TERRY BIRRELL
CERTIFIED PUBLIC ACCOUNTANT
N
Form 5471 Action (continued)
In determining stock ownership, section 958 provides that stock owned “directly or indirectly, by or for a foreign corporation, foreign partnership, or foreign trust or foreign estate (within the meaning of section 7701(a)(31)) shall be considered as being owned proportionately by its shareholders, partners, or beneficiaries.”
Furthermore, the constructive stock ownership rules apply so that an individual shall be considered as owning the stock owned, directly or indirectly, by or for certain members of his family, and there is attribution to and from partnerships, corporation, estates, and trusts. These rules are too lengthy to summarize herein.
I recommend that anyone who is potentially a beneficiary, family member, partner, shareholder, or officer of an individual or entity having ties to a foreign corporation prepare an ownership chart and seek professional assistance. [An individual or entity owning a few hundred shares of a foreign corporation whose shares are traded on a major stock exchange are unlikely to be subject to such reporting requirements.]
If someone becomes aware of an ownership interest or officer reporting requirement after December 31, 2008, for a prior period, then even though late filing penalties will automatically be assessed, they should pursue the matter with their professional advisor. It is possible that the IRS will waive the late filing penalty based upon demonstration of reasonable cause. Furthermore, the penalties for willful failure to file are more onerous than the late filing penalties explained above.Please contact me in order to discuss whether or not the Form 5471 reporting requirements apply to you. Contact.
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Copyright 2008.Terry L. Birrell. All rights reserved.