(a) Purpose and scope. This section sets forth information reporting requirements under section 6038B concerning certain transfers of property to foreign corporations. Paragraph (b) of this section provides general rules explaining when and how to carry out the reporting required under section 6038B with respect to the transfers to foreign corporations. Paragraph (c) of this section and §1.6038B-1T(d) specify the information that is required to be reported with respect to certain transfers of property that are described in section 6038B(a)(1)(A) and 367(d), respectively. Section 1.6038B-1 (e) describes the filing requirements for property transfers described in section 367(e). Paragraph (f) of this section sets forth the consequences of a failure to comply with the requirements of section 6038B and this section. For effective dates, see paragraph (g) of this section. For rules regarding transfers to foreign partnerships, see section 6038B(a)(1)(B) and any regulations thereunder.
(b) Time and manner of reporting-
(1)
In
general- (i)
Reporting
procedure. Except for stock or securities qualifying under the special
reporting rule of §1.6038B-1(b)(2), and certain exchanges described in
section 354 or 356 (listed below), any U.S. person that makes a transfer
described in section 6038B(a)(1)(A), 367(d) or (e), is required to report
pursuant to section 6038B and the rules of §1.6038B-1 and must attach the
required information to Form 926, "Return by a U.S. Transferor of Property to a
Foreign Corporation." In addition, if the U.S. person files a statement under
§1.367(a)-3(d)(2)(vi)(C), a gain recognition agreement under
§1.367(a)-8, or a liquidation document under §1.367(e)-2(b), such
person must comply in all material respects with the requirements of such
section pursuant to the terms of the statement, gain recognition agreement, or
liquidation document, as applicable, in order to satisfy a reporting obligation
under section 6038B. For special rules regarding cash transfers made in tax
years beginning after February 5, 1999, see paragraphs (b)(3) and (g) of this
section. For purposes of determining a U.S. transferor that is subject to
section 6038B, the rules of §§1.367(a)-1(c) and
1.367(a)-3 (d) shall apply with
respect to a transfer described in section 367(a), and the rules of
§1.367(a)-1(c) shall apply with respect to a transfer described in section
367(d). Additionally, if in an exchange described in section 354 or 356, a U.S
person exchanges stock or securities of a foreign corporation in a
reorganization described in section 368(a)(1)(E), or a U.S. person exchanges
stock or securities of a domestic or foreign corporation pursuant to an asset
reorganization described in section 368(a)(1) (involving a transfer of assets
under section 361) that is not treated as an indirect stock transfer under
§1.367(a)-3(d), then the U.S. person exchanging stock or securities is not
required to report under section 6038B. Notwithstanding any statement to the
contrary on Form 926, the form and attachments must be attached to, and filed
by the due date (including extensions) of the transferor's income tax return
for the taxable year that includes the date of the transfer (as defined in
§1.6038B-1T(b)(4)). For taxable years beginning before January 1, 2003
any attachment to Form 926 required under the rules of this section is filed
subject to the transferor's declaration under penalties of perjury on Form 926
that the information submitted is true, correct and complete to the best of the
transferor's knowledge and belief. For taxable years beginning after December
31, 2002, Form 926 and any attachments shall be verified by signing the income
tax return with which the form and attachments are filed.
(ii)
Reporting by corporate
transferor. For transfers by corporations in taxable years beginning
before January 1, 2003, Form 926 must be signed by an authorized officer of the
corporation if the transferor is not a member of an affiliated group under
section 1504(a)(1) that files a consolidated Federal income tax return and by
an authorized officer of the common parent corporation if the transferor is a
member of such an affiliated group. For transfers by corporations in taxable
years beginning after December 31, 2002, Form 926 shall be verified by signing
the income tax return to which the form is attached.
(iii)
Transfers of jointly-owned
property. If two or more persons transfer jointly-owned property to a
foreign corporation in a transfer with respect to which a notice is required
under this section, then each person must report with respect to the particular
interest transferred, specifying the nature and extent of the interest
However, a husband and wife who jointly file a single Federal income tax return
may file a single Form 926 with their tax return.
(2)
Exceptions and special rules for
transfers of stock or securities under section 367(a)-
(i)
Transfers on or after July 20
1998. A U.S. person that transfers stock or securities on or after
July 20, 1998 in a transaction described in section 6038B(a)(1)(A) will be
considered to have satisfied the reporting requirement under section 6038B and
paragraph (b)(1) of this section if either-
(A) The U.S. transferor owned less than 5
percent of both the total voting power and the total value of the transferee
foreign corporation immediately after the transfer (taking into account the
attribution rules of section 318 as modified by section 958(b)), and either
(1) The U.S. transferor qualified for
nonrecognition treatment with respect to the transfer (i.e., the transfer was
not taxable under §§1.367(a)-3(b) or (c)); or
(2) The U.S. transferor is a tax-exempt
entity and the income was not unrelated business income; or
(3) The transfer was taxable to the U.S
transferor under §1.367(a)-3(c), and such person properly reported the
income from the transfer on its timely-filed (including extensions) Federal
income tax return for the taxable year that includes the date of the transfer;
or
(4) The transfer is considered
to be to a foreign corporation solely by reason of §1.83-6(d)(1) and the
fair market value of the property transferred did not exceed $100,000;
or
(B) The U.S.
transferor owned 5 percent or more of the total voting power or the total value
of the transferee foreign corporation immediately after the transfer (taking
into account the attribution rules of section 318 as modified by section
958(b)) and either: (1) Except as provided in
paragraph (b)(2)(iii) of this section, the U.S. transferor (or one or more
successors) filed an initial gain recognition agreement under §1.367(a)-8,
and filed Form 926 in accordance with paragraph (b)(2)(iv) of this section;
or
(2) The transferor is a
tax-exempt entity and the income was not unrelated business income;
or
(3) The transferor properly
reported the income from the transfer on its timely-filed (including
extensions) Federal income tax return for the taxable year that includes the
date of the transfer; or
(4) The
transfer is considered to be to a foreign corporation solely by reason of
§1.83-6(d)(1) and the fair market value of the property transferred did
not exceed $100,000.
(ii)
Transfers before July 20,
1998. With respect to transfers occurring after December 16, 1987, and
prior to July 20, 1998, a U.S. transferor that transferred U.S. or foreign
stock or securities in a transfer described in section 367(a) is not subject to
section 6038B if such person is described in paragraph (b)(2)(i)(A) of this
section.
(iii)
Timely filed
initial gain recognition agreement. Paragraph
(b)(2)(i)(B)(1) of this section will not apply unless the
initial gain recognition agreement is timely filed as determined under
§1.367(a)-8(d)(1), but for purposes of this section, determined without
regard to §1.367(a)-8(p). However, see paragraph (f)(3) of this section
for certain relief that may be available.
(iv)
Satisfaction of section 6038B
reporting if a gain recognition agreement is timely filed. If the U.S.
transferor is described in paragraph (b)(2)(i)(B)(1) of this
section and is not otherwise required to file a Form 926 with respect to a
transfer of assets other than the stock or securities to the transferee foreign
corporation, the requirements of this section are satisfied with respect to the
transfer of the stock or securities by completing Part I and Part II of Form
926, noting on the Form 926 that a gain recognition agreement is being filed
pursuant to §1.367(a)-8; reporting on the Form 926 the fair market value,
adjusted tax basis, and gain recognized with respect to the transferred stock
or securities; submitting on the Form 926 any other information that Form 926,
its accompanying instructions, or other applicable guidance require to be
submitted with respect to the transfer of the stock or...
