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New Reporting Requirements for Foreign-Owned U.S. Disregarded Entities: Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business  

03.06.17

Who must file Form 5472?

In general, a 25% foreign-owned U.S. corporation, or a foreign corporation engaged in a U.S. trade or business, must file Form 5472 if it had a reportable transaction with a foreign or domestic related party. 

New filing requirement

In December 2016, the Department of Treasury issued final regulations to treat U.S. single-member LLCs (LLCs with only one owner) owned by one foreign owner as separate entities for purposes of Form 5472 filing, effective for taxable years beginning on or after January 1, 2017, and ending on or after December 13, 2017. The new rule is a significant change from previous practice, as single-member LLCs have traditionally been treated as disregarded entities for U.S. federal tax and reporting purposes. In effect, the disregarded entities are now subject to the same reporting requirements as 25% foreign-owned domestic corporations.

For purposes of filing Form 5472, U.S. disregarded entities will have the same tax year as their foreign owner if the foreign owner is required to file a U.S. tax return.  If the foreign owner does not have U.S. tax filing obligation, the tax year of the U.S. disregarded entity is the calendar year.