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Proposed Regulations Expand Reporting Obligations for Foreign-Owned Disregarded Entities

May 16, 2016 Business & Tax Blog International Tax

In the wake of the Panama Papers leak, Treasury promulgated proposed regulations that require a US disregarded entity that is wholly-owned by a foreign owner to comply with the reporting, record maintenance, and associated compliance requirements that currently apply to US corporations that are owned 25% or more by a foreign owner under Code section 6038A, including the obligation to file Form 5472. The regulations also expand the types of transactions that must be reported. For example, contributions and distributions between the disregarded entity and its foreign owner would be subject to reporting even though these transactions would otherwise be ignored for tax purposes because of the involvement of the disregarded entity.

A link to the proposed regulations is here:

Michael J. Wilson