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Domestic company is wholly owned by a foreign corporation.

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Parent invested in the domestic...
domestic company is wholly owned by a foreign corporation. Parent invested in the domestic co. Do we file form 5472 with the tax return? if so which line should reflect the investment amount
Submitted: 1 year ago.Category: Tax
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9/30/2016
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 1 year ago
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 482
Experience: Former IRS Revenue Agent
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Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 1 year ago

Dear Customer,

1) Yes. You need to file Form 5472.

2) The tax return shows the balance sheet of the company. The Form 5472 is on the percentage of ownership and related parties for ownership.

Regards,

Fiona

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Customer reply replied 1 year ago
It is a wholly owned subsidiary. How should I report the money invested in the reporting Co? There is no trade between two. Parent sent money as an investment. In fact, the owner of the parent got a e2 investor visa with that
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 1 year ago

Dear Customer,

The balance sheet of the company shows the equity of the owner, the foreign corporation.

Shareholder by definition investment money in the corporation. The form 5472 serves the purpose.

When you use Form 5472, the size of equity on the balance sheet shows the investment.

Money coming to the U.S. is much welcomed. The money going overseas is much more restricted in its reporting requirement in general.

There is nothing wrong with the E visa obtained by the investor. If they have E Visas, the U.S. government know about them and their role of investment already. The more the merrier from the U.S. government's viewpoint.

The IRS has a program to welcome international visitors coming here for investment purpose.

https://www.irs.gov/businesses/international-businesses/internal-revenue-service-international-visitors-program-ivp-application

Regards,

Fiona

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