E-file with Form 5471

Client is part of a captive in the Cayman Islands. One of the Big 4 firms prepares the Form 5471 for each of the shareholders .

However, they do not provided all the other shareholders SSN and Profx will not allow the return to be efiled without that info. Is there some type of work around. We are forced to send in a paper return without the SSN so I am thinking it is no different than if we efile without the info

What category filer is the taxpayer?

I honestly did not think they had to file because they only own around 2% of the captive. The Form 5471 says No US Person is a greater than 10% shareholder. However, according to the 5471 provided we are a Category 3 filer. Is that because it is a captive.

I asked the Captive Adviser company and she explained why that was but I do not recall. They are not an officer or director either and have no check signing authority

[quote]Category 5 Filer

This category includes a U.S. shareholder who owns stock in a foreign corporation that is a CFC at any time during any tax year of the foreign corporation, and who owned that stock on the last day in that year on which it was a CFC.

U.S. shareholder. For purposes of Category 5, a U.S. shareholder is a U.S. person who:

1. Owns (directly, indirectly, or constructively, within the meaning of sections 958(a) and (b)) 10% or more of the total combined voting power of all classes of voting stock of a CFC or, in the case of a tax year of a foreign corporation beginning after December 31, 2017, 10% or more of the total combined voting power or value of shares of all classes of stock of a CFC; or

2. Owns (either directly or indirectly, within the meaning of section 958(a)) any stock of a CFC (as defined in sections 953(c)(1)(B) and 957(b)) that also is a captive insurance company.

Part II

Category 1, 3, 4, and 5 filers must complete Part II.

Report the direct shareholders of the foreign corporation. In the case of a CFC owned by a foreign disregarded entity (FDE), please include the information of the FDE and the regarded entity owner. Indicate the regarded entity owner's name in parentheses after the FDE's name.

Category 4 filers should list all direct owners of the CFC. Category 1, 3, and 5 filers should list all direct owners of the CFC through which such filer indirectly owns the CFC as described in section 958(a)(2). If the filer is a direct owner, include the filer's direct ownership.


I am not an expert on this, but it reads to me like a Category 5 owner with direct ownership is only required to list their own ownership?

Reading the instructions, I would certainly agree with you that it appears we should be labeled a Category 5 filer.

But the Form 5471 was prepared by one of the Big 4 accounting firms. They insist on filing it for each of the shareholders which I will gladly accept. But they checked Category 3

And I found this on a Top 60 CPA firm's website


Category 3

This category includes:

Any U.S. person that acquires stock in a foreign corporation that would put the person above the 10% ownership threshold (vote or value)

A U.S. person that acquires 10% or more of the foreign corporation during the tax year in addition to what they already own

A person treated as a U.S. shareholder in a captive insurance company

A person that becomes a U.S. person during the year while meeting the 10% ownership threshold

A U.S. person that disposes of stock and reduces their interest to below the 10% ownership threshold during the tax year

There is some nuance here – the 10% ownership threshold looks at what the U.S. person owns directly, indirectly, and constructively. However, with respect to individuals, the constructive ownership rules are expanded to include brothers and sisters. Thus, for an individual, this category is applied via attribution from spouse, ancestors (parents, grandparents), and lineal descendants (children) as defined above, but it also includes siblings (brothers and sisters) for purposes of Category 3.

Sorry to drudge up the last, but I am going through this with my client now. I wonder, must I list all the shareholders (over 100 of them!), or would it be ok to simply attach a copy of the 5471 prepared by the client’s company accountants?

Also, can I assume the Subpart F income reported to my client is correct? It is over $47,000 and makes a significant affect on his return. Any way for me to check the math on this calculation? Lastly, are there any other forms I need to file to disclose this position, such as an FBAR or 8938? TIA!

Captive insurance companies have special reporting rules, the 10% shareholder rule is not applicable. I would follow the form that was provided. I would also input all the detail into the software, a PDF attachment of a 5471 or any of the required statements is not considered a valid filing. For The Social Security question, use “applied for” or something like that ( this is a practical way to be eligible to e-file ).

I would assume the subpart f reported is correct, If you were to tie back the dividends to the shareholder, you’ll find that generally they line up with the subpart f income being reported.

Thank you HD, I appreciate the advice. I definitely attaching the provided 5471 to the return for reference. Thank you for the assistance with the SS question. That one threw me for a loop; I was thinking, the client’s birthdate?? Ha!