Real Client Tax Scenarios
One Foreign Owner, Two U.S. LLCs and Multiple Missing Forms 5472
A foreign investor owned two U.S. LLCs and had filed for neither. Each LLC needed its own Form 5472 for each year — and the transactions between the two companies had to be reported too.
Client confidentiality
These scenarios are based on matters our firm has handled. Names, locations, amounts, dates and other identifying details have been changed or omitted, and some facts may be combined, to protect client confidentiality. Results depend on each taxpayer's specific facts; a past result does not guarantee a similar outcome.
The client owned two U.S. LLCs. Neither had ever filed a Form 5472.
When we laid out the years and the companies side by side, there were six missing filings — and money had moved between the two LLCs as well.
The client's situation
The client lives in the Caribbean. Three years earlier he formed one LLC to own a U.S. condominium he rents out, and a second LLC to run a small online business. When the online business needed cash, the rental LLC sent it funds. The owner also contributed money to both companies and received distributions from the rental LLC.
What went wrong
No filings had been made for either LLC. The owner had also assumed that because both companies were his, transfers between them did not matter.
The tax or reporting requirement
Each foreign-owned U.S. single-member LLC is its own reporting entity and must file its own pro forma Form 1120 with Form 5472 for each year with reportable transactions. Two LLCs owned by the same foreign person are related parties to each other, so payments between them can be reportable on each company's Form 5472, in addition to the owner's contributions and distributions.
The potential IRS exposure
Two LLCs over three years meant at least six required forms, each with potential $25,000 penalty exposure. Depending on the related parties involved, some years could require more than one Form 5472 per LLC. The owner also needed to address his personal income tax reporting for the rental income.
How Chirino USA analyzed the situation
We built a transaction map for each LLC and each year: owner contributions, distributions, and the funds sent from the rental LLC to the online business. We determined how the intercompany transfers should be characterized and documented, and confirmed which related parties needed to be reported on each LLC's forms. We also reviewed the rental income for the owner's personal nonresident return.
How we addressed the issue
We prepared six sets of late pro forma Forms 1120 with Forms 5472 — one per LLC per year — each reflecting both owner transactions and intercompany transactions, with reasonable cause statements. We filed the owner's personal returns for the rental income at the same time, and set up separate books for the two companies.
The result
Both LLCs are now current and their filings agree with each other and with the owner's personal returns. Each company has its own records, and transfers between them are now documented when they happen.
What other taxpayers in similar situations should know
- Each LLC files its own Form 5472 — owning two LLCs means two sets of filings.
- LLCs with the same foreign owner are related parties to each other.
- Moving money between your companies can be reportable on both companies' forms.
- Keep separate bank accounts and books for each LLC.
How Chirino USA can help
If you own a U.S. company from outside the United States and are concerned about a missing or incorrect Form 5472, Chirino USA Accountants & Advisors can review your filings, identify potential exposure, and help determine the appropriate path forward. You can email us or message us on WhatsApp, in English or Spanish.
Concerned about a similar situation?
Send us a short description of your situation by email or WhatsApp, in English or Spanish. We will tell you what we need to review it.
roger@ChirinoUSA.com · WhatsApp +1 (786) 271-3806
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Key takeaways
- One foreign owner with two LLCs has two separate Form 5472 obligations each year.
- Intercompany transfers can be reportable related-party transactions.
- Filing all entities and years together keeps the record consistent.
Frequently asked questions
If I own two U.S. LLCs, does each one file Form 5472?
Yes. Each foreign-owned single-member LLC files its own pro forma Form 1120 with Form 5472 for each year with reportable transactions.
Do transfers between my two LLCs need to be reported?
Often yes. LLCs with the same foreign owner are generally related parties, so payments between them can be reportable transactions on Form 5472.
Sources and official references
Educational information only
This article provides general educational information and should not be considered tax, legal, accounting, or investment advice. Tax consequences depend on each taxpayer's specific circumstances.
Written by Roger I. Chirino
U.S. international tax team
Supported by licensed CPAs, IRS Enrolled Agents (EAs), and experienced U.S. tax professionals focused on cross-border compliance and planning.
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