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A U.S. corporation with non U.S. shareholders -- who own 25% or more of the stock of the U.S. corporation -- must file this form in any year when the US based corporation has a reportable transaction with the foreign shareholder(s).
A separate form must be filed for each foreign shareholder.
Generally, a reportable transaction is any exchange of money or property with the foreign shareholder except for the payment of dividends, but the specific transactions are listed in Part IV of the form and in the instructions to the form.
There are additional filing requirements for foreign owners of US LLCs related to this form, review this article.
This form basically requires the disclosure of the foreign shareholders' name, address and country of citizenship, organization or incorporation as well as the nature and amount of the reportable transaction with each foreign shareholder. This form is not required where various foreign persons own 25% or more of the U.S. company in the aggregate. It is only required where any one foreign person owns 25% or more of the U.S. corporation.
This form is filed with the U.S. corporation's income tax return, including any extensions of time to file.
The IRS estimate of the average time to prepare this 1.5 page form is 3.5 hours, excluding the time required to read the applicable law and instructions.
The penalty for failure to file this form is $10,000. Additional details about penalties are included in the instructions to the form.
There are numerous exceptions available for having to file this form that are explained in the instructions.
Copies of IRS Tax Forms and Instructions are available from their web site at