IRS Issues Final Regulations On Information Reporting And Record Maintenance For Certain Disregarded Entities

The Department of the Treasury and the IRS recently released final regulations (T.D. 9796) that treat a domestic disregarded entity wholly owned by a foreign person as a domestic corporation separate from its owner. Such treatment applies for information reporting, record maintenance and associated compliance requirements that otherwise apply to 25% foreign-owned domestic corporations under Section 6038A.

In addition to other requirements, the final regulations require a domestic disregarded entity wholly owned by a foreign person to file Form 5472, "Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business," reporting transactions that would have been regarded under general U.S. federal tax principles if the entity had been regarded as a corporation for U.S. federal tax purposes.