5472

Form 5472 is to provide information required under sections 6038A and 6038C when reportable transactions occur during the tax year of a reporting corporation [including a foreign-owned U.S. disregarded entity (DE)] with a foreign or domestic related party.

Disregarded entity (DE).

A DE is an entity that is disregarded as an entity separate from its owner for U.S. income tax purposes under Regulations sections 301.7701-2 and 301.7701-3. See the instructions for Form 8832. 

Foreign-owned U.S. DE.

A foreign-owned U.S. DE is a domestic DE that is wholly owned by a foreign person. For tax years beginning on or after January 1, 2017, and ending on or after December 13, 2017, a foreign-owned U.S. DE is treated as an entity separate from its owner and classified as a corporation for the limited purposes of the requirements under section 6038A that apply to 25% foreign-owned domestic corporations. See the final regulations at IRS.gov/irb/2017-03_IRB#TD-9796.

When and Where To File

File Form 5472 as an attachment to the reporting corporation's income tax return by the due date (including extensions) of that return.

While a foreign-owned U.S. DE has no income tax return filing requirement, as a result of final regulations under section 6038A, it will now be required to file a pro forma Form 1120 with Form 5472 attached by the due date (including extensions) of that Form 1120. The only information required to be completed on Form 1120 is the name and address of the foreign-owned U.S. DE and items B and E on the first page. The foreign-owned U.S. DE has the same tax year used by its owner for U.S. tax filing requirements or, if none, the calendar year.

Dedicated mailing address.

Foreign-owned U.S. DEs are required to use the following dedicated mailing address. These filers do not use the mailing address provided in the Instructions for Form 1120.

Foreign-owned U.S. DEs are required to use the special mailing address, as mentioned earlier. These filers do not use the mailing addresses provided in the Instructions for Form 1120.

Note.

“Foreign-owned U.S. DE” should be written across the top of the Form 1120. File these forms by:

Fax (300 DPI or higher) to 855-887-7737, or

Mail to:

Internal Revenue Service

1973 Rulon White Blvd

M/S 6112 Attn: PIN Unit

Ogden, UT 84201

Can I attach "proforma 1120 and 5472" as pdf to 1040NR?

• You can attach "proforma 1120 and 5472" as pdf to 1040NR, 

• but it does not absolve you from non-filing penalty of $25,000, 

• which will be assessed on any reporting corporation that fails to file Form 5472 when due and in the manner prescribed. 

Can I e-File 5472?

e-Filing of 5472 was always there with other forms like regular 1120 etc.

The new proforma filing requirements from IRS under sections 6038A and 6038C is only for foreign-owned U.S. when reportable transactions occur during the tax year of a reporting corporation with a foreign or domestic related party.

Therefore, 

• if you are a “Foreign-owned U.S. DE” you can choose to be taxed as C-Corp and file 1120 + 5472

• if you are a "1065 partnership" you can choose to be taxed as C-Corp and file 1120 + 5472

• if you are a "C-Corp" you will be taxed as C-Corp and file 1120 + 5472

Also, If you do not have ITIN it does not make any sense to you to choose a DE status. You anyways are not eligible for standard deduction on 1040NR and taxed on whole amount.

Qualified Business Income Deduction (QBI)

If you have ITIN, and are a sole prop foreign DE, only then your can claim Qualified Business Income Deduction (QBI)

The qualified business income deduction (QBI) is a tax deduction that allows eligible self-employed and small-business owners to deduct up to 20% of their qualified business income on their taxes.

In general, total taxable income in 2023 must be under $182,100 for single filers or $364,200 for joint filers to qualify. In 2024, the limits rise to $191,950 for single filers and $383,900 for joint filers.

Who qualifies for the qualified business income deduction?

The qualified business income deduction is for people who have “pass-through income” — that’s business income that you report on your personal tax return. Entities eligible for the qualified business income deduction include:

Sole proprietorships. [Yes, foreign persons can qualify as Sch C business with valid ITIN.]

Partnerships. [Yes, foreign persons can qualify if they have K-1 from 1065 return and with valid ITIN.]

S corporations. [NO, foreign persons cannot own S-Corp and do not qualify.]

Limited liability companies (LLCs). [Yes, foreign persons can qualify if they have K-1 from 1065 return and with valid ITIN.]

https://www.irs.gov/instructions/i5472#en_US_202301_publink100058495