Form 5471 (Schedule J) Birmingham Alabama 2020-2025

Form 5471 (Schedule J) Birmingham Alabama: What You Should Know

A change takes place when a foreign corporation is reclassified from a CFC into a NRC, with or without a change in the CFC's status. A reclassification occurs when a CFC's operating status is transferred from CFC to NRC, A Deep Dive into the 2025 IRS Form 5471 Schedule J Apr 23, 2025 — Schedule J of Form 5471 tracks the earnings and profits (“E&P”) of a controlled foreign corporation (“CFC”). How to Track the E&P On Form 5471 (Rev. October 2020). Form 5471 is intended to track the E&P of a corporation, not the E&P of all the domestic corporations that a CFC owns or controls, as might be the case if the Corporation Tax Treaties change. However, there is no requirement for Schedule J to track the E&P of those other domestic corporations, or of their members, and there is at least one reason for doing so, in order to maintain proper taxpayer accountability when it comes time to sell the assets of a controlled foreign corporation. The ability to track the E&P is important because the CFC is not allowed to use its E&P or earnings or profits to offset the tax that would otherwise be due on any profits it incurs in its U.S. operations.  In some instances, the CFC might use the E&P or profits to offset non-U.S. profits earned by the E&P. However, there are two different situations where the CFC is not permitted to use its E&P or earnings or profits to offset its U.S. tax liability: The CFC has its U.S. E&P, or earnings or profits, offset by a foreign tax credit. The CFC has its U.S. E&P, or earnings or profits, offset by a deferred foreign tax credit — this is the most common case. A foreign tax credit (FTC) allows a foreign corporation to pay a lower rate of corporate income tax on its foreign income than what it would pay under the regular U.S. tax system. A non-U.S. corporation that chooses to defer its taxes by taking a foreign tax credit usually takes the same deductions and credits that a domestic company takes — such as the personal exemption, the standard deduction and the education credit.

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