26 U.S.C. § 6038A — Information with respect to certain for-

Page 3336 TITLE 26—INTERNAL REVENUE CODE § 6038A ‘‘If a domestic corporation fails to furnish’’ in the open- ing provisions, inserted provisions relating to reduction of taxes in applying sections 901 and 960 of this title, to the maximum amount of reduction under par. (1) for each failure to furnish information with respect to a foreign corporation required under subsec. (a)(1), and making the reduction provided by subsec. (b) inappli- cable, in applying subsecs. (a) and (b) of section 902 and subsec. (a) of section 960, for purposes of determining the amount of accumulated profits in excess of income, war profits, and excess profits taxes, and eliminated provisions which related to the furnishing of informa- tion with respect to foreign subsidiaries. Subsec. (c). Pub. L. 87–834 substituted provisions em- powering the Secretary to provide for the furnishing of information by only one person where two or more per- sons would be required to furnish information under subsec. (a) with respect to the same foreign corporation for the same period for provisions which required a do- mestic corporation if at any time during its taxable year owned more than 50 percent of the voting stock of a foreign corporation to be deemed to be in control of such foreign corporation, and in the case of a foreign corporation if at any time during its annual accounting period owned more than 50 percent of the voting stock of another foreign corporation, that such other cor- poration shall be considered a foreign subsidiary of the corporation owning such stock. The provisions relating to control are now contained in subsec. (d) of this sec- tion. Subsec. (d). Pub. L. 87–834 added par. (1) which was formerly covered in part by subsec. (c) of this section, designated existing provisions as par. (2), and elimi- nated from par. (2) provisions which related to the an- nual accounting period of a foreign subsidiary. Subsec. (e). Pub. L. 87–834 designated existing provi- sions as par. (1) and added par. (2). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2017 AMENDMENT Amendment by Pub. L. 115–97 applicable to taxable years of foreign corporations beginning after Dec. 31, 2017, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end, see section 14301(d) of Pub. L. 115–97, set out as a note under section 78 of this title. 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 Amendment by Pub. L. 105–34 applicable to annual ac- counting periods beginning after Aug. 5, 1997, see sec- tion 1142(f) of Pub. L. 105–34, set out as a note under section 318 of this title. EFFECTIVE DATE OF 1990 AMENDMENT Amendment by Pub. L. 101–508 effective, except as otherwise provided, as if included in the provision of the Revenue Reconciliation Act of 1989, Pub. L. 101–239, title VII, to which such amendment relates, see section 11701(n) of Pub. L. 101–508, set out as a note under sec- tion 42 of this title. EFFECTIVE DATE OF 1989 AMENDMENT Pub. L. 101–239, title VII, § 7712(b), Dec. 19, 1989, 103 Stat. 2394, provided that: ‘‘The amendments made by subsection (a) [amending this section] shall apply to re- turns and statements the due date for which (deter- mined without regard to extensions) is after December 31, 1989.’’ EFFECTIVE DATE OF 1986 AMENDMENT Amendment by section 1202(c) of Pub. L. 99–514 appli- cable to distributions by foreign corporations out of, and to inclusions under section 951(a) of this title at- tributable to, earnings and profits for taxable years be- ginning after Dec. 31, 1986, see section 1202(e) of Pub. L. 99–514, set out as a note under section 960 of this title. Amendment by section 1245(b)(5) of Pub. L. 99–514 ap- plicable to taxable years beginning after Dec. 31, 1986, see section 1245(c) of Pub. L. 99–514, set out as a note under section 6038A of this title. EFFECTIVE DATE OF 1982 AMENDMENT Pub. L. 97–248, title III, § 338(d), Sept. 3, 1982, 96 Stat. 631, provided that: ‘‘The amendments made by this sec- tion [amending this section] shall apply with respect to information for annual accounting periods ending after the date of the enactment of this Act [Sept. 3, 1982].’’ EFFECTIVE DATE OF 1964 AMENDMENT Amendment by Pub. L. 88–554 effective Aug. 31, 1964, except that for purposes of sections 302 and 304 of this title, such amendments shall not apply to distributions in payment for stock acquisitions or redemptions, if such acquisitions or redemptions occurred before Aug. 31, 1964, see section 4(c) of Pub. L. 88–554, set out as a note under section 318 of this title. EFFECTIVE DATE OF 1962 AMENDMENT Pub. L. 87–834, § 20(e)(1), Oct. 16, 1962, 76 Stat. 1063, provided that: ‘‘The amendments made by subsection (a) [amending this section] shall apply with respect to annual accounting periods of foreign corporations be- ginning after December 31, 1962.’’ EFFECTIVE DATE Pub. L. 86–780, § 6(c), Sept. 14, 1960, 74 Stat. 1016, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘The amendments made by sub- section (a) [enacting this section and amending section 902 of this title] shall apply to taxable years of domes- tic corporations beginning after December 31, 1960, with respect to information relating to a foreign corporation or a foreign subsidiary described in section 6038(a) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by subsection (a)) for its annual accounting periods beginning after December 31, 1960.’’ § 6038A. Information with respect to certain for- eign-owned corporations (a) Requirement If, at any time during a taxable year, a cor- poration (hereinafter in this section referred to as the ‘‘reporting corporation’’)— (1) is a domestic corporation, and (2) is 25-percent foreign-owned, such corporation shall furnish, at such time and in such manner as the Secretary shall by regula- tions prescribe, the information described in subsection (b) and such corporation shall main- tain (in the location, in the manner, and to the extent prescribed in regulations) such records as may be appropriate to determine the correct treatment of transactions with related parties as the Secretary shall by regulations prescribe (or shall cause another person to so maintain such records). (b) Required information (1) In general For purposes of subsection (a), the informa- tion described in this subsection is such infor- mation as the Secretary prescribes by regula- tions relating to— (A) the name, principal place of business, nature of business, and country or countries in which organized or resident, of each per- son which— Page 3337 TITLE 26—INTERNAL REVENUE CODE § 6038A (i) is a related party to the reporting cor- poration, and (ii) had any transaction with the report- ing corporation during its taxable year, (B) the manner in which the reporting cor- poration is related to each person referred to in subparagraph (A), and (C) transactions between the reporting corporation and each foreign person which is a related party to the reporting corporation. (2) Additional information regarding base ero- sion payments For purposes of subsection (a) and section 6038C, if the reporting corporation or the for- eign corporation to whom section 6038C ap- plies is an applicable taxpayer, the informa- tion described in this subsection shall in- clude— (A) such information as the Secretary de- termines necessary to determine the base erosion minimum tax amount, base erosion payments, and base erosion tax benefits of the taxpayer for purposes of section 59A for the taxable year, and (B) such other information as the Sec- retary determines necessary to carry out such section. For purposes of this paragraph, any term used in this paragraph which is also used in section 59A shall have the same meaning as when used in such section. (c) Definitions For purposes of this section— (1) 25-percent foreign-owned A corporation is 25-percent foreign-owned if at least 25 percent of— (A) the total voting power of all classes of stock of such corporation entitled to vote, or (B) the total value of all classes of stock of such corporation, is owned at any time during the taxable year by 1 foreign person (hereinafter in this section referred to as a ‘‘25-percent foreign share- holder’’). (2) Related party The term ‘‘related party’’ means— (A) any 25-percent foreign shareholder of the reporting corporation, (B) any person who is related (within the meaning of section 267(b) or 707(b)(1)) to the reporting corporation or to a 25-percent for- eign shareholder of the reporting corpora- tion, and (C) any other person who is related (within the meaning of section 482) to the reporting corporation. (3) Foreign person The term ‘‘foreign person’’ means any person who is not a United States person. For pur- poses of the preceding sentence, the term ‘‘United States person’’ has the meaning given to such term by section 7701(a)(30), except that any individual who is a citizen of any posses- sion of the United States (but not otherwise a citizen of the United States) and who is not a resident of the United States shall not be treated as a United States person. (4) Records The term ‘‘records’’ includes any books, pa- pers, or other data. (5) Section 318 to apply Section 318 shall apply for purposes of para- graphs (1) and (2), except that— (A) ‘‘10 percent’’ shall be substituted for ‘‘50 percent’’ in section 318(a)(2)(C), and (B) subparagraphs (A), (B), and (C) of sec- tion 318(a)(3) shall not be applied so as to consider a United States person as owning stock which is owned by a person who is not a United States person. (d) Penalty for failure to furnish information or maintain records (1) In general If a reporting corporation— (A) fails to furnish (within the time pre- scribed by regulations) any information de- scribed in subsection (b), or (B) fails to maintain (or cause another to maintain) records as required by subsection (a), such corporation shall pay a penalty of $25,000 for each taxable year with respect to which such failure occurs. (2) Increase in penalty where failure continues after notification If any failure described in paragraph (1) con- tinues for more than 90 days after the day on which the Secretary mails notice of such fail- ure to the reporting corporation, such corpora- tion shall pay a penalty (in addition to the amount required under paragraph (1)) of $25,000 for each 30-day period (or fraction thereof) during which such failure continues after the expiration of such 90-day period. (3) Reasonable cause For purposes of this subsection, the time prescribed by regulations to furnish informa- tion or maintain records (and the beginning of the 90-day period after notice by the Sec- retary) shall be treated as not earlier than the last day on which (as shown to the satisfaction of the Secretary) reasonable cause existed for failure to furnish the information or maintain the records. (e) Enforcement of requests for certain records (1) Agreement to treat corporation as agent The rules of paragraph (3) shall apply to any transaction between the reporting corporation and any related party who is a foreign person unless such related party agrees (in such man- ner and at such time as the Secretary shall prescribe) to authorize the reporting corpora- tion to act as such related party’s limited agent solely for purposes of applying sections 7602, 7603, and 7604 with respect to any request by the Secretary to examine records or produce testimony related to any such trans- action or with respect to any summons by the Secretary for such records or testimony. The appearance of persons or production of records by reason of the reporting corporation being such an agent shall not subject such persons or records to legal process for any purpose Page 3338 TITLE 26—INTERNAL REVENUE CODE § 6038A other than determining the correct treatment under this title of any transaction between the reporting corporation and such related party. (2) Rules where information not furnished If— (A) for purposes of determining the correct treatment under this title of any trans- action between the reporting corporation and a related party who is a foreign person, the Secretary issues a summons to such cor- poration to produce (either directly or as agent for such related party) any records or testimony, (B) such summons is not quashed in a pro- ceeding begun under paragraph (4) and is not determined to be invalid in a proceeding begun under section 7604(b) to enforce such summons, and (C) the reporting corporation does not sub- stantially comply in a timely manner with such summons and the Secretary has sent by certified or registered mail a notice to such reporting corporation that such reporting corporation has not so substantially com- plied, the Secretary may apply the rules of para- graph (3) with respect to such transaction (whether or not the Secretary begins a pro- ceeding to enforce such summons). If the re- porting corporation fails to maintain (or cause another to maintain) records as required by subsection (a), and by reason of that failure, the summons is quashed in a proceeding de- scribed in subparagraph (B) or the reporting corporation is not able to provide the records requested in the summons, the Secretary may apply the rules of paragraph (3) with respect to any transaction to which the records relate. (3) Applicable rules in cases of noncompliance If the rules of this paragraph apply to any transaction— (A) the amount of the deduction allowed under subtitle A for any amount paid or in- curred by the reporting corporation to the related party in connection with such trans- action, and (B) the cost to the reporting corporation of any property acquired in such transaction from the related party (or transferred by such corporation in such transaction to the related party), shall be the amount determined by the Sec- retary in the Secretary’s sole discretion from the Secretary’s own knowledge or from such information as the Secretary may obtain through testimony or otherwise. (4) Judicial proceedings (A) Proceedings to quash Notwithstanding any law or rule of law, any reporting corporation to which the Sec- retary issues a summons referred to in para- graph (2)(A) shall have the right to begin a proceeding to quash such summons not later than the 90th day after such summons was issued. In any such proceeding, the Sec- retary may seek to compel compliance with such summons. (B) Review of secretarial determination of noncompliance Notwithstanding any law or rule of law, any reporting corporation which has been notified by the Secretary that the Secretary has determined that such corporation has not substantially complied with a summons referred to in paragraph (2) shall have the right to begin a proceeding to review such determination not later than the 90th day after the day on which the notice referred to in paragraph (2)(C) was mailed. If such a pro- ceeding is not begun on or before such 90th day, such determination by the Secretary shall be binding and shall not be reviewed by any court. (C) Jurisdiction The United States district court for the district in which the person (to whom the summons is issued) resides or is found shall have jurisdiction to hear any proceeding brought under subparagraph (A) or (B). Any order or other determination in such a pro- ceeding shall be treated as a final order which may be appealed. (D) Suspension of statute of limitations If the reporting corporation brings an ac- tion under subparagraph (A) or (B), the run- ning of any period of limitations under sec- tion 6501 (relating to assessment and collec- tion of tax) or under section 6531 (relating to criminal prosecutions) with respect to any affected taxable year shall be suspended for the period during which such proceeding, and appeals therein, are pending. In no event shall any such period expire before the 90th day after the day on which there is a final determination in such proceeding. For pur- poses of this subparagraph, the term ‘‘af- fected taxable year’’ means any taxable year if the determination of the amount of tax imposed for such taxable year is affected by the treatment of the transaction to which the summons relates. (f) Cross reference For provisions relating to criminal penalties for violation of this section, see section 7203. (Added Pub. L. 97–248, title III, § 339(a), Sept. 3, 1982, 96 Stat. 632; amended Pub. L. 97–448, title III, § 306(b)(4), Jan. 12, 1983, 96 Stat. 2406; Pub. L. 98–369, div. A, title VII, § 714(l), July 18, 1984, 98 Stat. 963; Pub. L. 99–514, title XII, § 1245(a), (b)(1)–(4), Oct. 22, 1986, 100 Stat. 2581; Pub. L. 101–239, title VII, § 7403(a)–(d), Dec. 19, 1989, 103 Stat. 2358, 2359; Pub. L. 101–508, title XI, §§ 11315(b)(1), 11704(a)(23), Nov. 5, 1990, 104 Stat. 1388–457, 1388–519; Pub. L. 104–188, title I, §§ 1702(c)(5), 1704(f)(5)(B), Aug. 20, 1996, 110 Stat. 1869, 1880; Pub. L. 115–97, title I, § 14401(b), Dec. 22, 2017, 131 Stat. 2232.) Editorial Notes AMENDMENTS 2017—Subsec. (b). Pub. L. 115–97, § 14401(b)(1), amended subsec. (b) generally. Prior to amendment, subsec. (b) described information required to be furnished by cer- tain foreign-owned corporations. Subsec. (d)(1), (2). Pub. L. 115–97, § 14401(b)(2), sub- stituted ‘‘$25,000’’ for ‘‘$10,000’’. Page 3339 TITLE 26—INTERNAL REVENUE CODE § 6038A 1996—Subsec. (b)(2) to (4). Pub. L. 104–188, § 1704(f)(5)(B), inserted ‘‘and’’ at end of par. (2), sub- stituted a period for ‘‘, and’’ at end of par. (3), and struck out par. (4) which read as follows: ‘‘such infor- mation as the Secretary may require for purposes of carrying out the provisions of section 453C.’’ Subsec. (e)(4)(D). Pub. L. 104–188, § 1702(c)(5), sub- stituted ‘‘any affected taxable year’’ for ‘‘any trans- action to which the summons relates’’ and inserted at end ‘‘For purposes of this subparagraph, the term ‘af- fected taxable year’ means any taxable year if the de- termination of the amount of tax imposed for such tax- able year is affected by the treatment of the trans- action to which the summons relates.’’ 1990—Subsec. (a)(1). Pub. L. 101–508, § 11315(b)(1), struck out ‘‘or is a foreign corporation engaged in trade or business within the United States’’ after ‘‘corpora- tion’’. Subsec. (c)(3) to (6). Pub. L. 101–508, § 11704(a)(23), re- designated pars. (4) to (6) as (3) to (5), respectively. 1989—Subsec. (a). Pub. L. 101–239, § 7403(b), inserted before period at end ‘‘and such corporation shall main- tain (in the location, in the manner, and to the extent prescribed in regulations) such records as may be ap- propriate to determine the correct treatment of trans- actions with related parties as the Secretary shall by regulations prescribe (or shall cause another person to so maintain such records)’’. Subsec. (a)(2). Pub. L. 101–239, § 7403(a)(1), amended par. (2) generally, substituting ‘‘is 25-percent foreign- owned,’’ for ‘‘is controlled by a foreign person,’’. Subsec. (c). Pub. L. 101–239, § 7403(a)(2), amended sub- sec. (c) generally, substituting pars. (1) to (6) for former pars. (1) to (3) defining ‘‘control’’, ‘‘related party’’, and ‘‘foreign person’’. Subsec. (d). Pub. L. 101–239, § 7403(c), inserted ‘‘or maintain records’’ after ‘‘information’’ in heading and amended text generally, making changes in substance and structure of pars. (1) to (3). Subsecs. (e), (f). Pub. L. 101–239, § 7403(d), added sub- sec. (e) and redesignated former subsec. (e) as (f). 1986—Subsec. (b)(1). Pub. L. 99–514, § 1245(a), sub- stituted ‘‘each person’’ for ‘‘each corporation’’ in intro- ductory provisions and amended subpar. (A) generally, substituting ‘‘related party to the reporting corpora- tion’’ for ‘‘member of the same controlled group as the reporting corporation’’. Subsec. (b)(2). Pub. L. 99–514, § 1245(b)(1), substituted ‘‘each person’’ for ‘‘each corporation’’. Subsec. (b)(3). Pub. L. 99–514, § 1245(b)(2), (3), amended par. (3) generally, substituting ‘‘foreign person which is a related party to the reporting corporation, and’’ for ‘‘foreign corporation which is a member of the same controlled group as the reporting corporation.’’ Subsec. (b)(4). Pub. L. 99–514, § 1245(b)(3), added par. (4). Subsec. (c)(2). Pub. L. 99–514, § 1245(b)(4), amended par. (2) generally. Prior to amendment, par. (2), controlled group, read as follows: ‘‘The term ‘controlled group’ means any controlled group of corporations within the meaning of section 1563(a); except that— ‘‘(A) ‘at least 50 percent’ shall be substituted— ‘‘(i) for ‘at least 80 percent’ each place it appears in section 1563(a)(1), and ‘‘(ii) for ‘more than 50 percent’ each place it ap- pears in section 1563(a)(2)(B), and ‘‘(B) the determination shall be made without re- gard to subsections (a)(4), (b)(2)(C), and (e)(3)(C) of section 1563.’’ 1984—Subsec. (c)(1). Pub. L. 98–369 substituted section ‘‘6038(e)(1)’’ for ‘‘6038(d)(1)’’. 1983—Subsec. (c)(2)(B). Pub. L. 97–448 inserted ‘‘, (b)(2)(C),’’ after ‘‘(a)(4)’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2017 AMENDMENT Amendment by Pub. L. 115–97 applicable to base ero- sion payments (as defined in section 59A(d) of this title) paid or accrued in taxable years beginning after Dec. 31, 2017, see section 14401(e) of Pub. L. 115–97, set out as a note under section 26 of this title. EFFECTIVE DATE OF 1996 AMENDMENT Amendment by section 1702(c)(5) of Pub. L. 104–188 ef- fective, except as otherwise expressly provided, as if in- cluded in the provision of the Revenue Reconciliation Act of 1990, Pub. L. 101–508, title XI, to which such amendment relates, see section 1702(i) of Pub. L. 104–188, set out as a note under section 38 of this title. EFFECTIVE DATE OF 1990 AMENDMENT Pub. L. 101–508, title XI, § 11315(c), Nov. 5, 1990, 104 Stat. 1388–457, provided that: ‘‘The amendments made by this section [enacting section 6038C of this title and amending this section] shall apply to— ‘‘(1) any requirement to furnish information under section 6038C(a) of the Internal Revenue Code of 1986 (as added by this section) if the time for furnishing such information under such section is after the date of the enactment of this Act [Nov. 5, 1990], ‘‘(2) any requirement under such section 6038C(a) to maintain records which were in existence on or after March 20, 1990, ‘‘(3) any requirement to authorize a corporation to act as a limited agent under section 6038C(d)(1) of such Code (as so added) if the time for authorizing such action is after the date of the enactment of this Act, and ‘‘(4) any summons issued after such date of enact- ment, without regard to when the taxable year (to which the information, records, authorization, or summons re- lates) began.’’ EFFECTIVE DATE OF 1989 AMENDMENT Pub. L. 101–239, title VII, § 7403(e), Dec. 19, 1989, 103 Stat. 2361, provided that: ‘‘The amendments made by this section [amending this section] shall apply to tax- able years beginning after July 10, 1989.’’ EFFECTIVE DATE OF 1986 AMENDMENT Pub. L. 99–514, title XII, § 1245(c), Oct. 22, 1986, 100 Stat. 2581, provided that: ‘‘The amendments made by this section [amending this section and section 6038 of this title] shall apply to taxable years beginning after December 31, 1986.’’ EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–369 effective as if included in the provision of the Tax Equity and Fiscal Responsi- bility Act of 1982, Pub. L. 97–248, to which such amend- ment relates, see section 715 of Pub. L. 98–369, set out as a note under section 31 of this title. EFFECTIVE DATE OF 1983 AMENDMENT Amendment by Pub. L. 97–448 effective as if included in the provisions of the Tax Equity and Fiscal Respon- sibility Act of 1982, Pub. L. 97–248, to which such amendment relates, see section 311(d) of Pub. L. 97–448, set out as a note under section 31 of this title. EFFECTIVE DATE Pub. L. 97–248, title III, § 339(c), Sept. 3, 1982, 96 Stat. 633, provided that: ‘‘The amendments made by this sec- tion [enacting this section] shall apply to taxable years beginning after December 31, 1982.’’ APPLICABILITY OF 1989 AMENDMENT Pub. L. 101–508, title XI, § 11314, Nov. 5, 1990, 104 Stat. 1388–455, provided that: ‘‘(a) GENERAL RULE.—The amendments made by sec- tion 7403 of the Revenue Reconciliation Act of 1989 [Pub. L. 101–239, amending this section] shall apply to— ‘‘(1) any requirement to furnish information under section 6038A(a) of the Internal Revenue Code of 1986 (as amended by such section 7403) if the time for fur- Page 3340 TITLE 26—INTERNAL REVENUE CODE § 6038B nishing such information under such section is after the date of the enactment of this Act [Nov. 5, 1990], ‘‘(2) any requirement under such section 6038A(a) to maintain records which were in existence on or after March 20, 1990, ‘‘(3) any requirement to authorize a corporation to act as a limited agent under section 6038A(e)(1) of such Code (as so amended) if the time for authorizing such action is after the date of the enactment of this Act, and ‘‘(4) any summons issued after such date of enact- ment, without regard to when the taxable year (to which the information, records, authorization, or summons re- lates) began. Such amendments shall also apply in any case to which they would apply without regard to this section. ‘‘(b) CONTINUATION OF OLD FAILURES.—In the case of any failure with respect to a taxable year beginning on or before July 10, 1989, which first occurs on or before the date of the enactment of this Act [Nov. 5, 1990] but which continues after such date of enactment, section 6038A(d)(2) of the Internal Revenue Code of 1986 (as amended by subsection (c) of such section 7403) shall apply for purposes of determining the amount of the penalty imposed for 30-day periods referred to in such section 6038A(d)(2) which begin after the date of the en- actment of this Act.’’ § 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 con- tribution described in regulations prescribed by the Secretary, or (2) makes a distribution described in section 336 to a person who is not a United States per- son, shall furnish to the Secretary, at such time and in such manner as the Secretary shall by regula- tions prescribe, such information with respect to such exchange or distribution as the Sec- retary 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 partner- ship only if— (A) the United States person holds (imme- diately after the transfer) directly or indi- rectly at least a 10-percent interest (as de- fined 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 part- nership 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 regu- lations, 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 sub- section (a)(1)(B), such person shall recognize gain as if the contributed property had been sold for such value at the time of such con- tribution). (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 un- less the failure with respect to such exchange was due to intentional disregard. (Added Pub. L. 98–369, div. A, title I, § 131(d)(1), July 18, 1984, 98 Stat. 664; amended Pub. L. 105–34, title XI, § 1144(a)–(c), Aug. 5, 1997, 111 Stat. 984, 985; Pub. L. 105–206, title VI, § 6011(g), July 22, 1998, 112 Stat. 818; Pub. L. 109–135, title IV, § 409(c), Dec. 21, 2005, 119 Stat. 2636.) Editorial Notes AMENDMENTS 2005—Subsec. (a)(1)(B). Pub. L. 109–135 inserted ‘‘or’’ at end. 1998—Subsec. (c). Pub. L. 105–206, § 6011(g), made tech- nical amendment to directory language of Pub. L. 105–206, § 1144(c). See 1997 Amendment note below. 1997—Subsec. (a)(1). 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’’. Subsec. (b). Pub. L. 105–34, § 1144(b), added subsec. (b). Former subsec. (b) redesignated (c). Subsec. (c). Pub. L. 105–34, § 1144(c), as amended by Pub. L. 105–206, § 6011(g), substituted ‘‘equal to 10 per- cent 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 rec- ognize 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 Amendment by Pub. L. 109–135 effective as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 409(d) of Pub. L. 109–135, set out as a note under section 961 of this title. EFFECTIVE DATE OF 1998 AMENDMENT Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of