How to properly report ROBS transaction ownership on 1120 Schedule G for C corp with retirement plan shares?

Thank you for confirming my instincts! I was leaning that way but wasn't confident. Just to be clear, I should list each spouse separately on Schedule G, correct? Each would be shown as a 50% owner?

Yes, you should list each spouse separately on Schedule G. Each would be shown as owning 50% of the voting stock through their respective portions of the retirement plan. Make sure to complete all required information for each spouse, including their TINs, addresses, and percentage of ownership. This properly discloses the beneficial ownership structure to the IRS.

How exactly does taxr.ai handle ROBS situations? My understanding was that a qualified retirement plan is technically the legal owner of the shares, not the individuals. Does the tool distinguish between legal and beneficial ownership?

Sounds too good to be true. I've spent countless hours researching these indirect ownership reporting requirements. Does this tool actually provide specific citations to the relevant regulations? And does it help with the actual form preparation or just the research?

It actually distinguishes between legal and beneficial ownership, which is crucial for ROBS structures. The tool identified that while the retirement plan is the legal owner, the individuals who control the plan are the beneficial owners for reporting purposes, which is what Schedule G is really asking for. Yes, the tool provides specific citations! It referenced Treasury Regulation 1.6038A-1(e) regarding constructive ownership rules and provided the exact IRS guidance on looking through retirement plans for beneficial ownership reporting. It doesn't prepare the forms for you, but it gives you clear guidance on how to complete them correctly with the exact regulatory support.

How does this actually work? I'm confused - do they somehow have a special line to the IRS or something? I've been on hold for hours with the IRS before and it seems impossible to get through.

Yeah right. There's no way this actually works. I've tried calling the IRS Business line multiple times this tax season and it's always the same "due to high call volume" message and disconnection. If this service actually got you through to a real person in 15 minutes, I'll eat my calculator.

They don't have a special line to the IRS. What they do is use an automated system that waits on hold for you. When their system detects that an agent has picked up, they call you and connect you with the agent. It's basically like having someone else do the hold time for you. I was pretty skeptical too. But after wasting so many hours trying to get through myself, I figured it was worth a try. I submitted my request around 9am, went about my day working on other returns, and got a call about 2 hours later that an agent was on the line. I didn't have to actually sit there listening to the hold music or worry about missing my place in line. Trust me, I understand the skepticism, but it actually works.

Form 5472 typically applies to foreign-owned U.S. corporations or foreign corporations engaged in U.S. trade/business. Unless there are foreign persons in this ROBS structure (which wasn't mentioned), Form 5472 shouldn't be required. The focus should remain on Schedule G for domestic beneficial ownership reporting.

You're right that Form 5472 typically involves foreign ownership. I should have been clearer - I was wondering if the retirement plan had any foreign investments or if any of the beneficial owners might be foreign persons, which could trigger additional reporting requirements. If it's purely domestic individuals owning a domestic retirement plan that owns a domestic corporation, then you're absolutely correct that Schedule G would be the primary focus rather than Form 5472.

We haven't encountered any life insurance policies in this particular ROBS structure, but that's a really good point to check! I'll definitely verify with the client if there are any employer-owned life insurance contracts that would require Form 8925. Thanks for flagging this - it's easy to miss these additional filing requirements in complex structures.

That's an excellent point about Form 5500 requirements! I hadn't fully considered the ERISA compliance side of this ROBS structure. Since the retirement plan is investing in employer securities (the corporation shares), proper valuation will be critical for Form 5500 reporting. Do you know if there are specific valuation requirements for employer securities in ROBS arrangements? I'm wondering if they need an independent appraisal annually or if there are other acceptable valuation methods for the plan's investment in the corporation. This is definitely adding another layer of complexity to what I initially thought was just a Schedule G reporting question!

This is incredibly helpful information about the appraisal requirements! I'm just getting up to speed on ROBS structures and had no idea about the annual independent appraisal requirement for Form 5500 compliance. Quick follow-up question - do you know if the appraisal timing needs to align with the plan year end, or can it be done at any point during the year? And are there any safe harbors or simplified valuation methods for smaller ROBS arrangements, or is the independent appraisal pretty much mandatory regardless of business size? Also wondering about the 10% employer securities limitation you mentioned - in most ROBS structures I've seen, the plan owns 100% of the corporation shares. Are you saying this could be an ERISA violation, or are there specific exceptions that apply to ROBS arrangements?

Great questions! The appraisal should typically be done as of the plan year end for Form 5500 reporting purposes, though some plans get it done within a reasonable time after year-end (usually within the first quarter of the following year). Regarding the 10% limitation - you're absolutely right to question this. ROBS structures are actually a specific exception to the normal ERISA employer securities limitations. When properly structured, the retirement plan can own 100% of the qualifying employer securities without violating ERISA's diversification requirements. The key is that it must be "qualifying employer securities" as defined under ERISA Section 407(d)(5). However, the plan still needs to meet other ERISA requirements like proper fiduciary oversight, reasonable investment terms, and adequate valuation. The annual appraisal becomes even more critical in these 100% ownership situations since there's no market pricing available for the securities. There aren't really any safe harbors for smaller arrangements - the fiduciary responsibility and valuation requirements apply regardless of business size. The cost of annual appraisals (typically $3,000-$8,000+) is something clients need to budget for as an ongoing compliance cost of maintaining the ROBS structure.

This is such a great question! I'm also relatively new to ROBS structures and have been learning a lot from this thread. For educational resources, I'd recommend starting with the Department of Labor's guidance on ROBS arrangements (they have some helpful FAQs) and the IRS Employee Plans page which covers the tax aspects. The American Society of Pension Professionals & Actuaries (ASPPA) often has webinars and courses that cover ROBS compliance from the retirement plan perspective. For the corporate tax side, I've found that CCH and BNA have some good treatises that cover the Schedule G reporting requirements for these complex ownership structures. When taking on ROBS clients, I think creating a comprehensive checklist is crucial - covering everything from Schedule G reporting to Form 5500 requirements to annual appraisal scheduling. The interconnected nature of corporate, retirement plan, and ERISA compliance makes it easy to miss something important. It might also be worth developing relationships with ERISA attorneys and qualified appraisers who specialize in ROBS structures, since you'll likely need their expertise regularly.

This is excellent advice about documentation! I'm just starting to work with ROBS structures and hadn't fully appreciated how important the paper trail is for establishing the beneficial ownership chain. Quick question - when you mention state law implications, are you referring to things like beneficial ownership disclosure requirements at the state level, or are there other state corporate filing obligations that could impact the federal Schedule G reporting? I want to make sure I'm not missing any state-specific requirements that could create compliance issues for my ROBS clients. Also, do you have any recommendations for what to do if the original ROBS setup documents are incomplete or ambiguous about the individuals' control over the plan? Is it possible to amend the plan documents retroactively, or would that create other complications?