Form 5472 Information return on a 25% Foreign Owned U.S. Corporati

Form

5472

Information Return of a 25% Foreign-Owned U.S. Corporation
or a Foreign Corporation Engaged in a U.S. Trade or Business

(Rev. December 2007)
Department of the Treasury
Internal Revenue Service

Part I

OMB No. 1545-0805

(Under Sections 6038A and 6038C of the Internal Revenue Code)
For tax year of the reporting corporation beginning

,

, and ending

,

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

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)
1d Principal business activity
1f

$
1e Principal business activity code

©

Total value of gross payments made or received
(see instructions) reported on this Form 5472

1g Total number of Forms 5472
filed for the tax year

$

$
1k Country(ies) under whose laws the reporting
corporation files an income tax return as a resident

1l Principal country(ies) where
business is conducted

1i

Check here if this
is a consolidated
filing of Form
©
5472

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

Part II

1j Country of
incorporation

©

1h Total value of gross payments made or received
(see instructions) reported on all Forms 5472

25% Foreign Shareholder (see instructions)

1a Name and address of direct 25% foreign shareholder

1c Principal country(ies) where
business is conducted

1b U.S. identifying number, if any

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

2a Name and address of direct 25% foreign shareholder

2c Principal country(ies) where
business is conducted

2b U.S. identifying number, if any

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

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

3c Principal country(ies) where
business is conducted

3d Country of citizenship,
organization, or incorporation

3b U.S. identifying number, if any

3e Country(ies) under whose laws the ultimate indirect 25%
foreign shareholder files an income tax return as a resident

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

4c Principal country(ies) where
business is conducted

Part III

4d Country of citizenship,
organization, or incorporation

4b U.S. identifying number, if any

4e Country(ies) under whose laws the ultimate indirect 25%
foreign shareholder files an income tax return as a resident

Related Party (see instructions)
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.

1a Name and address of related party

1c Principal business activity

©

1e Relationship—Check boxes that apply:
1f

1b U.S. identifying number, if any

1d Principal business activity code
Related to reporting corporation

Principal country(ies) where business is conducted

For Paperwork Reduction Act Notice, see page 4.

Related to 25% foreign shareholder

©

25% foreign shareholder

1g Country(ies) under whose laws the related party files an income tax return as
a resident

Cat. No. 49987Y

Form

5472

(Rev. 12-2007)

Page 2
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.

Form 5472 (Rev. 12-2007)

Part IV

If estimates are used, check here

©

1

1

Sales of stock in trade (inventory)

2

Sales of tangible property other than stock in trade

2

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

3a
3b

b Royalties received (for other than intangible property rights)
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
a Beginning balance

b Ending balance or monthly average

©

7b

7

Amounts borrowed (see instructions)

8

Interest received

8

9
10
11

Premiums received for insurance or reinsurance
Other amounts received (see instructions)
Total. Combine amounts on lines 1 through 10

10

12

Purchases of stock in trade (inventory)

12

13

Purchases of tangible property other than stock in trade

9
11
13
14a

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

14b
15

15

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

16

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

17

Commissions paid

18

Amounts loaned (see instructions) a Beginning balance

19

Interest paid

19

20
21
22

Premiums paid for insurance or reinsurance
Other amounts paid (see instructions)
Total. Combine amounts on lines 12 through 21

20

Part V

Part VI
1

16
17

b Ending balance or monthly average

©

18b

21
22

Nonmonetary and Less-Than-Full Consideration Transactions Between the Reporting Corporation
and the Foreign Related Party (see instructions)
Describe these transactions on an attached separate sheet and check here. ©
Additional Information
All reporting corporations must complete Part VI.

Does the reporting corporation import goods from a foreign related party?

2a If “Yes,” is the basis or inventory cost of the goods valued at greater than the customs value of the imported goods?
If “No,” do not complete b and c below.

Yes

No

Yes

No

Yes

No

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?

General Instructions

Definitions

Section references are to the Internal
Revenue Code unless otherwise noted.

Reporting corporation. A reporting corporation
is either:

What’s New
● The IRS has modified Part IV, lines 3 and
14.
● 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).

Purpose of Form
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.

● 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.
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 a foreign person.
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,
● 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
● Any other person who is related to the
reporting corporation within the meaning of
section 482 and the related regulations.
“Related party” does not include any
corporation filing a consolidated Federal
income tax return with the reporting
corporation.
The rules in section 318 apply to the
definition of related party with the
modifications listed under the definition of
25% foreign shareholder above.

Form 5472 (Rev. 12-2007)
Reportable transaction. A reportable transaction is:
● 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

Page
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:

● Any transaction or group of transactions listed in
Part IV, if:

● 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

1. Any part of the consideration paid or received
was not monetary consideration or

● Any expense, loss, or other deduction that is
allocable or apportionable to such income.

2. 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.

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.
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.

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.

When and Where To File
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.

However, the term “foreign person” does not
include any foreign person who consents to the
filing of a joint income tax return.

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.

Who Must File

Electronic Filing of Form 5472

Generally, a reporting corporation must file Form
5472 if it had a reportable transaction with a foreign
or domestic related party.
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.
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.
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.
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.

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.”

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).

Penalties
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.

3

Note. Filing a substantially incomplete Form 5472
constitutes a failure to file Form 5472.
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.
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.
Criminal penalties under sections 7203, 7206, and
7207 may also apply for failure to submit information
or for filing false or fraudulent information.

Record Maintenance
Requirements
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.

Specific Instructions
Part I
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.
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.
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.
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.
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 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.
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).

Form 5472 (Rev. 12-2007)

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.
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.

Part II
Note. Only 25% foreign-owned U.S.
corporations complete Part II.
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.

Part IV
Note. Do not complete Part IV for transactions
with a domestic related party.
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.

Page

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.
Generally, all reportable transactions
between the reporting corporation and a
related foreign party must be entered in
Part IV.
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.”
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.

4

Part V
Note. Do not complete Part V for transactions
with a domestic related party.
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:
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.
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.
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.
The time needed to complete and file this
form will vary depending on individual
circumstances. The estimated average time
is:
56
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.