If you already know you need to file Form 5472 — see our general explainer if not — the harder question is usually which transactions belong on it. It’s not just sales and invoices. A rent-free office, an unpaid favor, a $500 wire to cover formation costs — all of these can be reportable related party transactions. Here’s exactly what counts, sorted by the part of the form it belongs in, so nothing slips through.
In short: any money, property, or service that moves between your entity and a related party is likely reportable — including transfers where nothing was actually charged. We map every transaction to the right part of Form 5472 as part of our federal tax filing service.
Who counts as a related party
Form 5472 defines “related party” more broadly than most owners expect, under IRC Section 6038A. Four groups typically qualify:
- Direct foreign owners. Anyone who owns 25% or more of your US entity — if you’re the sole member of your LLC, that’s you.
- Family members. Spouse, children, grandchildren, parents, and siblings, as defined under IRC §267(b). Their transactions with your LLC are reportable too.
- Entities you control. Corporations or partnerships where you (or another 25%+ shareholder) hold 50% or more control — for example, a foreign corporation that funds your US LLC.
- Parties related under §482. Affiliated groups and common-control relationships where pricing has to be arm’s-length — most often a parent-subsidiary relationship.
One detail that surprises people: Form 5472 uses a 10% threshold (not the usual 50%) for constructive ownership under §318(a)(2)(C). Ownership through family, partnerships, trusts, or other corporations can create related-party status even without any direct stake — see the IRS Form 5472 instructions.
What you have to report: Parts IV, V, and VI
Form 5472 splits related party transactions across three parts. Which one a transaction lands in depends on whether money changed hands, whether it’s equity-related, and whether it was priced fairly.
Part IV: transactions that would show up on a normal statement
These are the transactions most owners expect to report — the ones that would appear on financial statements if you ran them through a standard set of books:
- Sales and purchases of inventory or tangible property
- Rents, royalties, and license fees for property or intangible rights (patents, trademarks, formulas)
- Service fees — technical, managerial, engineering, construction, or scientific
- Commissions paid or received
- Loans, and the interest on them (subject to IRC §163(j) limits)
- Insurance premiums and loan guarantee fees
- Any other amount affecting taxable income that isn’t listed elsewhere
Part V: equity moves for foreign-owned disregarded entities
This part is unique to single-member LLCs treated as disregarded entities, and it’s where most owners under-report. Four transaction types belong here:
- Capital contributions — money or property you transfer into the LLC
- Distributions — cash or property the LLC sends back out to you
- Formation or dissolution amounts — payments tied to setting up or winding down the entity
- Other §482 transactions — anything under Reg. §1.482-1(i)(7) not already captured in Part IV
Even a modest $1,000 wire to cover formation costs is a reportable transaction here — the LLC having zero revenue doesn’t exempt it.
Part VI: transactions where nothing (or not enough) was charged
This is the section that catches people off guard, because these transactions never show up on a normal balance sheet:
| Transaction | Example | What to report |
|---|---|---|
| Rent-free property use | You let the LLC use your property without charging rent | Fair market value (FMV) of the rent that should have been charged |
| Below-market loans | You loan the LLC $100,000 at 0% interest | FMV of the interest that should have been charged |
| Unpaid services | You consult for the LLC without invoicing it | FMV of the services rendered |
| In-kind property transfers | You contribute equipment worth $50,000 | FMV plus your calculation methodology |
| Guarantees without a fee | You guarantee the LLC’s loan for free | FMV of the guarantee service |
Every Part VI entry needs a description and a “reasonable estimate” of FMV — the IRS treats an estimate as reasonable when it lands within 75–125% of the actual value.
We prepare the FMV calculations and methodology notes for every Part VI transaction as part of our federal tax filing service, so your non-cash transactions are documented as thoroughly as your cash ones.
What you don’t have to report
- Transactions with related parties who are US persons, unless they trigger other reporting rules
- Any single transaction type under $50,000 for the year — report it as “$50,000 or less” without a specific figure
- Amounts already reported on Form 5471, Schedule M
- Arm’s-length transactions with parties who aren’t related to you at all
Capital contributions: cash and non-cash
Capital contributions are the most common Part V transaction, and the one owners most often assume is too small to matter.
Cash contributions are straightforward: record the transfer (wire, check, or otherwise), convert it to USD at the rate on the transaction date if it started in another currency, and report the total in Part V. Keep the bank statement, the transfer confirmation, and a short note on what the funds were for — that’s usually all the backup you need.
Non-cash contributions — a laptop, office furniture, software licenses, intellectual property — take more documentation. Say you contribute a $2,000 laptop, $3,000 of furniture, and $5,000 of software licenses when you form the LLC: that’s a $10,000 non-monetary contribution, reported in Part V with FMV support in Part VI. For each asset, keep a description, the FMV methodology you used, the contribution date, and any supporting comparables or appraisals. Our accounting service keeps this kind of record organized year-round, so nothing has to be reconstructed at filing time.
Loans between you and your LLC
Loans between related parties are common, and the IRS gives you two ways to report the balance in Part IV:
| Method | Best for | How it’s calculated |
|---|---|---|
| Outstanding balance | A single loan or a handful of transactions | Report the balance as of year-end |
| Monthly average | Multiple loans or frequent draws | Sum of month-end balances ÷ 12 |
Interest gets closer scrutiny. Deductions are capped under §163(j), pricing has to be arm’s-length under §482, and if you want a safe harbor, the Applicable Federal Rate (AFR) is the reference point — but claiming it requires a Part VII disclosure. Keep a written loan agreement, your rate justification (market comparison or AFR citation), an amortization schedule, and payment records. Loan guarantee fees get reported separately in Part VI even when no fee was actually charged.
Service fees and management payments
Any service a related party provides to your LLC — or vice versa — is reportable in Part IV. That covers technical work (engineering, IT, development), managerial and strategic services, construction, scientific or research work, and professional or administrative support like bookkeeping and HR.
Pricing for these services has to meet the arm’s-length standard under IRC §482 — comparable to what an unrelated party would charge for the same work.
We help establish and document arm’s-length pricing for related party services as part of your bookkeeping, so the comparability analysis is already in place when it’s time to file.
If you provide services to your own LLC without invoicing it — consulting, design work, anything — that’s a Part VI entry: report the FMV of what should have been charged, backed by the hours worked and a comparable market rate.
Keeping records the IRS will accept
Documentation is what makes a Form 5472 filing defensible if the IRS ever asks questions.
Keep supporting records for 7 years from the filing date. Inadequate records carry the same $25,000 penalty as failing to file — one more reason we keep this organized for you throughout the year, not just at deadline time.
| Transaction type | Keep |
|---|---|
| Capital contributions | Bank statements, wire confirmations, property valuations |
| Distributions | Distribution authorization, payment records |
| Sales and purchases | Invoices, purchase orders, shipping and payment records |
| Service fees | Service agreements, invoices, timesheets |
| Loans | Loan agreements, amortization schedules, interest calculations |
| Non-monetary transactions | FMV appraisals, comparable analysis, asset descriptions |
A few habits make this easy instead of a scramble: log transactions as they happen rather than at year-end, write a plain-language description of the business purpose for each one, note the exchange rate for anything in foreign currency, and keep a written methodology for every FMV estimate. Our accounting service handles this continuously, so your Form 5472 filing draws from records that are already organized.
Common mistakes worth avoiding
A few patterns come up often enough that they’re worth naming directly:
Assuming a dormant LLC has nothing to report. Say you form a Wyoming LLC in 2026 and wire $5,000 to the business account to cover formation costs. Even with zero revenue, that $5,000 is a reportable Part V transaction — Form 5472 is still due.
Missing the non-cash transactions. Using your own laptop for LLC business, letting the LLC use your home office rent-free, guaranteeing a loan without a fee — none of these involve cash changing hands, but all of them belong in Part VI.
Each related party needs its own Form 5472. If your LLC transacted with you, your spouse, and your foreign corporation, that’s three separate forms — one omitted form is treated the same as one unfiled return.
Under-documenting fair market value. “Office equipment — $5,000” isn’t enough for Part VI. A defensible entry looks more like: “Laptop purchased 6 months ago for $2,000, current FMV $1,800 per comparable listings; desk purchased for $300, current FMV $250; total FMV $2,050, based on recent purchase price adjusted for depreciation.”
Using the wrong ownership threshold. If a business partner owns 15% of your foreign corporation, and that corporation owns your US LLC, standard related-party rules wouldn’t flag them — but Form 5472’s modified §318 rules, with their 10% threshold, do.
Trying to e-file. Foreign-owned disregarded entities can’t e-file Form 5472 — submissions are rejected automatically. It has to be mailed or faxed with the pro forma Form 1120 attached; see our pro forma 1120 walkthrough for the mechanics, and our deadlines and extensions guide if timing is tight.
How we handle it
Related party analysis is the part of Form 5472 that’s easiest to get wrong on your own, so it’s where our process focuses first. We identify every reportable transaction from your year’s activity — contributions, distributions, service fees, loans, and non-monetary exchanges alike — calculate defensible fair market values where needed, and keep your records organized through our accounting service so nothing has to be reconstructed at filing time. From there, we prepare the pro forma Form 1120 and attached Form 5472, and mail or fax it to the IRS using the procedure required for foreign-owned disregarded entities.
Our federal tax filing plans start at $399 per filing for a single-member LLC, or $899 per filing for a multi-member LLC or C-Corp election — both reviewed by a US-licensed CPA before anything is filed.
FAQ: Form 5472 related party transactions
What counts as a related party for Form 5472?
Any 25%+ foreign owner, family members under IRC §267(b) (spouse, children, parents, siblings), entities you control, and parties related under §482. Form 5472 also applies a modified §318 constructive ownership rule with a 10% threshold, which pulls in more relationships than standard related-party rules would.
Do I need to report capital contributions?
Yes. Every capital contribution to a foreign-owned disregarded entity is reported in Part V, whether it’s cash or property — even a few hundred dollars to cover formation costs.
What happens if I don’t charge my LLC for services I provide?
It’s a Part VI non-monetary transaction. Report the fair market value of what should have been charged, based on comparable rates for similar professional services.
How do I report loans between myself and my LLC?
In Part IV, using either the outstanding year-end balance or the monthly average method. Interest is reported separately, and if you charge below-market rates, the interest differential belongs in Part VI.
What documentation do I need to keep, and for how long?
Seven years from the filing date — bank statements, wire confirmations, invoices, contracts, loan documents, FMV calculations, and currency conversion notes. Inadequate records carry the same $25,000 penalty as a missed filing.
Can I report small transactions as “$50,000 or less”?
Yes, for any transaction type under $50,000 for the year. You still need to keep documentation behind that figure in case it’s requested.
Do I need a separate Form 5472 for each related party?
Yes. If your LLC has transactions with three related parties, that’s three separate forms, each with its own filing requirement.
Want the full picture before diving into related parties? Start with our Form 5472 explainer for who files and when. When you’re ready, every one of our federal tax filing plans prepares and files Form 5472 for you — related party analysis, FMV calculations, and all.
