Your entrepreneurial spirit crosses continents; your accounting team should too

Your accountant can help you select the form you need, but Form 1120 is for c-corporations. Form 1120-S is for corporations that have made the S-corp election.  Form 1120-W is the estimated tax form for corporations based on the current year’s taxes.

Form 5472 is a U.S. tax form used to report transactions between certain FODEs, foreign corporations engaged in a trade or business within the U.S., and related parties. The purpose of Form 5472 is to provide the IRS with information about these transactions to ensure proper taxation and to prevent tax avoidance or evasion through intercompany transactions.

So form 5472 is used when a company has a reportable transaction with a foreign or domestic related party.  In most cases, this will mean that you have a non-US person or persons who own 25% or more of the company.  It could also be used when you have a foreign company engaged in business in the US. If either of those sound familiar then yes you need a form 5472.

Form 5471 is required for companies that are shareholders in a foreign corporation. We can include a form 5471 for a dormant entity if it has less than $5k in income and expenses and less than $100k in assets. If your business has active foreign subsidiaries please see our Foreign Subsidiary packages.  

Form 1125-A is used by companies that need to report a deduction in their Cost of Goods Sold. 

Form 8949 is used by corporations to report sales and other dispositions of capital assets. Usually, these will be reported on Form 1099-B or 1099-S and Form 8949 is used to reconcile the amounts.  

Form 6252 is used by companies when they have installment sale income. An installment sale is when you sell property and at least one of the payments is received after the end of the tax year in which you sold the property. 

Form 1139 is how a corporation can apply for a tentative refund from the carryback of a net operating loss, a net capital loss, or an unused general business credit.  It can also be used for an overpayment of tax due to a claim of right adjustment.  Please note that amended return fees may apply.  

Yes! Cleer not only ensures tax filing compliance for Foreign-Owned Disregarded Entities, but compliance with state tax, and also Delaware Franchise Tax. Cleer provides accurate, affordable, and efficient financials and tax services for U.S. businesses and subsidiaries to help entrepreneurs do it right from the start. We offer tax services from preparation to filing, including for Foreign-Owned Disregarded Entities and Form 5472. Once all financial statements and necessary documentation are provided to us, we can start preparing the form. After Form 5472 is drafted, it will be reviewed by our internal tax reviewers before sending it to you for review. The return will be sent for review and sign off which includes Form 1120 and 5472. We will also extend the return if your purchase is made before the April deadline. 

A Foreign-Owned Disregarded Entity (FODE) refers to a legal entity that is owned by foreign individuals or entities and is classified as a “disregarded entity” for U.S. federal tax purposes. In this context, “foreign” refers to individuals or entities that are not considered residents or citizens of the United States.

Since 2018, foreign-owned disregarded entities must file Form 5472 and Form 1120. Due by April 15, they can be extended to October 15 with Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. Form 1120 doesn’t imply tax liability; it offers basic info. Form 5472 provides detailed info, mainly reporting transactions between the owner and LLC.

Not filing results in severe penalties. Missing or filing an inaccurate Form 5472 deadline can lead to a $25,000 penalty.