Do I need to file a form 926 for an investment in a private UK technology company?

Forum|Forum|5 years ago
January 18, 2021
2 replies
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I invested $20k in 2020 into a UK private limited company in the technology industry (non-financial related). Turbotax shows a form 8938 is not necessary because the value of my investment did not exceed $100k (married filing jointly). I own roughly 1% of outstanding shares and did not receive any income from the investment. I have no other foreign investments or accounts. Is a form 926 necessary to file or is Turbotax correct that no reporting is necessary this year?

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Best answer by JohnW152

You don't appear to have a filing requirement for Form 926 for tax year 2020. The mere investment of cash in a foreign corporation doesn't automatically mean you need to file the form.

According to Transfers of cash in the Instructions for Form 926,

"A U.S. person that transfers cash to a foreign corporation must report the transfer on Form 926 if (a) immediately after the transfer, the person holds, directly or indirectly, at least 10% of the total voting power or the total value of the foreign corporation; or (b) the amount of cash transferred by the person to the foreign corporation during the 12-month period ending on the date of the transfer is more than $100,000." [Bolding mine.]

Based on your statement, neither of these provisions trigger the need for a Form 926.

JohnW152Answer

You don't appear to have a filing requirement for Form 926 for tax year 2020. The mere investment of cash in a foreign corporation doesn't automatically mean you need to file the form.

According to Transfers of cash in the Instructions for Form 926,

Based on your statement, neither of these provisions trigger the need for a Form 926.

jhulwickAuthor

Many thanks @JohnW152 !

Is it your interpretation that no other reporting is necessary as well?

PattiF

Yes, no other reporting is necessary. I just wanted to confirm and agree with johnW152 that he is absolutely correct. See page 1 of the IRS instructions Form 926 Instructions. Future actions such as a sale of this investment or dividends would be reportable.

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