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Throughout these instructions, when

continues after the 90-day period has

to 1 Japanese Yen). Divide 30,255,400

the pronouns “you” and “your” are used,

expired. The additional penalty is limited

Yen by 118.5050 to determine the U.S.

they are used in reference to the U.S.

to a maximum of $50,000 for each failure.

dollar amount to enter on line 7 of

person filing Form 8858.

Any person who fails to file or report all

Schedule H. Enter 118.5050 after the flush

language following line 7.

of the information required within the time

Foreign Disregarded Entity

prescribed will be subject to a reduction of

Electronic Filing of Form 8858

(FDE)

10% of the foreign taxes available for

If you file your income tax return

credit under sections 901, 902, and 960. If

An FDE is an entity that is not created or

electronically, see the instructions for your

the failure continues 90 days or more after

organized in the United States and that is

income tax return for general information

the date the IRS mails notice of the failure

disregarded as an entity separate from its

about electronic filing.

to the U.S. person, an additional 5%

owner for U.S. income tax purposes under

reduction is made for each 3-month

Regulations sections 301.7701-2 and

Note. If you are filing Form 1120 or 1065

period, or fraction thereof, during which

301.7701-3. See the instructions for Form

electronically, you must attach Form 8858

the failure continues after the 90-day

8832, Entity Classification Election, for

electronically (as an attachment to your

period has expired. See section 6038(c)

more information.

electronically filed Form 5471, Form 8865,

(2) for limits on the amount of this penalty.

Form 1120, or Form 1065). If you are filing

An eligible entity uses Form 8832 to

Criminal penalties. Criminal penalties

Form 1040 or Form 1041 electronically

elect how it will be classified for federal tax

under sections 7203, 7206, and 7207 may

(with or without a Form 5471 or Form

purposes. A copy of Form 8832 is

apply for failure to file the information

8865), attach Form 8858 to the applicable

attached to entity's federal tax return for

required by section 6038.

Form 8453.

the tax year of the election; however,

special rules apply if the entity is not

ComputerGenerated Form

Note. Any person required to file Form

required to file a tax return. For more

8858 and Schedule M (Form 8858) who

8858 and Schedules

information, see Where To File in the

agrees to have another person file the

instructions for Form 8832.

A computer-generated Form 8858 and its

form and schedules for him or her may be

schedules may be filed if they conform to

subject to the above penalties if the other

Note. New rules, effective September 28,

and do not deviate from the official form

person does not file a correct and proper

2009, allow an eligible entity to request a

and schedules. Generally, all

form and schedule.

late entity classification election. See Rev.

computer-generated forms must receive

Proc. 2009-41, 2009-39 I.R.B. 439 for

prior approval from the IRS and are

Other Reporting

more information.

subject to an annual review.

Requirements

Tax Owner of FDE

Submit all requests for approval to:

Reporting Exchange Rates on

The tax owner of the FDE is the person

Internal Revenue Service, Attention:

that is treated as owning the assets and

Form 8858

Substitute Forms Program,

liabilities of the FDE for purposes of U.S.

SE:W:CAR:MP:T:M:S, 1111 Constitution

When translating amounts from functional

income tax law.

Avenue NW, IR-6526, Washington, DC

currency to U.S. dollars, you must use the

20224.

Direct Owner of FDE

method specified in these instructions.

But, regardless of the specific method

The direct owner of an FDE is the legal

Important: Be sure to attach the approval

required, all exchange rates must be

owner of the disregarded entity.

letter to Form 8858.

reported using a “divide-by convention”

rounded to at least 4 places. That is, the

For example, assume A, a U.S.

Every year, the IRS issues a revenue

exchange rate must be reported in terms

individual, is a 60% partner of CFP, a

procedure to provide guidance for filers of

of the amount by which the functional

controlled foreign partnership. FDE 1 is a

computer-generated forms. In addition,

currency amount must be divided in order

foreign disregarded entity owned by CFP,

every year the IRS issues Pub. 1167,

to reflect an equivalent amount of U.S.

and FDE 2 is a foreign disregarded entity

General Rules and Specifications For

dollars. As such, the exchange rate must

owned by FDE 1. In this example, FDE 1

Substitute Forms and Schedules, which

be reported as the units of foreign

is the direct owner of FDE 2, and CFP is

reprints the most recent applicable

currency that equal one U.S. dollar,

the direct owner of FDE 1. CFP is the tax

revenue procedure. Pub. 1167 is available

rounded to at least 4 places. Do not report

owner with respect to both FDE 1 and

at , or can be

the exchange rate as the number of U.S.

FDE 2. A would be required to file the

ordered by calling 1-800-TAX-FORM

dollars that equal one unit of foreign

Forms 8858 relating to FDE 1 and FDE 2

(1-800-829-3676).

currency.

with the Form 8865 it files with respect to

Dormant FDEs

CFP.

Note. You must round the result to more

Announcement 2004-4, 2004-4 I.R.B. 357,

Penalties

than 4 places if failure to do so would

provides for a summary filing procedure

materially distort the exchange rate or the

for filing Form 8858 for a dormant FDE. A

Failure to file information required by

equivalent amount of U.S. dollars.

dormant FDE is an FDE that would be a

section 6038(a) (Form 8858 and

Example. During its annual

dormant controlled foreign corporation

Schedule M (Form 8858)).

accounting period, an FDE owned by a

(CFC) if it were treated as a foreign

A $10,000 penalty is imposed for each

U.S. person had current income of

corporation for U.S. tax purposes.

annual accounting period of each CFC or

30,255,400 Yen on Schedule H, line 6.

CFP for failure to furnish the required

If you elect the summary procedure,

The Schedule H instructions specify that

information within the time prescribed. If

complete only the identifying information

the filer must translate these amounts into

the information is not filed within 90 days

above Schedule C on page 1 of Form

U.S. dollars at the average exchange rate

after the IRS has mailed a notice of the

8858 for each dormant FDE as follows:

for the tax year in accordance with the

failure to the U.S. person, an additional

The top margin of the summary return

rules of section 989(b). The average

$10,000 penalty (per CFC or CFP) is

must be labeled “Filed Pursuant to

exchange rate is 118.5050 Japanese Yen

charged for each 30-day period, or

Announcement 2004-4 for Dormant FDE.”

to 1 U.S. dollar (0.00843846 U.S. dollars

fraction thereof, during which the failure

Instructions for Form 8858 (Rev. 122012)

Instructions For Form 8858 - Information Return Of U.s. Persons With Respect To Foreign Disregarded Entities - 2012 Page 2

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