(iv) Compliance with Declaring Section 6038B when a profit accounting agreement is submitted in a timely manner. If the United States Seller 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 any transfer of assets other than the shares or securities to the recipient`s foreign company, the requirements of this Section will be met with respect to the transfer of the shares or securities by completing Parts I and II of the Form 926. indicates on Form 926 that a recognition agreement is filed in accordance with paragraph 1.367(a)-8; the declaration of fair value, adjusted tax base and gains recognized in relation to the shares or securities transferred on Form 926; Submission on Form 926 of any other information required by Form 926, accompanying instructions or other applicable instructions regarding the transfer of shares or securities; and attach a signed copy of Form 926 to the U.S. tax return in a timely manner (including renewals) for the year of transfer. If the United States Seller is required to file Form 926 with respect to a transfer of assets in addition to the shares or securities, the requirements of this Section are met with respect to the transfer of the shares or securities by indicating on Form 926 that a profit recognition agreement is filed pursuant to § 1.367(a)-8; the declaration of fair value, adjusted tax base and gains recognized in relation to the shares or securities transferred on Form 926; and on Form 926 any other information required by Form 926, the attached instructions or any other applicable direction regarding the transfer of shares or securities. (ii) Procedures for proving that the non-compliance was unintentional – (A) Timing and method of filing. A taxpayer`s statement that the non-compliance was not intentional shall be taken into account only if, immediately after becoming aware of the non-compliance, an amended return is filed for the taxation year to which the offence relates, containing the information that should have been included in the original income tax return for that taxation year or that otherwise complies with the provisions of this Division. this includes a written statement explaining the reasons for the non-compliance. The amended tax return must be filed with the Internal Revenue Service at the location where the taxpayer filed their original tax return. The taxpayer may apply for immunity from punishment provided for in Article 6038B on the basis of the same request. See § 1.6038B-1(f).
(b) * * * (1) * * * – (i) * In addition, if the U.S. person files a return pursuant to § 1.367(a)-3(d)(2)(vi)(C), a profit recognition agreement under § 1.367(a)-8, or a disposition of record pursuant to § 1.367(e)-2(b), that person shall in all material respects comply with the requirements of this Section in accordance with the terms of the Declaration, of the Recognition Agreement or the Deed of Liquidation, if any, to comply with a reporting obligation under Section 6038B. * (i) In the case of a stock exchange to which Section 351 or 354 applies, in which the shares of a foreign acquiring company are received, the U.S. seller shall attach to the new profit accounting agreement a statement that the sale, in whole or in part, shares of the foreign acquiring company received on the stock exchange constitute a triggering event. The principles set out in paragraph (o(1)(i) or (ii) are applied to determine whether a subsequent sale, in whole or in part, of the shares of the foreign acquiring company received on the stock exchange will terminate or reduce the amount of the new profit accounting agreement. (B) Outcome. In determining whether UST`s profit recognition agreement in connection with the initial transfer is terminated in accordance with paragraph (o)(5) of this Section or triggered pursuant to points (j) (1) and (j) (4) of this Section, only the 10 TFD shares transferred by UST in the initial transfer shall be taken into account. Thus, the 1% share of TFD shares that TFC received in exchange for ownership in year 2 is not taken into account. (5) Certain distributions or transfers of shares or securities transferred to persons in the United States. To the extent that a distribution or transfer of transferred shares or securities fulfils the conditions set out in points (o)(5)(i) to (iii) of this Section, the profit recognition agreement shall terminate without further effect or the amount of profits covered by the recognition of profits agreement shall be reduced, where applicable. (B) Choice to reduce the base of the shares or securities transferred. If the basic condition set out in paragraph (o)(5)(iii)(A) of this Section is not met, each qualified beneficiary may reduce the basis of the transferred shares or securities received in the course of the transaction to the extent necessary to satisfy the basic condition.
A qualified beneficiary shall reduce the base of the shares or securities transferred by attaching to its return in a timely manner for the taxation year in which the distribution or transfer takes place a statement entitled “Election to reduce the share base pursuant to section 1.367(a)-8(o)(5)(iii)(B)”, which contains the following: This document contains final and temporary provisions regarding the consequences for U.S. and foreign persons, if they do not submit recognition agreements (AGMs) or related documents. or to comply with other reporting obligations associated with certain transfers of ownership to foreign companies in non-accounting exchanges. The regulations are necessary to update and clarify the rules that apply if a U.S. or foreign person does not file a GRA or related documents or does not comply with other reporting obligations. These regulations apply to U.S. and foreign persons who transfer ownership to foreign companies on unrecognized exchanges. .