U.S. Individual Income Tax Return

Instructions for Form 926

Department of the Treasury
Internal Revenue Service

(Rev. December 2011)

Return by a U.S. Transferor of Property to a Foreign Corporation
Section references are to the Internal
Revenue Code unless otherwise noted.

What’s New
• T.D. 9525, 2011-23 I.R.B. 837, finalizes
regulations that affect U.S. persons that
transfer property subject to lease of
aircraft or vessels in foreign commerce to
a foreign corporation. Such transfers are
reported on the “property to be leased”
line of Form 926, Part III. Furthermore,
such U.S. persons would also be required
to complete Form 926, Part IV, line 13.
• Section 512 of the Hiring Incentives to
Restore Employment Act of 2010
provided a new penalty for
underpayments attributable to
undisclosed foreign financial asset
understatements. For more information,
see Section 6662(j) Penalty below.

General Instructions
Purpose of Form
Use Form 926 to report certain transfers
of tangible or intangible property to a
foreign corporation 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 2 for additional
information.
• Transfers by a husband and wife. A
husband and wife 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
Dec 27, 2011

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
exceeds $100,000. See Regulations
section 1.6038B-1(b)(3).

Exceptions to Filing
1. For exchanges described in section
354 or 356, a U.S. person does not have
to file Form 926 if:
a. The U.S. person exchanges stock
of a foreign corporation in a
recapitalization described in section
368(a)(1)(E) or
b. The U.S. person exchanges stock
of a domestic or foreign corporation for
stock of a foreign corporation under an
asset reorganization described in section
368(a)(1) that is not treated as an indirect
stock transfer under Regulations section
1.367(a)-3(d).
2. Generally, a domestic corporation
that distributes stock or securities of a
domestic corporation under section 355 is
not required to file Form 926. However,
this exception does not apply if the
distribution is of stock or securities of a
foreign controlled corporation to a
distributee shareholder who is not a U.S.
citizen or resident or a domestic
corporation.
3. A U.S. person that transfers stock
or securities under section 367(a) does
not have to file Form 926 if either a or b
below applies.
a. The U.S. transferor owned less
than 5% of both the total voting power
and the total value of the transferee
foreign corporation immediately after the
transfer and:
• The U.S. transferor qualified for
nonrecognition treatment with respect to
the transfer, or
• The U.S. transferor is a tax-exempt
entity and the income was not unrelated
business income, or
• The transfer was taxable to the U.S.
transferor under Regulations section
1.367(a)-3(c) and such person properly
reported the income from the transferor
on its timely filed return (including
extensions) for the tax year that includes
the date of transfer; or
• The transfer is considered to be to a
foreign corporation solely by reason of
Regulations section 1.83-6(d)(1) and the
fair market value of the property
transferred did not exceed $100,000.
b. The U.S. transferor owned 5% or
more of the total voting power or the total
value of the transferee foreign corporation
immediately after the transfer and:
Cat. No. 27037X

• The transferor (or one or more
successors) properly entered into a gain
recognition agreement, or
• The U.S. transferor is a tax-exempt
entity and the income was not unrelated
business income, or
• The transfer was taxable to the U.S.
transferor and such person properly
reported the income from the transfer on
its timely filed return, or
• The transfer is considered to be to a
foreign corporation solely by reason of
Regulations section 1.83-6(d)(1) and the
fair market value of the property
transferred did not exceed $100,000.

When and How To File
Form 926 (and the additional information
required under Regulations section
1.6038B-1(c) and Temporary Regulations
sections 1.6038B-1T(c)(1) through (5)
and 1.6038B-1T(d)) must be filed with the
U.S. transferor’s income tax return (or, if
applicable, exempt organization return)
for the tax year that includes the date of
the transfer.

Other Forms That May Be
Required
Persons filing this form may be required
to file Form TD F 90-22.1, Report of
Foreign Bank and Financial Accounts.
A U.S. transferor that is required to
enter into a gain recognition agreement
under section 367 to qualify for
nonrecognition treatment must file Form
8838, Consent To Extend the Time To
Assess Tax Under Section 367 — Gain
Recognition Agreement, or a similar
statement, to extend the statute of
limitations with respect to the gain
realized but not recognized on the
transfer.

Penalties for Failure to File
If a taxpayer fails to comply with section
6038B, the penalty equals 10% of the fair
market value of the property at the time of
the transfer. The penalty will not apply if
the failure to comply is due to reasonable
cause and not to willful neglect. The
penalty is limited to $100,000 unless the
failure to comply was due to intentional
disregard. Moreover, the period of
limitations for assessment of tax upon the
transfer of that property is extended to the
date that is 3 years after the date on
which the information required to be
reported is provided.

Section 6662(j) Penalty
For tax years beginning after March 18,
2010, a 40% penalty may be imposed on
any underpayment resulting from an
undisclosed foreign financial asset

understatement. No penalty will be
imposed with respect to any portion of an
underpayment if the taxpayer can
demonstrate that the failure to comply
was due to reasonable cause with respect
to such portion of the underpayment and
the taxpayer acted in good faith with
respect to such portion of the
underpayment. See sections 6662(j) and
6664(c) for additional information.

Specific Instructions

Important: All information reported on
Form 926 must be in English. All amounts
must be stated in U.S. dollars. If the
information required in a given section
exceeds the space provided within that
section, do not write “see attached” in the
section and then attach all of the
information on additional sheets. Instead,
complete all entry spaces in the section
and attach the remaining information on
additional sheets. The additional sheets
must conform with the IRS version of that
section.

Part I—U.S. Transferor
Information
Identifying Number
The identifying number of an individual is
his or her social security number (SSN).
The identifying number of all others is
their employer identification number
(EIN).

Line 1a
If you answered “Yes” to question 1a and
the asset is a tangible asset, section
367(a)(5) may require basis adjustments.
If you answered “No” to question 1a and
the asset is a tangible asset, the transfer
is taxable under sections 367(a)(1) and
(a)(5). If the asset transferred is an
intangible asset, see section 367(d) and
its regulations.

Line 1b
If the transferor went out of existence
pursuant to the transfer (e.g., as in a
reorganization described in section
368(a)(1)(C)), list the controlling
shareholders and their identifying
numbers.

Line 1c
If the transferor was a member of an
affiliated group filing a consolidated tax
return (see sections 1501 through 1504),
but was not the parent corporation, list the
name and EIN of the parent corporation
and file Form 926 with the parent
corporation’s consolidated return.

Line 1d
If the answer to line 1d is ‘‘Yes,’’ and if the
asset is transferred in an exchange
described in section 361(a) or (b), attach
the following:
• A statement that the conditions set
forth in the second sentence of section

367(a)(5) and any regulations under that
section have been satisfied.
• An explanation of any basis or other
adjustments made pursuant to section
367(a)(5) and any regulations thereunder.

Line 2
If a partnership (whether foreign or
domestic) transfers property to a foreign
corporation in an exchange described in
section 367(a)(1), then a U.S. person that
is a partner in the partnership shall be
treated as having transferred a
proportionate share of the property in an
exchange described in section 367(a)(1).
A U.S. person’s proportionate share of
partnership property shall be determined
under the rules and principles of sections
701 through 761 and the regulations
thereunder. See Temporary Regulations
section 1.367(a)-1T(c)(3).
Line 2d. For definition of “regularly
traded on an established securities
market,” see Temporary Regulations
section 1.367(a)-1T(c)(3)(ii)(D). If the
answer to line 2d is “Yes,” the rules of
Regulations section
1.367(a)-1T(c)(3)(ii)(C) apply.

Supplemental Information section or on
attached sheets). With respect to section
367(d) transfers, see Temporary
Regulations section 1.6038B-1T(d). With
respect to section 367(e) transfers, see
Regulations section 1.6038B-1(e).
Column (c). Fair market value. Enter
the fair market value of the property
transferred (measured as of the date of
transfer).
Column (d). Cost or other basis. Enter
your adjusted basis in the property
transferred on the date of the transfer.
See sections 1011 through 1016 for more
information for the determination of
adjusted basis.

Supplemental information required
to be reported
Enter any information from Part III that is
required to be reported in greater detail.
Identify the applicable column number
next to the information entered in this
section. In addition, if you contributed
property to a foreign corporation as a part
of a wider transaction, briefly describe the
entire transaction.

Part II—Transferee
Foreign Corporation
Information

Part IV— Additional
Information Regarding
Transfer of Property

Line 5. Address. Enter the information
in the following order: city, province or
state, and country. Follow the country’s
practice for entering the postal code, if
any. Do not abbreviate the country name;
however, if you file electronically, please
follow the convention specified.
Line 6. Enter the two-letter country code
(from the list at www.IRS.gov/
countrycodes) of the transferee foreign
corporation’s country of incorporation or
organization.
Line 7. List the entity classification (e.g.,
partnership, corporation, etc.) of the
transferee foreign corporation under the
laws of the country of incorporation or
organization.
Line 8. See section 957(a) to determine
whether the corporation is a controlled
foreign corporation immediately after the
transfer.

Line 10. List the type of nonrecognition
transaction that gave rise to the reporting
obligation (e.g., section 332, 351, 354,
356, or 361).
Line 11a. If gain recognition was
required with respect to any transfer
reported in Part III under section
904(f)(3), attach a statement identifying
the transfer and the amount of gain
recognized.
Line 11b. If gain recognition was
required with respect to any transfer
reported in Part III under section
904(f)(5)(F), attach a statement
identifying the transfer and the amount of
gain recognized.
Line 11c. If recapture was required with
respect to any transfer reported in Part III
under section 1503(d) (dual consolidated
loss), attach a statement identifying the
transfer and the amount of recapture. See
section 1503(d) and the regulations
thereunder.
Line 11d. If exchange gain recognition
was required with respect to any transfer
reported in Part III under section 987,
attach a statement identifying the transfer
and the amount of exchange gain
recognized. See Regulations section
1.987-5.
Line 12. If this transfer resulted from a
change in the classification of the
transferee to that of a foreign corporation
(a deemed transfer resulting from a
classification change on Form 8832,
Entity Classification Election, or a
termination of a section 1504(d) election),
check the “Yes” box. If the transfer was
an actual transfer of property to a foreign
corporation, check the “No” box.

Part III—Information
Regarding Transfer of
Property
Column (a). Date of Transfer. Enter the
first date on which title to, possession of,
or rights to the use of the property passed
for U.S. income tax purposes. See
Temporary Regulations section
1.6038B-1T(b)(4) for additional
information.
Column (b). Description of property.
Provide a description of the property
transferred. With respect to section
6038B(a)(1)(A) transfers, see Temporary
Regulations section 1.6038B-1T(c)(4) for
specific information that must be reported
in column (b) (or, if necessary, under the

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Line 13. See final and temporary
Regulations sections 1.367(a)-4 through
1.367(a)-6 for instances in which a
transferor must recognize income on the
transfer of tangible property that qualifies
for nonrecognition treatment (see section
367(a)(3) and Temporary Regulations

section 1.367(a)-2T). Additional
information is required to be attached to
this form. See Temporary Regulations
sections 1.6038B-1T(c)(4)(iii) and (vii),
and 1.6038B-1T(c)(5).
Line 17a. If you checked the ‘‘Yes’’ box,
additional information is required to be

attached to this form. See Temporary
Regulations section 1.6038B-1T(d).
Line 17b. See Temporary Regulations
section 1.6038B-1T(d).

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The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden for
individual taxpayers filing this form is approved under OMB control number 1545-0074 and is included in the estimates shown in the
instructions for their individual income tax return. The estimated burden for all other taxpayers who file this form is shown below.
Recordkeeping ........................................................................................23 hr., 12 min.
Learning about the law or the form ...........................................................6hr., 52min.
Preparing and sending the form to the IRS ..............................................14hr., 44 min.
If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be
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