Instructions for Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation
| Legal Form Number | 926 |
| Year | 2018 |
| Issuer | Treasury Department |
| Section | Treasury Department |
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Instructions for Form 926
(Rev. November 2018)
Return by a U.S. Transferor of Property to a Foreign Corporation
Department of the Treasury
Internal Revenue Service
Section references are to the Internal
Revenue Code unless otherwise noted.
What's New
Form 926, line 1 is new. For transfers
occurring after 2017, taxpayers are
required to specify whether a
reportable property transfer was to a
foreign corporation that is a
non-controlled “specified 10%-owned
foreign corporation” as defined in
section 245A, which was added to the
Code by section 14101(a) of the Tax
Cuts and Jobs Act (TCJA) (P.L.
115-97).
For transfers after 2017, section
14102(e) of the TCJA repealed the
active trade or business exception
under section 367. Transfers of
tangible property (other than certain
stock transfers) are subject to full gain
recognition under the general rule of
section 367(a)(1).
TCJA section 14102(d) added section
91 to the Code. New section 91
provides rules for transfers of foreign
branch assets to foreign corporations
requiring the transferor to include a
“Transferred Loss Amount” as
income.
For transfers in tax years beginning
after 2017, TCJA section 14221
revised the definition of intangible
property under section 936(h)(3)(B)
so that it now includes goodwill, going
concern value, workforce in place,
and any other item the value or
potential value of which is not
attributable to tangible property or the
services of an individual. The
definition in section 936(h)(3)(B) was
subsequently redesignated (without
substantive change from TCJA) as
section 367(d)(4) by Division U, Title
IV, section 401(d)(1)(D)(viii)(l) of the
Consolidated Appropriations Act,
2018, P.L. 115-141. This revision
affects the question on Form 926,
line 13 and the information entered on
Form 926, Part III, Section C.
General Instructions
Future Developments
For the latest information about
developments related to Form 926
and its instructions, such as
legislation enacted after they were
published, go to IRS.gov/Form926.
Purpose of Form
Use Form 926 to report certain
transfers of tangible or intangible
property to a foreign corporation, as
required by section 6038B.
Who Must File
Generally, a U.S. citizen or resident, a
domestic corporation, or a domestic
estate or trust must complete and file
Form 926 to report certain transfers of
property to a foreign corporation that
are described in section 6038B(a)(1)
(A), 367(d), or 367(e). See section
6038B and Regulations sections
1.6038B-1 and 1.6038B-1T for more
information.
Special Rules
•Transfers by a partnership. If the
transferor is a partnership (domestic
or foreign), the domestic partners of
the partnership, not the partnership
itself, are required to comply with
section 6038B and file Form 926.
Each domestic partner is treated as a
transferor of its proportionate share of
the property. See the instructions for
line 3 for additional information.
•Transfers by spouses. Spouses
may file Form 926 jointly, but only if
they file a joint income tax return.
•Transfers of cash. A U.S. person
that transfers cash to a foreign
corporation must report the transfer
on Form 926 if (a) immediately after
the transfer, the person holds, directly
or indirectly, at least 10% of the total
voting power or the total value of the
foreign corporation; or (b) the amount
of cash transferred by the person to
the foreign corporation during the
12-month period ending on the date of
the transfer is more than $100,000.
See Regulations section 1.6038B-1(b)
(3).
•Transfers of stock or securities
for which a gain recognition
agreement (GRA) is filed. A U.S.
transferor must file a Form 926 with
respect to a transfer of stock or
securities in all cases in which a GRA
is filed under Regulations section
1.367(a)-8. Provided that the initial
GRA is timely filed (determined
without regard to Regulations section
1.367(a)-8(p)), then, with respect to
the transfer of the stock or securities,
the U.S. transferor should (1)
complete Part I and Part II of Form
926; (2) complete columns (a) through
(e) of the "Stock and securities" line in
Part III, Section B, of the form, and
check the “Yes” box on line 11; and
(3) complete the Supplemental Part III
Information Required To Be Reported
section at the end of Part III of the
form using the Line 11 instructions
under the Supplemental Part III
Information Required To Be Reported
section, later. In addition, the U.S.
transferor must comply in all material
respects with the terms of a GRA
(determined without regard to
Regulations section 1.367(a)-8(p)) in
order to satisfy its section 6038B
reporting obligations. See Regulations
section 1.6038B-1 for further
information.
•Distributions by domestic
liquidating corporations. A
domestic liquidating corporation must
file a Form 926 with respect to a
distribution of property in complete
liquidation under section 332 to a
foreign distributee corporation that
meets the stock ownership
requirements of section 332(b). If the
distribution qualifies for the exception
in Regulations section 1.367(e)-2(b)
(2)(i) or (iii), then, provided that all
initial liquidation documents are timely
filed (determined without regard to
Regulations section 1.367(e)-2(f)), the
domestic liquidating corporation
should complete Form 926 and, in the
Supplemental Information Required
To Be Reported section at the end of
Part III of the form, note that the
information required by Form 926 is
contained in the statement required
by Regulations section 1.367(e)-2(b)
Oct 30, 2018 Cat. No. 27037X
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