Td 9556

sis in the nominal share for any transfers
described in §1.368–2(l), designate the
share of stock of the issuing corporation
to which the basis, if any, of the nominal
share will attach.
(a)(2)(iv) through (c), Example 14
[Reserved]. For further guidance, see
§1.358–2(a)(2)(iv) through (c), Example
14.
Example 15. (i) Facts. Each of Corporation X and
Corporation Y has a single class of stock outstanding,
all of which is owned by J, an individual. J acquired
100 shares of Corporation X stock on Date 1 for $1.50
each. On Date 2, Corporation Y acquires the assets
of Corporation X for $100 of cash, their fair market value, in a transaction described in §1.368–2(l).
Pursuant to the terms of the exchange, Corporation
X does not receive any Corporation Y stock. Corporation X distributes the $100 of cash to J in liquidation. Pursuant to §1.368–2(l), Corporation Y will
be deemed to issue a nominal share of Corporation Y
stock to Corporation X in addition to the $100 of cash
actually exchanged for the Corporation X assets, and
Corporation X will be deemed to distribute all of the
consideration to J. J will have a basis of $50 in the
nominal share of Corporation Y stock under section
358(a).
(ii) Analysis. Under paragraph (a)(2)(iii) of this
section, J is the actual shareholder of Corporation
Y, the issuing corporation, deemed to receive the
nominal share of Corporation Y stock described in
§1.368–2(l). Therefore, J must designate any share
of Corporation Y stock to which the basis of $50 in
the nominal share of Corporation Y stock will attach.
Example 16. (i) Facts. Each of Corporation X and
Corporation Y has a single class of stock outstanding, all of which is owned by Corporation P. Corporation T has a single class of stock outstanding, all
of which is owned by Corporation X. The corporations do not join in the filing of a consolidated return.
Corporation X acquired 100 shares of Corporation T
stock on Date 1 for $1.50 each. On Date 2, Corporation Y acquires the assets of Corporation T for $100
of cash, their fair market value, in a transaction described in §1.368–2(l). Pursuant to the terms of the
exchange, Corporation T does not receive any Corporation Y stock. Corporation T distributes the $100
of cash to Corporation X in liquidation. Pursuant to
§1.368–2(l), Corporation Y will be deemed to issue a
nominal share of Corporation Y stock to Corporation
T in addition to the $100 of cash actually exchanged
for the Corporation T assets, and Corporation T will
be deemed to distribute all of the consideration to
Corporation X. Corporation X will have a basis of
$50 in the nominal share of Corporation Y stock under section 358(a). Corporation X will be deemed to
distribute the nominal share of Corporation Y stock to
Corporation P. Corporation X does not recognize the
loss on the deemed distribution of the nominal share
to Corporation P under section 311(a). Corporation
P’s basis in the nominal share is zero, its fair market
value, under section 301(d).
(ii) Analysis. Corporation X is deemed to receive the nominal share of Corporation Y stock described in §1.368–2(l). However, under paragraph
(a)(2)(iii) of this section, Corporation X is not an actual shareholder of Corporation Y, the issuing corpo-

December 19, 2011

ration. Therefore, Corporation X cannot designate
any share of Corporation Y stock to which the basis,
if any, of the nominal share of Corporation Y stock
will attach. Furthermore, Corporation P cannot designate a share of Corporation Y stock to which basis
will attach because Corporation P receives the nominal share with a basis of zero.

(d) Effective/applicability date. This
section applies to exchanges and distributions of stock and securities occurring on
or after November 21, 2011.
(e) Expiration date. This section expires on or before November 18, 2014.
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
Approved November 1, 2011.
Emily S. McMahon,
Acting Assistant Secretary of
the Treasury (Tax Policy).
(Filed by the Office of the Federal Register on November 18,
2011, 8:45 a.m., and published in the issue of the Federal
Register for November 21, 2011, 76 F.R. 71878)

Section 6011.—General
Requirement of Return,
Statement, or List
26 CFR 26.6011–4: Requirement of statement disclosing participation in certain transactions by taxpayers.

T.D. 9556
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Parts 26 and 301
Generation-Skipping
Transfers (GST) Section
6011 Regulations and
Amendments to the Section
6112 Regulations
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains final regulations that provide rules relating
to the disclosure of listed transactions and
transactions of interest with respect to
the generation-skipping transfer tax under

862

section 6011 of the Internal Revenue Code
(Code), conforming amendments under
sections 6111 and 6112, and rules relating to the preparation and maintenance
of lists with respect to reportable transactions under section 6112. The regulations
affect taxpayers participating in listed
transactions and transactions of interest
and material advisors to such transactions.
The final regulations also contain rules
under section 6112 that affect material
advisors to reportable transactions. These
regulations provide guidance regarding
the length of time a material advisor has
to prepare the list that must be maintained
after the list maintenance requirement
first arises with respect to a reportable
transaction. These regulations also clarify
guidance regarding designation agreements.
DATE: These regulations are effective
November 14, 2011.
FOR
FURTHER
INFORMATION
CONTACT: Charles D. Wien, (202)
622–3070 (not a toll-free number).
Background
This document contains final regulations
that amend 26 CFR part 26 to provide
rules for purposes of the generation-skipping transfer tax that require the disclosure
of listed transactions and transactions of
interest by certain taxpayers on their Federal tax returns under section 6011. This
document also contains final regulations
that modify and clarify some of the rules
under 26 CFR part 301 relating to the
disclosure obligations of material advisors
under section 6111 and the list maintenance requirements of material advisors
with respect to reportable transactions under section 6112.
On July 31, 2007, the IRS and Treasury Department issued final regulations
under section 6011 (T.D. 9350, 72 FR
43146) 6111 (T.D. 9351, 72 FR 43157)
and 6112 (T.D. 9352, 72 FR 43154) (the
July 2007 regulations) that were published
in the Federal Register on August 3,
2007. In the July 2007 regulations, the
IRS and Treasury Department amended
26 CFR parts 20, 25, 31, 53, 54, and 56
to provide that certain taxpayers would
be required to disclose transactions of
interest, in addition to listed transactions,

2011–51 I.R.B.

on their Federal tax returns under section
6011. On September 10, 2009, the IRS and
Treasury Department issued a notice of
proposed rulemaking under sections 6011,
6111, and 6112 (REG–136563–07) (the
September 2009 proposed regulations).
The September 2009 proposed regulations
were published in the Federal Register
(74 FR 46705) on September 11, 2009.
In response to the September 2009 proposed regulations, the IRS and Treasury
Department received two written public
comments. A public hearing was not requested. After consideration of the comments received, the IRS and Treasury Department are adopting the proposed regulations without change.

in §301.6111–3(b)(3), and the transaction
is entered into by the taxpayer.
In addition, the regulations are not
amended to require advance notice before
designating a transaction as a transaction
of interest or as a listed transaction as suggested by a commentator. In appropriate
circumstances, the IRS and Treasury Department may choose to publish advance
notice of a transaction of interest and request comments in certain circumstances.
The IRS and Treasury Department will determine whether to provide advance notice
and a request for comments on a transaction by transaction basis. Accordingly,
the proposed regulations will be adopted
without change.

Explanation of Comments

Special Analyses

Two commentators expressed concern
that if the IRS and Treasury Department
designate a transaction involving gift, estate, or generation-skipping transfer taxes
as a listed transaction or transaction of interest, that a corporate fiduciary, merely
by acting as an executor or trustee with
respect to an estate or trust that is incidental to the transaction, would be treated
as a material advisor under section 6112
and the regulations thereunder. One of the
commentators proposed that the September 2009 proposed regulations and existing final regulations under sections 6011,
6111, and 6112 be amended to require public comment before a transaction involving
Chapters 11, 12, and 13 of the Code can be
designated as a listed transaction or transaction of interest.
The IRS and Treasury Department believe that in the situation described by the
commentators the existing regulations under sections 6111 and 6112 properly address which parties are material advisors,
and transactions involving gift, estate, or
generation-skipping transfer taxes should
not be treated differently than other transactions. A fiduciary will not be treated as a
material advisor merely by acting as an executor or trustee with respect to an estate or
trust that is incidental to a transaction. A
fiduciary will be treated as a material advisor only if the fiduciary provides material aid, assistance or advice as described in
§301.6111–3(b)(2), the fiduciary directly
or indirectly derives gross income in excess of the threshold amount as described

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It has also 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
in these regulations will not have a significant economic impact on a substantial
number of small entities. This certification
is based on the fact that most of the material advisors affected by these regulations
are not small entities and for those material advisors that are small entities most
of the information is already required under the current regulations. Any additional
recordkeeping burdens on material advisors that result from this regulation are insubstantial. Also, the collection of information referenced in these regulations has
been approved under OMB control number 1545–1686. The clarification and new
information required by these final regulations add little or no new burden to those
existing requirements. Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6)
is not required. Pursuant to section 7805(f)
of the Code, the notice of proposed rulemaking preceding these regulations was
submitted to the Chief Counsel for Advocacy of the Small Business Administration
for comment on its impact on small business.

2011–51 I.R.B.

863

Drafting Information
The principal author of these regulations is Charles D. Wien, Office of the
Associate Chief Counsel (Passthroughs
and Special Industries).
However,
other personnel from the IRS and
Treasury Department participated in their
development.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 26 and 301
are amended as follows:
PART 26—GENERATION-SKIPPING
TRANSFER TAX REGULATIONS
UNDER THE TAX REFORM ACT OF
1986
Paragraph 1. The authority citation for
part 26 is amended to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 26.6011–4 also issued under
26 U.S.C. 6011 * * *
Par. 2. Section 26.6011–4 is added to
read as follows:
§26.6011–4 Requirement of statement
disclosing participation in certain
transactions by taxpayers.
(a) In general. If a transaction is identified as a listed transaction or a transaction of interest as defined in §1.6011–4 of
this chapter by the Commissioner in published guidance, and the listed transaction
or transaction of interest involves a tax on
generation-skipping transfers under chapter 13 of subtitle B of the Internal Revenue
Code, the transaction must be disclosed in
the manner stated in such published guidance.
(b) Effective/applicability date. This
section applies to listed transactions and
transactions of interest entered into on or
after November 14, 2011.
PART 301—PROCEDURE AND
ADMINISTRATION
Par. 3. The authority citation for part
301 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 4. Section 301.6111–3 is amended
as follows:

December 19, 2011

1.
Paragraphs (b)(2)(i)(A) and
(b)(3)(i)(B) are amended by adding the
language “26.6011–4,” after each occurrence of “25.6011–4,”.
2.
Paragraphs (c)(2) and (c)(13)
are amended by adding the language
“26.6011–4,” after “25.6011–4,”.
3. Paragraph (i)(1) is revised.
The revision reads as follows:
§301.6111–3 Disclosure of reportable
transactions.
*****
(i) Effective/applicability date—(1) In
general. This section applies to transactions with respect to which a material
advisor makes a tax statement on or after
August 3, 2007. However, this section
applies to transactions of interest entered into on or after November 2, 2006,
with respect to which a material advisor
makes a tax statement under this section
on or after November 2, 2006. Paragraphs (b)(2)(i)(A), (b)(3)(i)(B), (c)(2),
and (c)(13) of this section apply to transactions with respect to which a material
advisor makes a tax statement under this
section after November 14, 2011. Paragraph (h) of this section applies to ruling
requests received on or after November 2,
2006. Otherwise, the rules that apply
on or before November 14, 2011 are
contained in this section in effect prior to
November 14, 2011, (see 26 CFR part 301
revised as of April 1, 2011).
*****
Par. 5. Section 301.6112–1 is amended
as follows:
1. Paragraph (b)(1) is revised.
2.
Paragraphs (c)(3) and (c)(12)
are amended by adding the language
“26.6011–4,” after “25.6011–4,”.
3. Paragraphs (f) and (g) are revised.
The revisions read as follows:
§301.6112–1 Material advisors of
reportable transactions must keep lists of
advisees, etc.
*****

December 19, 2011

(b) * * * (1) In general. A separate list
must be prepared and maintained for each
reportable transaction. However, one list
must be maintained for substantially similar transactions. A material advisor will
have 30 calendar days from the date the
list maintenance requirement first arises
(see §301.6111–3(b)(4) and paragraph (a)
of this section) with respect to a reportable
transaction to prepare the list that must be
maintained under this section with respect
to that transaction. The Commissioner in
his discretion also may provide in published guidance designating a transaction
as a reportable transaction a list preparation time period greater than 30 calendar
days. If a list is requested under this section during the list preparation time period,
the request for the list will be treated as
having been made on the day after the list
preparation time period ends. A list must
be maintained in a form that enables the
IRS to determine without undue delay or
difficulty the information required in paragraph (b)(3) of this section. The Commissioner in his discretion may provide in
published guidance a form or method for
maintaining or furnishing the list.
*****
(f) Designation agreements. If more
than one material advisor is required to
maintain a list of persons for a reportable
transaction, in accordance with paragraph
(b) of this section, the material advisors
may designate by written agreement a single material advisor (the designated material advisor) to maintain the list or a portion of the list. A designation agreement
does not relieve material advisors from
their obligation to maintain a list in accordance with paragraph (b) of this section or
to furnish their list to the IRS in accordance
with paragraph (e)(1) of this section, but a
designation agreement may allow one material advisor to maintain a list on behalf
of the other material advisors who are a
party to the designation agreement. A material advisor is not relieved from the requirement of this section because a material advisor is unable to obtain the list from

864

any designated material advisor, any designated material advisor did not maintain
a list, or the list maintained by any designated material advisor is not complete.
The existence of a designation agreement
does not affect the ability of the IRS to request a list from any party to the designation agreement. The IRS may request a list
from any party to the designation agreement, and the party receiving the request
must furnish their list to the IRS in accordance with paragraph (e)(1) of this section, regardless of whether their list was
maintained by another party pursuant to
the terms of a designation agreement.
(g) Effective/applicability date. In general, this section applies to transactions
with respect to which a material advisor
makes a tax statement under §301.6111–3
on or after August 3, 2007. However, this
section applies to transactions of interest
entered into on or after November 2, 2006,
with respect to which a material advisor
makes a tax statement under §301.6111–3
on or after November 2, 2006. Paragraphs (b)(1), (c)(3), (c)(12), and (f) of
this section apply to transactions with respect to which a material advisor makes
a tax statement under §301.6111–3 after
November 14, 2011.
Otherwise, the rules that apply on or before November 14, 2011, are contained in
this section in effect prior to November 14,
2011, (see 26 CFR part 301 revised as of
April 1, 2011).
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
Approved November 4, 2011.
Emily S. McMahon,
Assistant Secretary of
the Treasury (Tax Policy).
(Filed by the Office of the Federal Register on November 10,
2011, 8:45 a.m., and published in the issue of the Federal
Register for November 14, 2011, 76 F.R. 70340)

2011–51 I.R.B.