Report taxes carried over to a foreign surviving corporation after an acquisition by a foreign corporation of the assets of another foreign corporation in a transaction described in section 381. Enter the employer identification number (EIN) or reference ID number of the payor entity listed in column (a). Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), to disclose a return position that any treaty of the United States (such as an income tax treaty, an estate and gift tax treaty, or a friendship, commerce, and navigation treaty): Overrides or modifies any provision of the Internal Revenue Code; and. as of the close of:", "1a. If a taxpayer requires an extension of filing Form 5471, then they would file an extension on Form 4868 for their regular tax return and then the 5471 will go on extension as well. For more detailed instructions, see the instructions for Form 1120, Schedule K, Question 21. U.S. property is measured on a quarterly average basis. The line 4 result can be positive or negative. The same reference ID number must be used consistently from tax year to tax year with respect to a given foreign corporation. During Year 2, CFC3 distributes $40 to CFC2. On page 5 of Form 5471, five questions on Schedule G pertaining to cost sharing arrangements have been moved to new separate Schedule G-1 and all subsequent questions have been renumbered accordingly. Adjusted net foreign personal holding company income:", "14b.Expenses directly related to amount on line 2" field, "14c.Subtract line 14b from line 14a" field, "14d.Related person interest expense (see section 954(b)(5))" field, "14e.Other expenses allocated and apportioned to the amount on line 2 under section 954(b)(5)" field, "14f.Net foreign personal holding company income. Attach this statement to Form 5471. Report the exchange rate using the divide-by convention specified under Reporting Exchange Rates on Form 5471, earlier. The corporate U.S. shareholder should include the line 5e amount on Form 1120, Schedule C, line 14, column (a), or the comparable line of other corporate income tax returns. That is, the exchange rate must be reported in terms of the amount by which the functional currency amount must be divided in order to reflect an equivalent amount of U.S. dollars. The amounts reported on line 5c include both foreign source and U.S. source income. An actual distribution is first out of PTEP, if any, and then out of the section 959(c)(3) balance. Use Schedule E, Part I, to report taxes paid, accrued, or deemed paid under section 960(b)(2) by a foreign corporation for which a foreign tax credit is allowed and use Schedule E, Part III, to report taxes for which a credit may not be taken. See section 959(c). 851, available at, Enter foreign currency transaction gain or loss reported on the income statement. The amended Form 5471 should include an attachment with a schedule that looks like the current version of Schedule E, Part I, Section 1, with the following entries for the general category of income. Proc. Do not include adjustments required to be reported on line 6 or 12. If Yes, complete line 9b. 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. This rule uses the payors asset apportionment percentages as a proxy for the accumulated earnings of the payor taxable unit from which the remittance is made. Enter the PTEP distribution with respect to the PTEP group within the annual PTEP account identified in column (d) and column (e) in the functional currency of the distributing lower-tier foreign corporation. It has a total of 12 schedules built into it and allows the government to detect hidden irregularities. See Form 8993 and its instructions for information on the section 250 deduction. E&P takes into account foreign income taxes paid or accrued by the foreign corporation. If this Item D is checked, complete Schedule O. 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. Enter the total amount of the lower-tier foreign corporations PTEP group taxes with respect to the PTEP group within the annual PTEP account identified in column (d) and column (e). If the shareholder of a CFC can clearly demonstrate that the income earned for the tax year is from specific operations, then, instead of applying the international boycott factor, the addition to subpart F income is the amount specifically from the operations in which there was participation in or cooperation with an international boycott. from investment in U.S. property and to translate the amount from functional currency to U.S. dollars. This election will not be effective if the corporation was a disqualified corporation (as defined in section 953(c)(3)(E)) for the tax year for which the election was made or for any prior tax year beginning after 1986. 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). However, in the case of Schedule Q (Form 5471) filers, if a foreign corporation has more than one of those categories of income, the filer must also complete and file a separate Schedule Q using code TOTAL that aggregates all amounts listed for each line and column of all other Schedules Q. Foreign Base Company Income and Insurance Income and Summary of U.S. Certain current year deficits of a member of the same chain of corporations may be considered in determining subpart F income. On pages 2 and 3, Schedule E-1, former line 16 is now line 14 and has been reserved for future use. Otherwise, check No. Apply Regulations section 1.385-3(b)(3)(iii)(E) to determine when a debt instrument is treated as issued for purposes of Regulations section 1.385-3(b)(3)(iii). Schedule A reports the U.S. shareholder's pro rata share of amounts for each CFC from each CFC's Form 5471, Schedule I-1, Information for Global Intangible Low-Taxed Income. Proc. 1167, General Rules and Specifications for Substitute Forms and Schedules, which reprints the most recent applicable revenue procedure. Schedule M. In translating the amounts from functional currency to U.S. dollars, use the average exchange rate for the foreign corporation's tax year. The income groups include the subpart F income groups, the tested income group, and the residual income group. CFC1, in turn, wholly owns the only class of stock of CFC2, a foreign corporation. If the tax is attributable to a pass-through entity owned by a foreign corporation, the foreign tax year of the foreign corporation within which such pass-through entitys year ends should be reported on this line. Subtract line 16b from line 16a" field, "16d.Net foreign base company services income excluded under high-tax exception" field, "16e.Subtract line 16d from line 16c" field, "17.Adjusted net foreign base company oil-related income:", "17b.Expenses allocated and apportioned to line 5 under section 954(b)(5)" field, "17c.Subtract line 17b from line 17a" field, "18.Adjusted net full inclusion foreign base company income:", "18a.Enter the excess, if any, of line 12 over line 8" field, "18b.Expenses allocated and apportioned under section 954(b)(5)" field, "18c.Net full inclusion foreign base company income. But, regardless of the specific method required, all exchange rates must be reported using a divide-by convention rounded to at least four places. During Year 2, CFC3 distributes $40 to CFC2. If there is an income tax benefit amount on line 21a or 21b, add that amount to the line 19 net income or (loss) amount in arriving at line 22 current year net income or (loss) per the books. See Regulations section 1.9603(c)(1). If the answer to Question 10 is "Yes," attach a statement providing the name and EIN of the domestic corporation or partnership, as defined in Regulations section 1.7874-12(a)(6) and the relationship of the foreign corporation to the domestic corporation or partnership. If code 901j is entered on line a, enter on line 1l, column (a), the country code for the sanctioned country using the two-letter codes (from the list at IRS.gov/CountryCodes). If code 901j is entered on line a, enter on line b the country code for the sanctioned country using the two-letter codes (from the list at IRS.gov/CountryCodes). For each Category 4, 5a, or 5b filer that is required to file a Schedule I, send a copy of their separate Schedule I to them to assist them in completing their tax return. 369. . Any transaction identified by the IRS by notice, regulation, or other published guidance as a transaction of interest. See Notice 2009-55, 2009-31 I.R.B. Indicate the regarded entity owner's name in parentheses after the FDE's name. Actual distributions are taken into account for the tax year before section 951(a)(1)(B) inclusions. A foreign corporation may need to report E&P with respect to all categories of income listed in the Instructions for Form 1118, with the exception of foreign branch category income. Certain income derived in the ordinary course of business of a securities dealer (section 954(c)(2)(C)(i)). 1221. Also, a trade or service receivable acquired or treated as acquired by a CFC from a related U.S. person is considered an investment in U.S. property for purposes of section 956 (Worksheet B) if the obligor is a U.S. person. In the case of a CFC owned by a foreign disregarded entity (FDE), please include the information of the FDE and the regarded entity owner. See the Instructions for Form 8938 for more information. Enter the CFCs qualified interest income, as defined in Regulations section 1.951A4(b)(2)(iii). The functional currency of all corporations is the U.S. dollar. Then Mr. Lyons is required to indicate that he is a 10% or more shareholder in corporations F, FI, and FJ. During the tax year, was the CFCs foreign personal holding company income, foreign base company sales income, or foreign base company services income reduced so as to take into account any deductions (including taxes)? Any person who fails to file or report all of the information required within the time prescribed will be subject to a reduction of 10% of the foreign taxes available for credit under sections 901 and 960. Inst 5471. Page Last Reviewed or Updated: 20-Apr-2022, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation. Any person required to file If so, an adjustment for the prior year amended return (and its impact on intervening years) should be reflected on line 2. If the information is not filed within 90 days after the IRS has mailed a notice of the failure to the U.S. person, 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 extraction (by the corporation or any other person) of minerals from oil or gas wells located outside the United States and its possessions. Proc. Section 6 of Rev. If the sum of foreign base company income (determined without regard to section 954(b)(5)) and gross insurance income for the tax year exceeds 70% of gross income for income tax purposes, the entire gross income for the tax year must (subject to the high-tax exception described below, the section 952(b) exclusion, and the deductions to be taken into account under section 954(b)(5)) be treated as foreign base company income or insurance income, whichever is appropriate. 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 in the same country under the laws of which the CFC is created or organized? A corporation that uses an accrual method of accounting must use accrued payments and accrued receipts for purposes of computing the total amount to enter on each line of Schedule M. Schedule O is used to report the organization or reorganization of a foreign corporation and the acquisition or disposition of its stock. This line is only applicable if a U.S. person appropriately amended a prior year return and there were intervening years between the amended year return and the current year return for which an amended return was not filed. Enter the amount of the dividends received by the shareholder from the foreign corporation that is an extraordinary disposition amount. If this is the case, you do not have to also report these assets on Form 8938, Statement of Specified Foreign Financial Assets. An additional 10% or more (in value or voting power) of the outstanding stock of the foreign corporation. The corporation is required to complete both lines only if the corporation provides a platform contribution to other controlled participants and is required to make platform contribution transaction payments to other controlled participants that provide a platform contribution to other controlled cost sharing arrangement participants. If one of the following exceptions applies, use the exchange rate in effect on the date the foreign corporation paid the tax. No changes have been made to Schedule O (Form 5471). Average amount of U.S. property held (directly or indirectly) by the C.F.C. Proc. Attach a statement with a description and the amount of any adjustments required before taking into account taxes deemed paid by the foreign corporation. On page 1, Schedule E, Part I, Section 2, for purposes of clarification, the title of Section 2 has been amended as Taxes Deemed Paid by Foreign Corporation.. If there is more than one majority shareholder, the required tax year will be the tax year that results in the least aggregate deferral of income to all U.S. shareholders of the foreign corporation. An example of an adjustment entered on Line 6 is the foreign taxes imposed on receipt of a distribution of PTEP from a lowertier foreign corporation. 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. Enter the line 5c functional currency amount translated into U.S. dollars at the average exchange rate for the foreign corporation's tax year. If an individual, estate, or trust that is a U.S. shareholder of a CFC makes an election under section 962 (962 electing shareholder), any inclusions under section 951 or 951A of the U.S. shareholder will be treated as received by a corporate U.S. shareholder for purposes of section 960. Enter on line 5e dividends not reported on line 5a, 5b, 5c, or 5d. Question: Are there any checks and balances within Form 5471 to ensure Schedule Q is completed correctly? Shareholder Calculation of Global Intangible Low-Taxed Income (GILTI), and may assist in the completion of Form 1118, or Form 1116, if applicable. The purpose of Section 2 is to track deemed-paid foreign income taxes with respect to current year PTEP distributions from lower-tier foreign corporations to the foreign corporation with respect to which this Schedule E (Form 5471) is being completed (the foreign corporation). No credit is allowed for these taxes because only foreign income taxes paid or accrued to a foreign country or possession of the United States are allowed as a credit. Enter the date the shareholder first acquired 10% or more (in value or voting power) of the outstanding stock of the foreign corporation. The U.S. shareholders U.S. dollar basis is used by the U.S. shareholder to determine the amount of foreign currency gain or loss on the PTEP that the U.S. shareholder is required to recognize under section 986(c). Enter the following passive category foreign personal holding company income of the CFC on line 1e: Income from notional principal contracts. If the post office does not deliver mail to the street address and the U.S. person has a P.O. Do not complete a separate Schedule E for taxes assigned to the section 951A category. These changes to columns (a) through (d) take into account that post-TCJA, taxes paid or accrued by a CFC are only relevant for foreign tax credit purposes if they are current year taxes. (c) Identifying number of shareholder. If there is more than one U.S. shareholder, the amounts reported on Schedule P with respect to each U.S. shareholder might be different from the amounts reported on Schedule J. "field, "65.Translate the amount on line 64 from functional currency to U.S. dollars at the average exchange rate. Proc. Column (xii). As a result, these U.S. shareholders may also claim a foreign tax credit for foreign income taxes deemed paid with respect to such inclusions. Enter on line 8c the CFCs total extraordinary disposition account balance with respect to all U.S shareholders of the CFC at the beginning of the CFC year and at the end of the CFC tax year. For purposes of this Schedule P, include in each separate category of income, foreign source and U.S. source income. Also, Schedule G, question 9b has been modified to clarify that a functional currency amount is being requested. In the case of section 988 losses, determine whether Form 8886 needs to be completed, as described in Additional Filing Requirements, earlier. Check the box if taxes were paid on U.S. source income. (a) During the tax year, did the CFC derive income in connection with the purchase from or sale to a related or unrelated person of personal property manufactured or sold for use outside the country under the laws of which the CFC is created or organized (for example, property manufactured or sold by a disregarded entity of the CFC)? See the instructions for, An interest in a trust, partnership, or REMIC; however, see the instructions for, If the sum of foreign base company income (determined without regard to section 954(b)(5)) and gross insurance income (as defined in section 954(b)(3)(C)) for the tax year is, The name of the person filing Form 5471 is generally the name of the U.S. person described in the applicable category or categories of filers (see, Complete a separate Schedule E for each applicable separate category of income. Unaudited separate-entity financial statements of the foreign corporation that are prepared in accordance with U.S. GAAP. For line 1(a)(1), $100 of gross income is reported in column (ii), $35 of foreign tax is reported in each of columns (x) and (xii), and the checkbox in column (xiv) is checked. 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). If Worksheet A, line 37c, is less than the amount on Worksheet A, line 36, allocate the subpart F income remaining (after having been limited) (that is, the line 38 amount) to the four categories of subpart F income listed on Worksheet A, lines 40 through 43, using the rules of Regulations section 1.952-1(e). Summary: This is an example of Worksheet B, used to calculate the U.S. shareholder's share of earnings of a C.F.C. Noncorporate U.S. shareholders should leave line 1a blank. Translate the amount on line 18 from functional currency to U.S. dollars at the year-end spot rate (as provided in section 989(b)). Enter the U.S. dollar amount of the recipient foreign corporation's income taxes deemed paid that are properly attributable to the PTEP distribution reported in column (f) and not deemed to have been paid by the domestic corporation for any prior tax year. Filers are permitted to enter both an EIN and a reference ID number. For purposes of the preceding sentence, a CFC includes an SFC that is only treated as a CFC for limited purposes under section 965(e)(2). See Regulations section 1.960-1. The amount of U.S. property held (directly or indirectly) by the CFC does not include any item that was acquired by the foreign corporation before it became a CFC, except for the property acquired before the foreign corporation became a CFC that exceeds the applicable earnings (as defined in section 956(b)) accumulated during periods before it became a CFC. 2019-40 provides a safe harbor for determining certain items of certain SFCs based on alternative information. To determine the appropriate code, see, If code 901(j) is entered on line a, enter on line b the country code for the sanctioned country using the two-letter codes (from the list at, Columns (a) through (j) of Schedule P correspond to Schedule J, columns (e)(i) through (e)(x). Filers are permitted to enter both an EIN and a reference ID number. PTEP attributable to hybrid dividends under section 245A(e)(2) and reclassified as investments in U.S. property. What information must be provided? Reporting other foreign financial assets. Proc. These headings must comport to those used on the Schedule M (Form 5471) to which this statement is attached. See the instructions for lines 1 through 4. With respect to distributions of PTEP resulting from inclusions under section 965, report the taxes properly attributable to such PTEP without reduction for the foreign tax credit disallowance. Changes to separate Schedule P (Form 5471). Subtract line 60 from line 57. Line 22. Also, information pertaining to hovering deficits is no longer reported in column (d).