
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC6111]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                Subtitle F--Procedure and Administration
 
                   CHAPTER 61--INFORMATION AND RETURNS
 
                 Subchapter B--Miscellaneous Provisions
 
Sec. 6111. Registration of tax shelters


(a) Registration

                           (1) In general

        Any tax shelter organizer shall register the tax shelter with 
    the Secretary (in such form and in such manner as the Secretary may 
    prescribe) not later than the day on which the first offering for 
    sale of interests in such tax shelter occurs.

              (2) Information included in registration

        Any registration under paragraph (1) shall include--
            (A) information identifying and describing the tax shelter,
            (B) information describing the tax benefits of the tax 
        shelter represented (or to be represented) to investors, and
            (C) such other information as the Secretary may prescribe.

(b) Furnishing of tax shelter identification number; inclusion on return

                          (1) Sellers, etc.

        Any person who sells (or otherwise transfers) an interest in a 
    tax shelter shall (at such times and in such manner as the Secretary 
    shall prescribe) furnish to each investor who purchases (or 
    otherwise acquires) an interest in such tax shelter from such person 
    the identification number assigned by the Secretary to such tax 
    shelter.

                  (2) Inclusion of number on return

        Any person claiming any deduction, credit, or other tax benefit 
    by reason of a tax shelter shall include (in such manner as the 
    Secretary may prescribe) on the return of tax on which such 
    deduction, credit, or other benefit is claimed the identification 
    number assigned by the Secretary to such tax shelter.

(c) Tax shelter

    For purposes of this section--

                           (1) In general

        The term ``tax shelter'' means any investment--
            (A) with respect to which any person could reasonably infer 
        from the representations made, or to be made, in connection with 
        the offering for sale of interests in the investment that the 
        tax shelter ratio for any investor as of the close of any of the 
        first 5 years ending after the date on which such investment is 
        offered for sale may be greater than 2 to 1, and
            (B) which is--
                (i) required to be registered under a Federal or State 
            law regulating securities,
                (ii) sold pursuant to an exemption from registration 
            requiring the filing of a notice with a Federal or State 
            agency regulating the offering or sale of securities, or
                (iii) a substantial investment.

                    (2) Tax shelter ratio defined

        For purposes of this subsection, the term ``tax shelter ratio'' 
    means, with respect to any year, the ratio which--
            (A) the aggregate amount of the deductions and 350 percent 
        of the credits which are represented to be potentially allowable 
        to any investor under subtitle A for all periods up to (and 
        including) the close of such year, bears to
            (B) the investment base as of the close of such year.

                         (3) Investment base

        (A) In general

            Except as provided in this paragraph, the term ``investment 
        base'' means, with respect to any year, the amount of money and 
        the adjusted basis of other property (reduced by any liability 
        to which such other property is subject) contributed by the 
        investor as of the close of such year.

        (B) Certain borrowed amounts excluded

            For purposes of subparagraph (A), there shall not be taken 
        into account any amount borrowed from any person--
                (i) who participated in the organization, sale, or 
            management of the investment, or
                (ii) who is a related person (as defined in section 
            465(b)(3)(C)) to any person described in clause (i),

        unless such amount is unconditionally required to be repaid by 
        the investor before the close of the year for which the 
        determination is being made.

        (C) Certain other amounts included or excluded

            (i) Amounts held in cash equivalents, etc.

                No amount shall be taken into account under subparagraph 
            (A) which is to be held in cash equivalent or marketable 
            securities.
            (ii) Amounts included or excluded by Secretary

                The Secretary may by regulation--
                    (I) exclude from the investment base any amount 
                described in subparagraph (A), or
                    (II) include in the investment base any amount not 
                described in subparagraph (A),

          if the Secretary determines that such exclusion or inclusion 
            is necessary to carry out the purposes of this section.

                     (4) Substantial investment

        An investment is a substantial investment if--
            (A) the aggregate amount which may be offered for sale 
        exceeds $250,000, and
            (B) there are expected to be 5 or more investors.

(d) Certain confidential arrangements treated as tax shelters

                           (1) In general

        For purposes of this section, the term ``tax shelter'' includes 
    any entity, plan, arrangement, or transaction--
            (A) a significant purpose of the structure of which is the 
        avoidance or evasion of Federal income tax for a direct or 
        indirect participant which is a corporation,
            (B) which is offered to any potential participant under 
        conditions of confidentiality, and
            (C) for which the tax shelter promoters may receive fees in 
        excess of $100,000 in the aggregate.

                  (2) Conditions of confidentiality

        For purposes of paragraph (1)(B), an offer is under conditions 
    of confidentiality if--
            (A) the potential participant to whom the offer is made (or 
        any other person acting on behalf of such participant) has an 
        understanding or agreement with or for the benefit of any 
        promoter of the tax shelter that such participant (or such other 
        person) will limit disclosure of the tax shelter or any 
        significant tax features of the tax shelter, or
            (B) any promoter of the tax shelter--
                (i) claims, knows, or has reason to know,
                (ii) knows or has reason to know that any other person 
            (other than the potential participant) claims, or
                (iii) causes another person to claim,

        that the tax shelter (or any aspect thereof) is proprietary to 
        any person other than the potential participant or is otherwise 
        protected from disclosure to or use by others.

    For purposes of this subsection, the term ``promoter'' means any 
    person or any related person (within the meaning of section 267 or 
    707) who participates in the organization, management, or sale of 
    the tax shelter.

      (3) Persons other than promoter required to register in 
                                certain cases

        (A) In general

            If--
                (i) the requirements of subsection (a) are not met with 
            respect to any tax shelter (as defined in paragraph (1)) by 
            any tax shelter promoter, and
                (ii) no tax shelter promoter is a United States person,

        then each United States person who discussed participation in 
        such shelter shall register such shelter under subsection (a).

        (B) Exception

            Subparagraph (A) shall not apply to a United States person 
        who discussed participation in a tax shelter if--
                (i) such person notified the promoter in writing (not 
            later than the close of the 90th day after the day on which 
            such discussions began) that such person would not 
            participate in such shelter, and
                (ii) such person does not participate in such shelter.

         (4) Offer to participate treated as offer for sale

        For purposes of subsections (a) and (b), an offer to participate 
    in a tax shelter (as defined in paragraph (1)) shall be treated as 
    an offer for sale.

(e) Other definitions

    For purposes of this section--

                      (1) Tax shelter organizer

        The term ``tax shelter organizer'' means--
            (A) the person principally responsible for organizing the 
        tax shelter,
            (B) if the requirements of subsection (a) are not met by a 
        person described in subparagraph (A) at the time prescribed 
        therefor, any other person who participated in the organization 
        of the tax shelter, and
            (C) if the requirements of subsection (a) are not met by a 
        person described in subparagraph (A) or (B) at the time 
        prescribed therefor, any person participating in the sale or 
        management of the investment at a time when the tax shelter was 
        not registered under subsection (a).

                              (2) Year

        The term ``year'' means--
            (A) the taxable year of the tax shelter, or
            (B) if the tax shelter has no taxable year, the calendar 
        year.

(f) Regulations

    The Secretary may prescribe regulations which provide--
        (1) rules for the aggregation of similar investments offered by 
    the same person or persons for purposes of applying subsection 
    (c)(4),
        (2) that only 1 person shall be required to meet the 
    requirements of subsection (a) in cases in which 2 or more persons 
    would otherwise be required to meet such requirements,
        (3) exemptions from the requirements of this section, and
        (4) such rules as may be necessary or appropriate to carry out 
    the purposes of this section in the case of foreign tax shelters.

(Added Pub. L. 98-369, div. A, title I, Sec. 141(a), July 18, 1984, 98 
Stat. 677; amended Pub. L. 99-514, title II, Sec. 201(d)(13), title XV, 
Sec. 1531(a), title XVIII, Sec. 1899A(54), Oct. 22, 1986, 100 Stat. 
2142, 2749, 2961; Pub. L. 105-34, title X, Sec. 1028(a), Aug. 5, 1997, 
111 Stat. 926.)


                            Prior Provisions

    A prior section 6111 was renumbered 6116 of this title.


                               Amendments

    1997--Subsecs. (d) to (f). Pub. L. 105-34 added subsec. (d) and 
redesignated former subsecs. (d) and (e) as (e) and (f), respectively.
    1986--Subsec. (c)(2)(A). Pub. L. 99-514, Sec. 1531(a), substituted 
``350 percent'' for ``200 percent''.
    Subsec. (c)(3)(B)(ii). Pub. L. 99-514, Sec. 201(d)(13), substituted 
``section 465(b)(3)(C)'' for ``section 168(e)(4)''.
    Subsec. (d)(1)(B). Pub. L. 99-514, Sec. 1899A(54), substituted 
``subparagraph'' for ``subpargraph''.


                    Effective Date of 1997 Amendment

    Section 1028(e) of Pub. L. 105-34 provided that:
    ``(1) In general.--Except as provided in paragraph (2), the 
amendments made by this section [amending this section and sections 6662 
and 6707 of this title] shall apply to any tax shelter (as defined in 
section 6111(d) of the Internal Revenue Code of 1986, as amended by this 
section) interests in which are offered to potential participants after 
the Secretary of the Treasury prescribes guidance with respect to 
meeting requirements added by such amendments.
    ``(2) Modifications to substantial understatement penalty.--The 
amendments made by subsection (c) [amending section 6662 of this title] 
shall apply to items with respect to transactions entered into after the 
date of the enactment of this Act [Aug. 5, 1997].''


                    Effective Date of 1986 Amendment

    Amendment by section 201(d)(13) of Pub. L. 99-514 applicable to 
property placed in service after Dec. 31, 1986, in taxable years ending 
after such date, with exceptions, see sections 203 and 204 of Pub. L. 
99-514, set out as a note under section 168 of this title.
    Amendment by section 201(d)(13) of Pub. L. 99-514 not applicable to 
any property placed in service before Jan. 1, 1994, if such property 
placed in service as part of specified rehabilitations, and not 
applicable to certain additional rehabilitations, see section 251(d)(2), 
(3) of Pub. L. 99-514, set out as a note under section 46 of this title.
    Section 1531(b) of Pub. L. 99-514 provided that: ``The amendment 
made by this section [amending this section] shall apply to any tax 
shelter (within the meaning of section 6111 of the Internal Revenue Code 
of 1986 [formerly I.R.C. 1954] as amended by this section) interests in 
which are first offered for sale after December 31, 1986.''


                             Effective Date

    Section 141(d) of Pub. L. 98-369, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
    ``(1) In general.--The amendments made by this section [enacting 
this section and section 6707 of this title and renumbering former 
section 6111 as section 6112 of this title] shall apply to any tax 
shelter (within the meaning of section 6111 of the Internal Revenue Code 
of 1986 [formerly I.R.C. 1954], as added by this section) any interest 
in which is first sold to any investor after August 31, 1984.
    ``(2) Substantial investment test.--For purposes of determining 
whether any investment is a tax shelter by reason of section 
6111(c)(1)(B)(iii) of such Code (as added by this section), only offers 
for sale after August 31, 1984, shall be taken into account.
    ``(3) Furnishing of shelter identification number for interests sold 
before september 1, 1984.--With respect to interests sold before 
September 1, 1984, any liability to act under paragraph (1) of section 
6111(b) of such Code (as added by this section) which would (but for 
this sentence) arise before such date shall be deemed to arise on 
December 31, 1984.''

                  Section Referred to in Other Sections

    This section is referred to in sections 6112, 6707 of this title.
