Demystifying the 2021 Tax Year IRS Form 5471 Schedule P Tracking “Previously Taxed Earnings and Profits of U.S. Shareholder of Certain Foreign Corporations”
By Anthony Diosdi Schedule P of Form 5471 is used to report PTEP of the U.S. shareholder of a controlled foreign currency (“CFC”) in the CFC’s functional currency. The term PTEP refers to earnings and profits (“E&P”) of a foreign corporation. In most cases, special ordering rules under Section 959 of the Internal Revenue Code apply in determining how E&P is reported on Schedule P. This article will take a deep dive into each column and line of 2021 Schedule P of the Form 5471. Who Must Complete the Form 5471 Schedule PAnyone preparing a Form 5471 knows that the return consists of many schedules. Schedule P is just one schedule of the Form 5471. Whether or not a CFC shareholder is required to complete Schedule P depends on what…