Short answer
A U.S. C-Corporation is a reporting corporation if it has at least one direct or indirect 25% foreign shareholder at any time during the tax year. It files its regular Form 1120, pays corporate income tax at 21% of taxable income, and attaches a separate Form 5472 for each related party with which it had reportable transactions. The penalty for each missing Form 5472 is $25,000.
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| Foreign-owned single-member LLC | U.S. corporation, 25% foreign-owned | |
|---|---|---|
| Return | Pro forma Form 1120 (identification only) | Full Form 1120 with income, deductions and tax |
| Corporate income tax | None at the LLC level (disregarded entity) | 21% of taxable income |
| Form 5472 | Attached to the pro forma 1120 | One for each related party with reportable transactions |
| How it is sent | Fax or mail, per the Form 5472 instructions | With the Form 1120; see the Form 1120 instructions for electronic filing |
Who counts as a 25% foreign shareholder
A foreign person who owns, directly or indirectly, at least 25% of the total voting power or the total value of the corporation's stock at any time during the year. One day above the threshold is enough to make the corporation a reporting corporation for that year.
One Form 5472 per related party
The instructions require a separate Form 5472 for each foreign or U.S. person who is a related party and had reportable transactions with the corporation: for example, the foreign shareholder, a foreign parent company or a sister company abroad that sells to or buys from the corporation. All of them are attached to the Form 1120.
Deadlines
- Form 1120: the 15th day of the 4th month after year end. For a calendar-year corporation, April 15.
- Extension: Form 7004 filed by the original due date gives more time to file. It does not extend the time to pay.
- Form 5472: due with the Form 1120, including extensions.
- Electronic filing: corporations that file 10 or more returns of any type in a calendar year are generally required to e-file Form 1120.
Penalties and records
The IRS assesses $25,000 for each Form 5472 that is not filed or does not meet the rules, plus $25,000 for each 30 days the failure continues more than 90 days after an IRS notice. The corporation must also keep the books and records that support the reported transactions.
Paying dividends to the foreign owner
Most U.S.-source income paid to a foreign person, including dividends, is subject to 30% U.S. tax collected through withholding. A tax treaty may reduce the rate if the shareholder qualifies and documents it. The corporation, as the withholding agent, reports these payments on Form 1042-S and files Form 1042.
What to do
- Confirm the foreign ownership percentage during the whole year.
- List every related party and every transaction with each one: loans, sales, services, royalties, capital contributions.
- Prepare the Form 1120 and one Form 5472 per related party.
- If dividends were paid abroad, check the withholding and the Forms 1042 and 1042-S.
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Frequently asked questions
When is a U.S. corporation a reporting corporation for Form 5472?
When it has at least one direct or indirect 25% foreign shareholder at any time during the tax year and reportable transactions with a related party.
Do I file one Form 5472 or several?
One for each related party with reportable transactions, all attached to the Form 1120.
What is the corporate tax rate?
Form 1120 computes the income tax at 21% of taxable income.
Are dividends to a foreign shareholder taxed?
Generally yes: 30% withheld at the source, unless a tax treaty lowers the rate and the shareholder documents eligibility.
Official sources
This article is general information about U.S. federal tax rules as of October 2026. It is not advice for your specific situation. Rules and amounts change; confirm how they apply to you before acting.