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The 1994 Form 5472 identified GITIC as a 25-percent-or-more
foreign shareholder of petitioner. The 1994 Form 5472 stated
that GITIC was incorporated in China and conducted its principal
business activities and filed income tax returns there. The 1994
Form 5472 identified GXE as a related party to petitioner and
described GXE as a foreign person conducting its principal
activity as a “trading company”. Petitioner reported $99,145 of
interest paid to GXE during 1994 on account of a loan with a
beginning and ending balance of $2 million. The 1994 Form 5472
further stated that GXE principally conducted its business
activity in and filed its income tax returns as a resident of
Hong Kong.
On a date that is not in the record, respondent issued to
petitioner a Form 4564, Information Document Request, regarding
interest paid by petitioner. By letter dated September 8, 1998,
petitioner informed Mr. Steinhardt that it paid interest to GITIC
of $177,010.41 in 1995 and $139,798.61 in 1996 on account of the
GITIC loan and that it paid interest to GXE of $164,762.08 in
1995 and $77,099.91 in 1996 on account of the GXE loan.
Petitioner apparently furnished a copy of the September 8, 1998,
letter to respondent in connection with respondent’s examination
of petitioner’s returns.
On July 27, 1999, petitioner filed a Form 1120X, Amended
U.S. Corporation Income Tax Return, with a Form 5472 attached,
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Last modified: March 27, 2008