Return by a U.S. Transferor of Property to a Foreign Corporation
Paperwork Reduction Act Notice.
We ask for the information on this form to carry out the Internal
Revenue laws of the United States. You are required to give us the
information. We need it to ensure that you are complying with these
laws and to allow us to figure and collect the right amount of tax.
You are not required to provide the information requested on a form
that is subject to the Paperwork Reduction Act unless the form
displays a valid OMB control number. Books or records relating to a
form or its instructions must be retained as long as their contents
may become material in the administration of any Internal Revenue law.
Generally, tax returns and return information are confidential, as
required by section 6103.
The time needed to complete and file this form will vary depending
on individual circumstances. The estimated average time is:
| Recordkeeping |
6 hr., 56 min. |
| Learning about the law or the form |
4 hr., 4 min. |
| Preparing and sending the form to the IRS |
4 hr., 22 min. |
If you have comments concerning the accuracy of these time
estimates or suggestions for making this form simpler, we would be
happy to hear from you. See the instructions for the tax return with
which this form is filed.
Changes To Note
General Instructions
Purpose of Form
Use Form 926 to report certain transfers of tangible or intangible
property to a foreign corporation when required by section 6038B.
Who Must File
Generally, a U.S. citizen or resident, a domestic corporation, or
an estate or trust (other than a foreign estate or trust) must file
Form 926 to report a transfer of property (even if such property is
not appreciated property) to a foreign corporation described in
sections 6038B(a)(1)(A) or 367(d).
Special Rules
- Transfers by a partnership. If the transferor is
a partnership (domestic or foreign), the partners of the partnership,
not the partnership itself, are required to comply with section 6038B
and file Form 926.
- Transfers by a husband and wife. A husband and
wife may file Form 926 jointly but only if they file a joint income
tax return.
- Transfers subject to section 367(e)(1). See
Temporary Regulations section 1.6038B-1T(e).
Exceptions to filing for transfers after July 19, 1998.
- Transfers of cash. When this form was published,
transfers of cash were not currently required to be reported. This may
change. Check the regulations under section 6038B to determine whether
transfers of cash are required to be reported at the time of your
transfer.
- Transfers by a tax-exempt entity. A transferor
that is a tax-exempt entity need not report the transfer unless the
income was unrelated business income.
- Transfers of stock or securities. Transfers of
stock or securities need not be reported on Form 926. Certain
transferors (5% shareholders) may be required, however, to file a gain
recognition agreement to qualify for nonrecognition treatment on the
transfer but other transferors may be taxable on their transfers. See
Regulations sections 1.367(a)-3 and 1.367-8. Penalties under section
6038B may apply if the transferor fails to file a gain recognition
agreement or report the gain from the transfer.
Exceptions to filing for transfers before July 20, 1998.
- Transfers of cash. No reporting required.
- Transfers by a tax-exempt entity. No reporting
required.
- Transfers of stock or securities. No reporting is
required if either (1) the transferor owned less than 5
percent of both the total voting power and the total value of the
transferee foreign corporation immediately after the transfer (taking
into account the attribution rules under section 318 as modified by
section 958(b)), and the U.S. transferor qualified for nonrecognition
treatment with respect to the transfer, or (2) the transfer
was taxable to the U.S. transferor and such person properly reported
the income on its timely filed return. See Regulations section
1.6038-1(b)(2).
When and How To File
Form 926 (and the additional information required under Regulations
section 1.6038B-1(c) and Temporary Regulations sections 1.6038B-1T(c)
and 1.6038B-1T(d)) must be filed with the U.S. transferor's annual tax
return for the tax year that includes the date of the transfer.
Other Forms That May Be Required
Persons filing this form may be required to file Form TD F
90-22.1, Report of Foreign Bank and Financial Accounts.
A U.S. transferor that is required to enter into a gain recognition
agreement under section 367 to qualify for nonrecognition treatment
must file Form 8838, Consent To Extend the Time To Assess
Tax Under Section 367-Gain Recognition Agreement (or a similar
statement) to extend the statute of limitations with respect to the
gain realized but not recognized on the transfer.
Who Must Sign
Form 926 must be signed and dated by the transferor. If the
transferor is a partnership, each partner is treated as a transferor
of its proportionate share of the property. If the transferor is a
corporation, the president, vice president, treasurer, assistant
treasurer, chief accounting officer, or other authorized officer (such
as a tax officer) must sign. However, if the transferor is a
corporation that is a member of an affiliated group (under section
1504(a)(1)) that files a consolidated Federal income tax return, but
the transferor is not the common parent corporation, an authorized
officer of the common parent corporation must sign.
If the transferor is a fiduciary, the fiduciary or officer
representing the fiduciary must sign.
Anyone who is paid to prepare the return must sign it and fill in
the Paid Preparer's Use Only area. However, anyone who prepares Form
926 but does not charge the transferor should not sign.
The paid preparer must complete the required preparer information
and:
- Sign the return, by hand, in the space provided for the
preparer's signature (signature stamps and labels are not
acceptable).
- Provide a social security number (or, if permitted by
regulations, an alternative preparer identification number).
- Give a copy of the return to the transferor.
Penalties for Failure To File
If a taxpayer fails to comply with section 6038B for a transfer
occurring after August 5, 1997, the penalty equals 10% of the fair
market value of the property at the time of the transfer. The penalty
shall not apply if the failure to comply is due to reasonable cause
and not to willful neglect. The penalty is limited to $100,000 unless
the failure to comply was due to intentional disregard. Moreover, the
period of limitations for assessment of tax upon the transfer of that
property is extended to the date which is 3 years after the date on
which the information required to be reported under this section is
provided (by filing Form 926).
Specific Instructions
Part I - U.S. Transferor Information
Address
Include the suite, room, or other unit number after the street
address. If the Post Office does not deliver mail to the street
address and the transferor has a P.O. box, use the box number instead
of the street address.
Foreign address.
Enter the information in the following order: city, province or
state, and country. Follow the country's practice for entering the
postal code, if any. Please do not abbreviate the country name.
Identification Number
Use the employer identification number for any other entity. Use
the social security number for an individual.
Lines 1 and 2
Line 1a.
If you answered Yes to question 1a and the asset is a
tangible asset, section 367(a)(5) may require basis adjustments. If
you answered No to question 1a and the asset is a tangible
asset, the transfer is taxable under sections 367(a)(1) and (a)(5). If
the asset transferred is an intangible, see section 367(d) and the
regulations thereunder.
Line 1b.
If the transferor went out of existence pursuant to the transfer
(e.g., as in a reorganization described in section 368(a)(1)(C) or
368(a)(1)(F)), list the controlling shareholders.
Line 1c.
If the transferor was a member of an affiliated group filing a
consolidated tax return (see sections 1501 through 1504), but was not
the parent corporation, list the name and EIN of the parent
corporation and file Form 926 with the parent corporation's
consolidated return.
Line 2.
If the actual transferor was a partnership, the partners of the
partnership, not the partnership itself, are deemed to be the
transferors. See Temporary Regulations section 1.367(a)-1T(c)(3). List
the name and identification number of the partnership.
Part II - Transferee Foreign Corporation Information
Line 7.
List the entity classification of the transferee foreign
corporation in its place of organization (e.g., partnership,
corporation, etc.).
Line 8.
See section 957(a) to determine whether the corporation is a
controlled foreign corporation immediately after the transfer.
Part III - Information Regarding Transfer of Property
Line 10.
List the type of nonrecognition transaction that gave rise to the
reporting obligation (e.g., section 332, 351, 354, 356, or 361).
Line 11.
Give a brief description of the property transferred and attach to
Form 926 the more comprehensive reporting required under Regulations
sections 1.6038B-1(c) and Temporary Regulations sections
1.6038B-1T(c)(1) through 1.6038B-1T(c)(5) and 1.6038B-1T(d).
Line 12.
If this transfer resulted from a change in the classification of
the transferee to that of a foreign corporation (a deemed transfer
resulting from, e.g., a check-the-box election pursuant to Form
8832, Entity Classification Election, or a termination of a
section 1504(d) election), check the Yes box. If the transfer
was an actual transfer of property to a foreign corporation, check the
No box.
Line 13.
See Temporary Regulations sections 1.367(a)-4T through 1.367-6T for
instances in which a transferor must recognize income on the transfer
of tangible property that qualifies for nonrecognition treatment under
section 367(a)(3) and Temporary Regulations section 1.367(a)-2T.
Additional information is required to be attached to this Form 926.
See Temporary Regulations sections 1.6038B-1T(c)(4)(iii) and (vii),
and 1.6038B-1T(c)(5).
Line 14a.
If you check Yes, additional information is required to be
attached to Form 926. See Temporary Regulations section
1.6038B-1T(d).
Line 14b.
See Temporary Regulations section 1.6038B-1T(d).
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