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Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 3282
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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I absolutely need international (foreign) tax expert please: I

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I absolutely need international (foreign) tax expert please:

I am a US citizen residing in Turkey (do not pay any state taxes)
a) I have a Corp created in Turkey in Jan 2012 owning 96%, i am director, in the decision making, on the board, etc, but no salary

b)and bought 100 shares of another corp in Costa Rica (paid some money to the previous foreign owner and injected some money into the corp) owning 100% shares but do not have control on day to day decisions, no salary, not on the board, no access to company bank accounts, etc

I have an individual income tax return extension till Oct 15,2013

I have prepared form 5471 and 926 for both companies.


a) Very important? What other forms, if any, need to be filled out?

b) Do I not have to sign these forms? I do not see where to sign.

c) I assumed that there is no need to fill in 1120-F since there is no activity whatsoever of these corporations with and within USA (no trade, no office, no agents etc). Is that correct?

Hello again, Ned.


Did you exchange or transfer property to either foreign corporation? If not, Form 926 is not needed.


You do not sign the Form 5471. It is attached to, and part of, your personal tax return.


If you do not have a corporation formed in the US, there is no need to file form 1120S.


Let me know if I can assist you further.



Customer: replied 3 years ago.

Yes i transfered cash only (926).

There was no mention of 1120S, I was asking about 1120-F

(both corporations were formed in their respective countries)

Hi, Ned.


My apologies. I referenced the 1120-S because you mentioned it in your first question, and I just assumed it was a typo. My mistake.


Yes. Form 1120-F would be required to be filled out for both foreign corporations. I have reviewed the form itself, and it seems fairly simple to fill out. If you have any questions about any of the information you have to provide, please let me know.


Since you hold more than 10% of the total voting power or total value of the foreign corporation, you would need to use Form 926 to report the transfer of cash.


Please let me know if I can assist you further. Thank you.





Barbara and other Tax Specialists are ready to help you

Hello again, Ned.


I guess I was on the right track at the beginning. A colleague of mine pointed out that Form 1120-F is only required if the corporation carries on business in the United States. If 100% of its activities are outside of the US, no 1120-F is required, only the Form 5471.


Thank you.

Barbara and other Tax Specialists are ready to help you
Customer: replied 3 years ago.

Thanks Barb,


According to the form 5471 the Turkish company shows a loss and the Costa Rican company shows profit. What do I do now? Do I add/subtract those dividends in my individual income tax form?

Hi, Ned.


I would include the net amount (profit amount minus loss amount) on Line 21 of your 1040 and put Form 5471 on that line. You will be including both 5471's to your tax return as supporting documentation for that amount.


Please let me know if you have any other questions.





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