Form 5471 applies to certain U.S. persons who fall within one or more of the IRS filer categories. Depending on the circumstances, this may include:

• Certain U.S. shareholders of controlled foreign corporations or section 965 specified foreign corporations;
• U.S. persons who control a foreign corporation, generally through ownership of more than 50% of its voting power or value;
• U.S. persons who acquire stock that reaches the 10% ownership threshold, acquire an additional 10% or more, or dispose of enough stock to fall below 10%;
• Individuals who become U.S. persons while meeting the applicable 10% ownership threshold;
• U.S. citizens or residents who are officers or directors of a foreign corporation when a U.S. person makes a specified reportable stock acquisition; and
• Taxpayers required to report GILTI or Subpart F income or considering a Section 962 election.

Owning 10% of a foreign corporation does not automatically create an annual Form 5471 requirement. The result depends on the filer category, the corporation’s classification and ownership structure, the timing of acquisitions or dispositions, direct and indirect ownership, constructive ownership rules, and applicable filing exceptions.

A filing requirement can apply even when the foreign corporation has no profit or makes no distributions. Failure to file when required can result in penalties beginning at $10,000. The particular penalty provision depends on the filer category and whether the failure concerns annual reporting or a reportable transaction.