Get Persons With Respect To Certain Foreign Corporations See Separate Instructions

Schedule E (Form 5471), Income, War Profits, and Excess Profits Taxes Paid or Accrued. Foreign corporation's that file Form 5471 use this schedule, to report taxes paid, accrued, or deemed paid and to report taxes for which a credit may not be taken.

To put it simply, any US citizen, corporation, partnership, trust, or estate who has at least 10% ownership of a foreign corporation, is generally required to file Form 5471 at least once, any many have to file Form 5471 every year.

An SFC is any foreign corporation where one or more domestic corporations is a U.S. shareholder or where U.S. shareholders own more than 50% of the stock of the corporation.

This means that — in most scenarios — US individuals who are considered to have 10% or more ownership over a controlled foreign Corporation will have to file Form 5471. There is also requirements for corporations with ownership/interest in other corporations, but for the individual, it is generally for owners of CFCs.

(1) In general For purposes of this section, the term “specified foreign corporation” means— (A) any controlled foreign corporation, and (B) any foreign corporation with respect to which one or more domestic corporations is a United States shareholder.

In the United States, 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.

Form 5471 is used by U.S. persons involved in foreign corporations to satisfy federal reporting requirements under Internal Revenue Code (IRC) sections 6038 and 6046. The IRS has delineated five categories of persons required to file Form 5471.

Are You Required to File Tax Form 5471? U.S. citizens and residents who are officers, directors or shareholders in certain foreign corporations must file Form 5471 as part of their expat tax return. This form is officially called the Information Return of U.S. Persons with Respect to Certain Foreign Corporations.

A foreign corporation is considered to be a CFC if it is more than 50% owned by U.S. shareholders. 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.