Enter the appropriate code on line a (at the top of page 1 of Schedule J). Category 2 filers who are shareholders, officers, and directors of an FSC (as defined in section 922, as in effect before its repeal) must file Form 5471 and a separate Schedule O to report changes in the ownership of the FSC. Enter the U.S. dollar amount of the recipient foreign corporation's income taxes deemed paid that are properly attributable to the PTEP distribution reported in column (f) and not deemed to have been paid by the domestic corporation for any prior tax year. For more information, see Regulations section 1.6011-4. Penalties may be imposed for undisclosed foreign financial asset understatements. For purposes of Category 1c, the term foreign-controlled section 965 SFC has the same meaning as provided in Category 1b Filers, above. Complete lines 19a and 19b only if the filer is a domestic corporation. 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. Check the Item E checkbox if any excepted specified foreign financial assets are reported on Form 5471. See Rev. Check the Yes box on line 6a if the filer is claiming a deduction under section 250 with respect to foreign-derived intangible income (FDII), and enter the amounts requested on lines 6b, 6c, and 6d. 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). 8 A subpart F loss is allocated to a separate category from net tested income, and there does not appear to be any provision that allows this loss to be allocated across to reduce the CFC's tested income. This is the case for both direct foreign tax credits (that is, those foreign taxes paid or accrued directly by the shareholder upon receipt of the PTEP distribution and allowed as a credit under sections 901 or 903) and indirect foreign tax credits (that is, those taxes deemed paid by the shareholder with respect to taxes originally paid or accrued by the CFC under section 960(b)). If the failure continues for more than 90 days after the date the IRS mails notice of the failure, an additional $10,000 penalty will apply for each 30-day period, or fraction thereof, during which the failure continues after the 90-day period has expired. The balance of foreign income taxes paid or accrued with respect to the three income groups that is entered on line 16 should equal zero after taking into account the reductions. 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. There is no provision on Schedule K or Schedule K-1 (1120S) for Farm Income to be a separately stated item. See section 959(b). See Regulations section 1.960-1(c)(1). 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. In the case of a CFC owned by a foreign disregarded entity (FDE), please include the information of the FDE and the regarded entity owner. 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). Enter on line 8c the CFCs total extraordinary disposition account balance with respect to all U.S shareholders of the CFC at the beginning of the CFC year and at the end of the CFC tax year. The partnership should use this code to report your share of income/gain that comes from your total net section 743 (b) basis adjustments. When a schedule is required but all amounts are zero, the schedule should still be filed with one or more zero amounts. Enter the excess of foreign currency gains over foreign currency losses from section 988 transactions. If a CFC is treated as owning a capital or profits interest in a partnership under constructive ownership rules similar to the rules of section 958(b), the CFC shall be treated as owning such interest directly or indirectly for purposes of this definition. 2019-40 provides a safe harbor for determining certain items of certain SFCs based on alternative information. Reclassified section 951A PTEP and section 951A PTEP that is in the section 951A category should be reported on the general category Schedule J. Any person who fails to file or report all of the information requested by section 6046 is subject to a $10,000 penalty for each such failure for each reportable transaction. As a result, the GILTI rules generally impose a U.S. corporate minimum tax of 10.5 percent (50% x 21%) and to the extent foreign tax credits are available to reduce the US corporate tax, may result in no additional U.S. federal income tax being due (this would require a foreign tax rate of at least 13.125%, so that 80% of such tax would offset . Do not include column (d) amounts in the total reported in column (f). 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). Except as otherwise provided in the instructions for each type of Category 1 filer below, the following definitions apply for purposes of Category 1: For purposes of Category 1, a U.S. shareholder is a U.S. person who owns (directly, indirectly, or constructively, within the meaning of section 958(a) and (b)) 10% or more of the total combined voting power or value of shares of all classes of stock of a section 965 SFC. 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? Subpart F income reportable on lines 1e through 1h includes the following. 2019-40). QBAI is the average of the CFC's aggregate adjusted bases, as of the close of each quarter of its taxable year, in specified tangible property used in its trade or business in the production of tested income, and for which a deduction is allowable under section 167. In columns (a), (b), and (c), report only the foreign income taxes the foreign corporation pays or accrues attributable to the subpart F income group, the tested income group, and the residual income group, respectively. To determine the appropriate code, see Categories of Income in the Instructions for Form 1118. "field, "60.Enter the smaller of line 58 or line 59. Thus, the sale of a partnership interest by a CFC that meets the ownership threshold constitutes subpart F income only to the extent that a proportionate sale of the underlying partnership assets attributable to the partnership interest would constitute subpart F income. Column (a) of the attached statement should provide a description of the type of other amounts received during the annual accounting period. Lines 13g, 14d, 15d, 16d, 18d, and 19d. See section 59A(d)(1). See Regulations section 1.482-7(e) for rules on a determining and updating controlled participants RAB share. If Worksheet A, line 37c, is less than the amount on Worksheet A, line 36, allocate the subpart F income remaining (after having been limited) (that is, the line 38 amount) to the four categories of subpart F income listed on Worksheet A, lines 40 through 43, using the rules of Regulations section 1.952-1(e). Enter the exchange rate used in computing line 5d. If a U.S. person has appropriately amended the immediately prior year return, including its Schedule E-1, to redetermine its U.S. tax liability, no adjustment should be included on this line. For example, with respect to line 1g, there is a single subpart F income group within the general category that consists of all of a CFCs foreign base company sales income. Pub. See section 951A (f) (1). 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 hovering deficit offset included in column (d) is reported as a positive number. LA R.S. Also assume for both years that the local currency in which the tax was paid was the same as the foreign corporations functional currency. In subsequent years, the Form 5471 filer may continue to enter both the EIN on line 1b(1) and the reference ID number on line 1b(2), but must enter at least the EIN on line 1b(1). If code 901(j) is entered on line a, enter on line b the country code for the sanctioned country using the two-letter codes (from the list at IRS.gov/CountryCodes). Use line 4 to report the information required in columns (i) through (xvi) that is in a section 904 category but that is not of a type that is included in one of the subpart F income groups or a tested income group and is therefore assigned to the residual income group. For details, see the Instructions for Form 8918. In other words, are any amounts excluded from line 1d of Worksheet A by reason of being attributable to a transaction(s) directly related to the business needs of the foreign corporation? A hybrid deduction account with respect to a share of stock of a CFC reflects the amount of hybrid deductions of the CFC that has been allocated to the share. With respect to a taxpayer completing Schedule I-1 with respect to a foreign corporation with only general category income (and no passive category income) on line 6, the taxpayer should enter the code GEN in the entry space for separate category. The annual accounting period of an SFC (as defined in section 898) is generally required to be the tax year of the corporation's majority U.S. shareholder. See the instructions for, An interest in a trust, partnership, or REMIC; however, see the instructions for, If the sum of foreign base company income (determined without regard to section 954(b)(5)) and gross insurance income (as defined in section 954(b)(3)(C)) for the tax year is, The name of the person filing Form 5471 is generally the name of the U.S. person described in the applicable category or categories of filers (see, Complete a separate Schedule E for each applicable separate category of income. Click on List One (XLS). United States Code, 2021 Edition Title 26 - INTERNAL REVENUE CODE Subtitle A - Income Taxes CHAPTER 1 - NORMAL TAXES AND SURTAXES Subchapter E - Accounting Periods and Methods of Accounting PART II - METHODS OF ACCOUNTING Subpart D - Inventories Sec. See Regulations section 1.9601(d)(2). During the tax year, did the CFC receive dividends* or interest** from a related person that (i) is a corporation created or organized under the laws of the same country under the laws of which the CFC is created or organized, and (ii) has a substantial part of its assets used in its trade or business located in the same foreign country? Taxpayers no longer have the option of entering FOREIGNUS or APPLIED FOR in a column that requests an EIN or reference ID number with respect to a foreign entity. These adjustments may include both positive and negative adjustments to conform the foreign book income to U.S. GAAP and to U.S. tax accounting principles. These codes are available at www.six-group.com/en/products-services/financial-information/data-standards.html#scrollTo=currency-codes. One person may file Form 5471 and the applicable schedules for other persons who have the same filing requirements. Then Mr. Lyons is required to indicate that he is a 10% or more shareholder in corporations F, FI, and FJ. When translating amounts from functional currency to U.S. dollars, you must use the method specified in these instructions. Enter the amount of taxes paid or accrued by the foreign corporation to the United States. An actual distribution is first out of PTEP, if any, and then out of the section 959(c)(3) balance. Report these amounts in U.S. dollars. Check Yes if the foreign corporation received any intangible property in a prior year or the current tax year in an exchange under section 351 or section 361 from a U.S. transferor that is required to report a section 367(d) annual income inclusion for the tax year. "field, "49.Section 954(c) subpart F Foreign Base Company Sales Income subtotal. 92-70). Every year, the IRS issues a revenue procedure to provide guidance for filers of computer-generated forms. Column (x) is PTEP attributable to section 951(a)(1)(A) inclusions (section 959(c)(2) amounts) not otherwise described in the instructions for columns (e)(vi) through (ix). If the corporation does not itself incur intangible development costs, then it should only report cost sharing transaction payments made on line 20. Check Yes if, during the tax year, the filer engaged in at least one of the transactions described in Regulations section 1.385-3(b)(2). CFC1, in turn, wholly owns the only class of stock of CFC2, a foreign corporation. In addition to the separate category codes referred to above, if you have more than one of the categories of income referred to above, you must complete and file a separate Schedule Q using code TOTAL that aggregates all amounts listed for each line and column in all other Schedules Q. Enter the result here and on Form 5471, Schedule I, line 1e. 341, and Rev. The amounts entered on line 5a may be negative or positive. Enter the line 5c functional currency amount translated into U.S. dollars at the average exchange rate for the foreign corporation's tax year. The above rules apply with respect to amounts received for services under a particular contract only if at some time during the tax year 25% or more in value of the outstanding stock of the corporation is owned, directly or indirectly, by or for the individual who has performed, is to perform, or may be designated (by name or by description) as the one to perform, such services. 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. Subpart F Income. A Category 1a filer is a Category 1 filer that is not a Category 1b or 1c filer. Source: IRS Form 1065, Schedule K-1 . If the person who is filing Form 5471 on behalf of others is married to a person identified in Item H and they are filing Form 1040 jointly, the statement described above does not have to be attached to the jointly filed Form 1040. Current year tax on reattributed income from disregarded payments. 55, available at IRS.gov/irb/2003-28_IRB#RP-2003-47, for procedural rules regarding the election under section 953(d). 1494, which enacted sections 78dd-1 to 78dd-3 of Title 15, Commerce and Trade, and amended sections 78m and 78ff of Title 15.For complete classification of this Act to the Code, see Short Title of 1977 Amendment note set out under section 78a of . Report all information in the foreign corporation's functional currency in accordance with U.S. GAAP and translate using U.S. GAAP translation principles. Category 1b and 5b filers are not required to file Schedule G for foreign-controlled section 965 SFCs and foreign-controlled CFCs, respectively. If you have other foreign financial assets, you may be required to file Form 8938, Statement of Specified Foreign Financial Assets. A Section 962 election permits individual CFC shareholders to pay a maximum of 21 percent on subpart F inclusions. In the instructions for Schedule G , later, in the Schedule G, Line 14 table, question 18 has been revised for clarity. The transferor and transferee in certain section 351 transactions may make a joint election under section 362(e)(2)(C) to limit the transferor's basis in the stock received instead of the transferee's basis in the transferred property. Report the relevant section 965(a) amount and the relevant section 965(c) deduction on Form . 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). Enter the current income tax expense (benefit) on line 21a and deferred income tax expense (benefit) on line 21b. A Category 4 filer does not have to file Form 5471 if all of the following conditions are met: The Category 4 filer does not own a direct interest in the foreign corporation; The Category 4 filer is required to furnish the information requested solely because of constructive ownership (as determined under Regulations section 1.958-2, 1.6038-2(c), or 1.6046-1(i)) from another U.S. person; and. Enter the reduction to the column (b) tested income group for tested income taxes not deemed paid. Enter taxes for which a foreign tax credit is disallowed other than those detailed in columns (c) through (g). Generally, all computer-generated forms must receive prior approval from the IRS and are subject to an annual review. Subtract line 51 from line 50. Instead, they should be reported in the year to which such taxes relate. 10% or more of the total combined voting power of all classes of stock with voting rights. See section 59A(c)(2)(A) and (B) for further details. If there is more than one U.S. shareholder, the amounts reported on Schedule P with respect to each U.S. shareholder might be different from the amounts reported on Schedule J. 374, for rules for computing section 986(c) gain or (loss) and Regulations section 1.986(c)-1(a) and (b) for rules for computing section 986(c) gain or (loss) recognized with respect to distributions of PTEP within the reclassified section 965(a) PTEP group and the section 965(a) PTEP group. For a noncorporate U.S. shareholder, include the result as Other income on Schedule 1 (Form 1040), line 8z, or on the comparable line of other noncorporate tax returns. 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. Interest income includes factoring income arising when a person acquires a trade or service receivable (directly or indirectly) from a related person. A Category 4 filer does not have to file Form 5471 if it: No statement is required to be attached to the tax return of a Category 4 filer claiming either constructive ownership exception. Regulations sections 1.6038-2(h) and 1.6046-1(g) require that certain amounts be reported in U.S. dollars and/or in the foreign corporation's functional currency. Schedules E and E-1 are also relevant for noncorporate U.S. shareholders who do not make a section 962 election. 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. Other penalties, such as an accuracy-related penalty under section 6662A, may also apply. Proc. Information described in a code listed above qualifies as alternative information only if information described in any preceding code is not readily available (as defined in section 3.04 of Rev. Include the amount, if any, that is not eligible for the section 245A dividends received deduction pursuant to section 964(e)(4) on line 1e. Line 21. Follow the country's practice for entering the postal code, if any. Enter the amount, if any, of the CFCs gross income excluded from foreign base company income (as defined in section 954) and insurance income (as defined in section 953) by reason of section 954(b)(4), the high-tax exception (include amounts excluded from tested income under Regulations section 1.951A-2(c)(7)). A $10,000 penalty is imposed for each annual accounting period of each foreign corporation for failure to furnish the information required by section 6038(a) within the time prescribed. 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. Do not abbreviate the country name. Subtract line 21b from line 21a" field, "21d.Net related person insurance income excluded under high-tax exception" field, "21e.Subtract line 21d from line 21c" field, "22.International boycott income (section 952(a)(3))" field, "23.Illegal bribes, kickbacks, and other payments (section 952(a)(4))" field, "24.Enter the portion of line 13h that is U.S. source income effectively connected with a U.S. trade or business (section 952(b))" field, "25.Exclusions under section 959(b) that apply to line 13h amount" field, "26.Section 954(c) subpart F Foreign Personal Holding Company Income. 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 the instructions for Schedule J for specific line instructions. 9866) (the Final Regulations) on June 14, 2019, regarding the new regime for taxing global intangible low-taxed income (GILTI) contained in the 2017 Tax Cuts and Jobs Act (TCJA). See Regulations section 1.904-4(c)(3)(ii). See section 951A(c)(2). 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). All persons identified in Item H must complete a separate Schedule P (Form 5471) if the person is a U.S. shareholder described in Category 1a, 1b, 4, 5a, or 5b. This includes taxes attributable to the column (b) tested income group that were not deemed paid as a result of the domestic corporations inclusion percentage or as a result of the application of the 80% limit. For example, if you are the sole owner of a CFC (that is, you are described in Categories 4 and 5a), complete all six pages of Form 5471 and separate Schedules E, G-1, H, I-1, J, M, P, Q, and R. Complete a separate Form 5471 and all applicable schedules for each applicable foreign corporation. See Rev. The name of the person filing Form 5471 is generally the name of the U.S. person described in the applicable category or categories of filers (see Categories of Filers , earlier). The amount reported in column (x), line 4, is the sum of the amounts reported in column (x) on lines 1(a)(1), 3(1), and 4(1), which equals $210 ($35 + $70 + $105). "field, "67.Translate the amount on line 66 from functional currency to U.S. dollars at the average exchange rate. See the instructions for, Enter the amount of interest income included on line 4. If more than one category applies, check all boxes that apply. During the tax year, was the sum of the CFCs foreign base company income (determined without regard to deductions) and gross insurance income less than the lesser of 5% of gross income or $1 million? The line 6 result can be positive or negative. Foreign tax imposed by reason of a disregarded payment that is a remittance is assigned to the income groups based upon the assets of the payor. A U.S. person who disposes of sufficient stock in the foreign corporation to reduce his or her interest to less than the 10% stock ownership requirement.

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