How to fill out Form 5472

Before you start: what to have open

Assembling these six things first turns an afternoon into fifteen minutes:

• Your EIN confirmation letter (CP 575, or a 147C if you requested a replacement) — for the exact legal name and nine-digit number
• Formation documents — for the formation state and the exact formation date
• Bank and payment-processor statements for the whole tax year — every transfer between you and the entity
• Invoices you paid personally — registered agent, state fees, software, anything on the entity's behalf
• The closing balance on the last day of the tax year, plus anything else the entity owned
• Last year's filing, if there is one — for the reference ID you used

Part I — reporting corporation

Despite the heading, this part is about your US entity even if that entity is an LLC. For these reporting rules a foreign-owned disregarded entity is treated as a corporation, so the form calls it one.

Swipe the table sideways to see all columns

Part II — 25% foreign shareholder

This identifies the foreign person whose ownership brings the entity into scope. For a single-member LLC it is the sole owner — you, or your holding company.

• Name and address. The owner's full legal name and their address outside the United States. Use the address where they actually are, not the LLC's address.
• US identifying number, if any. An SSN, ITIN or EIN. Most foreign owners have none. Leave it blank — that is expected and does not prevent filing.
• Reference ID number. Required where there is no US identifying number. See the box below; this is the single most-missed field on the form.
• Principal country of business. Where the owner's own business activity happens.
• Country of citizenship, organisation or incorporation. Citizenship for an individual; country of organisation for a company.
• Country where an income tax return is filed as a resident. If the owner is not required to file anywhere, "none" is an accurate answer.

Part III — related party

Part III identifies the party the reportable transactions were with. For a single-member LLC whose only transactions were with its owner, this repeats Part II — same name, same address, same reference ID. That duplication feels wrong the first time; it is correct.

Part III adds two things Part II does not ask for:

• Relationship to the reporting corporation. For a disregarded entity, describing the party as the sole owner of the disregarded entity is straightforward and accurate. For a corporation, "25% foreign shareholder" or the actual relationship.
• Whether the related party is a US person or a foreign person. Answer for the party named in Part III, not for the entity.

If your entity transacted with more than one related party, each related party needs its own Form 5472. Part I repeats identically on each; Part III differs.

Part IV — monetary transactions with the foreign related party

Part IV is used by 25% foreign-owned US corporations. It lists monetary transactions between the reporting corporation and the foreign related party over the year, by category: sales and purchases of stock in trade and other property, rents and royalties paid and received, consideration for services either way, interest, and amounts borrowed and loaned.

Two points of technique. Report totals for the year by category, not individual transactions. And where amounts must be converted from another currency, the instructions specify the approach — be consistent, and keep a note of the rates you used and why.

If you are a foreign-owned disregarded entity, Part IV is not your part. Use Part V.

Part V — reportable transactions of a foreign-owned US DE

This is the part that matters for most people reading this page. It exists specifically because the 2017 change brought foreign-owned disregarded entities into the reporting regime, and their transactions do not fit the corporate categories in Part IV.

What belongs here:

• Contributions to the entity — money or property you put in, including the initial funding
• Distributions from the entity — money or property you took out for your own use
• Amounts loaned in either direction — even with no interest and no written agreement
• Payments for services, rent, royalties or interest between the entity and a related party
• Sales and purchases of property between the entity and a related party
• Entity expenses paid personally by the owner — formation fees, agent fees, software, bank charges

Amounts are reported in US dollars. If you funded the entity in another currency, convert at a defensible rate and keep the working. Do not leave the part blank because the figures are small: an empty transaction part on a form that is required precisely because there were transactions is a contradiction the IRS can read.

Part VI — non-monetary and less-than-full-consideration transactions

Part VI covers transfers of property that were not for money, and transactions where what was given was worth less than what was received. These are described rather than totalled.

Typical examples from small foreign-owned entities:

• Transferring a domain name, trademark or codebase into the LLC at no charge
• Contributing equipment — a laptop, camera or server — instead of cash
• Providing your own services to the entity without charging for them
• Letting the entity use property you own without rent

Describe what was transferred, by whom, to whom, and on what terms, in enough detail for a reader to understand the substance. If nothing of this kind happened, saying so plainly is better than leaving the part empty.

The pro forma Form 1120 cover

A foreign-owned disregarded entity has no income tax return of its own, so there is nothing for Form 5472 to attach to. The solution the IRS instructions set out is a pro forma Form 1120: a Form 1120 used purely as a cover sheet.

1. Complete only the identifying header — name, address, EIN, date incorporated, total assets, tax year.
2. Write FOREIGN-OWNED U.S. DE across the top of the form.
3. Leave every income, deduction and tax line blank. No income is reported and no tax is computed.
4. Attach the Form 5472 behind it.
5. Sign and date the Form 1120.

Filing a complete Form 1120 with income figures would be a different and incorrect filing. The pro forma return is a carrier, nothing more. More on the pro forma 1120 →

Signing, sending and keeping proof

• Sign the pro forma Form 1120, not the Form 5472. An unsigned return can be treated as never filed.
• Who signs. For a single-member LLC, the owner or an authorised representative. If a paid preparer completed it, they complete the preparer section; if you prepared it yourself, that section shows no preparer.
• Where to send it. The current instructions give a specific address, and a fax number, for foreign-owned DE filings. Verify both on IRS.gov before sending — they have changed.
• E-filing. A corporation attaching Form 5472 to an e-filed return follows the electronic route. A pro forma 1120 filed solely to carry a 5472 generally cannot be e-filed.
• Proof. Use a tracked international service or keep the fax confirmation. If a question arises years later, proof of timely filing is what settles it.
• Keep a full copy of everything sent, with the supporting statements, for at least as long as the assessment period could remain open.

Ten mistakes worth avoiding

1. Not filing because there was no income. The test is transactions, not profit.
2. Leaving the reference ID blank when the owner has no US number.
3. Forgetting the pro forma 1120. A 5472 sent alone by a disregarded entity may not be processed as a filing.
4. Omitting the FOREIGN-OWNED U.S. DE notation across the top of the cover.
5. Not signing the pro forma return.
6. Missing owner-paid expenses — the fees you paid personally are reportable.
7. Changing the reference ID between years so filings cannot be matched.
8. Filling in income lines on the pro forma 1120 that should be blank.
9. Filing one form for several related parties instead of one per party.
10. Using last year's form revision instead of the current one from IRS.gov.

Questions

Read next

DefinitionsWhat counts as a reportable transactionThe full list, with the examples founders miss. The cover pagePro forma Form 1120 explainedWhy a disregarded entity files a corporate return. DatesWhen it is dueDue dates, extensions and missed years. ConsequencesThe $25,000 penaltyWhy incomplete can count as unfiled.