Capital contribution to foreign business - Form 926 filing requirement?

Thanks for the info! But I'm a little confused - if I just transferred cash (not physical property or intellectual property), does Form 926 still apply? And how detailed does the form get? Do I need to provide documentation from the foreign business?

Cash is absolutely considered property for Form 926 purposes, so your cash contribution does trigger the filing requirement. The IRS considers essentially any type of asset as "property" in this context. The form itself isn't extremely complicated, but you'll need to provide details about the foreign corporation (name, address, identifying number), information about your transfer, and your ownership percentage before and after the transfer. You generally won't need to attach documentation from the business with the form, but you should keep those records in case of any questions from the IRS later. Part III of the form is where you'll report the cash transfer.

That sounds helpful, but how does it work with foreign language documents? All my business paperwork is in Korean and I'm worried about translation issues.

Are they actually legit though? I've tried so many tax tools that claim to handle international situations but then completely fall apart once you get into the details. How accurate was their guidance compared to what an actual accountant would tell you?

They handle foreign language documents really well - you can upload documents in their original language and the system can process many of them directly. For some languages, they'll recommend using their translation feature first, but Korean is one they handle natively from what I remember. Regarding legitimacy - I was skeptical too initially. The difference is they specifically focus on international tax situations rather than trying to be a general tax tool. I actually had my accountant review their recommendations afterward, and he was impressed with the accuracy. He said their guidance on the Form 926 was spot-on, especially for identifying which parts of the form applied to my situation and which didn't.

How does this actually work? Do they just call the IRS for you or something? I'm confused about what service they're providing that I couldn't just do myself.

Yeah right. There's no way this actually works. The IRS phone system is fundamentally broken - I've tried calling at all hours and days of the week and never get through. And even if you did somehow get an agent, they'd probably give you wrong information anyway. I'll believe it when I see it.

They don't just call for you - their system navigates the IRS phone tree and holds your place in line. When they're about to connect with an agent, you get a call so you can speak directly with the IRS person. It's basically like having someone wait on hold for you, and you only get pulled in when there's actually an agent ready. Regarding getting accurate information - I was concerned about that too. What I learned is that if you ask very specific questions about forms and filing requirements (rather than tax law interpretations), the agents are actually quite knowledgeable. The agent I spoke with immediately recognized my foreign business situation and directed me to the exact forms and instructions I needed.

Thanks for the reminder about FBAR! I do file those annually, but it's a good callout since my ownership percentage has increased. Does my ownership change affect anything specific on the FBAR filing? Also, should I be worried about any other forms besides 926 and FBAR with this new capital contribution?

Your increased ownership doesn't change the FBAR filing itself - if you're already filing them, you'll just continue to do so. The key is ensuring you list all accounts where you have signature authority or financial interest. As for other forms, you should definitely look into Form 8938 (Statement of Specified Foreign Financial Assets) if your ownership in the foreign company exceeds certain thresholds. Also, depending on how the foreign business is structured, you might need to file Form 5471 if it's a foreign corporation where you own 10% or more. Given your 43% ownership, this would almost certainly apply. These international information returns can be complex, but the penalties for not filing them are substantial, so it's worth making sure you've covered all your bases.

This is a great point. I went down this exact rabbit hole last year. The determining factor is whether the entity is treated as a corporation or partnership for US tax purposes, which doesn't always match how it's categorized in the foreign country. Drove me insane trying to figure it out!

This is such an important distinction that I completely overlooked initially! I'm actually not 100% sure about the exact legal structure - I know it's registered as a company in the local jurisdiction, but you're right that the US tax treatment could be different. I should probably dig into the incorporation documents to see exactly what type of entity it is and whether any elections were made for US purposes. Would the wrong form filing be considered a failure to file the correct form, or would the IRS give some credit for attempting to report the transaction? I'm worried I might pick the wrong one!