U. S. Business Income Tax Return

Instructions for Form 926
(Rev. January 2015)

Department of the Treasury
Internal Revenue Service

(Use with the December 2013 revision of Form 926.)
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
The gain recognition agreement (GRA)
regulations under sections 367(a) and
6038B have been finalized and are
effective November 19, 2014. See
Transfers of stock or securities for which
a gain recognition agreement (GRA) is
filed and Distributions by domestic
liquidating corporations under Special
Rules, later.

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.

Jan 29, 2015

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).
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 the Form 926, (2)
complete columns (a) through (e) in Part
III of the form, and (3) in the
Supplemental Information Required To
Be Reported section in Part III of the
form, note that a GRA is being filed
pursuant to Regulations section
1.367(a)-8. 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 (1) complete Part I and Part II of
Cat. No. 27037X

the Form 926, (2) in the Supplemental
Information Required To Be Reported
section in 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)(2)(i)
(C)(2) or (iii)(D), as the case may be,
and (3) with respect to distributed
property that is not described in the
statement required by Regulations
section 1.367(e)-2(b)(2)(i)(C)(2) or (iii)
(D), as the case may be, complete
columns (a) through (e) in Part III of the
form. In addition, the domestic
liquidating corporation must comply in
all material respects with the terms of a
liquidation document (determined
without regard to Regulations section
1.367(e)-2(f)) in order to satisfy its
section 6038B reporting obligations.
See Regulations section 1.6038B-1 for
further information.

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 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).
A U.S. transferor that is required to
enter into a GRA 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, 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”
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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 reorganization,
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 (for
example, 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
Instructions for Form 926 (Rev. 01-2015)

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 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

Instructions for Form 926 (Rev. 01-2015)

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.

Line 8. See section 957(a) to
determine whether the corporation is a
controlled foreign corporation
immediately after the transfer.

Note. This correlation requirement
applies only to the first year the new
reference ID number is used.

Supplemental Information
Required To Be Reported

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 (for
example, partnership, corporation, etc.)
of the transferee foreign corporation
under the laws of the country of
incorporation or organization.

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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 Required To
Be Reported 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.

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 (for example,
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).

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the
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allow us to figure and collect the right amount of tax.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless
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information are confidential, as required by section 6103.
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Learning about the law or the form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Preparing and sending the form to the IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . .

23 hr., 26 min.
6 hr., 58 min.
14 hr., 51 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we
would be happy to hear from you. See the instructions for the tax return with which this form is filed.

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Instructions for Form 926 (Rev. 01-2015)