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Code § 6038 provides the rules for filing Form 5471. Treas. Reg.
1.6038-2(a) specifies that Form 5471 must be filed. Treas. Reg.
1.6038-2(b) defines control for this purpose. Treas. Reg. 1.6038-2(c)
provides that Code § 318 applies with certain modifications. However,
the modification in Code § 958(b)(1) is not included in this
regulation. Treas. Reg. 1.6038-2(l) provides an exception from filing
where stock is owned via attribution. However, this exception only
applies if the U.S. person does not own any direct or indirect
interest in the foreign corporation. Because you own an interest in
the foreign corporation, this exception will not apply. Therefore,
you are attributed the stock owned by your wife for purposes of
determining control under Code § 6038. This makes you a category 4
filer. The rules for category 3 filers are generally found in Code §
6046.

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Where is that specified in the regulations?

Tony

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You have a special circumstance. You are correct that Code § 958(b)
(1) indicates that your nonresident alien wife's shares are not
attributed to you for purposes of determining whether the corporation
is a CFC. Thus, I agree that the corporation would not be a CFC and
the year end can be a non-calendar year. However, for purposes of
filing Form 5471, you are treated as controlling the foreign
corporation. This makes you a category 4 filer and you need to file
Form 5471 annually. I don't recall your specific facts provided in
other threads, but you may also be a category 3 filer and a category 2
filer.

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<jmail7[at]andrewmitchel.com> wrote in message
news:f9fdf0b3-bc44-4a4f-ae80-5ccef974539f[at]k13g2000hse.googlegroups.com...
- quote -

The majority of shares are owned by my wife, who is not a US citizen and
never has been. We both live in England and have done for the entire time
the company has been in existence.

- quote -


Have I interpreted that correctly, or am I mistaken?

Tony

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- quote -

You need to make sure you understand the ownership rules to conclude
that U.S. ownership is less than 50%. If U.S. persons, in substance,
have control of more than 50% of the vote or of the value of the
foreign corporation, then it would likely be a CFC.

If you conclude that it is not a CFC, then Code § 898 does not apply
to require a December or November year end.

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It appears I need to file this form. The company year ends each year on
February 28.

US ownership is less than 50% of the company.

Do I really need to recalculate the accounts to end on December 31?

TOny

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >