Get Form 5471 Schedule O

Form 5471 Schedule O – Organization or reorganization of foreign corporation, and acquisitions and dispositions of its stock (Part I to be completed by U.S. officers and directors, Part II to be completed by U.S. shareholders)

In the U.S., a CFC is a foreign corporation in which U.S. shareholders own more than 50% of the total combined voting power of all voting stock or the total value of the company's stock.

Example: Your corporation owns another corporation. You are the indirect owner of that second corporation. Constructive ownership means you are closely related to the real owner — so closely, in fact, that the IRS thinks you should be treated like a owner, even if you are not one in real life.

Subpart F Income is the income of a controlled foreign corporation (CFC) on any day during the tax year. A CFC is a foreign corporation in which U.S. persons own more than 50% of the corporation's stock.

The US owner of a foreign corporation must include the taxable income of the entity in their own income tax returns. Generally, a US shareholder will only include dividend, or deemed dividend, income from the CFC. However, the amount and type of income from the entity is not all the same and not taxed at the same rate.

U.S. shareholders are U.S. persons (U.S. citizens or residents, domestic partnerships, domestic corporations, or non-foreign estates or trusts) that own 10% or more of the stock of a foreign corporation by vote or value.

Direct Ownership – A person or an entity has direct ownership in a foreign entity when they are the immediate owner of the shares (not a related party or another entity) of the foreign entity.

The form and attached schedules are used to satisfy the reporting requirements of transactions between foreign corporations and U.S. persons per sections 6038 and 6046, and the related regulations, as well as for Specified Foreign Corporations (SFC) as defined in section 965.