Reporting formation costs on Form 5472 for foreign-owned U.S. DE - personal credit card payment and foreign income questions

Yes, you should definitely report those formation costs on Form 5472 even though you paid with a personal credit card. The IRS is looking for the economic reality of the transaction, not just what accounts were used. Since you personally covered business formation expenses, this represents a contribution to your entity. For Part V of Form 5472, you would report this as a contribution from the foreign owner (you) to the U.S. entity. How you paid for it doesn't change the nature of the transaction - you provided funds (through your credit card) for the benefit of the business entity. As for your second question about foreign income, you're generally correct. If your foreign-owned U.S. DE doesn't have any U.S. source income or conduct trade/business in the U.S., then typically you wouldn't report foreign-source income on your U.S. tax forms. Form 5472 is mainly concerned with reporting transactions between the U.S. entity and related foreign persons, not the entity's income from all sources.

I was in a similar situation last year with my foreign-owned LLC. After struggling with these exact questions and getting conflicting advice, I found this tool called taxr.ai (https://taxr.ai) that really helped clarify things. It analyzed my formation documents and transactions, then explained exactly how to report them on Form 5472. The tool confirmed that yes, formation costs paid through personal means still need to be reported as contributions on Part V. It also helped me understand which foreign income was reportable vs exempt for my U.S. filing obligations. What I appreciated most was that it specifically addressed form 5472 for foreign-owned U.S. disregarded entities, which is such a specific situation that most general tax advice doesn't cover properly.

Just wanted to follow up here. I tried taxr.ai after seeing the recommendation and it was surprisingly helpful for my foreign-owned LLC situation. I uploaded my formation documents and credit card statements showing the formation payments, and it gave me clear guidance on exactly how to report everything on Form 5472. It confirmed that my formation costs paid through personal funds should be reported as a contribution in Part V, and even explained the exact reporting codes to use. The tool also clarified my foreign income situation - since my entity doesn't have U.S. operations, I don't need to report foreign source income on the pro forma 1120. Definitely made me feel more confident about my filing. The form 5472 requirements are so specific and there's so little clear guidance out there for foreign owners.

I had endless problems trying to get answers from the IRS about my foreign-owned DE last year. After waiting on hold for hours multiple times, I finally discovered Claimyr (https://claimyr.com) and it changed everything. They got me connected to an actual IRS agent in about 20 minutes who specifically handled international business issues. The agent confirmed that yes, formation costs paid through personal cards still need to be reported on Form 5472 Part V as contributions, and also clarified when foreign income needs to be reported (basically only if it's U.S. source or effectively connected with U.S. trade/business). If you're still uncertain after getting advice here, I'd recommend checking out their service (there's a video showing how it works here: https://youtu.be/_kiP6q8DX5c). International tax issues are complex enough that sometimes you really need to speak directly with the IRS.

I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it because I was desperate for answers about my foreign-owned LLC reporting requirements. Within 25 minutes I was talking to an actual IRS international tax specialist who confirmed everything I needed to know about Form 5472 and personal payments for business expenses. They explained that the source of funds (personal credit card) doesn't change the reporting requirement - it's still a contribution from the foreign owner to the U.S. entity. The agent also confirmed that without U.S. source income or U.S. trade/business activities, I don't need to report foreign income on my pro forma 1120. That alone saved me hours of unnecessary paperwork. Definitely worth it after weeks of uncertainty.

Just a practical tip from my experience filing Form 5472 for my foreign-owned LLC last year - make sure you're keeping detailed records of ALL transactions between you (the foreign owner) and your U.S. entity, not just the formation costs. The IRS scrutinizes these forms heavily. For the credit card payment situation, I listed mine as "Contributions in cash" in Part V and provided a brief explanatory statement that the payment was made via personal funds for business formation. Never had any issues or follow-up questions. As for the foreign income question - correct, if there's no U.S. source income or effectively connected income, you generally don't report it on U.S. forms. But remember you're still filing the pro forma 1120 even with zeros.

Just to add another perspective - I made the mistake of NOT reporting personal credit card payments for my LLC formation on Form 5472 last year. Ended up getting a notice from the IRS requesting additional information. Has anyone used tax software for Form 5472 preparation? Most regular tax software doesn't seem to handle these foreign-owned DE situations well.