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Form 926 Reporting Transfers to Foreign Corporations: Avoiding Harsh Penalties

Ensuring Consistency Between FATCA, FBAR, Form 5471 and Other Foreign Asset Forms

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Friday, January 12, 2024

Recorded event now available

or call 1-800-926-7926

This course will provide tax advisers and compliance professionals with a comprehensive guide to reporting transfers of property to foreign corporations, as well as review the technical analysis of the types of transactions that require such reporting. The panel will identify the types of transactions that trigger Form 926 reporting obligations and discuss required information to be reported on Form 926. The webinar will also cover the relationship between Form 926 and other required foreign information filings and address penalties for failure to report relevant transactions on Form 926.

Description

Section 6038B requires U.S. persons to report specific information to the IRS regarding property transfers to foreign persons in certain non-recognition transactions. While the Code and regulatory guidance are intended to prevent taxpayers from shifting appreciated property to foreign jurisdictions to avoid U.S. taxation, the reporting requirements apply whether or not the transferred asset has appreciated.

Taxpayers making these transfers must file Form 926 and include the form with their individual income tax return in the year of the transfer. The filing requirements apply for all property, including cash and intangible property, subject to certain requirements, ownership and valuation thresholds, and exceptions.

The information required on Form 926 can be extensive, and the penalties for noncompliance--10 percent of the fair market value of the property transferred, up to $100,000 and potential gain recognition as if the transfer were a sale for fair market value--are considerable. Moreover, technical expertise is necessary to identify when given transactions require such reporting. Further, the IRS uses Form 926 to verify consistency with other foreign reporting requirements, so a failure to file a complete and accurate Form 926 can result in additional tax consequences--such as FATCA penalties and extension of the statute of limitations.

Listen as our experienced panel provides a thorough and practical guide to completing Form 926 and complying with the relevant information reporting obligations.

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Outline

  1. Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation
  2. Transactions requiring Form 926 reporting
  3. What must be reported on Form 926
  4. Unique issues related to partnerships and hedge funds
  5. Penalties for noncompliance
  6. Best practices

Benefits

The panel will discuss these and other relevant issues:

  • What types of transactions potentially require Form 926 reporting and what are the thresholds for Form 926 reporting?
  • A detailed walk-through of Form 926
  • What are the Form 926 reporting requirements when a partnership transfers property to a foreign corporation?
  • What are the challenges of completing Part III, Information Regarding Transfer of Property, and how Part III intersects with Form 5471 and FinCEN Form 114?
  • What are the calculations required to complete Part IV, Additional Information Regarding Transfer of Property?

Faculty

Brogan, Kevin
Kevin J. Brogan, Esq.
Principal, International Tax, Washington National Tax
KPMG US

Mr. Brogan provides advice on a wide range of international tax issues, for both multinational and private equity...  |  Read More

Gottlieb, Daren
Daren J. Gottlieb
International Tax Senior Manager, Washington National Tax
KPMG US

Mr. Gottlieb specializes in domestic and cross-border transactions involving complex international tax issues. He has...  |  Read More

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