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Video instructions and help with filling out and completing Where Do You Mail Irs Form 966

Instructions and Help about Where Do You Mail Irs Form 966

Form 926 is used to report certain transfers of property by US persons to foreign corporations generally the form is required only in a corporate non-recognition transaction such as an outbound section 351 exchange or an outbound section 332 liquidation if the transfer order is a partnership with us partners the US partners are required to file form 926 in part 1 you list the name of the transfer or and their US taxpayer identification number line 1 is completed only if the u.s. transfer or is a corporation line 2 is completed only if the transfer or is a partnership if the transfer or is a u.s. individual then put their name and social security number at the top and then go directly to part 2 in part 2 you list the name and address of the foreign corporation then you list the country code on line 6 and the foreign law characterization on line 7 for example partnership or corporation on line 8 you check yes or no whether the foreign corporation is a controlled foreign corporation very generally this means a foreign corporation controlled by US persons moving on to part 3 sometimes the only type of property transferred is cash in this case you just list the date of the transfer and the amount transferred on the first line if cash was transferred on multiple dates I attach a statement showing amounts transferred on each date if property other than cash is transferred to a foreign corporation the rules are quite complex often gain but not loss must be recognized on the transfers of certain types of assets such as receivables inventory or property to be sold sometimes inclusions in income are required such as for depreciation recapture many other special rules can apply to outbound transfers of property I cannot emphasize this enough not only might gain be recognized under multiple sets of overlapping rules but it is even possible for the foreign corporation to be taxed as a u.s. corporation for all future years under the Indian version rules of section 78 74 moving on to part 4 on line 9 you list the percentage owned before and after the transfer on line 10 you list the Code section that makes the transaction a non recognition transaction such as a section 351 exchange or a section 332 liquidation note that under the normal corporate tax rules a contribution to the capital of a corporation where no shares are issued in exchange for the property contributed the transaction may not qualify as a section 351 exchange however section 367 c2 may override this rule to deem shares to be issued by the foreign corporation causing the contribution to capital to be a section 351 exchange and therefore be subject to the special rules of sections 367 and 60 38 be lines 11 through 17 deal with some of the complicated rules mentioned before however if only cash is being transferred you may only need to answer yes to question 16 and the answer to all the other questions may be no the instructions to the form indicate that not only must form 926 be filed but the information required under Section 60 38 be regulations must also be filed I usually attach a statement to the form 926 with the additional information required under the 60 38b regulation if a taxpayer fails to file form 926 the penalty is 10% of the value of the transferred property but generally not more than $100,000.

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