Form 926 for Expats Explained: Reporting Property Transfers to a Foreign Corporation

If you transferred cash, equipment, intellectual property, or other assets to a foreign corporation, the IRS may require you to report that transfer on Form 926. This form exists because the IRS wants to know when U.S. taxpayers move valuable property outside the U.S. tax system, and in some cases, you may owe tax on the transfer itself.

According to the IRS, Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation) must be filed by any U.S. person who transfers property to a foreign corporation in certain transactions described under Section 367 of the Internal Revenue Code. In plain terms: if you put money or property into a foreign company, the IRS wants to know about it. The penalty for not filing can be up to 10% of the value transferred (capped at $100,000 per transfer, unless the failure was willful). The two most common triggers:

Cash transfers exceeding $100,000 to a foreign corporation over a 12-month period
Any transfer of stock, securities, or other property to a foreign corporation where you own 10% or more after the transfer

Transferring Assets to a Foreign Corporation? Know the Rules

Greenback helps you file Form 926 correctly and avoid costly IRS penalties.

Here’s when Form 926 applies, what counts as a reportable transfer, and what the penalties look like if you miss it.

What Form 926 Reports and Why the IRS Requires It

Form 926 tracks transfers of property from U.S. persons to foreign corporations. The IRS requires this reporting because when property moves from a U.S. person to a foreign entity, it may leave the U.S. tax system permanently. Without this reporting, a U.S. taxpayer could transfer appreciated property (property that has gone up in value) to a foreign corporation and never pay U.S. tax on the gain.

Under Section 367(a) of the tax code, transferring appreciated property to a foreign corporation is generally treated as a taxable event, meaning you may owe capital gains tax as if you sold the property at fair market value on the date of transfer, even though you didn’t receive any cash. Form 926 is how the IRS tracks these transfers and ensures the correct tax is paid.

In plain language: If you put $150,000 worth of equipment into your foreign company, the IRS wants to know (1) that the transfer happened, (2) what the property was worth, and (3) whether you recognized gain on the transfer. The form is informational, but the tax consequences behind it can be significant.

Who Must File Form 926?

The IRS defines “U.S. person” broadly for Form 926 purposes. Any of the following may need to be filed:

U.S. citizens (including expats living abroad)
U.S. resident aliens (green card holders)
Domestic corporations
Domestic partnerships
Domestic trusts and estates

For individual expats, the most common scenarios involve transferring cash or property to a foreign corporation you own or in which you invest. This includes incorporating a business abroad, capitalizing a new foreign entity, or contributing assets to an existing foreign company.

When Cash Transfers Trigger Form 926 Filing

Not every cash transfer to a foreign corporation requires Form 926. The filing thresholds are:

Cash transfers: You must file if you transfer more than $100,000 in cash to a foreign corporation during any 12-month period, OR if you own 10% or more of the foreign corporation (by vote or value) immediately after the transfer.
Property transfers (non-cash): Any transfer of stock, securities, or other property to a foreign corporation generally requires Form 926 reporting, regardless of the dollar amount, if the transfer falls under Section 367.

Example: David, a U.S. citizen living in the UK, starts a new Ltd company in England. He transfers $120,000 in cash to capitalize the business. Because the transfer exceeds $100,000, he must file Form 926 with his U.S. tax return for the year of the transfer.

Example: Maria, a U.S. citizen in Germany, transfers a patent she developed (valued at $75,000) to her German GmbH in exchange for shares. Even though the value is under $100,000, this is a property transfer to a foreign corporation that triggers Form 926 and may result in gain recognition under Section 367(a).

How Form 926 Connects to Form 5471 and Other Foreign Business Reporting

Form 926 is not the only form you’ll need if you own a foreign corporation. It reports the transfer event itself, but ongoing ownership typically triggers additional filing requirements:

Form 5471 (Information Return of U.S. Persons With Respect to Certain Foreign Corporations): If you own 10% or more of a foreign corporation, you likely need to file Form 5471 annually. This form reports the corporation’s income, balance sheet, and transactions with U.S. shareholders. The penalty for not filing is $10,000 per form per year.
Form 8865 (Return of U.S. Persons With Respect to Certain Foreign Partnerships): If the foreign entity is structured as a partnership rather than a corporation, Form 8865 may apply instead of (or in addition to) Form 926.
GILTI and Subpart F income: If the foreign corporation earns income, you may need to report your share of that income on your U.S. return through GILTI (Global Intangible Low-Taxed Income) or Subpart F provisions, even if the corporation doesn’t distribute any cash to you.

Form 926 is often just the first form in a chain of ongoing foreign business reporting requirements. If you’re setting up or investing in a foreign company, the annual compliance obligations (Form 5471, GILTI calculations, etc.) are typically more complex and more expensive than the initial Form 926.

When You May Be Exempt from Filing Form 926

The IRS provides several exceptions, but they’re narrow and technical:

Minor ownership (under 5%): If you own less than 5% of the foreign corporation by both vote and value after the transfer, you may be exempt, but only if additional conditions are met (such as the transfer being properly taxed or the total value being under $100,000).
Tax-exempt organizations: Certain transfers by tax-exempt entities (like charities) may be exempt if the income from the transfer isn’t related to their tax-exempt purpose.
Transfers where gain was properly recognized: If the transfer resulted in taxable gain and you reported and paid the tax correctly on your return, certain exemptions may apply.

The exemptions are highly fact-specific and depend on the exact terms of the transfer, your ownership percentage, and how the transaction was reported. Misapplying an exemption can result in the full 10% penalty. This is an area where professional guidance is essential.

Penalties for Not Filing Form 926

The penalties for missing Form 926 are severe relative to the form’s complexity:

Penalty Type	Amount
Standard penalty for failure to file	10% of the fair market value of the property transferred
Per-transfer cap (non-willful)	$100,000 maximum per transfer
Willful failure	No cap; penalties can exceed $100,000 and may include criminal charges
Statute of limitations impact	The statute of limitations on your entire tax return stays open indefinitely until Form 926 is filed

The indefinite statute of limitations is particularly important: if you fail to file Form 926, the IRS can audit your entire tax return for that year at any time, with no expiration.

If you’ve missed filing Form 926, the IRS offers amnesty programs, including the Streamlined Filing Procedures, that allow you to come into compliance without facing the standard penalties, as long as your failure was non-willful and you come forward before the IRS contacts you.

How Greenback Handles Form 926 for Expats

Foreign business reporting is one of the most penalty-heavy areas of U.S. tax law, and Form 926 is often the starting point for a complex web of ongoing obligations. Our CPAs and Enrolled Agents help expats with Form 926 by:

Determining whether your transfer triggers a filing requirement: Not every payment to a foreign entity requires Form 926. We evaluate the type of transfer, the dollar amount, your ownership percentage, and the structure of the foreign entity to determine whether filing is required.
Analyzing whether gain recognition applies under Section 367(a): If you transferred appreciated property, you may owe tax on the transfer as if you sold it. We calculate the gain, determine whether any exceptions apply, and report everything correctly so you don’t face surprises.
Coordinating with Form 5471 and other ongoing obligations: Form 926 is rarely a standalone filing. We connect it to your annual Form 5471 reporting, GILTI calculations, and any other foreign business forms so your complete compliance picture is handled from the start.
Addressing missed filings through amnesty programs: If you set up a foreign business years ago and didn’t know about Form 926, we can bring you into compliance through the Streamlined Filing Procedures or other IRS programs before penalties apply.

Frequently Asked Questions

Does transferring cash to a foreign bank account trigger Form 926?

No. Form 926 applies to transfers of property to a foreign corporation, not to your own foreign bank accounts. Moving money to your personal bank account abroad is reported through the FBAR (if accounts exceed $10,000) and possibly FATCA Form 8938, but it doesn’t trigger Form 926 unless you’re transferring those funds to a foreign corporation.

Do I need Form 926 if I’m starting a small business abroad?

It depends on how the business is structured. If you incorporate a foreign company (such as a UK Ltd, German GmbH, or Canadian Corp) and contribute cash or property to it, Form 926 likely applies if the transfer exceeds $100,000 or if you own 10% or more. If you operate as a sole proprietor abroad without a separate legal entity, Form 926 doesn’t apply.

What’s the filing deadline for Form 926?

Form 926 is attached to your annual U.S. tax return (Form 1040) and is due by the same deadline. For expats, that’s April 15 with an automatic extension to June 15 (and further extension to October 15 with Form 4868).

What happens if I didn’t know about Form 926 and never filed it?

If your failure to file was non-willful (you didn’t know about the requirement), you may be able to come into compliance through the Streamlined Filing Procedures without facing the standard 10% penalty. The key is to come forward before the IRS contacts you. Once the IRS initiates contact, amnesty options may no longer be available.

Is Form 926 related to Form 5471?

Yes. Form 926 reports the initial transfer of property to a foreign corporation, while Form 5471 reports your ongoing ownership and the corporation’s annual activity. If you file Form 926 for a transfer that gives you 10% or more ownership, you’ll almost certainly need to file Form 5471 annually going forward. The $10,000 per-year penalty for missing Form 5471 makes this an ongoing compliance obligation you can’t ignore.

Your Next Steps

If you’ve transferred cash or property to a foreign corporation, or you’re planning to start or invest in a business abroad, the filing requirements matter. Form 926 is the IRS’s way of tracking these transfers, and the penalties for missing it are steep.

If you need help determining whether Form 926 applies to your situation, or you’ve missed filing in prior years and want to come into compliance, we can help. Our CPAs and Enrolled Agents work with expat business owners every day and handle the full chain of foreign business reporting, from Form 926 through Form 5471 and beyond.

Contact us, and one of our Customer Champions will be happy to help. If you’re ready to be matched with a Greenback accountant, get started here.

Stay Compliant With Foreign Corporation Reporting

Greenback helps you manage Form 926 and related filings from start to finish.

This article is for informational purposes only and does not constitute tax, legal, or accounting advice. Foreign business reporting rules are complex and change frequently. For advice related to your specific situation, consult with a qualified tax professional.