Taxation of Foreign Subsidiaries and How to Prepare Form 5471

Author: Robert J. Misey

With more companies conducting business globally, the number of foreign subsidiaries has exploded. That leaves many U.S. owners needing to know the tax rules for foreign subsidiaries and how to file Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations. The IRS is aggressively pursuing penalties for non-filing, so Form 5471 compliance is critical for your business or clients.

This two-hour course presented by former IRS attorney and noted international tax advisor, author and presenter, Robert Misey, J.D., LL.M., M.B.A., and Benjamin Genzer, J.D., will help you understand the U.S. tax principles for foreign corporations and the rules for filing Form 5471. This program will provide a helpful review of the rigorous filing obligations for U.S. persons with ownership interests in foreign corporations.

Publication Date: July 2017

Designed For
Business tax and finance executives, directors, managers and staff; CPAs; Enrolled Agents; tax preparers and staff; accountants, attorneys and financial advisors who work with and advise businesses and individuals that have cross-border operations, activities and issues. All professionals in public practice and in industry involved with cross-border tax planning and compliance matters will benefit from this helpful course.

Topics Covered

• Weeding through the confusing Form 5471 filing categories
• Determining Subpart F income that must be reported on Schedule I
• Determining which foreign taxes are creditable
• Translating items denominated in foreign currencies
• Reporting intercompany transactions on Schedule M
• Failing to file Form 5471 and the related penalties
• Completing a sample Form 5741

Learning Objectives

• Identify and apply the tax law behind the informational requirements on Form 5471
• Describe U.S. international tax reporting and compliance with respect to foreign corporations
• Differentiate the categories for filing under Form 5471
• Recognize when is it acceptable for a U.S. shareholder of a CFC to exclude Subpart F income from their federal income tax return
• Identify scenarios when a U.S. manufacturer has foreign base company income
• Recognize reporting which foreign currency is typically translated using the spot rate
• Identify what happens if a taxpayer neglects to file Form 5471
• Recognize the purpose of Form 5471
• Describe who the deemed paid foreign tax credit is available to
• Identify the purpose of Section 78 gross-up
• Describe how a corporation's functional currency can be changed
• Recognize the most reliable measure of an arms-length result with regard to transfer pricing
• Identify how to pass the four manufacturing tests a product must go through
• Recognize the requirements of Subpart F income

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
Basic understanding of federal international income taxation concepts.

Advance Preparation
None