Let’s Talk about Form 5471 – Information Return of U.S. Persons With Respect To Certain Foreign Corporations

Category 3 filers must attach a statement that includes:

Foreign sales corporations (FSCs).

Section 338 election.

If a section 338 election is made with respect to a qualified stock purchase of a foreign target corporation for which a Form 5471 must be filed:

1. Any listed transaction, which is a transaction that is the same as or substantially similar to one of the types of transactions that the IRS has determined to be a tax avoidance transaction and identified by notice, regulation, or other published guidance as a listed transaction.
2. Any transaction offered under conditions of confidentiality for which the corporation (or a related party) paid an advisor a fee of at least $250,000.
3. Certain transactions for which the corporation (or a related party) has contractual protection against disallowance of the tax benefits.
4. Certain transactions resulting in a loss of at least $10 million in any single year or $20 million in any combination of years.
5. Any transaction identified by the IRS by notice, regulation, or other published guidance as a “transaction of interest.” See Notice 2009-55, 2009-31 I.R.B. 170, available at IRS.gov/irb/2009-31_IRB#NOT-2009-55.

Penalties.

The U.S. shareholder may have to pay a penalty if it is required to disclose a reportable transaction under section 6011 and fails to properly complete and file Form 8886. Penalties also may apply under section 6707A if the U.S. shareholder fails to file Form 8886 with its income tax return, fails to provide a copy of Form 8886 to the Office of Tax Shelter Analysis (OTSA), or files a form that fails to include all the information required (or includes incorrect information). Other penalties, such as an accuracy-related penalty under section 6662A, may also apply. See the Instructions for Form 8886 for details on these and other penalties.

Failure to file information required by section 6038(a) (Form 5471 and Schedule M).

Failure to file information required by section 6046 and the related regulations (Form 5471 and Schedule O).

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. 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 additional penalty is limited to a maximum of $50,000.

Criminal penalties.

Criminal penalties under sections 7203, 7206, and 7207 may apply for failure to file the information required by sections 6038 and 6046.

Section 6662(j).

Penalties may be imposed for undisclosed foreign financial asset understatements. No penalty will be imposed with respect to any portion of an underpayment if the taxpayer can demonstrate that the failure to comply was due to reasonable cause with respect to such portion of the underpayment and the taxpayer acted in good faith with respect to such portion of the underpayment. See sections 6662(j) and 6664(c) for additional information.

Inapplicability of certain penalties.

Certain penalties under sections 6038 and 6662 may be waived for certain persons under Rev. Proc. 2019-40. See section 7 of Rev. Proc. 2019-40 for more details.

Reporting exchange rates on Form 5471.

When translating amounts from functional currency to U.S. dollars, you must use the method specified in these instructions. For example, when translating amounts to be reported on Schedule E, you must generally use the average exchange rate as defined in section 986(a). But, regardless of the specific method required, all exchange rates must be reported using a “divide-by convention” rounded to at least four places. That is, the exchange rate must be reported in terms of the amount by which the functional currency amount must be divided in order to reflect an equivalent amount of U.S. dollars. As such, the exchange rate must be reported as the units of foreign currency that equal one U.S. dollar, rounded to at least four places. Do not report the exchange rate as the number of U.S. dollars that equal one unit of foreign currency.

Example.

During its annual accounting period, the foreign corporation paid income taxes of 30,255,400 Yen to Japan. The Schedule E instructions specify that the foreign corporation must translate these amounts into U.S. dollars at the average exchange rate for the tax year to which the tax relates in accordance with the rules of section 986(a). The average exchange rate is 108.8593 Japanese Yen to one U.S. dollar or (0.009184) U.S. dollar to one Japanese Yen. The foreign corporation divides 30,255,400 Yen by 108.8593 to determine the U.S. dollar amount to enter in column (k) of Schedule E, Part I, Section 1, line 1. Line 1 of Schedule E, Part I, Section 1, is completed in relevant part as follows.

Computer-Generated Form 5471 and Schedules

Generally, all computer-generated forms must receive prior approval from the IRS and are subject to an annual review. However, see the Exception below. Requests for approval may be submitted electronically to substituteforms@irs.gov, or requests may be mailed to:

Every year, the IRS issues a revenue procedure to provide guidance for filers of computer-generated forms. In addition, every year the IRS issues Pub. 1167, General Rules and Specifications for Substitute Forms and Schedules, which reprints the most recent applicable revenue procedure. Pub. 1167 is available at IRS.gov/Pub. 1167.

Dormant Foreign Corporations

Rev. Proc. 92-70, 1992-2 C.B. 435, provides a summary filing procedure for filing Form 5471 for a dormant foreign corporation (defined in section 3 of Rev. Proc. 92-70). This summary filing procedure will satisfy the reporting requirements of sections 6038 and 6046.

If you elect the summary procedure, complete only page 1 of Form 5471 for each dormant foreign corporation as follows.

For more information, see Rev. Proc. 92-70.

File this summary return in the manner described in When and Where To File, earlier.

Treaty-Based Return Positions

You are generally required to file
Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), to disclose a return position that any treaty of the United States (such as an income tax treaty, an estate and gift tax treaty, or a friendship, commerce, and navigation treaty):

See Form 8833 for exceptions.

Failure to make a required disclosure may result in a $1,000 penalty ($10,000 for a C corporation). See section 6712.

Section 362(e)(2)(C) Elections

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. The election is made by a statement as provided in Regulations section 1.362-4(d)(3).

.Do not attach the statement described above to Form 5471..

Section 108(i) Elections

If the controlling domestic shareholder(s) of a CFC made an election in 2009 or 2010 to defer income from cancellation of debt in connection with the CFC’s reacquisition of an applicable debt instrument, a statement must be filed (in the manner specified in the Caution below) beginning with the tax year following the tax year for which the controlling domestic shareholder of the CFC made the election, and ending the first tax year all income deferred has been included in income. In addition, a copy of the election statement it filed to make the election to defer income must be filed annually (also in the manner specified in the Caution below). For details, see section 108(i) and Rev. Proc. 2009-37, 2009-36 I.R.B. 309, available at IRS.gov/irb/2009-36_IRB#RP-2009-37.

.Do not attach the statements described above to Form 5471. Instead, if the foreign corporation is required to file a U.S. income tax return (for example, Form 1120-F), attach the statements to that return..

Corrections to Form 5471

If you file a Form 5471 that you later determine is incomplete or incorrect, file a corrected Form 5471 with an amended tax return, using the amended return instructions for the return with which you originally filed Form 5471. Write “Corrected” at the top of the form and attach a statement identifying the changes.

Specific Instructions

Annual Accounting Period

Enter, in the space provided below the title of Form 5471, the annual accounting period of the foreign corporation for which you are furnishing information. Except for information contained on Schedule O, report information for the tax year of the foreign corporation that ends with or within your tax year. When filing Schedule O, report acquisitions, dispositions, and organizations or reorganizations that occurred during your tax year.

Name of Person Filing This Return

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). However, in the case of a consolidated return, enter the name of the U.S. parent in the field for “Name of person filing this return.” Be sure to list each U.S. shareholder of the foreign corporation in Schedule B, Part I.

Address

Include the suite, room, or other unit number after the street address. If the post office does not deliver mail to the street address and the U.S. person has a P.O. box, show the box number instead.

Item A—Identifying Number

The identifying number of an individual is his or her social security number (SSN). The identifying number of all others is their employer identification number (EIN). If a U.S. corporation that owns stock in a foreign corporation is a member of a consolidated group, list the common parent as the person filing the return and enter its EIN in Item A.

Item B—Category of Filer

Complete Item B to indicate the category or categories that describe the person filing this return. If more than one category applies, check all boxes that apply. See Categories of Filers, earlier.

Item C—Percentage of Voting Stock Owned

Enter the total percentage of the foreign corporation’s voting stock you owned directly, indirectly, or constructively at the end of the corporation’s annual accounting period.

Item D—Final Year

Check the Item D checkbox only if this is the final year of the foreign corporation’s existence as a corporation for federal tax purposes, for example, if a reorganization has occurred, a complete liquidation has occurred, or an election to treat the foreign corporation as a disregarded entity has been made. If this Item D is checked, complete Schedule O.

Item E—Excepted Specified Foreign Financial Assets

Check the Item E checkbox if any excepted specified foreign financial assets are reported on Form 5471. If this is the case, you do not have to also report these assets on Form 8938, Statement of Specified Foreign Financial Assets. It is only necessary to complete Form 8938, Part IV, line 3. For more information, see the Instructions for Form 8938, generally, and in particular, Duplicative Reporting and the specific instructions for Part IV, Excepted Specified Foreign Financial Assets.

Item F—Alternative Information Under Rev. Proc. 2019-40

Check the box on line F if Form 5471 has been completed using alternative information (as defined in section 3.01 of Rev. Proc. 2019-40).

Section 5 of Rev. Proc. 2019-40 provides a safe harbor for determining certain items, including taxable income and E&P, of certain CFCs based on alternative information. Specifically, in the case of a foreign-controlled CFC with respect to which there is no related section 958(a) U.S. shareholder, if information satisfying the requirements of Regulations sections 1.952-2(a), (b), and (c)(2) and section 964 and the regulations thereunder is not readily available to an unrelated section 958(a) U.S. shareholder or an unrelated constructive U.S. shareholder with respect to the foreign-controlled CFC, an amount reported on a Form 5471 may be determined by the unrelated section 958(a) U.S. shareholder or the unrelated constructive U.S. shareholder, as applicable, on the basis of alternative information (without adjustments other than those described in section 3.01(b) and 3.10 of the revenue procedure) with respect to the foreign-controlled CFC. See section 3 of Rev. Proc. 2019-40 for definitions of terms.

Section 6 of Rev. Proc. 2019-40 provides a safe harbor for determining certain items of certain SFCs based on alternative information. Specifically, in the case of an SFC, other than either a foreign-controlled CFC with respect to which there is no related section 958(a) U.S. shareholder or a U.S. controlled CFC, if information satisfying the requirements of section 964 and the regulations thereunder is not readily available to an unrelated section 958(a) U.S. shareholder or an unrelated constructive U.S. shareholder with respect to the SFC, an amount reported on a Form 5471 may be determined by the unrelated section 958(a) U.S. shareholder or the unrelated constructive U.S. shareholder, as applicable, on the basis of alternative information (without adjustments other than those described in sections 3.01(b) and 3.10 of the revenue procedure) with respect to the SFC. See section 3 of Rev. Proc. 2019-40 for definitions of terms.

Item G—Alternative Information Code

If the box on line F is checked, enter the applicable code from the list provided below.

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. Proc. 2019-40). For example, information described in code “03” above qualifies as alternative information only if information described in code “01” and “02” is not readily available.

For more information, see Rev. Proc. 2019-40, available at IRS.gov/irb/2019-43_IRB#REV-PROC-2019-40.

Item H—Person(s) on Whose Behalf This Information Return Is Filed

One person may file Form 5471 and the applicable schedules for other persons who have the same filing requirements. See Multiple filers of same information , earlier. The person that files the required information on behalf of other persons must complete a joint Form 5471 according to the applicable column(s) of the Filing Requirements for Categories of Filers, earlier. This includes completing Item H on page 1 of the form. When completing Item H with respect to members of a consolidated group, identify only the direct owners in Item H (constructive owners are not required to be listed).

A separate Schedule I must be filed for each person described in Category 4, 5a, or 5b. For each Category 4, 5a, or 5b filer that is required to file a Schedule I, send a copy of their separate Schedule I to them to assist them in completing their tax return.

Item 1b(2)—Reference ID Number

A reference ID number (defined below) is required on line 1b(2) only in cases where no EIN was entered on line 1b(1) for the foreign corporation. However, filers are permitted to enter both an EIN on line 1b(1) and a reference ID number on line 1b(2). If applicable, enter the reference ID number you have assigned to the foreign corporation identified on line 1a.

A “reference ID number” is a number established by or on behalf of the U.S. person identified at the top of page 1 of the form that is assigned to a foreign corporation with respect to which Form 5471 reporting is required. These numbers are used to uniquely identify the foreign corporation in order to keep track of the corporation from tax year to tax year.

The reference ID number must meet the requirements set forth below.

Items 1f and 1g—Principal Business Activity

Enter the principal business activity code number and the description of the activity from the list at the end of these instructions.

Item 1h—Functional Currency

Enter the applicable three-character alphabet code for the foreign corporation’s functional currency using the ISO 4217 standard. These codes are available at www.iso.org/iso-4217-currency-codes.html or www.currency-iso.org/en/home/tables/table-a1.html. 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. The specific instructions for the affected schedules state these requirements.

Special rules apply for foreign corporations that use the U.S. dollar approximate separate transactions method of accounting (DASTM) under Regulations section 1.985-3. See the instructions for Schedule C and Schedule H.

Part I

Category 3 and 4 filers must complete Schedule B, Part I, for U.S. persons that owned (at any time during the annual accounting period), directly or indirectly through foreign entities, 10% or more in value or voting power of any class of the foreign corporation’s outstanding stock.

Column (e).

Enter each shareholder’s allocable percentage of the foreign corporation’s subpart F income.

Part II

Category 1a, 1c, 3, 4, 5a, and 5c filers must complete Part II.

Report the direct shareholders of the foreign corporation. 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. Indicate the regarded entity owner’s name in parentheses after the FDE’s name. If there is more than one regarded entity owner, use separate lines for each, listing each regarded entity owner in column (a) and reporting the information requested in columns (b), (c), and (d) for each such regarded entity owner.

Category 4 filers should list all direct owners of the CFC. Category 1a, 3, and 5a filers should list all direct owners of the SFC or CFC through which such filer indirectly owns the SFC or CFC as described in section 958(a)(2). Category 1c and 5c filers should list all direct owners of the SFC or CFC from which such filer is attributed ownership in the SFC or CFC as described in section 958(b). If the filer is a direct owner, include the filer’s direct ownership.

Line 8.

Enter foreign currency transaction gain or loss reported on the income statement. For amounts included in Other Comprehensive Income (OCI), see the instructions for Lines 23 and 24. Enter unrealized gain or loss on line 8a and realized gain or loss on line 8b.

Line 16.

Enter transactional taxes excluding items reportable in income tax expense (benefit). Report income taxes on line 21.

Line 20.

The term “unusual or infrequently occurring items” is defined by U.S. GAAP (see FASB Accounting Standards Codification (ASC) Topic 220 (Income Statement), Subtopic 220-20 (Extraordinary and Unusual Items) or subsequent guidance). If “prior period adjustments” are not reported separately on the income statement, do not report such amounts on this line item (see ASC 250 (Accounting Changes and Error Corrections) or subsequent guidance).

Line 21.

Enter income tax expense (benefit) reported in accordance with U.S. GAAP (ASC 740 (Income Taxes)). Income tax expense (benefit) includes current and deferred income tax expense (benefit). It may also reflect uncertain tax positions (ASC 740-10) and would not include taxes paid in respect of uncertain tax positions recorded in prior years. Enter the current income tax expense (benefit) on line 21a and deferred income tax expense (benefit) on line 21b.

Lines 23 and 24.

Enter amounts defined in ASC 220 (Comprehensive Income).

Line 23a.

Enter foreign currency translation adjustments before the income tax expense (benefit) is allocated.

Line 23b.

Enter other comprehensive income such as foreign currency gains or losses on certain hedging transactions, pensions and other post-retirement benefits, and certain investments available-for-sale.

Line 23c.

Enter the income tax expense (benefit) allocated to OCI items in the intraperiod allocation.

Important.

Differences between the functional currency amount of income tax expense (benefit) reported on line 21 and the amount of taxes that reduce or increase U.S. earnings and profits (E&P) should be accounted for on line 2g of Schedule H.

Lines 3 and 17.

Enter the total asset amount of derivatives on line 3 and total amount of liability on line 17 reported in accordance with ASC 815 (Derivatives and Hedging). Do not net positions.

Include all derivatives, both short-term and long-term.

Note.

Category 1b and 5b filers are not required to file Schedule G for foreign-controlled corporations.

Question 1

If the foreign corporation owned at least a 10% interest, directly or indirectly, in any foreign partnership, attach a statement listing the following information for each foreign partnership.

Question 3

Check the “Yes” box if the foreign corporation is the tax owner of an FDE or FB. The “tax owner” of an FDE is the person that is treated as owning the assets and liabilities of the FDE for purposes of U.S. income tax law.

If the foreign corporation is the tax owner of an FDE or FB and you are a Category 4, 5a, or 5c filer of Form 5471, you are required to attach Form 8858 to Form 5471.

If the foreign corporation is the tax owner of an FDE or FB and you are not a Category 1b, 4, or 5 filer of Form 5471, you must attach the statement described below in lieu of Form 8858.

Questions 4b and 4c

Complete lines 4b and 4c if:

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. See section 59A(d)(1). Base erosion payments also include amounts received or accrued by the foreign corporation in connection with the acquisition of depreciable or amortizable property (section 59A(d)(2)), reinsurance payments (section 59A(d)(3)), and certain payments relating to expatriated entities (section 59A(d)(4)).

The term “base erosion tax benefit” generally means any U.S. deduction that is allowed under chapter 1 for the tax year with respect to any base erosion payment. See section 59A(c)(2)(A) and (B) for further details.

Questions 5a and 5b

If the foreign corporation paid or accrued any interest or royalty (including in the case of a foreign corporation that is a partner in a partnership, the foreign corporation’s allocable share of interest or royalty paid by the partnership) for which a deduction is disallowed under section 267A, check “Yes” for question 5a and enter the total amount for which a deduction is not allowed on line 5b. The amount reported on line 5b should not include disallowed deductions attributable to interest or royalty paid or accrued by a U.S. taxable branch of the foreign corporation; such amounts are reported on Form 1120-F.

Interest or royalty paid or accrued by a foreign corporation (including through a partnership) is subject to section 267A, provided in general that the foreign corporation is a CFC (and there are one or more U.S. tax residents that own directly or indirectly at least 10% of the stock of the CFC). Section 267A disallows a deduction for certain interest or royalty paid or accrued pursuant to a hybrid arrangement, to the extent that, under the foreign tax law, there is not a corresponding income inclusion (including long-term deferral). For more detailed instructions, see the instructions for Form 1120, Schedule K, Question 21.

Question 6

Check the “Yes” box on line 6a if the filer of this Form 5471 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. Enter U.S. dollar amounts on lines 6b, 6c, and 6d, translated from functional currency at the average exchange rate for the foreign corporation’s tax year (see section 989(b)). See Form 8993 and its instructions for information on the section 250 deduction. If no deduction is being claimed, check the “No” box and go to line 7.

Question 11

Enter the foreign corporation’s reasonably anticipated benefits (RAB) share of the total present value of all platform contributions made by the U.S. taxpayer during the tax year with respect to the foreign corporation, even if only a portion (or none) of the value of those platform contributions was included in the U.S. taxpayer’s taxable income as platform contribution transaction (PCT) payments during the tax year. If possible, include a reasonable present value estimate for any PCTs that are priced using a method that does not involve the calculation of a present value. Otherwise, attach a brief statement of the reason(s) it is not possible to include a present value estimate for one or more PCTs (for example, no revenue projections for a PCT that is priced based on a sales-based royalty from a comparable uncontrolled transaction).

Question 12

If the U.S. taxpayer engaged in multiple PCTs during the tax year with the foreign corporation and used different methods to price the PCTs, then check the appropriate boxes to indicate which methods were selected as the best method for one or more of the PCTs reported in the tax year. See Regulations section 1.482-7(g) for more information on the methods applicable to PCTs.

Question 14a

Under section 367(d), a U.S. transferor must report an annual income inclusion attributed to the intangible property transferred to a foreign corporation over the useful life of the property. 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. If “Yes,” complete line 14b.

Question 14b

Enter the amount of the E&P reduction made by the foreign corporation for the current tax year that equals the amount required to be included in the income of the U.S. transferor. See section 367(d). This amount should also be entered on Schedule H, Current Earnings and Profits, as a net subtraction on line 2i.

Question 15

A foreign corporation may qualify as an expatriated foreign subsidiary under Regulations section 1.7874-12(a)(9) if such foreign corporation is a CFC with respect to which an expatriated entity as defined in Regulations section 1.7874-12(a)(8) is a U.S. shareholder. Certain transactions involving an expatriated foreign subsidiary and/or its U.S. shareholders may be subject to special rules. If the answer to Question 15 is “Yes,” attach a statement providing the name and EIN of the domestic corporation or partnership as defined in Regulations section 1.7874-12(a)(6) and the relationship of the foreign corporation to the domestic corporation or partnership.

Question 19

Check the “Yes” box on line 19 if you answer “Yes” to any of the 22 questions in the Schedule G, Line 19 table below. If “Yes,” enter the Corresponding Code(s) from the table in the entry space provided on line 19 of the form. Enter the applicable corresponding code in capital letters. Enter a space between each code. Also attach the statement described in the table below.

Form 5471

Question 20

For the foreign corporation’s annual accounting period with respect to which reporting is being made on this Form 5471, if the foreign corporation is required to file a U.S. income tax return (for example, Form 1120‐F), check the “Yes” box if the foreign corporation has interest expense disallowed under section 163(j). If “Yes,” enter the amount from the current year Form 8990, line 31.

Question 21

For the foreign corporation’s annual accounting period with respect to which reporting is being made on this Form 5471, if the foreign corporation is required to file a U.S. income tax return (for example, Form 1120‐F), check the “Yes” box if the foreign corporation has previously disallowed interest expense under section 163(j) carried forward to the current tax year. If “Yes” enter the amount from the prior year Form 8990, line 31.

Question 22a

Check the “Yes” box on line 22a if there was an extraordinary reduction with respect to any controlling section 245A shareholder of the foreign corporation, as defined in Regulations section 1.245A-5(i)(2), during the tax year of the foreign corporation. See Regulations section 1.245A-5(e)(2)(i) for the definition of extraordinary reduction.

Question 22b

If the answer to the question on line 22a was “Yes,” complete the question on line 22b. Check the “Yes” box on line 22b if any controlling section 245A shareholder (as defined in Regulations section 1.245A-5(i)(2)) made an election to close the tax year of the foreign corporation such that no amount is treated as an extraordinary reduction amount or tiered extraordinary reduction amount as to any U.S. shareholder of the foreign corporation. See Regulations section 1.245A-5(e)(3)(i) for further guidance regarding the election to close the tax year. If the “Yes” box on line 22b has been checked and the U.S. shareholder filing the Form 5471 is a controlling section 245A shareholder of the foreign corporation, the U.S. shareholder filing this Form 5471 must attach an Elective Section 245A Year-Closing Statement pursuant to Regulations section 1.245A-5(e)(3)(i)(C) containing the information required under Regulations section 1.245A-5(e)(3)(i)(D).

Note.

A separate Schedule I must be filed by or for each Category 4, 5a, or 5b U.S. shareholder of the foreign corporation with respect to which reporting is furnished on this Form 5471.

Line 1

Line 1a

Corporate U.S. shareholders should enter the foreign-source portion of any subpart F income inclusions attributable to the sale or exchange by a CFC of stock in another foreign corporation described in section 964(e)(4) that is eligible for the section 245A dividends received deduction. Include the amount, if any, that is not eligible for the section 245A dividends received deduction on line 1e. Noncorporate U.S. shareholders should leave line 1a blank and include the amount, if any, of section 964(e)(4) dividend income on line 1e.

Line 1b

Enter the amount of the U.S. shareholder’s subpart F income inclusion attributable to tiered hybrid dividends received by the CFC. In general, a dividend received by a CFC from another CFC is a tiered hybrid dividend to the extent of the sum of the receiving CFC’s hybrid deduction accounts with respect to shares of stock of the CFC that pays the dividend. As to a domestic corporation that is a U.S. shareholder with respect to both CFCs, the tiered hybrid dividend is treated as subpart F income of the receiving CFC, and the U.S. shareholder must include in its gross income its pro rata share of the tiered hybrid dividend. See section 245A(e)(2) and Regulations section 1.245A(e)-1(c) for additional information about tiered hybrid dividends.

Line 1c

Enter the subpart F income inclusion attributable to tiered extraordinary disposition amounts resulting from distributions from an extraordinary disposition account of the shareholder filing this Form 5471 and received by the foreign corporation. See Regulations section 1.245A-5(d) for further guidance on tiered extraordinary disposition amounts.

Line 1d

Enter the subpart F income inclusion attributable to tiered extraordinary reduction amounts resulting from extraordinary reductions. See Regulations section 1.245A-5(f) for further guidance on tiered extraordinary reduction amounts.

Lines 1e Through 1h

Enter on lines 1e through 1h the amounts from Worksheet A, lines 63, 65, 67, and 69, respectively. However, corporate U.S. shareholders should report on line 1e the amount from Worksheet A, line 63, less the amount, if any, reported on line 1a.

Use Worksheet A, later in these instructions, to compute the U.S. shareholder’s pro rata share of subpart F income of the CFC, which is reportable on lines 1e through 1h. Do not include any income includible on Form 5471, Schedule I, lines 1a through 1d, or any income includible under section 951A (Schedule I-1 is used to provide information relating to section 951A). Subpart F income reportable on lines 1e through 1h includes the following.

Important.

If the subpart F income of any CFC for any tax year was reduced because of the current E&P limitation, any excess of the E&P of the CFC for any subsequent tax year over the subpart F income of the CFC for the tax year must be recharacterized as subpart F income. 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). See the instructions for Line 37, Current E&P limitation, later, for a discussion of the current-year E&P limitation.

Line 2

Report on line 2 earnings invested in U.S. property (Worksheet B).

Line 3

Reserved for future use.

Line 4

Enter the factoring income (as defined in section 864(d)(1)) if no subpart F income is reported on line 1a of Worksheet A, because of the operation of the de minimis rule (see lines 1a and 10 of Worksheet A and the related instructions under Line 1a and Line 10, De minimis rule), later.

Line 5a

Enter the amount of dividends received by the shareholder from the foreign corporation that is eligible for a deduction under section 245A. This amount does not include the amount of dividends that are not eligible for a deduction under section 245A and are instead entered on lines 5b, 5c, and 5d. See section 245A for guidance on computing the amount of a dividend eligible for a deduction.

Line 5b

Enter the amount of the dividends received by the shareholder from the foreign corporation that is an extraordinary disposition amount. See Regulations section 1.245A-5(c) for rules for calculating an extraordinary disposition amount.

Line 5c

Enter the amount of the dividends received by the shareholder from the foreign corporation that is an extraordinary reduction amount. See Regulations section 1.245A-5(e) for rules for calculating an extraordinary reduction amount.

Line 5d

Enter the amount of hybrid dividends received by the U.S. shareholder from the foreign corporation. In general, in the case of a domestic corporation that is a U.S. shareholder with respect to a CFC, a dividend received by the domestic corporation from the CFC is a hybrid dividend to the extent of the sum of the U.S. shareholder’s hybrid deduction accounts with respect to shares of stock of the CFC. See section 245A(e) and Regulations section 1.245A(e)-1(b) for additional information about hybrid dividends.

Line 5e

Enter on line 5e dividends not reported on line 5a, 5b, 5c, or 5d.

Line 6

If previously taxed E&P (PTEP) described in section 959(a) or (b) was distributed, enter the amount of foreign currency gain or (loss) on the distribution, computed under section 986(c). See Notice 88-71, 1988-2 C.B. 374, for rules for computing section 986(c) gain or (loss).

For a corporate U.S. shareholder, include the gain or (loss) as “Other income” on Form 1120, line 10, or on the comparable line of other corporate tax returns. For a noncorporate U.S. shareholder, include the result as “Other income” on Schedule 1 (Form 1040), line 8, or on the comparable line of other noncorporate tax returns.

Certain current year deficits of a member of the same chain of corporations may be considered in determining subpart F income. See section 952(c)(1)(C).

Line 8a

Check the “Yes” box on line 8a if the U.S. shareholder completing this form had an extraordinary disposition account with respect to the foreign corporation having a balance greater than zero at any time during the tax year of the foreign corporation. See Regulations section 1.245A-5(c) for rules regarding an extraordinary disposition account.

Line 8b

If “Yes” is checked on line 8a, enter on line 8b the U.S. shareholder’s extraordinary disposition account balance at the beginning and end of the foreign corporation’s tax year. Attach a statement detailing any differences between the starting and ending balance of the extraordinary disposition account reported on line 8b.

Line 8c

Enter on line 8c the CFC’s 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. Attach a statement detailing any differences between the starting and ending balance reported on line 8c.

Line 9

If the foreign corporation is a CFC and the filer is a domestic corporation, enter on line 9 the sum of the hybrid deduction accounts with respect to each share of stock of the CFC that the domestic corporation owns directly or indirectly (within the meaning of section 958(a)(2), and determined by treating a domestic partnership as foreign). The reported amount should reflect the balance of the hybrid deduction accounts as of the close of the tax year of the CFC, and after all adjustments to the hybrid deduction accounts for the tax year (for example, to reflect hybrid deductions of the CFC, or hybrid dividends paid by the CFC). For example, if the CFC is an upper-tier CFC all the stock of which is owned by the filer, then line 9 must reflect the sum of the filer’s hybrid deduction accounts with respect to shares of stock of the upper-tier CFC; if instead the CFC is a lower-tier CFC all the stock of which is owned by the filer through an upper-tier CFC, then line 9 must reflect the sum of the upper-tier CFC’s hybrid deduction accounts with respect to shares of stock of the lower-tier CFC.

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. In general, a hybrid deduction is a deduction or other tax benefit allowed to the CFC (or a related person) under a foreign tax law for an amount paid, accrued, or distributed with respect to an instrument of the CFC that is stock for U.S. tax purposes. A hybrid deduction includes a deduction allowed to the CFC under a foreign tax law with respect to equity (such as a notional interest deduction). See Regulations section 1.245A(e)-1(d) for additional information about hybrid deduction accounts.

A domestic corporation that is a U.S. shareholder with respect to a CFC must maintain a hybrid deduction account with respect to each share of stock of the CFC that the domestic corporation owns directly or indirectly through a partnership, trust, or estate. In addition, certain upper-tier CFCs must maintain a hybrid deduction account with respect to each share of the stock of a lower-tier CFC that the upper-tier CFC owns directly or indirectly through a partnership, trust, or estate. See Regulations section 1.245A(e)-1(d) for more on maintenance of hybrid deduction accounts.

Name of person filing Form 5471.

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). However, in the case of a consolidated return, enter the name of the U.S. parent in the field for “Name of person filing Form 5471.”

Reference ID number of foreign corporation.

If applicable, use the reference ID number shown on Form 5471, page 1, Item 1b(2).

Lines a and b.

Complete a separate Schedule E for each applicable separate category of income. Enter the appropriate code on line a (above Part I). To determine the appropriate code, see Categories of Income in the Instructions for Form 1118, Foreign Tax Credit—Corporations. A foreign corporation may need to report taxes with respect to all categories of income listed in the Instructions for Form 1118, with the exception of foreign branch category income. A foreign corporation may accrue or pay taxes properly attributable to an income group within the general category, passive category, or section 901(j) category. See Regulations section 1.960-1(d)(2)(ii). A foreign corporation may accrue or pay taxes properly attributable to a PTEP group within any of the separate categories of income, with the exception of foreign branch category income. See Regulations section 1.960-3(c)(1).

If code 901j 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).

Note.

Do not complete a separate Schedule E for taxes assigned to the section 951A category. Taxes paid, accrued, or deemed paid with respect to section 951A PTEP that is in the section 951A category are reported on the Schedule E completed for the general category.

Part I—Taxes for Which a Foreign Tax Credit Is Allowed

In Part I, Section 1, list income, war profits, and excess profits taxes (income taxes) paid or accrued to each foreign country or U.S. possession for the foreign corporation’s foreign tax year(s) that end with or within its U.S. tax year. With respect to dividends paid in tax years of foreign corporations beginning before January 1, 2018, the taxes reported on this schedule include taxes deemed paid with respect to a dividend from a lower-tier foreign corporation. See section 902 before its repeal by the Act.

In Part I, Section 2, report taxes deemed paid under section 960(b) with respect to distributions of PTEP from a lower-tier foreign corporation to the foreign corporation with respect to which this Schedule E (Form 5471) is being completed.

Comparison to income tax expense reported on Schedule C (Form 5471).

The foreign income taxes reported on Schedule E may differ from the amount reported as income tax expense on line 21a of Schedule C. This is due in part to differences in the accounting for foreign tax redeterminations, disallowed taxes, and foreign income taxes reported in Other Comprehensive Income for U.S. GAAP purposes.

Comparison to income tax expense reported on Schedule H (Form 5471).

The taxes added or deducted on line 2g of Schedule H include both foreign income taxes reported in Part I of Schedule E as well as the taxes reported in Part III of Schedule E that are not creditable foreign income taxes.

Section 1—Taxes Paid or Accrued Directly by Foreign Corporation

Line 5

Report the total of the amounts listed in column (k) on this line 5. This total also should be reported on Schedule E-1, line 4.

Line 6

Report the total of the amounts listed in column (l) on this line 6. This total and the amount reported on line 3 of Schedule E, Part III, are the appropriate reduction to current year E&P for income taxes. See Schedule H, line 2g.

Section 2—Taxes Deemed Paid (Section 960(b))

The purpose of Section 2 is to track deemed-paid foreign income taxes with respect to current year PTEP distributions from lower-tier foreign corporations to the foreign corporation with respect to which this Schedule E (Form 5471) is being completed (“the foreign corporation”).

Report a PTEP distribution by a lower-tier foreign corporation in Section 2 only if foreign income taxes are deemed paid under section 960(b) by the foreign corporation with respect to such PTEP distribution. Also include deemed paid taxes related to PTEP distributions received from lower-tier foreign corporations in tax years of foreign corporations beginning before January 1, 2018. See section 960(a)(3).

The only foreign taxes of the distributing foreign corporation that may be treated as deemed paid under section 960(b) are foreign taxes paid, accrued, or deemed paid by the distributing foreign corporation with respect to the receipt of a PTEP distribution from another lower-tier foreign corporation below the distributing foreign corporation. Accordingly, there can be no deemed-paid foreign taxes with respect to a PTEP distribution from a lower-tier foreign corporation that is the lowest foreign-tier foreign corporation in a chain, and therefore no such distributions will be reported in Section 2. See Regulations section 1.960-1(d)(3)(ii)(C).

Any foreign income taxes paid or accrued (but not deemed paid) by the foreign corporation with respect to a PTEP distribution from a lower-tier foreign corporation (whether or not such PTEP distribution is reported in Section 2), such as withholding taxes imposed on the PTEP distribution, are reported in Section 1.

Part III—Taxes for Which Foreign Tax Credit Is Disallowed

Use Part III to report taxes for which foreign tax credits are not allowed. While not allowed as a credit, such taxes are taken into account in determining the foreign corporation’s E&P.

Do not enter taxes that do not meet the criteria under Regulations section 1.901-2.

Do not enter foreign income taxes that have been suspended under the anti-splitter rules under section 909 or the hovering deficit rules under Regulations section 1.367(b)-7. Such taxes are reported on Schedule E-1.

Line 3

Total each amount in column (i) and enter on line 3. All amounts should be in functional currency.

Line 4

Translate the line 3 amount from functional currency to U.S. dollars using, in general, the average exchange rate as defined by section 989(b)(3).

Column (a)

In column (a), report only the foreign income taxes the foreign corporation pays or accrues with respect to all of its current E&P. No amount should be reported in column (a) on lines 1a through 1c, and line 2. Do not include foreign income taxes paid or accrued by the foreign corporation in its other tax years beginning after December 31, 2017, or that do not relate to the current tax year. Do not include foreign income taxes that are disallowed and are reported on Schedule E, Part III, including taxes related to the residual income group reported in column (g). Do not include taxes paid or accrued by the foreign corporation with respect to its receipt of a PTEP distribution, even if those amounts were included in the total entered on line 5, column (k), of Schedule E, Part I, Section 1. These are reported in column (e). Do not include taxes deemed paid by the foreign corporation with respect to its receipt of a PTEP distribution. These are also reported in column (e).

Report reductions for the portion of such taxes that are deemed paid by a U.S. shareholder with respect to an inclusion under section 951(a) or 951A. Also report reductions for the amount of foreign income taxes paid or accrued with respect to current year E&P that are not deemed paid, which consists of tested foreign income taxes not deemed paid and other foreign income taxes not deemed paid. The balance of foreign income taxes paid or accrued with respect to current year E&P that is entered on line 18 should equal zero after taking into account the reductions.

Column (b)

In column (b), report the opening balance and any adjustments to post-1986 foreign income taxes, as defined in section 902(c)(2), and as in effect prior to the repeal of section 902. The repeal of section 902 is effective for tax years of foreign corporations beginning after December 31, 2017, and to tax years of U.S. shareholders in which or with which such tax years of foreign corporations end (post-2017 foreign corporate tax years).

Column (c)

In column (c), report the opening balance and any adjustments to the aggregate amount of the foreign corporation’s foreign income taxes paid or accrued with respect to pre-1987 section 964(a) E&P accumulated since 1962 and not previously distributed or deemed distributed.

Column (d)

Use column (d) to report taxes related to hovering deficits and taxes suspended under section 909.

Columns (e)(i) through (e)(x)

Report foreign income taxes paid or accrued with respect to E&P described in sections 959(c)(1) and (c)(2). See instructions for Schedule J, Column (e), for specific information about the ten PTEP group columns. Also see Regulations section 1.960-3(c)(2) for additional information regarding the ten PTEP groups.

Note.

Category 5b and 5c filers are not required to file Schedule H for foreign-controlled corporations.

Name of person filing Form 5471.

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). However, in the case of a consolidated return, enter the name of the U.S. parent in the field for “Name of person filing Form 5471.”

Reference ID number of foreign corporation.

If applicable, use the reference ID number shown on Form 5471, page 1, Item 1b(2).

Special rules for DASTM.

If the foreign corporation uses DASTM, enter on line 1 the dollar GAAP income or (loss) from line 22 of Schedule C. Enter on lines 2a through 4 the adjustments made in figuring current E&P for U.S. tax purposes. Report these amounts in U.S. dollars. Enter on line 5b the DASTM gain or loss figured under Regulations section 1.985-3(d).

Lines 2a through 2i.

Certain adjustments (required by Regulations sections 1.964-1(b) and (c)) must be made to the foreign corporation’s line 1 net book income or (loss) to determine its current E&P. 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. If the foreign corporation’s books are maintained in functional currency in accordance with U.S. GAAP, enter on line 1 the functional currency GAAP income or (loss) from line 22 of Schedule C, rather than starting with foreign book income, and show GAAP-to-tax adjustments on lines 2a through 2i.

Lines 2b and 2c.

Generally, depreciation, depletion, and amortization allowances must be based on the historical cost of the underlying asset, and depreciation must be figured according to section 167. However, if 20% or more of the foreign corporation’s gross income is from U.S. sources, depreciation must be figured on a straight line basis according to Regulations section 1.312-15.

Line 2f.

Inventories must be taken into account according to the rules of
sections 471 (incorporating the provisions of section 263A) and 472 and the related regulations.

Line 2g.

See the instructions for Schedule C, Line 21, earlier. Reflect differences between the income tax expense (benefit) reported for book purposes and the income taxes deducted or added to E&P. Such differences include, for example, deferred income tax expenses, uncertain tax positions, intraperiod allocations, adjustments made after closing the financial statements (post-closing adjustments) and not reflected in income tax expense (benefit), and the adjustment for a foreign tax redetermination that required a redetermination of the U.S. tax liability.

Line 2h.

Enter the adjustment to foreign currency gains or losses. Attach a statement with a description of the gain or losses.

In the case of section 988 losses, determine whether Form 8886 needs to be completed as described in Additional Filing Requirements, earlier.

Line 2i.

Enter the net amount of any additional adjustments not included on lines 2a through 2h. List these additional adjustments on a separate statement. Attach this statement to Form 5471. Schedule H is only prepared for the general, passive, and section 901(j) categories of income. If U.S. GAAP income contains items related to section 951A PTEP, include the necessary adjustments in line 2i of Schedule H for the appropriate category of income (general or passive) and attach a statement that itemizes and explains those adjustments. Report adjustments for foreign taxes related to the section 951A PTEP on line 2g.

Line 5b.

DASTM gain or (loss), reflecting unrealized exchange gain or loss, should be entered on line 5b only for foreign corporations that use DASTM.

Line 5c.

The line 5c current year E&P amount may include amounts with respect to the general category, passive category, or section 901(j) category. See Regulations section 1.960‐1(d)(2). Enter on lines 5c(i), 5c(ii), 5c(iii)(A), 5c(iii)(B), and 5c(iii)(C), as applicable, the portion of the line 5c current year E&P amount with respect to each applicable category of income. If applicable for lines 5c(iii)(A), 5c(iii)(B), and 5c(iii)(C), also enter the country code for the sanctioned country using the two-letter codes (from the list at IRS.gov/CountryCodes).

Note.

The amounts reported on line 5c include both foreign source and U.S. source income.

Line 5d.

Enter the line 5c functional currency amount translated into U.S. dollars at the average exchange rate for the foreign corporation’s tax year. See section 989(b). Report the exchange rate using the “divide-by convention” specified under Reporting Exchange Rates on Form 5471, earlier. If the foreign corporation uses DASTM, enter on line 5d the same amount entered on line 5c.

Line 5e.

Enter the exchange rate used in computing line 5d. Report the exchange rate using the “divide-by convention” specified under Reporting exchange rates on Form 5471.

Blocked income.

The E&P of the foreign corporation, as reflected on Schedule H, must not be reduced by all or any part of such E&P that could not have been distributed by the foreign corporation due to currency or other restrictions or limitations imposed under the laws of any foreign country.

Name of person filing Form 5471.

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). However, in the case of a consolidated return, enter the name of the U.S. parent in the field for “Name of person filing Form 5471.”

Separate category.

Schedule I-1 is now completed once. (It is no longer completed separately for each applicable category of income.) Therefore, Schedule I-1 is completed once (for general category income, passive category income, or both). A Schedule I-1 that includes passive category income on line 6 must include the code for passive category income (PAS) in the entry space for separate category (at the top of Schedule I-1). 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.

Line 1.

Enter the CFC’s gross income.

Line 2a.

Enter the amount of the CFC’s income described in section 952(b), which generally is income from sources within the United States that is effectively connected to the conduct of a trade or business by the CFC in the United States and not reduced or exempt from tax pursuant to an income tax treaty with the United States.

Line 2b.

Enter the amount, if any, of the CFC’s gross income taken into account in determining the CFC’s subpart F income (as defined in section 952). Note that an amount determined under section 956(a) is not considered subpart F income. The amount to be entered is computed after application of the high-tax exception in section 954(b)(4), but before application of the E&P limitation in section 952(c)(1)(A).

Line 2c.

Enter the amount, if any, of the CFC’s 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).

Line 2d.

Enter the amount of any dividend income received by the CFC from a related person as defined in section 954(d)(3). Do not include the amounts of any dividend income received from a related person that are already included in the amounts entered on line 2b or line 2c.

Line 2e.

Enter the amount of the CFC’s taxable income from sources outside the United States and its possessions from the following.

Line 3.

Enter the sum of lines 2a through 2e.

Line 4.

Subtract line 3 from line 1 and enter the result on line 4.

Line 5.

Enter the deductions (including taxes) properly allocable to the amount on line 4 (or to which such deductions would be allocable if there were such gross income).

Line 6.

Subtract line 5 from line 4 and enter the result on line 6. This amount must be converted from functional currency to U.S. dollars using the average exchange rate for the year of the CFC. See Regulations section 1.951A-1(d)(1).

Report the exchange rate using the “divide-by convention” specified under Reporting exchange rates on Form 5471, earlier.

Line 7.

If the CFC has a tested loss on line 6, enter zero. If the CFC has tested income on line 6, enter only those foreign income taxes that are properly attributable to the CFC’s tested income group. This amount must be converted from functional currency to U.S. dollars using the average exchange rate for the year of the CFC. See section 986.

Line 8.

If the CFC has a tested loss on line 6, enter zero. If the CFC has tested income on line 6, enter the Qualified Business Asset Investment (QBAI) (defined below). This amount must be converted from functional currency to U.S. dollars using the average exchange rate for the year of the CFC. See Regulations section 1.951A-1(d)(1).

Gross tested income.

For these purposes, a CFC’s gross tested income is its gross income less total exclusions (Schedule I‐1, line 4).

Lines 9a through 9d.

In general, see Regulations section 1.951A‐4(b)(1) to determine how to compute the CFC’s tested interest expense.

Line 9b.

Enter the CFC’s qualified interest expense as defined in Regulations section 1.951A‐4(b)(1)(iii).

Line 9c.

Enter the CFC’s tested loss QBAI amount as defined in Regulations section 1.951A‐4(b)(1)(iv).

Lines 10a through 10c.

In general, see Regulations section 1.951A‐4(b)(2) to determine how to compute the CFC’s tested interest income.

Note.

Category 1b, 1c, 5b, and 5c filers are not required to file Schedule J for foreign-controlled corporations.

Name of person filing Form 5471.

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). However, in the case of a consolidated return, enter the name of the U.S. parent in the field for “Name of person filing Form 5471.”

Reference ID number of foreign corporation.

If applicable, use the reference ID number shown on Form 5471, page 1, Item 1b(2).

Lines a and b.

Complete a separate Schedule J for each applicable separate category of income. Enter the appropriate code on line a (at the top of page 1 of Schedule J). To determine the appropriate code, see Categories of Income in the Instructions for Form 1118. A foreign corporation may need to report E&P with respect to all categories of income listed in the Instructions for Form 1118, with the exception of foreign branch category income. A foreign corporation may have E&P in an income group within the general category, passive category, or section 901(j) category. See Regulations section 1.960‐1(d)(2)(ii). A foreign corporation may have PTEP in a PTEP group within any of the separate categories of income, with the exception of foreign branch category income. See Regulations section 1.960‐3(c)(1).

If code 901j 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).

Note.

A separate Schedule J should not be completed for the section 951A category. Section 951A PTEP that is in the section 951A category should be reported on the general category Schedule J.

Note.

For purposes of this Schedule J, include in each separate category of income, foreign source and U.S. source income.

Important.

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 J using code “TOTAL” that aggregates all amounts listed for each line and column in Part I of all other Schedules J.

Part I—Accumulated E&P of Controlled Foreign Corporation

Check the box at the top of Part I if the person filing Form 5471 does not have all U.S. shareholders’ information necessary to complete any one of the previously taxed E&P amounts required to be included in column (e). If the person filing Form 5471 is unable to determine whether amounts should be reported as previously taxed E&P, those amounts should be included in column (a), Post-2017 E&P Not Previously Taxed, section 959(c)(3) balance. For example, one U.S. shareholder might not know the other U.S. shareholder’s section 951A inclusion with respect to a CFC because the first U.S. shareholder does not have information with respect to the second U.S. shareholder’s tested loss for the CFC or QBAI. See the instructions for Schedule P for an example.

Enter the amounts in this schedule in the functional currency of the foreign corporation as reported on Form 5471, page 1, Item 1h. If the foreign corporation is the owner of a qualified business unit(s) (QBU) with a different functional currency, translate the E&P of the QBU(s) to the foreign corporation’s functional currency.

Columns (a), (b), and (c)

Report the opening balance, current year additions and subtractions, and the closing balance in the foreign corporation’s E&P described in section 959(c)(3). In general, this is E&P of the foreign corporation that has not been included in gross income of a U.S. person under section 951(a)(1) and section 951A.

In column (a), report E&P described in section 959(c)(3) and earned after the repeal of section 902, that is, post-2017 E&P not previously taxed (post-2017 section 959(c)(3) balance). The repeal of section 902 is effective for tax years of foreign corporations beginning after December 31, 2017, and to tax years of U.S. shareholders in which or with which such tax years of foreign corporations end.

In column (b), report post-1986 undistributed earnings, as defined under section 902(c)(1), and as in effect prior to the repeal of section 902.

Use column (c) to report the aggregate amount of the foreign corporation’s pre-1987 section 964(a) E&P accumulated since 1962 and not previously distributed or deemed distributed. These amounts are figured in U.S. dollars using the rules of Regulations sections 1.964-1(a) through (e), translated into the foreign corporation’s functional currency according to Notice 88-70, 1988-2 C.B. 369.

Column (d)

Use column (d) to report hovering deficits (see section 381(c)(2)(B) and Regulations section 1.367(b)-7) and suspended taxes (see section 909). See Specific instructions related to lines 1 through 13, below, for additional information pertaining to reporting amounts in column (d).

Column (e)

Use column (e) to report the running balance of the foreign corporation’s PTEP, section 964(a) E&P accumulated since 1962 that have resulted in deemed inclusions under subpart F, or amounts treated as PTEP under section 965(b)(4)(A). Pre-1987 U.S. dollar PTEP should be translated into the foreign corporation’s functional currency using the rules of Notice 88-70 and added to post-1986 amounts in the appropriate PTEP category.

Column (f)

Use column (f) to report the opening and closing balance of the foreign corporation’s accumulated E&P. This amount is the sum of post-2017 E&P not previously taxed, post-1986 undistributed earnings, pre-1987 E&P not previously taxed, and PTEP. Do not include column (d) amounts in the total reported in column (f).

Specific Instructions Related to Lines 1 Through 13

Important.

In translating the amounts from functional currency to U.S. dollars, use the average exchange rate for the foreign corporation’s tax year. See section 989(b). Report the exchange rate in the entry space provided at the top of Schedule M using the “divide-by convention” specified under Reporting exchange rates on Form 5471, earlier.

Name of person filing Form 5471.

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). However, in the case of a consolidated return, enter the name of the U.S. parent in the field for “Name of person filing Form 5471.”

Reference ID number of foreign corporation.

Use the reference ID number shown on Form 5471, line 1b(2).

Lines 4 and 17.

Report on these lines platform contribution transaction payments received and paid by the foreign corporation (without giving effect to any netting of payments due and owed). See Regulations section 1.482-7(b)(1)(ii). The corporation is required to complete both lines only if the corporation provides a platform contribution to other controlled participants and is required to make platform contribution transaction payments to other controlled participants that provide a platform contribution to other controlled cost sharing arrangement participants.

Lines 5 and 18.

Report on these lines cost sharing transaction payments received and paid by the foreign corporation (without giving effect to any netting of payments due and owed). See Regulations section 1.482-7(b)(1)(i). The corporation is required to complete line 5 only if the corporation itself incurred intangible development costs. If the corporation does not itself incur intangible development costs, then it should only report cost sharing transaction payments made on line 18.

Lines 9 and 22.

Report on line 9 the sum of tiered hybrid dividends received by the foreign corporation during its tax year. Report on line 22 the sum of hybrid dividends or tiered hybrid dividends paid by the foreign corporation during its tax year.

Lines 10 and 23.

Report on these lines dividends received and paid by the foreign corporation not previously taxed under subpart F in the current year or in any prior year.

Lines 27 and 29.

Report on these lines the largest aggregate outstanding accounts receivable and payable balances during the year with the related parties described in columns (b) through (f). Report only accounts receivables or payables arising in connection with the provision of services or the sale or processing of property. Only net accounts receivables and payables to the extent that the CFC’s books net the accounts payable against the receivables as payment of the accounts receivable.

Lines 28 and 30.

Report on these lines the largest outstanding balances during the year of gross amounts borrowed from, and gross amounts loaned to, the related parties described in columns (b) through (f). Do not enter aggregate cash flows, year-end loan balances, average balances, or net balances. Do not include an account receivable or payable balance arising in connection with the provision of services or the sale or processing of property if the amount of such balance does not, at any time during the tax year, exceed what is ordinary and necessary to carry on the trade or business. Any outstanding balance from these transactions should be reported on the Balance Sheet (Form 5471, Schedule F, page 4) and possibly also on Schedule M, lines 27 and 29.

Accrued payments and receipts.

A corporation that uses an accrual method of accounting must use accrued payments and accrued receipts for purposes of computing the total amount to enter on each line of Schedule M.

Name of person filing Form 5471.

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). However, in the case of a consolidated return, enter the name of the U.S. parent in the field for “Name of person filing Form 5471.”

Reference ID number of foreign corporation.

Use the reference ID number shown on Form 5471, line 1b(2).

Part I

Part II

Note.

A separate Schedule P must be completed by each Category 1, 4, or 5 U.S. shareholder of the foreign corporation with respect to which reporting is furnished on this Form 5471. However, Category 1c and 5c filers are not required to file Schedule P for foreign-controlled corporations.

Example.

Corporation A, a domestic corporation, owns 50% of the only class of stock of CFC1 and Corporation B, a domestic corporation, owns the remaining 50% of the stock of CFC1. Corporation A wholly owns the only class of stock of CFC2. The functional currency of all corporations is the U.S. dollar. CFC1 has tested income of $100x and CFC2 has tested loss of $30x. See section 951A(c)(2). Neither Corporation A nor Corporation B has any net deemed tangible income return that would reduce the tested income taken into account by Corporation A or B with respect to CFC1. Corporation A has a section 951A inclusion of $20 because its pro rata share of CFC1’s tested income ($50x) is offset by its pro rata share of CFC2’s tested loss ($30x). Corporation B has a section 951A inclusion of $50x. On Schedule P of the Form 5471 with respect to CFC1 filed by Corporation B, Corporation B will report on line 7, column (c), $50x of PTEP as a result of its section 951A inclusion with respect to CFC1. Corporation A will report $20x of PTEP as a result of its section 951A inclusion on its Form 5471, Schedule P, line 7, column (c), with respect to CFC1.

The Form 5471, Schedule J, for CFC1 should include PTEP of $70x with respect to the aggregate section 951A inclusions of Corporation A and Corporation B. However, if Corporation A does not know Corporation B’s section 951A inclusion at the time Corporation A files its Form 5471, Corporation A will only be able to complete Schedule J, Part I, with respect to its PTEP of $20x on line 8, column (e)(x). Similarly, Corporation B will only be able to complete Schedule J, Part I, with respect to its PTEP of $50x on line 8, column (e)(x). In the following year, Corporation A and Corporation B should each report the other corporation’s PTEP on Schedule J, Part I, line 1b, column (e)(x).

Name of person filing Form 5471.

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). However, in the case of a consolidated return, enter the name of the U.S. parent in the field for “Name of person filing Form 5471.”

Reference ID number of foreign corporation.

If applicable, use the reference ID number shown on Form 5471, page 1, Item 1b(2).

Lines a and b.

Complete a separate Schedule P for each applicable separate category of income. Enter the appropriate code on line a (at the top of page 1 of Schedule P). To determine the appropriate code, see Categories of Income in the Instructions for Form 1118. A foreign corporation may have PTEP in a PTEP group within any of the separate categories of income, with the exception of foreign branch category income. See Regulations section 1.960‐3(c)(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).

Columns (a) through (k).

Enter amounts on this schedule in the functional currency of the foreign corporation as reported on Form 5471, page 1, Item 1h.

Use columns (a) through (k) to report the opening balance, current year additions and subtractions, and the closing balance in the foreign corporation’s PTEP; section 964(a) E&P accumulated since 1962 that have resulted in inclusions under subpart F; and amounts treated as PTEP under section 965(b)(4)(A). Pre-1987 U.S. dollar PTEP should be translated into the foreign corporation’s functional currency using the rules of Notice 88-70 and added to post-1986 amounts in the appropriate PTEP category.

Columns (a) through (j) of Schedule P correspond to Schedule J, columns (e)(i) through (e)(x). See the instructions for Schedule J for specific line instructions.

Note.

If an individual, estate, or trust that is a U.S. shareholder of a CFC makes an election under section 962 (“962 electing shareholder”), any inclusions under section 951 or 951A of the U.S. shareholder will be treated as received by a corporate U.S. shareholder for purposes of section 960. See section 962(b) and Regulations section 1.962-2(b). As a result, these U.S. shareholders may also claim a foreign tax credit for foreign income taxes deemed paid with respect to such inclusions. See sections 962(a)(1) and 951A(f)(1)(A).

Note.

See also section 1293(f) for inclusions with respect to a passive foreign investment company.

Computer Generated Schedule Q

Expand the Schedule Q if you are reporting with respect to more than two units and/or with respect to more than one section 901(j) country. Specifically, if you are reporting with respect to more than two units, add to pages 1 and 2, as appropriate, new lines (3), (4), (5), etc. in all necessary locations. If you are reporting with respect to more than one section 901(j) country, add to page 3 new lines 1m, 1n, 1o, etc. as needed.

Specific Instructions for Schedule Q

Item A.

Complete a separate Schedule Q for each applicable separate category of income. Enter the appropriate code from the table below for the separate category of income with respect to which the Schedule Q is being completed.

Item B.

If category code “PAS” is entered in Item A, a separate Schedule Q must be completed for each applicable grouping under Regulations section 1.904-4(c)(3). See Regulations sections 1.954-1(c)(1)(iii)(B) and 1.904-4(c)(3) through (5). Enter in item B the appropriate code from the table below for each of the following groups under Regulations section 1.904-4(c)(3):

Note.

The grouping rules of Regulations section 1.904-4(c)(3)(i) through (iv) apply separately to income attributable to each foreign QBU of a CFC. See Regulations section 1.904-4(c)(4). This is one reason that QBU-by-QBU reporting is required with respect to the income groups in lines 1a through 1j and line 2.

Item C.

Complete a separate Schedule Q for foreign source income in each separate category and U.S. source income in each separate category. Check the box for either foreign source income or U.S. source income, as applicable.

Item D.

A separate Schedule Q is required for foreign oil and gas extraction income (FOGEI) and foreign oil related income (FORI). If the Schedule Q is being prepared to report the FOGEI or FORI of a CFC, check the box for Item D. Indicate the amount of FOGEI and FORI in each income group.

Line 1. Subpart F Income Groups

The separate subpart F income groups within each applicable section 904 category of a CFC are on line 1 (“subpart F income groups”). See Regulations section 1.960-1(d)(2)(ii)(B). Each single item of foreign base company income as defined in Regulations section 1.954-1(c)(1)(iii) is a separate subpart F income group. For example, with respect to a CFC, Regulations section 1.954-1(c)(1)(iii)(A)(2) identifies as a single item of income all foreign base company income (other than foreign personal holding company income) that falls within both a single separate category (typically, general category income) and a single category of foreign base company income described in each of Regulations sections 1.954-1(c)(1)(iii)(A)(2)(i) through (v). For example, with respect to line 1f, there is a single subpart F income group within the general category that consists of all of a CFC’s foreign base company sales income.

Use lines 1a through 1e to enter the passive category foreign personal holding company income of the CFC under the appropriate income group (dividends, interest, rents, royalties, and annuities; net gain from certain property transactions; net gain from commodities transactions; net foreign currency gain; and income equivalent to interest), each of which is also treated as a separate subpart F income group under Regulations section 1.960-1. See Regulations section 1.954-1(c)(1)(iii)(B).

Use lines 1f through 1i to enter the foreign base company sales income, foreign base company services income, full inclusion income, and insurance income described in section 952(a)(1) of the CFC.

To figure the amounts to enter on lines 1a through 1i, on lines (1), (2), etc., under each line 1a through 1i, enter the name of each QBU of the CFC, including the CFC itself, and the information required in each column (i) through (xiv) with respect to the amount in each subpart F income group within each category for each QBU. On lines 1a through 1i, enter for the total for each column by adding the amounts on lines (1), (2), etc., excluding from such total any amounts reported with respect to income excluded from subpart F income under the high-tax exception in section 954(b)(4) (“subpart F high-tax exception”). These amounts are included in the total amount of residual income, which is reported on line 4. As a result, the amounts included on lines 1a through 1i for each column may not equal the sum of the amounts reported in lines (1), (2), etc., for each column because any item excluded from subpart F income by reason of the high-tax election is included in the summation on line 4 instead of the summations on lines 1a through 1i. See the instructions for column (xiv) and line 4.

On lines 1j through 1l, enter international boycott income described in section 952(a)(3), illegal bribes, kickbacks, and other payments described in section 952(a)(4), and income included in a section 901(j) separate category described in section 952(a)(5). See Regulations section 1.960-1(d)(2)(ii)(B)(2).

Line 2. Recaptured Subpart F Income

Enter income that is recaptured as subpart F income in the current year. See section 952(c)(2).

Line 3. Tested Income Group

Use line 3 to report tested income in the tested income group of the CFC (a “tested income group”). See Regulations section 1.960-1(d)(2)(ii)(C). On lines (1), (2), etc., under line 3, enter the name of each tested unit of the CFC (including the CFC tested unit itself) and enter for each tested unit the information required in columns (ii) through (xiv), based on the tentative gross tested income attributable to each tested unit (without regard to any amounts excluded under the GILTI high-tax exclusion in Regulations section 1.951A-2(c)(7) (“GILTI high-tax exclusion”)). If the GILTI high-tax exclusion applies with respect to any tested unit of the CFC, include the amounts reported for columns (ii) through (xiv) in the total reported on line 4. See the instructions for line 4. As a result, the total amount entered on line 3 may not equal the sum of the amounts reported in columns (ii) through (xiii) on lines 3(1), 3(2), etc., if any tested unit’s tentative tested income is excluded under the GILTI high-tax exclusion (these amounts are included in the total amounts reported on line 4). In general, tested income will be in a single tested income group within the general category. Because a CFC cannot earn section 951A category income or foreign branch category income at the CFC level, there is no tested income group within either section 904 category. With respect to the general category tested income group of a CFC, GILTI inclusion amounts and taxes with respect to the tested income group will generally be treated as income and deemed paid taxes in the section 951A category. See Regulations sections 1.904-4(g) and 1.904-6(b)(1).

Line 4. Residual Income Group

Use line 4 to report the information required in columns (i) through (xiv) 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. See Regulations section 1.960-1(d)(2)(ii)(D). Enter the name of each QBU and enter the information required for columns (i) through (xiv) for each QBU on lines 4(1), 4(2), etc., but do not enter amounts excluded from subpart F income under the subpart F high-tax exception (those amounts are reported on lines (1), (2), etc. under lines 1a through 1i) or tested income under the GILTI high-tax exclusion (those amounts are reported on lines 3(1), 3(2), etc.). Enter the sum of the amounts reported on lines 4(1), 4(2), etc., plus the sum of amounts excluded from subpart F income under the subpart F high-tax exception and tested income under the GILTI high-tax exclusion, in the appropriate column on line 4.

Column (i).

Consistent with the reporting requirement on Form 1118, enter the two-letter code (from the list at IRS.gov/CountryCodes) of each foreign country and U.S. possession within which income is sourced and/or to which taxes were paid or accrued.

Column (ii).

Enter the amount of gross income of the CFC that is assigned to each income group within each section 904 category.

Columns (iii) through (vii). Expenses.

Deductions of the CFC, including for current-year taxes, are allocated and apportioned to the income groups to determine net income (or loss) in each income group and to identify the current year foreign income taxes that relate to the income in each income group for section 960 purposes. See Regulations section 1.960-1(d)(3)(i). Enter the expenses allocated and apportioned to the item of gross income reported for each QBU or tested unit as well as the aggregate amount of such expenses allocated and apportioned to each group. See the instructions for lines 1 through 4.

Column (viii). Current-year tax on reattributed income from disregarded payments.

This column is used to report current-year tax imposed solely by reason of the receipt of a disregarded payment that is a reattribution payment. The current year tax is allocated and apportioned to the income group to which an amount of gross income is assigned by reason of the receipt of the reattribution payment. See Regulations section 1.960-1(d)(3)(ii)(A), Regulations section 1.904-6(a)(2)(ii), and proposed Regulations section 1.861-20(d)(3)(v)(B). Report current-year taxes allocated and apportioned to the item of gross income reported for each QBU or tested unit as well as the aggregate amount of such foreign taxes in each group. See the instructions for lines 1 through 4.

Column (ix). Current-year tax on all other disregarded payments.

This column is used to report current tax imposed solely by reason of the receipt of a disregarded payment other than a reattribution payment, and which is therefore either a remittance or a contribution. See proposed Regulations section 1.861-20(d)(3)(v)(C). 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. See proposed Regulations section 1.861-20(d)(3)(v)(C)(1). Foreign tax imposed by reason of a disregarded payment that is a contribution is assigned to the income groups based upon the assets of the payor. See proposed Regulations section 1.861-20(d)(3)(v)(C)(2). Report current-year taxes allocated and apportioned to the item of gross income reported for each QBU or tested unit as well as the aggregate amount of such foreign taxes allocated and apportioned to each group. See the instructions for lines 1 through 4.

Column (x). Other current-year taxes.

Any other current-year tax is allocated and apportioned among the section 904 categories under the rules of Regulations section 1.904-6(a)(1) based on the portion of the foreign taxable income (as characterized under federal income tax principles) that is assigned to a particular section 904 category. Any other current year foreign tax is allocated to the CFC income group to which the items of foreign gross income are assigned under the rules of Regulations section 1.861-20. Report current-year taxes allocated and apportioned to the item of gross income reported for each QBU or tested unit as well as the aggregate amount of such foreign taxes allocated and apportioned to each group. See the instructions for lines 1 through 4.

Column (xii). Foreign taxes for which credit allowed (U.S. dollars).

The amount reported in column (xii) may not be the same as the sum of the amounts in columns (viii) through (x) if columns (viii) through (x) include taxes that are not creditable, including taxes paid or accrued to sanctioned countries, foreign taxes disallowed under sections 901(k), (m), and (l), and taxes paid or accrued to the United States.

Column (xiii). Average asset value.

Foreign gross income that arises from a disregarded payment that is treated as a remittance for U.S. tax purposes is assigned to an income group by reference to the income groups to which the assets of the payor taxable unit are assigned (or would be assigned if the taxable unit were a United States person) under the rules of Regulations section 1.861-9 for purposes of apportioning interest expense. This rule uses the payor’s asset apportionment percentages as a proxy for the accumulated earnings of the payor taxable unit from which the remittance is made. For this purpose the assets of the taxable unit making the remittance are determined in accordance with the rules of Regulations section 1.987-6(b) that apply in determining the source and separate category of exchange gain or loss on a section 987 remittance, as modified in two respects. See proposed Regulations section 1.861-20(d)(3)(v)(C)(1). Report asset values for each QBU or tested unit as well as the aggregate amount of assets in each group. See the instructions for lines 1 through 4.

Column (xiv). High-tax election.

Check the box in column (xiv) of the line corresponding to any item of income with respect to which the subpart F high-tax exception applies. If any amount is excluded under the subpart F high-tax exception, do not include it in the total for line 1a through 1i, but instead add the amount to the total for line 4. See the instructions for lines 1 and 4. If a GILTI high-tax exclusion under Regulations section 1.951A-2(c)(7)(viii) is effective with respect to the CFC for the CFC inclusion year, check the box in column (xiv) that corresponds to the item(s) of income to which the exception applies. If an amount reported on line 3(1), 3(2), etc., is excluded from gross income under the GILTI high-tax exclusion, do not include it in the total amount for line 3. Instead, include the amounts in the total for line 4. See the instructions for lines 3 and 4.

Name of Person Filing Form 5471

The name of the person filing Form 5471 is generally the name of the U.S. person described in the category or categories of filers (see Categories of Filers, earlier). However, in the case of a consolidated return, enter the name of the U.S. parent in the field for “Name of person filing Form 5471.”

Reference ID Number of Foreign Corporation

If applicable, use the reference ID number shown on Form 5471, page 1, Item 1b(2).

Column (a): Description of distribution.

The description should include whether the distribution was cash or non-cash and taxable or nontaxable to shareholders. Use code sections to properly identify the distribution. For example, “taxable cash dividend eligible for a dividends received deduction under section 245A.” If non-cash distributions were made, attach a statement and show both the tax bases and fair market values.

Column (b): Date of distribution.

Enter the month, day, and year using the following format: MM-DD-YYYY. For example, June 30, 2020, would be entered as “06-30-2020.”

Column (c): Amount of distribution in foreign corporation’s functional currency.

The amount of a distribution is generally the amount of any money paid to the shareholder plus the fair market value (FMV) of any property transferred to the shareholder. However, this amount is reduced (but not below zero) by the following liabilities.

The FMV of any property distributed to a shareholder becomes the shareholder’s basis in that property.

Column (d): Amount of E&P distribution in foreign corporation’s functional currency.

A corporate distribution to a shareholder is generally treated as a distribution of earnings and profits. Report distributions from either current or accumulated earnings and profits. These amounts are taxed as dividends to the shareholder. Do not report any part of a distribution that is not from earnings and profits. These amounts are applied against and reduce the adjusted basis of the stock in the hands of the shareholder.

If PTEP was distributed, include any foreign currency gain or (loss) on the distribution, computed under section 986(c). See Notice 88-71, 1988-2 C.B. 374, for rules for computing section 986(c) gain or (loss).

211120 – Crude Petroleum Extraction
211130 – Natural Gas Extraction
212110 – Coal Mining
212200 – Metal Ore Mining
212310 – Stone Mining & Quarrying
212320 – Sand, Gravel, Clay, & Ceramic & Refractory Minerals Mining & Quarrying
212390 – Other Nonmetallic Mineral Mining & Quarrying
213110 – Support Activities for Mining

221100 – Electric Power Generation, Transmission & Distribution
221210 – Natural Gas Distribution
221300 – Water, Sewage & Other Systems
221500 – Combination Gas & Electric

551111 – Offices of Bank Holding Companies
551112 – Offices of Other Holding Companies

611000 – Educational Services (including schools, colleges, & universities)