Form 5472: 25% Foreign-Owned U.S. Corporations

Form 5472 is an information return. A U.S. corporation that is 25% foreign owned, or a foreign corporation with a U.S. trade or business, uses it to report certain transactions with related parties. The corporation attaches the form to its income tax return. The form does not tax those transactions. It gives the IRS information about them.

The Instructions for Form 5472 (Rev. December 2024) explain the rules. This post is general information. It does not tell you how to file your own return.

What makes a corporation a reporting corporation

A reporting corporation is one of two things. It can be a 25% foreign-owned U.S. corporation, including a foreign-owned U.S. disregarded entity. Or it can be a foreign corporation engaged in a trade or business in the United States.

A corporation is 25% foreign owned if at least one foreign person owned 25% or more at any time during the tax year. The test looks at voting power or value of the stock, owned directly or indirectly. For this test, the instructions use 10% in place of 50% in one ownership attribution rule.

When to file

A reporting corporation generally must file if it had a reportable transaction with a foreign or domestic related party. The reportable transactions are listed in Parts IV, V, and VI of the form. Transactions with a U.S. related party do not have to be listed one by one in those parts.

There are exceptions. A corporation does not have to file if it had no reportable transactions of the listed types. Another exception applies when a U.S. person that controls the foreign related corporation files Form 5471 and includes a Schedule M that shows the transactions. That exception does not apply to foreign-owned disregarded entities.

Foreign-owned disregarded entities

A foreign-owned U.S. disregarded entity has no income tax return of its own. Under the rules, it must still file a pro forma Form 1120 with Form 5472 attached. The pro forma return needs only the name and address of the entity and certain items on the first page. The entity uses its owner's tax year, or the calendar year if there is no owner year.

Due date

File Form 5472 with the corporation's income tax return. It is due by the return's due date, including extensions. For the extension form for business returns, see Form 7004: More Time to File a Business Return, Not More Time to Pay.

Penalties

A penalty of $25,000 applies to a reporting corporation that does not file Form 5472 when due, or does not file it in the manner prescribed. The same penalty applies if the corporation does not keep the records the regulations require. A substantially incomplete form counts as a failure to file.

If the failure continues more than 90 days after the IRS notifies the corporation, another $25,000 penalty applies. It applies for each 30-day period that the failure continues. Each member of a consolidated group is a separate reporting corporation, and each member is jointly and severally liable. Criminal penalties may also apply in some cases.

Keep the records

Keep the records that support each amount and each transaction listed on the form. The regulations set the records rule, so records are part of compliance, not only a formality.

A U.S. person who controls a foreign corporation may file Form 5471. See Form 5471: Reporting Interests in Foreign Corporations. For the corporate return itself, see Form 1120: The Corporate Income Tax Return and Who Must File It.

Checklist

Check whether a foreign person owns at least 25% of the corporation, directly or indirectly.
List every related-party transaction for the year.
Check whether an exception applies, such as a controlling U.S. person who files Form 5471 with Schedule M.
For a foreign-owned disregarded entity, prepare the pro forma Form 1120.
Attach Form 5472 to the return, and file by the due date.

This is general information only. It is not tax advice for your situation.

Sources: Sources: IRS, Instructions for Form 5472 (Rev. December 2024; use with the December 2023 revision of Form 5472) (https://www.irs.gov/pub/irs-pdf/i5472.pdf) This is general information, not advice about your specific return.

More guides on: Expats, military and international taxes

← Back to the blog · Leer en español