Form 8858 (Rev. December 2019) – 2019 Tax Year Checklist
Purpose
Form 8858 enables US taxpayers to report interests in Foreign Disregarded Entities and foreign branches operating under foreign law during the 2019 Tax Year for U.S. tax purposes. The IRS forms require expanded disclosures for base erosion provisions under international tax provisions that became effective in 2018 and continued through 2019 for compliance. The Information Return of U.S. Persons With Respect To Foreign Disregarded Entities includes Schedule C-1 for voluntary exchange gain or loss tracking. At the same time, qualified business unit regulations remained deferred by the Internal Revenue Service.
This reporting applies to unincorporated foreign businesses treated as a disregarded entity under Treasury Regulation Section 1.367(a)-6T(g) and related Tax Cuts and Jobs Act provisions. US international tax reporting requirements expanded to capture foreign ownership structures involving controlled foreign corporations, Foreign Partnership interests, and Trade or Business activities conducted abroad. Form 8858 satisfies obligations under sections 6011, 6012, 6031, and 6038, aligning international filings with applicable tax laws governing foreign branches and Foreign Disregarded Entity reporting.
Step-by-Step Filing Checklist
Step 1: Verify Filing Requirement
Confirm classification as a U.S. Citizen, resident aliens, Lawful Permanent Resident, or other U.S. Person with a direct or indirect interest in a Foreign Disregarded Entity or foreign branch for the 2019 Tax Year. The entity must be organized in a foreign country and be treated as disregarded for tax purposes under Treasury Regulation Section 1.367(a)-6T(g).
Step 2: Determine Functional Currency
Identify whether the foreign branch or disregarded entity uses the U.S. dollar or a functional foreign currency, such as the Mexican Peso or the Canadian dollar. Exchange Rate determinations affect income statements, books and records, and translation rules applied under U.S. GAAP or section 989(b).
Step 3: Complete Identifying Information
Provide the entity name, foreign country of organization, Employer Identification Numbers if applicable, formation date, and principal Trade or Business activity. Accurate identification ensures alignment with IRS Form 8858 instructions and U.S. international tax reporting requirements.
Step 4: Report Ownership Information
Disclose the tax owner and any indirect owners, including coordination with Form 5471 for a controlled foreign corporation or Form 8865 for a Foreign Partnership. Ownership reporting must reflect foreign shareholders and FDE owners consistently across international filings.
Step 5: Attach Ownership Structure Documentation
Prepare an organizational overview showing foreign ownership chains, classification elections under Form 8832, and relationships involving foreign corporations or foreign branches. Clear documentation supports transparency and compliance with reporting requirements.
Step 6: Complete Schedule C
Report income statements for the Foreign Disregarded Entity or foreign branch, including gross income, deductions, and foreign taxes for the 2019 Tax Year. Amounts must be translated into U.S. dollars using the appropriate Exchange Rate methodology.
Step 7: Complete Schedule C-1 if Applicable
If the entity qualifies as a qualified business unit and voluntary reporting is elected, complete Schedule C-1 to reflect section 987 gain or loss activity. Mandatory reporting remained deferred for 2019 under Notice 2019-65, affecting prior years and elective compliance.
Step 8: Complete Schedule F
Prepare the Balance Sheet as of the end of the Tax Year, reporting assets and liabilities translated into U.S. dollars. Revenue Procedure 2022-39 guidance may affect documentation for entities operating in hyperinflationary environments.
Step 9: Complete Schedule G
Answer ownership, classification, and base erosion questions, including disclosures under international tax provisions and Proposed Regulations 112096-22. Schedule G ensures proper reporting of foreign branches, foreign corporations, and related-party transactions.
Step 10: Complete Schedule M
Report transactions between the Foreign Disregarded Entity, the filer, and other related entities, including payments affecting foreign tax credit calculations. Schedule M supports compliance with sections 6011 and U.S. international tax reporting requirements.
Year-Specific 2019 Notes
Section 59A base erosion reporting was fully effective for the 2019 Tax Year, requiring disclosure of qualifying payments involving foreign corporations and Foreign Partnership structures. Schedule G reporting captured these transactions as part of expanded international tax provisions under the Tax Cuts and Jobs Act.
Notice 2019-65 deferred mandatory section 987 regulations, making Schedule C-1 reporting optional for qualified business units during 2019. U.S. taxpayers using Offshore Disclosure or Delinquent International Information Return Submission Procedures should document Exchange Rate methodologies applied to prior years consistently.
Important Reminders
Form 8858 must be attached to a timely filed U.S. tax return, including Form 1040, for each Foreign Disregarded Entity or foreign branch reported. Separate filings are required for each entity to meet IRS forms and international filings standards.
Failure to comply may result in Criminal Penalties and civil tax penalties, including $10,000 per annual accounting period under section 1.6664-2(c)(4)(ii). Continued noncompliance may trigger additional enforcement under tax controversy 360 and related Internal Revenue Service procedures.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
