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

OMB No. 1545-0805 (Rev. June 1997)

Department of the Treasury

Internal Revenue Service

For tax year of the reporting corporation beginning , 19 , and ending , 19

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, state or province, ZIP or postal code, and country

Total number of Forms 5472

filed for the tax year

1d Principal business activity

Total value of gross payments made or received 1f

(see instructions)

1e

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

1d Relationship—Check boxes that apply:

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

a resident

1f

Part I

Part II

Part III

$

U.S. identifying number, if any

1b

1c Principal business activity

Cat. No. 49987Y Form 5472 (Rev. 6-97)

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 2.

1h Country of incorporation 1j Principal country(ies) where

business is conducted

1i 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

1g Check here

if this is a

consolidated filing

of Form 5472 ©

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.

Related to reporting corporation Related to 25% foreign shareholder 25% foreign shareholder
Form 5472 (Rev. 6-97) Page 2

Describe All Nonmonetary and Less-Than-Full Consideration Transactions Between the Reporting

Corporation and the Foreign Related Party

Additional Information

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

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

If “No,” do not complete the rest of Part VI.

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.

Paperwork Reduction

Act Notice

The time needed to complete and file

this form will vary depending on individual

circumstances. The estimated average time

is:

Recordkeeping 17 hr., 13 min.

Learning about the law

or the form 1 hr., 47 min.

Preparing and sending

the form to the IRS 2 hr., 9 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.

Monetary Transactions Between Reporting Corporations and Foreign Related Party

If reasonable estimates are used, check here © . (See instructions.)

1 Sales of stock in trade (inventory) 1

2 Sales of tangible property other than stock in trade 2

3 Rents and royalties received (for other than intangible property rights) 3

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

14 Rents and royalties paid (for other than intangible property rights) 14

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

(Attach separate sheet and check here. © ) (See instructions.)

All reporting corporations must complete Part VI.

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.

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.

Use Form 5472 to provide information

required under sections 6038A and 6038C

whenever transactions occur between a

reporting corporation and 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.

Note: Only reporting corporations that

engage in reportable transactions during

the tax year must file Form 5472. See page

3 for definition of a reportable transaction.

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 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

A transaction with a foreign entity that is

subject to reporting under section 6038A

may also be a section 1491 transfer. Form

926, Return by a U.S. Transferor of

Property To a Foreign Corporation, Foreign

Estate or Trust, or Foreign Partnership, is

used to report a section 1491 transfer.

However, if no excise tax applies, the

section 1491 reporting requirement will be

satisfied if the transferor complies with the

section 6038A reporting requirements by

filing Form 5472. See Notice 97-18,

1997-10, I.R.B. 35 for more details.
Form 5472 (Rev. 6-97) 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

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

section 1.6038A-1(h) and Regulations

section 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 the notice

required under section 6114.

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,

Form 5471 must contain information

required by Regulations section

1.6038-2(f)(11) concerning the 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. See Definitions, which starts

on page 2.

● any other person who is related to the

reporting corporation within the meaning of

section 482 and the related regulations.

Reportable transaction.—A reportable

transaction is:

● any type of transaction listed in Part IV

of the form (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 of the form, if

—any part of the consideration paid or

received was not monetary consideration,

or

—if less than full consideration was paid or

received.

Transactions with a U.S. related party,

however, are not required to be specifically

identified in Parts IV and V.

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.

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 and

file a copy of Form 5472 with the Internal

Revenue Service Center, Philadelphia, PA

19255. If the reporting corporation’s

income tax return is not filed when due, file

a timely Form 5472 (with a copy to

Philadelphia) 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.

● 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

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 318(a)(3)(A), (B), and (C) so

as to consider a U.S. person as owning

stock that is owned by foreign person.

Related party.—A related party is either:

● 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,

● 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.

“Related party” does not include any

corporation filing a consolidated Federal

income tax return with the reporting

corporation.

The rules contained in section 318 apply

to the definition of related party with the

modifications listed under the definition of

25% foreign shareholder on page 2.

number of each member who is including

transactions on the consolidated Form

5472.
Form 5472 (Rev. 6-97) 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 II

Part IV

Generally, all reportable transactions

between the reporting corporation and a

related foreign party must be entered on

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.

If the related party is a foreign person,

the reporting corporation must attach a

schedule describing each reportable

transaction, or group of reportable

transactions, listed in Part IV of the form.

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:

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 above 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

Line 10—Other amounts received.—Enter

on line 10 amounts received that are not

specifically reported in lines 1 though 9.

Include amounts in 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 on

line 21 amounts paid that are not

specifically reported on lines 12 through

20. Include amounts in line 21 to the

extent that these amounts are taken into

account in determining the taxable income

of the reporting corporation.

Do not complete Part IV if the reportable

transactions are with a domestic related

party.

Only 25% foreign-owned U.S. corporations

complete Part II.

The form provides sufficient space to

report information on two direct 25%

foreign shareholders and two ultimate

indirect 25% foreign shareholders. If more

space is needed, show the information

called for in Part II on an attached sheet.

Report in 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 in 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 in 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 in 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 (foreign and domestic) 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 with

which the reporting corporation had

reportable transactions during the tax year.

Line 1j.—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 1e, Part III.

Line 1f.—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.

If the related party is a domestic entity, the

reporting corporation is not required to

attach the information called for in Part V.

Line 1e.—Enter on line 1e 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 1e 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.

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 15, column (d),

Schedule L, Form 1120-F.

Specific Instructions

Part I

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

of the street address.

Line 1d—Principal business activity.—

See the instructions for Form 1120 or Form

1120-F for a list of principal business

activities.

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.