Form 8858 Information Return: A Complete Guide for 2012

Understanding international tax reporting can feel overwhelming, but Form 8858 is essentially the IRS's way of keeping tabs on American-owned foreign business entities that are "invisible" for tax purposes. Think of it as a transparency requirement—Uncle Sam wants to know about your foreign business activities, even when those entities don't file their own tax returns.

What Form 8858 Is For

Form 8858 is an information return that certain U.S. persons must file when they own or have interests in foreign disregarded entities (FDEs) or operate foreign branches.

What Is a Foreign Disregarded Entity (FDE)?

In plain English, it's a business entity formed outside the United States that the IRS treats as if it doesn't exist separately from its owner—like a single-member LLC that's not taxed as a corporation.

Purpose of the Form

The form serves multiple reporting requirements under sections 6011, 6012, 6031, and 6038 of the Internal Revenue Code. While Form 8858 itself doesn't create any new tax liability, it helps the IRS track international business activities and ensure proper tax reporting on income generated through these foreign entities.

The 2012 version requires filers to provide comprehensive information including balance sheets, income statements, ownership chains, and detailed transaction data between the foreign entity and related parties. You'll also need to complete Schedule M (Form 8858) in certain circumstances to report transactions between the foreign entity and the tax owner or other related entities.

When You’d Use Form 8858 (Including Late and Amended Filings)

Regular Filing Timeline

Form 8858 is due at the same time as your regular tax return, including any extensions you've been granted.

For individuals filing Form 1040, the typical due date is April 15 of the year following the tax year (or October 15 with an extension).
Corporate filers using Form 1120 or partnerships using Form 1065 follow their respective deadlines.

Who Must File

You must file Form 8858 if you fall into one of these categories:

Direct U.S. Owners: You’re a U.S. person who is the tax owner of an FDE at any time during your tax year.
Indirect Owners Through CFCs: You’re required to file Form 5471 (for controlled foreign corporations) as a Category 4 or 5 filer, and that CFC is the tax owner of an FDE.
Indirect Owners Through Partnerships: You’re required to file Form 8865 (for controlled foreign partnerships) as a Category 1 or 2 filer, and that partnership is the tax owner of an FDE.

Late or Amended Filings

If you missed the deadline or need to correct information, file the form as soon as possible. Attach it to an amended return if necessary.
For 2012, the IRS also offered a “dormant FDE” summary filing procedure under Announcement 2004-4 for entities with no activity, which streamlined reporting requirements.

Key Rules and Requirements for 2012

New Requirements for 2012

The 2012 revision introduced several key changes:

Filers must now provide a reference ID number on line 1b(2) if no EIN exists for the foreign entity.
This alphanumeric ID (up to 50 characters, no spaces or special characters) must remain consistent year to year.
Line 3c(2) requests the reference ID number of the tax owner.
Schedule G expanded with new questions (4–7) addressing dual consolidated losses.

Functional Currency and Translation Rules

The IRS requires a “divide-by” convention rounded to at least four decimal places when reporting exchange rates—how many units of foreign currency equal one U.S. dollar (e.g., 118.5050 Japanese Yen = $1 USD).
For hyperinflationary economies, DASTM (Dollar Approximate Separate Transactions Method) rules apply, requiring use of the U.S. dollar as the functional currency.

Documentation Requirements

You must attach an organizational chart showing the ownership chain between the tax owner and the FDE, including all entities where the FDE has a 10% or greater interest. Include entity names, ownership percentages, classifications, and countries of organization.

Step-by-Step Filing Guide (High Level)

Step 1: Determine Your Filing Obligation

Confirm whether you’re required to file based on ownership (direct or indirect) and category of filer (Forms 5471 or 8865).

Step 2: Gather Entity Information

Collect:

Legal name and address
Date and place of organization
Functional currency
Principal business activity
Identification numbers and U.S. agent details

Step 3: Complete the Identifying Information

Provide filer details, FDE details, tax owner and direct owner information, and reference ID numbers.

Step 4: Prepare Financial Schedules

Complete Schedule C (Income Statement) and Schedule F (Balance Sheet) using U.S. GAAP principles.
Report amounts in both functional currency and U.S. dollars, translating as per section 989(b).

Step 5: Complete Schedule H

Calculate current earnings and profits or taxable income, adjust book income, and translate the final amount to U.S. dollars.

Step 6: Address Schedule G Questions

Answer questions on:

Trusts and foreign partnerships
Tax treaty claims
Losses and dual consolidated loss situations

Step 7: Complete Schedule M (If Required)

Category 4 filers (Form 5471) and Category 1 filers (Form 8865) must complete Schedule M for related-party transactions.

Step 8: Attach and File

Attach Form 8858 and schedules to your income tax return or to Forms 5471/8865 if you’re not the tax owner. File by your return’s due date, including extensions.

Common Mistakes and How to Avoid Them

Mistake 1: Using the Wrong Exchange Rate Convention

Always use the divide-by method—foreign currency per U.S. dollar, not the reverse.

Mistake 2: Forgetting the Reference ID Number

Mandatory for entities without EINs. Use a consistent, unique identifier every year.

Mistake 3: Incomplete Schedule M

Don’t omit transaction data between the FDE and related parties. Include both functional currency and U.S. dollar amounts.

Mistake 4: Mixing GAAP and Tax Accounting

Remember:

Schedule C = GAAP accounting
Schedule H = Tax accounting

Mistake 5: Overlooking the Organizational Chart

You must attach a complete ownership chart. It’s not optional.

What Happens After You File

Processing and Record-Keeping

Form 8858 becomes part of your permanent IRS record. Keep copies and documentation for at least seven years.

No Immediate Tax Consequences

Form 8858 is informational only, but inconsistencies between schedules and returns can trigger audits.

Penalty Enforcement

$10,000 per annual accounting period per entity for initial failure
Additional $10,000 every 30 days (up to $50,000 total) after notice
Loss of foreign tax credit benefits and potential criminal penalties under sections 7203–7207 for willful violations.

FAQs

1. What’s the difference between the tax owner and the direct owner?

The direct owner legally owns the entity under local law; the tax owner is who the IRS considers to own it for tax purposes. These can differ in tiered structures.

2. Do I need an EIN for my foreign disregarded entity?

Not always. If the FDE doesn’t have an EIN, assign a reference ID number.
If the entity filed Form 8832 (entity classification election), an EIN is required.

3. Can someone else file Form 8858 on my behalf?

Yes. Multiple filers with identical filing requirements can designate one filer to submit the form and Schedule M for all. Each filer remains responsible for compliance.

4. What if my foreign entity had no activity during 2012?

You may qualify for the dormant FDE summary filing procedure under Announcement 2004-4.
Label the return “Filed Pursuant to Announcement 2004-4 for Dormant FDE.”

5. How do I handle dual consolidated losses?

Report dual consolidated losses on Schedule G, Questions 4–5, per Reg. 1.1503(d) rules. These are complex—seek professional advice.

6. What’s DASTM and when does it apply?

DASTM (Dollar Approximate Separate Transactions Method) applies in hyperinflationary economies (three-year inflation >100%).
Use the U.S. dollar as functional currency and follow Reg. 1.985-3 translation methods.

7. Where can I find the 2012 forms and instructions?

Available at:

Sources

Form 8858 Instructions (Rev. December 2012)
Form 8858 (Rev. December 2012)
IRS.gov Form 8858 Information Page

This summary is for educational purposes and should not be considered tax advice. Consult a qualified tax professional for guidance specific to your situation.

Frequently Asked Questions

Form 8858 Information Return: A Complete Guide for 2012

Understanding international tax reporting can feel overwhelming, but Form 8858 is essentially the IRS's way of keeping tabs on American-owned foreign business entities that are "invisible" for tax purposes. Think of it as a transparency requirement—Uncle Sam wants to know about your foreign business activities, even when those entities don't file their own tax returns.

What Form 8858 Is For

Form 8858 is an information return that certain U.S. persons must file when they own or have interests in foreign disregarded entities (FDEs) or operate foreign branches.

What Is a Foreign Disregarded Entity (FDE)?

In plain English, it's a business entity formed outside the United States that the IRS treats as if it doesn't exist separately from its owner—like a single-member LLC that's not taxed as a corporation.

Purpose of the Form

The form serves multiple reporting requirements under sections 6011, 6012, 6031, and 6038 of the Internal Revenue Code. While Form 8858 itself doesn't create any new tax liability, it helps the IRS track international business activities and ensure proper tax reporting on income generated through these foreign entities.

The 2012 version requires filers to provide comprehensive information including balance sheets, income statements, ownership chains, and detailed transaction data between the foreign entity and related parties. You'll also need to complete Schedule M (Form 8858) in certain circumstances to report transactions between the foreign entity and the tax owner or other related entities.

When You’d Use Form 8858 (Including Late and Amended Filings)

Regular Filing Timeline

Form 8858 is due at the same time as your regular tax return, including any extensions you've been granted.

For individuals filing Form 1040, the typical due date is April 15 of the year following the tax year (or October 15 with an extension).
Corporate filers using Form 1120 or partnerships using Form 1065 follow their respective deadlines.

Who Must File

You must file Form 8858 if you fall into one of these categories:

Direct U.S. Owners: You’re a U.S. person who is the tax owner of an FDE at any time during your tax year.
Indirect Owners Through CFCs: You’re required to file Form 5471 (for controlled foreign corporations) as a Category 4 or 5 filer, and that CFC is the tax owner of an FDE.
Indirect Owners Through Partnerships: You’re required to file Form 8865 (for controlled foreign partnerships) as a Category 1 or 2 filer, and that partnership is the tax owner of an FDE.

Late or Amended Filings

If you missed the deadline or need to correct information, file the form as soon as possible. Attach it to an amended return if necessary.
For 2012, the IRS also offered a “dormant FDE” summary filing procedure under Announcement 2004-4 for entities with no activity, which streamlined reporting requirements.

Key Rules and Requirements for 2012

New Requirements for 2012

The 2012 revision introduced several key changes:

Filers must now provide a reference ID number on line 1b(2) if no EIN exists for the foreign entity.
This alphanumeric ID (up to 50 characters, no spaces or special characters) must remain consistent year to year.
Line 3c(2) requests the reference ID number of the tax owner.
Schedule G expanded with new questions (4–7) addressing dual consolidated losses.

Functional Currency and Translation Rules

The IRS requires a “divide-by” convention rounded to at least four decimal places when reporting exchange rates—how many units of foreign currency equal one U.S. dollar (e.g., 118.5050 Japanese Yen = $1 USD).
For hyperinflationary economies, DASTM (Dollar Approximate Separate Transactions Method) rules apply, requiring use of the U.S. dollar as the functional currency.

Documentation Requirements

You must attach an organizational chart showing the ownership chain between the tax owner and the FDE, including all entities where the FDE has a 10% or greater interest. Include entity names, ownership percentages, classifications, and countries of organization.

Step-by-Step Filing Guide (High Level)

Step 1: Determine Your Filing Obligation

Confirm whether you’re required to file based on ownership (direct or indirect) and category of filer (Forms 5471 or 8865).

Step 2: Gather Entity Information

Collect:

Legal name and address
Date and place of organization
Functional currency
Principal business activity
Identification numbers and U.S. agent details

Step 3: Complete the Identifying Information

Provide filer details, FDE details, tax owner and direct owner information, and reference ID numbers.

Step 4: Prepare Financial Schedules

Complete Schedule C (Income Statement) and Schedule F (Balance Sheet) using U.S. GAAP principles.
Report amounts in both functional currency and U.S. dollars, translating as per section 989(b).

Step 5: Complete Schedule H

Calculate current earnings and profits or taxable income, adjust book income, and translate the final amount to U.S. dollars.

Step 6: Address Schedule G Questions

Answer questions on:

Trusts and foreign partnerships
Tax treaty claims
Losses and dual consolidated loss situations

Step 7: Complete Schedule M (If Required)

Category 4 filers (Form 5471) and Category 1 filers (Form 8865) must complete Schedule M for related-party transactions.

Step 8: Attach and File

Attach Form 8858 and schedules to your income tax return or to Forms 5471/8865 if you’re not the tax owner. File by your return’s due date, including extensions.

Common Mistakes and How to Avoid Them

Mistake 1: Using the Wrong Exchange Rate Convention

Always use the divide-by method—foreign currency per U.S. dollar, not the reverse.

Mistake 2: Forgetting the Reference ID Number

Mandatory for entities without EINs. Use a consistent, unique identifier every year.

Mistake 3: Incomplete Schedule M

Don’t omit transaction data between the FDE and related parties. Include both functional currency and U.S. dollar amounts.

Mistake 4: Mixing GAAP and Tax Accounting

Remember:

Schedule C = GAAP accounting
Schedule H = Tax accounting

Mistake 5: Overlooking the Organizational Chart

You must attach a complete ownership chart. It’s not optional.

What Happens After You File

Processing and Record-Keeping

Form 8858 becomes part of your permanent IRS record. Keep copies and documentation for at least seven years.

No Immediate Tax Consequences

Form 8858 is informational only, but inconsistencies between schedules and returns can trigger audits.

Penalty Enforcement

$10,000 per annual accounting period per entity for initial failure
Additional $10,000 every 30 days (up to $50,000 total) after notice
Loss of foreign tax credit benefits and potential criminal penalties under sections 7203–7207 for willful violations.

FAQs

1. What’s the difference between the tax owner and the direct owner?

The direct owner legally owns the entity under local law; the tax owner is who the IRS considers to own it for tax purposes. These can differ in tiered structures.

2. Do I need an EIN for my foreign disregarded entity?

Not always. If the FDE doesn’t have an EIN, assign a reference ID number.
If the entity filed Form 8832 (entity classification election), an EIN is required.

3. Can someone else file Form 8858 on my behalf?

Yes. Multiple filers with identical filing requirements can designate one filer to submit the form and Schedule M for all. Each filer remains responsible for compliance.

4. What if my foreign entity had no activity during 2012?

You may qualify for the dormant FDE summary filing procedure under Announcement 2004-4.
Label the return “Filed Pursuant to Announcement 2004-4 for Dormant FDE.”

5. How do I handle dual consolidated losses?

Report dual consolidated losses on Schedule G, Questions 4–5, per Reg. 1.1503(d) rules. These are complex—seek professional advice.

6. What’s DASTM and when does it apply?

DASTM (Dollar Approximate Separate Transactions Method) applies in hyperinflationary economies (three-year inflation >100%).
Use the U.S. dollar as functional currency and follow Reg. 1.985-3 translation methods.

7. Where can I find the 2012 forms and instructions?

Available at:

Sources

Form 8858 Instructions (Rev. December 2012)
Form 8858 (Rev. December 2012)
IRS.gov Form 8858 Information Page

This summary is for educational purposes and should not be considered tax advice. Consult a qualified tax professional for guidance specific to your situation.

Frequently Asked Questions

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Form 8858 Information Return: A Complete Guide for 2012

Understanding international tax reporting can feel overwhelming, but Form 8858 is essentially the IRS's way of keeping tabs on American-owned foreign business entities that are "invisible" for tax purposes. Think of it as a transparency requirement—Uncle Sam wants to know about your foreign business activities, even when those entities don't file their own tax returns.

What Form 8858 Is For

Form 8858 is an information return that certain U.S. persons must file when they own or have interests in foreign disregarded entities (FDEs) or operate foreign branches.

What Is a Foreign Disregarded Entity (FDE)?

In plain English, it's a business entity formed outside the United States that the IRS treats as if it doesn't exist separately from its owner—like a single-member LLC that's not taxed as a corporation.

Purpose of the Form

The form serves multiple reporting requirements under sections 6011, 6012, 6031, and 6038 of the Internal Revenue Code. While Form 8858 itself doesn't create any new tax liability, it helps the IRS track international business activities and ensure proper tax reporting on income generated through these foreign entities.

The 2012 version requires filers to provide comprehensive information including balance sheets, income statements, ownership chains, and detailed transaction data between the foreign entity and related parties. You'll also need to complete Schedule M (Form 8858) in certain circumstances to report transactions between the foreign entity and the tax owner or other related entities.

When You’d Use Form 8858 (Including Late and Amended Filings)

Regular Filing Timeline

Form 8858 is due at the same time as your regular tax return, including any extensions you've been granted.

For individuals filing Form 1040, the typical due date is April 15 of the year following the tax year (or October 15 with an extension).
Corporate filers using Form 1120 or partnerships using Form 1065 follow their respective deadlines.

Who Must File

You must file Form 8858 if you fall into one of these categories:

Direct U.S. Owners: You’re a U.S. person who is the tax owner of an FDE at any time during your tax year.
Indirect Owners Through CFCs: You’re required to file Form 5471 (for controlled foreign corporations) as a Category 4 or 5 filer, and that CFC is the tax owner of an FDE.
Indirect Owners Through Partnerships: You’re required to file Form 8865 (for controlled foreign partnerships) as a Category 1 or 2 filer, and that partnership is the tax owner of an FDE.

Late or Amended Filings

If you missed the deadline or need to correct information, file the form as soon as possible. Attach it to an amended return if necessary.
For 2012, the IRS also offered a “dormant FDE” summary filing procedure under Announcement 2004-4 for entities with no activity, which streamlined reporting requirements.

Key Rules and Requirements for 2012

New Requirements for 2012

The 2012 revision introduced several key changes:

Filers must now provide a reference ID number on line 1b(2) if no EIN exists for the foreign entity.
This alphanumeric ID (up to 50 characters, no spaces or special characters) must remain consistent year to year.
Line 3c(2) requests the reference ID number of the tax owner.
Schedule G expanded with new questions (4–7) addressing dual consolidated losses.

Functional Currency and Translation Rules

The IRS requires a “divide-by” convention rounded to at least four decimal places when reporting exchange rates—how many units of foreign currency equal one U.S. dollar (e.g., 118.5050 Japanese Yen = $1 USD).
For hyperinflationary economies, DASTM (Dollar Approximate Separate Transactions Method) rules apply, requiring use of the U.S. dollar as the functional currency.

Documentation Requirements

You must attach an organizational chart showing the ownership chain between the tax owner and the FDE, including all entities where the FDE has a 10% or greater interest. Include entity names, ownership percentages, classifications, and countries of organization.

Step-by-Step Filing Guide (High Level)

Step 1: Determine Your Filing Obligation

Confirm whether you’re required to file based on ownership (direct or indirect) and category of filer (Forms 5471 or 8865).

Step 2: Gather Entity Information

Collect:

Legal name and address
Date and place of organization
Functional currency
Principal business activity
Identification numbers and U.S. agent details

Step 3: Complete the Identifying Information

Provide filer details, FDE details, tax owner and direct owner information, and reference ID numbers.

Step 4: Prepare Financial Schedules

Complete Schedule C (Income Statement) and Schedule F (Balance Sheet) using U.S. GAAP principles.
Report amounts in both functional currency and U.S. dollars, translating as per section 989(b).

Step 5: Complete Schedule H

Calculate current earnings and profits or taxable income, adjust book income, and translate the final amount to U.S. dollars.

Step 6: Address Schedule G Questions

Answer questions on:

Trusts and foreign partnerships
Tax treaty claims
Losses and dual consolidated loss situations

Step 7: Complete Schedule M (If Required)

Category 4 filers (Form 5471) and Category 1 filers (Form 8865) must complete Schedule M for related-party transactions.

Step 8: Attach and File

Attach Form 8858 and schedules to your income tax return or to Forms 5471/8865 if you’re not the tax owner. File by your return’s due date, including extensions.

Common Mistakes and How to Avoid Them

Mistake 1: Using the Wrong Exchange Rate Convention

Always use the divide-by method—foreign currency per U.S. dollar, not the reverse.

Mistake 2: Forgetting the Reference ID Number

Mandatory for entities without EINs. Use a consistent, unique identifier every year.

Mistake 3: Incomplete Schedule M

Don’t omit transaction data between the FDE and related parties. Include both functional currency and U.S. dollar amounts.

Mistake 4: Mixing GAAP and Tax Accounting

Remember:

Schedule C = GAAP accounting
Schedule H = Tax accounting

Mistake 5: Overlooking the Organizational Chart

You must attach a complete ownership chart. It’s not optional.

What Happens After You File

Processing and Record-Keeping

Form 8858 becomes part of your permanent IRS record. Keep copies and documentation for at least seven years.

No Immediate Tax Consequences

Form 8858 is informational only, but inconsistencies between schedules and returns can trigger audits.

Penalty Enforcement

$10,000 per annual accounting period per entity for initial failure
Additional $10,000 every 30 days (up to $50,000 total) after notice
Loss of foreign tax credit benefits and potential criminal penalties under sections 7203–7207 for willful violations.

FAQs

1. What’s the difference between the tax owner and the direct owner?

The direct owner legally owns the entity under local law; the tax owner is who the IRS considers to own it for tax purposes. These can differ in tiered structures.

2. Do I need an EIN for my foreign disregarded entity?

Not always. If the FDE doesn’t have an EIN, assign a reference ID number.
If the entity filed Form 8832 (entity classification election), an EIN is required.

3. Can someone else file Form 8858 on my behalf?

Yes. Multiple filers with identical filing requirements can designate one filer to submit the form and Schedule M for all. Each filer remains responsible for compliance.

4. What if my foreign entity had no activity during 2012?

You may qualify for the dormant FDE summary filing procedure under Announcement 2004-4.
Label the return “Filed Pursuant to Announcement 2004-4 for Dormant FDE.”

5. How do I handle dual consolidated losses?

Report dual consolidated losses on Schedule G, Questions 4–5, per Reg. 1.1503(d) rules. These are complex—seek professional advice.

6. What’s DASTM and when does it apply?

DASTM (Dollar Approximate Separate Transactions Method) applies in hyperinflationary economies (three-year inflation >100%).
Use the U.S. dollar as functional currency and follow Reg. 1.985-3 translation methods.

7. Where can I find the 2012 forms and instructions?

Available at:

Sources

Form 8858 Instructions (Rev. December 2012)
Form 8858 (Rev. December 2012)
IRS.gov Form 8858 Information Page

This summary is for educational purposes and should not be considered tax advice. Consult a qualified tax professional for guidance specific to your situation.

Frequently Asked Questions

Form 8858 Information Return: A Complete Guide for 2012

Understanding international tax reporting can feel overwhelming, but Form 8858 is essentially the IRS's way of keeping tabs on American-owned foreign business entities that are "invisible" for tax purposes. Think of it as a transparency requirement—Uncle Sam wants to know about your foreign business activities, even when those entities don't file their own tax returns.

What Form 8858 Is For

Form 8858 is an information return that certain U.S. persons must file when they own or have interests in foreign disregarded entities (FDEs) or operate foreign branches.

What Is a Foreign Disregarded Entity (FDE)?

In plain English, it's a business entity formed outside the United States that the IRS treats as if it doesn't exist separately from its owner—like a single-member LLC that's not taxed as a corporation.

Purpose of the Form

The form serves multiple reporting requirements under sections 6011, 6012, 6031, and 6038 of the Internal Revenue Code. While Form 8858 itself doesn't create any new tax liability, it helps the IRS track international business activities and ensure proper tax reporting on income generated through these foreign entities.

The 2012 version requires filers to provide comprehensive information including balance sheets, income statements, ownership chains, and detailed transaction data between the foreign entity and related parties. You'll also need to complete Schedule M (Form 8858) in certain circumstances to report transactions between the foreign entity and the tax owner or other related entities.

When You’d Use Form 8858 (Including Late and Amended Filings)

Regular Filing Timeline

Form 8858 is due at the same time as your regular tax return, including any extensions you've been granted.

For individuals filing Form 1040, the typical due date is April 15 of the year following the tax year (or October 15 with an extension).
Corporate filers using Form 1120 or partnerships using Form 1065 follow their respective deadlines.

Who Must File

You must file Form 8858 if you fall into one of these categories:

Direct U.S. Owners: You’re a U.S. person who is the tax owner of an FDE at any time during your tax year.
Indirect Owners Through CFCs: You’re required to file Form 5471 (for controlled foreign corporations) as a Category 4 or 5 filer, and that CFC is the tax owner of an FDE.
Indirect Owners Through Partnerships: You’re required to file Form 8865 (for controlled foreign partnerships) as a Category 1 or 2 filer, and that partnership is the tax owner of an FDE.

Late or Amended Filings

If you missed the deadline or need to correct information, file the form as soon as possible. Attach it to an amended return if necessary.
For 2012, the IRS also offered a “dormant FDE” summary filing procedure under Announcement 2004-4 for entities with no activity, which streamlined reporting requirements.

Key Rules and Requirements for 2012

New Requirements for 2012

The 2012 revision introduced several key changes:

Filers must now provide a reference ID number on line 1b(2) if no EIN exists for the foreign entity.
This alphanumeric ID (up to 50 characters, no spaces or special characters) must remain consistent year to year.
Line 3c(2) requests the reference ID number of the tax owner.
Schedule G expanded with new questions (4–7) addressing dual consolidated losses.

Functional Currency and Translation Rules

The IRS requires a “divide-by” convention rounded to at least four decimal places when reporting exchange rates—how many units of foreign currency equal one U.S. dollar (e.g., 118.5050 Japanese Yen = $1 USD).
For hyperinflationary economies, DASTM (Dollar Approximate Separate Transactions Method) rules apply, requiring use of the U.S. dollar as the functional currency.

Documentation Requirements

You must attach an organizational chart showing the ownership chain between the tax owner and the FDE, including all entities where the FDE has a 10% or greater interest. Include entity names, ownership percentages, classifications, and countries of organization.

Step-by-Step Filing Guide (High Level)

Step 1: Determine Your Filing Obligation

Confirm whether you’re required to file based on ownership (direct or indirect) and category of filer (Forms 5471 or 8865).

Step 2: Gather Entity Information

Collect:

Legal name and address
Date and place of organization
Functional currency
Principal business activity
Identification numbers and U.S. agent details

Step 3: Complete the Identifying Information

Provide filer details, FDE details, tax owner and direct owner information, and reference ID numbers.

Step 4: Prepare Financial Schedules

Complete Schedule C (Income Statement) and Schedule F (Balance Sheet) using U.S. GAAP principles.
Report amounts in both functional currency and U.S. dollars, translating as per section 989(b).

Step 5: Complete Schedule H

Calculate current earnings and profits or taxable income, adjust book income, and translate the final amount to U.S. dollars.

Step 6: Address Schedule G Questions

Answer questions on:

Trusts and foreign partnerships
Tax treaty claims
Losses and dual consolidated loss situations

Step 7: Complete Schedule M (If Required)

Category 4 filers (Form 5471) and Category 1 filers (Form 8865) must complete Schedule M for related-party transactions.

Step 8: Attach and File

Attach Form 8858 and schedules to your income tax return or to Forms 5471/8865 if you’re not the tax owner. File by your return’s due date, including extensions.

Common Mistakes and How to Avoid Them

Mistake 1: Using the Wrong Exchange Rate Convention

Always use the divide-by method—foreign currency per U.S. dollar, not the reverse.

Mistake 2: Forgetting the Reference ID Number

Mandatory for entities without EINs. Use a consistent, unique identifier every year.

Mistake 3: Incomplete Schedule M

Don’t omit transaction data between the FDE and related parties. Include both functional currency and U.S. dollar amounts.

Mistake 4: Mixing GAAP and Tax Accounting

Remember:

Schedule C = GAAP accounting
Schedule H = Tax accounting

Mistake 5: Overlooking the Organizational Chart

You must attach a complete ownership chart. It’s not optional.

What Happens After You File

Processing and Record-Keeping

Form 8858 becomes part of your permanent IRS record. Keep copies and documentation for at least seven years.

No Immediate Tax Consequences

Form 8858 is informational only, but inconsistencies between schedules and returns can trigger audits.

Penalty Enforcement

$10,000 per annual accounting period per entity for initial failure
Additional $10,000 every 30 days (up to $50,000 total) after notice
Loss of foreign tax credit benefits and potential criminal penalties under sections 7203–7207 for willful violations.

FAQs

1. What’s the difference between the tax owner and the direct owner?

The direct owner legally owns the entity under local law; the tax owner is who the IRS considers to own it for tax purposes. These can differ in tiered structures.

2. Do I need an EIN for my foreign disregarded entity?

Not always. If the FDE doesn’t have an EIN, assign a reference ID number.
If the entity filed Form 8832 (entity classification election), an EIN is required.

3. Can someone else file Form 8858 on my behalf?

Yes. Multiple filers with identical filing requirements can designate one filer to submit the form and Schedule M for all. Each filer remains responsible for compliance.

4. What if my foreign entity had no activity during 2012?

You may qualify for the dormant FDE summary filing procedure under Announcement 2004-4.
Label the return “Filed Pursuant to Announcement 2004-4 for Dormant FDE.”

5. How do I handle dual consolidated losses?

Report dual consolidated losses on Schedule G, Questions 4–5, per Reg. 1.1503(d) rules. These are complex—seek professional advice.

6. What’s DASTM and when does it apply?

DASTM (Dollar Approximate Separate Transactions Method) applies in hyperinflationary economies (three-year inflation >100%).
Use the U.S. dollar as functional currency and follow Reg. 1.985-3 translation methods.

7. Where can I find the 2012 forms and instructions?

Available at:

Sources

Form 8858 Instructions (Rev. December 2012)
Form 8858 (Rev. December 2012)
IRS.gov Form 8858 Information Page

This summary is for educational purposes and should not be considered tax advice. Consult a qualified tax professional for guidance specific to your situation.

Frequently Asked Questions

Form 8858 Information Return: A Complete Guide for 2012

Heading

Understanding international tax reporting can feel overwhelming, but Form 8858 is essentially the IRS's way of keeping tabs on American-owned foreign business entities that are "invisible" for tax purposes. Think of it as a transparency requirement—Uncle Sam wants to know about your foreign business activities, even when those entities don't file their own tax returns.

What Form 8858 Is For

Form 8858 is an information return that certain U.S. persons must file when they own or have interests in foreign disregarded entities (FDEs) or operate foreign branches.

What Is a Foreign Disregarded Entity (FDE)?

In plain English, it's a business entity formed outside the United States that the IRS treats as if it doesn't exist separately from its owner—like a single-member LLC that's not taxed as a corporation.

Purpose of the Form

The form serves multiple reporting requirements under sections 6011, 6012, 6031, and 6038 of the Internal Revenue Code. While Form 8858 itself doesn't create any new tax liability, it helps the IRS track international business activities and ensure proper tax reporting on income generated through these foreign entities.

The 2012 version requires filers to provide comprehensive information including balance sheets, income statements, ownership chains, and detailed transaction data between the foreign entity and related parties. You'll also need to complete Schedule M (Form 8858) in certain circumstances to report transactions between the foreign entity and the tax owner or other related entities.

When You’d Use Form 8858 (Including Late and Amended Filings)

Regular Filing Timeline

Form 8858 is due at the same time as your regular tax return, including any extensions you've been granted.

For individuals filing Form 1040, the typical due date is April 15 of the year following the tax year (or October 15 with an extension).
Corporate filers using Form 1120 or partnerships using Form 1065 follow their respective deadlines.

Who Must File

You must file Form 8858 if you fall into one of these categories:

Direct U.S. Owners: You’re a U.S. person who is the tax owner of an FDE at any time during your tax year.
Indirect Owners Through CFCs: You’re required to file Form 5471 (for controlled foreign corporations) as a Category 4 or 5 filer, and that CFC is the tax owner of an FDE.
Indirect Owners Through Partnerships: You’re required to file Form 8865 (for controlled foreign partnerships) as a Category 1 or 2 filer, and that partnership is the tax owner of an FDE.

Late or Amended Filings

If you missed the deadline or need to correct information, file the form as soon as possible. Attach it to an amended return if necessary.
For 2012, the IRS also offered a “dormant FDE” summary filing procedure under Announcement 2004-4 for entities with no activity, which streamlined reporting requirements.

Key Rules and Requirements for 2012

New Requirements for 2012

The 2012 revision introduced several key changes:

Filers must now provide a reference ID number on line 1b(2) if no EIN exists for the foreign entity.
This alphanumeric ID (up to 50 characters, no spaces or special characters) must remain consistent year to year.
Line 3c(2) requests the reference ID number of the tax owner.
Schedule G expanded with new questions (4–7) addressing dual consolidated losses.

Functional Currency and Translation Rules

The IRS requires a “divide-by” convention rounded to at least four decimal places when reporting exchange rates—how many units of foreign currency equal one U.S. dollar (e.g., 118.5050 Japanese Yen = $1 USD).
For hyperinflationary economies, DASTM (Dollar Approximate Separate Transactions Method) rules apply, requiring use of the U.S. dollar as the functional currency.

Documentation Requirements

You must attach an organizational chart showing the ownership chain between the tax owner and the FDE, including all entities where the FDE has a 10% or greater interest. Include entity names, ownership percentages, classifications, and countries of organization.

Step-by-Step Filing Guide (High Level)

Step 1: Determine Your Filing Obligation

Confirm whether you’re required to file based on ownership (direct or indirect) and category of filer (Forms 5471 or 8865).

Step 2: Gather Entity Information

Collect:

Legal name and address
Date and place of organization
Functional currency
Principal business activity
Identification numbers and U.S. agent details

Step 3: Complete the Identifying Information

Provide filer details, FDE details, tax owner and direct owner information, and reference ID numbers.

Step 4: Prepare Financial Schedules

Complete Schedule C (Income Statement) and Schedule F (Balance Sheet) using U.S. GAAP principles.
Report amounts in both functional currency and U.S. dollars, translating as per section 989(b).

Step 5: Complete Schedule H

Calculate current earnings and profits or taxable income, adjust book income, and translate the final amount to U.S. dollars.

Step 6: Address Schedule G Questions

Answer questions on:

Trusts and foreign partnerships
Tax treaty claims
Losses and dual consolidated loss situations

Step 7: Complete Schedule M (If Required)

Category 4 filers (Form 5471) and Category 1 filers (Form 8865) must complete Schedule M for related-party transactions.

Step 8: Attach and File

Attach Form 8858 and schedules to your income tax return or to Forms 5471/8865 if you’re not the tax owner. File by your return’s due date, including extensions.

Common Mistakes and How to Avoid Them

Mistake 1: Using the Wrong Exchange Rate Convention

Always use the divide-by method—foreign currency per U.S. dollar, not the reverse.

Mistake 2: Forgetting the Reference ID Number

Mandatory for entities without EINs. Use a consistent, unique identifier every year.

Mistake 3: Incomplete Schedule M

Don’t omit transaction data between the FDE and related parties. Include both functional currency and U.S. dollar amounts.

Mistake 4: Mixing GAAP and Tax Accounting

Remember:

Schedule C = GAAP accounting
Schedule H = Tax accounting

Mistake 5: Overlooking the Organizational Chart

You must attach a complete ownership chart. It’s not optional.

What Happens After You File

Processing and Record-Keeping

Form 8858 becomes part of your permanent IRS record. Keep copies and documentation for at least seven years.

No Immediate Tax Consequences

Form 8858 is informational only, but inconsistencies between schedules and returns can trigger audits.

Penalty Enforcement

$10,000 per annual accounting period per entity for initial failure
Additional $10,000 every 30 days (up to $50,000 total) after notice
Loss of foreign tax credit benefits and potential criminal penalties under sections 7203–7207 for willful violations.

FAQs

1. What’s the difference between the tax owner and the direct owner?

The direct owner legally owns the entity under local law; the tax owner is who the IRS considers to own it for tax purposes. These can differ in tiered structures.

2. Do I need an EIN for my foreign disregarded entity?

Not always. If the FDE doesn’t have an EIN, assign a reference ID number.
If the entity filed Form 8832 (entity classification election), an EIN is required.

3. Can someone else file Form 8858 on my behalf?

Yes. Multiple filers with identical filing requirements can designate one filer to submit the form and Schedule M for all. Each filer remains responsible for compliance.

4. What if my foreign entity had no activity during 2012?

You may qualify for the dormant FDE summary filing procedure under Announcement 2004-4.
Label the return “Filed Pursuant to Announcement 2004-4 for Dormant FDE.”

5. How do I handle dual consolidated losses?

Report dual consolidated losses on Schedule G, Questions 4–5, per Reg. 1.1503(d) rules. These are complex—seek professional advice.

6. What’s DASTM and when does it apply?

DASTM (Dollar Approximate Separate Transactions Method) applies in hyperinflationary economies (three-year inflation >100%).
Use the U.S. dollar as functional currency and follow Reg. 1.985-3 translation methods.

7. Where can I find the 2012 forms and instructions?

Available at:

Sources

Form 8858 Instructions (Rev. December 2012)
Form 8858 (Rev. December 2012)
IRS.gov Form 8858 Information Page

This summary is for educational purposes and should not be considered tax advice. Consult a qualified tax professional for guidance specific to your situation.

Form 8858 Information Return: A Complete Guide for 2012

Frequently Asked Questions

Form 8858 Information Return: A Complete Guide for 2012

Understanding international tax reporting can feel overwhelming, but Form 8858 is essentially the IRS's way of keeping tabs on American-owned foreign business entities that are "invisible" for tax purposes. Think of it as a transparency requirement—Uncle Sam wants to know about your foreign business activities, even when those entities don't file their own tax returns.

What Form 8858 Is For

Form 8858 is an information return that certain U.S. persons must file when they own or have interests in foreign disregarded entities (FDEs) or operate foreign branches.

What Is a Foreign Disregarded Entity (FDE)?

In plain English, it's a business entity formed outside the United States that the IRS treats as if it doesn't exist separately from its owner—like a single-member LLC that's not taxed as a corporation.

Purpose of the Form

The form serves multiple reporting requirements under sections 6011, 6012, 6031, and 6038 of the Internal Revenue Code. While Form 8858 itself doesn't create any new tax liability, it helps the IRS track international business activities and ensure proper tax reporting on income generated through these foreign entities.

The 2012 version requires filers to provide comprehensive information including balance sheets, income statements, ownership chains, and detailed transaction data between the foreign entity and related parties. You'll also need to complete Schedule M (Form 8858) in certain circumstances to report transactions between the foreign entity and the tax owner or other related entities.

When You’d Use Form 8858 (Including Late and Amended Filings)

Regular Filing Timeline

Form 8858 is due at the same time as your regular tax return, including any extensions you've been granted.

For individuals filing Form 1040, the typical due date is April 15 of the year following the tax year (or October 15 with an extension).
Corporate filers using Form 1120 or partnerships using Form 1065 follow their respective deadlines.

Who Must File

You must file Form 8858 if you fall into one of these categories:

Direct U.S. Owners: You’re a U.S. person who is the tax owner of an FDE at any time during your tax year.
Indirect Owners Through CFCs: You’re required to file Form 5471 (for controlled foreign corporations) as a Category 4 or 5 filer, and that CFC is the tax owner of an FDE.
Indirect Owners Through Partnerships: You’re required to file Form 8865 (for controlled foreign partnerships) as a Category 1 or 2 filer, and that partnership is the tax owner of an FDE.

Late or Amended Filings

If you missed the deadline or need to correct information, file the form as soon as possible. Attach it to an amended return if necessary.
For 2012, the IRS also offered a “dormant FDE” summary filing procedure under Announcement 2004-4 for entities with no activity, which streamlined reporting requirements.

Key Rules and Requirements for 2012

New Requirements for 2012

The 2012 revision introduced several key changes:

Filers must now provide a reference ID number on line 1b(2) if no EIN exists for the foreign entity.
This alphanumeric ID (up to 50 characters, no spaces or special characters) must remain consistent year to year.
Line 3c(2) requests the reference ID number of the tax owner.
Schedule G expanded with new questions (4–7) addressing dual consolidated losses.

Functional Currency and Translation Rules

The IRS requires a “divide-by” convention rounded to at least four decimal places when reporting exchange rates—how many units of foreign currency equal one U.S. dollar (e.g., 118.5050 Japanese Yen = $1 USD).
For hyperinflationary economies, DASTM (Dollar Approximate Separate Transactions Method) rules apply, requiring use of the U.S. dollar as the functional currency.

Documentation Requirements

You must attach an organizational chart showing the ownership chain between the tax owner and the FDE, including all entities where the FDE has a 10% or greater interest. Include entity names, ownership percentages, classifications, and countries of organization.

Step-by-Step Filing Guide (High Level)

Step 1: Determine Your Filing Obligation

Confirm whether you’re required to file based on ownership (direct or indirect) and category of filer (Forms 5471 or 8865).

Step 2: Gather Entity Information

Collect:

Legal name and address
Date and place of organization
Functional currency
Principal business activity
Identification numbers and U.S. agent details

Step 3: Complete the Identifying Information

Provide filer details, FDE details, tax owner and direct owner information, and reference ID numbers.

Step 4: Prepare Financial Schedules

Complete Schedule C (Income Statement) and Schedule F (Balance Sheet) using U.S. GAAP principles.
Report amounts in both functional currency and U.S. dollars, translating as per section 989(b).

Step 5: Complete Schedule H

Calculate current earnings and profits or taxable income, adjust book income, and translate the final amount to U.S. dollars.

Step 6: Address Schedule G Questions

Answer questions on:

Trusts and foreign partnerships
Tax treaty claims
Losses and dual consolidated loss situations

Step 7: Complete Schedule M (If Required)

Category 4 filers (Form 5471) and Category 1 filers (Form 8865) must complete Schedule M for related-party transactions.

Step 8: Attach and File

Attach Form 8858 and schedules to your income tax return or to Forms 5471/8865 if you’re not the tax owner. File by your return’s due date, including extensions.

Common Mistakes and How to Avoid Them

Mistake 1: Using the Wrong Exchange Rate Convention

Always use the divide-by method—foreign currency per U.S. dollar, not the reverse.

Mistake 2: Forgetting the Reference ID Number

Mandatory for entities without EINs. Use a consistent, unique identifier every year.

Mistake 3: Incomplete Schedule M

Don’t omit transaction data between the FDE and related parties. Include both functional currency and U.S. dollar amounts.

Mistake 4: Mixing GAAP and Tax Accounting

Remember:

Schedule C = GAAP accounting
Schedule H = Tax accounting

Mistake 5: Overlooking the Organizational Chart

You must attach a complete ownership chart. It’s not optional.

What Happens After You File

Processing and Record-Keeping

Form 8858 becomes part of your permanent IRS record. Keep copies and documentation for at least seven years.

No Immediate Tax Consequences

Form 8858 is informational only, but inconsistencies between schedules and returns can trigger audits.

Penalty Enforcement

$10,000 per annual accounting period per entity for initial failure
Additional $10,000 every 30 days (up to $50,000 total) after notice
Loss of foreign tax credit benefits and potential criminal penalties under sections 7203–7207 for willful violations.

FAQs

1. What’s the difference between the tax owner and the direct owner?

The direct owner legally owns the entity under local law; the tax owner is who the IRS considers to own it for tax purposes. These can differ in tiered structures.

2. Do I need an EIN for my foreign disregarded entity?

Not always. If the FDE doesn’t have an EIN, assign a reference ID number.
If the entity filed Form 8832 (entity classification election), an EIN is required.

3. Can someone else file Form 8858 on my behalf?

Yes. Multiple filers with identical filing requirements can designate one filer to submit the form and Schedule M for all. Each filer remains responsible for compliance.

4. What if my foreign entity had no activity during 2012?

You may qualify for the dormant FDE summary filing procedure under Announcement 2004-4.
Label the return “Filed Pursuant to Announcement 2004-4 for Dormant FDE.”

5. How do I handle dual consolidated losses?

Report dual consolidated losses on Schedule G, Questions 4–5, per Reg. 1.1503(d) rules. These are complex—seek professional advice.

6. What’s DASTM and when does it apply?

DASTM (Dollar Approximate Separate Transactions Method) applies in hyperinflationary economies (three-year inflation >100%).
Use the U.S. dollar as functional currency and follow Reg. 1.985-3 translation methods.

7. Where can I find the 2012 forms and instructions?

Available at:

Sources

Form 8858 Instructions (Rev. December 2012)
Form 8858 (Rev. December 2012)
IRS.gov Form 8858 Information Page

This summary is for educational purposes and should not be considered tax advice. Consult a qualified tax professional for guidance specific to your situation.

Frequently Asked Questions

Form 8858 Information Return: A Complete Guide for 2012

Understanding international tax reporting can feel overwhelming, but Form 8858 is essentially the IRS's way of keeping tabs on American-owned foreign business entities that are "invisible" for tax purposes. Think of it as a transparency requirement—Uncle Sam wants to know about your foreign business activities, even when those entities don't file their own tax returns.

What Form 8858 Is For

Form 8858 is an information return that certain U.S. persons must file when they own or have interests in foreign disregarded entities (FDEs) or operate foreign branches.

What Is a Foreign Disregarded Entity (FDE)?

In plain English, it's a business entity formed outside the United States that the IRS treats as if it doesn't exist separately from its owner—like a single-member LLC that's not taxed as a corporation.

Purpose of the Form

The form serves multiple reporting requirements under sections 6011, 6012, 6031, and 6038 of the Internal Revenue Code. While Form 8858 itself doesn't create any new tax liability, it helps the IRS track international business activities and ensure proper tax reporting on income generated through these foreign entities.

The 2012 version requires filers to provide comprehensive information including balance sheets, income statements, ownership chains, and detailed transaction data between the foreign entity and related parties. You'll also need to complete Schedule M (Form 8858) in certain circumstances to report transactions between the foreign entity and the tax owner or other related entities.

When You’d Use Form 8858 (Including Late and Amended Filings)

Regular Filing Timeline

Form 8858 is due at the same time as your regular tax return, including any extensions you've been granted.

For individuals filing Form 1040, the typical due date is April 15 of the year following the tax year (or October 15 with an extension).
Corporate filers using Form 1120 or partnerships using Form 1065 follow their respective deadlines.

Who Must File

You must file Form 8858 if you fall into one of these categories:

Direct U.S. Owners: You’re a U.S. person who is the tax owner of an FDE at any time during your tax year.
Indirect Owners Through CFCs: You’re required to file Form 5471 (for controlled foreign corporations) as a Category 4 or 5 filer, and that CFC is the tax owner of an FDE.
Indirect Owners Through Partnerships: You’re required to file Form 8865 (for controlled foreign partnerships) as a Category 1 or 2 filer, and that partnership is the tax owner of an FDE.

Late or Amended Filings

If you missed the deadline or need to correct information, file the form as soon as possible. Attach it to an amended return if necessary.
For 2012, the IRS also offered a “dormant FDE” summary filing procedure under Announcement 2004-4 for entities with no activity, which streamlined reporting requirements.

Key Rules and Requirements for 2012

New Requirements for 2012

The 2012 revision introduced several key changes:

Filers must now provide a reference ID number on line 1b(2) if no EIN exists for the foreign entity.
This alphanumeric ID (up to 50 characters, no spaces or special characters) must remain consistent year to year.
Line 3c(2) requests the reference ID number of the tax owner.
Schedule G expanded with new questions (4–7) addressing dual consolidated losses.

Functional Currency and Translation Rules

The IRS requires a “divide-by” convention rounded to at least four decimal places when reporting exchange rates—how many units of foreign currency equal one U.S. dollar (e.g., 118.5050 Japanese Yen = $1 USD).
For hyperinflationary economies, DASTM (Dollar Approximate Separate Transactions Method) rules apply, requiring use of the U.S. dollar as the functional currency.

Documentation Requirements

You must attach an organizational chart showing the ownership chain between the tax owner and the FDE, including all entities where the FDE has a 10% or greater interest. Include entity names, ownership percentages, classifications, and countries of organization.

Step-by-Step Filing Guide (High Level)

Step 1: Determine Your Filing Obligation

Confirm whether you’re required to file based on ownership (direct or indirect) and category of filer (Forms 5471 or 8865).

Step 2: Gather Entity Information

Collect:

Legal name and address
Date and place of organization
Functional currency
Principal business activity
Identification numbers and U.S. agent details

Step 3: Complete the Identifying Information

Provide filer details, FDE details, tax owner and direct owner information, and reference ID numbers.

Step 4: Prepare Financial Schedules

Complete Schedule C (Income Statement) and Schedule F (Balance Sheet) using U.S. GAAP principles.
Report amounts in both functional currency and U.S. dollars, translating as per section 989(b).

Step 5: Complete Schedule H

Calculate current earnings and profits or taxable income, adjust book income, and translate the final amount to U.S. dollars.

Step 6: Address Schedule G Questions

Answer questions on:

Trusts and foreign partnerships
Tax treaty claims
Losses and dual consolidated loss situations

Step 7: Complete Schedule M (If Required)

Category 4 filers (Form 5471) and Category 1 filers (Form 8865) must complete Schedule M for related-party transactions.

Step 8: Attach and File

Attach Form 8858 and schedules to your income tax return or to Forms 5471/8865 if you’re not the tax owner. File by your return’s due date, including extensions.

Common Mistakes and How to Avoid Them

Mistake 1: Using the Wrong Exchange Rate Convention

Always use the divide-by method—foreign currency per U.S. dollar, not the reverse.

Mistake 2: Forgetting the Reference ID Number

Mandatory for entities without EINs. Use a consistent, unique identifier every year.

Mistake 3: Incomplete Schedule M

Don’t omit transaction data between the FDE and related parties. Include both functional currency and U.S. dollar amounts.

Mistake 4: Mixing GAAP and Tax Accounting

Remember:

Schedule C = GAAP accounting
Schedule H = Tax accounting

Mistake 5: Overlooking the Organizational Chart

You must attach a complete ownership chart. It’s not optional.

What Happens After You File

Processing and Record-Keeping

Form 8858 becomes part of your permanent IRS record. Keep copies and documentation for at least seven years.

No Immediate Tax Consequences

Form 8858 is informational only, but inconsistencies between schedules and returns can trigger audits.

Penalty Enforcement

$10,000 per annual accounting period per entity for initial failure
Additional $10,000 every 30 days (up to $50,000 total) after notice
Loss of foreign tax credit benefits and potential criminal penalties under sections 7203–7207 for willful violations.

FAQs

1. What’s the difference between the tax owner and the direct owner?

The direct owner legally owns the entity under local law; the tax owner is who the IRS considers to own it for tax purposes. These can differ in tiered structures.

2. Do I need an EIN for my foreign disregarded entity?

Not always. If the FDE doesn’t have an EIN, assign a reference ID number.
If the entity filed Form 8832 (entity classification election), an EIN is required.

3. Can someone else file Form 8858 on my behalf?

Yes. Multiple filers with identical filing requirements can designate one filer to submit the form and Schedule M for all. Each filer remains responsible for compliance.

4. What if my foreign entity had no activity during 2012?

You may qualify for the dormant FDE summary filing procedure under Announcement 2004-4.
Label the return “Filed Pursuant to Announcement 2004-4 for Dormant FDE.”

5. How do I handle dual consolidated losses?

Report dual consolidated losses on Schedule G, Questions 4–5, per Reg. 1.1503(d) rules. These are complex—seek professional advice.

6. What’s DASTM and when does it apply?

DASTM (Dollar Approximate Separate Transactions Method) applies in hyperinflationary economies (three-year inflation >100%).
Use the U.S. dollar as functional currency and follow Reg. 1.985-3 translation methods.

7. Where can I find the 2012 forms and instructions?

Available at:

Sources

Form 8858 Instructions (Rev. December 2012)
Form 8858 (Rev. December 2012)
IRS.gov Form 8858 Information Page

This summary is for educational purposes and should not be considered tax advice. Consult a qualified tax professional for guidance specific to your situation.

Frequently Asked Questions

Form 8858 Information Return: A Complete Guide for 2012

Understanding international tax reporting can feel overwhelming, but Form 8858 is essentially the IRS's way of keeping tabs on American-owned foreign business entities that are "invisible" for tax purposes. Think of it as a transparency requirement—Uncle Sam wants to know about your foreign business activities, even when those entities don't file their own tax returns.

What Form 8858 Is For

Form 8858 is an information return that certain U.S. persons must file when they own or have interests in foreign disregarded entities (FDEs) or operate foreign branches.

What Is a Foreign Disregarded Entity (FDE)?

In plain English, it's a business entity formed outside the United States that the IRS treats as if it doesn't exist separately from its owner—like a single-member LLC that's not taxed as a corporation.

Purpose of the Form

The form serves multiple reporting requirements under sections 6011, 6012, 6031, and 6038 of the Internal Revenue Code. While Form 8858 itself doesn't create any new tax liability, it helps the IRS track international business activities and ensure proper tax reporting on income generated through these foreign entities.

The 2012 version requires filers to provide comprehensive information including balance sheets, income statements, ownership chains, and detailed transaction data between the foreign entity and related parties. You'll also need to complete Schedule M (Form 8858) in certain circumstances to report transactions between the foreign entity and the tax owner or other related entities.

When You’d Use Form 8858 (Including Late and Amended Filings)

Regular Filing Timeline

Form 8858 is due at the same time as your regular tax return, including any extensions you've been granted.

For individuals filing Form 1040, the typical due date is April 15 of the year following the tax year (or October 15 with an extension).
Corporate filers using Form 1120 or partnerships using Form 1065 follow their respective deadlines.

Who Must File

You must file Form 8858 if you fall into one of these categories:

Direct U.S. Owners: You’re a U.S. person who is the tax owner of an FDE at any time during your tax year.
Indirect Owners Through CFCs: You’re required to file Form 5471 (for controlled foreign corporations) as a Category 4 or 5 filer, and that CFC is the tax owner of an FDE.
Indirect Owners Through Partnerships: You’re required to file Form 8865 (for controlled foreign partnerships) as a Category 1 or 2 filer, and that partnership is the tax owner of an FDE.

Late or Amended Filings

If you missed the deadline or need to correct information, file the form as soon as possible. Attach it to an amended return if necessary.
For 2012, the IRS also offered a “dormant FDE” summary filing procedure under Announcement 2004-4 for entities with no activity, which streamlined reporting requirements.

Key Rules and Requirements for 2012

New Requirements for 2012

The 2012 revision introduced several key changes:

Filers must now provide a reference ID number on line 1b(2) if no EIN exists for the foreign entity.
This alphanumeric ID (up to 50 characters, no spaces or special characters) must remain consistent year to year.
Line 3c(2) requests the reference ID number of the tax owner.
Schedule G expanded with new questions (4–7) addressing dual consolidated losses.

Functional Currency and Translation Rules

The IRS requires a “divide-by” convention rounded to at least four decimal places when reporting exchange rates—how many units of foreign currency equal one U.S. dollar (e.g., 118.5050 Japanese Yen = $1 USD).
For hyperinflationary economies, DASTM (Dollar Approximate Separate Transactions Method) rules apply, requiring use of the U.S. dollar as the functional currency.

Documentation Requirements

You must attach an organizational chart showing the ownership chain between the tax owner and the FDE, including all entities where the FDE has a 10% or greater interest. Include entity names, ownership percentages, classifications, and countries of organization.

Step-by-Step Filing Guide (High Level)

Step 1: Determine Your Filing Obligation

Confirm whether you’re required to file based on ownership (direct or indirect) and category of filer (Forms 5471 or 8865).

Step 2: Gather Entity Information

Collect:

Legal name and address
Date and place of organization
Functional currency
Principal business activity
Identification numbers and U.S. agent details

Step 3: Complete the Identifying Information

Provide filer details, FDE details, tax owner and direct owner information, and reference ID numbers.

Step 4: Prepare Financial Schedules

Complete Schedule C (Income Statement) and Schedule F (Balance Sheet) using U.S. GAAP principles.
Report amounts in both functional currency and U.S. dollars, translating as per section 989(b).

Step 5: Complete Schedule H

Calculate current earnings and profits or taxable income, adjust book income, and translate the final amount to U.S. dollars.

Step 6: Address Schedule G Questions

Answer questions on:

Trusts and foreign partnerships
Tax treaty claims
Losses and dual consolidated loss situations

Step 7: Complete Schedule M (If Required)

Category 4 filers (Form 5471) and Category 1 filers (Form 8865) must complete Schedule M for related-party transactions.

Step 8: Attach and File

Attach Form 8858 and schedules to your income tax return or to Forms 5471/8865 if you’re not the tax owner. File by your return’s due date, including extensions.

Common Mistakes and How to Avoid Them

Mistake 1: Using the Wrong Exchange Rate Convention

Always use the divide-by method—foreign currency per U.S. dollar, not the reverse.

Mistake 2: Forgetting the Reference ID Number

Mandatory for entities without EINs. Use a consistent, unique identifier every year.

Mistake 3: Incomplete Schedule M

Don’t omit transaction data between the FDE and related parties. Include both functional currency and U.S. dollar amounts.

Mistake 4: Mixing GAAP and Tax Accounting

Remember:

Schedule C = GAAP accounting
Schedule H = Tax accounting

Mistake 5: Overlooking the Organizational Chart

You must attach a complete ownership chart. It’s not optional.

What Happens After You File

Processing and Record-Keeping

Form 8858 becomes part of your permanent IRS record. Keep copies and documentation for at least seven years.

No Immediate Tax Consequences

Form 8858 is informational only, but inconsistencies between schedules and returns can trigger audits.

Penalty Enforcement

$10,000 per annual accounting period per entity for initial failure
Additional $10,000 every 30 days (up to $50,000 total) after notice
Loss of foreign tax credit benefits and potential criminal penalties under sections 7203–7207 for willful violations.

FAQs

1. What’s the difference between the tax owner and the direct owner?

The direct owner legally owns the entity under local law; the tax owner is who the IRS considers to own it for tax purposes. These can differ in tiered structures.

2. Do I need an EIN for my foreign disregarded entity?

Not always. If the FDE doesn’t have an EIN, assign a reference ID number.
If the entity filed Form 8832 (entity classification election), an EIN is required.

3. Can someone else file Form 8858 on my behalf?

Yes. Multiple filers with identical filing requirements can designate one filer to submit the form and Schedule M for all. Each filer remains responsible for compliance.

4. What if my foreign entity had no activity during 2012?

You may qualify for the dormant FDE summary filing procedure under Announcement 2004-4.
Label the return “Filed Pursuant to Announcement 2004-4 for Dormant FDE.”

5. How do I handle dual consolidated losses?

Report dual consolidated losses on Schedule G, Questions 4–5, per Reg. 1.1503(d) rules. These are complex—seek professional advice.

6. What’s DASTM and when does it apply?

DASTM (Dollar Approximate Separate Transactions Method) applies in hyperinflationary economies (three-year inflation >100%).
Use the U.S. dollar as functional currency and follow Reg. 1.985-3 translation methods.

7. Where can I find the 2012 forms and instructions?

Available at:

Sources

Form 8858 Instructions (Rev. December 2012)
Form 8858 (Rev. December 2012)
IRS.gov Form 8858 Information Page

This summary is for educational purposes and should not be considered tax advice. Consult a qualified tax professional for guidance specific to your situation.

Frequently Asked Questions

Form 8858 Information Return: A Complete Guide for 2012

Understanding international tax reporting can feel overwhelming, but Form 8858 is essentially the IRS's way of keeping tabs on American-owned foreign business entities that are "invisible" for tax purposes. Think of it as a transparency requirement—Uncle Sam wants to know about your foreign business activities, even when those entities don't file their own tax returns.

What Form 8858 Is For

Form 8858 is an information return that certain U.S. persons must file when they own or have interests in foreign disregarded entities (FDEs) or operate foreign branches.

What Is a Foreign Disregarded Entity (FDE)?

In plain English, it's a business entity formed outside the United States that the IRS treats as if it doesn't exist separately from its owner—like a single-member LLC that's not taxed as a corporation.

Purpose of the Form

The form serves multiple reporting requirements under sections 6011, 6012, 6031, and 6038 of the Internal Revenue Code. While Form 8858 itself doesn't create any new tax liability, it helps the IRS track international business activities and ensure proper tax reporting on income generated through these foreign entities.

The 2012 version requires filers to provide comprehensive information including balance sheets, income statements, ownership chains, and detailed transaction data between the foreign entity and related parties. You'll also need to complete Schedule M (Form 8858) in certain circumstances to report transactions between the foreign entity and the tax owner or other related entities.

When You’d Use Form 8858 (Including Late and Amended Filings)

Regular Filing Timeline

Form 8858 is due at the same time as your regular tax return, including any extensions you've been granted.

For individuals filing Form 1040, the typical due date is April 15 of the year following the tax year (or October 15 with an extension).
Corporate filers using Form 1120 or partnerships using Form 1065 follow their respective deadlines.

Who Must File

You must file Form 8858 if you fall into one of these categories:

Direct U.S. Owners: You’re a U.S. person who is the tax owner of an FDE at any time during your tax year.
Indirect Owners Through CFCs: You’re required to file Form 5471 (for controlled foreign corporations) as a Category 4 or 5 filer, and that CFC is the tax owner of an FDE.
Indirect Owners Through Partnerships: You’re required to file Form 8865 (for controlled foreign partnerships) as a Category 1 or 2 filer, and that partnership is the tax owner of an FDE.

Late or Amended Filings

If you missed the deadline or need to correct information, file the form as soon as possible. Attach it to an amended return if necessary.
For 2012, the IRS also offered a “dormant FDE” summary filing procedure under Announcement 2004-4 for entities with no activity, which streamlined reporting requirements.

Key Rules and Requirements for 2012

New Requirements for 2012

The 2012 revision introduced several key changes:

Filers must now provide a reference ID number on line 1b(2) if no EIN exists for the foreign entity.
This alphanumeric ID (up to 50 characters, no spaces or special characters) must remain consistent year to year.
Line 3c(2) requests the reference ID number of the tax owner.
Schedule G expanded with new questions (4–7) addressing dual consolidated losses.

Functional Currency and Translation Rules

The IRS requires a “divide-by” convention rounded to at least four decimal places when reporting exchange rates—how many units of foreign currency equal one U.S. dollar (e.g., 118.5050 Japanese Yen = $1 USD).
For hyperinflationary economies, DASTM (Dollar Approximate Separate Transactions Method) rules apply, requiring use of the U.S. dollar as the functional currency.

Documentation Requirements

You must attach an organizational chart showing the ownership chain between the tax owner and the FDE, including all entities where the FDE has a 10% or greater interest. Include entity names, ownership percentages, classifications, and countries of organization.

Step-by-Step Filing Guide (High Level)

Step 1: Determine Your Filing Obligation

Confirm whether you’re required to file based on ownership (direct or indirect) and category of filer (Forms 5471 or 8865).

Step 2: Gather Entity Information

Collect:

Legal name and address
Date and place of organization
Functional currency
Principal business activity
Identification numbers and U.S. agent details

Step 3: Complete the Identifying Information

Provide filer details, FDE details, tax owner and direct owner information, and reference ID numbers.

Step 4: Prepare Financial Schedules

Complete Schedule C (Income Statement) and Schedule F (Balance Sheet) using U.S. GAAP principles.
Report amounts in both functional currency and U.S. dollars, translating as per section 989(b).

Step 5: Complete Schedule H

Calculate current earnings and profits or taxable income, adjust book income, and translate the final amount to U.S. dollars.

Step 6: Address Schedule G Questions

Answer questions on:

Trusts and foreign partnerships
Tax treaty claims
Losses and dual consolidated loss situations

Step 7: Complete Schedule M (If Required)

Category 4 filers (Form 5471) and Category 1 filers (Form 8865) must complete Schedule M for related-party transactions.

Step 8: Attach and File

Attach Form 8858 and schedules to your income tax return or to Forms 5471/8865 if you’re not the tax owner. File by your return’s due date, including extensions.

Common Mistakes and How to Avoid Them

Mistake 1: Using the Wrong Exchange Rate Convention

Always use the divide-by method—foreign currency per U.S. dollar, not the reverse.

Mistake 2: Forgetting the Reference ID Number

Mandatory for entities without EINs. Use a consistent, unique identifier every year.

Mistake 3: Incomplete Schedule M

Don’t omit transaction data between the FDE and related parties. Include both functional currency and U.S. dollar amounts.

Mistake 4: Mixing GAAP and Tax Accounting

Remember:

Schedule C = GAAP accounting
Schedule H = Tax accounting

Mistake 5: Overlooking the Organizational Chart

You must attach a complete ownership chart. It’s not optional.

What Happens After You File

Processing and Record-Keeping

Form 8858 becomes part of your permanent IRS record. Keep copies and documentation for at least seven years.

No Immediate Tax Consequences

Form 8858 is informational only, but inconsistencies between schedules and returns can trigger audits.

Penalty Enforcement

$10,000 per annual accounting period per entity for initial failure
Additional $10,000 every 30 days (up to $50,000 total) after notice
Loss of foreign tax credit benefits and potential criminal penalties under sections 7203–7207 for willful violations.

FAQs

1. What’s the difference between the tax owner and the direct owner?

The direct owner legally owns the entity under local law; the tax owner is who the IRS considers to own it for tax purposes. These can differ in tiered structures.

2. Do I need an EIN for my foreign disregarded entity?

Not always. If the FDE doesn’t have an EIN, assign a reference ID number.
If the entity filed Form 8832 (entity classification election), an EIN is required.

3. Can someone else file Form 8858 on my behalf?

Yes. Multiple filers with identical filing requirements can designate one filer to submit the form and Schedule M for all. Each filer remains responsible for compliance.

4. What if my foreign entity had no activity during 2012?

You may qualify for the dormant FDE summary filing procedure under Announcement 2004-4.
Label the return “Filed Pursuant to Announcement 2004-4 for Dormant FDE.”

5. How do I handle dual consolidated losses?

Report dual consolidated losses on Schedule G, Questions 4–5, per Reg. 1.1503(d) rules. These are complex—seek professional advice.

6. What’s DASTM and when does it apply?

DASTM (Dollar Approximate Separate Transactions Method) applies in hyperinflationary economies (three-year inflation >100%).
Use the U.S. dollar as functional currency and follow Reg. 1.985-3 translation methods.

7. Where can I find the 2012 forms and instructions?

Available at:

Sources

Form 8858 Instructions (Rev. December 2012)
Form 8858 (Rev. December 2012)
IRS.gov Form 8858 Information Page

This summary is for educational purposes and should not be considered tax advice. Consult a qualified tax professional for guidance specific to your situation.

Frequently Asked Questions

Form 8858 Information Return: A Complete Guide for 2012

Understanding international tax reporting can feel overwhelming, but Form 8858 is essentially the IRS's way of keeping tabs on American-owned foreign business entities that are "invisible" for tax purposes. Think of it as a transparency requirement—Uncle Sam wants to know about your foreign business activities, even when those entities don't file their own tax returns.

What Form 8858 Is For

Form 8858 is an information return that certain U.S. persons must file when they own or have interests in foreign disregarded entities (FDEs) or operate foreign branches.

What Is a Foreign Disregarded Entity (FDE)?

In plain English, it's a business entity formed outside the United States that the IRS treats as if it doesn't exist separately from its owner—like a single-member LLC that's not taxed as a corporation.

Purpose of the Form

The form serves multiple reporting requirements under sections 6011, 6012, 6031, and 6038 of the Internal Revenue Code. While Form 8858 itself doesn't create any new tax liability, it helps the IRS track international business activities and ensure proper tax reporting on income generated through these foreign entities.

The 2012 version requires filers to provide comprehensive information including balance sheets, income statements, ownership chains, and detailed transaction data between the foreign entity and related parties. You'll also need to complete Schedule M (Form 8858) in certain circumstances to report transactions between the foreign entity and the tax owner or other related entities.

When You’d Use Form 8858 (Including Late and Amended Filings)

Regular Filing Timeline

Form 8858 is due at the same time as your regular tax return, including any extensions you've been granted.

For individuals filing Form 1040, the typical due date is April 15 of the year following the tax year (or October 15 with an extension).
Corporate filers using Form 1120 or partnerships using Form 1065 follow their respective deadlines.

Who Must File

You must file Form 8858 if you fall into one of these categories:

Direct U.S. Owners: You’re a U.S. person who is the tax owner of an FDE at any time during your tax year.
Indirect Owners Through CFCs: You’re required to file Form 5471 (for controlled foreign corporations) as a Category 4 or 5 filer, and that CFC is the tax owner of an FDE.
Indirect Owners Through Partnerships: You’re required to file Form 8865 (for controlled foreign partnerships) as a Category 1 or 2 filer, and that partnership is the tax owner of an FDE.

Late or Amended Filings

If you missed the deadline or need to correct information, file the form as soon as possible. Attach it to an amended return if necessary.
For 2012, the IRS also offered a “dormant FDE” summary filing procedure under Announcement 2004-4 for entities with no activity, which streamlined reporting requirements.

Key Rules and Requirements for 2012

New Requirements for 2012

The 2012 revision introduced several key changes:

Filers must now provide a reference ID number on line 1b(2) if no EIN exists for the foreign entity.
This alphanumeric ID (up to 50 characters, no spaces or special characters) must remain consistent year to year.
Line 3c(2) requests the reference ID number of the tax owner.
Schedule G expanded with new questions (4–7) addressing dual consolidated losses.

Functional Currency and Translation Rules

The IRS requires a “divide-by” convention rounded to at least four decimal places when reporting exchange rates—how many units of foreign currency equal one U.S. dollar (e.g., 118.5050 Japanese Yen = $1 USD).
For hyperinflationary economies, DASTM (Dollar Approximate Separate Transactions Method) rules apply, requiring use of the U.S. dollar as the functional currency.

Documentation Requirements

You must attach an organizational chart showing the ownership chain between the tax owner and the FDE, including all entities where the FDE has a 10% or greater interest. Include entity names, ownership percentages, classifications, and countries of organization.

Step-by-Step Filing Guide (High Level)

Step 1: Determine Your Filing Obligation

Confirm whether you’re required to file based on ownership (direct or indirect) and category of filer (Forms 5471 or 8865).

Step 2: Gather Entity Information

Collect:

Legal name and address
Date and place of organization
Functional currency
Principal business activity
Identification numbers and U.S. agent details

Step 3: Complete the Identifying Information

Provide filer details, FDE details, tax owner and direct owner information, and reference ID numbers.

Step 4: Prepare Financial Schedules

Complete Schedule C (Income Statement) and Schedule F (Balance Sheet) using U.S. GAAP principles.
Report amounts in both functional currency and U.S. dollars, translating as per section 989(b).

Step 5: Complete Schedule H

Calculate current earnings and profits or taxable income, adjust book income, and translate the final amount to U.S. dollars.

Step 6: Address Schedule G Questions

Answer questions on:

Trusts and foreign partnerships
Tax treaty claims
Losses and dual consolidated loss situations

Step 7: Complete Schedule M (If Required)

Category 4 filers (Form 5471) and Category 1 filers (Form 8865) must complete Schedule M for related-party transactions.

Step 8: Attach and File

Attach Form 8858 and schedules to your income tax return or to Forms 5471/8865 if you’re not the tax owner. File by your return’s due date, including extensions.

Common Mistakes and How to Avoid Them

Mistake 1: Using the Wrong Exchange Rate Convention

Always use the divide-by method—foreign currency per U.S. dollar, not the reverse.

Mistake 2: Forgetting the Reference ID Number

Mandatory for entities without EINs. Use a consistent, unique identifier every year.

Mistake 3: Incomplete Schedule M

Don’t omit transaction data between the FDE and related parties. Include both functional currency and U.S. dollar amounts.

Mistake 4: Mixing GAAP and Tax Accounting

Remember:

Schedule C = GAAP accounting
Schedule H = Tax accounting

Mistake 5: Overlooking the Organizational Chart

You must attach a complete ownership chart. It’s not optional.

What Happens After You File

Processing and Record-Keeping

Form 8858 becomes part of your permanent IRS record. Keep copies and documentation for at least seven years.

No Immediate Tax Consequences

Form 8858 is informational only, but inconsistencies between schedules and returns can trigger audits.

Penalty Enforcement

$10,000 per annual accounting period per entity for initial failure
Additional $10,000 every 30 days (up to $50,000 total) after notice
Loss of foreign tax credit benefits and potential criminal penalties under sections 7203–7207 for willful violations.

FAQs

1. What’s the difference between the tax owner and the direct owner?

The direct owner legally owns the entity under local law; the tax owner is who the IRS considers to own it for tax purposes. These can differ in tiered structures.

2. Do I need an EIN for my foreign disregarded entity?

Not always. If the FDE doesn’t have an EIN, assign a reference ID number.
If the entity filed Form 8832 (entity classification election), an EIN is required.

3. Can someone else file Form 8858 on my behalf?

Yes. Multiple filers with identical filing requirements can designate one filer to submit the form and Schedule M for all. Each filer remains responsible for compliance.

4. What if my foreign entity had no activity during 2012?

You may qualify for the dormant FDE summary filing procedure under Announcement 2004-4.
Label the return “Filed Pursuant to Announcement 2004-4 for Dormant FDE.”

5. How do I handle dual consolidated losses?

Report dual consolidated losses on Schedule G, Questions 4–5, per Reg. 1.1503(d) rules. These are complex—seek professional advice.

6. What’s DASTM and when does it apply?

DASTM (Dollar Approximate Separate Transactions Method) applies in hyperinflationary economies (three-year inflation >100%).
Use the U.S. dollar as functional currency and follow Reg. 1.985-3 translation methods.

7. Where can I find the 2012 forms and instructions?

Available at:

Sources

Form 8858 Instructions (Rev. December 2012)
Form 8858 (Rev. December 2012)
IRS.gov Form 8858 Information Page

This summary is for educational purposes and should not be considered tax advice. Consult a qualified tax professional for guidance specific to your situation.

Form 8858 Information Return: A Complete Guide for 2012

What Form 8858 Is For

What Is a Foreign Disregarded Entity (FDE)?

Purpose of the Form

When You’d Use Form 8858 (Including Late and Amended Filings)

Regular Filing Timeline

Who Must File

Late or Amended Filings

Key Rules and Requirements for 2012

New Requirements for 2012

Functional Currency and Translation Rules

Documentation Requirements

Step-by-Step Filing Guide (High Level)

Step 1: Determine Your Filing Obligation

Step 2: Gather Entity Information

Step 3: Complete the Identifying Information

Step 4: Prepare Financial Schedules

Step 5: Complete Schedule H

Step 6: Address Schedule G Questions

Step 7: Complete Schedule M (If Required)

Step 8: Attach and File

Common Mistakes and How to Avoid Them

Mistake 1: Using the Wrong Exchange Rate Convention

Mistake 2: Forgetting the Reference ID Number

Mistake 3: Incomplete Schedule M

Mistake 4: Mixing GAAP and Tax Accounting

Mistake 5: Overlooking the Organizational Chart

What Happens After You File

Processing and Record-Keeping

No Immediate Tax Consequences

Penalty Enforcement

FAQs

1. What’s the difference between the tax owner and the direct owner?

2. Do I need an EIN for my foreign disregarded entity?

3. Can someone else file Form 8858 on my behalf?

4. What if my foreign entity had no activity during 2012?

5. How do I handle dual consolidated losses?

6. What’s DASTM and when does it apply?

7. Where can I find the 2012 forms and instructions?

Sources

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Frequently Asked Questions

Related Articles

Form 8858 Information Return: A Complete Guide for 2012

What Form 8858 Is For

What Is a Foreign Disregarded Entity (FDE)?

Purpose of the Form

When You’d Use Form 8858 (Including Late and Amended Filings)

Regular Filing Timeline

Who Must File

Late or Amended Filings

Key Rules and Requirements for 2012

New Requirements for 2012

Functional Currency and Translation Rules

Documentation Requirements

Step-by-Step Filing Guide (High Level)

Step 1: Determine Your Filing Obligation

Step 2: Gather Entity Information

Step 3: Complete the Identifying Information

Step 4: Prepare Financial Schedules

Step 5: Complete Schedule H

Step 6: Address Schedule G Questions

Step 7: Complete Schedule M (If Required)

Step 8: Attach and File

Common Mistakes and How to Avoid Them

Mistake 1: Using the Wrong Exchange Rate Convention

Mistake 2: Forgetting the Reference ID Number

Mistake 3: Incomplete Schedule M

Mistake 4: Mixing GAAP and Tax Accounting

Mistake 5: Overlooking the Organizational Chart

What Happens After You File

Processing and Record-Keeping

No Immediate Tax Consequences

Penalty Enforcement

FAQs

1. What’s the difference between the tax owner and the direct owner?

2. Do I need an EIN for my foreign disregarded entity?

3. Can someone else file Form 8858 on my behalf?

4. What if my foreign entity had no activity during 2012?

5. How do I handle dual consolidated losses?