Form 5471 (Schedule J) MS 2020-2025

Form 5471 (Schedule J) MS: What You Should Know

If you plan to use Form 5471 Form 5471(X) As shown in the diagram, Schedule J is where your CFC pay foreign taxes and is your basis for paying a foreign tax. There are two steps before you could make this election. Step 1: Make the election to report the foreign tax on Form 5471, if needed. Step 2: Enter as a credit for U.S. income tax purposes income attributable to foreign sources that you report for foreign tax purposes, to the extent it is attributable to CFC's. Enter on line 7 of Form 5471 any U.S. taxable income. Example: On February 22, 2018, the CFC, DTC, is a U.S. person. The DTC has reported U.S. source domestic income for the two preceding years. Form 1501 provides its basis for making the elective foreign tax credit, with income attributable to its interests in a controlled foreign corporation, for its first two years of operation. In each of its first two years of operation, the DTC elects to report foreign tax income on Form 5471 at its foreign tax rate. If the foreign taxes paid were not previously tax-deductible, a credit also may be reported. CFC electing to report foreign income as an accrual of income (Form 5471) § 1.9011-3(b). CFC electing to report foreign income as an accrual of profit (Form 5471) § 1.9011-3(c). CFC electing to report foreign income as an accrual of loss (Form 5230) § 1.9081-5(c). CFC electing to report foreign income as income of CFC as a subpart F subsidiary (Form 5471) § 1.9012-1(b). This election can apply to any CFC. You may obtain or review information that may be important to completing this election. There are several exceptions to the elections and requirements that apply to CFC's listed below. No elections. The Form 5471 election does not apply to any CFC. Other credits can apply to CFC's. This includes: Section 868, which credits the CFC for the excess of its U.S. assets over its foreign assets; Section 868A, which credits the CFC for the excess of its U.S.

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