Form 5471 Questions

I own a foreign corporation but receive no income from it. Should I file? Do I need Form 5471?

It's a tricky question. If you do not file Form 5471 you could be leaving yourself open to penalties. Here is no check box to indicate that you are not required to file Form 5471 because due to low income. If you file Form 5471 you must also file form 1040.

The whole purpose of Form 5471 is to disclose any assets that you currently do not include as part of your taxable income (which put you below the filing threshold for Form 1040) to the IRS. However, you have retained earnings that are ultimately yours and the IRS will not accept Form 5471 unless it is attached to Form 1040, which may declare zero income.

Can you prepare Form 5471 as a stand-alone form?

Form 5471 is an informational return submitted to the IRS as an attachment to Form 1040. The results of calculations performed on Form 5471 correspond with specific lines on Form 1040. Moreover, because of the difference in the foreign corporation accounting period and the U.S. accounting period, in some cases numbers from Form 5471 will need to be prorated to reconcile any differences between it and Form 1040.

We strongly advise you to complete and file Forms 5471 and 1040 together, even if you hire a preparer to do it for you. In fact, most tax preparers will recommend this, rather than relying on the client to report that additional information to IRS separately.

For these reasons we do not prepare Form 5471 as a stand-alone form and we do not advise that you work with tax firms that are willing to do so.  

For the same reasons, it's impossible to prepare Form 5471 for one year and then copy it for each successive year.

“Copying” the same form for multiple years on your own puts you at risk of filing an incorrect return and we cannot recommend it.

  1. You cannot "copy" one Form 5471 for use for another year because certain schedules do not simply roll over, but are dependent on prior year numbers (decrease or increase).
  2. If you received any distributions from the company (and unless the corporation is dormant, this is highly probable) then those distributions must be reported on Form 1040 and will affect all other calculations on the form, increasing the odds of the IRS examining your return.

Does a U.S. corporation owned by sibling, all of whom are U.S. citizens, require the filing of multiple copies of Form 5471?

No, we can file one Form 5471 for you that reports all U.S. shareholders.

If the shareholders are not related, it may be a greater gamble unless you can be absolutely sure that the shareholder responsible for filing included your information when filing the Form 5471.

Each family member will receive a copy of Form 5471. It’s important that one tax preparer is used in order to facilitate information sharing.

I own my own French company (SARL). Do I need to file form 5471?

Yes, a SARL is considered a foreign corporation and requires the filing of Form 5471.

As opposed to a SARL or an EURL, an EI (Entreprise Individuel) is not considered a corporation and can be reported via Schedule C.

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