forms 1118 and 5471

0

Compliance Aspects of the

Forms 1118 and 5471

Edward Umling CPA, LLM

December 7, 2009

North American

International Tax Conference

1

Form 1118 — Foreign Tax Credits — Corporations

This form is not mandatory. It is used to claim a credit for income taxes paid to a foreign country on which U.S. taxes are also paid on the same income.

You have up to 10 years to file this form!

2

Form 5471 — Information return of US Persons —

Certain Foreign Corporations

Form 5471 is used by certain U.S. citizens and residents who are officers, directors, or shareholders in certain foreign corporations. The form and schedules are used to satisfy the reporting requirements of I.R.C. 6038 and 6046.

Form 5471 is due when your income tax return is due, including extensions. Attach Form 5471 and schedules to your income tax return.

3

Form Overview

4

17,337,549

to Schedule C line 13

11,717,690

to Schedule C line 15To 1120 page 1

line 7To 1120 page 1

line 10

This number may carry

to page 2

From 1118 Page 3 Part I

5

From the 1120 page 1 line 30

From 1118

page 3 part 1

column 10

To 1120 page 3

schedule J line 5a From the 1120 page 3

Schedule J line 4

43,520,504

2 possible entries:

either the schedule J part 1 line 11 or, amount from 1118 page 1 column 13

From 5471

Schedule E

15,230,420

.558

6

To 1118 page 2

Schedule B

From 1118 page 4

Part 1 column 7From 5471 To 1118

page 1 Schedule A

7

To Page 3 Schedule

C Column 6bFrom 5471 page 4

Schedule I

8

From 1118 Page

1 Columns

(2a+2b+3a+3b)

From 1118

Page 1

column 5

From

1118

Page 1

column 7

9

To

Form

1118

Page 2

Line 7a

From 1120

Page 3

Schedule J

line 10

10

To page 1 line 4

From 1118

Page 1

Column2a

and 3a

From 1118

page 1

column 2b

and 3b

Schedule M-3 Item

11

From the 1118 page 2

part II line 5

To 1118 page 2

part II line 9

To 1120 page 1 line 31

Calculated

Tax

Local Currency Number relates to

translated amounts on 1118 page 1

schedule A

14,390,165 /.83 =17,337,549

*WARNING*

This schedule is functional currency only!

14,390,165

Actual Taxes Paid

To Form 1118 page 2

Schedule B Column (h)

Amount carries to 1118 page 1 Schedule A

(192,014 * .97740 ) = 187,675

3,250,000

To 1118 page 4 schedule D

Debrief

Dividends must reconcile

Other income items must

reconcile

Tax liability must reconcile

Foreign reporting must tie-out

15

If you have any questions please contact

Edward Umling, Parente Randolph, LLC

Phone (412) 697-6427, email: eumling@parentenet.com

The informal comments and the information presented in these

slides should not be construed as constituting tax advice

applicable to any specific taxpayer because each taxpayer’s facts

are different

To ensure compliance with requirements imposed by the IRS, we

inform you that any U.S. tax advice mentioned in the presentation

or contained in these slides is not intended or written to be used,

and cannot be used, for the purpose of (i) avoiding penalties

under the Internal Revenue Code or (ii) promoting, marketing or

recommending to another party any transactions or matters

addressed herein.

Thank You for

Attending The Conference

Edward Umling CPA, LLM

412-391-1994 Ext 259

eumling@urishpopeck.com