Preparing a 5471 for a client who has an investment in CFC. 2017 is their first year so will be Category 3, 4 and 5. I have received the financial statements from the CFC foreign country accountant on fiscal year end date of 03/31/2018. However, the US citizen is reporting on calendar basis and owns 100% of CFC’s including voting power. There will be no Sub Part F income or FPHC income involved -its all service income based in the resident country. From what I understand, it will be difficult to get the 12/31/2017 year-end accurate numbers from the accounting department since the depreciation and other entries are done on fiscal year basis.
Are there exceptions to the rule that if that CFC’s majority US shareholder year is the calendar year, the CFC’s tax year is the calendar year, regardless of its accounting period - IRC §898(c)(3)(A)?
Thanks,