Form 926 - Return by a U.S. Transferor of Property to a Foreign Corporation

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14102(e) of the TCJA repealed the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

-2-

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.
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
Instructions for Form 926 (Rev. 11-2018)

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 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
-3-

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).

-4-

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).
-5-

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.

-6-

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

-7-

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.

-8-

Instructions for Form 926 (Rev. 11-2018)