IRS Form 8858 - What Do I Do

[dascpa]

Business client sold his business for cash and stock in an international conglomerate. My client's company just received the K-1 and in it are nine IRS Forms 8858 "Information Return of U.S. Persons with Respect to Foreign Disregarded Entities and Foreign Branches".  The nine come from different countries.  My question - since the K-1 went to his business, do I have to fill out the same forms for his 1120S to go from his entity to him as an individual, and then of course complete the K-2/K-3 (yea...) or is this just from the top tier to the next level K-1 owner?

If anybody cares, I friggin hate foreign transactions.

[TaxGuyBill]

I'm not sure if he is available, but I suspect that @itonewbie  is the most capable of answering this one.

[qbteachmt]

I want to clarify this part: "since the K-1 went to his business"

Because you first stated: "Business client sold his business for cash and stock in an international conglomerate."

So, he sold a Business, but has a Corporation under which that business operated, so "he" isn't really the seller; the Corporation was the seller? And his own corporation is not operating as a subsidiary of that foreign entity?

[dascpa]

Yes, his business sold his business for cash and stock in another business.  So his business is a 2% member of an LLC that is also the owner of foreign entities.

[qbteachmt · Accepted solution]

The last time I researched this, it would be: "or is this just from the top tier to the next level K-1 owner?"

Your scenario: US LLC owns the FDE(s), and each FDE uses Form 8858 to report to/for the LLC (considered the only real entity in this flow). The LLC is its own entity. The S Corp not only also is its own entity, but I seem to remember S Corp and REIT (what I was researching) are excluded from filing Form 8858 anyway.

And I remember 10% being the minimum for "US persons who operate an FB or own an FDE directly, or, in certain circumstances, indirectly or constructively, are required to file the form." That would be the LLC, anyway. Not the 1120-S entity nor the 1040 entity.

[dascpa]

Your reply was what I had thought too.  I really appreciate your technical response. 

I've been dealing with this international conglomerate deal and secondarily a consolidation of 24 TIC entities into one and 23 of the 24 had 1031 transactions.  I'm just a little local accountant who wants simple accounting, simple tax returns and easy clients.  Who did I piss off to deserve all of this.........

[dkh]

 Who did I piss off to deserve all of this.........  

Is this you......... 

😁

[qbteachmt]

"I'm just a little local accountant who wants simple accounting, simple tax returns and easy clients. Who did I piss off to deserve all of this........."

I smell a boat payment in your future.