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 ...
I exchanged my California property for an out-of-state one — do I really have to file FTB 3840 every year now?
I sold a California rental and exchanged into a replacement property in Texas. At the federal level I deferred the gain under Section 1031. Now I'm hearing California wants me to keep filing some form...
The section 1059A trap: my customs value is lower than my tax COGS — is that a problem?
I import from my own foreign company. For customs I declared a fairly low value, but for my tax return I want to book a higher cost of goods sold including my real landed cost. A friend mentioned 'sec...
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, ...
I've been transacting business in Texas for over a year without registering — how bad are the late penalties?
I realized my LLC has had a Texas office and local activity for more than a year and I never registered as a foreign entity in Texas. Now I want to fix it. How does Texas calculate the late-registrati...
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...
What actually changes between 2025 and 2026 on Form 1099-DA?
I keep reading that 2025 was the first Form 1099-DA year and that 2026 adds basis reporting, but the explanations contradict each other. My LLC received a 2025 statement that lists sale proceeds and n...
Our trust deed names no US beneficiaries — does that protect me from the grantor trust rules when I move to the US?
My parents and I set up a foreign trust years ago. The deed lists only family members in our home country, and nobody in the family lives in the US today. I'm planning a move to the States for my star...
Selling my 40% of a two-member US LLC — what does section 864(c)(8) actually do to my gain?
Our LLC has two foreign members and files Form 1065 as a partnership. I'm selling my 40% interest to a US buyer. I assumed my gain would be foreign-source capital gain with no US tax, but the buyer's ...
Our payroll will be tiny — can my LLC just file annual Form 944 instead of quarterly 941s?
Founder in Turkey here. My US LLC is hiring one part-time employee starting July 2026, maybe ten hours a week. Total federal employment tax for the year will clearly be under a thousand dollars. My pa...
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...
Are there sale prices where FIRPTA drops to 10% or even zero?
I'm a foreign seller and a friend mentioned that smaller home sales sometimes get a reduced FIRPTA rate, or no withholding at all, if the buyer is moving in. Is that real? What price thresholds matter...
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 ...
Does FBA inventory create sales tax physical nexus even if Amazon collects the tax?
Amazon already collects and remits sales tax on my marketplace orders under marketplace facilitator laws. So does the fact that my FBA inventory physically sits in warehouses across several states sti...
I'm paying a foreign freelancer who did work inside the US — do I withhold, and is W-8ECI the right form for a treaty claim?
My LLC hired an independent contractor based abroad. For one project they actually flew to the US and performed the work here. They asked to send me a W-8ECI so I don't withhold, and they mentioned a ...
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...
Crypto exchange wants a W-9 from my US LLC, but the owner is foreign — is that the right form?
During onboarding, a US exchange asked my LLC for a Form W-9 because it is a US-registered entity with an EIN. The LLC is a single-member disregarded entity and I (the only owner) am not a US person. ...
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...
Can I add myself to my LLC's payroll now that it runs payroll for a real employee?
I live in the UAE and own a US single-member LLC. We just hired a US employee and a payroll provider now runs Form 941 filings for the LLC. Since the payroll machinery exists anyway, I'd like to put m...
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...
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