Complete guide here: How to determine your IRS Form 5471 Category:
Questions of on IRS Form 5471 Schedules:
Questions on IRS Form 5471 Preparation fees
US Taxpayers, their CPAs, accountant attorneys, enrolled agents, taxpapyers and even th3 IRS are massively confused by IRS form 5471 rules.
In this Part 4 of our 2020 Form 5471 series, Anthony Parent and Robert Hanson discuss the following questions:
How do I know what Category I am for Form 5471?
Here are some rules of thumb:
• If you know that you directly, indirectly, or constructively own greater than 50% of the foreign entity, then you are probably a Category Four and/or Five filer.
• If you have had a change in the percentage of ownership of a foreign company, are an officer or director of the company, then you could be a Category Two or Three filer.
• Category One is back. Tax Reform brought back Category One, and thanks to the transition tax, this can be a big issue.
Do I need Form 5471 schedule H? What is schedule H?
Schedule H is the schedule that documents what your earnings and profits are for the year. You will only need this if you are Category Four or Five filer.
When was Form 5471 schedule J introduced?
Schedule J has been around for as long as we've been doing the form. Schedule P is new.
Are there state Forms 5471?
We are not aware of any particular information reporting forms at the state level. Some of the issues in recent years have been whether states will actually be taxing GILTI inclusion amounts.
Is net income on Form 5471 schedule C cash flow?
Not by default, and only in limited circumstances. Schedule C is used in situations where there is a disregarded entity, or just a sole proprietorship. You do not use a Schedule C to report income from a foreign corporation. If you “check the box” and possess an eligible LLC abroad, then you may be able to use schedule C income at that point.
What is the average fee for preparation of a Form 5471?
It is difficult to define an “average” 5471, as there are simply too many variables from case to case. The simpler cases – such as preparing Form 5471 on a dormant corporation – can be of negligible cost, whereas a more complicated or extensive Form 5471 can cost over $15,000 to prepare.
Further, the large firms don’t necessarily want anything other than non-price-sensitive corporations as clients. So for the global entrepreneur, it can actually be very hard to find a firm that can complete a Form 5471 that would survive the toughest scrutiny, and be reasonably priced.
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