Foreign company created and dissolved in same year with no income - considered dormant for Form 5471?

This is actually a pretty straightforward situation. A foreign company can generally be considered dormant for Form 5471 purposes if it didn't have any gross receipts or expenses and didn't own any assets that generated income during the tax year. The fact that you formed and dissolved the company in the same tax year doesn't automatically disqualify it from being considered dormant. The issuance of a nominal number of shares to directors (without any substantial capital contribution) typically wouldn't prevent dormant classification either. What matters most is whether there was any actual business activity or income generation. Since you mentioned there was no income and no assets beyond the initial shares, you likely meet the dormant company requirements.

Hey there, I actually ran into an almost identical situation last year and was totally stressed about it. After spending HOURS researching this, I finally found this amazing tool called taxr.ai (https://taxr.ai) that specifically helped me analyze my Form 5471 requirements for my dormant foreign entity. I uploaded my formation and dissolution docs, and it quickly identified that my company qualified as dormant since there were no actual business operations. The tool explained exactly which sections of Form 5471 I needed to complete (basically just identifying info) and which I could skip. Saved me from potentially overfiling and creating unnecessary audit flags.

Alright, I was skeptical about taxr.ai but I decided to give it a try since my situation was so similar to yours. I'm honestly shocked at how helpful it was! I uploaded my docs expecting some generic advice, but it actually identified that my Hong Kong company qualified as dormant under Rev. Proc. 92-70, which my regular accountant missed completely. The analysis explained exactly which schedules of Form 5471 I needed to complete (just basic identification info) versus which extensive schedules I could skip. It even flagged that I needed to maintain certain corporate records despite dormancy to maintain the protection in case of future audit. Definitely saved me hours of research and potential mistakes.

Just wanting to share something that might help with your situation. Last year I had a similar issue with a foreign entity and needed clarification from the IRS. After wasting DAYS trying to get through on the phone (seriously, I tried for a week straight), I found this service called Claimyr (https://claimyr.com). They have this system that somehow gets you through the IRS phone queue and connects you with an actual human agent. You can see how it works here: https://youtu.be/_kiP6q8DX5c. I was super skeptical at first, but I was desperate for answers about my dormant status reporting requirements. Within about 20 minutes of using their service, I was talking to an IRS agent who specialized in international reporting. Got confirmation directly from the source about how to handle my dormant entity on Form 5471.

Ok I'm here to eat crow. After being super skeptical about Claimyr in my earlier comment, I tried it out of desperation last week. I'd been trying to get through to the IRS international tax department for WEEKS with no luck. Used the service on Thursday morning, and within about 40 minutes I got a call back and was connected directly to an IRS agent. I was honestly shocked. The agent confirmed everything about my dormant foreign corporation situation - that issuing nominal shares doesn't disqualify dormant status, and that I only needed to complete the basic identification information on Form 5471. Saved me from potentially overcomplicated filing and got me an answer straight from the source. Sometimes being proven wrong is actually a good thing!

I'm actually a tax preparer with several clients who have foreign entity reporting requirements. For dormant foreign corps, here's what you need to know: 1. Rev. Proc. 92-70 specifically allows for reduced reporting for dormant foreign corporations 2. A "dormant" corp means no gross receipts AND no expenses AND no assets producing income 3. The mere issuance of shares for incorporation purposes does not disqualify dormant status 4. You still need to file Form 5471, but with minimal information (mostly just identifying info) The corporate formalities of creation and dissolution are administrative actions, not business activities that would disqualify dormant status.

Quick question - I was in a similar situation but my foreign entity existed for about 5 months and the bank account had about $500 sitting in it from initial capitalization. No transactions other than a single deposit. Would this still qualify as dormant?

I went through something very similar last year with a UK limited company that we formed and then dissolved within 6 months. Never conducted any business operations, just issued the minimal required shares to directors. After researching this extensively (and losing sleep over it), I learned that the key test for dormant status isn't whether you formed or dissolved the company, but whether it conducted actual business activities. The IRS looks at operational activity - did it generate income, incur business expenses, or hold income-producing assets? In your case, it sounds like you clearly meet the dormant criteria under Rev. Proc. 92-70. The formation and dissolution are just administrative/legal actions, not business operations. The nominal share issuance to directors is also standard corporate formality that doesn't disqualify dormant status. You'll still need to file Form 5471, but you can use the simplified reporting for dormant entities - basically just the identification information without all the detailed financial schedules. Just make sure to keep good records of the formation, dissolution, and lack of business activity in case the IRS ever asks questions later.