Return by a U.S. Transferor of Property to a Foreign Corporation

Instructions for Form 926
(Rev. December 2013)

Department of the Treasury
Internal Revenue Service

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
Part II, line 4a is new. This new line
requests the reference ID number of the
transferee foreign corporation. See page 2
for more information.

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
www.irs.gov/form926.

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

Oct 31, 2013

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:
The transferor (or one or more
successors) properly entered into a gain
recognition agreement, or

Cat. No. 27037X

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 FinCEN Form 114, Report of Foreign
Bank and Financial Accounts (FBAR)
(formerly Form TD F 90-22.1).
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.
If you answered “No” to question 1a: If
the U.S. transferor is owned directly by
more than five domestic corporations
immediately before the reorganiztion, but
some combination of five or fewer
domestic corporations controls the U.S.
transferor, the U.S. transferor must
designate the five or fewer domestic
corporations that comprise the control
group. List these designated corporations
on Form 926, line 1b.

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.

Part II—Transferee
Foreign Corporation
Information
Reference ID number. A reference ID
number is required on line 4b only in
cases where no EIN was entered on
line 4a for the transferee foreign
corporation. However, filers are permitted
to enter both an EIN and a reference ID
number. If applicable, enter on line 4b the
reference ID number (defined below) you
have assigned to the transferee foreign
corporation.
A “reference ID number” is a number
established by or on behalf of the U.S.
transferor identified at the top of page 1 of
the form that is assigned to the transferee
foreign corporation with respect to which
Form 926 reporting is required. These
numbers are used to uniquely identify the
transferee foreign corporation in order to
keep track of the entity from tax year to tax

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year. The reference ID number must meet
the requirements set forth below.
Note. Because reference ID numbers are
established by or on behalf of the U.S.
person filing Form 926, there is no need to
apply to the IRS to request a reference ID
number or for permission to use these
numbers.
Note. In general, the reference ID
number assigned to a transferee foreign
corporation on Form 926 has relevance
only to Form 926 and should not be used
with respect to the transferee foreign
corporation on other IRS forms.
Requirements. The reference ID number
must be alphanumeric (defined below)
and no special characters or spaces are
permitted. The length of a given reference
ID number is limited to 50 characters.
For these purposes, the term
“alphanumeric” means the entry can be
alphabetical, numeric, or any combination
of the two.
The same reference ID number must
be used consistently from tax year to tax
year with respect to a given transferee
foreign corporation. If for any reason a
reference ID number falls out of use (for
example, the transferee foreign
corporation no longer exists due to
disposition or liquidation), the reference ID
number used for that transferee foreign
corporation cannot be used again for
another transferee foreign corporation for
purposes of Form 926 reporting.
There are some situations that warrant
correlation of a new reference ID number
with a previous reference ID number when
assigning a new reference ID number to a
transferee foreign corporation. For
example:
In the case of a merger or acquisition, a
Form 926 filer must use a reference ID
number which correlates the previous
reference ID number with the new
reference ID number assigned to the
transferee foreign corporation.
In the case of an entity classification
election that is made on behalf of a
transferee foreign corporation on Form
8832, Regulations section 301.6109-1(b)
(2)(v) requires the transferee foreign
corporation to have an EIN for this
election. For the first year that Form 926 is
filed after an entity classification election is
made on behalf of the transferee foreign
corporation on Form 8832, the new EIN
must be entered on line 4a and the old
reference ID number must be entered on
line 4b. In subsequent years, the Form
926 filer may continue to enter both the
EIN and the reference ID number, but
must enter at least the EIN on line 4a.
You must correlate the reference ID
numbers as follows: New reference ID
number [space] Old reference ID number.

If there is more than one old reference ID
number, you must enter a space between
each such number. As indicated above,
the length of a given reference ID number
is limited to 50 characters and each
number must be alphanumeric and no
special characters are permitted.
Note. This correlation requirement
applies only to the first year the new
reference ID number is used.
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.

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
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 IV— Additional
Information Regarding
Transfer of Property
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.
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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