Paperwork Reduction Act Notice.

We ask for the information on this form to carry out the Internal Revenue laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103.

The time needed to complete and file this form and related schedules will vary depending on individual circumstances. The estimated average times are:

Form	Recordkeeping	Learning about the law or the form	Preparing and sending the form to the IRS
5471	82 hr., 45 min.	15 hr., 50 min.	23 hr., 53 min.
Sch. J (5471)	3 hr., 49 min.	1 hr., 29 min.	1 hr., 37 min.
Sch. M (5471)	26 hr., 33 min.	6 min.	32 min.
Sch. N (5471)	8 hr., 22 min.	2 hr., 28 min.	2 hr., 43 min.
Sch. O (5471)	10 hr., 45 min.	24 min.	35 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form and related schedules simpler, we would be happy to hear from you. See the instructions for the tax return with which this form is filed.

Changes To Note

• The Tax Relief and Extension Act of 1999 extended the temporary exceptions for certain active financing income from subpart F foreign personal holding company income, foreign base company services income, and insurance income. The exceptions now apply to tax years of foreign corporations beginning after December 31, 1998, and before January 1, 2002, and to tax years of U.S. shareholders with or within which any such tax year of the foreign corporation ends. For more information, see the instructions for Worksheet A beginning on page 6.
• For tax years of foreign corporations ending on or after December 29, 1999, a Category 4 or 5 filer does not have to file Form 5471 if the shareholder: (a) does not own a direct or indirect interest in the foreign corporation and (b) is required to file Form 5471 solely because of constructive ownership of stock from a nonresident alien. For more information, see Regulations section 1.6038-2(l) and the instructions for exceptions from filing for constructive owners on page 3.

General Instructions

Purpose of Form

Form 5471 is used by certain U.S. citizens and residents who are officers, directors, or shareholders in certain foreign corporations. The form and schedules are used to satisfy the reporting requirements of sections 6035, 6038, 6046, and the related regulations.

Who Must File

Generally, all U.S. persons described in Categories of Filers below must complete the schedules, statements, and/or other information requested in the chart, Filing Requirements for Categories of Filers, on page 2. Read the information for each category carefully to determine which schedules, statements, and/or information apply.

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) that is also a foreign personal holding company (i.e., you are described in Categories 1, 4, and 5), complete all four pages of Form 5471 and separate Schedules J, M, and N.

Note:   Complete a separate Form 5471 and all applicable schedules for each applicable foreign corporation.

When and Where To File

Form 5471 is due when your income tax return is due, including extensions. File two copies of the form and required schedules. Attach one copy to your income tax return. Send the other copy to the Internal Revenue Service Center, Philadelphia, PA 19255.

Categories of Filers

Category 1 Filer

This includes a U.S. citizen or resident who is an officer, director, or 10% shareholder of a foreign personal holding company.

A 10% shareholder is any individual who owns, directly or indirectly (within the meaning of section 554), 10% or more in value of the outstanding stock of the foreign personal holding company.

Foreign personal holding company.   A foreign corporation qualifies as a foreign personal holding company if:

• At any time during the tax year more than 50% of the combined voting power of all classes of stock entitled to vote or the total value of the stock of the corporation is owned (directly or indirectly) by or for a group of five or fewer citizens or residents of the United States and
• At least 60% of the foreign corporation's gross income (as defined in section 555(a)) is foreign personal holding company income (defined in section 553).

For more information, see section 552.

Once a foreign personal holding company meets the gross income test, the minimum percentage is lowered to 50% for any subsequent tax year. The foreign corporation will, however, continue to be considered a foreign personal holding company until either:

1. The stock requirement test is not met or
2. The end of 3 consecutive tax years in each of which less than 50% of the gross income is foreign personal holding company income.

Category 2 Filer

This includes a U.S. citizen or resident who is an officer or director of a foreign corporation in which a U.S. person (defined on page 2) has acquired (in one or more transactions):

1. Stock which meets the 10% stock ownership requirement (described on page 2) or
2. An additional 10% or more (in value or voting power) of the outstanding stock of the foreign corporation.

A U.S. person has acquired stock in a foreign corporation when that person has an unqualified right to receive the stock, even though the stock is not actually issued. See Regulations section 1.6046-1(f)(1) for more details.

Stock ownership requirement.   The stock ownership threshold is met if a U.S. person owns:

1. 10% or more of the total value of the corporation's stock or
2. 10% or more of the total combined voting power of all classes of stock with voting rights.

U.S. person.   For purposes of Category 2 and Category 3, a U.S. person is:

1. A citizen or resident of the United States,
2. A domestic partnership,
3. A domestic corporation, and
4. An estate or trust that is not a foreign estate or trust defined in section 7701(a)(31).

See Regulations section 1.6046-1(f)(3) for exceptions.

Category 3 Filer

This category includes:

• A U.S. person who acquires stock in a foreign corporation which, when added to any stock owned on the date of acquisition, meets the 10% stock ownership requirement (discussed above) for the corporation;
• A U.S. person who acquires stock (without regard to stock already owned on the date of acquisition) that meets the 10% stock ownership requirement;
• A person who is treated as a U.S. shareholder under section 953(c);
• A person who becomes a U.S. person while meeting the 10% stock ownership requirement; or
• A U.S. person who disposes of sufficient stock in the foreign corporation to reduce his or her interest to less than the stock ownership requirement.

For more information, see section 6046 and Regulations section 1.6046-1. For the definition of a Category 3 U.S. person, see U.S. person above.

Filing Requirements for Categories of Filers

Category 4 Filer

This includes a U.S. person who had control (defined below) of a foreign corporation for an uninterrupted period of at least 30 days during the annual accounting period of the foreign corporation.

U.S. person.   For purposes of Category 4, a U.S. person is:

1. A citizen or resident of the United States;
2. A nonresident alien for whom an election is in effect under section 6013(g) to be treated as a resident of the United States;
3. An individual for whom an election is in effect under section 6013(h), relating to nonresident aliens who become residents of the United States during the tax year and are married at the close of the tax year to a citizen or resident of the United States;
4. A domestic partnership;
5. A domestic corporation; and
6. An estate or trust that is not a foreign estate or trust defined in section 7701(a)(31).

See Regulations section 1.6038-2(d) for exceptions.

Control.   A U.S. person has control of a foreign corporation if, at any time during that person's tax year, it owns stock possessing:

1. More than 50% of the total combined voting power of all classes of stock entitled to vote or
2. More than 50% of the total value of shares of all classes of stock of the foreign corporation.

A person in control of a corporation that, in turn, owns more than 50% of the combined voting power, or the value, of all classes of stock of another corporation is also treated as being in control of such other corporation.

Example.   Corporation A owns 51% of the voting stock in Corporation B. Corporation B owns 51% of the voting stock in Corporation C. Corporation C owns 51% of the voting stock in Corporation D. Therefore, Corporation D is controlled by Corporation A.

For more details on control, see Regulations sections 1.6038-2(b) and (c).

Category 5 Filer

This includes a U.S. shareholder who owns stock in a foreign corporation that is a CFC for an uninterrupted period of 30 days or more during any tax year of the foreign corporation, and who owned that stock on the last day of that year.

U.S. shareholder.   For purposes of Category 5, a U.S. shareholder is a U.S. person who:

1. Owns (directly, indirectly, or constructively, within the meaning of sections 958(a) and (b)) 10% or more of the total combined voting power of all classes of voting stock of a CFC or
2. Owns (either directly or indirectly, within the meaning of section 958(a)) any stock of a CFC (as defined in sections 953(c)(1)(B) and 957(b)) that is also a captive insurance company.

U.S. person.   For purposes of Category 5, a U.S. person is:

1. A citizen or resident of the United States,
2. A domestic partnership,
3. A domestic corporation, and
4. An estate or trust that is not a foreign estate or trust defined in section 7701(a)(31).

See section 957(c) for exceptions.

CFC.   A CFC is a foreign corporation that has U.S. shareholders that own (directly, indirectly, or constructively, within the meaning of sections 958(a) and (b)) on any day of the tax year of the foreign corporation, more than 50% of:

1. The total combined voting power of all classes of its voting stock or
2. The total value of the stock of the corporation.

Exceptions From Filing

Multiple filers of same information.   One person may file Form 5471 and the applicable schedules for other persons who have the same filing requirements. If you and one or more other persons are required to furnish information for the same foreign corporation for the same period, a joint information return that contains the required information may be filed with your income tax return or with the income tax return of any one of the other persons. For example, a U.S. person described in Category 5 may file a joint Form 5471 with a Category 4 or another Category 5 filer. However, for Category 3 filers, the required information may only be filed by another person having an equal or greater interest (measured in terms of value or voting power of the stock of the foreign corporation).

The person that files Form 5471 must complete Item D on page 1 of the form. All persons identified in Item D must attach a statement to their income tax returns that include the information described in the instructions for Item D on page 5.

Domestic corporations.   Shareholders are not required to file the information checked in the chart on page 2 for a foreign insurance company that has elected (under section 953(d)) to be treated as a domestic corporation and has filed a U.S. income tax return for its tax year under that provision.

Members of consolidated groups.   A Category 4 filer is not required to file Form 5471 for a corporation defined in section 1504(d) that files a consolidated return for the tax year.

Constructive owners.  

• A U.S. citizen or resident described in Category 1 that is a 10% shareholder that does not own 10% or more in value of the outstanding stock directly but is required to file Form 5471 solely by attribution of another U.S. person's stock ownership does not have to file if the direct owner is an individual who furnishes all the required information.
• A U.S. person described in Category 3 or 4 does not have to file Form 5471 if all of the following conditions are met:
  1. The U.S. person does not own a direct interest in the foreign corporation,
  2. The U.S. person is required to furnish the information requested solely because of constructive ownership (as determined under Regulations section 1.6038-2(c) or 1.6046-1(i)) from another U.S. person, and
  3. The U.S. person through which the indirect shareholder constructively owns an interest in the foreign corporation files Form 5471 to report all of the required information.
• A Category 2 filer does not have to file Form 5471 if:
  1. Immediately after a reportable stock acquisition, three or fewer U.S. persons own 95% or more in value of the outstanding stock of the foreign corporation and the U.S. person making the acquisition files a return for the acquisition as a Category 3 filer or
  2. The U.S. person(s) for which the Category 2 filer is required to file Form 5471 does not directly own an interest in the foreign corporation but is required to furnish the information solely because of constructive stock ownership from a U.S. person and the person from whom the stock ownership is attributed furnishes all of the required information.
• For tax years of foreign corporations ending on or after December 29, 1999, a Category 4 or 5 filer does not have to file Form 5471 if the shareholder:
  1. Does not own a direct or indirect interest in the foreign corporation and
  2. Is required to file Form 5471 solely because of constructive ownership from a nonresident alien.

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