Reportable transaction (Form 5472)

A reporting corporation is a US corporation that is 25% foreign-owned, or a foreign corporation with a US trade or business. Its related parties include any 25% foreign shareholder, and anyone related to that shareholder or to the corporation.

Reportable transactions are mainly the income, deduction and loan items between the corporation and a related party. The regulations list sales and purchases of goods and intangible property, rents, royalties, service fees, commissions, loans, interest and insurance premiums. The same dealings count when paid in something other than money, or for less than full value. For an ordinary corporation, a shareholder buying its stock is not on the list. Dealings with a US related party go on the form, though they need not be itemized.

A US LLC wholly owned by one foreign person is usually disregarded for tax, meaning the IRS treats it as part of its owner. For Form 5472, though, it is a reporting corporation. Its owner’s capital contributions and distributions are reportable, and so are other payments made in forming or closing it. An LLC whose owner only put money in that year still files. It sends Form 5472 with a pro forma Form 1120, a cover return with only its identifying details. It must fax or mail them, not file electronically.

The Form 5472 meaning differs from the reportable and listed transactions disclosed on Form 8886, which the IRS flags for potential tax avoidance.