Recalde Law Firm, P.A. is a Florida law firm with an office in Miami, Florida. We advise on United States law only. We do not practice Mexican law, and we do not give Mexican tax or succession advice. We do not practice the law of any other country. Formation of a non-U.S. entity, and the local law of that jurisdiction, are matters for local counsel. We handle the U.S. architecture: classification, the documents a U.S. custodian and a U.S. court will read, and coordination with the family's tax adviser.
A limited liability company formed in the United States with a single foreign owner is often disregarded for federal income tax. Disregarded does not mean invisible. Section 6038A and the regulations under it require that LLC, in the ordinary case, to file Form 5472 and a pro forma Form 1120 to report reportable transactions with its foreign related parties. The filing is information. It is not a reason to avoid the entity, and it is not a promise about tax due.
Advisers and accountants see this when a Wyoming or Delaware LLC is the general partner of a holding partnership, or when the LLC itself holds an account, and the sole member is a foreign individual or a foreign company. Families from Mexico, Chile, or Colombia use that pattern. Families from Brazil, Panama, or Argentina use it as well. The home-country treatment of the LLC is for home-country counsel. The Form 5472 question is a U.S. reporting question.
Who files
The reporting corporation is the LLC, even though its income, if any, is reported by its owner. The Instructions for Form SS-4 tell a disregarded entity that is requesting an EIN in order to file Form 5472, as a U.S. disregarded entity wholly owned by a foreign person, to say so on the application. The LLC needs its own EIN for that filing. The owner's EIN, if the owner is a company, does not replace it.
The return is a pro forma Form 1120 with Form 5472 attached. It is not an income-tax return that computes taxable income of the LLC as a corporation, unless the LLC has in fact elected corporate classification. Leaving the default in place and then filing a full corporate return by habit is a different mistake. The tax adviser prepares the form. The firm assigns responsibility for the classification: disregarded, partnership, or corporation. That classification is Form 8832, and the place of the LLC in the stack is holding structures for U.S. investments.
What the form is asking for
Form 5472 reports certain transactions between the reporting corporation and foreign related parties: contributions, distributions, and the other categories the form lists. A capitalization of the LLC, a distribution back to the foreign owner, and amounts paid to a foreign related party can be reportable even when the LLC has no U.S. income tax of its own. "There was no taxable income, so there is no form" is the sentence that produces a late file. We do not state a penalty amount on this page. If a filing is missed, the computation belongs to the tax adviser, on the facts and on the statute in force for that year. This page is not a path to penalty relief.
Reporting, not a reason to skip the entity
The LLC may still be the right general partner, the right title holder, or the right single-member blocker-that-is-not-a-blocker. Form 5472 is a cost of using a U.S. disregarded entity with a foreign owner. It is coordinated with the rest of the calendar when a foreign trust sits above the LLC. See an annual U.S. reporting calendar. The broader engagement, if the LLC is only one piece, is Private Wealth.
We do not describe any client's joint venture, and we do not describe a workaround. If the LLC exists, the form is part of keeping it. If the classification should be something other than disregarded, that is a Form 8832 conversation before the first transaction, not a Form 5472 conversation after it.