THE NEW REGULATIONS EXPAND THE FILING REQUIREMENTS FOR FORM 5472 TO INCLUDE DISREGARDED ENTITIES WITH FOREIGN OWNERS WHEN THERE ARE CERTAIN REPORTABLE TRANSACTIONS.

If a non-U.S. person (individual or corporation) owns 100 percent of the stock of a U.S. corporate subsidiary, the subsidiary needs to obtain an employer identification number (EIN) and maintain adequate books and records to be able to prepare its tax return and Form 5472 (Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business ), on which the ownership of the non-U.S. owner is reported, along with certain related party transactions. New reporting requirements finalized on December 13, 2016 1 now extend those rules to disregarded entities. A “disregarded entity” is a company, other than a corporation formed under state law, with a single owner that is not treated as an entity separate from its owner for U.S. federal tax purposes. For example, an LLC with only one owner is disregarded for U.S. federal tax purposes, unless it elects to be classified as a corporation.