Form 5472 filing requirements for your books

Form 5472 filing requirements usually reach the books in March, when a preparer emails the owner of a foreign-owned LLC and asks for every amount that moved between the company and its owner during the year. The owner forwards the request, and the bookkeeper finds that the startup wire is in sales, the owner’s card paid the registered agent with nothing recorded, and the money sent home in November is an expense called “transfer”. Each of those is a reportable transaction, and none of them can be pulled from the file as it stands.

Ledgerbrook keeps books and does not prepare tax returns, so this post covers the records side: what the form asks for, how to set up QuickBooks Online so each amount sits in its own account, and the schedule a preparer needs at year end. Who must file, and how, is summarized from the IRS instructions (revised December 2024), and the filing decision belongs to your preparer.

What is Form 5472?

Form 5472 is the IRS information return a reporting corporation files for each related party it transacted with during its tax year. It reports amounts, not tax. The IRS instructions define a reporting corporation as either:

• a 25% foreign-owned US corporation, which includes a foreign-owned US disregarded entity, or
• a foreign corporation engaged in a trade or business within the United States.

The case most small businesses meet is the second half of the first bullet: a US single-member LLC wholly owned by a foreign person. For income tax the LLC is disregarded, but for tax years beginning on or after January 1, 2017, and ending on or after December 13, 2017, it is treated as a corporation for the reporting rules in IRC §6038A (Treas. Reg. §301.7701-2(c)(2)(vi)). That is why an LLC with no income tax return of its own still files a form.

Does a single-member LLC need to file Form 5472?

A foreign-owned single-member LLC files Form 5472 for any tax year in which it had a reportable transaction with a related party. A single-member LLC owned by a US citizen or resident does not, because it is not foreign owned.

The foreign-owned LLC attaches Form 5472 to a pro forma Form 1120. According to the instructions, the only items completed on that Form 1120 are the LLC’s name and address and items B and E on the first page, with “Foreign-owned U.S. DE” written across the top. The LLC uses its owner’s tax year, or the calendar year if the owner has none.

Do you have to file Form 5472 if there are no reportable transactions?

No. The first exception in the instructions is a reporting corporation with no reportable transactions of the types in Parts IV and VI, and, for a foreign-owned disregarded entity, none of the type in Part V either. In practice the exception is narrow for an LLC: the owner’s first deposit is a contribution, and an owner who pays the LLC’s state fee personally has made one too. A year with no movement at all between the LLC and its owner or the owner’s other companies is the exception, not the rule.

Who is considered a related party on Form 5472?

The instructions list four kinds of related party:

• any direct or indirect 25% foreign shareholder of the reporting corporation, which for a foreign-owned LLC is its owner,
• any person related to the reporting corporation within the meaning of IRC §267(b) or §707(b)(1),
• any person related in the same way to a 25% foreign shareholder, which reaches a company the owner controls, and
• any other person related to the reporting corporation under IRC §482 and its regulations.

A separate Form 5472 is filed for each related party. An owner who lends money personally and also runs a foreign company that invoices the LLC creates two related parties and two forms, which is why the books should keep each one in its own accounts.

What transactions must be reported on Form 5472?

A reportable transaction is any type of transaction listed in Part IV paid for in money, any transaction listed in Part V, and any transaction listed in Part VI. The table below lists the lines a small foreign-owned LLC usually touches, from the form (revised December 2023), with the account that should hold each one.

Transaction	Form 5472	Example	Where it sits in QuickBooks Online
Owner puts money in	Part V	The first wire that opens the LLC’s bank account	Owner Contributions, an Equity account for that owner
Owner pays an LLC bill personally	Part V	State filing or registered agent fee paid on the owner’s card	The expense, offset to Owner Contributions
Money paid out to the owner	Part V	A transfer to the owner’s personal account	Owner Distributions, an Equity account for that owner
Loan from a related party	Part IV, line 17	A note from the owner’s foreign company	Loan from (name), a liability
Loan to a related party	Part IV, line 31	The LLC lends to the owner’s company	Loan to (name), an asset
Interest paid	Part IV, line 32	Interest on the note above	Interest Expense, one account per lender
Services bought from a related party	Part IV, line 29	Monthly fee from the owner’s foreign company	An expense account named for that related party
Services sold to a related party	Part IV, line 15	The LLC invoices the owner’s company	An income account named for that related party
Rent paid or received	Part IV, lines 13a and 27a	Office space rented from the owner	Rent, named for that related party
Property given or received for less than full value	Part VI	Equipment the owner hands over without payment	A described entry, with the fair market value on the schedule

Part V covers “amounts paid or received in connection with the formation, dissolution, acquisition, and disposition of the entity, including contributions to, and distributions from, the entity”, described on an attached statement. Part IV and Part VI are completed only for a foreign related party; transactions with a US related party are not itemized there.

Two rules decide how amounts are counted. A reporting corporation on the accrual method uses accrued payments and receipts. And all Part IV amounts are stated in US dollars, with a schedule of the exchange rates used, which matters for an owner who wires euros or pounds into a dollar account.

How to set up QuickBooks Online for Form 5472

The rule is one set of accounts per related party, never a memo field. A memo can be searched; it cannot be totaled on a report without someone reading every line.

1. Equity for the owner. Go to All apps, then Accounting, then Chart of accounts, and select New. Intuit’s owner and partner equity article uses Equity as the account type with Owner’s Equity as the detail type. Create Owner Contributions - Lena Hoffmann and Owner Distributions - Lena Hoffmann, each as a sub-account of the owner’s equity account.
2. A liability for each lender. Choose Other Current Liabilities as the account type and Loan Payable as the detail type, the setup Intuit’s line of credit article uses, and name it after the lender. A note running past 12 months can go under Long Term Liabilities instead.
3. An expense or income account for each related party you trade with, named for that party, plus a vendor or customer record in the same name.
4. Owner-paid bills. When the owner pays an LLC expense personally, Intuit’s personal funds article records it as an Expense with the expense on one line and the owner investment account on the next, for the same amount, so the transaction totals $0.00. Use the owner’s contributions account on that second line.

Keep the wire confirmation for every transfer that crosses a currency. It shows the dollar amount the bank credited and the rate it used, which is the exchange-rate schedule the form asks for.

A year of transactions, recorded

Lena Hoffmann lives in Germany and owns all of Kestrel Digital LLC, a Wyoming company. She also owns Hoffmann Beratung GmbH, a German company that does development work. Kestrel keeps its books on the cash basis for the 2026 calendar year. Two related parties means two Forms 5472: one for Lena and one for the GmbH.

Date	What happened	Debit	Credit	Amount
Jan 6	Lena pays the formation and registered agent fees on her own card	Legal and Professional Fees	Owner Contributions - Lena Hoffmann	450.00
Jan 15	Lena wires starting capital	Kestrel Checking	Owner Contributions - Lena Hoffmann	10,000.00
Mar 1	The GmbH lends Kestrel money on a signed note at 5% a year	Kestrel Checking	Loan from Hoffmann Beratung GmbH	15,000.00
Apr 30 to Dec 31	The GmbH’s monthly development invoice, $2,000 for 9 months	Development Services - Hoffmann Beratung	Kestrel Checking	18,000.00
Nov 20	Kestrel pays Lena a distribution	Owner Distributions - Lena Hoffmann	Kestrel Checking	6,000.00
Dec 31	Principal repaid to the GmbH	Loan from Hoffmann Beratung GmbH	Kestrel Checking	5,000.00
Dec 31	Interest for March to December	Interest Expense - Hoffmann Beratung	Kestrel Checking	625.00

The interest is 10 months at 5% a year on $15,000. The December 31 payment is one $5,625 line on the bank statement, split across two accounts in one QuickBooks Online expense. Every other row except January 6 is a single line on the bank statement; January 6 never touched the LLC’s bank, which is why it needs the owner-paid entry above.

The year-end related-party schedule

At year end, run the General ledger report for the related-party accounts only and total each one. The result is the schedule a preparer works from, one block per related party.

Related party	Form 5472	Amount for 2026	Source account
Lena Hoffmann	Part V, contributions	10,450.00	Owner Contributions - Lena Hoffmann
Lena Hoffmann	Part V, distributions	6,000.00	Owner Distributions - Lena Hoffmann
Hoffmann Beratung GmbH	Part IV, line 17a, amounts borrowed, beginning balance	0.00	Loan from Hoffmann Beratung GmbH
Hoffmann Beratung GmbH	Part IV, line 17b, ending balance	10,000.00	Loan from Hoffmann Beratung GmbH
Hoffmann Beratung GmbH	Part IV, line 29, services paid	18,000.00	Development Services - Hoffmann Beratung
Hoffmann Beratung GmbH	Part IV, line 32, interest paid	625.00	Interest Expense - Hoffmann Beratung

The $10,450 is the $450 Lena paid personally plus the $10,000 wire. The loan balance is $15,000 borrowed less $5,000 repaid. Lines 17 and 31 accept either the beginning and ending balances or a monthly average; the outstanding balance method is shown because it comes straight off the balance sheet.

Under the instructions, any actual amount in a transaction or series of transactions with a foreign related party that does not exceed $50,000 in total may be reported as “$50,000 or less”. Whether to use that is the preparer’s call; the books should hold the exact figure either way. Attach the transaction detail behind each line, so the preparer can see the dates without opening the file.

When must Form 5472 be filed?

Form 5472 is due with the return it is attached to, including extensions. For a foreign-owned LLC that is the pro forma Form 1120, so a calendar-year LLC files by the Form 1120 due date in April. An extension is requested on Form 7004, with “Foreign-owned U.S. DE” written across its top. A foreign-owned disregarded entity cannot file Form 5472 electronically: the instructions give a dedicated fax number and an Ogden, Utah mailing address instead, and your preparer will use those.

Do I need to file Form 5472 every year?

Every year the LLC has a reportable transaction. Distributions, interest, a loan balance or a related-party invoice in a later year are each reportable, so most active foreign-owned LLCs file every year. The first-year filer checks line 1j.

What is the penalty for not filing Form 5472?

The instructions set a penalty of $25,000 for failing to file Form 5472 when due and in the manner prescribed. Filing a substantially incomplete form counts as not filing. If the failure continues for more than 90 days after the IRS notifies the corporation, another $25,000 applies for each related party, for each 30-day period or part of one that the failure continues. Criminal penalties under IRC §§7203, 7206 and 7207 may also apply to false or fraudulent information.

The same $25,000 penalty applies to a failure to maintain records as required by Treas. Reg. §1.6038A-3. That is the part that belongs to the books. The instructions require records “sufficient to establish the correctness” of the return, including records that may be relevant to the treatment of related-party transactions. A ledger that names every related party in its own accounts is that record.

Common questions about Form 5472

What is the difference between Form 5471 and Form 5472?

They report in opposite directions. Form 5471 is filed by US persons with respect to certain foreign corporations, for example a US owner of a company abroad. Form 5472 is filed by the US company, or the foreign company doing business in the United States, about its transactions with related parties. A foreign owner of a US LLC deals with Form 5472.

What is a reference ID number on Form 5472?

A number the reporting corporation assigns to a 25% foreign shareholder or foreign related party. It is required only when no US identifying number, such as an SSN, ITIN or EIN, is entered for that party, though a filer may enter both. It is up to 50 letters and digits with no spaces or special characters, and must stay the same for that party from year to year. Record it on the vendor or customer record so it is in the file next year.

Is Form 5472 part of Form 1120?

It is a separate form attached to the return. A US corporation attaches it to its own Form 1120. A foreign-owned disregarded LLC has no income tax return, so it attaches the form to a pro forma Form 1120 completed only as far as the instructions require.

Does the owner paying a business expense count as a reportable transaction?

The form does not say it in those words, but Part V covers contributions to the entity, and an LLC bill paid with the owner’s money is the owner contributing that amount. Record it the day it happens, as in the January 6 row above. The same problem in reverse, LLC money paying the owner’s personal costs, is a distribution, and commingling funds covers how to find and fix both kinds.

What if the LLC lends to the owner’s other US company?

Transactions with a US related party are not itemized in Parts IV and VI, but they still need the same records. The entries in both files and the interest question are in intercompany loans between LLCs, and how a single LLC handles owner money is in bookkeeping for an LLC.

When to hand this off

A foreign-owned LLC with a few owner transfers a year can keep the accounts above itself. Once a second related party, a loan and monthly invoices are involved, the year-end schedule depends on every month being categorized to the right party, and a mistake shows up as a blank or wrong line on a form with a $25,000 penalty. The year-end package a preparer needs, related-party schedule included, is described in what your CPA needs at year end, and it is priced once per client file:

$199per client, one-time

Kept monthly, the related-party accounts are reconciled at every close from $99 a file. How Ledgerbrook works with tax preparers and with business owners is on those pages.

When to hand this off: if the year is over and the owner’s transfers sit in sales, expenses or a single “transfer” account, every one of them has to be found and reclassed to the right party before the preparer can fill in the form. A free file review lists them by related party.