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This means that in most scenarios US individuals who are considered to have 10% or more ownership over a controlled foreign Corporation will have to file Form 5471. There is also requirements for corporations with ownership/interest in other corporations, but for the individual, it is generally for owners of CFCs.
We strongly advise you to complete and file Forms 5471 and 1040 together, even if you hire a preparer to do it for you. Most tax preparers will recommend this rather than relying on the client to report that additional information to the IRS separately.
In addition, a continuation penalty of $10,000 per Form 5471 may be assessed for every 30-day period (or fraction thereof) beginning 90 days after the USP was notified that a failure exists. The maximum continuation penalty per Form 5471 is $50,000.
Lets take a look at a few common ways a taxpayer may be able to minimize Form 5471 Filing: Dormant Corporation. When a foreign corporation is dormant, then there are much more limited requirements for filing and reporting. Multiple Filers, Same Information. Certain Constructive Owners.
At this time, we only support the creation and electronic filing of five copies of Form 5471. If the return requires more than five copies of the form, the only option is to manually complete the additional copies and attach them to the return. In this case, you must paper file the return.
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