March 2000

More Tax Forms for Reporting Cross-Border Transactions

This column is the second in a two-part series on federal tax forms needed to report cross-border activities. As more than 80 IRS forms are peculiar to cross-border situations, the following forms and those presented in the February column cover only specific forms and the scope of reporting mandated by certain business transactions.

Form 706-NA, U.S. Estate and Generation-Skipping Trust. Use this form to compute the estate tax and generation-skipping tax on the transfer of a nonresident alien's U.S. estate.

Form 706-QFT, U.S. Estate Tax Return for Qualified Domestic Trusts. Use this form to figure the estate tax due on certain distributions from the QDOT and on the value of the remaining property in the QDOT. This form may also be used to notify the IRS that the trust has become exempt from further filing requirements.

Form 926, Return by U.S. Transferor of Property to a Foreign Corporation. Use this form to report transfers of tangible and intangible property to a foreign corporation.

Form 1040-NR, U.S. Nonresident Alien Income Tax Return. Nonresident aliens file this form to report their U.S. source income.

Form 1078, Certificate of Alien Claiming Residence in the United States. This form is used to stop withholding on passive U.S. source income going to a former nonresident alien that has become a U.S. resident.

Form 1116, Foreign Tax Credit: Individual, Estate, Trust, or Nonresident Alien Individual. Noncorporate taxpayers use this form to claim a foreign tax credit. They are not eligible to make an election to claim the credit without filing this form.

Form 1117, Income Tax Surety Bond. The IRS may request this form from a taxpayer who wishes to take a tax credit for foreign taxes that have not yet been paid. If the IRS requests that a surety bond be paid and the taxpayer does not comply, the foreign tax credit will be disallowed.

Form 1118, Foreign Tax Credit: Corporations. Use this form to compute a corporation's foreign tax credit.

Form 1120-F, U.S. Income Tax Return of a Foreign Corporation. All non-U.S. corporations use this form to report their U.S. source income.

Form 1120-FSC, U.S. Income Tax Return of a Foreign Sales Corporation. Foreign sales corporations use this form to report their U.S. taxed income.

Form 1120-IC-DISC, Interest Charge Domestic International Sales Corporation Return. Interest charge domestic international sales corporations use this form to file their U.S. tax returns.

Form 2063, U.S. Departing Alien Income Tax Statement. A nonresident alien files this information return when leaving the U.S., even temporarily, to report U.S. source income. This is, in effect, a "sailing permit."

Form 2350, Application for Extension of Time to File U.S. Income Tax Return (Citizens or Resident Aliens Abroad). U.S. individuals use this form to apply for a filing extension when they need additional time to establish that they meet the substantial presence test to use the exclusion on their income tax return.

Form 3520-A, Annual Information Return of Foreign Trust with U.S. Owner. A trustee of a foreign trust files this return to provide information needed by the U.S. owner to meet reporting requirements.

Form 4790, Report of International Transportation of Currency or Monetary Instruments. This form is necessary when $10,000 or more in currency is transported into or out of the United States.

Form 5713, International Boycott Report. This report is attached to the income tax return and includes a computation of tax if necessary. It has attachments of Schedules A, B, and C.

Form 5735, Possessions Corporation Tax Credit Allowed. Use this form to calculate any possessions tax credit to which the corporation may be entitled.

Form 8621, Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund. Use this form to report all PFIC calculations.

Form 8838, Consent to Extend the Time to Access Tax Under Section 367: Gain Recognition Agreement. This form preserves nontaxable treatment of cross-border transactions that would not have been taxable in a domestic setting.

Form 8854, Expatriation Information Statement. This form must be filed by U.S. citizens who gave up their citizenship or by long-term green card holders who relinquished their green cards.

On behalf of the NYSSCPA International Taxation Committee, I would like to extend our wishes to the readers of this column for a productive tax season. *

Lawrence Shoenthal is chair of the NYSSCPA International Taxation Committee and a principal with M.R. Weiser and Co. LLP.