Any U.S. based corporation that has 25 percent or more foreign ownership must file Form 5472 with the Internal Revenue Service. Like many IRS forms, the information requested can be daunting. However, with a little preparation, you can successfully fill out your IRS Form 5472. The form also must be completed by a foreign corporation that is engaged in in a U.S. trade or business.
Fill out the appropriate fields under Part I of Form 5472 using the information for your corporation. Most of the fields are self-explanatory, asking for name of the company, address and other information. You will need to fill out a Form 5472 for each individual who owns more than 25 percent of the company, whether he is U.S.-based or not. So, in Section 1g, enter the number of forms you will fill out--including the one upon which you are working.
Enter the name of the first foreign stockholder in Section 1a. If that stockholder has any sort of U.S. identity number such as a green card or Social Security card, enter that information in Section 1b. Sections 1c-1e will tell the IRS about your stockholder. Enter into Section 1c the country in which the shareholder conducts his primary business. In Section 1d you'll enter the country of citizenship of the stockholder. Section 1e is reserved for the primary country in which the stockholder files taxes.
Repeat this step for each foreign stockholder who owns 25 percent or more of the stock. IRS Form 5472 has four sections in Part II. If you need additional space for more shareholders, attach the documentation on a separate sheet.
Enter the "Related Party" information in Part III for the individual stockholder for the particular form and repeat this step on forms for each of the remaining foreign stockholders listed on your Form 5472. The IRS requires a separate Form 5472 for each shareholder in a corporation, so long as that shareholder owns at least 25 percent of the stock.
Enter the appropriate financial information about your corporation in Part IV. Lines 1 through 10 are reserved for income and revenues. Enter this information as requested and provide a total in Line 11. For Lines 12 through 21, enter your corporation's expenditures in the appropriate places and provide a total in Line 22.
Place a check in the box in Section V only if your company received non-monetary contributions, such as real estate or merchandise, or if you conducted "less-than-full-consideration" transactions with your foreign stockholders. Provide detailed descriptions of those transactions on a separate sheet.
Place a check in the "Yes" box of Part V, Line 1 only If you import merchandise from a foreign country. Then proceed to Line 2. If you do not import goods from a foreign country, you have completed the form and do not need to proceed any further.
For those who answered yes to Line 1, in Line 2 you must inform the IRS if you paid more than the declared customs value for the goods. If you answer no, you have completed the form and do not need to proceed any further. If you answer yes, you must attach documentation to explain why you paid more than the Customs Value, which can be found on the U.S. Customs and Border Protection Bureau website.
Preparation is key. Be sure to gather the required documentation before you begin filling out your IRS Form 5472.