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Would it be approptriate to use "No Activity" as a

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Would it be approptriate to...

Would it be approptriate to use "No Activity" as a placeholder for "Principal business activity" in IRS Form 5472 if my Foreign Disregarded Single Member Delaware LLC has not generated any revenue and does not have any business contracts that have future revenue potential?

Submitted: 2 months ago.Category: Finance

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3/15/2023

Financial Professional: Alex L., Director, Financial Planning & Analysis replied 2 months ago

Alex L., Director, Financial Planning & Analysis

Category: Finance

Satisfied Customers: 462

Experience: Expert

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Hi and welcome to JustAnswer! My name Alex and I’m a Finance, Tax and Social Security Expert here to assist you today. Please note that this service is for educational purposes, and not intended to substitute for acquiring advice from a professional licensed in your state. Give me some time to review your question in more detail and I will reply with the best possible answer or I will ask follow up questions.Thanks for your patience. In the meantime, who do I have the pleasure in chatting with and how are you doing today?

Yes, it would be appropriate to use "No Activity" as a placeholder for "Principal business activity" in IRS Form 5472 if your Foreign Disregarded Single Member Delaware LLC has not generated any revenue and does not have any business contracts that have future revenue potential.

According to the IRS instructions for Form 5472, if the LLC did not engage in any reportable transactions during the tax year, you should mark the "No" box on line 5a and enter "No Activity" on line 5b.

However, if you believe that your LLC will have reportable transactions in the future, you should choose a principal business activity that most accurately reflects the nature of your LLC's expected activities.

Customer reply replied 2 months ago

Understood. Would it be appropriate to use "All other business support services" in as a placeholder for "Principal business activity" as per IRS business code 561499 or should i explain my business activity in my own words?

Financial Professional: Alex L., Director, Financial Planning & Analysis replied 2 months ago

If your LLC provides services that are not described in any of the other IRS business codes, it would be appropriate to use "All other business support services" as a placeholder for "Principal business activity" in Form 5472, as per IRS business code 561499.

However, if your LLC provides a specific type of service that is not adequately described by that business code, or if you feel that the business code does not accurately reflect the nature of your LLC's activities, you may choose to explain your business activity in your own words on line 5b of Form 5472.

Regardless of which approach you choose, it is important to ensure that your description accurately reflects the nature of your LLC's activities, as this information will be used by the IRS to determine your tax liability and to monitor compliance with tax laws.

Financial Professional: Alex L., Director, Financial Planning & Analysis replied 2 months ago

Is there anything else I can assist you with today?

Financial Professional: Alex L., Director, Financial Planning & Analysis replied 2 months ago

Let me know if you need further assistance with this. Have a wonderful evening!

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