You funded a foreign company, maybe capitalized a new subsidiary abroad or moved some assets into it once, and now there is a tax form waiting for you that almost nobody warns you about.
That form is IRS Form 926, the Return by a U.S. Transferor of Property to a Foreign Corporation. It exists because the government wants a record whenever value leaves the U.S. tax base and lands inside a foreign company you control. The rules sit in Internal Revenue Code section 6038B, and the form is an information return, which means it can be required even when you owe no tax at all. This guide covers what to know about Form 926: who must file, what counts, when filing is required, and what failing to file actually costs.
The good news is that the logic is simpler than the form looks.
Once you see the two triggers and the handful of special cases, you can tell in a minute whether you need to file Form 926 or not.
Form 926 reports a transfer of property by a U.S. person into a foreign corporation. U.S. persons file Form 926 to report certain transfers of property to foreign corporations, and reporting property transfers to foreign corporations is the entire point of the filing.
Think of it as a one-time event report. When you move cash, equipment, real estate, stock, or intellectual property into a foreign company, the IRS wants the details: what you moved, its market value, your basis, and how much of the foreign corporation you owned afterward. The form ties to section 6038B of the Internal Revenue Code, and it is filed by the transferor of property, not by the foreign corporation receiving it. That last point trips people up, so hold onto it.
This is different from reporting that you own that company year after year.
That ongoing ownership picture lives on other international filings, and the reporting requirements track transfers to foreign corporations and the value leaving the U.S. Form 926 captures the moment of the move itself, the single event, which is why it shows up that year and not again after.
A U.S. person who transfers property to a foreign corporation is the one on the hook.
The Internal Revenue Service defines that group broadly. It includes U.S. citizens, resident aliens, domestic corporations, and domestic estates or trusts. If you fall in that group and you transfer property to a foreign corporation in the kinds of exchanges or transfers of property that section 6038B covers, such as capitalizing or contributing to the foreign entity, you are required to file Form 926. The rules can even reach certain foreign corporations your family controls together through attribution.
For cash specifically, two gates decide it, and either one is enough.
The first gate is ownership. If, immediately after the move, you hold at least 10% of the total voting power or value of the foreign corporation, you are required to file. The second gate is the dollar amount. If the cash you or any related person sent during the 12-month period ending on that date is more than $100,000, filing is required. That $100,000 figure is a fixed number written into the law, and it does not rise with inflation, so the same threshold that applied years ago still applies now. Either gate, on its own, creates the obligation.
Property here means almost anything of value, and the definition is wide on purpose.
Form 926 covers cash and tangible or intangible property, things like equipment, real estate, patents, or trademarks. A transfer of cash to a foreign corporation counts. Contributing a building, a machine, or a block of stock counts too. The form asks you to report the fair market value of the property transferred and your adjusted basis, because that reported value is what drives both the disclosure and any tax the IRS may eventually look at.
Here is the part that surprises people most.
Profit is not the test. You can move property at cost, complete a perfectly tax-free restructuring, or receive nothing in return, and Form 926 can still be required. The trigger is the move itself and the thresholds above, not whether you made money, so you still report the transfer on Form 926 even when nothing changed hands in return. Even a single property transfer to a foreign corporation can create the duty when the deal produced no gain, which is exactly why so many filers miss it and end up subject to a penalty.
Form 926 is never filed on its own.
You complete and file Form 926 to report it with your income tax return for the tax year that includes the date of the move, and you submit Form 926 with that return by its normal due date, including extensions. The Form 926 filing requirements simply follow your return deadline. For an individual, that means it rides along with your Form 1040. For a corporation it goes with the 1120, and for a partnership situation it follows the partner's own return. If you live abroad, the form follows your tax return deadline too, including the automatic extension expats get and any further extension you file. Getting the tax filing right means the Form 926 filing rides along with the return, so solid tax preparation catches the move during the year and the form lands with the return instead of after it. Expats face the same rules, and good expat tax services often catch the form because the transfer hides inside a quiet restructuring.
The information you need is the kind you should gather as the transfer happens, not months later.
Keep the date of the move, a clear description of the property, the market value on that date, your cost basis, and the ownership percentage you held afterward. Clean records make the form a quick exercise rather than a scramble at filing time.
The penalties for not filing Form 926 are steep for a form that often produces no tax, and if you fail to file, it can cost you even when no tax is due.
The base penalty for failure to file equals 10% of the property's fair market value at the time of the transfer. On a $2 million move, that is a $200,000 exposure for missing a disclosure. The penalty is generally capped at $100,000, but that cap disappears the moment the IRS decides the failure was due to intentional disregard. A reasonable cause exception can reduce or remove the penalty if you can show the miss was honest and you acted in good faith, but you do not want to rely on it.
The quieter consequence is the one that does the real damage.
When you skip it, the statute of limitations on your entire return for that year does not start running. Under the law, the assessment period stays open until you provide the required information, and then it runs for three more years. In plain terms, the IRS can keep looking at that whole tax year for far longer than normal, which invites added scrutiny from the IRS long after you assumed the year was closed. If you want a sense of how long an open year can haunt a filer, our guide on how far back the IRS can audit you walks through the timelines. When you file IRS Form 926 on time, that clock can finally start toward a close, accurate Form 926 reporting protects the whole return, and on a quiet filing like this, Form 926 is essential to closing the year cleanly.
Transferors of property to foreign corporations carry the filing duty themselves, and a few situations change who files and which form you actually use. The law requires Form 926 here, but the details shift by case.
Partnerships work differently from what you might expect. When a partnership contributes property to one, the partnership does not file it for its partners. Instead, each domestic partner files separately for their own share, and the partnership passes that information through on its Schedule K-2 and K-3. A related point: if the transfer is to a foreign partnership rather than a foreign corporation, the relevant filing is Form 8865, not Form 926, so the destination entity decides the form.
Two more cases come up often.
Spouses who file a joint return can report it on a single Form 926 between them. And most tax-exempt organizations under section 501(a) do not have to file for transfers, unless the income from the transferred property would be unrelated business income. Transfers by tax-exempt entities are the exception rather than the rule, but the carve-out is worth confirming before you skip the form.
For a CPA firm, Form 926 is a classic blind spot, because the trigger is a transaction, not a number on last year's return.
A client mentions they "set up a company in Singapore" or "moved some equipment to the new entity," and unless someone connects that to section 6038B, the form never gets prepared and the penalty clock starts. Catching it means asking the right onboarding questions and reading the year's activity for outbound moves. That review work, across a whole client base, is exactly the kind of international compliance an offshore team handles well. At Madras Accountancy, we help U.S. CPA firms spot these reportable moves during preparation and coordinate Form 926 with the rest of a client's cross-border structure, so the disclosure is filed on time and the year closes when it should.
The aim is simple.
Find the transfer while the return is being built, file the form with it, and keep a low-visibility, high-consequence obligation from turning into a six-figure problem.
What is IRS Form 926 used for?
Form 926 is used to report certain transfers of property by a U.S. person to a foreign corporation under Internal Revenue Code section 6038B. It captures the event itself, including the property's value, your basis, and your ownership in the foreign corporation afterward. It is an information return filed with your tax return.
Who needs to file Form 926?
Any U.S. person who transfers assets to a foreign corporation may need to file. That includes U.S. citizens, resident aliens, domestic corporations, estates, and trusts. For cash, you file if you own at least 10% of the foreign corporation right afterward or your cash payments exceed $100,000 in the 12-month period ending on that date.
Do I have to file Form 926 if I made no profit?
Yes. Form 926 is required based on the transfer and the thresholds, not on whether you made money. You can transfer property at cost, complete a tax-free restructuring, or receive nothing in return and still have a filing requirement. The form is a disclosure, so it applies even when no tax is due.
What property has to be reported on Form 926?
You report transfers of cash, tangible property, and intangible property such as intellectual property. Real estate, equipment, stock, and patents all count. The form asks for the date, a short description, the property's value, your cost basis, and any gain recognized on the deal.
When is Form 926 due?
Form 926 is filed with your income tax return for the tax year that includes the transfer date, by the return's due date including extensions. It is not filed separately. For individuals that means it goes with Form 1040, typically by April 15, with later deadlines for expats and anyone on extension.
What is the penalty for not filing Form 926?
The penalty for failing to file is 10% of the property's value at the time of the transfer. It is generally capped at $100,000, but the cap is removed if the failure was due to intentional disregard. A reasonable cause exception may apply if you can show the failure was not willful.
Does failing to file Form 926 affect my statute of limitations?
Yes, and this is the bigger risk. If you do not file, the statute of limitations on your entire return for that year does not begin until you provide the required information. After you file, it runs for three more years, so a missed form can keep the IRS able to assess tax on that year long after you expected it to close.
How does Form 926 differ from Form 8865?
Form 926 reports transfers of property to foreign corporations. Form 8865 reports transfers to and interests in a foreign partnership. The destination entity decides the form. If a partnership makes the transfer to a foreign corporation, the domestic partners file Form 926 for their shares rather than the partnership filing it for them.
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