What it is. A disclosure of a transfer of property to a foreign corporation, made for the year of the transfer. It covers cash paid in for shares and tax-free contributions and reorganisations (sections 332, 351, 354, 356 and 361). It is how the IRS polices the outbound transfer rules in section 367, which can tax a gain when assets leave the US.
Who has to file. US citizens and residents, domestic corporations, and domestic estates and trusts that transfer property to a foreign corporation. For cash, it's required only if the transferor owns at least 10% of the foreign corporation right after the transfer, or has sent it more than $100,000 in the 12 months ending on the transfer date. When a US fund partnership makes the transfer, the filing duty sits with its US partners, each for its share, which is why funds send partners the Form 926 details with their K-1s.
When it's due. Attached to the transferor's income tax return for the year of the transfer, including extensions. The penalty is 10% of the property's value, capped at $100,000 unless the failure was intentional, and the IRS's time to assess tax on the transfer stays open until three years after the form is filed.
Worked example
A US real estate fund puts $10m of cash into a new Luxembourg company that will buy an office building in Germany. Each US partner is treated as transferring its share. A pension fund with 5% of the fund has transferred $500,000, more than $100,000, so it attaches Form 926 to its return for that year. Missing it could cost up to $50,000 (10% of $500,000). Illustrative round numbers.
Where you'll see it: Setting up and funding non-US blockers and holding companies, capital calls into foreign portfolio companies, and K-1 footnotes on foreign transfers.
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This glossary is general information, simplified for learning. It is not tax, legal or investment advice, and real structures turn on facts and documents not shown here.