Instructions For Form 926 printable pdf download

Instructions for Form 926

Department of the Treasury

Internal Revenue Service

(Rev. December 2013)

Return by a U.S. Transferor of Property to a Foreign Corporation

Exceptions to Filing

Section references are to the Internal Revenue

The U.S. transferor is a tax-exempt

Code unless otherwise noted.

entity and the income was not unrelated

1. For exchanges described in section

business income, or

What's New

354 or 356, a U.S. person does not have

The transfer was taxable to the U.S.

to file Form 926 if:

transferor and such person properly

Part II, line 4a is new. This new line

a. The U.S. person exchanges stock

reported the income from the transfer on

requests the reference ID number of the

of a foreign corporation in a

its timely filed return, or

transferee foreign corporation. See page 2

recapitalization described in section

The transfer is considered to be to a

for more information.

368(a)(1)(E) or

foreign corporation solely by reason of

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

b. The U.S. person exchanges stock

General Instructions

fair market value of the property

of a domestic or foreign corporation for

transferred did not exceed $100,000.

stock of a foreign corporation under an

Future Developments

asset reorganization described in section

When and How To File

368(a)(1) that is not treated as an indirect

For the latest information about

stock transfer under Regulations section

developments related to Form 926 and its

Form 926 (and the additional information

1.367(a)-3(d).

instructions, such as legislation enacted

required under Regulations section

after they were published, go to

2. Generally, a domestic corporation

1.6038B-1(c) and Temporary Regulations

sections 1.6038B-1T(c)(1) through (5) and

that distributes stock or securities of a

1.6038B-1T(d)) must be filed with the U.S.

domestic corporation under section 355 is

Purpose of Form

transferor's income tax return (or, if

not required to file Form 926. However,

applicable, exempt organization return) for

this exception does not apply if the

Use Form 926 to report certain transfers of

distribution is of stock or securities of a

the tax year that includes the date of the

tangible or intangible property to a foreign

foreign controlled corporation to a

transfer.

corporation required by section 6038B.

distributee shareholder who is not a U.S.

Other Forms That May Be

Who Must File

citizen or resident or a domestic

Required

corporation.

Generally, a U.S. citizen or resident, a

Persons filing this form may be required to

3. A U.S. person that transfers stock

domestic corporation, or a domestic

file FinCEN Form 114, Report of Foreign

or securities under section 367(a) does

estate or trust must complete and file

Bank and Financial Accounts (FBAR)

not have to file Form 926 if either a or b

Form 926 to report certain transfers of

(formerly Form TD F 90-22.1).

below applies.

property to a foreign corporation that are

described in section 6038B(a)(1)(A),

a. The U.S. transferor owned less

A U.S. transferor that is required to

367(d), or 367(e). See section 6038B, and

than 5% of both the total voting power and

enter into a gain recognition agreement

Regulations sections 1.6038B-1 and

the total value of the transferee foreign

under section 367 to qualify for

1.6038B-1T for more information.

corporation immediately after the transfer

nonrecognition treatment must file Form

and:

8838, Consent To Extend the Time To

Special Rules

The U.S. transferor qualified for

Assess Tax Under Section 367—Gain

nonrecognition treatment with respect to

Recognition Agreement, or a similar

Transfers by a partnership. If the

the transfer, or

statement, to extend the statute of

transferor is a partnership (domestic or

The U.S. transferor is a tax-exempt

limitations with respect to the gain realized

foreign), the domestic partners of the

entity and the income was not unrelated

but not recognized on the transfer.

partnership, not the partnership itself, are

business income, or

required to comply with section 6038B and

Penalties for Failure to File

The transfer was taxable to the U.S.

file Form 926. Each domestic partner is

If a taxpayer fails to comply with section

transferor under Regulations section

treated as a transferor of its proportionate

6038B, the penalty equals 10% of the fair

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

share of the property. See the instructions

market value of the property at the time of

reported the income from the transferor on

for line 2 for additional information.

the transfer. The penalty will not apply if

its timely filed return (including extensions)

Transfers by spouses. Spouses may

the failure to comply is due to reasonable

for the tax year that includes the date of

file Form 926 jointly, but only if they file a

cause and not to willful neglect. The

transfer, or

joint income tax return.

penalty is limited to $100,000 unless the

The transfer is considered to be to a

Transfers of cash. A U.S. person that

failure to comply was due to intentional

foreign corporation solely by reason of

transfers cash to a foreign corporation

disregard. Moreover, the period of

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

must report the transfer on Form 926 if (a)

limitations for assessment of tax upon the

fair market value of the property

immediately after the transfer the person

transfer of that property is extended to the

transferred did not exceed $100,000.

holds directly or indirectly at least 10% of

date that is 3 years after the date on which

the total voting power or the total value of

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

the information required to be reported is

the foreign corporation or (b) the amount

more of the total voting power or the total

provided.

of cash transferred by the person to the

value of the transferee foreign corporation

immediately after the transfer and:

Section 6662(j) Penalty

foreign corporation during the 12-month

period ending on the date of the transfer

The transferor (or one or more

For tax years beginning after March 18,

exceeds $100,000. See Regulations

successors) properly entered into a gain

2010, a 40% penalty may be imposed on

section 1.6038B-1(b)(3).

recognition agreement, or

any underpayment resulting from an

Oct 31, 2013

Cat. No. 27037X

Instructions For Form 926

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