Tax News

CCH (cch.taxgroup.com) reports:

The IRS has issued an updated revenue procedure that provides that, for purposes of the tax shelter disclosure rules under Reg. §1.6011-4, certain transactions are not reportable as transactions with contractual protection. As noted in the procedure, Reg. §1.6011-4(b)(4), which pertains to transactions with contractual protection, does not apply to transactions in which refundable or contingent fees are based on the taxpayer's liability for taxes other than federal income taxes.
Eight transactions are excepted from the rules regarding transactions with contractual protection. Those transactions are transactions in which the refundable or contingent fee is related to:
--the work opportunity credit under Code Sec. 51;
--the welfare-to-work credit under Code Sec. 51A;
--the Indian employment credit under Code Sec. 45A(a);
--the low-income housing credit under Code Sec. 42(a);
--the new markets tax credit under Code Sec. 45D(a);
--the empowerment zone employment credit under Code Sec. 1396(a);
--the renewal community employment credit under Code Sec. 1400H; and
--the employee retention credit under Code Sec. 1400R(a), (b)
or (c).
CCH Comment. Although the transactions listed above are excepted from the disclosure rules under Reg. §§1.6011-4(b)(4), they may be reportable transactions for disclosure purposes under Reg. §§1.6011-4(b)(2) (listed transactions), (b)(3)
(confidential transactions), (b)(5)
(loss transactions), (b)(6)
(transactions with significant book-tax difference) or (b)(7)
(transactions involving a brief asset holding period).
The revenue procedure is effective January 26, 2007. The exceptions under section 4.02(1) through (3) of the procedure (exceptions (1) through (3), above) apply to transactions that are entered into on or after January 1, 2003. The exceptions under section 4.02(4) through (8) of the procedure (exceptions (4) through (8), above) apply to all transactions, regardless of when the transaction was entered into, that otherwise would have to have been disclosed under Reg. §1.6011-4(b)(4) on or after January 1, 2006.
Rev. Proc. 2004-65, 2004 2 C.B. 965, is modified and superseded.
Rev. Proc. 2007-20, 2007FED ¶46,286
Other References:
Code Sec. 6011
CCH Reference - 2007FED ¶35,141.78
Code Sec. 6111
CCH Reference - 2007FED ¶37,002.1789
Code Sec. 6112
CCH Reference - 2007FED ¶37,022.70
Tax Research Consultant
CCH Reference - TRC FILEBUS: 3,052.25