How Does Form 1120 Schedule K Question 7 Relate to Form 5472?

November 13, 2026 · 2 min read

For a corporation filing a full Form 1120, Schedule K Question 7 asks whether a foreign person owned at least 25% of voting power or stock value. A Yes answer calls for a separate Form 5472 review. The IRS generally requires a 25% foreign-owned corporation to file Form 5472 when it had a reportable transaction with a foreign or domestic related party during the tax year.

What to check

Apply the constructive ownership rules when checking the ownership threshold. A cap table showing only direct shareholders may miss relevant indirect or attributed holdings. If more than one foreign person meets the threshold, Question 7 asks for information about the one with the highest ownership percentage. The Form 5472 instructions separately describe how to identify related parties and when to file a form for each. If the filer is a foreign-owned U.S. disregarded entity filing the special pro forma Form 1120, follow the limited cover-page instructions in the Form 5472 instructions.

Example

A U.S. corporation has two unrelated foreign shareholders with 60% and 30% of voting power. Assume the example has no additional attributed ownership. Use the 60% owner's information for Question 7. If both shareholders had reportable transactions with the corporation during the year, review both parties for separate Form 5472 filings.

Before you proceed

Confirm that the company is preparing a full corporate Form 1120 for the period.
Document voting power, stock value and any constructive ownership that affects the answer.
Review the transactions by related party before deciding how many Forms 5472 to attach.

Does Question 7 identify every related party?

No. For multiple qualifying foreign shareholders, Question 7 identifies the one with the highest percentage. The Form 5472 review covers the relevant related parties and transactions separately.