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Section 6662(j) Penalty

Line 1d

Note. In general, the reference ID

number assigned to a transferee foreign

For tax years beginning after March 18,

If the answer to line 1d is "Yes," and if the

corporation on Form 926 has relevance

2010, a 40% penalty may be imposed on

asset is transferred in an exchange

only on Form 926 and on any other form

any underpayment resulting from an

described in section 361(a) or (b), attach

that is attached to or associated with Form

undisclosed foreign financial asset

the following:

926 (for example, any Form 5471

understatement. No penalty will be

A statement that the conditions set forth

completed for the transferee foreign

imposed with respect to any portion of an

in the second sentence of section 367(a)

corporation) and should not be used with

underpayment if the taxpayer can

(5) and any regulations under that section

respect to the transferee foreign

DRAFT AS OF

demonstrate that the failure to comply was

have been satisfied.

corporation on other IRS forms.

due to reasonable cause with respect to

An explanation of any basis or other

such portion of the underpayment and the

Requirements. The reference ID number

adjustments made pursuant to section

taxpayer acted in good faith with respect

must be alphanumeric and no special

367(a)(5) and any regulations thereunder.

to such portion of the underpayment. See

characters or spaces are permitted. The

Line 2

sections 6662(j) and 6664(c) for additional

length of a given reference ID number is

information.

May 21, 2013

If a partnership (whether foreign or

limited to 50 characters.

domestic) transfers property to a foreign

The same reference ID number must

corporation in an exchange described in

Specific Instructions

be used consistently from tax year to tax

section 367(a)(1), then a U.S. person that

year with respect to a given transferee

is a partner in the partnership shall be

foreign corporation. If for any reason a

Important: All information reported on

treated as having transferred a

reference ID number falls out of use (for

Form 926 must be in English. All amounts

proportionate share of the property in an

example, the transferee foreign

must be stated in U.S. dollars. If the

exchange described in section 367(a)(1).

corporation no longer exists due to

information required in a given section

A U.S. person's proportionate share of

disposition or liquidation), the reference ID

exceeds the space provided within that

partnership property shall be determined

number used for that transferee foreign

section, do not write “see attached” in the

under the rules and principles of sections

corporation cannot be used again for

section and then attach all of the

701 through 761 and the regulations

another transferee foreign corporation for

information on additional sheets. Instead,

thereunder. See Temporary Regulations

purposes of Form 926 reporting.

complete all entry spaces in the section

section 1.367(a)-1T(c)(3).

There are some situations that warrant

and attach the remaining information on

Line 2d. For definition of “regularly traded

correlation of a new reference ID number

additional sheets. The additional sheets

on an established securities market,” see

with a previous reference ID number when

must conform with the IRS version of that

Temporary Regulations section

assigning a new reference ID number to a

section.

1.367(a)-1T(c)(3)(ii)(D). If the answer to

transferee foreign corporation.

Part I—U.S. Transferor

line 2d is “Yes,” the rules of Regulations

For example:

section 1.367(a)-1T(c)(3)(ii)(C) apply.

Information

In the case of a merger or acquisition, a

Form 926 filer must use a reference ID

Part II—Transferee

Identifying Number

number which correlates the previous

Foreign Corporation

reference ID number with the new

The identifying number of an individual is

Information

reference ID number assigned to the

his or her social security number (SSN).

transferee foreign corporation.

The identifying number of all others is their

Reference ID number A reference ID

In the case of an entity classification

employer identification number (EIN).

number is required on line 4b only in

election that is made on behalf of a

cases where no EIN was entered on

transferee foreign corporation on Form

Line 1a

line 4a for the transferee foreign

8832, Regulations section 301.6109-1(b)

corporation. However, filers are permitted

If you answered “Yes” to question 1a and

(2)(v) requires the transferee foreign

to enter both an EIN and a reference ID

the asset is a tangible asset, section

corporation to have an EIN for this

number. If applicable, enter on line 4b the

367(a)(5) may require basis adjustments.

election. For the first year that Form 926 is

reference ID number (defined below) you

If you answered “No” to question 1a and

filed after an entity classification election is

have assigned to the transferee foreign

the asset is a tangible asset, the transfer is

made on behalf of the transferee foreign

corporation.

taxable under sections 367(a)(1) and (a)

corporation on Form 8832, the new EIN

(5). If the asset transferred is an intangible

must be entered on line 4a and the old

A “reference ID number” is a number

asset, see section 367(d) and its

reference ID number must be entered on

established by or on behalf of the U.S.

regulations.

line 4b. In in the applicable entry space

transferor identified at the top of page 1 of

just below. In subsequent years, the Form

the form that is assigned to the transferee

Line 1b

926 filer may continue to enter both the

foreign corporation with respect to which

If the transferor went out of existence

EIN and the reference ID number, but

Form 926 reporting is required. These

pursuant to the transfer (e.g., as in a

must enter at least the EIN on line 4a.

numbers are used to uniquely identify the

reorganization described in section 368(a)

transferee foreign corporation in order to

You must correlate the reference ID

(1)(C)), list the controlling shareholders

keep track of the entity from tax year to tax

numbers as follows: New reference ID

and their identifying numbers.

year. The reference ID number must meet

number [space] Old reference ID number.

the requirements set forth below.

Line 1c

If there is more than one old reference ID

number, you must enter a space between

If the transferor was a member of an

Note. Because reference ID numbers are

each such number. As indicated above,

affiliated group filing a consolidated tax

established by or on the behalf of the U.S.

the length of a given reference ID number

return (see sections 1501 through 1504),

person filing Form 926, there is no need to

is limited to 50 characters and each

but was not the parent corporation, list the

apply to the IRS to request a reference ID

number must be alphanumeric and no

name and EIN of the parent corporation

number or for permission to use these

special characters are permitted.

and file Form 926 with the parent

numbers.

corporation's consolidated return.

-2-

Instructions Draft For Form 926 - Return By A U.s. Transferor Of Property To A Foreign Corporation Page 3

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