Internal Revenue Code:Sec. 6038B. Notice of certain transfers to foreign persons

From TaxAlmanac

Location in Internal Revenue Code

     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle F - Procedure and Administration
       CHAPTER 61 - INFORMATION AND RETURNS
        Subchapter A - Returns and Records
         PART III - INFORMATION RETURNS
          Subpart A - Information Concerning Persons Subject to Special
                Provisions
         

Statute

    Sec. 6038B. Notice of certain transfers to foreign persons
 
    (a) In general
      Each United States person who -
        (1) transfers property to -
          (A) a foreign corporation in an exchange described in section
        332, 351, 354, 355, 356, or 361, or
          (B) a foreign partnership in a contribution described in
        section 721 or in any other contribution described in
        regulations prescribed by the Secretary, or (FOOTNOTE 1)
               (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
      (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.
      (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
      (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).
      (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.
      (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.
 

Sources

    (Added Pub. L. 98-369, div.  A, title I, Sec. 131(d)(1), July 18,
    1984, 98 Stat. 664; amended Pub. L. 105-34, title XI, Sec.
    1144(a)-(c), Aug. 5, 1997, 111 Stat. 984, 985; Pub. L. 105-206,
    title VI, Sec. 6011(g), July 22, 1998, 112 Stat. 818.)
 

Miscellaneous

                                 AMENDMENTS
      1998 - Subsec. (c). Pub. L. 105-206, Sec. 6011(g), made technical
    amendment to directory language of Pub. L. 105-206, Sec. 1144(c).
    See 1997 Amendment note below.
      1997 - Subsec. (a)(1). Pub. L. 105-34, Sec. 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''.
      Subsec. (b). Pub. L. 105-34, Sec. 1144(b), added subsec. (b).
    Former subsec. (b) redesignated (c).
      Subsec. (c). Pub. L. 105-34, Sec. 1144(c), as amended by Pub. L.
    105-206, Sec. 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).
      Pub. L. 105-34, Sec. 1144(b), redesignated subsec. (b) as (c).
                      EFFECTIVE DATE OF 1998 AMENDMENT
      Amendment by Pub. L. 105-206 effective, except as otherwise
    provided, as if included in the provisions of the Taxpayer Relief
    Act of 1997, Pub. L. 105-34, to which such amendment relates, see
    section 6024 of Pub. L. 105-206, set out as a note under section 1
    of this title.
                      EFFECTIVE DATE OF 1997 AMENDMENT
      Section 1144(d)(1) of Pub. L. 105-34 provided that: ''The
    amendments made by this section (amending this section) shall apply
    to transfers made after the date of the enactment of this Act (Aug.
    5, 1997).''
                               EFFECTIVE DATE
      Section applicable to transfers or exchanges after Dec. 31, 1984,
    in taxable years ending after such date, with special rules for
    certain transfers and ruling requests before Mar. 1, 1984, see
    section 131(g) of Pub. L. 98-369, set out as an Effective Date of
    1984 Amendment note under section 367 of this title.
                       ELECTION OF RETROACTIVE EFFECT
      Section 1141(d)(2) of Pub. L. 105-34 provided that: ''Section
    1494(c) of the Internal Revenue Code of 1986 shall not apply to any
    transfer after August 20, 1996, if all applicable reporting
    requirements under section 6038B of such Code (as amended by this
    section) are satisfied.  The Secretary of the Treasury or his
    delegate may prescribe simplified reporting requirements under the
    preceding sentence.''
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in section 6501 of this title.