taxable year of foreign corporation for form 5471 and section 898

You need to make sure you understand the ownership rules to conclude that U.S. ownership is less than 50%. If U.S. persons, in substance, have control of more than 50% of the vote or of the value of the foreign corporation, then it would likely be a CFC.

If you conclude that it is not a CFC, then Code § 898 does not apply to require a December or November year end.

The majority of shares are owned by my wife, who is not a US citizen and never has been. We both live in England and have done for the entire time the company has been in existence.

constructive ownership rules seem to disallow it in section (b)(1).

Have I interpreted that correctly, or am I mistaken?

Tony

You have a special circumstance. You are correct that Code § 958(b) (1) indicates that your nonresident alien wife's shares are not attributed to you for purposes of determining whether the corporation is a CFC. Thus, I agree that the corporation would not be a CFC and the year end can be a non-calendar year. However, for purposes of filing Form 5471, you are treated as controlling the foreign corporation. This makes you a category 4 filer and you need to file Form 5471 annually. I don't recall your specific facts provided in other threads, but you may also be a category 3 filer and a category 2 filer.

Where is that specified in the regulations?

Tony

Code § 6038 provides the rules for filing Form 5471. Treas. Reg.

1.6038-2(a) specifies that Form 5471 must be filed. Treas. Reg. 1.6038-2(b) defines control for this purpose. Treas. Reg. 1.6038-2(c) provides that Code § 318 applies with certain modifications. However, the modification in Code § 958(b)(1) is not included in this regulation. Treas. Reg. 1.6038-2(l) provides an exception from filing where stock is owned via attribution. However, this exception only applies if the U.S. person does not own any direct or indirect interest in the foreign corporation. Because you own an interest in the foreign corporation, this exception will not apply. Therefore, you are attributed the stock owned by your wife for purposes of determining control under Code § 6038. This makes you a category 4 filer. The rules for category 3 filers are generally found in Code § 6046.