Business or company outside the U.S.

Why ownership percentages matter

Provide your ownership percentage during the year, acquisition or sale dates, and details of the other owners. Direct ownership is not the only consideration: indirect and constructive ownership rules may also apply.

The 10% ownership and more-than-50% control thresholds matter for certain Form 5471 filing categories, but do not determine every filing obligation on their own. Each category has its own conditions and exceptions.

When Form 5471 needs to be reviewed

Form 5471 applies to certain U.S. persons connected with foreign corporations. A review may be needed following an acquisition or disposition, a change in tax status, control of a company, or ownership in a controlled foreign corporation.

Not every foreign business is a corporation for U.S. tax purposes. Depending on its classification, other forms, such as 8858 or 8865, may apply. Receiving no distributions does not automatically eliminate a reporting obligation.

What to gather

Registration documents, country of formation, ownership structure and percentages by voting power and value, dates of changes, financial statements, taxes, distributions, and transactions with owners. Include any previously filed U.S. forms relating to the company.

Company reporting, personal income, and bank accounts

Company reporting is reviewed separately from the owner’s personal income and foreign-account reporting under FBAR. These requirements may apply at the same time; one form does not replace another.