Form 5471 for Interests in Foreign Entities After Tax Reform

Form 5471 Information Return of U.S. Persons With Respect to Certain Foreign Corporations has long been one of the most complex reporting obligations in the U.S. offshore information tax reporting regime, and the 2017 legislation created additional challenges, increasing both the amount of information required and the number of U.S. taxpayers obligated to file. Failure to file a "substantially complete" Form 5471, absent reasonable cause, exposes the taxpayer to severe monetary and other penalties, beginning at $10,000 per year per missed form.

Filing Form 5471 requires data reporting from simple to highly intricate. Correctly completing the form involves hours of intensive work, including proper recordkeeping and data analysis. U.S. individuals and entities that own, acquire or dispose of shares of a foreign corporation may be required to file Form 5471 with their income tax returns. U.S. officers and directors of these foreign corporations may also have reporting responsibility.

Foreign corporation attribution rule changes under tax reform further complicate compliance. The law alters the definition of U.S. shareholder for purposes of information-filing duties, and some taxpayers will face new disclosure obligations for their foreign-sourced assets.

Listen as our panel of veteran advisers identifies and explains the more difficult aspects of preparing Form 5471 for U.S. owned foreign corporations. The panel will outline approaches to help you accurately identify taxpayer reporting categories, determine relevant direct, indirect and constructive ownership interests, identify common compliance mistakes, and stay ahead of IRS examination issues.

1. Purpose of Form 5471
2. Who is required to file
3. Tax reform changes to attribution rules and definition of U.S. shareholder
4. Preparation of Form 5471
5. New schedules added by 2017 tax reform law
6. IRS enforcement and audit environment to date
   1. Background on Form 5471 penalties
   2. Penalty structure for Form 5471
   3. Use of Form 5471 as an IRS audit tool

The panel will review these and other crucial concepts:

• Understand the purpose of Form 5471, the categories of U.S. persons required to file, and reporting requirements
• How 2017 tax law changes to attribution rules and the definition of U.S. shareholder likely increases the number of U.S. taxpayers required to file Form 54712
• New schedules added to Form 5471 by the 2017 tax reform law
• Grasp U.S. international tax reporting rules and obligations of U.S. persons with interests in foreign corporations
• Avoid errors and audit red flags for the Service when reviewing Form 5471

Learning Objectives

After completing this course, you will be able to:

• Determine how the definition of U.S. shareholders subject to tax on previously deferred foreign-source income has changed under the new law.
• Understand the purposes of Form 5471, the categories of U.S. persons required to file, and the reporting requirements.
• Distinguish the tax provisions under Subpart F from the GILTI provisions.
• Ascertain the new and enhanced IRS reporting requirements.
• Establish the impact that the termination of prior deferral benefits for U.S. shareholders of foreign business entities have on taxpayers after 2018 and beyond.

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite:

  Three years+ business or tax firm experience at mid-level within the organization, preparing complex tax forms and schedules, such as Form 5471. Specific knowledge and understanding of international taxation, foreign source income, deferred foreign source income, controlled foreign corporations, specified foreign corporations,  repatriation of deferred foreign earnings, and treatment of foreign-sourced income received by U.S. taxpayers, familiarity with cash and non-cash retained earnings and profits and  global intangible low-tax income (GILTI).

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).