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If you have a Single-Member LLC (1 owner) that is foreign-owned, then you need to file Form 5472 and Form 1120 every year.
Who Must File form 5472:
Generally, a reporting corporation must file Form 5472 if it had a reportable transaction with a foreign or domestic related party.
The requirements for foreign-owned U.S. Corporations to file Form 5472 and Form 1120 have been around for some time, however, the IRS released TD 9796 and added new regulations to Section 1.6038A-1 of the Code of Federal Regulations. These new changes went into effect on January 1st, 2017 and now also affect all foreign-owned Single-Member LLCs that are Disregarded Entities.
Starting in 2017, all foreign-owned Single-Member LLCs that are Disregarded Entities are now treated as Corporations for federal reporting requirements (submitting information) to the IRS. This doesn’t mean the LLC is paying tax like a Corporation, but rather, it’s simply reporting information like a Corporation.
A Single-Member LLC is automatically considered a Disregarded Entity by the IRS unless the LLC has made a special election to be taxed as a Corporation. The word “disregarded” simply means the IRS “ignores” the LLC for federal tax purposes and taxes the LLC the same way the owner is taxed.
The following types of LLCs have to file Form 5472 and Form 1120 every year:
- a Single-Member LLC that is Disregarded and owned by a non-US resident or foreign company
- a Single-Member LLC that is Foreign-owned and taxed as a Corporation
- a Multi-Member LLC that is taxed as a Corporation and has at least 1 Foreign owner that owns 25% or more of the LLC
SINGLE MEMBER LLC TAX FILING: IRS FORM 5472 & 1120
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