IRS Form 5471 w/ respect to Foreign Corporations
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Form 5471 requires you state your "Category" as a Filer. I am wondering if anyone out there works with U S Persons and Foreign Corporations, and if yes do you know the difference between a Category 2 Filer and a Category 3 Filer w/ respect to the Form 5471?
I believe the Category 2 Filer is a U S citizen or resident who is an officer or director of a foreign corporation in which a U S Person has at least 10% stock but who does not necessarily own any stock him/herself, and
the Category 3 Filer is the U S Person - not necessarily and officer - who actually owns the stock.
My client is a U S Person who owns 50% stock in a foreign corporation (Category 3) and is ALSO the director of the corporation in which a U S Person (himself) owns =>10% stock in a foreign corporation (Category 2)
Can he be both? Must he declare both, and as such file all schedules on the 5471 as both a Category 2 and a Category 3 filer?
Solved!
Solved!
Yes, you can be both, and yes he must declare both, and yes, he has to file all the schedules for both.
You might find the Form 5471 instructions (http://www.irs.gov/pub/irs-pdf... helpful in this regard. "If the filer is described in more than one filing category, do not duplicate information. However, complete all items that apply. For example, if you are the sole owner of a controlled foreign corporation (CFC) (i.e., you are described in Categories 4 and 5), complete all four pages of Form 5471 and separate Schedules J and M."
Note also that Lacerte has you check each category that applies, which indicates that more than one category is a possible right answer.
Comment
Thanks Phoebe... I too felt that since Lacerte allowed me to check two or more boxes on the 5471 screen that I was 'supposed' to check both and complete the schedules as per the instructions for both. I did not, however, see the statement you quoted from the instructions... I somehow missed that... my bad.
You're terrif !!