Tax
Delaware LLC with no US-source income: why you still file Form 5472
Common confusion: if your Delaware LLC earns no US-source income, do you still file Form 5472? Yes. Here is why and what to file.
The 5472 trigger is structural, not revenue-based
Treasury Regulation § 1.6038A-1 makes foreign-owned single-member US LLCs reportable corporations by default. The classification is structural: it does not depend on whether you earned US-source income, on transaction volume, or on whether the LLC was active during the tax year. If the LLC exists at any point during the tax year and has a foreign owner, the obligation attaches.
Many non-resident founders assume that if their LLC sat dormant with no revenue, no filing is required. This is wrong. A dormant Delaware LLC owned by a non-resident still owes Form 5472 plus a pro forma Form 1120.
What to file when there is no US-source income
Filings consist of two parts. First, Form 5472: report any reportable transactions between the LLC and the foreign owner during the year. If no transactions occurred, the form is mostly empty but still required. Second, pro forma Form 1120: a stripped-down version showing the LLC name, EIN, address, and the attached Form 5472. No tax is owed (the LLC is disregarded), but the filing must be made.
CPA fee for a no-transaction year: typically $300-$500. Much cheaper than the $25,000 penalty for non-filing.
When is the LLC actually dormant?
Many founders describe their LLC as dormant when, in fact, capital contributions, bank-fee payments, or owner distributions occurred during the year. These are reportable transactions for Form 5472. Even a $10 bank fee paid by the owner on behalf of the LLC is a reportable transaction.
Bank statements during the tax year are the simplest reality check. If anything moved in or out, the LLC was not fully dormant for 5472 purposes.
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