Information Return of a 25% Foreign-Owned U.S. Corporation

or a Foreign Corporation Engaged in a U.S. Trade or Business

(Under Sections 6038A and 6038C of the Internal Revenue Code)

Form 5472

(Rev. December 2007) OMB No. 1545-0805

Department of the Treasury

Internal Revenue Service

For tax year of the reporting corporation beginning , , and ending , 

Reporting Corporation (see instructions). All reporting corporations must complete Part I.

1a Name of reporting corporation 1b Employer identification number

Number, street, and room or suite no. (if a P.O. box, see instructions) 1c Total assets

City or town, state, and ZIP code (if a foreign address, see instructions)

Total number of Forms 5472

filed for the tax year

Total value of gross payments made or received 1g

(see instructions) reported on this Form 5472

1f

25% Foreign Shareholder (see instructions)

1a Name and address of direct 25% foreign shareholder

1c Principal country(ies) where

business is conducted

1b

1d Country of citizenship,

organization, or incorporation

1e Country(ies) under whose laws the direct 25% foreign

shareholder files an income tax return as a resident

Related Party (see instructions)

1a Name and address of related party

1f Principal country(ies) where business is conducted Country(ies) under whose laws the related party files an income tax return as

a resident

1g

Part I

Part II

Part III

$

U.S. identifying number, if any

1b

Cat. No. 49987Y Form 5472 (Rev. 12-2007)

2a Name and address of direct 25% foreign shareholder

2c Principal country(ies) where

business is conducted

2b

2d Country of citizenship,

organization, or incorporation

2e Country(ies) under whose laws the direct 25% foreign

shareholder files an income tax return as a resident

U.S. identifying number, if any

U.S. identifying number, if any

For Paperwork Reduction Act Notice, see page 4.

1j Country of

incorporation

1l Principal country(ies) where

business is conducted

1k Country(ies) under whose laws the reporting

corporation files an income tax return as a resident

3a Name and address of ultimate indirect 25% foreign shareholder

3c Principal country(ies) where

business is conducted

3b

3d Country of citizenship,

organization, or incorporation

3e Country(ies) under whose laws the ultimate indirect 25%

foreign shareholder files an income tax return as a resident

U.S. identifying number, if any

4a Name and address of ultimate indirect 25% foreign shareholder

4c Principal country(ies) where

business is conducted

4b

4d Country of citizenship,

organization, or incorporation

4e Country(ies) under whose laws the ultimate indirect 25%

foreign shareholder files an income tax return as a resident

U.S. identifying number, if any

Note. Enter all information in English and money items in U.S. dollars.

Check applicable box: Is the related party a foreign person or U.S. person?

All reporting corporations must complete this question and the rest of Part III.

$

1d Principal business activity © 1e Principal business activity code ©

1e Relationship—Check boxes that apply: Related to reporting corporation Related to 25% foreign shareholder 25% foreign shareholder

1c Principal business activity © 1d Principal business activity code ©

1i Check here if this

is a consolidated

filing of Form

5472 ©

Total value of gross payments made or received

(see instructions) reported on all Forms 5472

1h

2 Check here if, at any time during the tax year, any foreign person owned, directly or indirectly, at least 50% of (a) the total voting

power of all classes of the stock of the reporting corporation entitled to vote, or (b) the total value of all classes of stock of the

reporting corporation ©

$
Form 5472 (Rev. 12-2007) Page 2

Nonmonetary and Less-Than-Full Consideration Transactions Between the Reporting Corporation

and the Foreign Related Party (see instructions)

Additional Information

1 Does the reporting corporation import goods from a foreign related party? Yes No

If “Yes,” is the basis or inventory cost of the goods valued at greater than the customs value of the imported goods? Yes No

If “No,” do not complete b and c below.

2a

b If “Yes,” attach a statement explaining the reason or reasons for such difference.

c If the answers to questions 1 and 2a are “Yes,” were the documents used to support this treatment of the imported

goods in existence and available in the United States at the time of filing Form 5472? Yes No

Part VI

Part V

General Instructions

Section references are to the Internal

Revenue Code unless otherwise noted.

Monetary Transactions Between Reporting Corporations and Foreign Related Party (see instructions)

Caution: Part IV must be completed if the “foreign person” box is checked in the heading for Part III. 

If estimates are used, check here ©

1 Sales of stock in trade (inventory) 1

2 Sales of tangible property other than stock in trade 2

3a Rents received (for other than intangible property rights) 3a

4 Sales, leases, licenses, etc., of intangible property rights (e.g., patents, trademarks, secret formulas) 4

5 Consideration received for technical, managerial, engineering, construction, scientific, or like services 5

6 Commissions received 6

7 Amounts borrowed (see instructions) a Beginning balance b Ending balance or monthly average © 7b

8 Interest received 8

9 Premiums received for insurance or reinsurance 9

10 Other amounts received (see instructions) 10

11 Total. Combine amounts on lines 1 through 10 11

12 Purchases of stock in trade (inventory) 12

13 Purchases of tangible property other than stock in trade 13

14a Rents paid (for other than intangible property rights) 14a

15 Purchases, leases, licenses, etc., of intangible property rights (e.g., patents, trademarks, secret formulas) 15

16 Consideration paid for technical, managerial, engineering, construction, scientific, or like services 16

17 Commissions paid 17

18 Amounts loaned (see instructions) a Beginning balance b Ending balance or monthly average © 18b

19 Interest paid 19

20 Premiums paid for insurance or reinsurance 20

21 Other amounts paid (see instructions) 21

22 Total. Combine amounts on lines 12 through 21 22

Part IV

Purpose of Form

Describe these transactions on an attached separate sheet and check here. ©

All reporting corporations must complete Part VI.

Use Form 5472 to provide information required

under sections 6038A and 6038C when

reportable transactions occur during the tax year

of a reporting corporation with a foreign or

domestic related party.

Reporting corporation. A reporting corporation

is either:

● A 25% foreign-owned U.S. corporation or

● A foreign corporation engaged in a trade or

business within the United States.

25% foreign owned. A corporation is 25%

foreign owned if it has at least one direct or

indirect 25% foreign shareholder at any time

during the tax year.

25% foreign shareholder. Generally, a

foreign person (defined on page 3) is a 25%

foreign shareholder if the person owns,

directly or indirectly, at least 25% of either:

● The total voting power of all classes of

stock entitled to vote or

● The total value of all classes of stock of the

corporation.

Definitions

● Any other person who is related to the

reporting corporation within the meaning of

section 482 and the related regulations.

● Any person who is related (within the

meaning of section 267(b) or 707(b)(1)) to a

25% foreign shareholder of the reporting

corporation, or

Related party. A related party is:

● Any direct or indirect 25% foreign

shareholder of the reporting corporation,

● Any person who is related (within the

meaning of section 267(b) or 707(b)(1)) to the

reporting corporation,

“Related party” does not include any

corporation filing a consolidated Federal

income tax return with the reporting

corporation.

What’s New

● The IRS has modified Part IV, lines 3 and

14.

b Royalties received (for other than intangible property rights) 3b

b Royalties paid (for other than intangible property rights) 14b

● A reporting corporation that uses an accrual

method of accounting must use accrued

payments and accrued receipts for purposes of

computing the total amount to enter on each line

of the Form 5472. See Regulations section

1.6038A-2(b)(8).

318(a)(3)(A), (B), and (C) so as to consider a

U.S. person as owning stock that is owned

by a foreign person.

The rules in section 318 apply to the

definition of related party with the

modifications listed under the definition of

25% foreign shareholder above.

The constructive ownership rules of section

318 apply with the following modifications to

determine if a corporation is 25% foreign

owned. Substitute “10%” for “50%” in

section 318(a)(2)(C). Do not apply sections
Form 5472 (Rev. 12-2007) Page 3

Penalties for failure to file Form 5472. A penalty of

$10,000 will be assessed on any reporting

corporation that fails to file Form 5472 when due

and in the manner prescribed. The penalty also

applies for failure to maintain records as required by

Regulations section 1.6038A-3.

If the failure continues for more than 90 days after

notification by the IRS, an additional penalty of

$10,000 will apply. This penalty applies with respect

to each related party for which a failure occurs for

each 30-day period (or part of a 30-day period)

during which the failure continues after the 90-day

period ends.

Record Maintenance

Requirements

Note. A member is not required to join in filing a

consolidated Form 5472 just because the other

members of the group choose to file one or more

Forms 5472 on a consolidated basis.

When and Where To File

Note. Filing a substantially incomplete Form 5472

constitutes a failure to file Form 5472.

Consolidated returns. If a reporting corporation is a

member of an affiliated group filing a consolidated

income tax return, Regulations section 1.6038A-2

may be satisfied by filing a U.S. consolidated Form

5472. The common parent must attach to Form

5472 a schedule stating which members of the U.S.

affiliated group are reporting corporations under

section 6038A, and which of those members are

joining in the consolidated filing of Form 5472. The

schedule must show the name, address, and

employer identification number of each member who

is including transactions on the consolidated Form

5472. A reporting corporation must keep the permanent

books of account or records as required by section

6001. These books must be sufficient to establish

the correctness of the reporting corporation’s

Federal income tax return, including information or

records that might be relevant to determine the

correct treatment of transactions with related

parties. See Regulations section 1.6038A-3 for more

detailed information. Also, see Regulations sections

1.6038A-1(h) and 1.6038A-1(i) for special rules that

apply to small corporations and reporting

corporations with related party transactions of de

minimis value.

5. It is a foreign corporation all of whose gross

income is exempt from taxation under section 883

and it timely and fully complies with the reporting

requirements of sections 883 and 887.

6. Both the reporting corporation and the related

party are not U.S. persons as defined in section

7701(a)(30) and the transactions will not generate in

any tax year: 

Penalties

Criminal penalties under sections 7203, 7206, and

7207 may also apply for failure to submit information

or for filing false or fraudulent information.

Each member of a group of corporations filing a

consolidated information return is a separate

reporting corporation subject to a separate $10,000

penalty and each member is jointly and severally

liable.

Who Must File

Exceptions from filing. A reporting corporation is

not required to file Form 5472 if any of the following

apply:

1. It had no reportable transactions of the types

listed in Parts IV and V of the form.

4. It is a foreign corporation that does not have a

permanent establishment in the United States under

an applicable income tax treaty and timely files

Form 8833.

2. A U.S. person that controls the foreign related

corporation files Form 5471, Information Return of

U.S. Persons With Respect To Certain Foreign

Corporations, for the tax year to report information

under section 6038. To qualify for this exception, the

U.S. person must complete Schedule M (Form 5471)

showing all reportable transactions between the

reporting corporation and the related party for the

tax year.

3. The related corporation qualifies as a foreign

sales corporation for the tax year and files Form

1120-FSC, U.S. Income Tax Return of a Foreign

Sales Corporation.

Generally, a reporting corporation must file Form

5472 if it had a reportable transaction with a foreign

or domestic related party.

Ultimate indirect 25% foreign shareholder. An

ultimate indirect 25% foreign shareholder is a 25%

foreign shareholder whose ownership of stock of the

reporting corporation is not attributed (under the

principles of section 958(a)(1) and (2)) to any other

25% foreign shareholder. See Rev. Proc. 91-55,

1991-2 C.B. 784.

Foreign person. A foreign person is:

● An individual who is not a citizen or resident of

the United States,

● An individual who is a citizen or resident of a U.S.

possession who is not otherwise a citizen or

resident of the United States,

● Any partnership, association, company, or

corporation that is not created or organized in the

United States,

● Any foreign estate or foreign trust described in

section 7701(a)(31), or

● Any foreign government (or agency or

instrumentality thereof) to the extent that the foreign

government is engaged in the conduct of a

commercial activity as defined in section 892.

However, the term “foreign person” does not

include any foreign person who consents to the

filing of a joint income tax return.

File Form 5472 by the due date of the reporting

corporation’s income tax return (including

extensions). A separate Form 5472 must be filed for

each foreign or domestic related party with which

the reporting corporation had a reportable

transaction during the tax year. Attach Form 5472 to

the income tax return. You are required to file a

duplicate copy of Form 5472 with the Internal

Revenue Service Center, P.O. Box 409101, Ogden,

UT, 84409. However, if you file your income tax

return electronically, see Electronic Filing of Form

5472 below for additional information.

● Gross income from sources within the United

States or income effectively connected, or treated

as effectively connected, with the conduct of a trade

or business within the United States or

● Any expense, loss, or other deduction that is

allocable or apportionable to such income.

Line 1f. Enter the total value in U.S. dollars of all

foreign related party transactions reported in Parts

IV and V of this Form 5472. This is the total of the

amounts entered on lines 11 and 22 of Part IV plus

the fair market value of the nonmonetary and

less-than-full consideration transactions reported in

Part V. Do not complete line 1f if the reportable

transaction is with a U.S. related party.

Line 1a. Address. Include the suite, room, or other

unit number after the street address. If the Post

Office does not deliver mail to the street address

and the corporation has a P.O. box, show the box

number instead.

Line 1c. Total assets. Domestic reporting

corporations enter the total assets from item D,

page 1, Form 1120. Foreign reporting corporations

enter the amount from line 17, column (d), Schedule

L, Form 1120-F.

Specific Instructions

Part I

Lines 1d and 1e. Enter a description of the principal

business activity and enter the principal business

activity code. See the instructions for Form 1120 or

Form 1120-F for a list of principal business activities

and their associated codes.

Foreign address. Enter the information in the

following order: city, province or state, and country.

Follow the country’s practice for entering the postal

code, if any. Do not abbreviate the country name.

Direct 25% foreign shareholder. A foreign person

is a direct 25% foreign shareholder if it owns

directly at least 25% of the stock of the reporting

corporation by vote or value.

Transactions with a U.S. related party, however,

are not required to be specifically identified in Parts

IV and V.

● Any type of transaction listed in Part IV (e.g.,

sales, rents, etc.) for which monetary consideration

(including U.S. and foreign currency) was the sole

consideration paid or received during the reporting

corporation’s tax year or

● Any transaction or group of transactions listed in

Part IV, if:

1. Any part of the consideration paid or received

was not monetary consideration or

2. Less than full consideration was paid or received.

Accrued Payments and

Receipts

A reporting corporation that uses an accrual method

of accounting must use accrued payments and

accrued receipts for purposes of computing the total

amount to enter on each line of the Form 5472. See

Regulations section 1.6038A-2(b)(8).

Reportable transaction. A reportable transaction is:

If the reporting corporation’s income tax return is

not filed when due, file a timely Form 5472 (with a

copy to Ogden) separately with the service center

where the tax return is due. When the tax return is

filed, attach a copy of the previously filed Form

5472.

Electronic Filing of Form 5472

If you file your income tax return electronically, see

the instructions for your income tax return for

general information about electronic filing. If you file

your original Form 5472 electronically (as an

attachment to a timely filed, electronically filed

income tax return), such filing satisfies the duplicate

filing requirement referred to above. See the first

sentence under When and Where To File above for

the definition of “timely.”

Line 1h. Enter the total value in U.S. dollars of all

foreign related party transactions reported in Parts

IV and V of all Forms 5472 filed for the tax year.

This is the total of the amounts entered on line 1f of

all Forms 5472 filed for the tax year (including this

one).

Line 1g. File a separate Form 5472 for each foreign

or each U.S. person who is a related party with

which the reporting corporation had a reportable

transaction. Enter the total number of Forms 5472

(including this one) being filed for the tax year.
Form 5472 (Rev. 12-2007) Page 4

Reasonable estimates. When actual

amounts are not determinable, enter

reasonable estimates (see below) of the total

dollar amount of each of the categories of

transactions conducted between the reporting

corporation and the related person in which

monetary consideration (U.S. currency or

foreign currency) was the sole consideration

paid or received during the tax year of the

reporting corporation.

A reasonable estimate is any amount

reported on Form 5472 that is at least 75%

but not more than 125% of the actual amount

required to be reported.

Small amounts. If any actual amount in a

transaction or a series of transactions

between a foreign related party and the

reporting corporation does not exceed a total

of $50,000, the amount may be reported as

“$50,000 or less.”

Part V

Part IV

Generally, all reportable transactions

between the reporting corporation and a

related foreign party must be entered in

Part IV.

When completing Part IV or Part V, the terms

“paid” and “received” include accrued payments

and accrued receipts. State all amounts in U.S.

dollars and attach a schedule showing the

exchange rates used.

1. A description of all property (including

monetary consideration), rights, or obligations

transferred from the reporting corporation to

the foreign related party and from the foreign

related party to the reporting corporation;

2. A description of all services performed

by the reporting corporation for the foreign

related party and by the foreign related party

for the reporting corporation; and

3. A reasonable estimate of the fair market

value of all properties and services

exchanged, if possible, or some other

reasonable indicator of value.

If the entire consideration received for any

transaction includes both tangible and

intangible property and the consideration paid

is solely monetary consideration, report the

transaction in Part IV instead of Part V if the

intangible property was related and incidental

to the transfer of the tangible property (e.g., a

right to warranty services).

See the instructions for Part IV for

information on reasonable estimates and

small amounts.

If the related party transactions occur

between a related party and a partnership

that is, in whole or in part, owned by a

reporting corporation, the reporting

corporation reports only the percentage of

the value of the transaction(s) equal to the

percentage of its partnership interest. This

rule does not apply if the reporting

corporation owns a less-than-25% interest in

the partnership. The rules of attribution apply

when determining the reporting corporation’s

percentage of partnership interest.

Line 7. Amounts borrowed. Report amounts

borrowed using either the outstanding

balance method or the monthly average

method. If the outstanding balance method is

used, enter the beginning and ending

outstanding balance for the tax year on lines

7a and 7b. If the monthly average method is

used, skip line 7a and enter the monthly

average for the tax year on line 7b.

Line 10. Other amounts received. Enter

amounts received that are not specifically

reported on lines 1 through 9.

Include amounts on line 10 to the extent that

these amounts are taken into account in

determining the taxable income of the

reporting corporation.

Line 18. Amounts loaned. Report amounts

loaned using either the outstanding balance

method or the monthly average method. If the

outstanding balance method is used, enter

the beginning and ending outstanding

balance for the tax year on lines 18a and

18b. If the monthly average method is used,

skip line 18a and enter the monthly average

for the tax year on line 18b.

Line 21. Other amounts paid. Enter amounts

paid that are not specifically reported on lines

12 through 20. Include amounts on line 21 to

the extent that these amounts are taken into

account in determining the taxable income of

the reporting corporation.

Note. Do not complete Part IV for transactions

with a domestic related party.

The form provides sufficient space to

report information for two direct 25% foreign

shareholders and two ultimate indirect 25%

foreign shareholders. If more space is

needed, show the information requested in

Part II on an attached sheet.

Report on lines 1a through 1e information

about the direct 25% foreign shareholder who

owns (by vote or value) the largest

percentage of the stock of the U.S. reporting

corporation.

Report on lines 2a through 2e information

about the direct 25% foreign shareholder who

owns (by vote or value) the second-largest

percentage of the stock of the U.S. reporting

corporation.

Report on lines 3a through 3e information

about the ultimate indirect 25% foreign

shareholder who owns (by vote or value) the

largest percentage of the stock of the U.S.

reporting corporation.

Report on lines 4a through 4e information

about the ultimate indirect 25% foreign

shareholder who owns (by vote or value) the

second-largest percentage of the stock of the

U.S. reporting corporation.

Lines 3a through 3e and lines 4a

through 4e. Attach an explanation of the

attribution of ownership. See Rev. Proc.

91-55 and Regulations section 1.6038A-1(e).

Part III

All filers must complete Part III even if the

related party has been identified in Part II as

a 25% foreign shareholder. Report in Part III

information about the related party (domestic

or foreign) with which the reporting

corporation had reportable transactions

during the tax year.

Note. Do not complete Part V for transactions

with a domestic related party.

Paperwork Reduction Act Notice. We ask

for the information on this form to carry out

the Internal Revenue laws of the United

States. You are required to give us the

information. We need it to ensure that you are

complying with these laws and to allow us to

figure and collect the right amount of tax.

The time needed to complete and file this

form will vary depending on individual

circumstances. The estimated average time

is:

Recordkeeping 17 hr., 42 min.

Learning about the law

or the form 3 hr., 4 min.

Preparing and sending

the form to the IRS 3 hr., 30 min.

If you have comments concerning the

accuracy of these time estimates or

suggestions for making this form simpler, we

would be happy to hear from you. See the

instructions for the tax return with which this

form is filed.

You are not required to provide the

information requested on a form that is

subject to the Paperwork Reduction Act

unless the form displays a valid OMB control

number. Books or records relating to a form

or its instructions must be retained as long as

their contents may become material in the

administration of any Internal Revenue law.

Generally, tax returns and return information

are confidential, as required by section 6103.

Part II

Note. Only 25% foreign-owned U.S.

corporations complete Part II.

If the related party is a foreign person, the

reporting corporation must attach a schedule

describing each reportable transaction, or

group of reportable transactions. The

description must include sufficient information

so that the nature and approximate monetary

value of the transaction or group of

transactions can be determined. The

schedule should include:

Line 2. For purposes of this line:

● “Foreign person” has the same meaning as

provided on page 3.

● 50% direct or indirect ownership is

determined by applying the constructive

ownership rules of section 318 with the

modifications listed under 25% foreign

shareholder on page 2.

Line 1l. Provide the principal country(ies)

where business is conducted. Do not include

a country(ies) in which business is conducted

solely through a subsidiary. Do not enter

“worldwide” instead of listing the country(ies).

These rules also apply to lines 2c, 3c, 4c,

Part II, and line 1f, Part III.