Enter the CFCs qualified interest income, as defined in Regulations section 1.951A4(b)(2)(iii). The name of the person filing Form 5471 is generally the name of the U.S. person described in the category or categories of filers (see Categories of Filers , earlier). Section D must be completed by shareholders who dispose of their interest (in whole or in part) in a foreign corporation. If the Yes box on line 17b has been checked and the U.S. shareholder filing the Form 5471 is a controlling section 245A shareholder of the foreign corporation, the U.S. shareholder filing this Form 5471 must attach an Elective Section 245A Year-Closing Statement pursuant to Regulations section 1.245A-5(e)(3)(i)(C) containing the information required under Regulations section 1.245A-5(e)(3)(i)(D). Attach a statement with a description and the amount of any adjustments required before taking into account taxes deemed paid by the foreign corporation. See Regulations section 1.6046-1(i) for additional information. 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. For purposes of this Schedule P, include in each separate category of income, foreign source and U.S. source income. Attach a statement detailing the nature and amount of any adjustments not accounted for in the E&P determined before reduction for distributions and inclusions (that is, adjustments other than those listed on lines 2a through 5b). income but then it would not have gone to the 8960. Section 951(a)(1)(A) inclusions are taken into account for the tax year before actual distributions and section 951(a)(1)(B) inclusions. In which more than 50% of the total voting power or value of all classes of stock of the corporation is treated as owned by a U.S. shareholder. A person is a Category 5c filer if they are a related constructive U.S. shareholder of a foreign-controlled CFC. Report the exchange rate using the "divide-by convention" specified under Reporting Exchange Rates on Form 5471 . For purposes only of taking into account income described in section 953(a) (relating to insurance income), a CFC also includes a foreign corporation that is described in section 957(b); and for purposes only of taking into account related person insurance income, a CFC includes a foreign corporation described in section 953(c)(1)(B). 2019-40) to determine certain amounts in this schedule. The reference ID number assigned to a foreign corporation on Form 5471 generally has relevance only on Form 5471, its schedules, and any other form that is attached to or associated with Form 5471, and generally should not be used with respect to that foreign corporation on any other IRS forms. See Regulations sections 1.6038-1(j) and 1.6038-2(k)(3) for alleviation of this penalty in certain cases. In Line 1 - Gross receipts for section 59A(e), input a Total and/or the Total Effectively Connected Income Gross Receipts. The majority of income and expenses are reported on the face of the K-1 in Boxes 5 through 9b, Box 11A (portfolio income), and 13K (portfolio deduction 2% floor). Use Schedule E-1 (on pages 2 and 3 of separate Schedule E) to report the cumulative balance of foreign income taxes paid or accrued by a CFC by separate category of income. This list identifies the codes used on Schedule K-1 for all partners and provides summarized reporting information for partners who file Form 1040. See section 989(b). Enter the date the shareholder acquired (whether in one or more transactions) an additional 10% or more (in value or voting power) of the outstanding stock of the foreign corporation. The amount included in gross income of U.S. shareholders of the CFC under section 951A might not be known if there is more than one U.S. shareholder. and is due when the income tax return is due including any . 851, available at, Part IV, Excepted Specified Foreign Financial Assets, Enter foreign currency transaction gain or loss reported on the income statement. Applying the rules of Instead, include the amounts in the total for line 4. 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. An amended 2017 tax return should be filed by or for the U.S. person(s) with respect to which Form 5471 was required and that return should include an amended Form 5471. See also section 1293(f) for inclusions with respect to a passive foreign investment company. PTEP attributable to subpart F income inclusions (not described in any other column) and reclassified as investments in U.S. property. The line 4 result can be positive or negative. In other words, are any amounts described in section 954(c)(2)(A) excluded from line 1a of Worksheet A? Prior to the enactment of Subpart F . De minimis is defined as annual Subpart F income that is the lesser of 5% of gross income of the CFC or $1 million. Exclusion of U.S. income. For more details on control for purposes of Category 4, see section 6038(e)(2) and Regulations sections 1.6038-2(b) and (c). See the instructions for lines 3 and 4. Every U.S. person described in Category 3 must complete Part II. During the tax year, did the CFC receive or accrue from a related CFC dividends, interest (including factoring income treated as income equivalent to interest for purposes of section 954(c)(1)(E)), rents, or royalties attributable or properly allocable to income of the related person which is neither subpart F income nor income treated as effectively connected with the conduct of a trade or business in the United States? The person that files Form 5471 must complete Form 5471 in the manner described in the instructions for Item H. All persons identified in Item H must attach a statement to their income tax return that includes the information described in the instructions for Item H. See Regulations section 1.6038-2(j)(1) and (3) for additional information. See section 951(b). This section also clarifies exceptions for certain Category 1 and 5 filers announced in Notice 2018-13, 2018-6 I.R.B. Category 1b and 5b filers are not required to file Schedule G for foreign-controlled section 965 SFCs and foreign-controlled CFCs, respectively. In this case, enter zero on line 10 and skip lines 11 through 19. As to a domestic corporation that is a U.S. shareholder with respect to both CFCs, the tiered hybrid dividend is treated as subpart F income of the receiving CFC, and the U.S. shareholder must include in its gross income its pro rata share of the tiered hybrid dividend. Differences between this U.S. dollar GAAP column and the U.S. dollar income or loss figured for tax purposes under Regulations section 1.985-3(c) should be accounted for on Schedule H. See Schedule H, Special rules for DASTM , later. See section 989(b). There are three different types of Category 1 filers, each described below: Category 1a filers, Category 1b filers, and Category 1c filers. Enter the information in the following order: city, province or state, and country. Enter the CFCs exclusions as described in Regulations section 1.951A-2(c). 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. The term unusual or infrequently occurring items is defined by U.S. GAAP (see FASB Accounting Standards Codification (ASC) Topic 220 (Income Statement), Subtopic 220-20 (Unusual or Infrequently Occurring Items) or subsequent guidance). As a result, if the foreign corporation has E&P for the tax period covered by this return that is subject to recapture as a result of a prior-year E&P limitation, add such recapture amount to the result from Worksheet A, line 69, and include the combined amount on line 1h (Other subpart F income). If a GILTI high-tax exclusion under Regulations section 1.951A-2(c)(7)(viii) is effective with respect to the CFC for the CFC inclusion year, check the box in column (xiv) that corresponds to the item(s) of income to which the exception applies. See section 959(a)(2) and (f)(1). See Temporary Regulations section 1.921-1T(b)(3). During the tax year, did the CFC receive any item of income that was subject to an effective rate of income tax imposed by a foreign country greater than 90% of the maximum rate of tax specified in section 11? See Regulations section 1.6038-2(j)(2) and (3) and (l) for additional information. Corporation B has a section 951A inclusion of $50x. 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. On line 4(1), both columns (xii) and (xiv) should be blank in all cases. Use Schedule H to report the foreign corporation's current E&P for U.S. tax purposes. Audited separate-entity financial statements of the foreign corporation that are prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). Do not include column (d) amounts in the total reported in column (f). As such, the exchange rate must be reported as the units of foreign currency that equal one U.S. dollar, rounded to at least four places. This line of column (d) is the unsuspended taxes under section 909 as a result of related income taken into account by the foreign corporation, certain U.S. corporate owners of the foreign corporation, or a member of such U.S. corporate owners consolidated group. If you satisfy the requirements of both Category 4 and Category 5a filers, only check the box for Category 4 and leave the box for Category 5a blank. 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. Shareholder's Pro Rata Share of Subpart F Income of a C.F.C. If prior period adjustments are not reported separately on the income statement, do not report such amounts on this line item (see ASC 250 (Accounting Changes and Error Corrections) or subsequent guidance). Do not include foreign income taxes paid or accrued by the foreign corporation in its other tax years beginning after December 31, 2017, or that do not relate to the current tax year. Provide the total amount of the transactions described in Regulations section 1.385-3(b)(2) (as measured by the fair market value of the distribution or, as the case may be, the property exchanged for the debt instrument), and of the distributions and/or acquisitions described in Regulations section 1.385-3(b)(3)(i) (as measured by the fair market value of the property distributed and/or acquired). 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. If code 901j is entered on line A, enter the country code for the sanctioned country using the two-letter codes from the list at, Consistent with the reporting requirement on Form 1118, enter the two-letter code (from the list at. 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? See section 960(b). Use Part III to report taxes for which foreign tax credits are not allowed. For example, one U.S. shareholder might not know the amount of the other U.S. shareholders section 951A inclusion that is allocated to the CFC because the first U.S. shareholder does not have information with respect to the second U.S. shareholders net CFC tested income or pro rata share of QBAI. If a domestic corporation includes an amount in income under section 951A, such domestic corporation is deemed to pay foreign income taxes equal to 80% of the product of For the computation of such amount, see Form 1118, Schedule D. Amounts reported on line 9 should be negative numbers. For purposes of Category 1b, a foreign-controlled section 965 SFC is a foreign corporation that is a section 965 SFC that would not be a section 965 SFC if the determination were made without applying subparagraphs (A), (B), and (C) of section 318(a)(3) so as to consider a U.S. person as owning stock that is owned by a foreign person. However, these filers are required to file Form 5471 for an FSC, regardless of whether it has filed Form 1120-FSC, if the filer has inclusions with respect to the FSC under section 951(a) (as described above). This amount is the sum of post-2017 E&P not previously taxed, post-1986 undistributed earnings, pre-1987 E&P not previously taxed, and PTEP. A corporate U.S. shareholder may claim a credit for such foreign taxes, subject to certain limitations. If code 901j is entered on line A, enter the country code for the sanctioned country using the two-letter codes from the list at IRS.gov/CountryCodes. Enter the total amount of the lower-tier foreign corporations PTEP in the PTEP group within the annual PTEP account identified in column (d) and column (e). In the computation of earnings and profits determine that earnings and . Category 1a, 1c, 3, 4, 5a, and 5c filers must complete Part II. This will not be reported on the 1040. See section 6712. Schedule R is used to report basic information pertaining to distributions from foreign corporations. The most fundamental distinction between the definitions of Subpart F income and GILTI is this Subpart F income is defined initially by what it includes, while GILTI is defined initially by what it excludes. However, if the computer-generated form is identical to the IRS-prescribed form, it does not need to go through the approval process, and an attachment is not necessary. Report all information in the foreign corporation's functional currency in accordance with U.S. GAAP and translate using U.S. GAAP translation principles. If the taxpayer attaches the statement described in the previous sentence, then in the entry space provided for line 6b the taxpayer should include the total amount of stock-based compensation taken into account as an IDC, including stock-based compensation pursuant to the election described above and any not subject to such election. as of the close of each quarter of the tax year. For more information, see Regulations section 1.6011-4. The foreign tax year under foreign tax law may not be the same tax year as the U.S. tax year of the foreign corporation. See Regulations section 1.904-4(c)(3)(ii). The facts are the same as in Example 1, except that during Year 2 CFC2 invests $40 in U.S. property. L. 95-213, Dec. 19, 1977, 91 Stat. There are three different types of Category 5 filers, each described below: Category 5a filers, Category 5b filers, and Category 5c filers. Any foreign income taxes paid or accrued (but not deemed paid) by the foreign corporation with respect to a PTEP distribution from a lower-tier foreign corporation (whether or not such PTEP distribution is reported in Section 2), such as withholding taxes imposed on the PTEP distribution, are reported in Section 1. "field, "64.Amount of line 61 that applies to section 954(c) subpart F Foreign Base Company Sales Income. as of the close of:", "1a. Instead, they should be reported in the year to which such taxes relate. Proc. For amounts included in Other Comprehensive Income (OCI), see the instructions for Lines 23 and 24. Foreign base company shipping income as defined in former section 954(f). For purposes of this Schedule J, include in each separate category of income, foreign source and U.S. source income. Any liability of the corporation the shareholder assumes in connection with the distribution. Enter a space between each code. If a U.S. corporation that owns stock in a foreign corporation is a member of a consolidated group, list the common parent as the U.S. person filing During Year 1, Domestic Corporation reports an inclusion under section 951(a)(1) of $100 as a result of subpart F income of CFC2. Report such amounts as negative numbers. For example, the taxpayer may still be required to complete a Form 1116 or a Form 1118, and/or a Form 5471 (including Schedule J and Schedule P), and separately report passive category income and section 951A category income. Neither Corporation A nor Corporation B has any net deemed tangible income return that would reduce the GILTI inclusion of Corporation A or B. If you file a Form 5471 that you later determine is incomplete or incorrect, file a corrected Form 5471 with an amended tax return, using the amended return instructions for the return with which you originally filed Form 5471. I had already included it as nonqualified dividend income as an entry in the dividend screen. Check the box at the top of Part I if the person filing Form 5471 does not have all U.S. shareholders information necessary to complete any one of the previously taxed E&P amounts required to be included in column (e). Average amount of U.S. property held (directly or indirectly) by the C.F.C. Every year, the IRS issues a revenue procedure to provide guidance for filers of computer-generated forms. See Regulations section 1.904-4(c)(4). 1167, General Rules and Specifications for Substitute Forms and Schedules, which reprints the most recent applicable revenue procedure. The term base erosion payment generally means any amount paid or accrued by the U.S. filer to a foreign corporation that is a related party to the U.S. filer within the meaning of section 59A(g) and with respect to which a U.S. deduction is allowed under chapter 1 of the Code. Such tax is related to previously taxed subpart F income. 10% or more of the total combined voting power of all classes of stock with voting rights. Report on these lines loan guarantee fees received (line 13) and loan guarantee fees paid (line 28). When a schedule is required but all amounts are zero, the schedule should still be filed with one or more zero amounts. Attach a statement detailing any differences between the starting and ending balance reported on line 8c. Enter the greater of line 7a or line 7b" field, "9. See sections 956(c) and (d) and the regulations under section 956 to determine whether the CFC is treated as holding U.S. property. 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. Schedules K-2 and K-3 are new reporting forms that pass-through entities generally must complete, beginning in the 2021 tax year. Net investment income. In addition, certain upper-tier CFCs must maintain a hybrid deduction account with respect to each share of the stock of a lower-tier CFC that the upper-tier CFC owns directly or indirectly through a partnership, trust, or estate. The facts are the same as in Example 1, except that, in addition, CFC2 distributes $36 to CFC1 in Year 3. Domestic Corporation reports on CFC2s Form 5471, Schedule J, line 4, column (e)(x), as a positive number, the $40 PTEP distribution. However, if a taxpayer has entered code TOTAL on line A and the total reported on that Schedule Q includes both foreign source income and U.S. source income, the taxpayer may check both boxes on line D. A separate Schedule Q is required for foreign oil and gas extraction income (FOGEI) and foreign oil related income (FORI). Enter the amounts in this schedule in the functional currency of the foreign corporation as reported on Form 5471, page 1, Item 1h Functional Currency. Specifically, if the correlation requirement is applicable with respect to a tax year, it applies only on Form 5471, page 1, line 1b(2). Any foreign corporation with respect to which one or more domestic corporations is a U.S. shareholder. These amounts are included in the totals for each respective column on line 4. These lines of column (d) account for the balance of prior year hovering deficits and suspended taxes that have not yet been deducted. 341, and, A Category 1 filer does not have to file Form 5471 if, A Category 1 filer does not have to file Form 5471 if no U.S. shareholder (including the Category 1 filer) owns, within the meaning of section 958(a), stock in the section 965 SFC on the last day in the year of the foreign corporation in which it was a section 965 SFC and the SFC is a foreign-controlled section 965 SFC. The amounts from lines 58 and 59 of Worksheet A. However, see section 964(e) for an exception to section 954(c)(3) and section 964(e)(4) for an exception to section 954(c)(6). Line 3 should never have an amount entered in column (e). See 965(a) amount column. Line 7a plus accumulated earnings and profits" field, "8. If the filer is described in more than one filing category, do not duplicate information. See the line 4 instructions above for examples. While not allowed as a credit, such taxes are taken into account in determining the foreign corporations E&P. For purposes of Category 1, a section 965 SFC is: A CFC (see Category 5 Filers , later, for definition); or. Therefore, Schedule I-1 is completed once (for general category income, passive category income, or both). Section 6 of Rev. 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. See Regulations section 1.482-7(b)(1)(i). If taxes were paid or accrued to more than one country with respect to the same income, include each tax paid or accrued to a different country on separate lines. A potential section 951(a)(1)(B) inclusion results in a reclassification of section 959(c)(2) PTEP, if any, to section 959(c)(1) PTEP before reclassification out of the section 959(c)(3) E&P balance. Name and EIN (if any) of the foreign partnership. In general, a CFC is a foreign corporation that has U.S. shareholders that own (directly, indirectly, or constructively, within the meaning of section 958(a) and (b)) on any day of the tax year of the foreign corporation, more than 50% of: The total combined voting power of all classes of its voting stock, or. 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.). (c) and (d), which related to coordination of provisions with election of a foreign investment company to distribute income and coordination with foreign personal holding company provisions, respectively. Such tax should also be reflected as a negative amount in column (d). Column (xii). Enter the amounts on lines 1 through 10c in the CFC's functional currency. In doing so, the corporate U. S. shareholder must determine whether it meets the statutory and regulatory requirements for section 245A DRD. The reference ID number that is entered in Item 1b(2) must be alphanumeric (defined later) and no special characters or spaces are permitted. The repeal of section 902 is effective for tax years of foreign corporations beginning after December 31, 2017, and to tax years of U.S. shareholders in which or with which such tax years of foreign corporations end. A corporate distribution to a shareholder is generally treated as a distribution of earnings and profits. The line 5c current year E&P amount may include amounts with respect to the general category, passive category, or section 901(j) category. Such tax is attributable to previously taxed subpart F income and is reported on line 6, column (e)(x), of Schedule E1 of CFC1s Form 5471. It may also reflect uncertain tax positions (ASC 740-10) and would not include taxes paid in respect of uncertain tax positions recorded in prior years. The additional sheets must conform with the IRS version of that section. The total reported on Schedule E, Part I, Section 1, line 5, column (l), should be separated into columns (a) through (e) according to the type of income or E&P to which such taxes relate. The third quarter of the tax year" field, "1d. Reclassified section 951A PTEP and section 951A PTEP that is in the section 951A category should be reported on the Schedule P completed for the general category. Enter the amount of the U.S. shareholders subpart F income inclusion attributable to tiered hybrid dividends received by the CFC. Check the "Yes" box on line 14 if you answer Yes to any of the 22 questions in the Schedule G, line 14 table below. For example, a U.S. person described in Category 5 may file a joint Form 5471 with a Category 4 filer or another Category 5 filer; similarly, a U.S. person described in Category 5b may file a joint Form 5471 with a Category 4 or 5a filer or another Category 5b filer (but not a Category 5c filer). Certain other filing exceptions apply to all categories of filers. How is Accrued Passive Income from Foreign Mutual Funds Taxed. 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. See Rev. If the name of either the person filing the return or the corporation whose activities are being reported changed within the past 3 years, show the prior name(s) in parentheses after the current name. Pre-1987 U.S. dollar PTEP should be translated into the foreign corporation's functional currency using the rules of Notice 88-70 and added to post-1986 amounts in the appropriate PTEP group. Any tested loss under section 951A(c)(2)(B)(ii). Generally, the E&P of a CFC attributable to amounts that are, or have been, included in the gross income of a U.S. shareholder under section 951(a) are not, when distributed through a chain of ownership described in section 958(a), also included in the gross income of another CFC in such chain for purposes of the application of section 951(a) to such other CFC with respect to such U.S. shareholder. The line items to be completed are: Foreign base company income generally does not include the following. 2004Subsecs. If the failure continues 90 days or more after the date the IRS mails notice of the failure to the U.S. person, an additional 5% reduction is made for each 3-month period, or fraction thereof, during which the failure continues after the 90-day period has expired. A CFC with tested income that is a partner of a partnership that has depreciable tangible property determines its share of the partnerships average adjusted basis in the depreciable tangible property of the partnership based on the amount of the distributive share of the gross income produced by the property that is included in the CFCs gross tested income (defined below) relative to the total amount of gross income produced by the property. For line 3(2), $150 of gross income is reported in column (ii), $10 of foreign tax is reported in each of columns (x) and (xii), and the checkbox in column (xiv) is not checked. Enter the month, day, and year using the following format: MM-DD-YYYY. Criminal penalties under sections 7203, 7206, and 7207 may apply for failure to file the information required by sections 6038 and 6046. "field, "48.Shareholders pro rata share of export trade income that applies to line 47 amount. In the case of an entity classification election that is made on behalf of a foreign corporation on Form 8832, Regulations section 301.6109-1(b)(2)(v) requires the foreign corporation to have an EIN for this election. Section C is completed by shareholders who are completing Schedule O because they have acquired sufficient stock in a foreign corporation. This rule generally applies to covered asset acquisitions after December 31, 2010. 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). As a result of this change, former lines C and D have been re-lettered as new lines D and E. At the top of page 1 of the schedule, if a Schedule Q filer enters code TOTAL on line A, the filer must also check one or both boxes on line D (former line C) to indicate whether the total amounts reported on Schedule Q include only foreign source income, or both foreign source income and U.S. source income.
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