Form 5472: Why the §1.6038A-2 Attachment Is Mandatory (Don't Skip)

After Part IV: The "Reportable Transactions of a Foreign-Owned U.S. DE" Section

After Part IV (the monetary transactions), Form 5472 has a critically important section that many filers skip: the section asking about "reportable transactions of a reporting corporation that is a foreign-owned U.S. disregarded entity." The wording is awkward, but the function is enormous.

This section is specifically for foreign-owned single-member LLCs (DEs). You must check the box indicating you're filing as a foreign-owned U.S. DE, AND you must then attach a supplementary description of "other transactions" — transactions not captured in Part IV's monetary line items.

Why People Skip It (and Why That's a $25,000 Mistake)

Filers see the section, see that Part IV already captured the monetary transactions, and think "I already reported everything — this section must be for someone else." Wrong.

This section exists BECAUSE the IRS wants foreign-owned DEs to disclose all transactions, including ones that don't fit the structured Part IV line items. Capital contributions, loans, dissolutions, intercompany transfers, accommodations, in-kind transfers — anything not covered by Part IV's narrower categories needs to be described in the attached supplementary statement.

Section 1.6038A-2 — The Broad Definition

The regulation that drives this section (Treasury Regulation §1.6038A-2) defines "reportable transactions" extremely broadly. Any transaction between the reporting corporation and any foreign related party, of any kind, fits within scope.

This is why "my LLC has no transactions" rarely holds up — almost any cross-border money movement, in-kind transfer, accommodation, or service provision counts. The regulation is inclusive by design, precisely to avoid loopholes that would let filers avoid disclosure.

Check the Box, Then Attach a Description

Two steps:

1. Check the box indicating you're filing as a foreign-owned U.S. DE. This is a one-click action on the form.

2. Attach a separate document (no specific IRS template — you create it) describing the other transactions. This attachment is what fulfills the disclosure obligation.

What the Attachment Should Contain (Preview)

The attachment requires four core elements:

- **Amount paid or received** for each transaction - **Nature of the transaction** (capital contribution, dissolution payment, in-kind transfer, etc.) - **Identification of the related party** (yourself, by name) - **Sufficient factual detail** to make sense to an IRS reviewer

The video's recommended approach: think of the attachment as telling the story. Picture the IRS reviewer reading it cold — does it make clear what happened, who paid whom, when, and why? If yes, the disclosure is adequate. If not, add more context.

Don't Outsource Judgment Here If You're Doing It Yourself

If you're filing without a CPA, you're solely responsible for the attachment quality. A weak attachment can trigger "incomplete filing" notices that escalate to the $25,000 penalty.

The video suggests: even amateur filers should add more description than they think necessary. The IRS reviewer doesn't know your business; they need every relevant detail spelled out. Two paragraphs of context beats two sentences of summary every time.

If You're a Professional Filing for Clients

Professionals (CPAs, EAs, tax attorneys) preparing Form 5472 for clients should treat the attachment as core deliverable, not boilerplate. Each client's attachment should reflect their specific transaction set with specific dates, amounts, and descriptions. Templated attachments "customized" by name substitution often miss client-specific details that matter at the IRS level.