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5472 non monetary reporting

Technical topics regarding tax preparation.
#1
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A non-us person elected his 100% owned LLC via CTB to be treated as a C Corp, effective 01/01/19.
Is this a reportable transaction for 5472, part VI?
If it is a statement needs to be supplemented with the form 5472.. What information goes in the statement.
 

#2
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I guess in essence a transaction becomes reportable if it affects the taxable income of the reporting corporation.

In this case the LLC was elected to become a C Corp and as at 01-01-19 the corp transferred stock in exchange for equity from the shareholder. This transaction, however, does not affect the taxable income of the corp and hence would not be reportable.

Hope my understanding is correct....Any one would want to share their opinion otherwise or bless my understanding?

Thanks
 

#3
Nilodop  
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Reportable in Part V not VI. Transaction is defined in reg. 1.482-1(i)
(7) Transaction means any sale, assignment, lease, license, loan, advance, contribution, or any other transfer of any interest in or a right to use any property (whether tangible or intangible, real or personal) or money, however such transaction is effected, and whether or not the terms of such transaction are formally documented. A transaction also includes the performance of any services for the benefit of, or on behalf of, another taxpayer.


Part V
Reportable Transactions of a Reporting Corporation That is a Foreign-Owned U.S. DE (see instructions) Describe on an attached separate sheet any other transaction as defined by Regulations section 1.482-1(i)(7), such as amounts paid or received in connection with the formation, dissolution, acquisition, and disposition of the entity, including contributions to and distributions from the entity, and check here. ▶
 

#4
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Thank you, Nilodop.
The reporting corporation is not a disregarded entity for 2019 due to the CTB election effective 01/01/19. I guess part V would not apply in that case.
 

#5
Nilodop  
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When it checked the box, didn't the non-US person transfer/contribute assets to the corp.? You must see it differently than I (and the author of the article from which the following is excerpted) see it.
2. Adding New Paragraph to Reg. §1.6038A-2(b)(3)
Under prior law, Reg. §1.6038A-2(b)(3) featured a list of 10 types of monetary transactions that must be reported on Form 5472.
The Proposed Regulations added another category of reportable transaction for foreign-owned, single-member, domestic DREs by inserting new Reg. §1.6038A-2(b)(3) (xi). It would obligate disclosure of the following matters:
With respect to [a foreign-owned, single-member, do- mestic DRE] that is treated as a reporting corporation by reason of § 301.7701-2(c)(2)(vi) of this chapter, any other transaction as defined by § 1.482-1(i)(7), such as amounts paid or received in connection with the formation, dissolution, acquisition and disposition of the entity, including contributions to and distribu- tions from the entity.

According to Reg. §1.482-1(i)(7), the term “transaction” is broadly defined to mean “any sale, assignment, lease, license, loan, advance, contribution, or any other transfer of any interest in or a right to use any property (whether tangible or intangible, real or personal) or money, how- ever such transaction is effected, and whether or not the terms of such transaction are formally documented [and] a transaction also includes the performance of any services for the benefit of, or on behalf of, another taxpayer.”
The Final Regulations had nothing to add or detract from this topic, so the expanded list of what constitutes a reportable monetary transaction found in the Proposed Regulations remains in place.
https://www.chamberlainlaw.com/assets/h ... ations.pdf

Not to mention the possibile application of section 357(c), depencing on the facts w/r/to the asses and liabilities transferred.
 

#6
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Thank you, Nilodop for the response and citing the article and the code.

The return was filed without the reporting on 5472 part V. I had interpreted it differently to understand that part V would only apply to DREs.

The only reportable transactions were expense reimbursements to the related party of under $15k (reported in part IV, line 25 as Other amounts paid).

However, we did report the stock transfer in a separate statement pursuant to 1.351-3(b).

Do you recommend an amended to include the transfer in part V of 5472?

We are good with 357(c) as the total assets transferred were more than the liabilities assumed by the corp.
 

#7
Nilodop  
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Been retired too long to answer that. But as you know the penalties can be high.
 

#8
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thanks for guidance. much appreciated as always.
Let us see if someone else can chime in with a recommendation for an amendment.
 


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