5472 Question

Technical topics regarding tax preparation.
#1
PghCPA  
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Client is a C Corp, all shareholders are based out of Australia. A few trusts and a few individuals hold all of the shares. My contact at the client assured me that there were no transactions between the shareholders and the corporation.

However, after a deeper dive into the balance sheet I found two long term liabilities in the name of the two of the trust shareholders (18% and 10% respectively). I also found a third note in the name of one of the individual shareholders who holds 2% of the shares.

Historically a blank 5472 has been filed under the name of a trust shareholder who was listed as owning 48% of the stock. But this does not appear to be accurate, as the shareholder agreement indicates that this particular trust owns 10%.

Should I be concerned about filing a 5472 since none of the involved parties appear to be 25% owners?

Lots of weird stuff going on here, how would everyone recommend handling this?
 

#2
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I wonder if one or more of the trusts are related to the other shareholders? Under the ownership attribution rules, perhaps the trust is treated as constructively owning 48%. You should understand the relationships of all of the parties, including the beneficiaries of the trusts.
 

#3
PghCPA  
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I asked the client about this and he said "none of the individual shareholders are party to any of the trusts".

This seems that it may cover my responsibility to investigate, as reviewing the trust feels like it would be out of scope here. Any thoughts?
 

#4
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Ask if any of the discretionary beneficiaries of the trusts are related to any of the individuals directly owning the shares.
 

#5
PghCPA  
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I would think that if the individuals were discretionary benefits, he wouldn't have said they were not party to the trust. However, there seems to be some evidence that he's confused.
 


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