Real Tax Questions, Expert Answers
Get answers to your foreign-owned LLC tax questions from ForeignLLCTax. Every answer includes IRS source citations and step-by-step guidance.
How often does the IRS actually abate a Form 5472 penalty after assessing it?
I received a $25,000 Form 5472 penalty notice. A CPA quoted me $5,000 to fight it. Before I pay them, what is the realistic chance the IRS will remove the penalty if I just write a reasonable-cause le...
I filed Form 5472 on time — can the IRS still call it 'substantially incomplete' and assess the $25,000 penalty?
I filed Form 5472 by the April deadline last year, but I left some lines blank in Part II because I did not have my foreign owner's full address details. I also did not attach a separate statement for...
Which services are NOT allowed under the Services Cost Method? Where is the line for 'cost-only'?
I understand the Services Cost Method lets me charge some intercompany services at cost. But I want to charge my US LLC for a bunch of things my home-country team does — some of it is bookkeeping and ...
SDOP vs SFOP — how do I know which Streamlined track applies to me?
I keep seeing 'SDOP' and 'SFOP' for the Streamlined Procedures and I can't tell which one I fall under. I'm a foreign citizen who spends part of the year in the US. Does it come down to where I live, ...
Form 5472 valuation: when can I use a reasonable estimate instead of an exact amount?
I have an intercompany services charge between my foreign-owned Wyoming LLC and my parent company in Singapore, but I can't get the exact figure until the parent's books close in late April. Form 5472...
How do I identify the 'US customer subset' of my Stripe transactions for a defensive ECI filing?
I've decided to do a defensive ECI filing with a small voluntary amount on 1040-NR. My question is methodological — Stripe shows me a lot of customer data, but which fields actually justify treating a...
Can a non-resident owner of a US LLC elect S-corp status with Form 8832 then Form 2553?
I keep reading that an S corporation saves on self-employment tax. I'm a non-resident alien and own a US LLC. Can I file Form 8832 to become a corporation and then Form 2553 to elect S status? Is ther...
My books live in Xero in Europe — can I keep my LLC's records abroad or do they have to be in the US?
All of my LLC's bookkeeping is in a cloud accounting tool hosted in Europe, and my contractor invoices and bank records are over here too. Does section 6038A require me to physically keep the records ...
My Stripe 1099-K triggered a CP2000, but I already reported that income — what do I do?
I run my business through a US LLC and Stripe issued a 1099-K. The IRS sent a CP2000 treating the whole 1099-K as unreported income, but I did report those sales on my return. I think the problem is t...
How do I actually backfile old FBARs, and how many years do I have to go back?
I need to file FBARs for years I missed. Is there a paper form I mail, or is it all online now? And how far back do I have to go — every year I ever had an account, or some cutoff?
How is the gross-profit percentage on Form 6252 actually calculated?
I keep reading about a 'gross-profit ratio' on the installment sale. How do I actually compute it, and how does the mortgage the buyer is assuming affect it? I want to estimate how much of each paymen...
If I should have filed Form 8938 but didn't, does that keep my tax year open too?
My LLC may have crossed into being a specified domestic entity, and I think I should have filed Form 8938 with the return but didn't. Separate from the $10,000 penalty, does leaving Form 8938 off the ...
Is my SaaS subscription subject to US sales tax, and if so in which states?
My foreign-owned LLC sells a monthly software-as-a-service subscription to US customers — no physical product, just hosted software they log into. Do I have to charge US sales tax on SaaS? I keep gett...
My ITIN expired without any notice from the IRS — does this affect my old returns?
I just learned that ITINs expire after 3 years of non-use. My ITIN was issued in 2020 and I haven't filed any tax returns since 2021. Does that mean my ITIN is expired now? Does the expiration retroac...
Can I form a Wyoming LLC first, then later move into Stripe Atlas if I need to?
I'm leaning toward self-forming a Wyoming LLC for cost reasons, but I'd like to keep the Atlas option open. Can I form Wyoming now and then move the LLC into Stripe Atlas later if I need their bundled...
What are the Form 1116 'baskets', and why might I have to file more than one?
My accountant mentioned I might need more than one Form 1116 because my foreign income falls into different 'baskets'. I have some foreign dividends and also some foreign consulting income through my ...
My foreign corporation owns a US LLC — do I file BOTH Form 1120-F and Form 5472?
Structure: a corporation in my home country owns a US single-member LLC. The LLC is disregarded. I've been filing Form 5472 with the pro forma 1120 for the LLC every year and assumed that covered ever...
Which of my US assets are actually 'US-situs' for estate tax — and which are exempt?
I hold a mix of US things: shares of US companies, some shares of a non-US company, cash in a US bank, cash sitting in a US brokerage account, and a life-insurance policy on myself. Which of these wou...
All my viewers and sponsors are American but I work from home abroad — does that give me ECI?
My audience is almost entirely US-based and most of my sponsors are US companies, yet I film, edit, and run everything from my apartment overseas with no US office or staff. People keep warning me tha...
What is the 'material profit and loss statement' rule and does my small LLC have to worry about it?
Reading the section 6038A regs, I keep hitting this 'material profit and loss statement' concept with thresholds like $25 million and $100 million. My LLC does maybe $200k a year. Do these rules apply...
Why won't my CPA accept my QuickBooks books at year-end without redoing them?
I've been using QuickBooks all year with auto-sync from Mercury and Stripe. The books look clean to me. But my CPA wants raw bank CSVs and is essentially redoing the classification work. Is this just ...
Can my self-directed IRA take a 10% stake in a foreign-owned U.S. LLC without triggering UBTI?
I run a self-directed IRA and I'm considering a 10% stake in a Wyoming LLC majority-owned by a foreign founder and operating as an active e-commerce business. I've heard that an IRA's share of an acti...
How are foreign-currency gains and losses on my U.S. LLC's intercompany payable to me as the foreign owner treated under Section 988?
My U.S. LLC owes me $30,000 USD as the foreign owner; the payable is denominated in U.S. dollars. My home accounting is in euros. Between when the payable was booked and when it was paid, USD/EUR move...
What goes on Form 1042 Part III when my foreign-owned LLC made one royalty payment to its NRA owner?
My foreign-owned Delaware LLC paid one royalty of $8,000 USD to its NRA owner during 2025. I already filed Form 1042-S to report the payment to the IRS and to the owner. Now I have to file the annual ...
Form 8275 or Form 8275-R — which one do I file to disclose a tax position on my foreign-owned LLC return?
My CPA wants to take a position on my U.S. LLC's pro forma 1120 that he says goes against a Treasury regulation. He mentioned filing either Form 8275 or Form 8275-R but I don't really understand which...
How do I read Form 5471 Schedule J — what's the difference between accumulated E&P and PTEP?
I'm a U.S. shareholder of a foreign corporation that I own through my U.S. LLC, and my prior preparer left me with a Schedule J I can't decipher. There are columns for E&P, PTEP, and various sub-bucke...
What does SARS expect from a South African resident who owns a U.S. single-member LLC?
I'm a Cape Town resident running a Delaware LLC that I use to invoice U.S. consulting clients. South Africa taxes its residents on worldwide income, so I assume SARS wants to see the LLC's net income ...
How much underpayment interest does the IRS charge a foreign-owned LLC that paid corporate tax late in 2026?
My foreign-owned Delaware C-corp underpaid its 2025 estimated tax and now owes a balance after filing the 1120. The IRS notice mentions interest in addition to the penalty. I want to understand the ra...
What changed in the December 2024 revision of Form 5472 compared to the prior version?
I'm preparing my foreign-owned Wyoming LLC's 2026 Form 5472 and the IRS site now shows the current revision is dated December 2024. My prior return was filed on an older revision. Are there meaningful...
My US LLC buys finished goods from my foreign company and resells them — which IRC 482 method do I use, resale price or CPM?
The LLC imports finished inventory from a company I own abroad and resells it in the US. No manufacturing, no real product changes — just warehousing, order processing, customer service, and selling. ...
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