If you transfer property or cash to a foreign corporation, you have certain tax requirements. Here, we outline what you need to know about form 926, form 8865 and form 8886.

Form 926, Return by a US Transferor of Property to a Foreign Corporation

Who must file?

A U.S. citizen or resident, domestic corporation or domestic estate or trust that transfers cash to a foreign corporation must report the transfer on Form 926 if:

• immediately after the transfer, the person holds, directly or indirectly, at least 10% of the total voting power or the total value of the foreign corporation or
• the amount of cash transferred by the person to the foreign corporation during the 12-month period ending on the date of the transfer is more than $100,000.

Form 8865, Return of US persons with respect to certain foreign partnerships

Who must file?

A U.S. person who is a partner in a foreign partnership (or an entity electing to be taxed as a partnership) and qualifies under one or more of the Categories of Filers noted below:

1. Category 1 Filer: A U.S. person who controlled the foreign partnership at any time during the partnership tax year. (In order to be in control over the foreign partnership, the U.S. person has to have more than 50% interest in the partnership).
2. Category 2 Filer: A U.S. person owned at least a 10% interest in a foreign partnership while the partnership was controlled by U.S. persons each owning at least 10% interest. (If the foreign partnership had a Category 1 filer at any time during that tax year, no person will be considered a Category 2 filer.)
3. Category 3 Filer: A U.S. person who contributed property to a foreign partnership in exchange for a partnership interest if:
4. Category 4 Filer: A U.S. person that had a reportable event under section 6046A during the individual’s tax year. Reportable events are as follows:
   1. Immediately after the contribution, the U.S. person directly or indirectly owned at least a 10% interest in the foreign partnership; or
   2. The FMV of the property contributed, when added to other contributions of property by the person, or a related person, during the preceding 12-month period, exceeds $100,000.
   3. Category 3 filers also include a U.S. person that previously transferred appreciated property, that the foreign partnership disposed of while the U.S. person remained a direct or indirect partner to the foreign partnership.

4. Category 4 Filer: A U.S. person that had a reportable event under section 6046A during the individual’s tax year. Reportable events are as follows:

a. Acquisitions: A U.S. person acquired interest in a foreign partnership, resulting in the individual having more than 10% interest in the partnership. Or an event which results in the person’s direct interest increasing by 10% (i.e. 11% to 21%)

b. Dispositions: A U.S. person owned 10% or greater direct interest before the disposition, but as a result of the disposition owns less than 10% direct interest (i.e. 11% to 8%). Or an event which results in the person’s direct interest decreasing by 10% (i.e. 21% to 11%)

c. Proportional Interest: A U.S. person had a reportable event and if compared to the person’s direct proportional interest the last time they had a reportable event and that the person’s proportional interest increased or decreased by 10%.

Form 8886 Reportable Transaction Disclosure Statement-

Who must file?

Any taxpayer, including an individual, trust, estate, partnership, S corporation, other corporation, that participates in a reportable transaction:

Form 8886 must be filed for each tax year that the federal income tax liability is affected by its participation in the transaction. The following are reportable transactions.

• Any listed transaction that is the same as, or substantially similar to tax avoidance transactions identified by the IRS.
• Any transaction offered under conditions of confidentiality for which an advisor fee of at least $250,000 was paid.
• Certain transactions for which there is contractual protection against disallowance of the tax benefits.
• Any transaction resulting in a loss of at least $10 million in any single year or $20 million in any combination of years.
• Certain transactions identified by the IRS in published guidance as a “transaction of interest” (a transaction that the IRS believes has a potential for tax avoidance or evasion, but hasn’t yet been identified as a listed transaction)

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