Form 5472 Explained: What Transactions to Report (and What to Ignore)

Transactions

January 20, 2025

10 min read

Written by FODL Team

Foreign-owned single-member LLCs filing Form 5472 often get stuck on one question:

"What transactions am I actually supposed to report?"

This confusion is common — and understandable.

The good news is that Form 5472 only applies to a very specific type of transaction, and most first-year or inactive LLCs have little or nothing to report.

The One Rule to Remember

Form 5472 only reports transactions between the LLC and its foreign owner (or other related parties).

That's it. If money or value did not move between you and the LLC, it usually does not belong on Form 5472.

What Counts as a Reportable Transaction

You must report transactions where you (the owner) and the LLC exchanged money, property, or services.

Common Reportable Scenarios

You paid incorporation or registration fees personally

Capital contribution

You transferred money to the LLC

Capital contribution

You loaned money to the LLC

Related-party loan

The LLC paid you back

Distribution

You charged the LLC a service or consulting fee

Related-party service

The LLC paid rent or interest to you

Related-party payment

These transactions appear in Part IV of Form 5472.

What Does NOT Count (Very Important)

Many founders mistakenly try to report normal business activity. Do not report these on Form 5472.

Non-Reportable Scenarios

Customer paid your LLC

Not a related party

Stripe, PayPal, or bank deposits from clients

Business income

AWS, SaaS tools, ads paid by the LLC

Normal business expenses

Employee or contractor payroll

Operational cost

Sales revenue or invoices

Business activity

Expenses paid by the LLC's own bank account

Not owner-LLC interaction

👉 These belong in accounting or tax return calculations — not Form 5472.

The Most Common First-Year LLC Scenario

Example: Newly Formed Foreign-Owned LLC

• No revenue
• No customers
• Owner paid: incorporation fees, registered agent fees, state filing costs

How This Is Reported

✓ These payments are treated as cash capital contributions
✓ They are reported on Form 5472
✓ No other transactions are required

This is valid, normal, and very common.

What If My LLC Had No Activity at All?

That's also fine.

If:

• No money moved between you and the LLC
• No setup costs were paid
• No loans, payments, or services occurred

Then:

• Form 5472 is still filed
• Transactions are reported as zero

This is IRS-compliant and expected for inactive or holding LLCs.

Why the IRS Cares About These Transactions

The IRS uses Form 5472 to monitor cross-border related-party transactions, not business performance.

They want visibility into:

• Owner funding
• Owner withdrawals
• Loans and repayments
• Services between related parties

They do not use Form 5472 to measure revenue or profit.

Common Mistakes to Avoid

Reporting customer revenue

Reporting Stripe or PayPal deposits

Reporting business expenses paid by the LLC

Assuming "$0 transactions" is wrong

Over-reporting out of fear

Over-reporting creates confusion and errors.
Under-reporting owner transactions creates compliance risk.

Summary (Quick Checklist)

Ask yourself:

Did money move between me and the LLC?

Yes → Report it

No → Do not report it

That's the rule.

Final Reassurance

Most foreign-owned LLCs:

• Have no transactions, or
• Only have setup costs in the first year

Both situations are normal and compliant.

A correctly prepared Form 5472 reflects reality, not complexity.