Form 926 Instructions (Rev. 11-2018): Foreign Transfers

Updated October 7, 2026. Quick answer: Form 926 reports certain transfers of tangible or intangible property to a foreign corporation, as required by section 6038B. Cash transfers are reportable if the transferor holds at least 10% of the foreign corporation right afterward or moves more than $100,000 in a 12-month period. The form is filed with the income tax return for the year of the transfer. The penalty for not complying is 10% of the property’s fair market value, limited to $100,000 absent intentional disregard.

Form lines read one part at a time: Form 3520 Part I.

More IRS forms and schedules, read line by line: Form 8865 instructions, Form 8858 instructions and Form 3520 instructions.

What Form 926 is for and who files

The IRS states the purpose in one sentence: “Use Form 926 to report certain transfers of tangible or intangible property to a foreign corporation, as required by section 6038B.”

The filers: “Generally, a U.S. citizen or resident, a domestic corporation, or a domestic estate or trust must complete and file Form 926 to report certain transfers of property to a foreign corporation that are described in section 6038B(a)(1)(A), 367(d), or 367(e).”

Two special rules matter for individuals. On partnerships: “If the transferor is a partnership (domestic or foreign), the domestic partners of the partnership, not the partnership itself, are required to comply with section 6038B and file Form 926.” On spouses: “Spouses may file Form 926 jointly, but only if they file a joint income tax return.”

Transfers of cash: the 10% and $100,000 tests

Cash has its own thresholds. “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.”

Either prong is enough. The following is an illustration with made-up facts, not an IRS example:

On the form, cash is Section A of Part III, and “If cash was the only property transferred, skip the remainder of Part III and proceed to Part IV.”

Other property, section 367 and section 6038B

Section B of Part III covers property other than cash and certain intangibles. The instructions describe it as property “that is subject to full gain recognition under the general rule of section 367(a)(1).” Since 2017 the rule is stricter: “For transfers after 2017, section 14102(e) of the TCJA repealed the active trade or business exception under section 367.” Gain cannot be netted against losses on built-in loss property: “No loss is allowed under section 367(a)(1) for transferred built-in loss property.”

Intangibles go to Section C and are treated differently: “A U.S. person who transfers property subject to section 367(d) is treated as having sold such property in exchange for payments which are contingent upon the productivity, use, or disposition of such property”, with annual income inclusions over the useful life. Stock and securities transferred under a gain recognition agreement have their own filing path. The foreign-asset side of the same facts is covered on the FBAR versus Form 8938 page.

Parts I to IV, line by line

The form has four Parts.

Line 1 is the question added for transfers after 2017: “Check the “Yes” box on line 1 if the transferee is a specified 10%-owned foreign corporation that is not a controlled foreign corporation”. If the transferee is a CFC, the instructions say to “check the “Yes” box in Part II, line 9”. Part III columns (a) to (e) in Section B are date of transfer, description, fair market value, cost or other basis, and gain recognized. For the date, “Enter the first date on which title to, possession of, or rights to the use of the property passed for U.S. income tax purposes.”

Section C, for intangibles, adds useful life in column (c), the arm’s length price in column (d), basis in (e), and the income inclusion for the year of transfer in (f). If no amount is included, “enter “0.””

Exceptions to filing

Some transactions need no Form 926. For stock or securities under section 367(a), the exception turns on ownership right after the transfer: “The U.S. transferor owned less than 5% of both the total voting power and the total value of the transferee foreign corporation immediately after the transfer” together with a listed condition such as nonrecognition treatment, or “The U.S. transferor owned 5% or more of the total voting power or the total value of the transferee foreign corporation immediately after the transfer” with a different list of conditions.

Reorganizations also have carve-outs. The first listed example: “The U.S. person exchanges stock of a foreign corporation in a recapitalization described in section 368(a)(1)(E), or” A partnership transferor is not a filer itself; its domestic partners are treated as transferring a proportionate share, as the instructions state under line 3.

When and where to file, and the penalty

Timing is tied to the return: “Form 926 must be filed with the U.S. transferor’s income tax return (or, if applicable, exempt organization return) for the tax year that includes the date of the transfer.” The filing carries more than the form: “The Form 926 filed with the IRS must include the additional information required in Regulations sections 1.6038B-1(c) through (e)”.

The penalty: “If a taxpayer fails to comply with section 6038B, the penalty equals 10% of the fair market value of the property at the time of the transfer.” Two limits apply: “The penalty will not apply if the failure to comply is due to reasonable cause and not to willful neglect.” and “The penalty is limited to $100,000 unless the failure to comply was due to intentional disregard.”

An illustration with made-up values, not an IRS example:

The instructions also warn of a separate exposure: “A 40% penalty may be imposed on any underpayment resulting from an undisclosed foreign financial asset understatement.” A foreign corporation that holds investments may also bring in the passive foreign investment rules; see the Form 8621 page.

Which revision applies

The edition read for this page is the Instructions for Form 926 (Rev. November 2018), which is the revision irs.gov served when it was read on 2026-10-07. The IRS had not replaced it at that point, so later law changes show up only through the notice on IRS.gov/Form926. Check the revision printed on the form you are filing. “For the latest information about developments related to Form 926 and its instructions, such as legislation enacted after they were published, go to IRS.gov/Form926.”

Common mistakes

• Testing only the 10% ownership prong for a cash transfer. The second prong, more than $100,000 in the 12 months ending on the transfer date, applies on its own.
• Having a partnership file Form 926 for its partners. The instructions say the domestic partners, not the partnership, file and are treated as transferring their proportionate shares.
• Assuming a late filing costs nothing. The penalty is 10% of fair market value at the time of the transfer, limited to $100,000 unless the failure was due to intentional disregard.

Related: FBAR versus Form 8938, foreign inheritance and Form 3520, Form 1116 foreign tax credit, and Form 8621 for PFIC shareholders.

Sources

• Instructions for Form 926 (Rev. November 2018): https://www.irs.gov/pub/irs-pdf/i926.pdf
• Form 926 (Rev. November 2018): https://www.irs.gov/pub/irs-pdf/f926.pdf

Read from the IRS documents linked above on October 7, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.