Instructions for Form 926

Instructions for Form 926

Department of the Treasury

Internal Revenue Service

(Rev. November 2018)

Return by a U.S. Transferor of Property to a Foreign Corporation

Section references are to the Internal

Revenue Code unless otherwise noted.

What's New

Form 926, line 1 is new. For transfers

occurring after 2017, taxpayers are

required to specify whether a

reportable property transfer was to a

foreign corporation that is a

non-controlled “specified 10%-owned

foreign corporation” as defined in

section 245A, which was added to the

Code by section 14101(a) of the Tax

Cuts and Jobs Act (TCJA) (P.L.

115-97).

For transfers after 2017, section

14102(e) of the TCJA repealed the

active trade or business exception

under section 367. Transfers of

tangible property (other than certain

stock transfers) are subject to full gain

recognition under the general rule of

section 367(a)(1).

TCJA section 14102(d) added section

91 to the Code. New section 91

provides rules for transfers of foreign

branch assets to foreign corporations

requiring the transferor to include a

“Transferred Loss Amount” as

income.

For transfers in tax years beginning

after 2017, TCJA section 14221

revised the definition of intangible

property under section 936(h)(3)(B)

so that it now includes goodwill, going

concern value, workforce in place,

and any other item the value or

potential value of which is not

attributable to tangible property or the

services of an individual. The

definition in section 936(h)(3)(B) was

subsequently redesignated (without

substantive change from TCJA) as

section 367(d)(4) by Division U, Title

IV, section 401(d)(1)(D)(viii)(l) of the

Consolidated Appropriations Act,

2018, P.L. 115-141. This revision

affects the question on Form 926,

line 13 and the information entered on

Form 926, Part III, Section C.

Oct 30, 2018

General Instructions

Future Developments

For the latest information about

developments related to Form 926

and its instructions, such as

legislation enacted after they were

published, go to IRS.gov/Form926.

Purpose of Form

Use Form 926 to report certain

transfers of tangible or intangible

property to a foreign corporation, as

required by section 6038B.

Who Must File

Generally, a U.S. citizen or resident, a

domestic corporation, or a domestic

estate or trust must complete and file

Form 926 to report certain transfers of

property to a foreign corporation that

are described in section 6038B(a)(1)

(A), 367(d), or 367(e). See section

6038B and Regulations sections

1.6038B-1 and 1.6038B-1T for more

information.

Special Rules

• Transfers by a partnership. If the

transferor is a partnership (domestic

or foreign), the domestic partners of

the partnership, not the partnership

itself, are required to comply with

section 6038B and file Form 926.

Each domestic partner is treated as a

transferor of its proportionate share of

the property. See the instructions for

line 3 for additional information.

• Transfers by spouses. Spouses

may file Form 926 jointly, but only if

they file a joint income tax return.

• Transfers of cash. A U.S. person

that transfers cash to a foreign

corporation must report the transfer

on Form 926 if (a) immediately after

the transfer, the person holds, directly

or indirectly, at least 10% of the total

voting power or the total value of the

foreign corporation; or (b) the amount

of cash transferred by the person to

the foreign corporation during the

12-month period ending on the date of

the transfer is more than $100,000.

See Regulations section 1.6038B-1(b)

(3).

Cat. No. 27037X

• Transfers of stock or securities

for which a gain recognition

agreement (GRA) is filed. A U.S.

transferor must file a Form 926 with

respect to a transfer of stock or

securities in all cases in which a GRA

is filed under Regulations section

1.367(a)-8. Provided that the initial

GRA is timely filed (determined

without regard to Regulations section

1.367(a)-8(p)), then, with respect to

the transfer of the stock or securities,

the U.S. transferor should (1)

complete Part I and Part II of Form

926; (2) complete columns (a) through

(e) of the "Stock and securities" line in

Part III, Section B, of the form, and

check the “Yes” box on line 11; and

(3) complete the Supplemental Part III

Information Required To Be Reported

section at the end of Part III of the

form using the Line 11 instructions

under the Supplemental Part III

Information Required To Be Reported

section, later. In addition, the U.S.

transferor must comply in all material

respects with the terms of a GRA

(determined without regard to

Regulations section 1.367(a)-8(p)) in

order to satisfy its section 6038B

reporting obligations. See Regulations

section 1.6038B-1 for further

information.

• Distributions by domestic

liquidating corporations. A

domestic liquidating corporation must

file a Form 926 with respect to a

distribution of property in complete

liquidation under section 332 to a

foreign distributee corporation that

meets the stock ownership

requirements of section 332(b). If the

distribution qualifies for the exception

in Regulations section 1.367(e)-2(b)

(2)(i) or (iii), then, provided that all

initial liquidation documents are timely

filed (determined without regard to

Regulations section 1.367(e)-2(f)), the

domestic liquidating corporation

should complete Form 926 and, in the

Supplemental Information Required

To Be Reported section at the end of

Part III of the form, note that the

information required by Form 926 is

contained in the statement required

by Regulations section 1.367(e)-2(b)

(2)(i)(C)(2) or (iii)(D). In addition, the

domestic liquidating corporation must

comply in all material respects with

the terms of a liquidation document

(determined without regard to

Regulations section 1.367(e)-2(f)) in

order to satisfy its section 6038B

reporting obligations. See specific

instructions for lines 20a and 20b in

Part IV—Additional Information

Regarding Transfer of Property, later,

for more information. See Regulations

section 1.6038B-1 for further

information.

Exceptions to Filing

1. For exchanges described in

section 354 or 356, a U.S. person

does not have to file Form 926 if:

a. The U.S. person exchanges

stock of a foreign corporation in a

recapitalization described in section

368(a)(1)(E), or

b. The U.S. person exchanges

stock of a domestic or foreign

corporation for stock of a foreign

corporation under an asset

reorganization described in section

368(a)(1) that is not treated as an

indirect stock transfer under

Regulations section 1.367(a)-3(d).

2. Generally, a domestic

corporation that distributes stock or

securities of a domestic corporation

under section 355 is not required to

file Form 926. However, this

exception does not apply if the

distribution is of stock or securities of

a foreign controlled corporation to a

distributee shareholder who is not a

U.S. citizen or resident or a domestic

corporation. See specific instructions

for Part IV, line 21, later, for more

information.

3. A U.S. person that transfers

stock or securities under section

367(a) does not have to file Form 926

if either a or b below applies.

a. The U.S. transferor owned less

than 5% of both the total voting power

and the total value of the transferee

foreign corporation immediately after

the transfer and:

• The U.S. transferor qualified for

nonrecognition treatment with respect

to the transfer, or

• The U.S. transferor is a tax-exempt

entity and the income was not

unrelated business income, or

• The transfer was taxable to the U.S.

transferor under Regulations section

1.367(a)-3(c) and such person

properly reported the income from the

transfer on its timely filed return

(including extensions) for the tax year

that includes the date of transfer, or

• The transfer is considered to be to

a foreign corporation solely by reason

of Regulations section 1.83-6(d)(1)

and the fair market value of the

property transferred did not exceed

$100,000.

b. The U.S. transferor owned 5%

or more of the total voting power or

the total value of the transferee

foreign corporation immediately after

the transfer and:

• The U.S. transferor is a tax-exempt

entity and the income was not

unrelated business income, or

• The transfer was taxable to the U.S.

transferor and such person properly

reported the income from the transfer

on its timely filed return, or

• The transfer is considered to be to

a foreign corporation solely by reason

of Regulations section 1.83-6(d)(1)

and the fair market value of the

property transferred did not exceed

$100,000.

When and How To File

Form 926 must be filed with the U.S.

transferor's income tax return (or, if

applicable, exempt organization

return) for the tax year that includes

the date of the transfer.

The Form 926 filed with the

IRS must include the

CAUTION additional information

required in Regulations sections

1.6038B-1(c) through (e) and

Temporary Regulations sections

1.6038B-1T(c) and (d).

!

Other Forms That May Be

Required

Persons filing this form may be

required to file FinCEN Form 114,

Report of Foreign Bank and Financial

Accounts (FBAR).

statute of limitations with respect to

the gain realized but not recognized

on the transfer.

Penalties for Failure To File

If a taxpayer fails to comply with

section 6038B, the penalty equals

10% of the fair market value of the

property at the time of the transfer.

The penalty will not apply if the failure

to comply is due to reasonable cause

and not to willful neglect. The penalty

is limited to $100,000 unless the

failure to comply was due to

intentional disregard. Moreover, the

period of limitations for assessment of

tax upon the transfer of that property

is extended to the date that is 3 years

after the date on which the information

required to be reported is provided.

Section 6662(j) Penalty

A 40% penalty may be imposed on

any underpayment resulting from an

undisclosed foreign financial asset

understatement. No penalty will be

imposed with respect to any portion of

an underpayment if the taxpayer can

demonstrate that the failure to comply

was due to reasonable cause with

respect to such portion of the

underpayment and the taxpayer acted

in good faith with respect to such

portion of the underpayment. See

sections 6662(j) and 6664(c) for

additional information.

Specific Instructions

Important: All information reported on

Form 926 must be in English. All

amounts must be stated in U.S.

dollars. If the information required in a

given section exceeds the space

provided within that section, do not

write “see attached” in the section and

then attach all of the information on

additional sheets. Instead, complete

all entry spaces in the section and

attach the remaining information on

additional sheets. The additional

sheets must conform with the IRS

version of that section.

A U.S. transferor that is required to

enter into a GRA under section 367 to

qualify for nonrecognition treatment

must file Form 8838, Consent To

Extend the Time To Assess Tax

Under Section 367—Gain

Recognition Agreement, to extend the

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Instructions for Form 926 (Rev. 11-2018)

Part I—U.S. Transferor

Information

Identifying number. The identifying

number of an individual is his or her

social security number (SSN). The

identifying number of all others is their

employer identification number (EIN).

Line 1. Check the “Yes” box on

line 1 if the transferee is a specified

10%-owned foreign corporation that is

not a controlled foreign corporation

(as defined in section 957(a)).

A specified 10%-owned foreign

corporation is defined in section

245A(b)(1) as any foreign corporation

with respect to which any domestic

corporation is a U.S. shareholder. A

controlled foreign corporation is

defined in section 957(a) as any

foreign corporation if, on any day

during the tax year of such foreign

corporation, U.S. shareholders own

(within the meaning of section

958(a)), or are considered to own by

applying the rules of ownership of

section 958(b), more than 50% of (1)

the total combined voting power of all

classes of stock of such corporation

entitled to vote, or (2) the total value of

the stock of such corporation.

Check the “No” box on line 1 and

check the “Yes” box in Part II, line 9, if

the transferee foreign corporation is a

controlled foreign corporation.

Line 2a. If you answered “Yes” to

question 2a and the asset is stock,

section 367(a)(4) may require basis

adjustments. If you answered “No” to

question 2a and the asset is a tangible

asset, the transfer is taxable under

sections 367(a)(1) and (a)(4). If the

asset transferred is an intangible

asset, see section 367(d) and its

regulations.

If you answered “No” to question

2a: If the U.S. transferor is owned

directly by more than five domestic

corporations immediately before the

reorganization, but some combination

of five or fewer domestic corporations

controls the U.S. transferor, the U.S.

transferor must designate the five or

fewer domestic corporations that

comprise the control group. List these

designated corporations on Form 926,

line 2b.

the controlling shareholders and their

identifying numbers.

Line 2c. If the transferor was a

member of an affiliated group filing a

consolidated tax return (see sections

1501 through 1504), but was not the

parent corporation, list the name and

EIN of the parent corporation and file

Form 926 with the parent

corporation's consolidated return.

Line 2d. If the answer to line 2d is

"Yes," and if the asset is transferred in

an exchange described in section

361(a) or (b), attach the following.

• A statement that the conditions set

forth in the second sentence of

section 367(a)(4) and any regulations

under that section have been

satisfied.

• An explanation of any basis or other

adjustments made pursuant to section

367(a)(4) and any regulations

thereunder.

Line 3. If a partnership (whether

foreign or domestic) transfers property

to a foreign corporation in an

exchange described in section 367(a)

(1), then any U.S. person that is a

partner in the partnership shall be

treated as having transferred a

proportionate share of the property in

an exchange described in section

367(a)(1). A U.S. person's

proportionate share of partnership

property shall be determined under

the rules and principles of sections

701 through 761 and the regulations

thereunder. See Temporary

Regulations section 1.367(a)-1T(c)

(3).

Line 3d. For the definition of

“regularly traded on an established

securities market,” see Temporary

Regulations section 1.367(a)-1T(c)(3)

(ii)(D). If the answer to line 3d is “Yes,”

the rules of Temporary Regulations

section 1.367(a)-1T(c)(3)(ii)(C) apply.

Part II—Transferee

Foreign Corporation

Information

Line 2b. If the transferor went out of

existence pursuant to the transfer (for

example, as in a reorganization

described in section 368(a)(1)(C)), list

Line 5b, Reference ID number. A

reference ID number is required on

line 5b only in cases where no EIN

was entered on line 5a for the

transferee foreign corporation.

However, filers are permitted to enter

both an EIN and a reference ID

number. If applicable, enter on line 5b

the reference ID number (defined

Instructions for Form 926 (Rev. 11-2018)

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below) you have assigned to the

transferee foreign corporation.

A “reference ID number” is a

number established by or on behalf of

the U.S. transferor identified at the top

of page 1 of the form that is assigned

to the transferee foreign corporation

with respect to which Form 926

reporting is required. These numbers

are used to uniquely identify the

transferee foreign corporation in order

to keep track of the entity from tax

year to tax year. The reference ID

number must meet the requirements

set forth below.

Note. Because reference ID numbers

are established by or on behalf of the

U.S. person filing Form 926, there is

no need to apply to the IRS to request

a reference ID number or for

permission to use these numbers.

Note. In general, the reference ID

number assigned to a transferee

foreign corporation on Form 926 has

relevance only to Form 926 and

should not be used with respect to the

transferee foreign corporation on

other IRS forms.

Requirements. The reference ID

number must be alphanumeric

(defined below) and no special

characters or spaces are permitted.

The length of a given reference ID

number is limited to 50 characters.

For these purposes, the term

“alphanumeric” means the entry can

be alphabetical, numeric, or any

combination of the two.

The same reference ID number

must be used consistently from tax

year to tax year with respect to a given

transferee foreign corporation. If for

any reason a reference ID number

falls out of use (for example, the

transferee foreign corporation no

longer exists due to disposition or

liquidation), the reference ID number

used for that transferee foreign

corporation cannot be used again for

another transferee foreign corporation

for purposes of Form 926 reporting.

There are some situations that

warrant correlation of a new reference

ID number with a previous reference

ID number when assigning a new

reference ID number to a transferee

foreign corporation. For example:

• In the case of a merger or

acquisition, a Form 926 filer must use

a reference ID number which

correlates the previous reference ID

number with the new reference ID

number assigned to the transferee

foreign corporation; or

• In the case of an entity

classification election that is made on

behalf of a transferee foreign

corporation on Form 8832,

Regulations section 301.6109-1(b)(2)

(v) requires the transferee foreign

corporation to have an EIN for this

election. For the first year that Form

926 is filed after an entity

classification election is made on

behalf of the transferee foreign

corporation on Form 8832, you must

enter the new EIN on line 5a and the

old reference ID number on line 5b. In

subsequent years, the Form 926 filer

may continue to enter both the EIN

and the reference ID number, but

must enter at least the EIN on line 5a.

In the case of a merger or

acquisition, you must correlate the

reference ID numbers as follows: New

reference ID number [space] Old

reference ID number. If there is more

than one old reference ID number,

you must enter a space between each

such number. As indicated above, the

length of a given reference ID number

is limited to 50 characters and each

number must be alphanumeric with no

special characters.

Note. This correlation requirement

applies only to the first year the new

reference ID number is used.

Line 6, Address. Enter the

information in the following order: city,

province or state, and country. Follow

the country's practice for entering the

postal code, if any. Do not abbreviate

the country name; however, if you file

electronically, please follow the

convention specified.

Line 7. Enter the two-letter country

code (from the list at IRS.gov/

countrycodes) of the transferee

foreign corporation's country of

incorporation or organization.

Line 8. List the entity classification

(for example, partnership,

corporation, etc.) of the transferee

foreign corporation under the laws of

the country of incorporation or

organization.

Line 9. See section 957(a) to

determine whether the corporation is

a controlled foreign corporation

immediately after the transfer.

Part III—Information

Regarding Transfer of

Property

Information in Part III is reported in

three sections. Collectively, the three

sections capture information with

regard to all of the properties

transferred. The properties covered

by each section, respectively, are:

• Cash (“Section A”),

• Other property (other than

intangible property subject to section

367(d)) (“Section B”), and

• Intangible property subject to

section 367(d) (“Section C”).

For information that generally must

be included for a transfer described in

section 6038B(a)(1)(A), see the

beginning of the Supplemental Part III

Information Required To Be Reported

section, later.

If additional row(s) are needed to

enter information for a property

category in a Section in Part III,

provide the information in the same

format as required for the row in the

Section at issue in the Supplemental

Part III Information Required To Be

Reported section. For each property

category with such additional row(s),

in the Section enter “See

Supplemental” under column (b),

Description of Property, on the last

row of the property category and enter

in the remaining columns on that last

row the aggregated amounts from the

corresponding columns on the

additional rows.

For distributions covered by section

367(e)(2), see the instructions for

lines 20a through 20c, later.

Section A

Section A captures information

regarding cash.

Line 10. If cash was the only property

transferred, skip the remainder of Part

III and proceed to Part IV.

Section B

Section B captures information

regarding property (other than cash

and intangible property subject to

section 367(d)) that is subject to full

gain recognition under the general

rule of section 367(a)(1).

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Stock and securities. In column

(b), for each stock or security, provide

the class or type and the name of the

issuing corporation. See the Line 11

instructions in the Supplemental Part

III Information Required To Be

Reported section, later, for additional

reporting requirements.

Property with built-in loss.

Complete columns (a) through (d)

including the description of each item

transferred with a built-in loss that is

realized but not recognized. Section

367(a)(1) requires gain recognition

attributed to transferred property

(other than intangible property subject

to section 367(d) or certain stock

transfers under section 367(a) if

certain conditions are met); however,

such gain recognized on the

transferred property may not be

reduced or netted by realized losses

attributed to transferred built-in loss

property. No loss is allowed under

section 367(a)(1) for transferred

built-in loss property.

If the transfer was a distribution of

property in complete liquidation under

section 332, you must complete

columns (a) through (d) as described

above. You may use any built-in

losses under section 367(e)(2) to

reduce the overall recognized gain

from the liquidating distribution, but

not below zero, for purposes of

determining the amount entered on

line 20b in Part IV. See Regulations

section 1.367(e)-2(b)(1)(ii)(B) for the

overall loss limitation.

In general, the following

instructions apply to columns (a)

through (e).

Column (a), Date of transfer. Enter

the first date on which title to,

possession of, or rights to the use of

the property passed for U.S. income

tax purposes. See Temporary

Regulations section 1.6038B-1T(b)(4)

for additional information.

Column (b), Description of property. Provide a description of the

property transferred.

Column (c), Fair market value on

date of transfer. Enter the fair

market value of the property

transferred (measured as of the date

of transfer).

Instructions for Form 926 (Rev. 11-2018)

Column (d), Cost or other basis.

Enter the adjusted basis in the

property transferred on the date of the

transfer. See sections 1011 through

1016 for more information for the

determination of adjusted basis.

Column (e), Gain recognized on

transfer. Enter the gain recognized

on the transfer of each property.

Line 11. Indicate whether a gain

recognition agreement was filed

pursuant to Regulations section

1.367(a)-8 for a transfer of stock or

securities. If “Yes,” complete the

Supplemental Part III Information

Required To Be Reported section at

the end of Part III using the Line 11

instructions under the Supplemental

Part III Information Required To Be

Reported section, later.

Line 12a. Check “Yes” to line 12a if

any of the property transferred to a

foreign corporation consisted of

assets of a foreign branch (or a

branch that is a foreign disregarded

entity (FDE)). If you check “Yes,”

continue to line 12b; otherwise skip

lines 12b through 12d.

Line 12b. Check “Yes” to line 12b if

the property transferred to a specified

10%-owned foreign corporation

consisted of substantially all of the

assets of a foreign branch (or a

branch that is an FDE). If you check

“Yes” to line 12b, you must complete

line 12c. See the definition of

specified 10%-owned foreign

corporation in the instructions to

line 1, earlier; however, for these

purposes, the definition applies

without regard to whether the

corporation is a controlled foreign

corporation.

Line 12c. Check “Yes” to line 12c if

the transferor was a domestic

corporation and immediately after the

transfer the domestic corporation was

a U.S. shareholder (10%-or-more

shareholder) with respect to the

transferee foreign corporation. If

“Yes,” continue to line 12d; otherwise

skip line 12d.

Line 12d. Under section 91, the U.S.

transferor must include in gross

income an amount equal to the

transferred loss amount, if any, as

defined in section 91(b) upon a

transfer of substantially all of the

assets of a foreign branch (including a

foreign branch that is an FDE) to a

Instructions for Form 926 (Rev. 11-2018)

foreign corporation. The transferred

loss amount determined under

section 91(b) is:

1. The sum of losses incurred by

the foreign branch or FDE after

December 31, 2017, and before the

transfer and with respect to which a

deduction was allowed to the U.S.

transferor, reduced by;

2. The sum of:

a. Any taxable income of such

branch for a tax year after the tax year

in which the loss was incurred and

through the close of the tax year of the

transfer, and

b. Any amount recognized under

section 904(f)(3) resulting from the

transfer.

See section 91(c) and the transition

rule provided by TCJA section

14102(d)(4) for a possible reduction

of the transferred loss amount in

certain circumstances.

If the transferred loss amount is

zero or less, enter zero on line 12d (no

transferred loss amount is required to

be recognized by the U.S. transferor

on the transfer under section 91).

If the transferred loss amount is

greater than zero, enter the amount as

a positive number on line 12d and

report this amount as other income on

Form 1120, page 1, line 10 (other

income) or on the corresponding line

of the applicable 1120-series form.

Identify the amount as “Section 91

Transferred Loss Amount.” See also

the Line 12d instructions under the

Supplemental Part III Information

Required To Be Reported section,

later, for additional information that

must be reported.

Section C

Section C captures information

regarding transfers of intangible

property subject to section 367(d).

Property described in section

367(d)(4). Complete columns (a)

through (f) for each identified

transferred section 367(d)(4)

intangible. See the related instructions

for Section C under the Supplemental

Part III Information Required To Be

Reported section at the end of Part III,

later, for additional information that

you must report.

In general, the following

instructions apply to columns (a)

through (f).

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Column (a), Date of transfer. Enter

the first date on which title to,

possession of, or rights to the use of

the property passed for U.S. income

tax purposes. See Temporary

Regulations section 1.6038B-1T(b)(4)

for additional information.

Column (b), Description of property. Provide a separate description for

each identified intangible, including

each identified (i) patent, invention,

formula, process, design, pattern, or

know-how; (ii) copyright, literary,

musical, or artistic composition; (iii)

trademark, trade name, or brand

name; (iv) franchise, license, or

contract; (v) method, program,

system, procedure, campaign, survey,

study, forecast, estimate, customer

list, or technical data; (vi) any

goodwill, going concern value, or

workforce in place (including its

composition and terms and conditions

(contractual or otherwise) of its

employment); or (vii) any other item

the value or potential value of which is

not attributable to tangible property or

the services of any individual.

Column (c), Useful life. Enter the

useful life for each intangible. The

useful life of intangible property is

defined under Regulations section

1.367(d)-1(c)(3)(i). If the useful life of

intangible property is indefinite, enter

“indefinite.” Regulations section

1.367(d)-1(c)(3)(ii) is not relevant to

the determination of the useful life

entered in column (c).

Column (d), Arm’s length price on

date of transfer. Generally, if a U.S.

person transfers intangible property

subject to section 367(d), such person

shall, over the useful life of the

property, annually include in gross

income an amount that represents an

appropriate arm’s length charge for

use of the property. The appropriate

charge is determined in accordance

with the provisions of section 482 and

the regulations thereunder. See

Temporary Regulations section

1.367(d)-1T(c)(1). For each intangible

reported in Section C, provide the

arm’s length price on the date of

transfer. See the instructions below

for information that must be included

in the Supplemental Part III

Information Required To Be Reported

section.

Column (e), Cost or other basis.

Enter the adjusted basis in the

property transferred on the date of the

transfer. See sections 1011 through

1016 for more information for the

determination of adjusted basis.

Column (f), Income inclusion for

year of transfer. A U.S. person who

transfers property subject to section

367(d) is treated as having sold such

property in exchange for payments

which are contingent upon the

productivity, use, or disposition of

such property and receiving amounts

annually over the useful life of the

property that represent an appropriate

arm’s length charge for use of the

property. For each intangible

transferred, enter the amount included

in income under section 367(d) on the

income tax return for the year of the

transfer. If the amount reported in

column (d) as the arm’s length price

for intangible property is an allocation

of an amount determined based on an

aggregate analysis, enter the

inclusion amount in column (f) that

corresponds to the allocated amount

reported in column (d). If no amount is

so included, enter “0.” Include in the

amount entered in column (f) gain

recognized as a result of making an

election to treat a transfer of certain

intangible property as a sale under

Temporary Regulations section

1.367(d)-1T(g)(2). The amount

entered in column (f) should reflect

the application of Regulations section

1.367(d)-1(c)(3)(ii), if properly chosen.

See line 14c and related instructions

below. See also the Line 14c

instructions under the Supplemental

Part III Information Required To Be

Reported section, later, for additional

information that must be reported.

Line 14c. In cases where the useful

life of the transferred intangible

property is indefinite or reasonably

anticipated to be more than 20 years,

a taxpayer may, instead of including

amounts in income during the entire

useful life of the intangible property,

choose in the year of transfer to

increase annual inclusions during the

20-year period beginning with the first

year in which the U.S. transferor takes

into account income pursuant to

section 367(d), to reflect amounts

that, but for the choice to increase

annual inclusions, would have been

required to be included following the

end of the 20-year period. To apply

this 20-year inclusion period, a

taxpayer must attach a statement

titled “Application of the 20-year

Inclusion Period to Section 367(d)

Transfer” to a timely filed original

federal income tax return (including

extensions) for the year of the

transfer. See Regulations section

1.367(d)-1(c)(3)(ii). If the answer to

line 14c is “Yes,” see the Line 14c and

Line 14d instructions below for

information that must be included in

the Supplemental Part III Information

Required To Be Reported section at

the end of Part III of the form.

Supplemental Part III

Information Required To Be

Reported

Information to be generally reported for a transfer described in section 6038B(a)(1)(A). Provide a

general description of the transfer and

any wider transaction of which it forms

a part, including a chronology of the

transfers involved and an

identification of the other parties to the

transaction to the extent known. See

Temporary Regulations section

1.6038B-1T(c)(2)(ii).

Provide a description of the

consideration received by the U.S.

person making the transfer. The

description should identify:

• The property comprising the

consideration and the total fair market

value of the items; and

• In the case of stock or securities,

the class, type, amount, and

characteristics of the interest

received.

See Temporary Regulations

sections 1.6038B-1T(c)(3) and

1.6038B-1T(d)(1)(iii).

Information to be reported. When

providing any information in the

Supplemental Part III Information

Required To Be Reported section,

indicate the Section, column, row, and

line for which the information is being

provided.

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Additional Section rows. If you

need additional rows to enter

information for a property category in

a Section in Part III, provide the

information in the same format as

required for the row in the Section at

issue in the Supplemental Part III

Information Required To Be Reported

section. See the beginning of the Part

III instructions, earlier, for how to

incorporate the information from the

additional rows.

Line 11. If the answer to the line 11

question is “Yes,” for any stock or

securities transferred, provide a

general description of the corporation

issuing the stock or securities. See

Regulations section 1.6038B-1(c)(4)

(ii).

Lines 12b–d. If the answer to lines

12b and 12c is “Yes,” provide the

following information.

• Describe the foreign branch whose

property is transferred.

• Describe the property of the foreign

branch, including its adjusted basis

and fair market value.

• Set forth a detailed calculation of

the transferred loss amount. Provide,

on a year-by-year basis, amounts of

the losses generated by such foreign

branch after December 31, 2017, as

well as any income amounts

generated after such loss year.

• Provide the amount, if any,

recognized under section 904(f)(3) on

account of the transfer.

• Set forth a detailed summary of the

gain (other than the section 91

transferred loss amount) recognized

by the transferor, including any

section 367(a)(1) gain recognized on

the transfer of property. See section

91(c).

• Set forth a calculation of the net

sum of the previously deducted losses

incurred by such foreign branch for

tax years before January 1, 2018, that

would have been recaptured under

section 367(a)(3)(C), as determined

without regard to the repeal of the

section 367(a)(3) active trade or

business exception. See the transition

rule provided by TCJA section

14102(d)(4).

Instructions for Form 926 (Rev. 11-2018)

Section C, column (d). Provide a

brief explanation of how you

determined the arm’s length price on

the date of transfer for each

intangible.

Section C, column (f). If you

included an amount greater than zero,

provide a brief explanation of how you

figured the income inclusion for the

year of the transfer. Provide and

explain the calculation of the annual

deemed payment. See Temporary

Regulations section 1.6038B-1T(d)(1)

(v).

Line 14c. If the answer to the line 14c

question is “Yes,” describe the

property for which the transferor

chose to apply the 20-year inclusion

period. See Regulations sections

1.6038B-1(d)(1)(iv) and 1.367(d)-1(c)

(3)(ii).

Explain how you figured the

increase to the deemed payment rate

for property transferred. See

Regulations sections 1.6038B-1(d)(1)

(iv) and 1.367(d)-1(c)(3)(ii). The

explanation should include how you

figured the deemed payment rate for

each period of the useful life of the

intangible property and the 20-year

inclusion period.

Line 14d. If the answer to the

question on line 14c is “Yes,” explain

how you estimated the anticipated

income or cost reduction attributable

to the property’s (or properties’) use

beyond the 20-year period. See

Regulations section 1.6038B-1(d)(1)

(iv).

Part IV— Additional

Information Regarding

Transfer of Property

Line 17. List the type of

nonrecognition transaction that gave

Instructions for Form 926 (Rev. 11-2018)

rise to the reporting obligation (for

example, section 332, 351, 354, 356,

or 361).

Line 18a. If gain recognition was

required under section 904(f)(3) with

respect to any transfer reported in

Part III, attach a statement identifying

the transfer and the amount of gain

recognized.

Line 18b. If gain recognition was

required under section 904(f)(5)(F)

with respect to any transfer reported

in Part III, attach a statement

identifying the transfer and the

amount of gain recognized.

Line 18c. If recapture was required

under section 1503(d) (dual

consolidated loss) with respect to any

transfer reported in Part III, attach a

statement identifying the transfer and

the amount of recapture. See section

1503(d) and the regulations

thereunder.

Line 18d. If exchange gain

recognition was required under

section 987 with respect to any

transfer reported in Part III, attach a

statement identifying the transfer and

the amount of exchange gain

recognized. See Regulations section

1.987-5.

Line 19. If this transfer resulted from

a change in entity classification (a

deemed transfer resulting from a

classification change on Form 8832,

Entity Classification Election, or a

termination of a section 1504(d)

election), check the “Yes” box. If the

transfer was an actual transfer of

property to a foreign corporation,

check the “No” box.

Line 20a. Check the “Yes” box on

line 20a if the domestic corporation

(domestic liquidating corporation)

made a distribution of property in

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complete liquidation under section

332 to a foreign corporation that

meets the stock ownership

requirements of section 332(b) with

respect to stock in the domestic

liquidating corporation.

If the answer to line 20a is "Yes,"

complete lines 20b and 20c and

provide the following information in

the Supplemental Part III Information

Required To Be Reported section.

Preface this supplemental information

on the form with the heading “Section

367(e)(2) Information.”

• A description, including the

adjusted tax basis and fair market

value, of all property distributed by the

distributing corporation (regardless of

whether the distribution of the

property qualifies for nonrecognition

treatment).

• If the answer to line 20c is "Yes," an

identification of the items of property

for which nonrecognition treatment is

claimed under Regulations section

1.367(e)-2(b)(2)(ii) or (iii), as

applicable.

Line 20b. If the answer to line 20a is

“Yes,” enter the total amount of gain or

loss recognized according to

Regulations section 1.367(e)-(2)(b).

Under section 367(e)(2), you may not

recognize loss in excess of gain on

the distribution. If realized losses

exceed recognized losses on

transferred property, the loss is

recognized on a pro rata basis and

used to offset recognized gain on

other transferred property in the

category of assets (that is, capital or

ordinary), but not below zero. Enter

the net amount on line 20b.

Line 20c. If the answer to line 20c is

“Yes,” see Regulations section

1.367(e)-2(b)(2)(i) for further guidance

on the conditions for nonrecognition

for distributions of certain qualifying

property and additional reporting

documentation that is required.

Distributions of section 367(d)(4)

intangible property do not qualify for

nonrecognition and thus are subject to

gain recognition.

Line 21. Check “Yes” to line 21 if the

transferor is a domestic corporation

that makes a section 355 distribution

(or so much of section 356 as relates

to section 355) of stock in a foreign

controlled corporation to a foreign

corporation. Section 367(e)(1) and

Regulations section 1.367(e)-1

require the distributing domestic

corporation to recognize gain (not

loss) on the distribution. See

Regulations section 1.367(e)-1(b) for

the computation of recognized gain.

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the

United States. You are required to give us the information. We need it to ensure that you are complying with these laws

and to allow us to figure and collect the right amount of tax.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act

unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be

retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax

returns and return information are confidential, as required by section 6103.

The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden

for individual and business taxpayers filing this form is approved under OMB control numbers 1545-0074 and

1545-0123. The estimated burden for all other taxpayers who file this form is shown below.

Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Learning about the law or the form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Preparing the form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sending the form to the IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18 hr., 10 min.

7 hr., 50 min.

15 hr., 00 min.

1 hr., 52 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler,

we would be happy to hear from you. See the instructions for the tax return with which this form is filed.

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Instructions for Form 926 (Rev. 11-2018)