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Sec. 6111. Disclosure Of Reportable Transactions

I.R.C. § 6111(a) In General
Each material advisor with respect to any reportable transaction shall make a return (in such form as the Secretary may prescribe) setting forth—
I.R.C. § 6111(a)(1)
information identifying and describing the transaction,
I.R.C. § 6111(a)(2)
information describing any potential tax benefits expected to result from the transaction, and
I.R.C. § 6111(a)(3)
such other information as the Secretary may prescribe.
Such return shall be filed not later than the date specified by the Secretary.
I.R.C. § 6111(b) Definitions
For purposes of this section:
I.R.C. § 6111(b)(1) Material Advisor
I.R.C. § 6111(b)(1)(A) In General
The term “material advisor” means any person—
I.R.C. § 6111(b)(1)(A)(i)
who provides any material aid, assistance, or advice with respect to organizing, managing, promoting, selling, implementing, insuring, or carrying out any reportable transaction, and
I.R.C. § 6111(b)(1)(A)(ii)
who directly or indirectly derives gross income in excess of the threshold amount (or such other amount as may be prescribed by the Secretary) for such aid, assistance, or advice.
I.R.C. § 6111(b)(1)(B) Threshold Amount
For purposes of subparagraph (A), the threshold amount is-
I.R.C. § 6111(b)(1)(B)(i)
$50,000 in the case of a reportable transaction substantially all of the tax benefits from which are provided to natural persons, and
I.R.C. § 6111(b)(1)(B)(ii)
$250,000 in any other case.
I.R.C. § 6111(b)(2) Reportable Transaction
The term “reportable transaction” has the meaning given to such term by section 6707A(c).
I.R.C. § 6111(c) Regulations
The Secretary may prescribe regulations which provide—
I.R.C. § 6111(c)(1)
that only 1 person shall be required to meet the requirements of subsection (a) in cases in which 2 or more persons would otherwise be required to meet such requirements,
I.R.C. § 6111(c)(2)
exemptions from the requirements of this section, and
I.R.C. § 6111(c)(3)
such rules as may be necessary or appropriate to carry out the purposes of this section.
(Added Pub. L. 98-369, div. A, title I, 141(a), July 18, 1984, 98 Stat. 677, and amended Pub. L. 99-514, title II, 201(d)(13), title XV, 1531(a), title XVIII, 1899A(54), Oct. 22, 1986, 100 Stat. 2142, 2749, 2961; Pub. L. 105-34, title IX, Sec. 1028(a), Aug. 5, 1997, 111 Stat 788; Pub. L. 108-357, title VIII, Sec. 815, Oct. 22, 2004, 118 Stat. 1418; Pub. L. 109-135, title IV, Sec. 412(zz), Dec. 21, 2005, 119 Stat. 2577.)
BACKGROUND NOTES
AMENDMENTS
2005 - Subsec. (b)(1)(A)(ii). Pub. L. 109-135, Sec. 412(zz), amended clause (ii) by substituting “aid, assistance, or advice” for “advice or assistance”.
2004 - Sec. 6111. Pub. L. 108-357, Sec. 815(a), amended Sec. 6111. Before being amended it read as follows:
“Sec. 6111. Registration of tax shelters
“(a) Registration
“(1) In general
“Any tax shelter organizer shall register the tax shelter with the Secretary (in such form and in such manner as the Secretary may prescribe) not later than the day on which the first offering for sale of interests in such tax shelter occurs.
“(2) Information included in registration
“Any registration under paragraph (1) shall include--
“(A) information identifying and describing the tax shelter,
“(B) information describing the tax benefits of the tax shelter represented (or to be represented) to investors, and
“(C) such other information as the Secretary may prescribe.
“(b) Furnishing of tax shelter identification number; inclusion on return
“(1) Sellers, etc.
“Any person who sells (or otherwise transfers) an interest in a tax shelter shall (at such times and in such manner as the Secretary shall prescribe) furnish to each investor who purchases (or otherwise acquires) an interest in such tax shelter from such person the identification number assigned by the Secretary to such tax shelter.
“(2) Inclusion of number on return
“Any person claiming any deduction, credit, or other tax benefit by reason of a tax shelter shall include (in such manner as the Secretary may prescribe) on the return of tax on which such deduction, credit, or other benefit is claimed the identification number assigned by the Secretary to such tax shelter.
“(c) Tax shelter
“For purposes of this section--
“(1) In general
“The term “tax shelter” means any investment--
“(A) with respect to which any person could reasonably infer from the representations made, or to be made, in connection with the offering for sale of interests in the investment that the tax shelter ratio for any investor as of the close of any of the first 5 years ending after the date on which such investment is offered for sale may be greater than 2 to 1, and
“(B) which is--
“(i) required to be registered under a Federal or State law regulating securities,
“(ii) sold pursuant to an exemption from registration requiring the filing of a notice with a Federal or State agency regulating the offering or sale of securities, or
“(iii) a substantial investment.
“(2) Tax shelter ratio defined
“For purposes of this subsection, the term “tax shelter ratio” means, with respect to any year, the ratio which--
“(A) the aggregate amount of the deductions and 350 percent of the credits which are represented to be potentially allowable to any investor under subtitle A for all periods up to (and including) the close of such year, bears to
“(B) the investment base as of the close of such year.
“(3) Investment base
“(A) In general
“Except as provided in this paragraph, the term “investment base” means, with respect to any year, the amount of money and the adjusted basis of other property (reduced by any liability to which such other property is subject) contributed by the investor as of the close of such year.
“(B) Certain borrowed amounts excluded
“For purposes of subparagraph (A), there shall not be taken into account any amount borrowed from any person--
“(i) who participated in the organization, sale, or management of the investment, or
“(ii) who is a related person (as defined in section 465(b)(3)(C)) to any person described in clause (i), unless such amount is unconditionally required to be repaid by the investor before the close of the year for which the determination is being made.
“(C) Certain other amounts included or excluded
“(i) Amounts held in cash equivalents, etc.
“No amount shall be taken into account under subparagraph (A) which is to be held in cash equivalent or marketable securities.
“(ii) Amounts included or excluded by Secretary
“The Secretary may by regulation--
“(I) exclude from the investment base any amount described in subparagraph (A), or
“(II) include in the investment base any amount not described in subparagraph (A), if the Secretary determines that such exclusion or inclusion is necessary to carry out the purposes of this section.
“(4) Substantial investment
“An investment is a substantial investment if--
“(A) the aggregate amount which may be offered for sale exceeds $250,000, and
“(B) there are expected to be 5 or more investors.
“(d) Certain Confidential Arrangements Treated as Tax Shelters.--
“(1) In general.--
“For purposes of this section, the term ‘tax shelter’ includes any entity, plan, arrangement, or transaction--
“(A) a significant purpose of the structure of which is the avoidance or evasion of Federal income tax for a direct or indirect participant which is a corporation,
“(B) which is offered to any potential participant under conditions of confidentiality, and
“(C) for which the tax shelter promoters may receive fees in excess of $100,000 in the aggregate.
“(2) Conditions of confidentiality.--
“For purposes of paragraph (1)(B), an offer is under conditions of confidentiality if--
“(A) the potential participant to whom the offer is made (or any other person acting on behalf of such participant) has an understanding or agreement with or for the benefit of any promoter of the tax shelter that such participant (or such other person) will limit disclosure of the tax shelter or any significant tax features of the tax shelter, or
“(B) any promoter of the tax shelter--
“(i) claims, knows, or has reason to know,
“(ii) knows or has reason to know that any other person (other than the potential participant) claims, or
“(iii) causes another person to claim,
“that the tax shelter (or any aspect thereof) is proprietary to any person other than the potential participant or is otherwise protected from disclosure to or use by others.
“For purposes of this subsection, the term ‘promoter’ means any person or any related person (within the meaning of section 267 or 707) who participates in the organization, management, or sale of the tax shelter.
“(3) Persons other than promoter required to register in certain cases.--
“(A) In general.--
“If--
“(i) the requirements of subsection (a) are not met with respect to any tax shelter (as defined in paragraph (1)) by any tax shelter promoter, and
“(ii) no tax shelter promoter is a United States person,
“then each United States person who discussed participation in such shelter shall register such shelter under subsection (a).
“(B) Exception.--
“Subparagraph (A) shall not apply to a United States person who discussed participation in a tax shelter if--
“(i) such person notified the promoter in writing (not later than the close of the 90th day after the day on which such discussions began) that such person would not participate in such shelter, and
“(ii) such person does not participate in such shelter.
“(4) Offer to participate treated as offer for sale.--
“For purposes of subsections (a) and (b), an offer to participate in a tax shelter (as defined in paragraph (1)) shall be treated as an offer for sale.
“(e) Other definitions
“For purposes of this section--
“(1) Tax shelter organizer
“The term “tax shelter organizer” means--
“(A) the person principally responsible for organizing the tax shelter,
“(B) if the requirements of subsection (a) are not met by a person described in subparagraph (A) at the time prescribed therefor, any other person who participated in the organization of the tax shelter, and
“(C) if the requirements of subsection (a) are not met by a person described in subparagraph (A) or (B) at the time prescribed therefor, any person participating in the sale or management of the investment at a time when the tax shelter was not registered under subsection (a).
“(2) Year
“The term “year” means--
“(A) the taxable year of the tax shelter, or
“(B) if the tax shelter has no taxable year, the calendar year.
“(f) Regulations
“The Secretary may prescribe regulations which provide--
“(1) rules for the aggregation of similar investments offered by the same person or persons for purposes of applying subsection (c)(4),
“(2) that only 1 person shall be required to meet the requirements of subsection (a) in cases in which 2 or more persons would otherwise be required to meet such requirements,
“(3) exemptions from the requirements of this section, and
“(4) such rules as may be necessary or appropriate to carry out the purposes of this section in the case of foreign tax shelters.”
1997--Subsec. (d)-(e). Pub. L. 105-34, Sec. 1028(a), redesignated subsecs. (d) and (e) as subsecs. (e) and (f); and added a new subsec. (d).
1986--Subsec. (c)(2)(A). Pub. L. 99-514, 1531(a), substituted “350 percent” for “200 percent”.
Subsec. (c)(3)(B)(ii). Pub. L. 99-514, 201(d)(13), substituted “section 465(b)(3)(C)” for “section 168(e)(4)”.
Subsec. (d)(1)(B). Pub. L. 99-514, 1899A(54), substituted “subparagraph” for “subparagraph”.
EFFECTIVE DATE OF 2005 AMENDMENT
Amendment by Sec. 412(zz) of Pub. L. 109-135 applicable on the date of the enactment of this Act [Enacted: Dec. 21, 2005].
EFFECTIVE DATE OF 2004 AMENDMENT
Amendment by Sec. 815 of Pub. L. 108-357 applicable to transactions with respect to which material aid, assistance, or advice referred to in section 6111(b)(1)(A)(i) of the Internal Revenue Code of 1986 (as added by this section) is provided after the date of the enactment of this Act [Enacted: Oct. 22, 2004].
EFFECTIVE DATE OF 1997 AMENDMENTS
Amendments by Sec. 1028(a) of Pub. L. 105-34 applicable to any tax shelter (as defined in section 6111(d) of the Internal Revenue Code of 1986, as amended by this section) interests in which are offered to potential participants after the Secretary of the Treasury prescribes guidance with respect to meeting requirements added by such amendments.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 201(d)(13) of Pub. L. 99-514 applicable to property placed in service after Dec. 31, 1986, in taxable years ending after such date, with exceptions, see sections 203 and 204 of Pub. L. 99-514, set out as a note under section 168 of this title.
Amendment by section 201(d)(13) of Pub. L. 99-514 not applicable to any property placed in service before Jan. 1, 1994, if such property placed in service as part of specified rehabilitations, and not applicable to certain additional rehabilitations, see section 251(d)(2), (3) of Pub. L. 99-514, set out as a note under section 46 of this title.
Section 1531(b) of Pub. L. 99-514 provided that: “The amendment made by this section [amending this section] shall apply to any tax shelter (within the meaning of section 6111 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] as amended by this section) interests in which are first offered for sale after December 31, 1986.”
EFFECTIVE DATE
Section 141(d) of Pub. L. 98-369, as amended by Pub. L. 99-514, 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
“(1) In general.--The amendments made by this section [enacting sections 6111 and 6707 of this title and redesignating former section 6111 as 6112 of this title] shall apply to any tax shelter (within the meaning of section 6111 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], as added by this section) any interest in which is first sold to any investor after August 31, 1984.
“(2) Substantial investment test.--For purposes of determining whether any investment is a tax shelter by reason of section 6111(c)(1)(B)(iii) of such Code (as added by this section), only offers for sale after August 31, 1984, shall be taken into account.
“(3) Furnishing of shelter identification number for interests sold before september 1, 1984.--With respect to interests sold before September 1, 1984, any liability to act under paragraph (1) of section 6111(b) of such Code (as added by this section) which would (but for this sentence) arise before such date shall be deemed to arise on December 31, 1984.”
PRIOR PROVISION
A prior section 6111 was renumbered 6115.