26 C.F.R. § 1.6038-2T Information returns required of United States persons with respect to annual accounting periods of certain foreign corporations (temporary).
Title 26 - Internal Revenue
(a) through (c) [Reserved]. For further guidance, see §1.6038–2(a) through (c). (d) U.S. person—(1) In general. For purposes of section 6038 and this section, the term United States person has the meaning assigned to it by section 7701(a)(30), except as provided in paragraphs (d)(2) and (3) of this section. (2) Special rule for individuals residing in certain possessions. With respect to individuals who are bona fide residents of Puerto Rico or any section 931 possession, as defined in §1.931–1T(c)(1), the term United States person has the meaning assigned to it by §1.957–3T. (3) Special rule for certain nonresident aliens. An individual for whom an election under section 6013(g) or (h) is in effect shall, subject to the exceptions contained in paragraph (d)(2) of this section, be considered a United States person for purposes of section 6038 and this section. (e) through (f)(10) [Reserved]. For further guidance, see §1.6038–2(e) through (f)(10). (f)(11) Transactions with certain related parties. (i) A summary showing the total amount of each of the following types of transactions of the corporation, which took place during the annual accounting period, with the person required to file this return, any other corporation or partnership controlled by that person, or any United States person owning at the time of the transaction 10 percent or more in value of any class of stock outstanding of the foreign corporation, or of any corporation controlling that foreign corporation— (A) Sales and purchases of stock in trade; (B) Sales and purchases of tangible property other than stock in trade; (C) Sales and purchases of patents, inventions, models, or designs (whether or not patented), copyrights, trademarks, secret formulas or processes, or any other similar property rights; (D) Compensation paid and compensation received for the rendition of technical, managerial, engineering, construction, scientific, or like services; (E) Commissions paid and commissions received; (F) Rents and royalties paid and rents and royalties received; (G) Amounts loaned and amounts borrowed (except open accounts resulting from sales and purchases reported under other items listed in this paragraph (f)(11) that arise and are collected in full in the ordinary course of business); (H) Dividends paid and dividends received; (I) Interest paid and interest received; and (J) Premiums paid and premiums received for insurance or reinsurance. (ii) Special rule for banks. For purposes of this paragraph (f)(11), if the United States person is a bank, as defined in section 581, or is controlled within the meaning of section 368(c) by a bank, the term transactions shall not, as to a corporation with respect to which a return is filed, include banking transactions entered into on behalf of customers; in any event, however, deposits in accounts between a foreign corporation, controlled (within the meaning of paragraph (b) of this section) by a United States person, and a person described in this paragraph (f)(11) and withdrawals from such accounts shall be summarized by reporting end-of-month balances. (12) Accrued payments and receipts. For purposes of the required summary under paragraph (f)(11) of this section, a corporation that uses an accrual method of accounting shall use accrued payments and accrued receipts for purposes of computing the total amount of each of the types of transactions listed. (g) through (j)(3) [Reserved]. For further guidance, see §1.6038–2(g) through (j)(3). (k) Failure to furnish information—(1) Dollar amount penalty—(i) In general. If any person required to file Form 5471 under section 6038 and this section fails to furnish any information described in paragraphs (f) and (g) of this section within the time prescribed by paragraph (i) of this section, such person shall pay a penalty of $10,000 for each annual accounting period of each foreign corporation with respect to which such failure occurs. (ii) Increase in penalty for continued failure after notification. If a failure described in paragraph (k)(1)(i) of this section continues for more than 90 days after the date on which the Director of Field Operations mails notice of such failure to the person required to file Form 5471, such person shall pay a penalty of $10,000, in addition to the penalty imposed by section 6038(b)(1) and paragraph (k)(1)(i) of this section, for each 30-day period (or a fraction of) during which such failure continues after such 90-day period has expired. The additional penalty imposed by section 6038(b)(2) and this paragraph (k)(1)(ii) shall be limited to a maximum of $50,000 for each failure. (k)(2) through (k)(4) [Reserved]. For further guidance, see §1.6038–2(k)(2) through (k)(4). (k)(5) Illustrations. [Reserved]. For further guidance, see §1.6038–2(k)(5). Example 1 and 2. [Reserved]. For further guidance, see §1.6038–2(k)(5) Examples 1 and 2. Example 3. A, a U.S. person, owns 100 percent of the stock of FC. On April 15, 2008, A timely filed its 2007 income tax return but did not file Form 5471 with respect to FC's 2007 annual accounting period. On June 1, 2008, the Director of Field Operations mailed a notice to A of A's failure to file Form 5471 for 2007 with respect to FC. On August 1, 2008, A submits a written statement asserting facts for reasonable cause for failure to file the 2007 Form 5471 for FC. Based on A's statement and discussions with A, the Director of Field Operations agrees that A had reasonable cause for failure to file FC's 2007 Form 5471 and determined that it is reasonable for A to file FC's 2007 Form 5471 by September 15, 2008. The time prescribed for furnishing information under paragraph (i) of this section is September 15, 2008, and the 90-day period described under paragraphs (k)(1)(ii) and (k)(2)(iv)(A) of this section begins on that same date. Thus, if A files a completed Form 5471 by September 15, 2008, A is not subject to the penalties under paragraphs (k)(1) and (k)(2) of this section. If A does not file a completed Form 5471 by December 14, 2008, in addition to the penalties under paragraphs (k)(1) and (k)(2) of this section, A will also be subject to the penalties for continued failure under paragraphs (k)(1)(ii) and (k)(2)(iv)(A) of this section. Example 4. The facts are the same as in Example 3 except A submits the written statement to the Director before a notice of failure to furnish information is mailed to A. The notice is mailed to A on September 7, 2008. Under these facts, the time prescribed for furnishing information under paragraph (i) of this section is September 15, 2008, and the 90-day period after mailing of notice of failure under paragraphs (k)(1)(ii) and (k)(2)(iv)(A) of this section begins on that same date. (l) through (l)(2) [Reserved]. For further guidance, see §1.6038–(2)(l) through (l)(2). (m) Effective dates. (1) Except as otherwise provided, this section applies with respect to information for annual accounting periods beginning on or after June 21, 2006. Paragraph (d) of this section applies to taxable years ending after October 22, 2004. Paragraphs (k)(1) and (k)(5), Examples 3 and 4, of this section apply June 21, 2006. (2) The applicability of paragraphs (f)(11), (f)(12), (k)(1), and (k)(5), Examples 3 and 4, of this section will expire on or before June 22, 2009. [T.D. 9194, 70 FR 18946, Apr. 11, 2005, as amended by T.D. 9268, 71 FR 35525, June 21, 2006]
Title 26: Internal Revenue
PART 1—INCOME TAXES
information returns
§ 1.6038-2T Information returns required of United States persons with respect to annual accounting periods of certain foreign corporations (temporary).
