Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Rules and Regulations 16973 

after the date of the grant or award. A 

plan may satisfy the requirement to 

provide a maximum number of shares 

with respect to which stock options and 

stock appreciation rights may be granted 

to any individual employee during a 

specified period if the plan specifies an 

aggregate maximum number of shares 

with respect to which stock options, 

stock appreciation rights, restricted 

stock, restricted stock units and other 

equity-based awards that may be 

granted to any individual employee 

during a specified period under a plan 

approved by shareholders in accordance 

with § 1.162–27(e)(4). If the amount of 

compensation the employee may receive 

under the grant or award is not based 

solely on an increase in the value of the 

stock after the date of grant or award (for 

example, in the case of restricted stock, 

or an option that is granted with an 

exercise price that is less than the fair 

market value of the stock as of the date 

of grant), none of the compensation 

attributable to the grant or award is 

qualified performance-based 

compensation under this paragraph 

(e)(2)(vi)(A). Whether a stock option 

grant is based solely on an increase in 

the value of the stock after the date of 

grant is determined without regard to 

any dividend equivalent that may be 

payable, provided that payment of the 

dividend equivalent is not made 

contingent on the exercise of the option. 

The rule that the compensation 

attributable to a stock option or stock 

appreciation right must be based solely 

on an increase in the value of the stock 

after the date of grant or award does not 

apply if the grant or award is made on 

account of, or if the vesting or 

exercisability of the grant or award is 

contingent on, the attainment of a 

performance goal that satisfies the 

requirements of this paragraph (e)(2). 

* * * * * 

(vii) * * * 

Example 9. Corporation V establishes a 

stock option plan for salaried employees. The 

terms of the stock option plan specify that no 

individual salaried employee shall receive 

options for more than 100,000 shares over 

any 3-year period. The compensation 

committee grants options for 50,000 shares to 

each of several salaried employees. The 

exercise price of each option is equal to or 

greater than the fair market value of a share 

of V stock at the time of each grant. 

Compensation attributable to the exercise of 

the options satisfies the requirements of 

paragraph (e)(2)(vi) of this section. If, 

however, the terms of the options provide 

that the exercise price is less than fair market 

value of a share of V stock at the date of 

grant, no compensation attributable to the 

exercise of those options satisfies the 

requirements of this paragraph (e)(2) unless 

issuance or exercise of the options was 

contingent upon the attainment of a 

preestablished performance goal that satisfies 

this paragraph (e)(2). If, however, the terms 

of the plan also provide that Corporation V 

could grant options to purchase no more than 

900,000 shares over any 3-year period, but 

did not provide a limitation on the number 

of shares that any individual employee could 

purchase, then no compensation attributable 

to the exercise of those options satisfies the 

requirements of paragraph (e)(2)(vi) of this 

section. 

* * * * * 

(4) * * * 

(iv) Description of compensation. 

Disclosure as to the compensation 

payable under a performance goal must 

be specific enough so that shareholders 

can determine the maximum amount of 

compensation that could be paid to any 

individual employee during a specified 

period. If the terms of the performance 

goal do not provide for a maximum 

dollar amount, the disclosure must 

include the formula under which the 

compensation would be calculated. 

Thus, if compensation attributable to 

the exercise of stock options is equal to 

the difference between the exercise 

price and the current value of the stock, 

then disclosure of the maximum 

number of shares for which grants may 

be made to any individual employee 

during a specified period and the 

exercise price of those options (for 

example, fair market value on date of 

grant) would satisfy the requirements of 

this paragraph (e)(4)(iv). In that case, 

shareholders could calculate the 

maximum amount of compensation that 

would be attributable to the exercise of 

options on the basis of their 

assumptions as to the future stock price. 

* * * * * 

(f) * * * 

(3) Stock-based compensation. 

Paragraph (f)(1) of this section will 

apply to any compensation received 

pursuant to the exercise of a stock 

option or stock appreciation right, or the 

substantial vesting of restricted 

property, granted under a plan or 

agreement described in paragraph (f)(1) 

of this section if the grant occurs on or 

before the earliest of the events 

specified in paragraph (f)(2) of this 

section. This paragraph does not apply 

to any form of stock-based 

compensation other than the forms 

listed in the immediately preceding 

sentence. Thus, for example, 

compensation payable under a restricted 

stock unit arrangement or a phantom 

stock arrangement must be paid, rather 

than merely granted, on or before the 

occurrence of the earliest of the events 

specified in paragraph (f)(2) of this 

section in order for paragraph (f)(1) of 

this section to apply. 

* * * * * 

(j) * * * 

(2) * * * 

(vi) The modifications to paragraphs 

(e)(2)(vi)(A), (e)(2)(vii) Example 9, and 

(e)(4)(iv) of this section concerning the 

maximum number of shares with 

respect to which a stock option or stock 

appreciation right that may be granted 

and the amount of compensation that 

may be paid to any individual employee 

apply to compensation attributable to 

stock options and stock appreciation 

rights that are granted on or after June 

24, 2011. The last two sentences of 

§ 1.162–27(f)(3) apply to remuneration 

that is otherwise deductible resulting 

from a stock option, stock appreciation 

right, restricted stock (or other 

property), restricted stock unit, or any 

other form of equity-based remuneration 

that is granted on or after April 1, 2015. 

Approved: March 9, 2015. 

John Dalrymple, 

Deputy Commissioner for Services and 

Enforcement. 

Mark D. Mazur, 

Assistant Secretary of the Treasury (Tax 

Policy). 

[FR Doc. 2015–07386 Filed 3–30–15; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 301 

[TD–9718] 

RIN 1545–BH37 

Period of Limitations on Assessment 

for Listed Transactions Not Disclosed 

Under Section 6011 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations. 

SUMMARY: This document contains final 

regulations relating to the exception to 

the general three-year period of 

limitations on assessment under section 

6501(c)(10) of the Internal Revenue 

Code (Code) for listed transactions that 

a taxpayer failed to disclose as required 

under section 6011. These final 

regulations affect taxpayers who fail to 

disclose listed transactions in 

accordance with section 6011. 

DATES: 

Effective date: These regulations are 

effective March 31, 2015. 

Applicability date: For dates of 

applicability, see § 301.6501(c)–1(g)(9). 

FOR FURTHER INFORMATION CONTACT: 

Danielle Pierce of the Office of Chief 

Counsel (Procedure and 


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16974 Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Rules and Regulations 

Administration), at (202) 317–6845 (not 

a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act 

The collection of information 

contained in these regulations has been 

reviewed and approved by the Office of 

Management and Budget in accordance 

with the Paperwork Reduction Act of 

1995 (44 U.S.C. 3507(d)) under control 

number 1545–1940. The collection of 

information in these final regulations is 

in § 301.6501(c)–1(g)(5). This 

information is required to provide the 

IRS, under penalties of perjury, with the 

information necessary to properly 

determine the taxpayer’s applicable 

period of limitations. The collection of 

information in these final regulations is 

the same as the collection of 

information in Revenue Procedure 

2005–26 (2005–1 CB 965), which was 

previously reviewed and approved by 

the Office of Management and Budget 

under control number 1545–1940. The 

collection of information in 

§ 301.6501(c)–1(g)(6) is the same as the 

collection of information required under 

section 6112. See § 601.601(d)(2)(ii)(b). 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a valid control 

number assigned by the Office of 

Management and Budget. 

Books or records relating to a 

collection of information must be 

retained as long as their contents may 

become material in the administration 

of any internal revenue law. Generally, 

tax returns and tax return information 

are confidential, as required by 26 

U.S.C. 6103. 

Background 

This document contains amendments 

to the Procedure and Administration 

Regulations (26 CFR part 301) under 

section 6501(c) relating to exceptions to 

the period of limitations on assessment. 

Section 6501(a) provides that, except as 

otherwise provided, if a return is filed, 

tax with respect to that return must be 

assessed within 3 years from the later of 

the date the return was filed or the 

original due date of the return. Section 

6501(c) contains several exceptions to 

the general three-year period of 

limitations on assessment. 

Section 6501(c)(10) was added to the 

Code by section 814 of the American 

Jobs Creation Act of 2004, Public Law 

108–357 (118 Stat. 1418, 1581 (2004)) 

(AJCA), enacted on October 22, 2004. 

Section 6501(c)(10) provides that, if a 

taxpayer fails to disclose a listed 

transaction as required under section 

6011, the time to assess tax against the 

taxpayer with respect to that transaction 

will end no earlier than one year after 

the earlier of (A) the date on which the 

taxpayer furnishes the information 

required under section 6011, or (B) the 

date that the material advisor furnishes 

to the Secretary, upon written request, 

the information required under section 

6112 with respect to the taxpayer 

related to the listed transaction. Section 

6112 requires material advisors to 

maintain lists of advisees and other 

information with respect to reportable 

transactions, including listed 

transactions, and to furnish that 

information to the IRS upon request. 

The term ‘‘material advisor’’ is defined 

in § 301.6111–3(b). Section 6112 and 

§ 301.6112–1 provide guidance relating 

to the preparation, content, 

maintenance, retention, and furnishing 

of lists by material advisors. Under this 

provision, if neither the taxpayer nor a 

material advisor furnishes the requisite 

information, the period of limitations on 

assessment will remain open, and the 

tax with respect to the listed transaction 

may be assessed at any time. Section 

6501(c)(10) is effective for taxable years 

with respect to which the period of 

limitations on assessment did not expire 

prior to October 22, 2004. 

Section 6501(c)(10) applies when a 

taxpayer does not properly disclose a 

listed transaction (as defined in section 

6707A(c)(2)) as required under section 

6011. Taxpayers are required under 

section 6011 and the regulations 

thereunder (collectively referred to as 

the ‘‘section 6011 disclosure rules’’) to 

disclose certain information regarding 

each reportable transaction in which the 

taxpayer participated. See Treas. Reg. 

§§ 1.6011–4; 20.6011–4; 25.6011–4; 

31.6011–4; 53.6011–4; 54.6011–4; and 

56.6011–4. Among the transactions that 

are reportable are ‘‘listed transactions.’’ 

See Treas. Reg. § 1.6011–4(b)(2). Under 

the section 6011 disclosure rules, a 

listed transaction is a transaction that is 

the same as, or substantially similar to, 

a transaction that the IRS has 

determined to be a tax avoidance 

transaction and identified by notice, 

regulation, or other form of published 

guidance. Treas. Reg. § 1.6011–4(b)(2). 

For a list of transactions the IRS has 

identified as listed transactions, see 

Notice 2009–59, 2009–31 IRB 1. See 

§ 601.601(d)(2). 

If the section 6011 disclosure rules 

require a taxpayer to disclose a listed 

transaction, the taxpayer must complete 

and file a disclosure statement in 

accordance with the section 6011 

disclosure rules. The section 6011 

disclosure rules currently require that 

Form 8886, ‘‘Reportable Transaction 

Disclosure Statement’’ (or successor 

form), be used as the disclosure 

statement and be completed in 

accordance with the instructions to the 

form. The Form 8886 (or successor 

form) generally must be attached to the 

taxpayer’s original or amended tax 

return for each taxable year for which a 

taxpayer participates in a listed 

transaction. Treas. Reg. § 1.6011–4(e)(1). 

If a listed transaction results in a loss 

that is carried back to a prior year, Form 

8886 (or successor form) must be 

attached to the taxpayer’s application 

for tentative refund or amended tax 

return for that prior year. The taxpayer 

also must send a copy of Form 8886 (or 

successor form) to the IRS Office of Tax 

Shelter Analysis (OTSA), generally at 

the same time that a disclosure 

statement pertaining to a particular 

listed transaction is first filed. Under the 

current rules, when a transaction is 

identified as a listed transaction after 

the date on which the taxpayer files a 

tax return (including an amended 

return) for a taxable year reflecting the 

taxpayer’s participation in the listed 

transaction 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, then the taxpayer must file 

Form 8886 (or successor form) with 

OTSA within 90 calendar days after the 

date the transaction became a listed 

transaction. 

If a taxpayer does not disclose its 

participation in a listed transaction in 

accordance with all of the requirements 

of the section 6011 disclosure rules and 

section 6501(c)(10) applies, then the 

time to assess tax related to the listed 

transaction will expire no earlier than 

the earlier of (1) one year after the date 

on which the information described in 

section 6501(c)(10)(A) is provided, or (2) 

one year after the date on which the 

information described in section 

6501(c)(10)(B) is provided. 

The IRS and Treasury Department 

issued Rev. Proc. 2005–26 (2005–1 CB 

965) on April 25, 2005, to provide 

interim guidance on section 6501(c)(10). 

The revenue procedure prescribes how 

taxpayers and material advisors should 

disclose listed transactions that were 

not properly disclosed under section 

6011 in order to start the one-year 

period under section 6501(c)(10). 

On October 7, 2009, a notice of 

proposed rulemaking (REG–160871–04) 

relating to the section 6501(c)(10) 

exception to the general three-year 

period of limitations on assessment that 

applies if a taxpayer fails to disclose a 

listed transaction as required under 

section 6011 was published in the 

Federal Register (74 FR 51527). The 

preamble of the notice of proposed 


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rulemaking provided that taxpayers may 

continue to rely on the rules in Rev. 

Proc. 2005–26 until temporary or final 

regulations are issued under section 

6501(c)(10). No comments were 

received from the public in response to 

the notice of proposed rulemaking. No 

public hearing was requested or held. 

The proposed regulations are adopted as 

revised by this Treasury decision. 

Explanation of Revisions 

These final regulations adopt the 

proposed regulations with four 

substantive clarifications. First, 

§ 301.6501(c)–1(g)(1) is clarified with 

respect to the interaction of the one-year 

period of limitations on assessment after 

disclosure of a listed transaction under 

section 6501(c)(10) and the general 

three-year period of limitations on 

assessment under section 6501(a) (or 

other applicable limitations period 

under section 6501). The one-year 

period in section 6501(c)(10) serves only 

to extend the existing limitations 

period. For example, if the general 

section 6501(a) three-year period of 

limitations on assessment applies and 

the one-year period under section 

6501(c)(10) ends prior to the expiration 

of the section 6501(a) three-year period, 

the assessment period for the tax year 

remains open until the expiration of the 

general three-year period. Proposed 

section 301.6501(c)–1(g)(8), Example 5 

(renumbered as Example 6 in the final 

regulations) and Example 9, illustrated 

this point. However, the text of the 

proposed regulations did not 

specifically provide that in no case will 

the period of limitations be shorter than 

the period of limitations that would 

apply without regard to application of 

section 301.6501(c)–1(g). A sentence 

was added to the end of § 301.6501(c)– 

1(g)(1) to clarify this point. 

Second, the final regulations revise 

§ 301.6501(c)–1(g)(6) to clarify when a 

disclosure will be considered a 

disclosure by a material advisor for 

purposes of section 6501(c)(10)(B) so 

that the one-year period of limitations 

on assessment will begin. Under section 

6501(c)(10)(B), if a taxpayer fails to 

disclose information related to a listed 

transaction, the time to assess tax will 

end no earlier than one year after the 

date that ‘‘a material advisor meets the 

requirements of section 6112 with 

respect to a request by the Secretary 

under section 6112(b) relating to such 

transaction with respect to such 

taxpayer.’’ This means that unless a 

material advisor furnishes the 

information with respect to the taxpayer 

in response to an IRS written request for 

the list under section 6112(b) and in 

accordance with section 6112, the oneyear period under section 6501(c)(10)(B) 

will not begin. Accordingly, receipt of 

information from a person other than 

the material advisor with respect to the 

taxpayer will not satisfy the 

requirements of a disclosure for 

purposes of section 6501(c)(10)(B). The 

final regulations add § 301.6501(c)– 

1(g)(6)(ii)(A) to clarify that, consistent 

with the statutory language, except in 

limited circumstances related to 

dissolution or liquidation of an entity 

that is a material advisor or in the case 

of a designation agreement, only receipt 

of information furnished by the material 

advisor will satisfy the requirements for 

disclosure under § 301.6501(c)–1(g)(6). 

Third, the final regulations clarify that 

information received by the IRS in 

circumstances other than in response to 

a section 6112 request, such as in 

response to an Information Document 

Request in a section 6700 investigation 

or as a result of a summons enforcement 

proceeding, will not begin the one-year 

period under § 301.6501(c)–1(g)(6). 

Proposed section 301.6501(c)–1(g)(8), 

Example 10, illustrated this point. 

However, the text of the proposed 

regulations did not specifically address 

this point. The final regulations have 

been revised to add § 301.6501(c)– 

1(g)(6)(ii)(B) to provide that information 

not furnished in response to a section 

6112 request will not satisfy the 

requirements under § 301.6501(c)– 

1(g)(6) even if provided by the material 

advisor, unless furnished to OTSA in 

accordance with § 301.6112–1(d) in the 

case of material advisors that are 

liquidated or dissolved. 

Fourth, the final regulations clarify 

that if a material advisor furnishes 

information described in § 301.6112– 

1(e), but does not furnish information 

identifying the taxpayer as a person who 

entered into the listed transaction, the 

requirements of section 6501(c)(10)(B) 

will not have been satisfied for that 

taxpayer. Proposed section 301.6501(c)– 

1(g)(8), Example 11, illustrated this 

point. However, the text of the proposed 

regulations did not specifically address 

this point. The final regulations have 

been revised to add § 301.6501(c)– 

1(g)(6)(ii)(C) for clarification. 

In addition to the revisions described 

above, other minor clarifying changes 

have been made that are not intended to 

be substantive. 

These final regulations apply to 

taxable years for which the period of 

limitation on assessment under section 

6501, including the period of limitation 

set forth in section 6501(c)(10) and 

§ 301.6510(c)–1(g), did not expire before 

March 31, 2015, the date these final 

regulations are published in the Federal 

Register. 

Effect on Other Documents 

Upon the publication of these final 

regulations under section 6501(c)(10) in 

the Federal Register, Rev. Proc. 2005–26 

(2005–1 CB 965), is superseded for 

taxable years with respect to which the 

period of limitations on assessment 

under section 6501 (including section 

6501(c)(10)) did not expire before March 

31, 2015. Rev. Proc. 2005–26 (2005–1 

CB 965) will continue to apply to 

taxable years with respect to which the 

period of limitations on assessment 

expired on or after April 8, 2005, and 

before March 31, 2015, although as 

provided in the proposed regulations, 

taxpayers could rely on the rules in the 

notice of proposed rulemaking (REG– 

160871–04) under section 6501(c)(10) 

published in the Federal Register (74 

FR 51527) on October 7, 2009, until 

these final rules are published in this 

Treasury decision. 

Special Analyses 

It has been determined that these final 

regulations are not a significant 

regulatory action as defined in 

Executive Order 12866, as 

supplemented by Executive Order 

13653. 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. 

It is hereby certified that the 

collection of information contained in 

these regulations will not have a 

significant economic impact on a 

substantial number of small entities. 

Accordingly, a regulatory flexibility 

analysis is not required under the 

Regulatory Flexibility Act (5 U.S.C. 

chapter 6). Section 6501(c)(10) applies 

when taxpayers fail to comply with the 

reporting requirements set forth under 

section 6011 with respect to listed 

transactions. The Treasury Department 

and the IRS do not know the exact 

number and types of taxpayers that fail 

to comply with those requirements. 

However, although the Treasury 

Department and the IRS are aware that 

many tax avoidance transactions 

involve pass-through entities, when 

pass-through entities are utilized, the 

entities are not ultimately liable for the 

tax; rather, the taxpayers subject to 

section 6501(c)(10) will be the 

individuals and corporations owning, 

directly or indirectly, the interests in the 

pass-through entities. Therefore, the 

Treasury Department and the IRS have 

determined that these final regulations 

will not affect a substantial number of 

small entities. 


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In addition, the Treasury Department 

and the IRS have determined that any 

impact on small entities resulting from 

these final regulations will not be 

significant. Most of the information 

required under these final regulations is 

already required by other regulations or 

forms, namely, § 1.6011–4, § 301.6112– 

1, and Form 8886, ‘‘Reportable 

Transaction Disclosure Statement.’’ The 

only new information required to be 

submitted to the IRS is a cover letter, 

which must contain a reference to the 

tax returns and taxable year(s) at issue 

and a statement signed under penalty of 

perjury. The cover letter should take 

minimal time and expense to prepare. 

Therefore, the additional requirement of 

the cover letter should not significantly 

increase the burden on taxpayers. Based 

on these facts, the Treasury Department 

and the IRS have determined that these 

final regulations will not have a 

significant economic impact on a 

substantial number of small entities. 

Pursuant to section 7805(f) of the 

Internal Revenue Code, the notice of 

proposed rulemaking preceding this 

regulation 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 author of these 

regulations is Danielle Pierce of the 

Office of the Associate Chief Counsel 

(Procedure and Administration). 

List of Subjects in 26 CFR Part 301 

Employment taxes, Estate taxes, 

Excise taxes, Gift taxes, Income taxes, 

Penalties, Reporting and recordkeeping 

requirements. 

Adoption of Amendments to the 

Regulations 

Accordingly, 26 CFR part 301 is 

amended as follows: 

PART 301—PROCEDURE AND 

ADMINISTRATION 

■ Paragraph 1. The authority citation 

for part 301 continues to read in part as 

follows: 

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

■ Par. 2. Section 301.6501(c)–1 is 

amended by adding paragraph (g) to 

read as follows: 

§ 301.6501(c)–1 Exceptions to general 

period of limitations on assessment and 

collection. 

* * * * * 

(g) Listed transactions—(1) In general. 

If a taxpayer is required to disclose a 

listed transaction under section 6011 

and the regulations thereunder and does 

not do so in the time and manner 

required, then the time to assess any tax 

attributable to that listed transaction for 

the taxable year(s) to which the failure 

to disclose relates (as defined in 

paragraph (g)(3)(iii) of this section) will 

not expire before the earlier of one year 

after the date on which the taxpayer 

makes the disclosure described in 

paragraph (g)(5) of this section or one 

year after the date on which a material 

advisor makes a disclosure described in 

paragraph (g)(6) of this section. In no 

case will the operation of this paragraph 

(g) cause the period of limitations on 

assessment to expire any earlier than the 

period that would have otherwise 

applied under this section determined 

without regard to this paragraph (g)(1). 

(2) Limitations period if paragraph 

(g)(5) or (g)(6) is satisfied. If one of the 

disclosure provisions described in 

paragraphs (g)(5) or (6) of this section is 

satisfied, then the tax attributable to the 

listed transaction may be assessed at 

any time before the expiration of the 

limitations period that would have 

otherwise applied under this section 

(determined without regard to 

paragraph (g)(1) of this section) or the 

period ending one year after the date 

that one of the disclosure provisions 

described in paragraphs (g)(5) or (6) of 

this section was satisfied, whichever is 

later. If both disclosure provisions are 

satisfied, the one-year period will begin 

on the earlier of the dates on which the 

provisions were satisfied. Paragraph 

(g)(1) of this section does not apply to 

any period of limitations on assessment 

that expired before the date on which 

the failure to disclose the listed 

transaction under section 6011 

occurred. 

(3) Definitions—(i) Listed transaction. 

The term listed transaction means a 

transaction described in section 

6707A(c)(2) of the Code and § 1.6011– 

4(b)(2) of this chapter. 

(ii) Material advisor. The term 

material advisor means a person 

described in section 6111(b)(1) of the 

Code and § 301.6111–3(b) of this 

chapter. 

(iii) Taxable year(s) to which the 

failure to disclose relates. The taxable 

year(s) to which the failure to disclose 

relates are each taxable year that the 

taxpayer participated (as defined under 

section 6011 and the regulations 

thereunder) in a transaction that was 

identified as a listed transaction and the 

taxpayer failed to disclose the listed 

transaction as required under section 

6011. If the taxable year in which the 

taxpayer participated in the listed 

transaction is different from the taxable 

year in which the taxpayer is required 

to disclose the listed transaction under 

section 6011, the taxable year(s) to 

which the failure to disclose relates are 

each taxable year that the taxpayer 

participated in the transaction. 

(4) Application of paragraph with 

respect to pass-through entities. In the 

case of taxpayers who are partners in 

partnerships, shareholders in S 

corporations, or beneficiaries of trusts 

and are required to disclose a listed 

transaction under section 6011 and the 

regulations thereunder, paragraph (g)(1) 

of this section will apply to a particular 

partner, shareholder, or beneficiary if 

that particular partner, shareholder, or 

beneficiary does not disclose within the 

time and in the form and manner 

provided by section 6011 and § 1.6011– 

4(d) and (e), regardless of whether the 

partnership, S corporation, or trust or 

another partner, shareholder, or 

beneficiary discloses in accordance with 

section 6011 and the regulations 

thereunder. Similarly, because 

paragraph (g)(1) of this section applies 

on a taxpayer-by-taxpayer basis, the 

failure of a partnership, S corporation, 

or trust that has a disclosure obligation 

under section 6011 and that does not 

disclose within the time or in the form 

and manner provided by § 1.6011–4(d) 

and (e) will not cause paragraph (g)(1) 

of this section to apply to a partner, 

shareholder or beneficiary of the entity. 

Instead, the application of paragraph 

(g)(1) of this section to a partner, 

shareholder, or beneficiary will be 

determined based on whether the 

particular partner, shareholder, or 

beneficiary satisfied their disclosure 

obligation under section 6011 and the 

regulations thereunder. 

(5) Taxpayer’s disclosure of a listed 

transaction that the taxpayer did not 

properly disclose under section 6011— 

(i) In general—(A) Method of disclosure. 

The taxpayer must complete the most 

current version of Form 8886, 

‘‘Reportable Transaction Disclosure 

Statement’’ (or successor form), 

available on the date the taxpayer 

attempts to satisfy this paragraph (g)(5) 

in accordance with § 1.6011–4(d) and 

the instructions to the Form in effect on 

that date. The taxpayer must indicate on 

the Form 8886 that the form is being 

submitted for purposes of section 

6501(c)(10) and the tax return(s) and 

taxable year(s) for which the taxpayer is 

making a section 6501(c)(10) disclosure. 

Disclosure under this paragraph (g)(5) 

will only be effective for the tax 

return(s) and taxable year(s) that the 

taxpayer specifies on the Form 8886 that 

he or she is attempting to disclose for 

purposes of section 6501(c)(10). If the 

Form 8886 contains a line for this 

purpose, then the taxpayer must 

complete the line in accordance with 


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Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Rules and Regulations 16977 

the instructions to that form. Otherwise, 

the taxpayer must include on the top of 

Page 1 of the Form 8886, and each copy 

of the form, the following statement: 

‘‘Section 6501(c)(10) Disclosure’’ 

followed by the tax return(s) and taxable 

year(s) for which the taxpayer is making 

a section 6501(c)(10) disclosure. For 

example, if the taxpayer did not 

properly disclose its participation in a 

listed transaction the tax consequences 

of which were reflected on the 

taxpayer’s Form 1040 for the 2005 

taxable year, the taxpayer must include 

the following statement: ‘‘Section 

6501(c)(10) Disclosure; 2005 Form 

1040’’ on the form. The taxpayer must 

submit the properly completed Form 

8886 and a cover letter, which must be 

completed in accordance with the 

requirements set forth in paragraph 

(g)(5)(i)(B) of this section, to the Office 

of Tax Shelter Analysis (OTSA). The 

taxpayer is permitted, but not required, 

to file an amended return with the Form 

8886 and cover letter. Separate Forms 

8886 and separate cover letters must be 

submitted for each listed transaction the 

taxpayer did not properly disclose 

under section 6011. If the taxpayer 

participated in one listed transaction 

over multiple years, the taxpayer may 

submit one Form 8886 (or successor 

form) and cover letter and indicate on 

that form all of the tax returns and 

taxable years for which the taxpayer is 

making a section 6501(c)(10) disclosure. 

If a taxpayer participated in more than 

one listed transaction, then the taxpayer 

must submit separate Forms 8886 (or 

successor form) for each listed 

transaction, unless the listed 

transactions are the same or 

substantially similar, in which case all 

the listed transactions may be reported 

on one Form 8886. 

(B) Cover letter. (1) A cover letter to 

which a Form 8886 is to be attached 

must identify the tax return(s) and 

taxable year(s) for which the taxpayer is 

making a section 6501(c)(10) disclosure 

and include the following statement 

signed under penalties of perjury by the 

taxpayer: 

Under penalties of perjury, I declare that I 

have examined this reportable transaction 

disclosure statement and, to the best of my 

knowledge and belief, this reportable 

transaction disclosure statement is true, 

correct, and complete. 

(2) If the Form 8886 is prepared by a 

paid preparer, in addition to the 

statement under penalties of perjury 

signed by the taxpayer, the Form 8886 

must also include the following 

statement signed under penalties of 

perjury by the paid preparer. 

Under penalties of perjury, I declare that I 

have examined this reportable transaction 

disclosure statement and, to the best of my 

knowledge and belief, this reportable 

transaction disclosure statement is true, 

correct, and complete. This declaration is 

based on all information of which I, as paid 

preparer, have any knowledge. 

(C) Taxpayer under examination or 

Appeals consideration. A taxpayer 

making a disclosure under paragraph 

(g)(5) of this section with respect to a 

taxable year under examination or 

Appeals consideration by the IRS must 

satisfy the requirements of paragraphs 

(g)(5)(i)(A) and (B) of this section and 

also submit a copy of the submission to 

the IRS examiner or Appeals officer 

examining or considering the taxable 

year(s) to which the disclosure under 

this paragraph (g) relates. 

(D) Date the one-year period will 

begin to run if paragraph (g)(5) satisfied. 

Unless an earlier expiration is provided 

for in paragraph (g)(6) of this section, 

the time to assess tax under paragraph 

this (g) will not expire before one year 

after the date on which the Secretary is 

furnished the information from the 

taxpayer that satisfies all the 

requirements of paragraphs (g)(5)(i)(A) 

and (B) of this section and, if applicable, 

paragraph (g)(5)(i)(C) of this section. If 

the taxpayer does not satisfy all of the 

requirements on the same date, the oneyear period will begin on the date that 

the IRS is furnished the information 

that, together with prior disclosures of 

information, satisfies the requirements 

of this paragraph (g)(5). For purposes of 

this paragraph (g)(5), the information is 

deemed furnished on the date the IRS 

receives the information. 

(ii) Exception for returns other than 

annual returns. The IRS may prescribe 

alternative procedures to satisfy the 

requirements of this paragraph (g)(5) in 

a revenue procedure, notice, or other 

guidance published in the Internal 

Revenue Bulletin for circumstances 

involving returns other than annual 

returns. 

(6) Material advisor’s disclosure of a 

listed transaction not properly disclosed 

by a taxpayer under section 6011—(i) In 

general. In response to a written request 

of the IRS under section 6112, a material 

advisor with respect to a listed 

transaction must furnish to the IRS the 

information described in section 6112 

and § 301.6112–1(b) in the form and 

manner prescribed by section 6112 and 

§ 301.6112–1(e). If the information the 

material advisor furnishes identifies the 

taxpayer as a person who entered into 

the listed transaction, regardless of 

whether the material advisor provides 

the information before or after the 

taxpayer’s failure to disclose the listed 

transaction under section 6011, then the 

requirements of this paragraph (g)(6) 

will be satisfied for that taxpayer. The 

requirements of this paragraph (g)(6) 

will be considered satisfied even if the 

material advisor furnishes the 

information required under section 6112 

to the IRS after the date prescribed in 

section 6708 or published guidance 

relating to section 6708. 

(ii) Paragraph (g)(6) not satisfied—(A) 

Information not furnished by a material 

advisor or a person permitted to act on 

behalf of the material advisor. The 

requirements of this paragraph (g)(6) are 

not satisfied for a taxpayer unless the 

information is furnished by— 

(1) A person who is a material advisor 

(as defined in paragraph (g)(3)(ii) of this 

section) with respect to the taxpayer, 

(2) A person who is providing the 

information pursuant to § 301.6112–1(d) 

on behalf of a dissolved or liquidated 

material advisor with respect to the 

taxpayer, or 

(3) a person who is providing the 

information on behalf of a material 

advisor with respect to the taxpayer 

under a designation agreement in 

accordance with § 301.6112–1(f). 

(B) No written request by IRS. The 

requirements of this paragraph (g)(6) are 

not satisfied unless the information is 

furnished in response to a written 

request made by the IRS to the material 

advisor under section 6112 (except as 

provided in § 301.6112–1(d) with 

respect to a list furnished to OTSA 

within 60 days after dissolution or 

liquidation of a material advisor). 

(C) Information furnished does not 

identify the taxpayer. The requirements 

of this paragraph (g)(6) are not satisfied 

for a taxpayer unless the information 

furnished identifies the taxpayer as a 

person who entered into the listed 

transaction. 

(iii) Date the one-year period will 

begin if paragraph (g)(6) is satisfied. 

Unless an earlier expiration is provided 

for in paragraph (g)(5) of this section, 

the time to assess tax under this 

paragraph (g) will expire one year after 

the date on which the material advisor 

satisfies the requirements of paragraph 

(g)(6)(i) of this section with respect to 

the taxpayer. For purposes of this 

paragraph (g)(6), information is deemed 

to be furnished on the date that, in 

response to a request under section 

6112, the IRS receives the information 

from a material advisor that satisfies the 

requirements of paragraph (g)(6)(i) of 

this section with respect to the taxpayer. 

(7) Tax assessable under this section. 

If the period of limitations on 

assessment for a taxable year remains 

open under this section, the Secretary 

has authority to assess any tax with 


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16978 Federal Register / Vol. 80, No. 61 / Tuesday, March 31, 2015 / Rules and Regulations 

respect to the listed transaction in that 

year. This includes, but is not limited 

to, adjustments made to the tax 

consequences claimed on the return 

plus interest, additions to tax, 

additional amounts, and penalties that 

are related to the listed transaction or 

adjustments made to the tax 

consequences. This also includes any 

item to the extent the item is affected by 

the listed transaction even if it is 

unrelated to the listed transaction. An 

example of an item affected by, but 

unrelated to, a listed transaction is the 

threshold for the medical expense 

deduction under section 213 that varies 

if there is a change in an individual’s 

adjusted gross income. An example of a 

penalty related to the listed transaction 

is the penalty under section 6707A for 

failure to file the disclosure statement 

reporting the taxpayer’s participation in 

the listed transaction. Examples of 

penalties related to the adjustments 

made to the tax consequences are the 

accuracy-related penalties under 

sections 6662 and 6662A. 

(8) Examples. The rules of this 

paragraph (g) are illustrated by the 

following examples: 

Example 1. No requirement to disclose 

under section 6011. P, an individual, is a 

partner in a partnership that entered into a 

transaction in 2001 that was the same as or 

substantially similar to the transaction 

identified as a listed transaction in Notice 

2000–44 (2000–2 CB 255). P claimed a loss 

from the transaction on his Form 1040 for the 

tax year 2001. P filed the Form 1040 prior to 

June 14, 2002. P did not disclose his 

participation in the listed transaction because 

P was not required to disclose the transaction 

under the applicable section 6011 regulations 

(TD 8961), which were effective for any 

transaction entered into before January 1, 

2001 and any transaction entered into on or 

after January 1, 2001 that was reported on a 

return of the taxpayer filed on or before June 

14, 2002. Although the transaction was a 

listed transaction and P did not disclose the 

transaction, P had no obligation to include on 

any return or statement any information with 

respect to a listed transaction within the 

meaning of section 6501(c)(10) because TD 

8961 only applied to corporations, not 

individuals. Accordingly, section 6501(c)(10) 

does not apply. 

Example 2. Taxable year to which the 

failure to disclose relates when transaction is 

identified as a listed transaction after first 

year of participation and the transaction 

must be disclosed with the return next filed. 

(i) On December 30, 2003, Y, a corporation, 

enters into a transaction that at the time is 

not a reportable transaction. On March 15, 

2004, Y timely files its 2003 Form 1120, 

reporting the tax consequences from the 

transaction. On April 1, 2004, the IRS issues 

Notice 2004–31 that identifies the transaction 

as a listed transaction. Y also reports tax 

consequences from the transaction on its 

2004 Form 1120, which it timely filed on 

March 15, 2005. Y did not attach a completed 

Form 8886 to its 2004 Form 1120 and did not 

send a copy of the form to OTSA. The general 

three-year period of limitations on 

assessment for Y’s 2003 and 2004 taxable 

years would expire on March 15, 2007, and 

March 17, 2008, respectively. 

(ii) The period of limitations on assessment 

for Y’s 2003 taxable year was open on the 

date the transaction was identified as a listed 

transaction. Under the applicable section 

6011 regulations (TD 9108), which were 

effective for transactions entered into before 

August 3, 2007, Y should have disclosed its 

participation in the transaction with its next 

filed return, which was its 2004 Form 1120, 

but Y did not disclose its participation. Y’s 

failure to disclose with the 2004 Form 1120 

relates to taxable years 2003 and 2004. 

Section 6501(c)(10) operates to keep the 

period of limitations on assessment open for 

the 2003 and 2004 taxable years with respect 

to the listed transaction until at least one year 

after the date Y satisfies the requirements of 

paragraph (g)(5) of this section or a material 

advisor satisfies the requirements of 

paragraph (g)(6) of this section with respect 

to Y. 

Example 3. Taxable year to which the 

failure to disclose relates when transaction is 

identified as a listed transaction after the 

first year of participation and the transaction 

must be disclosed 90 days after the 

transaction became a listed transaction. (i) In 

January 2015, A, a calendar year taxpayer, 

enters into a transaction that at the time is 

not a listed transaction. A reports the tax 

consequences from the transaction on its 

individual income tax return for 2015 timely 

filed on April 15, 2016. The time for the IRS 

to assess tax against A under the general 

three-year period of limitations for A’s 2015 

taxable year would expire on April 15, 2019. 

A only participated in the transaction in 

2015. On March 7, 2017, the IRS identifies 

the transaction as a listed transaction. A does 

not file the Form 8886 with OTSA by June 

5, 2017. 

(ii) The period of limitations on assessment 

for A’s 2015 taxable year was open on the 

date the transaction was identified as a listed 

transaction. Under the current section 6011 

regulations (TD 9350) which are effective for 

transactions entered into on or after August 

3, 2007, A must disclose its participation in 

the transaction by filing a completed Form 

8886 with OTSA on or before June 5, 2017, 

which is 90 days after the date the 

transaction became a listed transaction. A did 

not disclose the transaction as required. A’s 

failure to disclose relates to taxable year 2015 

even though the obligation to disclose did 

not arise until 2017. Section 6501(c)(10) 

operates to keep the period of limitations on 

assessment open for the 2015 taxable year 

with respect to the listed transaction until at 

least one year after the date A satisfies the 

requirements of paragraph (g)(5) of this 

section or a material advisor satisfies the 

requirements of paragraph (g)(6) of this 

section with respect to A. 

Example 4. Requirements of paragraph 

(g)(6) satisfied. Same facts as Example 3, 

except that on April 5, 2019, the IRS hand 

delivers to Advisor J, who is a material 

advisor, a section 6112 request related to the 

listed transaction. Advisor J furnishes the 

required list with all the information 

required by section 6112 and § 301.6112–1, 

including all the information required with 

respect to A, to the IRS on May 8, 2019. The 

submission satisfies the requirements of 

paragraph (g)(6) even though Advisor J 

furnishes the information outside of the 20- 

business-day period provided in section 

6708. Accordingly, under section 6501(c)(10), 

the period of limitations with respect to A’s 

taxable year 2015 will end on May 8, 2020, 

one year after the IRS received the required 

information, unless the period of limitations 

remains open under another exception. Any 

tax for the 2015 taxable year not attributable 

to the listed transaction must be assessed by 

April 15, 2019. 

Example 5. Requirements of paragraph 

(g)(5) also satisfied. Same facts as Examples 

3 and 4, except that on May 23, 2019, A files 

a properly completed Form 8886 and signed 

cover letter with OTSA both identifying that 

the section 6501(c)(10) disclosure relates to 

A’s Form 1040 for 2015. A satisfied the 

requirements of paragraph (g)(5) of this 

section as of May 23, 2019. Because the 

requirements of paragraph (g)(6) were 

satisfied first as described in Example 4, 

under section 6501(c)(10) the period of 

limitations will end on May 8, 2020 (one year 

after the requirements of paragraph (g)(6) 

were satisfied) instead of May 23, 2020 (one 

year after the requirements of paragraph 

(g)(5) were satisfied). Any tax for the 2015 

taxable year not attributable to the listed 

transaction must be assessed by April 15, 

2019. 

Example 6. Period to assess tax remains 

open under another exception. Same facts as 

Examples 3, 4, and 5, except that on April 

1, 2019, A signed Form 872, consenting to 

extend, without restriction, its period of 

limitations on assessment for taxable year 

2015 under section 6501(c)(4) until July 15, 

2020. In that case, although under section 

6501(c)(10) the period of limitations would 

otherwise expire on May 8, 2020, the IRS 

may assess tax with respect to the listed 

transaction (as well as any other item on the 

return covered by the Form 872 extension) at 

any time up to and including July 15, 2020, 

pursuant to section 6501(c)(4). Section 

6501(c)(10) operates to extend the assessment 

period but not to shorten any other 

applicable assessment period. 

Example 7. Requirements of (g)(5) not 

satisfied. In 2015, X, a corporation, enters 

into a listed transaction. On March 15, 2016, 

X timely files its 2015 Form 1120, reporting 

the tax consequences from the transaction. X 

does not disclose the transaction as required 

under section 6011 when it files its 2015 

return. The failure to disclose relates to 

taxable year 2015. On February 13, 2017, X 

completes and files a Form 8886 with respect 

to the listed transaction with OTSA but does 

not submit a cover letter, as required. The 

requirements of paragraph (g)(5) of this 

section have not been satisfied. Therefore, 

the time to assess tax against X with respect 

to the transaction for taxable year 2015 

remains open under section 6501(c)(10). 

Example 8. Section 6501(c)(10) applies to 

keep one partner’s period of limitations on 

assessment open. T and S are partners in a 


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partnership, TS, that enters into a listed 

transaction in 2015. T and S each receive a 

Schedule K–1 from TS on April 11, 2016. On 

April 15, 2016, TS, T and S each file their 

2015 returns. Under the applicable section 

6011 regulations, TS, T, and S each are 

required to disclose the transaction. TS 

attaches a completed Form 8886 to its 2015 

Form 1065 and sends a copy of Form 8886 

to OTSA. Neither T nor S files a disclosure 

statement with their respective returns nor 

sends a copy to OTSA on April 15, 2016. On 

May 17, 2016, T timely files a completed 

Form 8886 with OTSA pursuant to § 1.6011– 

4(e)(1). T’s disclosure is timely because T 

received the Schedule K–1 within 10 

calendar days before the due date of the 

return and, thus, T had 60 calendar days to 

file Form 8886 with OTSA. TS and T 

properly disclosed the transaction in 

accordance with the applicable regulations 

under section 6011, but S did not. S’s failure 

to disclose relates to taxable year 2015. The 

time to assess tax with respect to the 

transaction against S for 2015 remains open 

under section 6501(c)(10) even though TS 

and T disclosed the transaction. 

Example 9. Section 6501(c)(10) satisfied 

before expiration of three-year period of 

limitations under section 6501(a). Same facts 

as Example 8, except that on August 26, 

2016, S satisfies the requirements of 

paragraph (g)(5) of this section. No material 

advisor satisfied the requirements of 

paragraph (g)(6) of this section with respect 

to S on a date earlier than August 26, 2016. 

Under section 6501(c)(10), the period of time 

in which the IRS may assess tax against S 

with respect to the listed transaction would 

expire no earlier than August 26, 2017, one 

year after the date S satisfied the 

requirements of paragraph (g)(5). As the 

general three-year period of limitations on 

assessment under section 6501(a) does not 

expire until April 15, 2019, the IRS will have 

until that date to assess any tax with respect 

to the listed transaction. 

Example 10. No section 6112 request. B, a 

calendar year taxpayer, entered into a listed 

transaction in 2015. B did not comply with 

the applicable disclosure requirements under 

section 6011 for taxable year 2015; therefore, 

section 6501(c)(10) applies to keep the period 

of limitations on assessment open with 

respect to the tax related to the transaction 

until at least one year after B satisfies the 

requirements of paragraph (g)(5) of this 

section or a material advisor satisfies the 

requirements of paragraph (g)(6) of this 

section with respect to B. In June 2016, the 

IRS conducts a section 6700 investigation of 

Advisor K, who is a material advisor to B 

with respect to the listed transaction. During 

the course of the investigation, the IRS 

obtains the name, address, and TIN of all of 

Advisor K’s clients who engaged in the 

transaction, including B. The information 

provided does not satisfy the requirements of 

paragraph (g)(6) with respect to B because the 

information was not provided pursuant to a 

section 6112 request. Therefore, the time to 

assess tax against B with respect to the 

transaction for taxable year 2015 remains 

open under section 6501(c)(10). 

Example 11. Section 6112 request but the 

requirements of paragraph (g)(6) are not 

satisfied with respect to B. Same facts as 

Example 10, except that on January 9, 2017, 

the IRS sends by certified mail a section 6112 

request to Advisor L, who is another material 

advisor to B with respect to the listed 

transaction. Advisor L furnishes some of the 

information required under section 6112 and 

§ 301.6112–1 to the IRS for inspection on 

January 17, 2017. The list includes 

information with respect to many clients of 

Advisor L, but it does not include any 

information with respect to B. The 

submission does not satisfy the requirements 

of paragraph (g)(6) of this section with 

respect to B. Therefore, the time to assess tax 

against B with respect to the transaction for 

taxable year 2015 remains open under 

section 6501(c)(10). 

Example 12. Section 6112 submission 

made before taxpayer failed to disclose a 

listed transaction. Advisor M, who is a 

material advisor, advises C, an individual, in 

2015 with respect to a transaction that is not 

a reportable transaction at that time. C files 

its return claiming the tax consequences of 

the transaction on April 15, 2016. The time 

for the IRS to assess tax against C under the 

general three-year period of limitations for 

C’s 2015 taxable year would expire on April 

15, 2019. The IRS identifies the transaction 

as a listed transaction on November 3, 2017. 

On December 7, 2017, the IRS hand delivers 

to Advisor M a section 6112 request related 

to the transaction. Advisor M furnishes the 

information to the IRS on December 29, 2017. 

The information contains all the required 

information with respect to Advisor M’s 

clients, including C. C does not disclose the 

transaction on or before February 1, 2018, as 

required under section 6011 and the 

regulations under section 6011. Advisor M’s 

submission under section 6112 satisfies the 

requirements of paragraph (g)(6) of this 

section even though it occurred prior to C’s 

failure to disclose the listed transaction. 

Thus, under section 6501(c)(10), the period 

of limitations to assess tax against C with 

respect to the listed transaction will end on 

December 29, 2018 (one year after the 

requirements of paragraph (g)(6) of this 

section were satisfied), unless the period of 

limitations remains open under another 

exception. 

Example 13. Transaction removed from the 

category of listed transactions after taxpayer 

failed to disclose. D, a calendar year 

taxpayer, entered into a listed transaction in 

2015. D did not comply with the applicable 

disclosure requirements under section 6011 

for taxable year 2015; therefore, section 

6501(c)(10) applies to keep the period of 

limitations on assessment open with respect 

to the tax related to the transaction until at 

least one year after D satisfies the 

requirements of paragraph (g)(5) of this 

section or a material advisor satisfies the 

requirements of paragraph (g)(6) of this 

section with respect to D. In 2017, the IRS 

removes the transaction from the category of 

listed transactions because of a change in 

law. Section 6501(c)(10) continues to apply 

to keep the period of limitations on 

assessment open for D’s taxable year 2015. 

Example 14. Taxes assessed with respect to 

the listed transaction. (i) F, an individual, 

enters into a listed transaction in 2015. F files 

its 2015 Form 1040 on April 15, 2016, but 

does not disclose his participation in the 

listed transaction in accordance with section 

6011 and the regulations under section 6011. 

F’s failure to disclose relates to taxable year 

2015. Thus, section 6501(c)(10) applies to 

keep the period of limitations on assessment 

open with respect to the tax related to the 

listed transaction for taxable year 2015 until 

at least one year after the date F satisfies the 

requirements of paragraph (g)(5) of this 

section or a material advisor satisfies the 

requirements of paragraph (g)(6) of this 

section with respect to F. 

(ii) On July 2, 2020, the IRS completes an 

examination of F’s 2015 taxable year and 

disallows the tax consequences claimed as a 

result of the listed transaction. The 

disallowance of a loss increased F’s adjusted 

gross income. Due to the increase of F’s 

adjusted gross income, certain credits, such 

as the child tax credit, and exemption 

deductions were disallowed or reduced 

because of limitations based on adjusted 

gross income. In addition, F now is liable for 

the alternative minimum tax. The 

examination also uncovered that F claimed 

two deductions on Schedule C to which F 

was not entitled. Under section 6501(c)(10), 

the IRS can timely issue a statutory notice of 

deficiency (and assess in due course) against 

F for the deficiency resulting from (1) 

disallowing the loss, (2) disallowing the 

credits and exemptions to which F was not 

entitled based on F’s increased adjusted gross 

income, and (3) being liable for the 

alternative minimum tax. In addition, the IRS 

can assess any interest and applicable 

penalties related to those adjustments, such 

as the accuracy-related penalty under 

sections 6662 and 6662A and the penalty 

under section 6707A for F’s failure to 

disclose the transaction as required under 

section 6011 and the regulations under 

section 6011. The IRS cannot, however, 

pursuant to section 6501(c)(10), assess the 

increase in tax that would result from 

disallowing the two deductions on F’s 

Schedule C because those deductions are not 

related to, or affected by, the adjustments 

concerning the listed transaction. 

(9) Effective/applicability date. The 

rules of this paragraph (g) apply to 

taxable years with respect to which the 

period of limitations on assessment 

under section 6501 (including 

subsection (c)(10)) did not expire before 

March 31, 2015. 

John Dalrymple, 

Deputy Commissioner for Services and 

Enforcement. 

Approved: March 10, 2015. 

Mark J. Mazur, 

Assistant Secretary of the Treasury (Tax 

Policy). 

[FR Doc. 2015–07378 Filed 3–30–15; 8:45 am] 

BILLING CODE 4830–01–P 


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