Instructions for IRS Form 926 "Return by a U.S. Transferor of Property to a Foreign Corporation"

Instructions for IRS Form 926

Use Instructions to Form 926 to fill in IRS Form 926 and report certain transfers of tangible or intangible property to a foreign corporation, as required by section 6038B.

The form is issued annually by the Internal Revenue Service (IRS) and was last revised in November 2018.

A PDF version of the Instructions for IRS Tax Form 926 can be downloaded below.

A PDF version of IRS Form 926 may be found here.

Note that Form 926 needs to be filed with the income tax return of the U.S. transferor (or, if they are exempt, the organization return) for the tax year when the date of the transfer occurred. IRS 926 filings with the IRS must have the additional information listed in the Regulation sections 1.6038B-1 (c) through (e) and Temporary Regulations sections 1.6038B-1T (c) and (d).

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Instructions for Form 926
Department of the Treasury
Internal Revenue Service
(Rev. November 2018)
Return by a U.S. Transferor of Property to a Foreign Corporation
General Instructions
Transfers of stock or securities
Section references are to the Internal
Revenue Code unless otherwise noted.
for which a gain recognition
agreement (GRA) is filed. A U.S.
Future Developments
What's New
transferor must file a Form 926 with
For the latest information about
respect to a transfer of stock or
Form 926, line 1 is new. For transfers
developments related to Form 926
securities in all cases in which a GRA
occurring after 2017, taxpayers are
and its instructions, such as
is filed under Regulations section
required to specify whether a
legislation enacted after they were
1.367(a)-8. Provided that the initial
reportable property transfer was to a
published, go to IRS.gov/Form926.
GRA is timely filed (determined
foreign corporation that is a
without regard to Regulations section
non-controlled “specified 10%-owned
Purpose of Form
1.367(a)-8(p)), then, with respect to
foreign corporation” as defined in
Use Form 926 to report certain
the transfer of the stock or securities,
section 245A, which was added to the
transfers of tangible or intangible
the U.S. transferor should (1)
Code by section 14101(a) of the Tax
property to a foreign corporation, as
complete Part I and Part II of Form
Cuts and Jobs Act (TCJA) (P.L.
required by section 6038B.
926; (2) complete columns (a) through
115-97).
(e) of the "Stock and securities" line in
Who Must File
For transfers after 2017, section
Part III, Section B, of the form, and
14102(e) of the TCJA repealed the
check the “Yes” box on line 11; and
Generally, a U.S. citizen or resident, a
active trade or business exception
(3) complete the Supplemental Part III
domestic corporation, or a domestic
under section 367. Transfers of
Information Required To Be Reported
estate or trust must complete and file
tangible property (other than certain
section at the end of Part III of the
Form 926 to report certain transfers of
stock transfers) are subject to full gain
form using the Line 11 instructions
property to a foreign corporation that
recognition under the general rule of
under the Supplemental Part III
are described in section 6038B(a)(1)
section 367(a)(1).
Information Required To Be Reported
(A), 367(d), or 367(e). See section
section, later. In addition, the U.S.
6038B and Regulations sections
TCJA section 14102(d) added section
transferor must comply in all material
1.6038B-1 and 1.6038B-1T for more
91 to the Code. New section 91
respects with the terms of a GRA
information.
provides rules for transfers of foreign
(determined without regard to
branch assets to foreign corporations
Special Rules
Regulations section 1.367(a)-8(p)) in
requiring the transferor to include a
order to satisfy its section 6038B
Transfers by a partnership. If the
“Transferred Loss Amount” as
reporting obligations. See Regulations
transferor is a partnership (domestic
income.
section 1.6038B-1 for further
or foreign), the domestic partners of
For transfers in tax years beginning
information.
the partnership, not the partnership
after 2017, TCJA section 14221
Distributions by domestic
itself, are required to comply with
revised the definition of intangible
liquidating corporations. A
section 6038B and file Form 926.
property under section 936(h)(3)(B)
domestic liquidating corporation must
Each domestic partner is treated as a
so that it now includes goodwill, going
file a Form 926 with respect to a
transferor of its proportionate share of
concern value, workforce in place,
distribution of property in complete
the property. See the instructions for
and any other item the value or
liquidation under section 332 to a
line 3 for additional information.
potential value of which is not
foreign distributee corporation that
Transfers by spouses. Spouses
attributable to tangible property or the
meets the stock ownership
may file Form 926 jointly, but only if
services of an individual. The
requirements of section 332(b). If the
they file a joint income tax return.
definition in section 936(h)(3)(B) was
distribution qualifies for the exception
Transfers of cash. A U.S. person
subsequently redesignated (without
in Regulations section 1.367(e)-2(b)
that transfers cash to a foreign
substantive change from TCJA) as
(2)(i) or (iii), then, provided that all
corporation must report the transfer
section 367(d)(4) by Division U, Title
initial liquidation documents are timely
on Form 926 if (a) immediately after
IV, section 401(d)(1)(D)(viii)(l) of the
filed (determined without regard to
the transfer, the person holds, directly
Consolidated Appropriations Act,
Regulations section 1.367(e)-2(f)), the
or indirectly, at least 10% of the total
2018, P.L. 115-141. This revision
domestic liquidating corporation
voting power or the total value of the
affects the question on Form 926,
should complete Form 926 and, in the
foreign corporation; or (b) the amount
line 13 and the information entered on
Supplemental Information Required
of cash transferred by the person to
Form 926, Part III, Section C.
To Be Reported section at the end of
the foreign corporation during the
Part III of the form, note that the
12-month period ending on the date of
information required by Form 926 is
the transfer is more than $100,000.
contained in the statement required
See Regulations section 1.6038B-1(b)
by Regulations section 1.367(e)-2(b)
(3).
Oct 30, 2018
Cat. No. 27037X
Instructions for Form 926
Department of the Treasury
Internal Revenue Service
(Rev. November 2018)
Return by a U.S. Transferor of Property to a Foreign Corporation
General Instructions
Transfers of stock or securities
Section references are to the Internal
Revenue Code unless otherwise noted.
for which a gain recognition
agreement (GRA) is filed. A U.S.
Future Developments
What's New
transferor must file a Form 926 with
For the latest information about
respect to a transfer of stock or
Form 926, line 1 is new. For transfers
developments related to Form 926
securities in all cases in which a GRA
occurring after 2017, taxpayers are
and its instructions, such as
is filed under Regulations section
required to specify whether a
legislation enacted after they were
1.367(a)-8. Provided that the initial
reportable property transfer was to a
published, go to IRS.gov/Form926.
GRA is timely filed (determined
foreign corporation that is a
without regard to Regulations section
non-controlled “specified 10%-owned
Purpose of Form
1.367(a)-8(p)), then, with respect to
foreign corporation” as defined in
Use Form 926 to report certain
the transfer of the stock or securities,
section 245A, which was added to the
transfers of tangible or intangible
the U.S. transferor should (1)
Code by section 14101(a) of the Tax
property to a foreign corporation, as
complete Part I and Part II of Form
Cuts and Jobs Act (TCJA) (P.L.
required by section 6038B.
926; (2) complete columns (a) through
115-97).
(e) of the "Stock and securities" line in
Who Must File
For transfers after 2017, section
Part III, Section B, of the form, and
14102(e) of the TCJA repealed the
check the “Yes” box on line 11; and
Generally, a U.S. citizen or resident, a
active trade or business exception
(3) complete the Supplemental Part III
domestic corporation, or a domestic
under section 367. Transfers of
Information Required To Be Reported
estate or trust must complete and file
tangible property (other than certain
section at the end of Part III of the
Form 926 to report certain transfers of
stock transfers) are subject to full gain
form using the Line 11 instructions
property to a foreign corporation that
recognition under the general rule of
under the Supplemental Part III
are described in section 6038B(a)(1)
section 367(a)(1).
Information Required To Be Reported
(A), 367(d), or 367(e). See section
section, later. In addition, the U.S.
6038B and Regulations sections
TCJA section 14102(d) added section
transferor must comply in all material
1.6038B-1 and 1.6038B-1T for more
91 to the Code. New section 91
respects with the terms of a GRA
information.
provides rules for transfers of foreign
(determined without regard to
branch assets to foreign corporations
Special Rules
Regulations section 1.367(a)-8(p)) in
requiring the transferor to include a
order to satisfy its section 6038B
Transfers by a partnership. If the
“Transferred Loss Amount” as
reporting obligations. See Regulations
transferor is a partnership (domestic
income.
section 1.6038B-1 for further
or foreign), the domestic partners of
For transfers in tax years beginning
information.
the partnership, not the partnership
after 2017, TCJA section 14221
Distributions by domestic
itself, are required to comply with
revised the definition of intangible
liquidating corporations. A
section 6038B and file Form 926.
property under section 936(h)(3)(B)
domestic liquidating corporation must
Each domestic partner is treated as a
so that it now includes goodwill, going
file a Form 926 with respect to a
transferor of its proportionate share of
concern value, workforce in place,
distribution of property in complete
the property. See the instructions for
and any other item the value or
liquidation under section 332 to a
line 3 for additional information.
potential value of which is not
foreign distributee corporation that
Transfers by spouses. Spouses
attributable to tangible property or the
meets the stock ownership
may file Form 926 jointly, but only if
services of an individual. The
requirements of section 332(b). If the
they file a joint income tax return.
definition in section 936(h)(3)(B) was
distribution qualifies for the exception
Transfers of cash. A U.S. person
subsequently redesignated (without
in Regulations section 1.367(e)-2(b)
that transfers cash to a foreign
substantive change from TCJA) as
(2)(i) or (iii), then, provided that all
corporation must report the transfer
section 367(d)(4) by Division U, Title
initial liquidation documents are timely
on Form 926 if (a) immediately after
IV, section 401(d)(1)(D)(viii)(l) of the
filed (determined without regard to
the transfer, the person holds, directly
Consolidated Appropriations Act,
Regulations section 1.367(e)-2(f)), the
or indirectly, at least 10% of the total
2018, P.L. 115-141. This revision
domestic liquidating corporation
voting power or the total value of the
affects the question on Form 926,
should complete Form 926 and, in the
foreign corporation; or (b) the amount
line 13 and the information entered on
Supplemental Information Required
of cash transferred by the person to
Form 926, Part III, Section C.
To Be Reported section at the end of
the foreign corporation during the
Part III of the form, note that the
12-month period ending on the date of
information required by Form 926 is
the transfer is more than $100,000.
contained in the statement required
See Regulations section 1.6038B-1(b)
by Regulations section 1.367(e)-2(b)
(3).
Oct 30, 2018
Cat. No. 27037X
(2)(i)(C)(2) or (iii)(D). In addition, the
The transfer was taxable to the U.S.
statute of limitations with respect to
domestic liquidating corporation must
transferor under Regulations section
the gain realized but not recognized
comply in all material respects with
1.367(a)-3(c) and such person
on the transfer.
the terms of a liquidation document
properly reported the income from the
Penalties for Failure To File
(determined without regard to
transfer on its timely filed return
If a taxpayer fails to comply with
Regulations section 1.367(e)-2(f)) in
(including extensions) for the tax year
section 6038B, the penalty equals
order to satisfy its section 6038B
that includes the date of transfer, or
10% of the fair market value of the
reporting obligations. See specific
The transfer is considered to be to
property at the time of the transfer.
instructions for lines 20a and 20b in
a foreign corporation solely by reason
The penalty will not apply if the failure
Part IV—Additional Information
of Regulations section 1.83-6(d)(1)
to comply is due to reasonable cause
Regarding Transfer of Property, later,
and the fair market value of the
and not to willful neglect. The penalty
for more information. See Regulations
property transferred did not exceed
is limited to $100,000 unless the
section 1.6038B-1 for further
$100,000.
failure to comply was due to
information.
b. The U.S. transferor owned 5%
intentional disregard. Moreover, the
or more of the total voting power or
Exceptions to Filing
period of limitations for assessment of
the total value of the transferee
tax upon the transfer of that property
foreign corporation immediately after
1. For exchanges described in
is extended to the date that is 3 years
the transfer and:
section 354 or 356, a U.S. person
after the date on which the information
The U.S. transferor is a tax-exempt
does not have to file Form 926 if:
required to be reported is provided.
entity and the income was not
a. The U.S. person exchanges
Section 6662(j) Penalty
unrelated business income, or
stock of a foreign corporation in a
The transfer was taxable to the U.S.
recapitalization described in section
A 40% penalty may be imposed on
transferor and such person properly
368(a)(1)(E), or
any underpayment resulting from an
reported the income from the transfer
undisclosed foreign financial asset
b. The U.S. person exchanges
on its timely filed return, or
understatement. No penalty will be
stock of a domestic or foreign
The transfer is considered to be to
imposed with respect to any portion of
corporation for stock of a foreign
a foreign corporation solely by reason
an underpayment if the taxpayer can
corporation under an asset
of Regulations section 1.83-6(d)(1)
demonstrate that the failure to comply
reorganization described in section
and the fair market value of the
was due to reasonable cause with
368(a)(1) that is not treated as an
property transferred did not exceed
respect to such portion of the
indirect stock transfer under
$100,000.
underpayment and the taxpayer acted
Regulations section 1.367(a)-3(d).
in good faith with respect to such
When and How To File
2. Generally, a domestic
portion of the underpayment. See
corporation that distributes stock or
Form 926 must be filed with the U.S.
sections 6662(j) and 6664(c) for
securities of a domestic corporation
transferor's income tax return (or, if
additional information.
under section 355 is not required to
applicable, exempt organization
file Form 926. However, this
return) for the tax year that includes
Specific Instructions
exception does not apply if the
the date of the transfer.
distribution is of stock or securities of
Important: All information reported on
The Form 926 filed with the
a foreign controlled corporation to a
Form 926 must be in English. All
IRS must include the
!
distributee shareholder who is not a
amounts must be stated in U.S.
additional information
U.S. citizen or resident or a domestic
CAUTION
dollars. If the information required in a
required in Regulations sections
corporation. See specific instructions
given section exceeds the space
1.6038B-1(c) through (e) and
for Part IV, line 21, later, for more
provided within that section, do not
Temporary Regulations sections
information.
write “see attached” in the section and
1.6038B-1T(c) and (d).
3. A U.S. person that transfers
then attach all of the information on
stock or securities under section
additional sheets. Instead, complete
Other Forms That May Be
367(a) does not have to file Form 926
all entry spaces in the section and
Required
if either a or b below applies.
attach the remaining information on
Persons filing this form may be
additional sheets. The additional
a. The U.S. transferor owned less
required to file FinCEN Form 114,
sheets must conform with the IRS
than 5% of both the total voting power
Report of Foreign Bank and Financial
version of that section.
and the total value of the transferee
Accounts (FBAR).
foreign corporation immediately after
the transfer and:
A U.S. transferor that is required to
The U.S. transferor qualified for
enter into a GRA under section 367 to
nonrecognition treatment with respect
qualify for nonrecognition treatment
to the transfer, or
must file Form 8838, Consent To
The U.S. transferor is a tax-exempt
Extend the Time To Assess Tax
entity and the income was not
Under Section 367—Gain
unrelated business income, or
Recognition Agreement, to extend the
-2-
Instructions for Form 926 (Rev. 11-2018)
Part I—U.S. Transferor
the controlling shareholders and their
below) you have assigned to the
identifying numbers.
transferee foreign corporation.
Information
A “reference ID number” is a
Line 2c. If the transferor was a
Identifying number. The identifying
number established by or on behalf of
member of an affiliated group filing a
number of an individual is his or her
the U.S. transferor identified at the top
consolidated tax return (see sections
social security number (SSN). The
of page 1 of the form that is assigned
1501 through 1504), but was not the
identifying number of all others is their
to the transferee foreign corporation
parent corporation, list the name and
employer identification number (EIN).
with respect to which Form 926
EIN of the parent corporation and file
reporting is required. These numbers
Line 1. Check the “Yes” box on
Form 926 with the parent
are used to uniquely identify the
line 1 if the transferee is a specified
corporation's consolidated return.
transferee foreign corporation in order
10%-owned foreign corporation that is
Line 2d. If the answer to line 2d is
to keep track of the entity from tax
not a controlled foreign corporation
"Yes," and if the asset is transferred in
year to tax year. The reference ID
(as defined in section 957(a)).
an exchange described in section
number must meet the requirements
A specified 10%-owned foreign
361(a) or (b), attach the following.
set forth below.
corporation is defined in section
A statement that the conditions set
245A(b)(1) as any foreign corporation
forth in the second sentence of
Note. Because reference ID numbers
with respect to which any domestic
section 367(a)(4) and any regulations
are established by or on behalf of the
corporation is a U.S. shareholder. A
under that section have been
U.S. person filing Form 926, there is
controlled foreign corporation is
satisfied.
no need to apply to the IRS to request
defined in section 957(a) as any
An explanation of any basis or other
a reference ID number or for
foreign corporation if, on any day
adjustments made pursuant to section
permission to use these numbers.
during the tax year of such foreign
367(a)(4) and any regulations
corporation, U.S. shareholders own
Note. In general, the reference ID
thereunder.
(within the meaning of section
number assigned to a transferee
Line 3. If a partnership (whether
958(a)), or are considered to own by
foreign corporation on Form 926 has
foreign or domestic) transfers property
applying the rules of ownership of
relevance only to Form 926 and
to a foreign corporation in an
section 958(b), more than 50% of (1)
should not be used with respect to the
exchange described in section 367(a)
the total combined voting power of all
transferee foreign corporation on
(1), then any U.S. person that is a
classes of stock of such corporation
other IRS forms.
partner in the partnership shall be
entitled to vote, or (2) the total value of
Requirements. The reference ID
treated as having transferred a
the stock of such corporation.
proportionate share of the property in
number must be alphanumeric
Check the “No” box on line 1 and
an exchange described in section
(defined below) and no special
check the “Yes” box in Part II, line 9, if
367(a)(1). A U.S. person's
characters or spaces are permitted.
the transferee foreign corporation is a
proportionate share of partnership
The length of a given reference ID
controlled foreign corporation.
property shall be determined under
number is limited to 50 characters.
the rules and principles of sections
Line 2a. If you answered “Yes” to
For these purposes, the term
question 2a and the asset is stock,
701 through 761 and the regulations
“alphanumeric” means the entry can
section 367(a)(4) may require basis
thereunder. See Temporary
be alphabetical, numeric, or any
adjustments. If you answered “No” to
Regulations section 1.367(a)-1T(c)
combination of the two.
question 2a and the asset is a tangible
(3).
The same reference ID number
asset, the transfer is taxable under
Line 3d. For the definition of
must be used consistently from tax
sections 367(a)(1) and (a)(4). If the
“regularly traded on an established
year to tax year with respect to a given
asset transferred is an intangible
securities market,” see Temporary
transferee foreign corporation. If for
asset, see section 367(d) and its
Regulations section 1.367(a)-1T(c)(3)
any reason a reference ID number
regulations.
(ii)(D). If the answer to line 3d is “Yes,”
falls out of use (for example, the
If you answered “No” to question
the rules of Temporary Regulations
transferee foreign corporation no
2a: If the U.S. transferor is owned
section 1.367(a)-1T(c)(3)(ii)(C) apply.
longer exists due to disposition or
directly by more than five domestic
liquidation), the reference ID number
Part II—Transferee
corporations immediately before the
used for that transferee foreign
reorganization, but some combination
Foreign Corporation
corporation cannot be used again for
of five or fewer domestic corporations
another transferee foreign corporation
Information
controls the U.S. transferor, the U.S.
for purposes of Form 926 reporting.
transferor must designate the five or
Line 5b, Reference ID number. A
There are some situations that
fewer domestic corporations that
reference ID number is required on
warrant correlation of a new reference
comprise the control group. List these
line 5b only in cases where no EIN
ID number with a previous reference
designated corporations on Form 926,
was entered on line 5a for the
ID number when assigning a new
line 2b.
transferee foreign corporation.
reference ID number to a transferee
However, filers are permitted to enter
Line 2b. If the transferor went out of
foreign corporation. For example:
both an EIN and a reference ID
existence pursuant to the transfer (for
In the case of a merger or
number. If applicable, enter on line 5b
example, as in a reorganization
acquisition, a Form 926 filer must use
the reference ID number (defined
described in section 368(a)(1)(C)), list
a reference ID number which
Instructions for Form 926 (Rev. 11-2018)
-3-
correlates the previous reference ID
a controlled foreign corporation
Stock and securities. In column
number with the new reference ID
immediately after the transfer.
(b), for each stock or security, provide
number assigned to the transferee
the class or type and the name of the
Part III—Information
foreign corporation; or
issuing corporation. See the Line 11
Regarding Transfer of
In the case of an entity
instructions in the Supplemental Part
classification election that is made on
Property
III Information Required To Be
behalf of a transferee foreign
Reported section, later, for additional
Information in Part III is reported in
corporation on Form 8832,
reporting requirements.
three sections. Collectively, the three
Regulations section 301.6109-1(b)(2)
sections capture information with
Property with built-in loss.
(v) requires the transferee foreign
regard to all of the properties
Complete columns (a) through (d)
corporation to have an EIN for this
transferred. The properties covered
including the description of each item
election. For the first year that Form
by each section, respectively, are:
transferred with a built-in loss that is
926 is filed after an entity
Cash (“Section A”),
realized but not recognized. Section
classification election is made on
Other property (other than
367(a)(1) requires gain recognition
behalf of the transferee foreign
intangible property subject to section
attributed to transferred property
corporation on Form 8832, you must
367(d)) (“Section B”), and
(other than intangible property subject
enter the new EIN on line 5a and the
Intangible property subject to
to section 367(d) or certain stock
old reference ID number on line 5b. In
section 367(d) (“Section C”).
transfers under section 367(a) if
subsequent years, the Form 926 filer
certain conditions are met); however,
may continue to enter both the EIN
For information that generally must
such gain recognized on the
and the reference ID number, but
be included for a transfer described in
transferred property may not be
must enter at least the EIN on line 5a.
section 6038B(a)(1)(A), see the
reduced or netted by realized losses
beginning of the Supplemental Part III
In the case of a merger or
attributed to transferred built-in loss
Information Required To Be Reported
acquisition, you must correlate the
property. No loss is allowed under
section, later.
reference ID numbers as follows: New
section 367(a)(1) for transferred
reference ID number [space] Old
If additional row(s) are needed to
built-in loss property.
reference ID number. If there is more
enter information for a property
If the transfer was a distribution of
than one old reference ID number,
category in a Section in Part III,
property in complete liquidation under
you must enter a space between each
provide the information in the same
section 332, you must complete
such number. As indicated above, the
format as required for the row in the
columns (a) through (d) as described
length of a given reference ID number
Section at issue in the Supplemental
above. You may use any built-in
is limited to 50 characters and each
Part III Information Required To Be
losses under section 367(e)(2) to
number must be alphanumeric with no
Reported section. For each property
reduce the overall recognized gain
special characters.
category with such additional row(s),
from the liquidating distribution, but
in the Section enter “See
not below zero, for purposes of
Note. This correlation requirement
Supplemental” under column (b),
determining the amount entered on
applies only to the first year the new
Description of Property, on the last
line 20b in Part IV. See Regulations
reference ID number is used.
row of the property category and enter
section 1.367(e)-2(b)(1)(ii)(B) for the
Line 6, Address. Enter the
in the remaining columns on that last
overall loss limitation.
information in the following order: city,
row the aggregated amounts from the
province or state, and country. Follow
In general, the following
corresponding columns on the
the country's practice for entering the
instructions apply to columns (a)
additional rows.
postal code, if any. Do not abbreviate
through (e).
For distributions covered by section
the country name; however, if you file
Column (a), Date of transfer. Enter
367(e)(2), see the instructions for
electronically, please follow the
the first date on which title to,
lines 20a through 20c, later.
convention specified.
possession of, or rights to the use of
Section A
Line 7. Enter the two-letter country
the property passed for U.S. income
Section A captures information
code (from the list at
IRS.gov/
tax purposes. See Temporary
countrycodes) of the transferee
regarding cash.
Regulations section 1.6038B-1T(b)(4)
foreign corporation's country of
for additional information.
Line 10. If cash was the only property
incorporation or organization.
transferred, skip the remainder of Part
Column (b), Description of proper-
III and proceed to Part IV.
Line 8. List the entity classification
ty. Provide a description of the
(for example, partnership,
property transferred.
Section B
corporation, etc.) of the transferee
Column (c), Fair market value on
Section B captures information
foreign corporation under the laws of
date of transfer. Enter the fair
regarding property (other than cash
the country of incorporation or
market value of the property
and intangible property subject to
organization.
transferred (measured as of the date
section 367(d)) that is subject to full
Line 9. See section 957(a) to
of transfer).
gain recognition under the general
determine whether the corporation is
rule of section 367(a)(1).
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Instructions for Form 926 (Rev. 11-2018)
foreign corporation. The transferred
Column (d), Cost or other basis.
Column (a), Date of transfer. Enter
loss amount determined under
Enter the adjusted basis in the
the first date on which title to,
section 91(b) is:
property transferred on the date of the
possession of, or rights to the use of
transfer. See sections 1011 through
1. The sum of losses incurred by
the property passed for U.S. income
1016 for more information for the
the foreign branch or FDE after
tax purposes. See Temporary
determination of adjusted basis.
December 31, 2017, and before the
Regulations section 1.6038B-1T(b)(4)
transfer and with respect to which a
for additional information.
Column (e), Gain recognized on
deduction was allowed to the U.S.
transfer. Enter the gain recognized
Column (b), Description of proper-
transferor, reduced by;
on the transfer of each property.
ty. Provide a separate description for
2. The sum of:
each identified intangible, including
Line 11. Indicate whether a gain
each identified (i) patent, invention,
a. Any taxable income of such
recognition agreement was filed
formula, process, design, pattern, or
branch for a tax year after the tax year
pursuant to Regulations section
know-how; (ii) copyright, literary,
in which the loss was incurred and
1.367(a)-8 for a transfer of stock or
musical, or artistic composition; (iii)
through the close of the tax year of the
securities. If “Yes,” complete the
trademark, trade name, or brand
transfer, and
Supplemental Part III Information
name; (iv) franchise, license, or
b. Any amount recognized under
Required To Be Reported section at
contract; (v) method, program,
section 904(f)(3) resulting from the
the end of Part III using the Line 11
system, procedure, campaign, survey,
transfer.
instructions under the Supplemental
study, forecast, estimate, customer
Part III Information Required To Be
See section 91(c) and the transition
list, or technical data; (vi) any
Reported section, later.
rule provided by TCJA section
goodwill, going concern value, or
Line 12a. Check “Yes” to line 12a if
14102(d)(4) for a possible reduction
workforce in place (including its
any of the property transferred to a
of the transferred loss amount in
composition and terms and conditions
foreign corporation consisted of
certain circumstances.
(contractual or otherwise) of its
assets of a foreign branch (or a
employment); or (vii) any other item
If the transferred loss amount is
branch that is a foreign disregarded
the value or potential value of which is
zero or less, enter zero on line 12d (no
entity (FDE)). If you check “Yes,”
not attributable to tangible property or
transferred loss amount is required to
continue to line 12b; otherwise skip
the services of any individual.
be recognized by the U.S. transferor
lines 12b through 12d.
on the transfer under section 91).
Column (c), Useful life. Enter the
Line 12b. Check “Yes” to line 12b if
useful life for each intangible. The
If the transferred loss amount is
the property transferred to a specified
useful life of intangible property is
greater than zero, enter the amount as
10%-owned foreign corporation
defined under Regulations section
a positive number on line 12d and
consisted of substantially all of the
1.367(d)-1(c)(3)(i). If the useful life of
report this amount as other income on
assets of a foreign branch (or a
intangible property is indefinite, enter
Form 1120, page 1, line 10 (other
branch that is an FDE). If you check
“indefinite.” Regulations section
income) or on the corresponding line
“Yes” to line 12b, you must complete
1.367(d)-1(c)(3)(ii) is not relevant to
of the applicable 1120-series form.
line 12c. See the definition of
the determination of the useful life
Identify the amount as “Section 91
specified 10%-owned foreign
entered in column (c).
Transferred Loss Amount.” See also
corporation in the instructions to
the Line 12d instructions under the
Column (d), Arm’s length price on
line 1, earlier; however, for these
Supplemental Part III Information
date of transfer. Generally, if a U.S.
purposes, the definition applies
Required To Be Reported section,
person transfers intangible property
without regard to whether the
later, for additional information that
subject to section 367(d), such person
corporation is a controlled foreign
must be reported.
shall, over the useful life of the
corporation.
property, annually include in gross
Section C
Line 12c. Check “Yes” to line 12c if
income an amount that represents an
Section C captures information
the transferor was a domestic
appropriate arm’s length charge for
regarding transfers of intangible
corporation and immediately after the
use of the property. The appropriate
property subject to section 367(d).
transfer the domestic corporation was
charge is determined in accordance
a U.S. shareholder (10%-or-more
Property described in section
with the provisions of section 482 and
shareholder) with respect to the
367(d)(4). Complete columns (a)
the regulations thereunder. See
transferee foreign corporation. If
through (f) for each identified
Temporary Regulations section
“Yes,” continue to line 12d; otherwise
transferred section 367(d)(4)
1.367(d)-1T(c)(1). For each intangible
skip line 12d.
intangible. See the related instructions
reported in Section C, provide the
for Section C under the Supplemental
arm’s length price on the date of
Line 12d. Under section 91, the U.S.
Part III Information Required To Be
transfer. See the instructions below
transferor must include in gross
Reported section at the end of Part III,
for information that must be included
income an amount equal to the
later, for additional information that
in the Supplemental Part III
transferred loss amount, if any, as
you must report.
Information Required To Be Reported
defined in section 91(b) upon a
section.
transfer of substantially all of the
In general, the following
assets of a foreign branch (including a
instructions apply to columns (a)
foreign branch that is an FDE) to a
through (f).
Instructions for Form 926 (Rev. 11-2018)
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Who Must File IRS Form 926?

An IRS Tax Form 926 needs to be filed when a U.S. citizen or resident, a domestic corporation, or a domestic estate or trust completes certain transfers of property to a foreign corporation described in section 6038B(a)(1)(A), 367(d), or 367(e).

IRS Form 926 Instructions include the following:

  1. The first part asks for the U.S. Transferor Information, including the name of the transferor, controlling shareholder(s), identifying number(s), name of the parent corporation, EIN of the parent corporation, name of the partnership, and EIN of partnership.
  2. The second part asks for the Transferee Foreign Corporation Information, including the name of transferee (foreign corporation), address, country code of the country of incorporation or organization, foreign law characteristics, identifying number (if any), reference ID number, and if the transferee foreign corporation is a controlled foreign corporation.
  3. The third part asks for Information Regarding the Transfer of Property. Section A for Cash, Section B for Other Property (listed as other than intangible property subject to section 367 (d)), Section C for Intangible Property Subject to Section 367 (d), and Supplemental Part III information Required to be Reported which asks the filer to provide a general description of the transfer and any wider transaction of which it forms a part, including a chronology of the transfers involved and an identification of the other parties to the transaction to the extent known.
  4. The fourth part asks for Additional Information Regarding Transfer of Property including type, gain recognition, exchange gain recognition, and if the transfer resulted in a change in entity recognition.
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