Form 5471 Schedule P: PTEP reporting for US shareholders of CFCs (2026 guide)

Form 5471 Schedule P tracks previously taxed earnings and profits, or PTEP, for certain US shareholders of foreign corporations. For a 2025 tax return filed in 2026, it helps show which CFC earnings were already included in US income.

That record becomes relevant when a CFC later distributes cash. Correct PTEP reporting can determine whether the distribution is excluded under IRC Section 959 and whether foreign tax credit or foreign-currency rules apply.

This guide uses the December 2025 Form 5471 instructions for 2025 returns. Later 2026 guidance is identified separately where it changes how taxpayers should track or analyze PTEP.

What is Form 5471 Schedule P? A plain-English overview

Form 5471 Schedule P tracks a US shareholder's annual PTEP accounts for a controlled foreign corporation. For 2025 filings in 2026, the IRS requires Schedule P from Category 1a, 1b, 4, 5a, and 5b filers, with amounts reported in functional currency and US dollars.

Schedule P is attached to Form 5471 reporting for US taxpayers with foreign corporations. It does not calculate the CFC's taxable income from scratch.

Instead, Schedule P records the shareholder's annual PTEP balances after income has already been included under rules such as Subpart F, Section 951A, or Section 965.

Part I reports PTEP in the CFC's functional currency. Part II reports the US shareholder's US-dollar basis in that PTEP, which is relevant to Section 986(c) foreign-currency gain or loss.

Schedule P tracks the pools of previously taxed earnings and profits that a US shareholder may later receive without a second federal income inclusion under Section 959, subject to the applicable distribution rules.

The following 3 points explain why the schedule matters:

• Who files it: Category 1a, 1b, 4, 5a, and 5b filers must complete a separate Schedule P when required by the 2025 Form 5471 instructions.
• What it tracks: opening PTEP, current-year additions, distributions, reclassifications, adjustments, and closing PTEP.
• Why accuracy matters: an incomplete required schedule can make Form 5471 incomplete and expose the filer to Section 6038 reporting penalties.

The IRS Form 5471 page and current schedules identify Schedule P as the schedule used to report PTEP in a US shareholder's annual accounts.

Key terms you must know before reading Schedule P

Six terms explain most of Schedule P's mechanics for a 2025 CFC year. A US shareholder generally begins at a 10% vote-or-value threshold, while CFC status generally requires more than 50% US-shareholder ownership by vote or value.

The TFX guide to controlled foreign corporation rules explains the ownership test in more detail.

The following 6 definitions provide the vocabulary used throughout Schedule P:

• US shareholder: a US person that owns, directly, indirectly, or constructively, at least 10% of a foreign corporation's voting power or value for the relevant CFC rules. See IRC Section 951(b).
• Controlled foreign corporation: a foreign corporation that satisfies the more-than-50% US-shareholder ownership test under IRC Section 957, subject to the applicable attribution rules.
• Previously taxed earnings and profits: CFC earnings already taken into a US shareholder's income under specified anti-deferral provisions and tracked so Section 959 can prevent a second income inclusion.
• Subpart F income: specified CFC income included currently by a US shareholder under Sections 951 and 952, even when the CFC does not distribute cash.
• GILTI (global intangible low-taxed income): for 2025, the Section 951A regime that can create a current inclusion and corresponding Section 951A PTEP. New NCTI rules apply to tax years beginning after December 31, 2025.
• Section 965 transition tax amounts: historic mandatory inclusions associated with specified foreign corporations, generally arising from the 2017–2018 transition-tax rules.

A 10 percent shareholder is not automatically a Category 4 filer. Category 4 uses a control test that generally exceeds 50%, while Category 5 applies to qualifying US shareholders of a CFC.

A US shareholder with a current inclusion may create a PTEP even when the controlled foreign corporation pays no dividend during that year.

The official 2025 Form 5471 instructions determine the category and schedule requirements for the return being filed.

Who must file Form 5471 Schedule P?

For a 2025 return filed in 2026, Schedule P is required for Category 1a, 1b, 4, 5a, and 5b filers. This is broader than saying only a Category 4 filer or Category 5 filer completes the schedule.

The following 4 filing points determine whether Schedule P belongs with Form 5471:

1. Category 1a and 1b filers: these specified-foreign-corporation categories are expressly listed by the 2025 instructions as Schedule P filers.
2. Category 4 filers: a US person with control of the foreign corporation can have a Schedule P obligation under the Form 5471 filing matrix.
3. Category 5a and 5b filers: qualifying US shareholders of a CFC are also expressly required to complete Schedule P.
4. Attributed ownership: direct shares are not the only ownership considered. IRC Section 958 and related Section 318 rules can affect shareholder and CFC status.

A person using the joint-filer exception can still have a separate Schedule P obligation. The IRS instructions say a qualifying person who is not filing Form 5471 personally under that exception must attach Schedule P to the required statement.

The TFX explanation of Subpart F income and CFC shareholder reporting is useful when the filing obligation arises from current CFC income rather than a cash distribution.

The informal phrase 5471 Sch. P does not create a different form. It refers to Schedule P of Form 5471 and follows the same category rules.

Likewise, Sch. P, Form 5471 is practitioner shorthand rather than a separate IRS filing.

Understanding previously taxed earnings and profits (PTEP)

PTEP represents CFC earnings that have already entered a US shareholder's gross income under provisions such as Section 951(a), Section 951A, or Section 965. Section 959 can then exclude qualifying later distributions of those earnings from a second gross-income inclusion.

PTEP is the recordkeeping mechanism that prevents the same CFC earnings from being included twice solely because the corporation later distributes cash.

The exclusion does not mean the distribution has no US tax consequences at all. Foreign-currency gain under Section 986(c), basis changes, or foreign tax credit rules can still affect the result.

PTEP reporting is therefore more than recording a single cumulative balance. The shareholder must preserve annual PTEP accounts and the statutory group that produced each amount.

A Subpart F inclusion can create Section 951(a)(1)(A) PTEP. This includes qualifying foreign personal holding company income and other Subpart F categories.

A Section 951A inclusion creates its own PTEP classification. For the 2025 tax year, the law and Form 5471 still use GILTI terminology for this inclusion.

Historic Section 965 amounts occupy separate groups. See the TFX guide to the Section 965 transition tax for the rule that produced those balances.

A deemed dividend under another provision is not automatically interchangeable with PTEP. The statutory source and prior inclusion must be identified before assigning an amount to a Schedule P column.

Annual tracking also matters when one CFC has multiple US shareholders. Each shareholder's Schedule P can differ because Schedule P is shareholder-specific, while Schedule J tracks the CFC's aggregate E&P information.

The PTEP groups tracked on Schedule P: a column-by-column breakdown

The 2025 Schedule P uses 10 PTEP columns, (a) through (j), plus total column (k). Those columns correspond to Schedule J columns (e)(i) through (e)(x), allowing separate tracking of different statutory PTEP groups.

Each group can carry different foreign-tax and currency attributes. The TFX GILTI guide for foreign corporations gives added context for the Section 951A group.

The key rule is to preserve all 10 PTEP classifications rather than combining earnings that arose under different Code provisions.

 

The column names follow the PTEP classifications in the official Form 5471 and Schedule P materials.

Schedule P also records movements through those groups. Columns (a) through (k) show opening balances, additions, subtractions, and closing balances in the shareholder's annual PTEP accounts.

The IRS requires a separate Schedule P for each applicable separate income category. If more than one category applies, the filer also completes a separate Schedule P coded “TOTAL.”

One special rule applies to Section 951A category income. The instructions state that a separate Schedule P is not prepared for the Section 951A category; qualifying Section 951A PTEP is reported on the general-category Schedule P.

How Schedule P relates to Schedule J: tracking E&P across both schedules

Schedule J and Schedule P track related data from 2 different viewpoints. Schedule J reports CFC-level accumulated earnings and profits, while Schedule P reports a particular US shareholder's annual PTEP accounts in functional currency and on a US-dollar basis.

The TFX Form 5471 Schedule J guide explains the CFC-level side of that relationship.

The following 4 reconciliation points help keep the schedules consistent:

• Schedule J reports the CFC's accumulated E&P, including PTEP classifications.
• Schedule P columns (a) through (j) correspond to Schedule J columns (e)(i) through (e)(x).
• A wholly owned CFC should show the same relevant PTEP information on Schedule P and Schedule J column (e).
• With multiple US shareholders, each shareholder's Schedule P can differ from the CFC-wide Schedule J balance.

Schedule J and Schedule P should reconcile at the level the IRS instructions require, but they are not always numerically identical when a CFC has more than 1 US shareholder.

This distinction corrects a common oversimplification. Schedule P is not merely Schedule J translated into US dollars.

Part I of Schedule P remains in functional currency. Part II separately carries the shareholder's US-dollar basis in PTEP.

Schedule P and the foreign tax credit: what you need to know

A PTEP distribution can carry foreign income taxes associated with the specific PTEP group being distributed. Under Section 960(b), qualifying corporate shareholders and individuals using applicable Section 962 rules can have deemed-paid credit consequences tied to those taxes.

For individual FTC mechanics outside the deemed-paid rules, review the TFX Form 1116 foreign tax credit guide.

The foreign tax credit attached to a PTEP distribution depends on the foreign taxes associated with the PTEP being distributed, not on an unrestricted pool of all taxes ever paid by the CFC.

The following 4 points matter when tracing PTEP and foreign taxes:

• Group-level tracking matters. Section 960 regulations associate taxes with PTEP groups rather than one undifferentiated PTEP balance.
• The shareholder type matters. Individuals do not automatically receive the same deemed-paid credits available to domestic corporations.
• A Section 962 election can change the analysis. An individual making the election can have Form 1118 obligations for deemed-paid credits.
• 2025 law added a new restriction. Section 960(d)(4) disallows 10% of specified foreign taxes tied to qualifying distributions of the post-June 28, 2025 Section 951A PTEP.

Notice 2025-77 divides Section 951A PTEP into pre-June 29, 2025 and post-June 28, 2025 groups for this purpose. A calendar-year 2025 inclusion falls into the post-June 28 group because the shareholder's year ends after that date.

As of August 31st, 2026, Treasury's detailed Section 960(d)(4) regulations remain proposed. REG-115145-25 was published in 2026 with comments due September 17, 2026.

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GILTI and Schedule P: how global intangible low-taxed income creates PTEP

For a 2025 return filed in 2026, a Section 951A GILTI inclusion can create Section 951A PTEP even when the CFC distributes $0. The later NCTI changes apply to tax years beginning after December 31, 2025, not the 2025 calendar-year return.

The following 4 steps explain the 2025 GILTI-to-PTEP connection:

• The CFC's tested income enters the 2025 Section 951A calculation.
• The US shareholder determines the applicable GILTI inclusion.
• The inclusion creates PTEP attributable to Section 951A.
• That PTEP is tracked in the applicable Schedule P annual account and group.

For 2025, GILTI still uses the pre-2026 rules, including the QBAI mechanism. The OBBBA changes to NCTI apply to tax years beginning after December 31, 2025.

The GILTI high-tax exception rules for CFC owners can change how much tested income enters the Section 951A calculation.

For 2025, the high-tax exception generally tests whether the relevant effective foreign tax rate exceeds 18.9%. Income validly excluded through the election does not create the same Section 951A inclusion that would otherwise generate PTEP.

 

 

Section 965 transition tax amounts and Schedule P

Section 965 PTEP still matters on a 2025 Schedule P even though the transition tax generally arose in 2017 or 2018. Schedule P retains separate groups for Section 965(a) PTEP and Section 965(b) PTEP, plus their reclassified Section 959(c)(1) counterparts.

TFX’s background on specified foreign corporations and Section 965 explains why these historic balances arose.

Historic Section 965 PTEP remains part of the shareholder's PTEP records until later distributions, reclassifications, or other permitted adjustments reduce the relevant account.

An election under Section 965(h) concerned payment of the transition-tax liability in installments. It did not make the underlying Section 965 inclusion disappear from the shareholder's PTEP history.

The distinction is important when a CFC makes a later distribution. Notice 2019-01 gives Section 965 PTEP special priority within the distribution-ordering rules.

Section 965(a) and Section 965(b) groups must therefore remain separately identifiable. Combining them with Subpart F or Section 951A PTEP can produce the wrong distribution source and the wrong associated foreign-tax result.

Taxpayers reconstructing old Schedule P records should go back to the original Section 965 inclusion year rather than starting with a recent cash distribution.

Common mistakes on Form 5471 Schedule P (and how to avoid them)

Six recurring Schedule P errors can change a 2025 closing PTEP balance: lost carryforwards, incorrect currency records, missing Section 965 groups, wrong PTEP classifications, unrecorded distributions, and omitted schedules. Each should be checked before the Form 5471 is filed.

For related filing risks, see the TFX Form 5471 penalty guide.

The following 6 errors deserve a separate review:

1. Dropping prior-year balances. Schedule P is cumulative. A 2025 opening balance normally begins with the prior year's closing PTEP by annual account and group.
2. Using one exchange rate for everything. Part II reflects a US-dollar basis in PTEP, not merely a translation of the closing Part I balance at a year-end rate.
3. Leaving out Section 965 PTEP. Historic Section 965(a) and Section 965(b) balances remain relevant until properly reduced.
4. Mixing Subpart F and Section 951A PTEP. Section 951(a)(1)(A) and Section 951A PTEP occupy different Schedule P groups.
5. Ignoring an actual distribution. A distribution can reduce PTEP and must be sourced under the Section 959 ordering rules.
6. Skipping Schedule P because there was no dividend. A current income inclusion or a carried PTEP balance can require Schedule P activity even with $0 of cash paid to the shareholder.

A second check should compare Schedule P with Schedule J and the shareholder's income-inclusion records.

For a wholly owned CFC, the relevant PTEP information on Schedule P should correspond with Schedule J column (e). With multiple shareholders, shareholder-specific differences can be proper.

Penalties for failing to file or incorrectly completing Schedule P

A required Schedule P is part of a complete Form 5471 filing. For 2025, Section 6038 can impose an initial $10,000 penalty per annual accounting period for each foreign corporation, with additional penalties after IRS notice if the required information remains unfiled.

The additional Section 6038 penalty can begin after the taxpayer fails to provide the information within 90 days of an IRS notice.

It can then increase by $10,000 for each 30-day period, or fraction of a period, during which the failure continues. The additional amount is subject to the statutory limit described in the Form 5471 instructions.

A missing required Schedule P can cause the IRS to treat Form 5471 as incomplete even when the filer submitted other parts of the form.

Section 6662 can also produce an accuracy-related penalty when an underlying tax underpayment meets the statutory requirements. The penalty is not automatically imposed merely because one Schedule P entry is wrong.

International tax compliance errors can also affect foreign tax credits. Section 6038 penalty rules allow a reduction in certain foreign taxes available for credit when required information is not provided.

Reasonable-cause relief is fact-specific. Taxpayers should not assume that a late corrective filing automatically eliminates a Form 5471 penalty.

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Constructive ownership rules and their effect on Schedule P obligations

Constructive ownership can affect Form 5471 even when a US person does not directly hold every share counted for CFC purposes. For the 2025 tax year, the Section 958(b) rules still reflect the post-2017 downward-attribution regime applicable before the new 2026 changes take effect.

The following 4 ownership paths can affect the analysis:

• Direct ownership under Section 958(a).
• Indirect ownership through foreign entities under Section 958(a).
• Constructive ownership through Section 958(b) and modified Section 318 rules.
• Ownership attributed through family members or entities when the specific statutory conditions are met.

Constructive ownership can affect whether someone is a US shareholder or whether a foreign corporation meets the CFC definition.

The TFX Section 962 and foreign-corporation ownership guide provides related context where CFC income reaches an individual shareholder.

A major timing distinction applies after 2025. Public Law 119-21 restores the Section 958(b)(4) limitation on downward attribution and adds Section 951B for specified foreign-controlled structures.

Those changes generally apply after December 31, 2025. They should not be retroactively used to decide a calendar-year 2025 Schedule P filing obligation.

That means the ownership analysis for a 2025 return filed in 2026 can differ from the analysis for the taxpayer's 2026 return filed in 2027.

Constructive ownership must be tested using the rules effective for the CFC year being reported, not merely the rules in force on the date the return is prepared.

Schedule P for expatriates and Americans living abroad

Living outside the United States does not itself remove Form 5471 obligations. A US citizen or green card holder filing a 2025 return can still have Schedule P duties when foreign-corporation ownership places the taxpayer in Category 1a, 1b, 4, 5a, or 5b.

This is a common overlap between expatriate tax obligations and overseas business reporting.

The TFX Form 2555 and Foreign Earned Income Exclusion guide explains a separate rule for foreign earned income.

Form 2555 does not erase a Form 5471 filing requirement. The Foreign Earned Income Exclusion applies to qualifying earned income, while CFC inclusions and PTEP distributions arise under different Code provisions.

The following 3 points are particularly important for Americans operating companies abroad:

• A foreign company can create Subpart F or Section 951A income before it pays a dividend.
• A 10% ownership interest can establish US-shareholder status, although the precise Form 5471 category depends on the full ownership facts.
• PTEP distributions are not foreign earned income merely because the shareholder lives abroad.

Based on our client scenario at TFX: A US citizen living in Germany owns 100% of a German GmbH. If the GmbH creates a 2025 Section 951A inclusion, Schedule P can record a new PTEP even when the company distributes $0 during 2025.

The same principle applies to a foreign Ltd., SARL, BV, or other entity treated as a corporation for US tax purposes. Local entity names do not control the US tax classification.

International tax compliance should therefore be coordinated across the individual's Form 1040 and the foreign-corporation reporting package.

Own a foreign company abroad? Get help coordinating your 2025 CFC filing.

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Does a dormant CFC still require Schedule P?

A dormant CFC does not automatically require Schedule P solely because it has a historic PTEP balance. If the corporation qualifies for and uses the Rev. Proc. 92-70 dormant-corporation summary procedure, the 2025 Form 5471 instructions say to complete only page 1 of Form 5471.

That rule requires a correction to a common Schedule P explanation.

The TFX guide to dormant foreign corporations and Form 5471 explains the narrow conditions for dormant status.

A corporation using the Rev. Proc. 92-70 summary procedure does not complete Schedule P because that procedure requires only page 1 of Form 5471.

A company that is merely “inactive” in ordinary language does not automatically qualify for Rev. Proc. 92-70.

If the corporation fails the dormant-company conditions, the taxpayer must return to the normal Form 5471 category rules. Schedule P then applies when the shareholder falls into a category that requires it.

A prior PTEP balance still needs reliable records because the balance can become relevant in a later year when the corporation no longer qualifies for summary filing or makes a distribution.

Schedule P vs. other Form 5471 schedules: how they fit together

Schedule P works with at least 3 upstream schedules: Schedule E reports foreign taxes, Schedule H reports current E&P, and Schedule J reports accumulated E&P. For 2025, Schedule P then preserves shareholder-level annual PTEP information in functional currency and US-dollar basis.

Schedule P does not replace Schedules E, H, or J. Each schedule answers a different part of the CFC reporting calculation.

 

• Schedule E does not itself create PTEP. It records foreign income taxes and deemed-paid tax information needed for the foreign tax credit rules.
• Schedule H addresses current E&P. Schedule J then tracks accumulated E&P, including the CFC-level PTEP classifications.
• Schedule P carries the shareholder-specific record needed when PTEP is later distributed.

This division explains why an error can originate before Schedule P. A wrong current E&P amount can flow into Schedule J, while a wrong PTEP classification can then affect Schedule P and the tax treatment of a later distribution.

Amended returns and catching up on unfiled Schedule P

A taxpayer who omitted a required Schedule P in prior years may need amended or delinquent returns, and the correct route depends on the full compliance history. Eligible non-willful expats using Streamlined Foreign Offshore Procedures generally correct 3 tax years and 6 FBAR years.

Reconstructing Schedule P can require going farther back than the streamlined tax-return period for recordkeeping purposes.

A PTEP opening balance for 2025 can depend on inclusions from 2024, 2020, 2018, or another earlier year.

That means the taxpayer may need historic CFC financial statements, prior Forms 5471, Subpart F calculations, Section 951A calculations, Section 965 workpapers, and distribution records.

The TFX article on GILTI and foreign-corporation deduction rules can help identify older Section 951A workpapers that may feed the reconstruction.

Reconstructing PTEP means starting with the earliest relevant inclusion and carrying each annual account forward, rather than estimating one net balance for the current year.

Streamlined filing is not automatically appropriate for every missing Schedule P.

The IRS Streamlined Foreign Offshore Procedures require non-willful conduct and include Forms 5471 among the information returns filed with the covered returns.

Section 965 can extend the work beyond the ordinary 3-year streamlined return period. IRS guidance states that taxpayers with missed Section 965 obligations must address the applicable transition-tax years as well.

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Form 5471 Schedule P instructions: where to find official guidance

For a 2025 return filed in 2026, use the December 2025 Form 5471 instructions rather than a later draft intended for another tax year. Four official sources cover the form, Schedule P mechanics, PTEP ordering, and underlying Sections 959 and 960 rules.

Always match the Form 5471 Schedule P instructions to the tax year being filed because later forms and proposed regulations can apply to different periods.

The following 4 official resources should be checked:

• 2025 Instructions for Form 5471: the IRS filing matrix and Schedule P line instructions identify who files and how Parts I and II work.
• IRS Form 5471 landing page: this page lists the current form, schedules, prior revisions, and Schedule P materials.
• Notice 2019-01: this is the relevant IRS PTEP guidance for annual accounts, groups, and distribution ordering. It is Notice 2019-01, not “Revenue Procedure 2019-1.”
• Treasury regulations under Sections 959 and 960: these rules govern PTEP exclusions, tax attributes, and related foreign tax credit calculations.

The 5471 Schedule P instructions for 2025 require separate Schedules P by applicable income category and a TOTAL schedule when more than one category applies. Schedule P, Form 5471 instructions also distinguish functional-currency PTEP in Part I from US-dollar basis in Part II.

As of August 31st, 2026, the IRS has also published proposed Section 960(d)(4) regulations. They are useful for understanding the new 10% FTC disallowance but remain proposed rules, not final regulations.