If any United States person fails to furnish the information described in subsection a at the time and in the manner required by regulations, 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 subsection a 1 B , such person shall recognize gain as if the contributed property had been sold for such value at the time of such contribution.
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. The Internal Revenue Service does not require all U. Instead, the IRS has carved out various exceptions to filing the Form For exchanges described in section or , a U. The U. Generally, a domestic corporation that distributes stock or securities of a domestic corporation under section is not required to file Form However, this exception does not apply if the distribution is of stock or securities of a foreign controlled corporation to a distributee shareholder who is not a U.
See specific instructions for Part IV, line 21, later, for more information. If the transferor is a partnership domestic or foreign , the domestic partner s of the partnership, not the partnership itself , are required to comply with section B and file Form Each domestic partner is treated as a transferor of its proportionate share of the property.
Spouses may file Form jointly, but only if they file a joint income tax return. No penalty will be imposed with respect to any portion of an underpayment if the taxpayer can demonstrate that the failure to comply was due to reasonable cause with respect to such portion of the underpayment and the taxpayer acted in good faith with respect to such portion of the underpayment. See sections j and c for additional information.
Contact our firm today for assistance with getting compliant. Skip to content. Such materials are for informational purposes only and may not reflect the most current legal developments. Moreover, pursuant to section c 8 , the period of limitations for assessment of any tax with respect to any tax return, event, or period to which the information relates is extended to the date that is 3 years after the date on which the information required to be reported is provided.
References to these legal authorities are included for the convenience of those who would like to read the technical reference material. Transferors of Property to a Foreign Corporation.
Specifically, a transfer of cash to a foreign corporation must be reported on Form if immediately after the transfer, the U. There is an exception to file Form for tax-exempt organizations; however, this exception only applies to non-cash transfers of certain stock or securities and the related income was not UBTI.
The vast majority of transfers by tax-exempt organizations to foreign corporations are cash e. As such, this narrow exception to filing Form relating to transfers of stock or securities rarely is applicable.
Due to the complexity of U.
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