taxable year of foreign corporation for form 5471 and section 898

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Subject Author Date taxable year of foreign corporation for form 5471 and section 898 A Wieser 03-13-2008  Re: taxable year of foreign corporation for form 5... jmail7 03-13-2008  Re: taxable year of foreign corporation for form 5... A Wieser 03-14-2008  Re: taxable year of foreign corporation for form 5... jmail7 03-14-2008  Re: taxable year of foreign corporation for form 5... A Wieser 03-14-2008  Re: taxable year of foreign corporation for form 5... jmail7 03-15-2008
Posted by A Wieser on March 13, 2008, 12:53 pm Please log in for more thread options It appears I need to file this form. The company year ends each year on February 28. US ownership is less than 50% of the company. Do I really need to recalculate the accounts to end on December 31? TOny -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by jmail7 on March 13, 2008, 11:24 pm Please log in for more thread options > It appears I need to file this form.  The company year ends each year on > February 28. > > US ownership is less than 50% of the company. > > Do I really need to recalculate the accounts to end on December 31? You need to make sure you understand the ownership rules to conclude that U.S. ownership is less than 50%. If U.S. persons, in substance, have control of more than 50% of the vote or of the value of the foreign corporation, then it would likely be a CFC. If you conclude that it is not a CFC, then Code § 898 does not apply to require a December or November year end. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by A Wieser on March 14, 2008, 10:46 am Please log in for more thread options >> It appears I need to file this form. The company year ends each year on >> February 28. >> >> US ownership is less than 50% of the company. >> >> Do I really need to recalculate the accounts to end on December 31? > > You need to make sure you understand the ownership rules to conclude > that U.S. ownership is less than 50%. If U.S. persons, in substance, > have control of more than 50% of the vote or of the value of the > foreign corporation, then it would likely be a CFC. > > If you conclude that it is not a CFC, then Code § 898 does not apply > to require a December or November year end. > The majority of shares are owned by my wife, who is not a US citizen and never has been. We both live in England and have done for the entire time the company has been in existence. >From what I understood of the rules, that makes it not a CFC, as the constructive ownership rules seem to disallow it in section (b)(1). Have I interpreted that correctly, or am I mistaken? Tony -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by jmail7 on March 14, 2008, 1:25 pm Please log in for more thread options > >> US ownership is less than 50% of the company. > > The majority of shares are owned by my wife, who is not a US citizen and > never has been.  We both live in England and have done for the entire time > the company has been in existence. > > >From what I understood of the rules, that makes it not a CFC, as the > constructive ownership rules seem to disallow it in section (b)(1). > > Have I interpreted that correctly, or am I mistaken? You have a special circumstance. You are correct that Code § 958(b) (1) indicates that your nonresident alien wife's shares are not attributed to you for purposes of determining whether the corporation is a CFC. Thus, I agree that the corporation would not be a CFC and the year end can be a non-calendar year. However, for purposes of filing Form 5471, you are treated as controlling the foreign corporation. This makes you a category 4 filer and you need to file Form 5471 annually. I don't recall your specific facts provided in other threads, but you may also be a category 3 filer and a category 2 filer. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by A Wieser on March 14, 2008, 3:07 pm Please log in for more thread options >> >> US ownership is less than 50% of the company. >> >> The majority of shares are owned by my wife, who is not a US citizen and >> never has been. We both live in England and have done for the entire time >> the company has been in existence. >> >> >From what I understood of the rules, that makes it not a CFC, as the >> constructive ownership rules seem to disallow it in section (b)(1). >> >> Have I interpreted that correctly, or am I mistaken? > > You have a special circumstance. You are correct that Code § 958(b) > (1) indicates that your nonresident alien wife's shares are not > attributed to you for purposes of determining whether the corporation > is a CFC. Thus, I agree that the corporation would not be a CFC and > the year end can be a non-calendar year. However, for purposes of > filing Form 5471, you are treated as controlling the foreign > corporation. This makes you a category 4 filer and you need to file > Form 5471 annually. I don't recall your specific facts provided in > other threads, but you may also be a category 3 filer and a category 2 > filer. > Where is that specified in the regulations? Tony -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Form 5471 Worksheet A - Can anyone explain how to fill in section 1? March 6, 2008, 8:32 am IRS Form 3520, Section 679 IRC - what is a "foreign trust"? Not a foreign partnership, right? July 25, 2007, 6:22 pm Do I have to fill in form 5471 at all? March 11, 2008, 1:54 pm foreign corporation in Hawaii and taxation October 5, 2008, 11:32 pm gift to a corporation taxable? 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