IRS Form 5471 (Schedule P) – U.S. shareholders of controlled foreign corporations (CFCs) or specified foreign corporations (SFCs) must navigate complex international tax reporting. IRS Form 5471 Schedule P tracks Previously Taxed Earnings and Profits (PTEP) to prevent double taxation on distributions. This schedule is a critical attachment to Form 5471, ensuring accurate reporting of earnings already taxed under Subpart F, GILTI (or its successors), Section 965 transition tax, and related provisions.
This comprehensive guide covers who must file, the purpose of Schedule P, PTEP categories, line-by-line instructions, recent updates as of the December 2025 Form 5471 instructions, and practical tips. It draws from official IRS sources, including the Schedule P form (Rev. December 2020) and Instructions for Form 5471 (Rev. December 2025).
Download the official Schedule P PDF here: https://www.irs.gov/pub/irs-pdf/f5471sp.pdf.
Always pair it with the latest Form 5471 instructions at IRS.gov for your specific tax year.
What Is IRS Form 5471 Schedule P?
Schedule P (Form 5471), titled “Previously Taxed Earnings and Profits of U.S. Shareholder of Certain Foreign Corporations,” reports the U.S. shareholder’s annual PTEP accounts for each foreign corporation.
PTEP represents earnings and profits (E&P) of a CFC or SFC that a U.S. shareholder has already included in gross income under sections 951(a)(1), 951A (GILTI), or 965. Section 959 ensures these amounts are not taxed again upon distribution.
The schedule has two parts:
- Part I: Tracks PTEP in the foreign corporation’s functional currency.
- Part II: Tracks PTEP on a U.S. dollar basis (essential for calculating section 986(c) foreign currency gain or loss on distributions).
It uses multiple columns to break down PTEP into specific groups and subgroups, reflecting reclassifications between section 959(c)(1) (E&P attributable to investments in U.S. property) and section 959(c)(2) (other PTEP).
Key fact: Schedule P mirrors much of Schedule J (Accumulated E&P) but is prepared on a per-U.S.-shareholder basis. In multi-shareholder CFCs, each filer’s PTEP may differ due to pro-rata share differences.
Who Must File Schedule P with Form 5471?
You must attach a separate Schedule P for each applicable foreign corporation if you are a U.S. person filing Form 5471 in one of these categories (per Instructions for Form 5471, Rev. Dec. 2025):
- Category 1a or 1b: Certain U.S. shareholders of SFCs.
- Category 4: U.S. persons who control the foreign corporation.
- Category 5a or 5b: U.S. shareholders of CFCs who own 10% or more (by vote or value).
Exceptions:
- Category 1c/5c (constructive owners without section 958(a) ownership) generally do not file.
- Use “Alternative Information” under Rev. Proc. 2019-40 (check box F on Form 5471) if data is unavailable for foreign-controlled CFCs/SFCs.
Joint filers or consolidated groups may need statements instead of full duplicate schedules in some cases. File Schedule P with your income tax return (Form 1040, 1120, etc.) by the due date, including extensions.
Purpose of Schedule P: Preventing Double Taxation
Schedule P ensures compliance with IRC sections 959, 960, 961, and related rules. It tracks:
- Beginning and ending PTEP balances.
- Additions (e.g., current-year inclusions).
- Reductions (e.g., distributions, reclassifications).
- Adjustments for taxes, nonrecognition transactions, and anti-splitter rules.
Proper PTEP reporting determines whether distributions are nontaxable (from PTEP) or taxable (from section 959(c)(3) E&P). It also supports foreign tax credit calculations and section 986(c) currency gains/losses.
Key PTEP Categories and Columns on Schedule P
The form uses 10+ columns (a through k, with “Total” in k) to segregate PTEP by type and reclassification status. Columns mirror subgroups in Schedule J, column (e):
| Column | PTEP Category | Description |
|---|---|---|
| (a) | Reclassified section 965(a) PTEP | Transition tax amounts reclassified to 959(c)(1) |
| (b) | Reclassified section 965(b) PTEP | Related deficit allocations reclassified |
| (c) | General section 959(c)(1) PTEP | PTEP attributable to U.S. property investments |
| (d) | Reclassified section 951A PTEP | GILTI inclusions reclassified |
| (e) | Reclassified section 245A(d) PTEP | Hybrid dividend or extraordinary reduction PTEP |
| (f) | Section 965(a) PTEP | Untaxed transition tax PTEP (959(c)(2)) |
| (g) | Section 965(b) PTEP | Deficit-related |
| (h) | Section 951A PTEP | GILTI inclusions (959(c)(2)) |
| (i) | Section 245A(d) PTEP | Disallowed credits/deductions |
| (j) | Section 951(a)(1)(A) PTEP | Subpart F inclusions |
| (k) | Total | Sum of all columns |
Reclassifications (e.g., from 959(c)(2) to 959(c)(1) when PTEP is invested in U.S. property) appear as negative amounts in one column and positive in another.
Enter a separate Schedule P (or statement) for each income category code (e.g., “GEN” for general category; reference Form 1118 instructions). For sanctioned countries, use code “901j” + country code.
How to Complete Schedule P: Line-by-Line Overview (Parts I & II)?
Header: Enter filer name, reference ID (from Form 5471, item 1b(2)), and category code (line a).
Part I – Functional Currency
- Line 1a: Balance at beginning of year (from prior-year Schedule P, line 12).
- Line 1b: Beginning balance adjustments (attach statement; e.g., corrections or elections).
- Line 1c: Adjusted beginning balance (1a + 1b).
- Line 2: Reduction for taxes unsuspended under anti-splitter rules (section 909).
- Line 3: PTEP attributable to distributions from lower-tier foreign corporations.
- Line 4: PTEP carried over in nonrecognition transactions.
- Line 5: Other adjustments (attach statement).
- Line 6: Total PTEP (sum of 1c–5).
- Line 7: Amounts reclassified to section 959(c)(2) from 959(c)(3).
- Line 8: Actual distributions of PTEP (ties to Schedule R distributions).
- Line 9: Amounts reclassified to 959(c)(1) from 959(c)(2).
- Line 10: Amounts included as earnings invested in U.S. property and reclassified to 959(c)(1).
- Line 11: Other adjustments (attach statement).
- Line 12: Balance at end of year (beginning + additions – reductions).
Part II – U.S. Dollar Basis
Identical structure to Part I, but report all amounts in U.S. dollars (using average exchange rate under section 986(a) or other applicable rules). This basis is used for section 986(c) gain/loss computations on distributions.
Positive = increases; negative = decreases. Round appropriately and attach detailed statements for any line requiring explanation.
Recent Updates & Considerations for 2025–2026 Tax Years
- Form remains Rev. December 2020; no structural changes to Schedule P columns or lines.
- Instructions (Rev. December 2025) integrate Schedule P more tightly with Schedule J, Schedule R (distributions), and Schedule I (currency gains/losses on PTEP).
- OBBBA (One Big Beautiful Bill Act, 2025) impacts: New rules on tax-year alignment for SFCs (post-Nov. 30, 2025), pro-rata share transition (Notice 2025-75), and recharacterized inclusions affect PTEP indirectly via Worksheet A and Schedule G. Report related adjustments on Schedule P line 1b or 5/11 as needed.
- Pillar Two / Top-up taxes: New Form 5471 lines (Schedule G) may require PTEP-related statements, but no direct Schedule P change.
- Currency rules: Continue using functional currency for Part I; translate per Reg. §1.985-1 and §1.986(c)-1.
For fiscal-year CFCs or complex structures, consult the full instructions and consider software that automates PTEP tracking across annual accounts.
Common Challenges & Pro Tips
- Multi-shareholder discrepancies: Your PTEP share may not match the corporation’s total Schedule J—document pro-rata calculations.
- Reclassifications: Track LIFO ordering and priority for section 965 groups carefully.
- Distributions: Always source first from PTEP (nontaxable under section 959(a)); specify on Schedule R.
- Attachments: Statements are mandatory for adjustments—keep detailed workpapers.
- Penalties: Failure to file can trigger $10,000 per form (up to $50,000 if not corrected) under sections 6038 and 6046, plus accuracy-related penalties.
- Software & Professionals: Use specialized tax software for multi-year PTEP tracking. Always consult a CPA or tax attorney experienced in international tax for complex CFCs.
Conclusion: Master Schedule P to Stay Compliant
IRS Form 5471 Schedule P is essential for accurate PTEP reporting and avoiding double taxation on foreign earnings. By properly tracking balances in functional currency and U.S. dollars across detailed categories, U.S. shareholders fulfill sections 6038/6046 requirements while optimizing their tax position.
Download the form directly: https://www.irs.gov/pub/irs-pdf/f5471sp.pdf
Review the full Instructions for Form 5471 (Rev. December 2025) at IRS.gov/Form5471.
International tax rules evolve quickly—especially with recent legislation like OBBBA. For personalized advice on your Form 5471 Schedule P filing, work with a qualified U.S. tax professional familiar with CFC reporting.
This guide is for informational purposes only and is not tax or legal advice. Tax laws and IRS forms are subject to change. Verify all information with the latest official IRS publications for your specific situation.