QUESTION: Do I Need to File Proforma 1120 and Form 5472 for My Wyoming Single-Member LLC (Disregarded Entity) with Zero Income?
EXPERT’S RESPONSE: Short Answer: Yes, you likely need to file Form 5472 for your Wyoming single-member LLC (disregarded entity) even if you haven’t generated any income yet in 2023.
As a non-resident alien with a U.S.-based LLC, you’re subject to specific tax reporting requirements. Proforma 1120 and Form 5472 helps the IRS track transactions between your LLC and any related parties, such as yourself, other businesses you own, or family members.
Why File Form 5472 Even with No Income?
Even with no income, filing might still be necessary if:
- You made any contributions or distributions to/from the LLC. This includes transferring money, property, or services.
- You incurred any expenses related to forming, dissolving, or acquiring the LLC
Understanding Reportable Transactions:
It’s important to note that the definition of “related party” is broad and can include anyone who owns 25% or more of your LLC, as well as family members, business partners, and even certain foreign entities. So, even seemingly simple transactions like using your personal bank account for your LLC’s business could be considered reportable.
Exceptions to Filing:
There are limited circumstances where you might not need to file Proforma 1120 and Form 5472:
- No Reportable Transactions: If you are absolutely certain there were no financial exchanges between you and the LLC throughout the year, you may not need to file. However, carefully review your records to ensure no inadvertent transactions occurred.
Consequences of non-filing:
Failing to file Form 5472 when required can lead to penalties and fines from the IRS. These penalties can accrue rapidly, making timely filing crucial.
Here are some additional resources to help you:
- IRS Instructions for Form 5472
- How to File Forms 5472 and 1120 for a Foreign-Owned Single-Member LLC
- O&G Tax and Accounting Video Explanations of Reportable Transactions:
- Foreign-owned U.S. DE, Form 5472 Part V (§ 1.6038A-2 (b)(11) – Year 4, Example 1 & 2).
- Foreign-owned U.S. DE, Form 5472 Part V (§ 1.6038A-2 (b)(11) – Year 3, Example 1 & 2).
- Foreign-owned U.S. DE, Form 5472 Part V (§ 1.6038A-2 (b)(11) – Year 2, Example 1 & 2).
- Foreign-owned U.S. DE, Form 5472 Part V (§ 1.6038A-2 (b)(11) – Year 1, Example 1 & 2).
- Foreign Owned U.S SMLLC transactions that triggers Proforma 1120 & 5472 Reporting.
For a comprehensive understanding of filing Form 5472 and initial/proforma Form 1120 for your Wyoming single-member LLC with zero income, consider subscribing to our youtube channel:
- Video Course: A step-by-step guide to filing both forms accurately, ideal for first-year US LLC owners.
- CPA Assistance: Get expert guidance from our team of CPAs throughout the filing process.
- International Tax Consultation: Schedule a paid consultation with our international tax expert for personalized advice and clarification.
We hope this clarifies your filing requirements for Proforma 1120 and Form 5472. Remember, timely and accurate filing is crucial to avoid penalties and maintain good standing with the IRS.
