If your business is expanding into the U.S. then you will need to determine exactly which forms to file and how much income to report on those forms, and as mentioned earlier, that’s what we’re here to explain. So, let’s start by explaining the two forms that tend to be the most confusing for expanding businesses: Form 5471 and Form 5472. Form 5471 is the “Information Return of U.S. Persons With Respect to Certain Foreign Corporations,” whereas Form 5472 is the Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business.”
You will be required to file a Form 5471 if you meet one of the following requirements:
Alternatively, you will need to file a Form 5472 if you meet at least one the following criteria:
To summarize, you will generally be required to file a Form 5471 if you are a U.S. citizen or resident and an officer, director, or shareholder in a controlled foreign corporation. Alternatively you will need to file a Form 5472 if you are a foreign person that has an ownership interest in an entity that has a total minimum amount of 25% U.S. ownership, or have an ownership interest in an entity that is engaged in a U.S. trade or business. When determining whether you need to file and which form you need to complete, you will need to look at what you “own” and what you “control.”
For assistance with filing these forms, or determining whether you have an obligation to file either one of these forms, please contact us at AsenaAdvisors.com.