Structural and magnetic properties of iron-free and iron-substituted SmCo5 have been investigated theoretically and experimentally. The nanocrystalline ribbons of SmCo5−xFex(0≤x≤2), which were produced by rapid solidification, crystallize in the hexagonal CaCu5 structure for x≤0.75. Small Fe additions (x=0.25) substantially improve the coercivity, from 0.45 to 2.70 T, which we interpret as combined intrinsic and extrinsic effect. Most of our findings are consistent with past samarium-cobalt research, but some are at odds with findings that have seemingly been well established through decades of rare-earth transition-metal research. In particular, our local spin-density approximation with Hubbard parameter calculations indicate that the electronic structure of the Sm atoms violates Hund's rules and that the orbital moment is strongly quenched. Possible reasons for the apparent disagreement between theory and experiment are discussed. We explicitly determine the dependence of the Sm 4f charge distribution, arguing that an accurate densityfunctional description of SmCo5 is a challenge to future research.