Glossary
Pro forma Form 1120
A Form 1120 with only the identifying information completed, used as the cover for Form 5472 when the filer is a foreign-owned disregarded LLC.
A disregarded LLC has no corporate income to report, so the IRS does not want a full corporate return from it. It wants the first page of Form 1120 with the name, address, EIN, tax year and a note that the return is pro forma, with Form 5472 attached. The combination is what the $25,000 penalty attaches to.
Because the 1120 is only a cover, no tax is calculated on it and nothing is owed with it. The LLC's actual income, if any is US-connected, is reported by the owner on Form 1040-NR. Filers confuse the two and either skip the 1040-NR when it is needed or fill in the 1120 with income figures that do not belong there.
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