We’ve had several enquiries about Form 5472 by some of our Asian based investors into the US. Therefore it is natural that it be the subject of my next blog entry.
As of 2015, over 6.8 million United States (US) workers were employed by foreign-owned companies. To ensure that foreign investment and foreign business activity is reported and taxed, Internal Revenue Code (IRC) §§ 6038A and 6038C impose reporting and substantiation requirements
on foreign-controlled businesses. IRS Form 5472, Information Return of a 25% Foreign-Owned U.S.
Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, is used to report the
information required under IRC §§ 6038A and 6038C. The consequence for failing to file IRS
Form 5472 includes the denial of deductions for payments to related parties, an initial $25,000
failure to file penalty, and continuation penalties of $25,000 per 30-day period until the taxpayer gets
into compliance. Below, we review the reporting and record-keeping requirements of Foreign-
Owned U.S. Corporations and Foreign Corporations doing business in the US.
That related-party transactions (as defined by I.R.C. § 6038A(b) which is discussed further in the following section) should be subject to extra scrutiny is not unique to foreign business activity. Transfer pricing examinations under IRC § 482 are routine. Historically, the IRS had trouble obtaining transfer pricing data from foreign companies.
The reporting and recordkeeping requirements of IRC §§ 6038A and 6038C were intended to reduce transfer pricing abuses and assist the IRS in examining related-party transactions involving foreign investors and corporations. A US business that is foreign-owned is subject to IRC §6038A. Foreign corporations with US operations are governed by IRC § 6038C.
IRC § 6038A “Information with respect to foreign-owned corporations” provides:
If, at any time during a taxable year, a corporation . . .
(1) is a domestic corporation (in accordance with I.R.C. § 7701(a)(3) & (a)(4)), and
(2) is 25-percent foreign-owned, such corporation shall furnish, at such time and in such manner as the Secretary shall by regulations prescribe, the information described in sub-section (b) and such corporation shall maintain . . . such records as may be appropriate to determine the correct treatment of transactions with related parties as the Secretary shall by regulations prescribe. . . .IRC § 6038C, “Information with respect to foreign corporations engaged in U.S. business,” provides: If a foreign corporation . . . is engaged in a trade or business within the United States at any time during a taxable year–
(1) such corporation shall furnish . . . the information described in subsection (b) and
(2) such corporation shall maintain . . . such records as may be appropriate to determine the liability of such corporation for tax under this title as the Secretary shall by regulations prescribe . . . .
Despite the statutory separation, the two tax provisions share the same regulations (i.e., those under IRC § 6038A), and corporations subject to either provision must supply the IRS with information each year on Form 5472. The regulations treat domestic disregarded entities, which are wholly owned by a foreign person, as US domestic corporations for Form 5472 filing purposes.
Disregarded entities must submit the Form 5472 with a pro forma Form 1120.
IRC § 6038A, Treas. Reg. § 1.6038A-1, and the Who, What, When, and Where of Filing Form 5472.
The Form 5472 requests information the IRS deems necessary to investigate whether foreigners are manipulating related-party transactions and consequently decreasing US tax revenues. To this end, Form 5472 requires identifying information from reporting corporations and 25% foreign shareholders. Regarding what information must be provided, IRC § 6038C(b)(1) adopts the requirements of IRC § 6038A(b), which include:
1. the name;
2. principal place of business;
3. nature of the business; and
4. the country or countries in which each related party—with any transaction with the reporting corporation—is organized or resides.
Once the related party is listed, information regarding how the reporting corporation is related to each related party must be provided. Then, any transactions between the reporting corporation and each foreign person which is a related party must be detailed.
IRC § 6038A and Treas. Reg. § 1.6038A-2 through 1.6038A-7 detail which foreign-owned US corporations and foreign corporations engaged in trade or business within the US must file Form 5472, what records must be maintained, and what information must be available for audit.
IRC § 6038A(c)(1) defines a reporting corporation required to file Form 5472 (sometimes the “Taxpayer”) as a domestic corporation that is 25-percent foreign-owned. Foreign-owned means ownership by one foreign person of either 25 percent of the voting stock or 25 percent of the value of all classes of the domestic corporation’s stock. A “foreign person” is any person who is not a “United States person” under IRC § 7701(a)(30). The attribution rules, under IRC § 318, apply when determining if a corporation is 25-percent foreign-owned and whether someone is a related party for IRC § 6038A purposes. Form 5472 is also required from each foreign or domestic related party with which the reporting corporation had a reportable transaction.
Under IRC § 6038A(b), the term related party means:
1. any 25-percent foreign shareholders of the reporting corporation;
2. any person related, as defined by § 267(b) and 707(b)(1), to the reporting corporation or to a 25-percent foreign shareholder of the reporting corporation; and,
3. any other person related to the reporting corporation, as defined under § 482.
Reportable transactions are defined in Treas. Reg. § 1.6038A-2(b)(3)&(4). Related-party transactions reported on Form 5472 include:
1. sales or stock or property;
2. commissions paid and received;
3. rents and royalties paid;
4. consideration for services; and
5. amounts loaned and borrowed.
- There is a Small Amounts Exception – Treas. Reg. § 1.6038A-2(b)(7) provides that, “[i]f any actual amount required under this section does not exceed $50,000, the amount may be reported as “$50,000 or less.”
- The Preparer May Use Reasonable Estimates – Treas. Reg. § 1.6038A-2(b)(6)(i) provides that “[a]ny amount reported under this section is considered to be a reasonable estimate if it is at least 75 percent and not more than 125 percent of the actual amount.”
- There is a Small Corporation Exception that Excuses Some Recordkeeping Requirements. Reporting corporations with less than $10,000,000.00 in gross receipts for a taxable year must file a Form 5472 but they are excused from the heightened record maintenance requirements in Treas. Reg. § 1.6038A-3 and the requirement to have an authorized agent, under Treas. Reg. § 1.6038A-5.
- The How, When, & Where of Filing Form 5472 – Form 5472 is due on the due date of the Taxpayer’s Form 1120, including extensions. Form 5472 should be attached to the corporation’s income tax return on the filing deadline, which also includes extensions. Disregarded entities cannot file their Form 5472 electronically. Form 5472 should be attached to the Form 1120 and filed either: electronically; via fax (300 DPI or higher) to (855) 887-7737; or mailed to Internal Revenue Service, 201 West Rivercenter Blvd., PIN Unit, Stop 97, Covington, KY 41011.
The Penalty for Failing to File Form 5472 Starts at $25,000
Failure to file Form 5472 can result in a penalty of $25,000.00 per year (was $10,000.00 prior to 2018). There is also a continuation penalty. This means that if the Taxpayer does not file a substantially complete Form 5472 within 90 days of being notified to do so by the IRS, the IRS can assess an additional $25,000.00 penalty for each 30-day period that the taxpayer fails to cure t
he failure to file. Unlike other continuation penalties, there is no limit to the continuation penalty for a failure to file Form 5472.
The Fifth Amendment implications of this penalty are beyond the scope of this overview. The $25,000 Penalty Applies to Forms 5472 that are Not Substantially Complete Treas. Reg. § 1.6038A-4(a)(1) memorializes the IRS’s position that filing a Form 5472 that is not “substantially complete” (i.e., a substantially incomplete filing) should be penalized as a failure to file.
By contrast, Treas. Reg. § 1.6038A-2(b) provides:
(6) Reasonable estimate –
(i) Estimate within 25 percent of actual amount. Any amount reported under this section is considered to be a reasonable estimate if it is at least 75 percent and not more than 125 percent of the actual amount.
(ii) Other estimates. If any amount reported under this paragraph (b) of this section fails to meet the reasonable estimate test of paragraph (b)(6)(i) of
this section, the
reporting corporation nevertheless
may show that such amount is a reasonable estimate by
making an affirmative showing of relevant
facts and circumstances
in a written
statement containing a
declaration that it
is made under
the penalties of
perjury. The District
Director shall determine
whether the amount
reported was a reasonable estimate.
(7) Small amounts. If
any actual amount required under this section
does not exceed $50,000, the amount may be
reported as “$50,000 or less.”
Against this background, whether an item “under or
over-reported” on a Form 5472 renders the Form 5472 “substantially incomplete” is
determined case by case considering the safe harbors provided by regulation. The IRS
guidance suggests that the tax professional contesting the penalty should perform
a two-prong balancing test:
(1) what is the magnitude of the errors
(2) what is the effect of the noncompliance on the IRS
ability to audit the information as required by statute and regulations.
Stated another way, tax professionals should argue that the
regulations on whether a Form 5472 complies or substantially complies with the
statute and regulations essentially incorporates the Beard test for whether a
return is validly filed, as adopted by the Tax Court in Beard v. Commissioner,
82 T.C. 766 (1984).
The IRS rarely
applies the First Time Abatement procedure to Form 5472 based penalties
Many have reported that the IRS has been automatically
imposing Form 5472 penalties whenever a Forms 5472 is filed late. This automatic
penalty is authorized by IRM 220.127.116.11.2 (4-28-2017). The automatic penalty
assessment causes the IRS to issue a CP 215 notice to the taxpayer. The CP 215
notice starts the collection process. Tax professionals receiving
CP 215 notices
should file a
request under the Freedom
of Information Act
(“FOIA”) requesting verification
of the IRS’s compliance with IRC § 6751(b)’s managerial approval requirement.
The first-time abatement
(FTA) penalty relief provisions
rarely apply to
event-based filing requirements, such as with Form 5472. However, the IRM authorizes abatement of the
Form 5472 penalty if the related abatement on the Form 1120 was made using FTA. The Penalty Can Be Excused or Mitigated on a
Showing of Reasonable Cause IRC § 6038A(d)(3)
and Treas. Reg.
§ 1.6038A-4(b)(1) provide
that “[c]ertain failures
may be excused
for reasonable cause, including not timely filing Form 5472, not
maintaining or causing another to maintain records as required by § 1.6038A-3.”
To show that reasonable cause exists,
Treas. Reg. § 1.6038A-4(b)(2) requires that the Taxpayer make an affirmative
showing of the facts in a written statement signed by the Taxpayer and
submitted under penalties of perjury. Treas. Reg. § 1.6038A -4(b)(2)(iii) explains
that the IRS determines whether a taxpayer acted with reasonable cause and in
good faith on a case-by-case basis, considering all facts and circumstances. Under Treas. Reg. § 1.6038A-4(b)(2)
reasonable cause includes but is not limited to:
1. Reliance on an information
2. Professional advice;
3. A reasonable belief that the
reporting corporation it is not owned by a 25-percent foreign share-
4. An honest
misunderstanding of fact
or law that
is reasonable in
light of the
knowledge of the taxpayer.
Small taxpayers requesting
penalty abatements should
direct the examiner’s
attention to Treas.
Reg. §1.6038A-4(b)(2)(ii) which
- · The District Director shall apply the reasonable
cause exception liberally in the case of a small corporation that had no
knowledge of the requirements imposed by section 6038A;
- · has limited presence in and contact with the
United States; and promptly and fully complies with all requests by the District Director to file Form 5472, and to furnish books, records, or other materials
relevant to the reportable transaction.
- · A small corporation is a corporation whose gross receipts for a taxable year are $20,000,000 or less.
Tax professionals preparing reasonable cause statements should address
the items referred to IRM Exhibit 21.8.2-2, Failure to File or Late-Filed Form
The Statute of Limitation to Penalize a Taxpayer and/or Audit a Form
5472 does not begin until the
Form 5472 is filed. Besides the
penalties resulting from not filing or late filing Forms 5472, failing to file
Form 5472 extends the time that the IRS has to audit the taxpayer’s
Effective for tax years beginning after March 18, 2010, IRC §
In the case of any information which is required
to be reported to the Secretary
pursuant to under.
. . section[s]
. . .
6038, 6038A, 6038B,
6038D, 6046, 6046A, or 6048, the time
for assessment of any tax
imposed by this title with respect to regarding any tax
return, event, or period to which such information relates shall not expire
before the date which is 3 years after the date on which the Secretary is
furnished the information required to be reported under such section.
The statute of limitations for tax returns
requiring a Form 5472 does not begin until the Form 5472 is filed. Failure to file Form 5472 thus risks giving
the IRS an indefinite amount of time to assess penalties against the taxpayer.
The Recordkeeping Requirements of IRC § 6038A and IRC § 6038C have
procedural and substantive due process consequences for the examination of
Taxpayers Tax professionals accustomed to domestic substantiation cases will
quickly observe that the first difference between the examination of a domestic
and foreign corporation is that IRC § 6038A imposes a penalty for failure to
maintain (or cause
another to maintain)
records as required.
Failure to maintain
adequate records also comes with
a $25,000.00 penalty per year. The IRC
§ 6038A penalty is also subject to a limitless
continuation penalty. The
penalties for failing
to maintain records
in IRC §
6038C which applies
to foreign corporations
engaged in US
trade or business
mirrors the language
and requirements of
IRC § 6038A. Penalties,
including continuation penalties, for
violations of both
failure to file
and failure to
maintain adequate books
and records can
run concurrently; meaning
that if a
foreign-owned US corporation
does not comply with both, it will be subject to two $25,000 penalties and to
potentially double continuation penalties, which would amount to $50,000 per
Professionals representing small corporations should know that although
small corporations must maintain records to substantiate deductions, they are
exempt from penalties for failure to maintain these records. Likewise, reporting corporations making or
receiving gross payments from foreign
related parties regarding related party transactions will not be
penalized for a failure to maintain records (or for a failure to authorize an
agent under Treas. Reg. § 1.6038A-5) if the value of the transactions is not
more than $5,000,000.00 or 10% of the company’s U.S. gross income.
The second difference between the examinations in domestic
substantiation cases and cases involving foreign corporations is the IRS’s
claim that the Cohan Rule (which allows the estimate of an expense where the
taxpayer has established that the expense is a business expense but cannot
prove the amount of the expense) does
not apply. The IRS’s position results
from the tension between
Treas. Reg § 1.6038A-2’s authorization of “reasonable estimates” for
return preparation and
the IRS discretion
to reduce or
deny the deduction
for any amount
paid or incurred by Taxpayer to a related party when the taxpayer has
not kept “adequate records.”
As explained above, for purposes of determining whether a Form 5472 is
filed, Treas. Reg. § 1.6038A-2(b) (6) authorizes a tax preparers use of
reasonable estimates. In traditional
audits, the tax professional argues that
under the Cohan
Rule taxpayers unable
to produce records
of actual expenditures
may use indirect
methods to substantiate their estimates and deductions.
By contrast, in the absence of books and records, IRC § 6038A(e)(3)
allows the IRS to determine, in its sole discretion:
(A) the amount
of the deduction
allowed under subtitle
A for any
amount paid or
incurred by the
reporting corporation to
the related party
in connection with such
(B) the cost
to the reporting
corporation of any
property acquired in
such transaction from the
related party (or
transferred by such
corporation in such transaction to the related party).
IRS examiners contend that absent records, IRC § 6038A(e)(3) gives the
IRS the discretion to reduce or deny the deduction for any amount paid or incurred
by Taxpayer to a related party based on the
failure to maintain
adequate records. The
IRS claims that
the noncompliance penalty
of IRC §6038A(e)(3)
also applies in
the case of
a failure to
substantially and timely
comply with a
summons to produce records or testimony during the examination. There are no reported cases on whether the
Tax Court can review the reasonableness of the IRS’s exercise of discretion or
on what the limits of that exercise of discretion might be.
Read together IRC § 6038A(e)(3) and IRC § 982 mean that failing to comply
with the formal document requests issued by the IRS during an examination will
preclude de novo review of an IRS determination. Another major difference
in the Form
5472 examination is
the document request
process. Document requests in domestic examinations are not self-enforcing.
If a taxpayer ignores or refuses to comply with an IDR or a summons, the IRS
must bring a proceeding in US District Court to obtain the documents. The taxpayer’s
failure to comply with an IRS document request had little consequence if the taxpayer petitioned the Tax Court.
In Greenberg’s Express, the Tax Court held that the Tax Court trial is a
de novo proceeding in which the administrative record is irrelevant.
In Form 5472 examinations the IRS is authorized by IRC § 982(c)(1) to
issue a Formal Document Request (FDR) to any taxpayer to request foreign-based documentation. An FDR
is “any request
(made after the
normal request procedures
have failed to
produce the requested documentation) for the production
of foreign-based documentation which is mailed by registered or certified mail
to the taxpayer at his last known address and which sets forth” certain
information. Documentation includes
books and records; “foreign-based documentation” is defined as
“any documentation which is
outside the United
States and which
may be relevant
or material to
the tax treatment
of the examined item.” IRC § 982(d)(1), (2).
The FDR discourages taxpayers from delaying or refusing to disclose
certain foreign-based information to the IRS.
If the taxpayer fails to
substantially comply with the FDR within
90 days of the mailing of the request and fails to bring a proceeding to have
the FDR quashed, the statute imposes an exclusionary rule. In any subsequent
civil proceeding concerning the tax treatment of an examined item, the court
then having jurisdiction, on motion of the IRS, can prohibit the taxpayer from
introducing any foreign-based documentation
covered by the
An exception to
this exclusionary rule
will apply if
the taxpayer establishes
in that subsequent civil
proceeding reasonable cause for non-compliance with the FDR. Any person mailed an FDR may begin a
proceeding to quash the FDR if the proceeding is filed within 90 days after the
FDR was mailed.
If the taxpayer files a proceeding, the Secretary may seek to compel
compliance with the FDR in the same proceeding. If the taxpayer files a
petition to quash the FDR but does not prevail, res judicata (which
is a legal
doctrine that prevents
litigants from re-litigating a previously litigated matter or issue) applies so that
the exclusionary rule will apply in any such subsequent civil proceeding if the
taxpayer continues to fail to substantially comply with the FDR. Appeals Considers Challenges to Form 5472
Penalties Post Assessment IRC § 6038A(d)
authorizes the IRS
to assess applicable
penalties without first
sending a notice
of deficiency. Existing
procedures provide for the automatic assessment of the Form 5472 penalty.
Appeal rights for Form 5472 are post-assessment pre-payment penalty rights.
IRC § 6751(b) provides: “No penalty under [the I.R.C.] shall be
assessed unless the initial determination of such assessment
is personally approved
(in writing) by the
immediate supervisor of
the individual making
such determination or such higher level official as the Secretary may
designate.” To comply with IRC § 6751(b), the initial penalty is asserted on a Form
8278, Assessment and Abatement of Miscellaneous Civil
Penalties. Once this
Form 8278 is
processed, the taxpayer will
be sent a
CP215, Notice of Penalty Charge. The
collection process begins, regardless of whether the taxpayer includes with the
late Forms 5472 a statement of reasonable cause or a Form 843 request for abatement.
If the taxpayer does not pay the penalty after the CP 215 notice, the
IRS sends a CP 504B, Notice of intent to
seize (levy) your
property or rights
to property, pursuant
to IRC §
6330. This notice
provides the taxpayer with the option of pursuing an
Appeals conference, by filing a Form 9423, Collection Appeal Request. More
importantly, a taxpayer can also file a Form 12153, Request for a Collection
Due Process or Equivalent Hearing. To
request Appeals Office consideration of the penalty and preserve the taxpayer’s
rights for Tax Court prepayment review of the penalty, the taxpayer should
request a de novo review of the penalty by requesting a Collection Due Process
Hearing on Form 12153. The Form 12153
should also request
that the Appeals
Office verify compliance
with IRC §
6751(b). Form 5472 based penalties must be approved, in
writing, by the revenue agent’s manager, under IRC § 6751(b).
The manager must approve the case-control, sign the notice letters, and
approve the penalty by signing the Form
8278 prior to
closing the case.
Tax professionals challenging
the Form 5472
based penalty should
request that the Appeals Office verify the IRS compliance with IRC §
6751(b). To obtain an
expedited hearing, along
with the Form
12153, the taxpayer
should submit a
Qualified Offer under IRC § 7430. IRM 18.104.22.168.4 (10-01-2012) provides that
cases with qualified offers must be expedited and the Appeals Office will try
to resolve the issues within 90 days of when the qualified offer is filed.
Substantive Tax relating to Form 5472 Tax Deficiency are Litigated In
Deficiency Proceedings While
Penalty Appeals are
Litigated in Post-Collection Due
Process Hearing Litigation
Before the Tax Court If the IRS examination of Forms 5472 results in a deficiency
determination, the taxpayer can file a petition for redetermination of the
deficiency in the Tax Court. To date, the Tax Court has only issued one
opinion: ASAT, Inc. v. Comm’r, 108 T.C. 147 (1997). ASAT reinforces
the importance of recordkeeping and internal controls: Section 6038A was
enacted to insure that the IRS would have either timely access to the
information necessary to make a complete analysis of costs between related
parties or the right to make an adjustment based solely on the information that
it did have.
Whether the taxpayer
can later justify
a cost is irrelevant: Accordingly,
the amounts establish
ed by the
Secretary cannot be
overturned by a court on the basis that they diverge from actual costs
or other amounts incurred, or
on the basis
that they do
not clearly reflect
income. The fact that amounts established by the
Secretary can be proven to be
clearly erroneous, by
reference to information
or materials that were not
within the Secretary’s
knowledge or possession,
would not alone, in the conferees’ view, be sufficient
cause for a court to redetermine
allowable amounts of
deductions and the
costs of goods sold.
* * * [H. Conf. Rept. 101-386, at 594 (1989).]
By contrast, the Form 5472 compliance-related penalties are not subject
to the notice of deficiency requirement in IRC § 6212 (i.e., the penalties are
immediately assessable). If the taxpayer disagrees with the Appeals Office’s
determination made at the Collection Due Process hearing, the taxpayer may
appeal to the US Tax Court.
The Tax Court
is the only
post-assessment pre-payment forum
available outside of
bankruptcy. Under IRC § 6330, a taxpayer has 30 days from the IRS’s determination
(which must be left at taxpayer’s dwelling or sent by certified or registered mail to the taxpayer’s last
known address) to petition for relief in Tax Court.
To initiate a Tax Court case, the taxpayer (now known as petitioner)
will file a petition, designation for place of trial, and a statement with the
taxpayer’s identification number, which will accompany a filing fee of $60 (made
payable to Clerk, US Tax Court). Petitions
must include, among other items, facts and legal theories on why the petitioner
should prevail. Any issue not contested in the petition is deemed conceded by
petitioner (except for statutorily required issues, such as § 6751(b)
compliance). Also, the notice being appealed must be attached and any taxpayer
identification numbers (such as social security number) must be redacted. Form
5472 Litigation before the US Court of Federal Claims or the US District Court Except
for litigation about FDRs, most tax litigation relating to Form 5472 is brought
by taxpayers in the Tax Court because it is a pre-payment forum. However, some taxpayers may want to litigate
in the US Court of Federal Claims or
the US District
Court. Before commencing
suit in these
courts, the taxpayer
must first pay the tax and file a claim for refund from
Claims for refund must include the grounds on which a refund is claimed
and facts to support those grounds; all of which must be sworn to under
penalties of perjury. There are no reported cases from US Court of Federal
Claims or the US District Court that would allow us to opine on whether the
refund litigation pertaining to Form 5472 is preferable to litigation before
the Tax Court.
DIIRSP and Correcting the
Failure to File a Form 5472
The Delinquent International Information Return Submission Procedure (“DIIRSP”)
allows eligible taxpayers to correct their failure to file, as opposed to
failure to comply with the record-keeping requirements, without penalty. DIIRSP allows taxpayers who are not compliant
to file late returns if these criteria are met:
1. the taxpayer did not file
one or more
required international information returns;
2. the taxpayer has a
reasonable cause for
not timely filing the information return;
3. the taxpayer is not under a
on or criminal investigation by the IRS; and
4. the IRS has not already
he taxpayer regarding the delinquent return.
If a taxpayer has not filed a Form 5472, due to a reasonable cause, and
the IRS is neither investigating him nor has contacted him, then he can file his
delinquent returns without being penalized.
The delinquent returns must be filed with a reasonable cause statement.
This reasonable cause statement should include a
certification that the
foreign entity was not engaged
in tax evasion.
Reasonable cause statements
should be attached
to every delinquent
return being filed.
If the IRS
does not accept
the taxpayer’s reasonable cause
then a penalty may apply. Anecdotal data suggests that the IRS is applying reasonable
cause liberally when delinquent Forms 5472 are filed under the DIIRSP
One of the major trends in tax practice is the globalization of small
business. To address the challenges of international tax
administration, the IRS
has increased its
enforcement efforts on
international information reporting
and recordkeeping requirements
and increased assessments
of related penalties.
Until recently, taxpayers,
and many tax preparers, were
unaware of the
additional compliance obligations
resulting from foreign investment
in a domestic corporation or foreign business activity. The increased
enforcement efforts together with the
increased cost of
non-compliance (i.e., penalties)
now requires taxpayers
to understand the reporting and
recordkeeping requirements associated with IRS Form 5472, Information Return of
a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S.
Trade or Business
Source: Agostino & Associates, Monthly Journal of Tax Controversy, April 2018