Ownership Submission
FORM 5
Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).
Form 3 Holdings Reported
Form 4 Transactions Reported
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

ANNUAL STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940
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1. Name and Address of Reporting Person *
ALLCHIN JAMES E
2. Issuer Name and Ticker or Trading Symbol
MICROSOFT CORP [MSFT]
5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)
_____ Director _____ 10% Owner
__X__ Officer (give title below) _____ Other (specify below)
Group Vice President
(Last)
(First)
(Middle)

ONE MICROSOFT WAY
3. Statement for Issuer's Fiscal Year Ended (Month/Day/Year)
06/30/2005
(Street)


REDMOND, WA 98052-6399
4. If Amendment, Date Original Filed(Month/Day/Year)
6. Individual or Joint/Group Reporting
(check applicable line)

_X_ Form Filed by One Reporting Person
___ Form Filed by More than One Reporting Person
(City)
(State)
(Zip)
Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1.Title of Security
(Instr. 3)
2. Transaction Date (Month/Day/Year) 2A. Deemed Execution Date, if any (Month/Day/Year) 3. Transaction Code
(Instr. 8)
4. Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4 and 5)
5. Amount of Securities Beneficially Owned at end of Issuer's Fiscal Year
(Instr. 3 and 4)
6. Ownership Form: Direct (D) or Indirect (I)
(Instr. 4)
7. Nature of Indirect Beneficial Ownership
(Instr. 4)
Amount (A) or (D) Price
Common Stock             20,703 (1) D  

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly. Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. SEC 2270 (9-02)

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security
(Instr. 3)
2. Conversion or Exercise Price of Derivative Security 3. Transaction Date (Month/Day/Year) 3A. Deemed Execution Date, if any (Month/Day/Year) 4. Transaction Code
(Instr. 8)
5. Number of Derivative Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4, and 5)
6. Date Exercisable and Expiration Date
(Month/Day/Year)
7. Title and Amount of Underlying Securities
(Instr. 3 and 4)
8. Price of Derivative Security
(Instr. 5)
9. Number of Derivative Securities Beneficially Owned at End of Issuer's Fiscal Year
(Instr. 4)
10. Ownership Form of Derivative Security: Direct (D) or Indirect (I)
(Instr. 4)
11. Nature of Indirect Beneficial Ownership
(Instr. 4)
(A) (D) Date Exercisable Expiration Date Title Amount or Number of Shares
Employee Stock Option (right to buy) #0284960 $ 25.1438 (2)           08/20/2005(3) 02/20/2011 Common Stock
2,222,222
  2,222,222 (2)
D
 
Employee Stock Option (right to buy) #0365080 $ 21.591 (4)           07/31/2005(5) 07/31/2012 Common Stock
1,444,444
  1,444,444 (4)
D
 

Reporting Owners

Reporting Owner Name / Address Relationships
Director 10% Owner Officer Other
ALLCHIN JAMES E
ONE MICROSOFT WAY
REDMOND, WA 98052-6399
      Group Vice President  

Signatures

Keith R. Dolliver, Attorney-in-Fact for James E. Allchin 07/08/2005
**Signature of Reporting Person Date

Explanation of Responses:

* If the form is filed by more than one reporting person, see Instruction 4(b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1) Includes 934 shares acquired on March 31, 2005 under the Microsoft employee stock purchase plan. Also includes an increase of 1,067 shares to the existing July 31, 2002 stock award in connection with the $3.00 special dividend paid to shareholders of record on November 17, 2004.
(2) This option was previously reported as an option covering 2,000,000 shares at an exercise price of $27.9375 per share and has been adjusted in connection with the $3.00 special dividend paid to shareholders of record on November 17, 2004.
(3) 1,666,666 shares are vested and immediately exercisable, 277,778 shares will vest and become exercisable on each of August 20, 2005, and February 20, 2006.
(4) This option was previously reported as an option covering 1,300,000 shares at an exercise price of $23.99 per share and has been adjusted in connection with the $3.00 special dividend paid to shareholders of record on November 17, 2004.
(5) 541,666 shares are vested and immediately exercisable, 180,556 shares will vest and become exercisable on July 31, 2005, 180,555 shares will vest and become exercisable on January 31, 2006, 180,556 shares will vest and become exercisable on July 31, 2006, 180,555 shares will vest and become exercisable on January 31, 2007, and 180,556 shares will vest and become exercisable on July 31, 2007.

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