Welcome to Just Answers! The expert you requested is not online now, so with your permission, I will assist you. I will do my best to help! This is actually an area that I am extremely familiar with, as I used to file over 100 Forms 5471 each year.
You do not need any way out, nor do you need any special financial statements. If you just acquired the company in July 2013, you do not have a reporting requirement yet. You report the acquisition of the CFC in the US tax year that includes the foreign corporation's year-end. You acquired the CFC during the year when the CFC's next year-end is April 30, 2014. That year-end will be in YOUR tax year that ends on December 31, 2014. So you will not have to report anything until NEXT year. You will always be a year in arrears, or behind, as long as you own the CFC.
If the company is a UK company, not only are the statements in UK Pounds, but they are also prepared in accordance with IFRS, International Financial Reporting Standards. You will have to convert not only to US$, but also to US GAAP basis
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Thanks again! Have a great weekend!
Thanks, XXXXX XXXXX and just saved me a ton of work. Also I would be interested to know if the IRS may deem the UK company to be a US person, and be fully taxable in the US, since I am now the majority shareholder, and I reside in the US.
Thank you for your very helpful answers. I just wanted to clarify something. I was led to believe that my share of profits (67%) would be taxable in my 1040 as subpart F income. So if the company made $10, $15 and $25 in the first three years, I would include my share of profits of $6.67 (67% of 10), $10 (67% of $15) and & $16.67 (67% of $25) in my 1040 as schedule C income. I would also take credit for my share of the taxes paid which be $2 (67% of $3), $3.33(67% of $5), and $6 (67% of $8). From what you say I was misled, and that I would only account for profits when I receive dividends.