In general
Exceptions for certain transfers to foreign partnerships; special rule
Exceptions
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.
Penalty for failure to furnish information
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).
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.
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.
Pub. L. 98–369, div. A, title I, § 131(d)(1)98 Stat. 664Pub. L. 105–34, title XI, § 1144(a)111 Stat. 984Pub. L. 105–206, title VI, § 6011(g)112 Stat. 818Pub. L. 109–135, title IV, § 409(c)119 Stat. 2636(Added , , ; amended –(c), , , 985; , , ; , , .)
Editorial Notes
Amendments
Pub. L. 109–1352005—Subsec. (a)(1)(B). inserted “or” at end.
Pub. L. 105–206, § 6011(g)Pub. L. 105–206, § 1144(c)1998—Subsec. (c). , made technical amendment to directory language of . See 1997 Amendment note below.
Pub. L. 105–34, § 1144(a)1997—Subsec. (a)(1). , 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”.
Pub. L. 105–34, § 1144(b)Subsec. (b). , added subsec. (b). Former subsec. (b) redesignated (c).
Pub. L. 105–34, § 1144(c)Pub. L. 105–206, § 6011(g)Subsec. (c). , as amended by , 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, § 1144(b), redesignated subsec. (b) as (c).
Statutory Notes and Related Subsidiaries
Effective Date of 2005 Amendment
Pub. L. 109–135Pub. L. 105–34section 409(d) of Pub. L. 109–135section 961 of this titleAmendment by effective as if included in the provisions of the Taxpayer Relief Act of 1997, , to which such amendment relates, see , set out as a note under .
Effective Date of 1998 Amendment
Pub. L. 105–206Pub. L. 105–34section 6024 of Pub. L. 105–206section 1 of this titleAmendment by effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, , to which such amendment relates, see , set out as a note under .
Effective Date of 1997 Amendment
Pub. L. 105–34, title XI, § 1144(d)(1)111 Stat. 985
Effective Date
section 131(g) of Pub. L. 98–369section 367 of this titleSection applicable to transfers or exchanges after , in taxable years ending after such date, with special rules for certain transfers and ruling requests before , see , set out as an Effective Date of 1984 Amendment note under .
Election of Retroactive Effect
Pub. L. 105–34, title XI, § 1144(d)(2)111 Stat. 985