LLC A receives a K-1 from LLC B. The K-1 contains information for filing out form 926. Does LLC A have to complete form 926 or pass the information down to its partners and the partners will have to complete form 926?

ANSWER

The BIDaWIZ Team's Answer:

The Form 926 requirement is assessed at partner level. The filing requirement will be triggered if either 1) immediately after the transfer, the transferor holds directly or indirectly at least 10 percent of the total voting power or total value of the foreign corporation, exclusive of transfers by other transferors or 2) the amount of cash contributed by the transferor or any "related" person during the 12 month period ending on the date of the transfer exceeds $100,000. However, since the partner's pro-rata share did not reach these conditions, the form 926 would not be required. This is referenced in IRC Code Sections 367(a) and 6038B.