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Pallav Acharya
To elaborate on both the issues:
1. The IRS now requires a reference ID for the foreign corporation. 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 in the instructions.
Since reference ID numbers are established by or on behalf of the U.S. person filing Form 5471, there is no need to apply to the IRS to request a reference ID number or for permission to use these numbers. Instructions further clarifies that The reference ID number assigned to a foreign corporation on Form 5471 generally has relevance only on Form 5471 and its schedules and should generally not be used with respect to that foreign corporation on any other IRS tax form.
2. Category 5 filer includes a U.S. shareholder who owns stock in a foreign corporation that is a CFC for an uninterrupted period of 30 days or more during any tax year of the foreign corporation, and who owned that stock on the last day of that year. For purposes of Category 5, a U.S. shareholder includes a U.S. person who: 1. Owns (directly, indirectly, or constructively, within the meaning of sections 958(a) and (b)) 10% or more of the total combined voting power of all classes of voting stock of a CFC.
If a U.S. person owns stock in a foreign corporation constructively and if the filer is a Category 3 and 4 filer, the U.S. person would qualify for the "constructive ownership" exception (see definition of constructive ownership in the instructions) and did not have to file Form 5471. This exception was not available to Category 5 filer until now. The instructions now clarifies that it is available to Category 5 filers as well.
The exception has now been extended to all Category 5 filers where ownership in the foreign corporation is solely through application of constructive ownership principles and the U.S. person through whom the U.S. shareholder constructively owns an interest in the foreign corporation files Form 5471 reporting all required information.
Hope this helps!
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596 weeks ago
1. The IRS now requires a reference ID for the foreign corporation. 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 in the instructions.
Since reference ID numbers are established by or on behalf of the U.S. person filing Form 5471, there is no need to apply to the IRS to request a reference ID number or for permission to use these numbers. Instructions further clarifies that The reference ID number assigned to a foreign corporation on Form 5471 generally has relevance only on Form 5471 and its schedules and should generally not be used with respect to that foreign corporation on any other IRS tax form.
2. Category 5 filer includes a U.S. shareholder who owns stock in a foreign corporation that is a CFC for an uninterrupted period of 30 days or more during any tax year of the foreign corporation, and who owned that stock on the last day of that year. For purposes of Category 5, a U.S. shareholder includes a U.S. person who: 1. Owns (directly, indirectly, or constructively, within the meaning of sections 958(a) and (b)) 10% or more of the total combined voting power of all classes of voting stock of a CFC.
If a U.S. person owns stock in a foreign corporation constructively and if the filer is a Category 3 and 4 filer, the U.S. person would qualify for the "constructive ownership" exception (see definition of constructive ownership in the instructions) and did not have to file Form 5471. This exception was not available to Category 5 filer until now. The instructions now clarifies that it is available to Category 5 filers as well.
The exception has now been extended to all Category 5 filers where ownership in the foreign corporation is solely through application of constructive ownership principles and the U.S. person through whom the U.S. shareholder constructively owns an interest in the foreign corporation files Form 5471 reporting all required information.
Hope this helps!