Part V of Form 5472 is where you report all "reportable transactions" between the foreign owner and the US reporting corporation (your LLC). Understanding what counts as a reportable transaction is essential to filing correctly. This guide breaks down each type of transaction the IRS expects you to report.

What Is a Reportable Transaction?

The IRS defines a reportable transaction broadly. Under the regulations (26 CFR 1.6038A-2), a reportable transaction is any transaction between the reporting corporation (your LLC) and a foreign related party (you, the foreign owner). This includes both monetary and non-monetary exchanges.

The key principle: if value moved between you and your LLC in any direction during the tax year, it is probably a reportable transaction.

Common Reportable Transactions

1. Capital Contributions

A capital contribution is money or property you put into your LLC. This is one of the most common transactions for foreign-owned LLCs.

Examples:

  • You wire $10,000 from your personal bank account to your LLC's US bank account to fund operations
  • You transfer equipment or other property to the LLC
  • You pay for LLC expenses from your personal funds

Report the total dollar amount of all capital contributions for the year on Line 4 of Part V (Amounts received from the foreign related party -- capital contributions).

2. Distributions

Distributions are money or property the LLC pays to you, the owner. For a single-member LLC, this typically means transferring profits or capital back to your personal account.

Examples:

  • Your LLC transfers $5,000 to your personal bank account as an owner's draw
  • Your LLC pays your personal expenses (this is treated as a distribution followed by a personal payment)

Report distributions on Line 17 of Part V (Amounts paid to the foreign related party).

3. Loans

Loans between you and your LLC are reportable in both directions.

Examples:

  • You lend money to your LLC (report as an amount received by the LLC)
  • Your LLC lends money to you (report as an amount paid by the LLC)
  • Repayments of principal on existing loans
  • Interest payments on loans

Report loan proceeds and repayments on the appropriate lines in Part V. Interest payments are reported separately from principal.

4. Payments for Services

If either party provides services to the other, the payment (or fair market value of the services) must be reported.

Examples:

  • You perform consulting work for your LLC and the LLC pays you for it
  • Your LLC pays you a management fee
  • You provide services to the LLC without charge (this may still be reportable as a non-monetary transaction)

Report on Lines 7 and 13 of Part V (Compensation paid/received for services).

5. Rent and Lease Payments

If either party rents property from the other, the rent payments are reportable.

Examples:

  • Your LLC rents office space from you
  • You use LLC-owned property for personal purposes and pay (or should pay) rent

Report on Lines 8-9 and 14-15 of Part V (Rents paid/received).

6. Purchases and Sales of Tangible Property

If you sell products to or buy products from your LLC, those transactions are reportable.

Examples:

  • You sell inventory to your LLC
  • Your LLC sells products to you at cost or below market value

Report on Lines 1-3 of Part V (Sales of stock in trade, tangible property).

7. Commissions and Royalties

Payments for the use of intellectual property, commission arrangements, or licensing agreements are reportable.

Examples:

  • Your LLC pays you royalties for the use of your intellectual property
  • You license software or a brand name to your LLC

Report on Lines 5-6 and 11-12 of Part V (Commissions and royalties paid/received).

What About Zero-Value Transactions?

If you had no transactions in a particular category, enter zero on that line. Do not leave lines blank. The IRS distinguishes between "zero" (no transactions occurred) and blank (you forgot to fill it in). A blank line can trigger the penalty for an incomplete filing.

Non-Monetary Transactions

Be aware that reportable transactions are not limited to cash exchanges. The IRS also requires reporting of:

  • Property transfers (at fair market value)
  • Services provided without charge (at fair market value)
  • Use of property without charge (at fair rental value)
  • Below-market-rate transactions (the difference between the actual amount and fair market value may be relevant)

Record-Keeping Requirements

The IRS requires you to maintain records sufficient to establish the correctness of your Form 5472. For each reportable transaction, keep:

  • Bank statements showing the transfer
  • Invoices or contracts describing the transaction
  • Documentation of fair market value for non-monetary transactions
  • Records of the business purpose for each transaction

Retain these records for at least 7 years. The statute of limitations for Form 5472 penalties does not apply if you fail to file or file an incomplete return, meaning the IRS can assess penalties at any time.

How Filabl Handles Transaction Reporting

When you use Filabl, you upload your LLC's bank statement and we automatically identify and classify transactions between you and your LLC. Capital contributions, distributions, and other reportable transactions are mapped to the correct lines on Form 5472. You review the classifications, make any adjustments, and we generate the completed form.