Who must file Form 5472?

Form 5472 is required for foreign-owned domestic disregarded entities, which in practice means US LLCs where a foreign person owns 25% or more of the LLC and the LLC had reportable transactions with that owner.

The 25% ownership threshold

A foreign person is a 25% foreign shareholderif they own, directly or indirectly, at least 25% of the total voting power or total value of the LLC's interests at any point during the tax year.

For a single-member LLC with one foreign owner, the most common case, the threshold is automatically met. 100% foreign ownership = 100% > 25%.

What is the ETBUS test?

ETBUS stands for Engaged in a Trade or Business in the United States. A foreign corporation (or LLC treated as a corporation for tax purposes) that is engaged in a US trade or business must also file Form 5472.

For most foreign-owned single-member LLCs (treated as disregarded entities), the ETBUS test is secondary, the 25% ownership + reportable transaction rule is the primary trigger. However, if your LLC has US-source income or US employees, additional rules and forms may apply.

What counts as a reportable transaction?

A reportable transaction is any exchange of money, property, or services between the US LLC and a related foreign party. This includes:

• Capital contributions by the foreign owner to the LLC
• Distributions from the LLC to the foreign owner
• Payments for services performed for or by the foreign owner
• Loans, advances, or debt between the LLC and the foreign owner
• Sales or purchases of property

Even a single $1 capital contribution from the foreign owner to the LLC triggers the reportable transaction rule.

Zero activity does not exempt you

A dormant LLC still needs to file if the ownership threshold is met and any transaction occurred. Many founders assume that because the LLC had no revenue, no filing is needed. This is incorrect.