN). Under a contract under which the corporation is to furnish personal services if (a) some person other than the corporation has a right to designate (by name or by description) the individual who is to perform the services, or (b) the individual who is to perform the services is designated (by name or by description) in the contract; and. On pages 2 and 3, Schedule E-1, former line 15 is now line 13 and now requests filers to combine lines 8 through 12 in columns (a), (b), and (c). During the tax year, did the CFC derive income (either directly or through a branch or similar establishment, for example, disregarded entity) in connection with the purchase or sale from, to, or on behalf of a related person, of personal property manufactured by the CFC within the meaning of Regulations section 1.954-3(a)(4)(iv)? See Regulations section 1.861-20(d)(3)(v)(C)(2). Translate the line 3 amount from functional currency to U.S. dollars using, in general, the average exchange rate as defined by section 989(b)(3). Certain income derived in the ordinary course of business of a securities dealer (section 954(c)(2)(C)(i)). The same amount entered in column (d) is reported as a negative number on line 13 of column (a) or (b), as appropriate. This is the case for both direct foreign tax credits (that is, those foreign taxes paid or accrued directly by the shareholder upon receipt of the PTEP distribution and allowed as a credit under sections 901 or 903) and indirect foreign tax credits (that is, those taxes deemed paid by the shareholder with respect to taxes originally paid or accrued by the CFC under section 960(b)). For purposes of Category 5 filers, a U.S. shareholder is a U.S. person who: Owns (directly, indirectly, or constructively, within the meaning of sections 958(a) and (b)) 10% or more of the total combined voting power of all classes of voting stock of a CFC or, in the case of a tax year of a foreign corporation beginning after December 31, 2017, 10% or more of the total combined voting power or value of shares of all classes of stock of a CFC; or.