Form 926 - Return By A U.s. Transferor Of Property To A Foreign Corporation - Internal Revenue Service Page 3
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Form 926 (Rev. 12-2005)
Page
● The transfer was taxable to the U.S. transferor and
General Instructions
such person properly reported the income on its timely
Purpose of Form
filed return, or
● The transfer is considered to be to a foreign corporation
Use Form 926 to report certain transfers of tangible or
solely by reason of Regulations section 1.83-6(d)(1) and
intangible property to a foreign corporation required by
the fair market value of the property transferred did not
section 6038B.
exceed $100,000.
Who Must File
b. The U.S. transferor owned 5% or more of the total
Generally, a U.S. citizen or resident, a domestic
voting power or the total value of the transferee foreign
corporation, or a domestic estate or trust must file Form
corporation immediately after the transfer and either:
● The transferor (or one or more successors) properly
926 to report transfers of property described in section
6038B(a)(1)(A) to a foreign corporation.
entered into a gain recognition agreement, or
● The U.S. transferor is a tax-exempt entity and the
Special Rules
income was not unrelated business income, or
● Transfers by a partnership. If the transferor is a
● The transfer was taxable to the U.S. transferor and
partnership (domestic or foreign), the domestic partners
such person properly reported the income on its timely
of the partnership, not the partnership itself, are required
filed return, or
to comply with section 6038B and file Form 926. Each
● The transfer is considered to be to a foreign corporation
domestic partner is treated as a transferor of its
solely by reason of Regulations section 1.83-6(d)(1) and
proportionate share of the property.
the fair market value of the property transferred did not
● Transfers by a husband and wife. A husband and wife
exceed $100,000.
may file Form 926 jointly, but only if they file a joint
income tax return.
When and How To File
● Transfers of cash. A U.S. person that transfers cash to
Form 926 (and the additional information required under
a foreign corporation must report the transfer on Form
Regulations section 1.6038B-1(c) and Temporary
926 if (a) immediately after the transfer the person holds
Regulations sections 1.6038B-1T(c)(1) through (5) and
directly or indirectly at least 10% of the total voting power
1.6038B-1T(d)) must be filed with the U.S. transferor’s
or the total value of the foreign corporation or (b) the
income tax return for the tax year that includes the date
amount of cash transferred by the person to the foreign
of the transfer.
corporation during the 12-month period ending on the
Other Forms That May Be Required
date of the transfer exceeds $100,000. See Regulations
section 1.6038B-1(b)(3).
Persons filing this form may be required to file
Form TD F 90-22.1, Report of Foreign Bank and Financial
Exceptions to Filing
Accounts.
1. For exchanges described in section 354, a U.S.
A U.S. transferor that is required to enter into a gain
person does not have to file Form 926 if:
recognition agreement under section 367 to qualify for
a. The U.S. person exchanges stock of a foreign
nonrecognition treatment must file Form 8838, Consent
corporation in a reorganization described in section
To Extend the Time To Assess Tax Under Section
368(a)(1)(E) or
367—Gain Recognition Agreement, or a similar statement,
b. The U.S. person exchanges stock of a domestic or
to extend the statute of limitations with respect to the
foreign corporation for stock of a foreign corporation
gain realized but not recognized on the transfer.
under an asset reorganization described in section
Penalties for Failure To File
368(a)(1)(C), (D), or (F), that is not treated as an indirect
stock transfer under section 367(a).
If a taxpayer fails to comply with section 6038B, the
2. Generally, a domestic corporation that distributes
penalty equals 10% of the fair market value of the
stock or securities of a domestic corporation under
property at the time of the transfer. The penalty will not
apply if the failure to comply is due to reasonable cause
section 355 is not required to file Form 926. However, this
and not to willful neglect. The penalty is limited to
exception does not apply if the distribution is of stock or
securities of a foreign controlled corporation to a
$100,000 unless the failure to comply was due to
intentional disregard. Moreover, the period of limitations
distributee shareholder who is not a U.S. citizen or
for assessment of tax upon the transfer of that property is
resident or a domestic corporation.
extended to the date that is 3 years after the date on
3. A U.S. person that transfers stock or securities under
which the information required to be reported is provided.
section 367(a) does not have to file Form 926 if either a
or b below applies.
Specific Instructions
a. The U.S. transferor owned less than 5% of both the
total voting power and the total value of the transferee
Part I—U.S. Transferor Information
foreign corporation immediately after the transfer and
Identifying Number
either:
● The U.S. transferor qualified for nonrecognition
The identifying number of an individual is his or her social
treatment with respect to the transfer, or
security number (SSN). The identifying number of all
● The U.S. transferor is a tax-exempt entity and the
others is their employer identification number (EIN).
income was not unrelated business income, or
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