A Complete Guide for Foreign-Owned Single-Member Disregarded LLCs
If you own a foreign-owned single-member LLC in the United States, you are required to file Form 5472 with the IRS. One of the most misunderstood parts of this filing is determining what counts as a reportable transaction.
Many foreign owners mistakenly believe this includes customer revenue, Stripe payments, or everyday business expenses. It does not.
This guide explains:
- what reportable transactions are for Form 5472,
- what transactions are not reportable,
- where reportable transactions are reported on Form 5472, and
- how the Form 1120 (pro forma) fits into the filing for foreign-owned disregarded entities.
What Is a Reportable Transaction on Form 5472?
For IRS purposes, a reportable transaction is:
Any transaction between a U.S. LLC and its foreign owner or other foreign related parties.
Form 5472 is an information return designed to monitor cross-border related-party activity, not ordinary business operations.
Form 5472 is not about customer income.
It is about transactions between related parties.
Who Must File Form 5472?
Form 5472 must be filed if:
- the entity is a U.S. LLC,
- it is owned by a foreign person, and
- it is treated as a disregarded entity for U.S. tax purposes.
This requirement applies even if:
- the company had no income, or
- the company had minimal activity during the year.
Who Is a Foreign Related Party?
A foreign related party generally includes:
- the foreign owner of the LLC, and
- any foreign individual or entity controlled by the same owner.
It does not include:
- customers (U.S. or foreign),
- independent contractors,
- banks or payment processors (Stripe, PayPal, etc.),
- software providers, or
- unrelated vendors.
Common Examples of Reportable Transactions
The following transactions are reportable on Form 5472 when they occur between the LLC and its foreign owner or other foreign related parties:
- Capital contributions
(money or property contributed by the owner) - Loans or advances
(money lent to or from the owner) - Services
(management, consulting, development, or administrative services) - Interest payments
on related-party loans - Rent or royalties
- Reimbursements
between the owner and the LLC
These transactions are reportable regardless of dollar amount.
Transactions That Are Not Reportable
The following are not reportable transactions for Form 5472:
- Revenue from customers
- Payments to unrelated contractors or vendors
- Advertising or marketing expenses
- Software subscriptions and hosting fees
- Payroll and employee expenses
- Bank fees and payment-processing activity
These transactions may be relevant for accounting or income tax purposes, but they do not belong on Form 5472.
Where Are Reportable Transactions Reported on Form 5472?
Reportable transactions are disclosed across three sections of Form 5472. You do not list every individual payment.
Part IV – Transactions Between the Foreign Owner (or Related Parties) and the LLC
Part IV is used to indicate whether transactions occurred between the U.S. LLC and its foreign owner or other foreign related parties.
This section focuses on monetary transactions, such as:
- services,
- interest,
- rent or royalties,
- commissions, and
- other payments between related parties.
Part IV establishes which categories of transactions took place during the year.
Part V – Other Reportable Transactions
Part V is used to report other reportable transactions, including:
- capital contributions,
- loans or advances, and
- other amounts exchanged between the owner and the LLC.
In many cases, the details and totals are provided on an attached statement, rather than listed line-by-line on the form.
Part VI – Transaction Method Information
Part VI explains how the reportable transactions occurred, including:
- whether transactions were monetary or non-monetary, and
- whether the LLC uses cash or accrual accounting.
This section provides context, not additional dollar amounts.
You Do Not List Every Payment
A common mistake is assuming Form 5472 requires a transaction-by-transaction listing.
It does not.
Transactions are reported by type and category, often using totals and supporting statements where required.
How Form 1120 (Pro Forma) Fits In
Foreign-owned single-member disregarded LLCs are required to file Form 5472 together with a Form 1120 (pro forma).
Important clarification:
- The pro-forma Form 1120 is not an income tax return
- It exists only to support Form 5472
Under the final regulations issued under section 6038A, the only required information on Form 1120 is:
- the entity’s name and address, and
- Items B and E on the first page
Balance-sheet items such as total assets are not required to be completed on the pro-forma Form 1120 for foreign-owned disregarded entities.
Capital Contributions vs. Total Assets
A capital contribution is a reportable transaction. Total assets is a balance-sheet concept.
It is possible — and valid — for:
- capital contributions to exist, and
- ending assets to be $0 (for example, if all contributed funds were spent on setup costs).
Capital contributions must still be reported correctly on Form 5472, even if assets are zero.
Why Correct Reporting Matters
Penalties for Form 5472 noncompliance are severe:
- $25,000 per year per form
- Additional penalties for continued failure to file or incomplete filings
Common errors include:
- reporting customer income as reportable transactions,
- missing capital contributions,
- misclassifying related-party transactions, and
- filing an incomplete or incorrect pro-forma Form 1120.
Key Takeaway
For foreign-owned single-member disregarded LLCs:
- Only transactions with foreign owners or foreign related parties are reportable
- Customer revenue is not reported on Form 5472
- Reportable transactions are disclosed in Parts IV, V, and VI
- Form 1120 (pro forma) is required but limited to identification items only
Need Help Filing Form 5472 Correctly?
Identifying and reporting related-party transactions is one of the most common sources of Form 5472 errors.
foreignfile.tax helps foreign-owned LLCs:
- identify reportable transactions,
- report capital contributions correctly,
- prepare Form 5472 with the required pro-forma Form 1120, and
- generate ready-to-file documents with clear IRS submission instructions.
👉 Start filing with confidence
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Last updated: January 2026