Instructions For Form 926 (Page 2 of 4) in pdf

and the total value of the transferee

realized but not recognized on the

to question 1a and the asset is a

foreign corporation immediately after

transfer.

tangible asset, the transfer is taxable

the transfer and:

under sections 367(a)(1) and (a)(5). If

Penalties for Failure to File

the asset transferred is an intangible

The U.S. transferor qualified for

If a taxpayer fails to comply with section

asset, see section 367(d) and its

nonrecognition treatment with respect to

6038B, the penalty equals 10% of the

regulations.

the transfer, or

fair market value of the property at the

The U.S. transferor is a tax-exempt

If you answered “No” to question 1a:

time of the transfer. The penalty will not

entity and the income was not unrelated

If the U.S. transferor is owned directly

apply if the failure to comply is due to

business income, or

by more than five domestic corporations

reasonable cause and not to willful

The transfer was taxable to the U.S.

immediately before the reorganization,

neglect. The penalty is limited to

transferor under Regulations section

but some combination of five or fewer

$100,000 unless the failure to comply

1.367(a)-3(c) and such person properly

domestic corporations controls the U.S.

was due to intentional disregard.

reported the income from the transferor

transferor, the U.S. transferor must

Moreover, the period of limitations for

on its timely filed return (including

designate the five or fewer domestic

assessment of tax upon the transfer of

extensions) for the tax year that

corporations that comprise the control

that property is extended to the date

includes the date of transfer, or

group. List these designated

that is 3 years after the date on which

The transfer is considered to be to a

corporations on Form 926, line 1b.

the information required to be reported

foreign corporation solely by reason of

Line 1b. If the transferor went out of

is provided.

Regulations section 1.83-6(d)(1) and

existence pursuant to the transfer (for

the fair market value of the property

Section 6662(j) Penalty

example, as in a reorganization

transferred did not exceed $100,000.

For tax years beginning after March 18,

described in section 368(a)(1)(C)), list

b. The U.S. transferor owned 5% or

2010, a 40% penalty may be imposed

the controlling shareholders and their

more of the total voting power or the

on any underpayment resulting from an

identifying numbers.

total value of the transferee foreign

undisclosed foreign financial asset

Line 1c. If the transferor was a member

corporation immediately after the

understatement. No penalty will be

of an affiliated group filing a

transfer and:

imposed with respect to any portion of

consolidated tax return (see sections

The U.S. transferor is a tax-exempt

an underpayment if the taxpayer can

1501 through 1504), but was not the

entity and the income was not unrelated

demonstrate that the failure to comply

parent corporation, list the name and

business income, or

was due to reasonable cause with

EIN of the parent corporation and file

The transfer was taxable to the U.S.

respect to such portion of the

Form 926 with the parent corporation's

transferor and such person properly

underpayment and the taxpayer acted

consolidated return.

reported the income from the transfer on

in good faith with respect to such portion

its timely filed return, or

of the underpayment. See sections

Line 1d. If the answer to line 1d is

The transfer is considered to be to a

6662(j) and 6664(c) for additional

"Yes," and if the asset is transferred in

foreign corporation solely by reason of

information.

an exchange described in section

Regulations section 1.83-6(d)(1) and

361(a) or (b), attach the following.

the fair market value of the property

A statement that the conditions set

Specific Instructions

transferred did not exceed $100,000.

forth in the second sentence of section

367(a)(5) and any regulations under that

Important: All information reported on

When and How To File

section have been satisfied.

Form 926 must be in English. All

An explanation of any basis or other

amounts must be stated in U.S. dollars.

Form 926 (and the additional

adjustments made pursuant to section

If the information required in a given

information required under Regulations

367(a)(5) and any regulations

section 1.6038B-1(c) and Temporary

section exceeds the space provided

thereunder.

Regulations sections 1.6038B-1T(c)(1)

within that section, do not write “see

through (5) and 1.6038B-1T(d)) must be

attached” in the section and then attach

Line 2. If a partnership (whether foreign

filed with the U.S. transferor's income

all of the information on additional

or domestic) transfers property to a

tax return (or, if applicable, exempt

sheets. Instead, complete all entry

foreign corporation in an exchange

organization return) for the tax year that

spaces in the section and attach the

described in section 367(a)(1), then a

includes the date of the transfer.

remaining information on additional

U.S. person that is a partner in the

sheets. The additional sheets must

partnership shall be treated as having

Other Forms That May Be

conform with the IRS version of that

transferred a proportionate share of the

Required

section.

property in an exchange described in

Persons filing this form may be required

section 367(a)(1). A U.S. person's

Part I—U.S. Transferor

to file FinCEN Form 114, Report of

proportionate share of partnership

Information

Foreign Bank and Financial Accounts

property shall be determined under the

(FBAR).

rules and principles of sections 701

Identifying number. The identifying

through 761 and the regulations

A U.S. transferor that is required to

number of an individual is his or her

thereunder. See Temporary Regulations

enter into a GRA under section 367 to

social security number (SSN). The

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

qualify for nonrecognition treatment

identifying number of all others is their

must file Form 8838, Consent To

Line 2d. For definition of “regularly

employer identification number (EIN).

Extend the Time To Assess Tax Under

traded on an established securities

Line 1a. If you answered “Yes” to

Section 367—Gain Recognition

market,” see Temporary Regulations

question 1a and the asset is a tangible

Agreement, to extend the statute of

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

asset, section 367(a)(5) may require

limitations with respect to the gain

answer to line 2d is “Yes,” the rules of

basis adjustments. If you answered “No”

-2-

Instructions for Form 926 (Rev. 01-2015)

Instructions For Form 926 Page 2

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