Forms: Form 926; Form 8865; Form 1065; Form 990
Final rules 15
(a) In general Each United States person who—
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(1) transfers property to—
Amended 1997
- 1997 Pub. L. 105-34 Pub. L. 105–34, § 1144(a), amended par. (1) generally. Prior to amendment, par. (1) read as follows: “transfers property to a foreign corporation in an exchange described in section 332, 351, 354, 355, 356, or 361, or”.
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(A) a foreign corporation in an exchange described in section 332, 351, 354, 355, 356, or 361, or
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(B) a foreign partnership in a contribution described in section 721 or in any other contribution described in regulations prescribed by the Secretary, or
Amended 2005
- 2005 Pub. L. 109-135 Pub. L. 109–135 inserted “or” at end.
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(2) makes a distribution described in section 336 to a person who is not a United States person,
shall furnish to the Secretary, at such time and in such manner as the Secretary shall by regulations prescribe, such information with respect to such exchange or distribution as the Secretary may require in such regulations.
(b) Exceptions for certain transfers to foreign partnerships; special rule
Amended 1997
- 1997 Pub. L. 105-34 Pub. L. 105–34, § 1144(b), added subsec. (b). Former subsec. (b) redesignated (c).
(1) Exceptions Subsection (a)(1)(B) shall apply to a transfer by a United States person to a foreign partnership only if—
(A) the United States person holds (immediately after the transfer) directly or indirectly at least a 10-percent interest (as defined in section 6046A(d)) in the partnership, or
(B) the value of the property transferred (when added to the value of the property transferred by such person or any related person to such partnership or a related partnership during the 12-month period ending on the date of the transfer) exceeds $100,000.
For purposes of the preceding sentence, the value of any transferred property is its fair market value at the time of its transfer.
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(2) Special rule If by reason of an adjustment under section 482 or otherwise, a contribution described in subsection (a)(1) is deemed to have been made, such contribution shall be treated for purposes of this section as having been made not earlier than the date specified by the Secretary.
(c) Penalty for failure to furnish information
Amended 1997, 1998
- 1998 Pub. L. 105-206 Pub. L. 105–206, § 6011(g), made technical amendment to directory language of Pub. L. 105–206, § 1144(c). See 1997 Amendment note below.
- 1997 Pub. L. 105-34 Pub. L. 105–34, § 1144(c), as amended by Pub. L. 105–206, § 6011(g), substituted “equal to 10 percent of the fair market value of the property at the time of the exchange (and, in the case of a contribution described in subsection (a)(1)(B), such person shall recognize gain as if the contributed property had been sold for such value at the time of such contribution)” for “equal to 25 percent of the amount of the gain realized on the exchange” in par. (1) and added par. (3).
- 1997 Pub. L. 105-34 Pub. L. 105–34, § 1144(b), redesignated subsec. (b) as (c).
(1) In general If any United States person fails to furnish the information described in subsection (a) at the time and in the manner required by regulations, such person shall pay a penalty equal to 10 percent of the fair market value of the property at the time of the exchange (and, in the case of a contribution described in subsection (a)(1)(B), such person shall recognize gain as if the contributed property had been sold for such value at the time of such contribution).
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(2) Reasonable cause exception Paragraph (1) shall not apply to any failure if the United States person shows such failure is due to reasonable cause and not to willful neglect.
“Reasonable” implies facts and circumstances. Cited by Reg. § 1.6038B-2(h)(3)
“Reasonable” implies facts and circumstances. Cited by Reg. § 1.6038B-2(h)(3)
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(3) Limit on penalty The penalty under paragraph (1) with respect to any exchange shall not exceed $100,000 unless the failure with respect to such exchange was due to intentional disregard.