One of the most confusing requirements for foreign-owned LLC owners is the pro forma Form 1120. You may have heard that single-member LLCs are "disregarded entities" that do not file corporate tax returns. That is true -- except when it comes to Form 5472. Here is what you need to know.

What Is a Pro Forma Form 1120?

A pro forma Form 1120 is a placeholder version of the US Corporate Income Tax Return. It is not a real tax return -- it serves only as a "cover sheet" to which you attach your Form 5472.

The IRS requires Form 5472 to be filed as an attachment to Form 1120. Since foreign-owned disregarded entities (single-member LLCs) do not normally file Form 1120, the IRS allows them to file a pro forma version instead.

Think of it this way: the IRS processing system expects Form 5472 to arrive attached to a Form 1120. The pro forma satisfies that requirement without creating an actual corporate tax liability.

Why Does the IRS Require It?

The requirement comes from Treasury Regulation section 1.6038A-2(a)(3). When a foreign person owns a disregarded entity, the entity is treated as a corporation solely for the purpose of filing Form 5472. This treatment means the entity must file "a return on Form 1120," but since there is no actual corporate tax liability, a pro forma return suffices.

The IRS uses the Form 1120 cover sheet to process and route the Form 5472 correctly in their system. Without it, your Form 5472 will be rejected.

How to Fill Out the Pro Forma 1120

The pro forma 1120 is much simpler than a real corporate tax return. Here is what you need to include:

Header Information

  • Name: Your LLC's legal name
  • EIN: Your LLC's Employer Identification Number
  • Address: Your LLC's principal address
  • Date incorporated: The date your LLC was formed
  • Check Box E: "Initial return" if this is the first year, otherwise leave unchecked

Income and Deductions (Lines 1-30)

For a disregarded entity, all income and deduction lines should be zero. This is because the LLC's income, if any, flows through to the owner's personal return -- it is not reported on a corporate return.

Tax and Payments (Lines 31-36)

Enter zero for all lines. The disregarded entity does not owe corporate income tax.

Schedule K and Other Schedules

Most schedules can be left blank or filled with zeros. Schedule K (Other Information) should be completed with basic entity information where applicable.

Key Things to Remember

  • Write "Foreign-Owned U.S. DE" (Disregarded Entity) at the top of the Form 1120
  • All financial lines should show zero
  • The return is unsigned -- a pro forma 1120 does not require a signature
  • Attach your completed Form 5472 to this pro forma 1120

Common Questions About Pro Forma 1120

Does my LLC owe corporate income tax because of this form?

No. The pro forma 1120 with all zeros does not create any tax liability. Your LLC remains a disregarded entity for income tax purposes. The pro forma is purely an administrative requirement for filing Form 5472.

Can I e-file the pro forma 1120?

No. The IRS does not currently accept electronic filing for pro forma 1120 returns filed by foreign-owned disregarded entities. You must submit by fax or mail.

What if my LLC had income?

Even if your LLC earned revenue, the pro forma 1120 still shows zeros. The income is reported on your personal tax return (if you have US tax filing obligations) or not at all if the income is not effectively connected with a US trade or business. The pro forma 1120 is only a cover sheet for Form 5472.

Do I need to file a state corporate tax return too?

That depends on your state. Some states require their own filings for LLCs. The pro forma 1120 is only for the federal IRS filing. Check with your state's tax authority for state-specific requirements.

Filing Made Simple

Filabl generates both your Form 5472 and the required pro forma Form 1120 automatically. You do not need to figure out which lines to fill in or worry about formatting -- we handle the entire package and fax it directly to the IRS.