Certain US corporations, residents and citizens who hold positions such as shareholders, directors, or officers in foreign corporations are required to file Form 5471.
Categories in Form 5471
Form 5471 comprises 5 categories
Category-1: Shareholders owning foreign corporation stock at year-end.
Category-2: Shareholders who are officers or directors in a foreign corporation with U.S. ownership.
Category-3: US persons with 10% stock ownership upon acquiring or increasing stock.
Category-4: U.S. person in control of a foreign corporation.
Category-5: U.S. shareholders with stock in a foreign corporation designated as CFC.
Required information in Form 5471
Form 5471 form necessitates providing an income statement, a balance sheet for the foreign corporation, and transaction details between the filer and the foreign corporation.
GILTI (Global Intangible Low Tax Income) taxes
Form 5471 includes foreign income reporting and GILTI tax liability. GILTI tax may apply if the foreign subsidiary operates in a high-tax country.
Deadline for Form 5471 filing
Form 5471 is typically filed with the income tax returns by April 15 but when properly extended, the final due date is October 15.
Penalties
Failure to provide required information on Form 5471 incurs a $10,000 penalty per form, with a continuation penalty of $10,000 per form, up to a maximum of $50,000. Criminal penalties may also apply for non-filing.
Note: Form 5471 is complex, individuals and corporations with foreign Interests should seek advice from tax professionals.