On January 28, 2021, the IRS published Instructions for Form 5471, which include significant changes. In accordance with Rev. Proc. 2019-40 (https://www.irs.gov/pub/irs-drop/rp-19-40.pdf), the new Instructions address revisions related to Category 5 filers. As a result of the repeal of Code section 958(b)(4), Rev. Proc. 2019-40 generally provides relief to U.S. persons that directly, indirectly, or constructively own stock in non-U.S. corporations that are Controlled Foreign Corporations.
Filers must use these new Instructions with the December 2020 revision of Form 5471 and separate Schedules E, H, J, P, Q, and R; the December 2019 revision of separate Schedule I-1; the December 2018 revision of Schedule M; and the December 2012 revision of separate Schedule O. There are changes throughout the new instructions based on the final regulations under section 960. Filers must review these Instructions carefully as there are many revisions and changes.