AJCA Modifications to the Section 6011 Regulations, 43146-43154 [07-3786]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 72, Number 149 (Friday, August 3, 2007)]
[Rules and Regulations]
[Pages 43146-43154]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 07-3786]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1, 20, 25, 31, 53, 54, and 56

[TD 9350]
RIN 1545-BE24


AJCA Modifications to the Section 6011 Regulations

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations under section 6011 of 
the Internal Revenue Code that modify the rules relating to the 
disclosure of reportable transactions under section 6011. These 
regulations affect taxpayers participating in reportable transactions 
under section 6011, material advisors responsible for disclosing 
reportable transactions under section 6111, and material advisors 
responsible for keeping lists under section 6112.

DATES: Effective Date: These regulations are effective August 3, 2007.

FOR FURTHER INFORMATION CONTACT: Charles D. Wien, Michael H. Beker, or 
Tolsun N. Waddle, 202-622-3070 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    This document contains final regulations that amend 26 CFR part 1 
by modifying and clarifying the rules relating to the disclosure of 
reportable transactions under section 6011. This document also contains 
final regulations that amend 26 CFR parts 20, 25, 31, 53, 54, and 56 by 
modifying the rules for purposes of estate, gift, employment, and 
pension and exempt organizations excise taxes that require the 
disclosure of listed transactions by certain taxpayers on their Federal 
tax returns under section 6011.
    The American Jobs Creation Act of 2004, Public Law 108-357, (118 
Stat. 1418), (AJCA) was enacted on October 22, 2004. The AJCA revised 
sections 6111 and 6112, thereby necessitating changes to the rules 
under section 6011. On November 1, 2006, the IRS and Treasury 
Department issued a notice of proposed rulemaking and temporary and 
final regulations under sections 6011, 6111, and 6112 (REG-103038-05, 
REG-103039-05, REG-103043-05, TD 9295) (the November 2006 regulations). 
The November 2006 regulations were published in the Federal Register 
(71 FR 64488, 71 FR 64496, 71 FR 64501, 71 FR 64458) on November 2, 
2006.
    The IRS and Treasury Department received written public comments 
responding to the proposed regulations and held a public hearing 
regarding the proposed rules on March 20, 2007. After consideration of 
the comments received and the comments made at the hearing, the 
proposed regulations are adopted as revised by this Treasury decision. 
These final regulations generally retain the provisions of the proposed 
regulations but include some modifications based on the recommendations 
made in the public comments.

Summary of Comments and Explanation of Provisions

    Nine written comments were received in response to the NPRM. All 
comments were considered and are available for public inspection upon 
request.

Transactions of Interest

    The proposed regulations identified transactions of interest as a 
new reportable transaction category. As stated in the preamble to the 
proposed regulations, a transaction of interest is a transaction that 
the IRS and Treasury Department believe has a potential for tax 
avoidance or evasion, but for which the IRS and Treasury Department 
lack enough information to determine whether the transaction should be 
identified specifically as a tax avoidance transaction. These final 
regulations adopt the language in the proposed regulations regarding 
transactions of interest without modification. This language provides 
that a transaction of interest is a transaction that is the same as or 
substantially similar to one of the types of transactions that the IRS 
has identified by notice, regulation, or other form of published 
guidance as a transaction of interest. These final regulations also 
retain the language in the proposed regulations that provide that a 
taxpayer's participation in a transaction of interest will be 
determined in the published guidance which identifies the transaction 
of interest.

[[Page 43147]]

    Several commentators requested more specificity and guidance on the 
definition of what constitutes a transaction of interest. Specifically, 
the commentators recommended that the term ``participation,'' for 
purposes of determining whether a taxpayer participated in a 
transaction of interest, be defined in the regulations rather than in 
the published guidance identifying the transaction of interest. The 
commentators also requested that the published guidance describing a 
transaction of interest be crafted in a clear and specific manner, 
thereby enabling taxpayers to determine whether they participated in a 
transaction of interest. One commentator also recommended providing a 
list of factors in the regulations that the IRS would consider when 
identifying a transaction of interest. Further, several commentators 
requested that the IRS and Treasury Department provide notice to 
taxpayers that the IRS and Treasury Department are considering 
designating a particular transaction as a transaction of interest and 
requesting comments prior to publishing guidance identifying a 
transaction as a transaction of interest.
    The IRS and Treasury Department believe that providing a specific 
definition for the transactions of interest category in the regulations 
would unduly limit the IRS and Treasury Department's ability to 
identify transactions that have the potential for tax avoidance or 
evasion. In order to maintain flexibility in identifying a transaction 
of interest, the description of a transaction of interest will be 
provided in the published guidance that identifies the transaction of 
interest. The published guidance identifying a transaction of interest 
will provide taxpayers with the information necessary to determine 
whether a particular transaction is the same as or substantially 
similar to the transaction described in the published guidance and to 
determine who participated in the transaction.
    The IRS and Treasury Department do not believe that the regulations 
should be amended to include language requiring the IRS and Treasury 
Department to provide advance notice for transactions of interest as 
suggested by the commentators. However, the IRS and Treasury Department 
may choose to publish advance notice and request comments in certain 
circumstances. The determination of whether to provide advance notice 
and a request for comments will be made on a transaction by transaction 
basis.
    The proposed regulations also provide that upon publication of the 
final regulations, the transactions of interest category of reportable 
transaction will apply to transactions entered into on or after 
November 2, 2006. These final regulations adopt the effective date 
stated in the proposed regulations.
    The preamble to the proposed regulations provides that when the IRS 
and Treasury Department have gathered enough information to make an 
informed decision as to whether a particular transaction of interest is 
a tax avoidance type of transaction, the IRS and Treasury Department 
may take one or more actions, including removing the transaction from 
the transaction of interest category in published guidance, designating 
the transaction as a listed transaction, or providing a new category of 
reportable transaction. Several commentators recommended that the 
period during which a transaction may be considered a transaction of 
interest be limited to twenty-four months, unless the IRS and Treasury 
Department affirmatively act to extend the designation for an 
additional twenty-four months with no limit on the number of 
permissible extensions. One commentator suggested that the length of 
the period be limited to twenty-four months, with no extensions.
    The IRS and Treasury Department believe that limiting the length of 
time a transaction may be designated a transaction of interest would be 
contrary to the purpose of the transactions of interest category of 
reportable transaction and would hinder the ability of the IRS and 
Treasury Department to efficiently and effectively gather the necessary 
information to determine whether a particular transaction is a tax 
avoidance type of transaction. Accordingly, these final regulations do 
not adopt these suggestions.

Disclosure of Reportable Transactions by Owners of a Pass-Through 
Entity

I. Timing of Disclosures

    The proposed regulations provide that if a taxpayer who is a 
partner in a partnership, a shareholder in an S corporation, or a 
beneficiary of a trust receives a timely Schedule K-1 less than 10 
calendar days before the due date of the taxpayer's return (including 
extensions) and, based on receipt of the timely Schedule K-1, the 
taxpayer determines that the taxpayer participated in a reportable 
transaction, the disclosure statement will not be considered late if 
the taxpayer discloses the reportable transaction by filing a 
disclosure statement with the Office of Tax Shelter Analysis (OTSA) 
within 45 calendar days after the due date of the taxpayer's return 
(including extensions). Several commentators requested that the 
proposed regulations not limit relief to taxpayers who receive a timely 
Schedule K-1 before the due date of their return. Others believed the 
45 day disclosure period was too short. One commentator recommended 
that the provision apply to late disclosures that were inadvertent or 
non-abusive. One commentator recommended that the 10 day period be 
extended to 30 days and the 45 day disclosure period be extended to 90 
days. With respect to the date the disclosure period begins, two 
commentators commented that the disclosure period should begin on the 
date the taxpayer receives the timely Schedule K-1.
    The IRS and Treasury Department agree that the 45 day disclosure 
period should be extended. These final regulations extend the 
disclosure period to 60 calendar days. The IRS and Treasury Department 
believe that this additional period will provide taxpayers with ample 
time to review the entity's return and comply with any administrative 
and regulatory requirements before filing their disclosure statement. 
It should be noted that if a taxpayer receives a timely Schedule K-1 
after the due date of the taxpayer's return (including extensions), the 
taxpayer will have received the timely Schedule K-1 less than 10 
calendar days before the due date of the return and will have 60 
calendar days after the due date of the taxpayer's return (including 
extensions) to file the disclosure statement.

II. Pass-Through Owners

    Several commentators have suggested that the disclosure obligations 
of owners of a pass-through entity that participates in a reportable 
transaction be amended to provide that only certain owners of the pass-
through entity are required to disclose their participation in the 
reportable transaction. One commentator suggested that an owner of a 
pass-through entity should be removed from this disclosure obligation 
when (1) the owner did not know and should not have known that the 
pass-through entity engaged in the reportable transaction; and (2) the 
pass-through entity failed to disclose timely its participation in the 
reportable transaction on its return to OTSA. The commentator also 
recommends that if the owner knew or reasonably should have known of 
the pass-through entity's participation in the reportable transaction, 
the owner should be required to file a disclosure statement even if the 
pass-through entity did not disclose the transaction to the owner. A 
different commentator suggested that an

[[Page 43148]]

owner of a pass-through entity not be required to disclose the owner's 
participation in a reportable transaction, even if the owner knew or 
should have known of the pass-through entity's participation in the 
reportable transaction.
    Several commentators also suggested adopting a de minimis ownership 
rule exempting taxpayers owning less than a certain percentage of the 
pass-through entity from the disclosure requirements. One commentator 
suggested exempting owners of 5 percent or less of the outstanding 
interests in the pass-through entity that participates in a reportable 
transaction.
    The IRS and Treasury Department are aware that certain partners, 
shareholders, and beneficiaries may file income tax returns that 
reflect the tax consequences, tax benefits, or tax strategy of a 
reportable transaction even though the taxpayer is unaware that the 
pass-through entity engaged in the reportable transaction. The IRS and 
Treasury Department recognize the concerns of the commentators. In 
light of the potential monetary penalties for failing to disclose 
participation in a reportable transaction and in order to maintain 
flexibility in determining who should be subject to the disclosure 
requirements for a particular transaction, these final regulations 
amend the proposed regulations to add language providing flexibility to 
the IRS and Treasury Department to issue other provisions for 
disclosure under Sec.  1.6011-4 in published guidance.

Time Period for Disclosing Participation in a Listed Transaction and 
Transaction of Interest

    Under the proposed regulations if a transaction becomes a listed 
transaction or a transaction of interest after the filing of a 
taxpayer's tax return (including an amended return) reflecting the 
taxpayer's participation in the listed transaction or transaction of 
interest and before the end of the period of limitations for assessment 
of tax for any taxable year in which the taxpayer participated in the 
listed transaction or transaction of interest, then a disclosure 
statement must be filed, regardless of whether the taxpayer 
participated in the listed transaction or transaction of interest in 
the year the transaction became a listed transaction or a transaction 
of interest, with OTSA within 60 calendar days after the date on which 
the transaction became a listed transaction or a transaction of 
interest. The proposed regulations also provide that the Commissioner 
may determine the time for disclosure of listed transactions and 
transactions of interest in the published guidance identifying the 
transaction.
    Many commentators suggested that the current rule, which requires 
the disclosure of subsequently identified listed transactions on the 
taxpayer's next filed tax return be retained in light of the potential 
monetary penalties and potential administrative burden due to the 
shortened disclosure period. One commentator recommended that the 
taxpayer be required to file the disclosure statement by the later of 
the taxpayer's next filed tax return or within 60 calendar days after 
the date on which the transaction becomes a listed transaction or 
transaction of interest.
    A critical factor in the ability to analyze a particular 
transaction is the ability to have the necessary information available 
in a timely manner. Thus, requiring taxpayers to file a disclosure 
statement with OTSA in a timely manner is essential. Because the IRS 
and Treasury Department recognize that compliance within 60 calendar 
days may be burdensome in certain circumstances, the proposed 
regulations are amended to provide that taxpayers have 90 calendar days 
to disclose their participation in a subsequently identified listed 
transaction or transaction of interest.

Brief Asset Holding Period Reportable Transaction Category

    Due to changes in section 901 and based on comments received, the 
IRS and Treasury Department have determined that the brief asset 
holding period reportable transaction category is no longer necessary. 
These final regulations therefore remove this category as a reportable 
transaction category.

Form 8271

    Before the enactment of the AJCA, section 6111 provided that tax 
shelter organizers were required to provide investors in tax shelters 
the registration number for the tax shelter. Section 301.6111-1T, Q&A 
55, requires investors to report the registration number of the tax 
shelter to the IRS on Form 8271, ``Investor Reporting of Tax Shelter 
Registration Number'', and attach the Form 8271 to any return on which 
any deduction, loss, credit, or other tax benefit attributable to the 
tax shelter is claimed. Because only a few investors must still file 
Form 8271 for pre-AJCA section 6111 tax shelters and because the IRS 
already is aware of these transactions, the IRS and Treasury Department 
have decided that investors are no longer required to file Forms 8271 
otherwise due on or after August 3, 2007. The Form 8271 will be 
obsoleted. Taxpayers required to file Form 8886, ``Reportable 
Transaction Disclosure Statement'', pursuant to Sec.  1.6011-4(d), and 
Form 8271 with respect to the same transaction only need to report the 
registration number on Form 8886.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in Executive Order 12866. 
Therefore, a regulatory assessment is not required. It also has been 
determined that section 553(b) of the Administrative Procedure Act (5 
U.S.C. chapter 5) does not apply to these regulations, and because 
these regulations do not impose a collection of information on small 
entities, the provisions of the Regulatory Flexibility Act (5 U.S.C. 
chapter 35) do not apply. The disclosure statement referenced in these 
regulations has been made available for public comment and any update 
to the disclosure statement will be made available for public comment 
in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
chapter 35). Pursuant to section 7805(f) of the Internal Revenue Code, 
the notice of proposed rulemaking preceding these regulations was 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on its impact on small business.

Drafting Information

    The principal authors of these regulations are Charles D. Wien, 
Michael H. Beker, and Tolsun N. Waddle, Office of the Associate Chief 
Counsel (Passthroughs and Special Industries). However, other personnel 
from the IRS and Treasury Department participated in their development.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 20

    Estate taxes, Reporting and recordkeeping requirements.

26 CFR Part 25

    Gift taxes, Reporting and recordkeeping requirements.

26 CFR Part 31

    Employment taxes, Income taxes, Penalties, Pensions, Railroad 
retirement, Reporting and recordkeeping requirements, Social security, 
Unemployment compensation.

[[Page 43149]]

26 CFR Part 53

    Excise taxes, Foundations, Investments, Lobbying, Reporting and 
recordkeeping requirements.

26 CFR Part 54

    Excise taxes, Pensions, Reporting and recordkeeping requirements.

26 CFR Part 56

    Excise taxes, Lobbying, Nonprofit organizations, Reporting and 
recordkeeping requirements.

Adoption of Amendments to the Regulations

0
Accordingly, 26 CFR parts 1, 20, 25, 31, 53, 54, and 56 are amended as 
follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read, in 
part, as follows:

    Authority: 26 U.S.C. 7805 * * *

0
Par. 2. Section 1.6011-4 is revised to read as follows:


Sec.  1.6011-4  Requirement of statement disclosing participation in 
certain transactions by taxpayers.

    (a) In general. Every taxpayer that has participated, as described 
in paragraph (c)(3) of this section, in a reportable transaction within 
the meaning of paragraph (b) of this section and who is required to 
file a tax return must file within the time prescribed in paragraph (e) 
of this section a disclosure statement in the form prescribed by 
paragraph (d) of this section. The fact that a transaction is a 
reportable transaction shall not affect the legal determination of 
whether the taxpayer's treatment of the transaction is proper.
    (b) Reportable transactions--(1) In general. A reportable 
transaction is a transaction described in any of the paragraphs (b)(2) 
through (7) of this section. The term transaction includes all of the 
factual elements relevant to the expected tax treatment of any 
investment, entity, plan, or arrangement, and includes any series of 
steps carried out as part of a plan.
    (2) Listed transactions. A listed transaction is a transaction that 
is the same as or substantially similar to one of the types of 
transactions that the Internal Revenue Service (IRS) has determined to 
be a tax avoidance transaction and identified by notice, regulation, or 
other form of published guidance as a listed transaction.
    (3) Confidential transactions--(i) In general. A confidential 
transaction is a transaction that is offered to a taxpayer under 
conditions of confidentiality and for which the taxpayer has paid an 
advisor a minimum fee.
    (ii) Conditions of confidentiality. A transaction is considered to 
be offered to a taxpayer under conditions of confidentiality if the 
advisor who is paid the minimum fee places a limitation on disclosure 
by the taxpayer of the tax treatment or tax structure of the 
transaction and the limitation on disclosure protects the 
confidentiality of that advisor's tax strategies. A transaction is 
treated as confidential even if the conditions of confidentiality are 
not legally binding on the taxpayer. A claim that a transaction is 
proprietary or exclusive is not treated as a limitation on disclosure 
if the advisor confirms to the taxpayer that there is no limitation on 
disclosure of the tax treatment or tax structure of the transaction.
    (iii) Minimum fee. For purposes of this paragraph (b)(3), the 
minimum fee is--
    (A) $250,000 for a transaction if the taxpayer is a corporation;
    (B) $50,000 for all other transactions unless the taxpayer is a 
partnership or trust, all of the owners or beneficiaries of which are 
corporations (looking through any partners or beneficiaries that are 
themselves partnerships or trusts), in which case the minimum fee is 
$250,000.
    (iv) Determination of minimum fee. For purposes of this paragraph 
(b)(3), in determining the minimum fee, all fees for a tax strategy or 
for services for advice (whether or not tax advice) or for the 
implementation of a transaction are taken into account. Fees include 
consideration in whatever form paid, whether in cash or in kind, for 
services to analyze the transaction (whether or not related to the tax 
consequences of the transaction), for services to implement the 
transaction, for services to document the transaction, and for services 
to prepare tax returns to the extent return preparation fees are 
unreasonable in light of the facts and circumstances. For purposes of 
this paragraph (b)(3), a taxpayer also is treated as paying fees to an 
advisor if the taxpayer knows or should know that the amount it pays 
will be paid indirectly to the advisor, such as through a referral fee 
or fee-sharing arrangement. A fee does not include amounts paid to a 
person, including an advisor, in that person's capacity as a party to 
the transaction. For example, a fee does not include reasonable charges 
for the use of capital or the sale or use of property. The IRS will 
scrutinize carefully all of the facts and circumstances in determining 
whether consideration received in connection with a confidential 
transaction constitutes fees.
    (v) Related parties. For purposes of this paragraph (b)(3), persons 
who bear a relationship to each other as described in section 267(b) or 
707(b) will be treated as the same person.
    (4) Transactions with contractual protection--(i) In general. A 
transaction with contractual protection is a transaction for which the 
taxpayer or a related party (as described in section 267(b) or 707(b)) 
has the right to a full or partial refund of fees (as described in 
paragraph (b)(4)(ii) of this section) if all or part of the intended 
tax consequences from the transaction are not sustained. A transaction 
with contractual protection also is a transaction for which fees (as 
described in paragraph (b)(4)(ii) of this section) are contingent on 
the taxpayer's realization of tax benefits from the transaction. All 
the facts and circumstances relating to the transaction will be 
considered when determining whether a fee is refundable or contingent, 
including the right to reimbursements of amounts that the parties to 
the transaction have not designated as fees or any agreement to provide 
services without reasonable compensation.
    (ii) Fees. Paragraph (b)(4)(i) of this section only applies with 
respect to fees paid by or on behalf of the taxpayer or a related party 
to any person who makes or provides a statement, oral or written, to 
the taxpayer or related party (or for whose benefit a statement is made 
or provided to the taxpayer or related party) as to the potential tax 
consequences that may result from the transaction.
    (iii) Exceptions--(A) Termination of transaction. A transaction is 
not considered to have contractual protection solely because a party to 
the transaction has the right to terminate the transaction upon the 
happening of an event affecting the taxation of one or more parties to 
the transaction.
    (B) Previously reported transaction. If a person makes or provides 
a statement to a taxpayer as to the potential tax consequences that may 
result from a transaction only after the taxpayer has entered into the 
transaction and reported the consequences of the transaction on a filed 
tax return, and the person has not previously received fees from the 
taxpayer relating to the transaction, then any refundable or contingent 
fees are not taken into account in determining whether the transaction 
has contractual protection. This paragraph (b)(4) does not provide any 
substantive rules regarding when a person may charge refundable or 
contingent fees with respect to a

[[Page 43150]]

transaction. See Circular 230, 31 CFR part 10, for the regulations 
governing practice before the IRS.
    (5) Loss transactions--(i) In general. A loss transaction is any 
transaction resulting in the taxpayer claiming a loss under section 165 
of at least--
    (A) $10 million in any single taxable year or $20 million in any 
combination of taxable years for corporations;
    (B) $10 million in any single taxable year or $20 million in any 
combination of taxable years for partnerships that have only 
corporations as partners (looking through any partners that are 
themselves partnerships), whether or not any losses flow through to one 
or more partners; or
    (C) $2 million in any single taxable year or $4 million in any 
combination of taxable years for all other partnerships, whether or not 
any losses flow through to one or more partners;
    (D) $2 million in any single taxable year or $4 million in any 
combination of taxable years for individuals, S corporations, or 
trusts, whether or not any losses flow through to one or more 
shareholders or beneficiaries; or
    (E) $50,000 in any single taxable year for individuals or trusts, 
whether or not the loss flows through from an S corporation or 
partnership, if the loss arises with respect to a section 988 
transaction (as defined in section 988(c)(1) relating to foreign 
currency transactions).
    (ii) Cumulative losses. In determining whether a transaction 
results in a taxpayer claiming a loss that meets the threshold amounts 
over a combination of taxable years as described in paragraph (b)(5)(i) 
of this section, only losses claimed in the taxable year that the 
transaction is entered into and the five succeeding taxable years are 
combined.
    (iii) Section 165 loss--(A) For purposes of this section, in 
determining the thresholds in paragraph (b)(5)(i) of this section, the 
amount of a section 165 loss is adjusted for any salvage value and for 
any insurance or other compensation received. See Sec.  1.165-1(c)(4). 
However, a section 165 loss does not take into account offsetting 
gains, or other income or limitations. For example, a section 165 loss 
does not take into account the limitation in section 165(d) (relating 
to wagering losses) or the limitations in sections 165(f), 1211, and 
1212 (relating to capital losses). The full amount of a section 165 
loss is taken into account for the year in which the loss is sustained, 
regardless of whether all or part of the loss enters into the 
computation of a net operating loss under section 172 or a net capital 
loss under section 1212 that is a carryback or carryover to another 
year. A section 165 loss does not include any portion of a loss, 
attributable to a capital loss carryback or carryover from another 
year, that is treated as a deemed capital loss under section 1212.
    (B) For purposes of this section, a section 165 loss includes an 
amount deductible pursuant to a provision that treats a transaction as 
a sale or other disposition, or otherwise results in a deduction under 
section 165. A section 165 loss includes, for example, a loss resulting 
from a sale or exchange of a partnership interest under section 741 and 
a loss resulting from a section 988 transaction.
    (6) Transactions of interest. A transaction of interest is a 
transaction that is the same as or substantially similar to one of the 
types of transactions that the IRS has identified by notice, 
regulation, or other form of published guidance as a transaction of 
interest.
    (7) [Reserved].
    (8) Exceptions--(i) In general. A transaction will not be 
considered a reportable transaction, or will be excluded from any 
individual category of reportable transaction under paragraphs (b)(3) 
through (7) of this section, if the Commissioner makes a determination 
by published guidance that the transaction is not subject to the 
reporting requirements of this section. The Commissioner may make a 
determination by individual letter ruling under paragraph (f) of this 
section that an individual letter ruling request on a specific 
transaction satisfies the reporting requirements of this section with 
regard to that transaction for the taxpayer who requests the individual 
letter ruling.
    (ii) Special rule for RICs. For purposes of this section, a 
regulated investment company (RIC) as defined in section 851 or an 
investment vehicle that is owned 95 percent or more by one or more RICs 
at all times during the course of the transaction is not required to 
disclose a transaction that is described in any of paragraphs (b)(3) 
through (5) and (b)(7) of this section unless the transaction is also a 
listed transaction or a transaction of interest.
    (c) Definitions. For purposes of this section, the following 
definitions apply:
    (1) Taxpayer. The term taxpayer means any person described in 
section 7701(a)(1), including S corporations. Except as otherwise 
specifically provided in this section, the term taxpayer also includes 
an affiliated group of corporations that joins in the filing of a 
consolidated return under section 1501.
    (2) Corporation. When used specifically in this section, the term 
corporation means an entity that is required to file a return for a 
taxable year on any 1120 series form, or successor form, excluding S 
corporations.
    (3) Participation--(i) In general--(A) Listed transactions. A 
taxpayer has participated in a listed transaction if the taxpayer's tax 
return reflects tax consequences or a tax strategy described in the 
published guidance that lists the transaction under paragraph (b)(2) of 
this section. A taxpayer also has participated in a listed transaction 
if the taxpayer knows or has reason to know that the taxpayer's tax 
benefits are derived directly or indirectly from tax consequences or a 
tax strategy described in published guidance that lists a transaction 
under paragraph (b)(2) of this section. Published guidance may identify 
other types or classes of persons that will be treated as participants 
in a listed transaction. Published guidance also may identify types or 
classes of persons that will not be treated as participants in a listed 
transaction.
    (B) Confidential transactions. A taxpayer has participated in a 
confidential transaction if the taxpayer's tax return reflects a tax 
benefit from the transaction and the taxpayer's disclosure of the tax 
treatment or tax structure of the transaction is limited in the manner 
described in paragraph (b)(3) of this section. If a partnership's, S 
corporation's or trust's disclosure is limited, and the partner's, 
shareholder's, or beneficiary's disclosure is not limited, then the 
partnership, S corporation, or trust, and not the partner, shareholder, 
or beneficiary, has participated in the confidential transaction.
    (C) Transactions with contractual protection. A taxpayer has 
participated in a transaction with contractual protection if the 
taxpayer's tax return reflects a tax benefit from the transaction and, 
as described in paragraph (b)(4) of this section, the taxpayer has the 
right to the full or partial refund of fees or the fees are contingent. 
If a partnership, S corporation, or trust has the right to a full or 
partial refund of fees or has a contingent fee arrangement, and the 
partner, shareholder, or beneficiary does not individually have the 
right to the refund of fees or a contingent fee arrangement, then the 
partnership, S corporation, or trust, and not the partner, shareholder, 
or beneficiary, has participated in the transaction with contractual 
protection.
    (D) Loss transactions. A taxpayer has participated in a loss 
transaction if the

[[Page 43151]]

taxpayer's tax return reflects a section 165 loss and the amount of the 
section 165 loss equals or exceeds the threshold amount applicable to 
the taxpayer as described in paragraph (b)(5)(i) of this section. If a 
taxpayer is a partner in a partnership, shareholder in an S 
corporation, or beneficiary of a trust and a section 165 loss as 
described in paragraph (b)(5) of this section flows through the entity 
to the taxpayer (disregarding netting at the entity level), the 
taxpayer has participated in a loss transaction if the taxpayer's tax 
return reflects a section 165 loss and the amount of the section 165 
loss that flows through to the taxpayer equals or exceeds the threshold 
amounts applicable to the taxpayer as described in paragraph (b)(5)(i) 
of this section. For this purpose, a tax return is deemed to reflect 
the full amount of a section 165 loss described in paragraph (b)(5) of 
this section allocable to the taxpayer under this paragraph 
(c)(3)(i)(D), regardless of whether all or part of the loss enters into 
the computation of a net operating loss under section 172 or net 
capital loss under section 1212 that the taxpayer may carry back or 
carry over to another year.
    (E) Transactions of interest. A taxpayer has participated in a 
transaction of interest if the taxpayer is one of the types or classes 
of persons identified as participants in the transaction in the 
published guidance describing the transaction of interest.
    (F) [Reserved].
    (G) Shareholders of foreign corporations--(1) In general. A 
reporting shareholder of a foreign corporation participates in a 
transaction described in paragraphs (b)(2) through (5) and (b)(7) of 
this section if the foreign corporation would be considered to 
participate in the transaction under the rules of this paragraph (c)(3) 
if it were a domestic corporation filing a tax return that reflects the 
items from the transaction. A reporting shareholder of a foreign 
corporation participates in a transaction described in paragraph (b)(6) 
of this section only if the published guidance identifying the 
transaction includes the reporting shareholder among the types or 
classes of persons identified as participants. A reporting shareholder 
(and any successor in interest) is considered to participate in a 
transaction under this paragraph (c)(3)(i)(G) only for its first 
taxable year with or within which ends the first taxable year of the 
foreign corporation in which the foreign corporation participates in 
the transaction, and for the reporting shareholder's five succeeding 
taxable years.
    (2) Reporting shareholder. The term reporting shareholder means a 
United States shareholder (as defined in section 951(b)) in a 
controlled foreign corporation (as defined in section 957) or a 10 
percent shareholder (by vote or value) of a qualified electing fund (as 
defined in section 1295).
    (ii) Examples. The following examples illustrate the provisions of 
paragraph (c)(3)(i) of this section:

    Example 1. Notice 2003-55 (2003-2 CB 395), which modified and 
superseded Notice 95-53 (1995-2 CB 334) (see Sec.  601.601(d)(2) of 
this chapter), describes a lease stripping transaction in which one 
party (the transferor) assigns the right to receive future payments 
under a lease of tangible property and treats the amount realized 
from the assignment as its current income. The transferor later 
transfers the property subject to the lease in a transaction 
intended to qualify as a transferred basis transaction, for example, 
a transaction described in section 351. The transferee corporation 
claims the deductions associated with the high basis property 
subject to the lease. The transferor's and transferee corporation's 
tax returns reflect tax positions described in Notice 2003-55. 
Therefore, the transferor and transferee corporation have 
participated in the listed transaction. In the section 351 
transaction, the transferor will have received stock with low value 
and high basis from the transferee corporation. If the transferor 
subsequently transfers the high basis/low value stock to a taxpayer 
in another transaction intended to qualify as a transferred basis 
transaction and the taxpayer uses the stock to generate a loss, and 
if the taxpayer knows or has reason to know that the tax loss 
claimed was derived indirectly from the lease stripping transaction, 
then the taxpayer has participated in the listed transaction. 
Accordingly, the taxpayer must disclose the transaction and the 
manner of the taxpayer's participation in the transaction under the 
rules of this section. For purposes of this example, if a bank lends 
money to the transferor, transferee corporation, or taxpayer for use 
in their transactions, the bank has not participated in the listed 
transaction because the bank's tax return does not reflect tax 
consequences or a tax strategy described in the listing notice (nor 
does the bank's tax return reflect a tax benefit derived from tax 
consequences or a tax strategy described in the listing notice) nor 
is the bank described as a participant in the listing notice.
    Example 2. XYZ is a limited liability company treated as a 
partnership for tax purposes. X, Y, and Z are members of XYZ. X is 
an individual, Y is an S corporation, and Z is a partnership. XYZ 
enters into a confidential transaction under paragraph (b)(3) of 
this section. XYZ and X are bound by the confidentiality agreement, 
but Y and Z are not bound by the agreement. As a result of the 
transaction, XYZ, X, Y, and Z all reflect a tax benefit on their tax 
returns. Because XYZ's and X's disclosure of the tax treatment and 
tax structure are limited in the manner described in paragraph 
(b)(3) of this section and their tax returns reflect a tax benefit 
from the transaction, both XYZ and X have participated in the 
confidential transaction. Neither Y nor Z has participated in the 
confidential transaction because they are not subject to the 
confidentiality agreement.
    Example 3. P, a corporation, has an 80% partnership interest in 
PS, and S, an individual, has a 20% partnership interest in PS. P, 
S, and PS are calendar year taxpayers. In 2006, PS enters into a 
transaction and incurs a section 165 loss (that does not meet any of 
the exceptions to a section 165 loss identified in published 
guidance) of $12 million and offsetting gain of $3 million. On PS' 
2006 tax return, PS includes the section 165 loss and the 
corresponding gain. PS must disclose the transaction under this 
section because PS' section 165 loss of $12 million is equal to or 
greater than $2 million. P is allocated $9.6 million of the section 
165 loss and $2.4 million of the offsetting gain. P does not have to 
disclose the transaction under this section because P's section 165 
loss of $9.6 million is not equal to or greater than $10 million. S 
is allocated $2.4 million of the section 165 loss and $600,000 of 
the offsetting gain. S must disclose the transaction under this 
section because S's section 165 loss of $2.4 million is equal to or 
greater than $2 million.

    (4) Substantially similar. The term substantially similar includes 
any transaction that is expected to obtain the same or similar types of 
tax consequences and that is either factually similar or based on the 
same or similar tax strategy. Receipt of an opinion regarding the tax 
consequences of the transaction is not relevant to the determination of 
whether the transaction is the same as or substantially similar to 
another transaction. Further, the term substantially similar must be 
broadly construed in favor of disclosure. For example, a transaction 
may be substantially similar to a listed transaction even though it 
involves different entities or uses different Internal Revenue Code 
provisions. (See for example, Notice 2003-54 (2003-2 CB 363), 
describing a transaction substantially similar to the transactions in 
Notice 2002-50 (2002-2 CB 98), and Notice 2002-65 (2002-2 CB 690).) The 
following examples illustrate situations where a transaction is the 
same as or substantially similar to a listed transaction under 
paragraph (b)(2) of this section. (Such transactions may also be 
reportable transactions under paragraphs (b)(3) through (7) of this 
section.) See Sec.  601.601(d)(2)(ii)(b) of this chapter. The following 
examples illustrate the provisions of this paragraph (c)(4):

    Example 1. Notice 2000-44 (2000-2 CB 255) (see Sec.  
601.601(d)(2)(ii)(b) of this chapter), sets forth a listed 
transaction involving offsetting options transferred to a 
partnership where the taxpayer claims basis

[[Page 43152]]

in the partnership for the cost of the purchased options but does 
not adjust basis under section 752 as a result of the partnership's 
assumption of the taxpayer's obligation with respect to the options. 
Transactions using short sales, futures, derivatives or any other 
type of offsetting obligations to inflate basis in a partnership 
interest would be the same as or substantially similar to the 
transaction described in Notice 2000-44. Moreover, use of the 
inflated basis in the partnership interest to diminish gain that 
would otherwise be recognized on the transfer of a partnership asset 
would also be the same as or substantially similar to the 
transaction described in Notice 2000-44. See Sec.  
601.601(d)(2)(ii)(b).
    Example 2. Notice 2001-16 (2001-1 CB 730) (see Sec.  
601.601(d)(2)(ii)(b) of this chapter), sets forth a listed 
transaction involving a seller (X) who desires to sell stock of a 
corporation (T), an intermediary corporation (M), and a buyer (Y) 
who desires to purchase the assets (and not the stock) of T. M 
agrees to facilitate the sale to prevent the recognition of the gain 
that T would otherwise report. Notice 2001-16 describes M as a 
member of a consolidated group that has a loss within the group or 
as a party not subject to tax. Transactions utilizing different 
intermediaries to prevent the recognition of gain would be the same 
as or substantially similar to the transaction described in Notice 
2001-16. An example is a transaction in which M is a corporation 
that does not file a consolidated return but which buys T stock, 
liquidates T, sells assets of T to Y, and offsets the gain on the 
sale of those assets with currently generated losses. See Sec.  
601.601(d)(2)(ii)(b).

    (5) Tax. The term tax means Federal income tax.
    (6) Tax benefit. A tax benefit includes deductions, exclusions from 
gross income, nonrecognition of gain, tax credits, adjustments (or the 
absence of adjustments) to the basis of property, status as an entity 
exempt from Federal income taxation, and any other tax consequences 
that may reduce a taxpayer's Federal income tax liability by affecting 
the amount, timing, character, or source of any item of income, gain, 
expense, loss, or credit.
    (7) Tax return. The term tax return means a Federal income tax 
return and a Federal information return.
    (8) Tax treatment. The tax treatment of a transaction is the 
purported or claimed Federal income tax treatment of the transaction.
    (9) Tax structure. The tax structure of a transaction is any fact 
that may be relevant to understanding the purported or claimed Federal 
income tax treatment of the transaction.
    (d) Form and content of disclosure statement. A taxpayer required 
to file a disclosure statement under this section must file a completed 
Form 8886, ``Reportable Transaction Disclosure Statement'' (or a 
successor form), in accordance with this paragraph (d) and the 
instructions to the form. The Form 8886 (or a successor form) is the 
disclosure statement required under this section. The form must be 
attached to the appropriate tax return(s) as provided in paragraph (e) 
of this section. If a copy of a disclosure statement is required to be 
sent to the Office of Tax Shelter Analysis (OTSA) under paragraph (e) 
of this section, it must be sent in accordance with the instructions to 
the form. To be considered complete, the information provided on the 
form must describe the expected tax treatment and all potential tax 
benefits expected to result from the transaction, describe any tax 
result protection (as defined in Sec.  301.6111-3(c)(12) of this 
chapter) with respect to the transaction, and identify and describe the 
transaction in sufficient detail for the IRS to be able to understand 
the tax structure of the reportable transaction and the identity of all 
parties involved in the transaction. An incomplete Form 8886 (or a 
successor form) containing a statement that information will be 
provided upon request is not considered a complete disclosure 
statement. If the form is not completed in accordance with the 
provisions in this paragraph (d) and the instructions to the form, the 
taxpayer will not be considered to have complied with the disclosure 
requirements of this section. If a taxpayer receives one or more 
reportable transaction numbers for a reportable transaction, the 
taxpayer must include the reportable transaction number(s) on the Form 
8886 (or a successor form). See Sec.  301.6111-3(d)(2) of this chapter.
    (e) Time of providing disclosure--(1) In general. The disclosure 
statement for a reportable transaction must be attached to the 
taxpayer's tax return for each taxable year for which a taxpayer 
participates in a reportable transaction. In addition, a disclosure 
statement for a reportable transaction must be attached to each amended 
return that reflects a taxpayer's participation in a reportable 
transaction. A copy of the disclosure statement must be sent to OTSA at 
the same time that any disclosure statement is first filed by the 
taxpayer pertaining to a particular reportable transaction. If a 
reportable transaction results in a loss which is carried back to a 
prior year, the disclosure statement for the reportable transaction 
must be attached to the taxpayer's application for tentative refund or 
amended tax return for that prior year. In the case of a taxpayer that 
is a partner in a partnership, a shareholder in an S corporation, or a 
beneficiary of a trust, the disclosure statement for a reportable 
transaction must be attached to the partnership, S corporation, or 
trust's tax return for each taxable year in which the partnership, S 
corporation, or trust participates in the transaction under the rules 
of paragraph (c)(3)(i) of this section. If a taxpayer who is a partner 
in a partnership, a shareholder in an S corporation, or a beneficiary 
of a trust receives a timely Schedule K-1 less than 10 calendar days 
before the due date of the taxpayer's return (including extensions) 
and, based on receipt of the timely Schedule K-1, the taxpayer 
determines that the taxpayer participated in a reportable transaction 
within the meaning of paragraph (c)(3) of this section, the disclosure 
statement will not be considered late if the taxpayer discloses the 
reportable transaction by filing a disclosure statement with OTSA 
within 60 calendar days after the due date of the taxpayer's return 
(including extensions). The Commissioner in his discretion may issue in 
published guidance other provisions for disclosure under Sec.  1.6011-
4.
    (2) Special rules--(i) Listed transactions and transactions of 
interest. In general, if a transaction becomes a listed transaction or 
a transaction of interest after the filing of a taxpayer's tax return 
(including an amended return) reflecting the taxpayer's participation 
in the listed transaction or transaction of interest and before the end 
of the period of limitations for assessment of tax for any taxable year 
in which the taxpayer participated in the listed transaction or 
transaction of interest, then a disclosure statement must be filed, 
regardless of whether the taxpayer participated in the transaction in 
the year the transaction became a listed transaction or a transaction 
of interest, with OTSA within 90 calendar days after the date on which 
the transaction became a listed transaction or a transaction of 
interest. The Commissioner also may determine the time for disclosure 
of listed transactions and transactions of interest in the published 
guidance identifying the transaction.
    (ii) Loss transactions. If a transaction becomes a loss transaction 
because the losses equal or exceed the threshold amounts as described 
in paragraph (b)(5)(i) of this section, a disclosure statement must be 
filed as an attachment to the taxpayer's tax return for the first 
taxable year in which the threshold amount is reached and to any 
subsequent tax return that reflects any amount of section 165 loss from 
the transaction.
    (3) Multiple disclosures. The taxpayer must disclose the 
transaction in the time and manner provided for under the

[[Page 43153]]

provisions of this section regardless of whether the taxpayer also 
plans to disclose the transaction under other published guidance, for 
example, Sec.  1.6662-3(c)(2).
    (4) Example. The following example illustrates the application of 
this paragraph (e):

    Example. In January of 2008, F, a calendar year taxpayer, enters 
into a transaction that at the time is not a listed transaction and 
is not a transaction described in any of the paragraphs (b)(3) 
through (7) of this section. All the tax benefits from the 
transaction are reported on F's 2008 tax return filed timely in 
April 2009. On May 2, 2011, the IRS publishes a notice identifying 
the transaction as a listed transaction described in paragraph 
(b)(2) of this section. Upon issuance of the May 2, 2011 notice, the 
transaction becomes a reportable transaction described in paragraph 
(b) of this section. The period of limitations on assessment for F's 
2008 taxable year is still open. F is required to file Form 8886 for 
the transaction with OTSA within 90 calendar days after May 2, 2011.

    (f) Rulings and protective disclosures--(1) Rulings. If a taxpayer 
requests a ruling on the merits of a specific transaction on or before 
the date that disclosure would otherwise be required under this 
section, and receives a favorable ruling as to the transaction, the 
disclosure rules under this section will be deemed to have been 
satisfied by that taxpayer with regard to that transaction, so long as 
the request fully discloses all relevant facts relating to the 
transaction which would otherwise be required to be disclosed under 
this section. If a taxpayer requests a ruling as to whether a specific 
transaction is a reportable transaction on or before the date that 
disclosure would otherwise be required under this section, the 
Commissioner in his discretion may determine that the submission 
satisfies the disclosure rules under this section for the taxpayer 
requesting the ruling for that transaction if the request fully 
discloses all relevant facts relating to the transaction which would 
otherwise be required to be disclosed under this section. The potential 
obligation of the taxpayer to disclose the transaction under this 
section will not be suspended during the period that the ruling request 
is pending.
    (2) Protective disclosures. If a taxpayer is uncertain whether a 
transaction must be disclosed under this section, the taxpayer may 
disclose the transaction in accordance with the requirements of this 
section and comply with all the provisions of this section, and 
indicate on the disclosure statement that the disclosure statement is 
being filed on a protective basis. The IRS will not treat disclosure 
statements filed on a protective basis any differently than other 
disclosure statements filed under this section. For a protective 
disclosure to be effective, the taxpayer must comply with these 
disclosure regulations by providing to the IRS all information 
requested by the IRS under this section.
    (g) Retention of documents. (1) In accordance with the instructions 
to Form 8886 (or a successor form), the taxpayer must retain a copy of 
all documents and other records related to a transaction subject to 
disclosure under this section that are material to an understanding of 
the tax treatment or tax structure of the transaction. The documents 
must be retained until the expiration of the statute of limitations 
applicable to the final taxable year for which disclosure of the 
transaction was required under this section. (This document retention 
requirement is in addition to any document retention requirements that 
section 6001 generally imposes on the taxpayer.) The documents may 
include the following:
    (i) Marketing materials related to the transaction;
    (ii) Written analyses used in decision-making related to the 
transaction;
    (iii) Correspondence and agreements between the taxpayer and any 
advisor, lender, or other party to the reportable transaction that 
relate to the transaction;
    (iv) Documents discussing, referring to, or demonstrating the 
purported or claimed tax benefits arising from the reportable 
transaction; and documents, if any, referring to the business purposes 
for the reportable transaction.
    (2) A taxpayer is not required to retain earlier drafts of a 
document if the taxpayer retains a copy of the final document (or, if 
there is no final document, the most recent draft of the document) and 
the final document (or most recent draft) contains all the information 
in the earlier drafts of the document that is material to an 
understanding of the purported tax treatment or tax structure of the 
transaction.
    (h) Effective/applicability date--(1) In general. This section 
applies to transactions entered into on or after August 3, 2007. 
However, this section applies to transactions of interest entered into 
on or after November 2, 2006. Paragraph (f)(1) of this section applies 
to ruling requests received on or after November 1, 2006. Otherwise, 
the rules that apply with respect to transactions entered into before 
August 3, 2007, are contained in Sec.  1.6011-4 in effect prior to 
August 3, 2007 (see 26 CFR part 1 revised as of April 1, 2007).
    (2) [Reserved].


Sec.  1.6011-4T  [Removed]

0
Par. 3. Section 1.6011-4T is removed.

PART 20--ESTATE TAX; ESTATES OF DECEDENTS DYING AFTER AUGUST 16, 
1954

0
Par. 4. The authority citation for part 20 continues to read, in part, 
as follows:

    Authority: 26 U.S.C. 7805 * * *


0
Par. 5. Section 20.6011-4 is revised to read as follows:


Sec.  20.6011-4  Requirement of statement disclosing participation in 
certain transactions by taxpayers.

    (a) In general. If a transaction is identified as a listed 
transaction or a transaction of interest as defined in Sec.  1.6011-4 
of this chapter by the Commissioner in published guidance (see Sec.  
601.601(d)(2)(ii)(b) of this chapter), and the listed transaction or 
transaction of interest involves an estate tax under chapter 11 of 
subtitle B of the Internal Revenue Code, the transaction must be 
disclosed in the manner stated in such published guidance.
    (b) Effective/applicability date. This section applies to listed 
transactions entered into on or after January 1, 2003. This section 
applies to transactions of interest entered into on or after November 
2, 2006.

PART 25--GIFT TAX; GIFTS MADE AFTER DECEMBER 31, 1954

0
Par. 6. The authority citation for part 25 continues to read, in part, 
as follows:

    Authority: 26 U.S.C. 7805 * * *


0
Par. 7. Section 25.6011-4 is revised to read as follows:


Sec.  25.6011-4  Requirement of statement disclosing participation in 
certain transactions by taxpayers.

    (a) In general. If a transaction is identified as a listed 
transaction or a transaction of interest as defined in Sec.  1.6011-4 
of this chapter by the Commissioner in published guidance (see Sec.  
601.601(d)(2)(ii)(b) of this chapter), and the listed transaction or 
transaction of interest involves a gift tax under chapter 12 of 
subtitle B of the Internal Revenue Code, the transaction must be 
disclosed in the manner stated in such published guidance.
    (b) Effective/applicability date. This section applies to listed 
transactions entered into on or after January 1, 2003. This section 
applies to transactions of interest entered into on or after November 
2, 2006.

[[Page 43154]]

PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT THE 
SOURCE

0
Par. 8. The authority citation for part 31 continues to read, in part, 
as follows:

    Authority: 26 U.S.C. 7805 * * *


0
Par. 9. Section 31.6011-4 is revised to read as follows:


Sec.  31.6011-4  Requirement of statement disclosing participation in 
certain transactions by taxpayers.

    (a) In general. If a transaction is identified as a listed 
transaction or a transaction of interest as defined in Sec.  1.6011-4 
of this chapter by the Commissioner in published guidance (see Sec.  
601.601(d)(2)(ii)(b) of this chapter), and the listed transaction or 
transaction of interest involves an employment tax under chapters 21 
through 25 of subtitle C of the Internal Revenue Code, the transaction 
must be disclosed in the manner stated in such published guidance.
    (b) Effective/applicability date. This section applies to listed 
transactions entered into on or after January 1, 2003. This section 
applies to transactions of interest entered into on or after November 
2, 2006.

PART 53--FOUNDATION AND SIMILAR EXCISE TAXES

0
Par. 10. The authority citation for part 53 continues to read, in part, 
as follows:

    Authority: 26 U.S.C. 7805 * * *

0
Par. 11. Section 53.6011-4 is revised to read as follows:


Sec.  53.6011-4  Requirement of statement disclosing participation in 
certain transactions by taxpayers.

    (a) In general. If a transaction is identified as a listed 
transaction or a transaction of interest as defined in Sec.  1.6011-4 
of this chapter by the Commissioner in published guidance (see Sec.  
601.601(d)(2)(ii)(b) of this chapter), and the listed transaction or 
transaction of interest involves an excise tax under chapter 42 of 
subtitle D of the Internal Revenue Code (relating to private 
foundations and certain other tax-exempt organizations), the 
transaction must be disclosed in the manner stated in such published 
guidance.
    (b) Effective/applicability date. This section applies to listed 
transactions entered into on or after January 1, 2003. This section 
applies to transactions of interest entered into on or after November 
2, 2006.

PART 54--PENSION EXCISE TAXES

0
Par. 12. The authority citation for part 54 continues to read, in part, 
as follows:

    Authority: 26 U.S.C. 7805 * * *


0
Par. 13. Section 54.6011-4 is revised to read as follows:


Sec.  54.6011-4  Requirement of statement disclosing participation in 
certain transactions by taxpayers.

    (a) In general. If a transaction is identified as a listed 
transaction or a transaction of interest as defined in Sec.  1.6011-4 
of this chapter by the Commissioner in published guidance (see Sec.  
601.601(d)(2)(ii)(b) of this chapter), and the listed transaction or 
transaction of interest involves an excise tax under chapter 43 of 
subtitle D of the Internal Revenue Code (relating to qualified pension, 
etc., plans) the transaction must be disclosed in the manner stated in 
such published guidance.
    (b) Effective/applicability date. This section applies to listed 
transactions entered into on or after January 1, 2003. This section 
applies to transactions of interest entered into on or after November 
2, 2006.

PART 56--PUBLIC CHARITY EXCISE TAXES

0
Par. 14. The authority citation for part 56 continues to read, in part, 
as follows:

    Authority: 26 U.S.C. 7805 * * *

0
Par. 15. Section 56.6011-4 is revised to read as follows:


Sec.  56.6011-4  Requirement of statement disclosing participation in 
certain transactions by taxpayers.

    (a) In general. If a transaction is identified as a listed 
transaction or a transaction of interest as defined in Sec.  1.6011-4 
of this chapter by the Commissioner in published guidance (see Sec.  
601.601(d)(2) of this chapter), and the listed transaction or 
transaction of interest involves an excise tax under chapter 41 of 
subtitle D of the Internal Revenue Code (relating to public charities), 
the transaction must be disclosed in the manner stated in such 
published guidance.
    (b) Effective date. This section applies to listed transactions 
entered into on or after January 1, 2003. This section applies to 
transactions of interest entered into on or after November 2, 2006.

Kevin M. Brown,
Deputy Commissioner for Services and Enforcement.
    Approved: July 25, 2007.
Eric Solomon,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 07-3786 Filed 7-31-07; 11:22 am]
BILLING CODE 4830-01-P