[Code of Federal Regulations]
[Title 26, Volume 18]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR301.6112-1]

[Page 140-148]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
                         Information and Returns
 
Sec. 301.6112-1  Requirement to prepare, maintain, and furnish lists with 
respect to potentially abusive tax shelters.

    (a) In general. Each organizer and seller, as described in paragraph 
(c) of this section, of a transaction that is a potentially abusive tax 
shelter, as described in paragraph (b) of this section, shall prepare 
and maintain a list of persons in accordance with paragraph (e) of this 
section and upon request shall furnish such list to the Internal Revenue 
Service (IRS) in accordance with paragraph (g) of this section.
    (b) Potentially abusive tax shelters. For purposes of this section, 
a potentially abusive tax shelter is any transaction that is a section 
6111 tax shelter, as described in paragraph (b)(1) of this section, or 
that has a potential for tax avoidance or evasion, as described in 
paragraph (b)(2) of this section. The term transaction includes all of 
the factual elements relevant to the expected tax treatment of any 
investment, entity, plan, or arrangement, and includes any series of 
steps carried out as part of a plan.
    (1) Transaction that is a section 6111 tax shelter. A section 6111 
tax shelter is any transaction that is required to be registered with 
the IRS under section 6111, regardless of whether that tax shelter is 
properly registered pursuant to section 6111.
    (2) Transaction that has a potential for tax avoidance or evasion--
(i) In general. A transaction that has a potential for tax avoidance or 
evasion includes--
    (A) Any listed transaction as defined in Sec. 1.6011-4(b)(2) of 
this chapter that is subject to disclosure under Sec. Sec. 1.6011-4, 
20.6011-4, 25.6011-4, 31.6011-4, 53.6011-4, 54.6011-4, or 56.6011-4 of 
this chapter;
    (B) Any transaction that a potential material advisor (at the time 
the transaction is entered into or an interest is acquired) knows is or 
reasonably expects will become a reportable transaction under Sec. 
1.6011-4(b)(3) through (7) of this chapter; and
    (C) Any interest in a type of transaction that is transferred if the 
transferor knows or reasonably expects that

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the transferee will sell or transfer an interest in that type of 
transaction to another transferee (subsequent participant), and the type 
of transaction would be a listed transaction under Sec. Sec. 1.6011-4, 
20.6011-4, 25.6011-4, 31.6011-4, 53.6011-4, 54.6011-4, or 56.6011-4 of 
this chapter, or a transaction described in Sec. 1.6011-4(b)(3) through 
(7) of this chapter assuming that the relevant thresholds are met.
    (ii) The determination of whether a transaction has the potential 
for tax avoidance or evasion does not depend upon whether the 
transaction is properly disclosed pursuant to Sec. Sec. 1.6011-4, 
20.6011-4, 25.6011-4, 31.6011-4, 53.6011-4, 54.6011-4, or 56.6011-4 of 
this chapter.
    (iii) If a transaction becomes a potentially abusive tax shelter on 
or after February 28, 2003, because it is a listed transaction as 
defined in Sec. 1.6011-4 of this chapter and is subject to disclosure 
under Sec. 1.6011-4 of this chapter this section shall apply with 
respect to any such transaction entered into or any interest acquired 
therein after February 28, 2000 (including interests acquired before the 
transaction becomes a listed transaction). If a transaction becomes a 
listed transaction as defined in Sec. 1.6011-4 of this chapter and is 
subject to disclosure under Sec. Sec. 20.6011-4, 25.6011-4, 31.6011-4, 
53.6011-4, 54.6011-4, or 56.6011-4 of this chapter, this section shall 
apply with respect to any such transaction entered into or any interest 
acquired therein on or after January 1, 2003 (including interests 
acquired before the transaction becomes a listed transaction).
    (c) Organizer and seller--(1) In general. A person is an organizer 
of, or a seller of an interest in, a transaction that is a potentially 
abusive tax shelter if that person is a material advisor, as described 
in paragraph (c)(2) of this section, with respect to that transaction.
    (2) Material advisor--(i) In general. A person is a material advisor 
with respect to a transaction that is a potentially abusive tax shelter 
if the person is required to register the transaction under section 
6111; or the person receives or expects to receive at least a minimum 
fee (as defined in paragraph (c)(3) of this section) with respect to the 
transaction, and the person makes a tax statement (as defined in 
paragraph (c)(2)(iii) of this section) to or for the benefit of--
    (A) A taxpayer who is required to disclose the transaction under 
Sec. Sec. 1.6011-4, 20.6011-4, 25.6011-4, 31.6011-4, 53.6011-4, 
54.6011-4, or 56.6011-4 of this chapter because the transaction is a 
listed transaction or who would have been required to disclose a listed 
transaction under Sec. Sec. 1.6011-4, 20.6011-4, 25.6011-4, 31.6011-4, 
53.6011-4, 54.6011-4, or 56.6011-4 of this chapter if the transaction 
had become a listed transaction within the statute of limitations period 
in Sec. 1.6011-4(e)(2);
    (B) A taxpayer who the potential material advisor (at the time the 
transaction is entered into) knows is or reasonably expects to be 
required to disclose the transaction under Sec. 1.6011-4 because the 
transaction is or is reasonably expected to become a transaction 
described in Sec. 1.6011-4(b)(3) through (7);
    (C) A person who is required to register the transaction under 
section 6111;
    (D) A person who purchases (or otherwise acquires) an interest in a 
section 6111 tax shelter; or
    (E) A transferee of an interest if the interest is described in 
paragraph (b)(2)(i)(C) of this section.
    (ii) Special rules. A material advisor generally does not include a 
person who makes a tax statement solely in the person's capacity as an 
employee, shareholder, partner or agent of another person. Any tax 
statement made by that person will be attributed to that person's 
employer, corporation, partnership or principal. However, a person shall 
be treated as a material advisor if that person forms or avails of an 
entity with the purpose of avoiding the rules of section 6111 or 6112 or 
the penalties under section 6707 or 6708.
    (iii) Tax statement--(A) In general. A tax statement means any 
statement, oral or written, that relates to a tax aspect of a 
transaction that causes the transaction to be a reportable transaction 
as defined in Sec. 1.6011-4(b)(2) through (7) or a tax shelter as 
described in section 6111.
    (B) Confidential transactions. A tax statement relates to an aspect 
of a transaction that causes it to be a confidential transaction if the 
statement concerns a tax benefit related to the transaction and either 
the taxpayer's

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disclosure of the tax treatment or tax structure of the transaction is 
limited in the manner described in Sec. 1.6011-4(b)(3) of this chapter 
by or for the benefit of the person making the statement, or the person 
making the statement knows the taxpayer's disclosure of the tax 
structure or tax aspects of the transaction is limited in the manner 
described in Sec. 1.6011-4(b)(3) of this chapter.
    (C) Transactions with contractual protection. A tax statement 
relates to an aspect of a transaction that causes it to be a transaction 
with contractual protection if the statement concerns a tax benefit 
related to the transaction and either--
    (1) The taxpayer has the right to a full or partial refund of fees 
paid to the person making the statement or if these fees are contingent 
in the manner described in Sec. 1.6011-4(b)(4) of this chapter; or
    (2) The person making the statement knows that the taxpayer has the 
right to a full or partial refund of fees (as described in Sec. 1.6011-
4(b)(4)(ii)) paid to another if all or part of the intended tax 
consequences from the transaction are not sustained or that fees (as 
described in Sec. 1.6011-4(b)(4)(ii)) paid by the taxpayer to another 
are contingent on the taxpayer's realization of tax benefits from the 
transaction in the manner described in Sec. 1.6011-4(b)(4) of this 
chapter.
    (D) Loss transactions. A tax statement relates to an aspect of a 
transaction that causes it to be a loss transaction if the statement 
concerns an item that gives rise to a loss described in Sec. 1.6011-
4(b)(5) of this chapter.
    (E) Transactions with a significant book-tax difference. A tax 
statement relates to an aspect of a transaction that causes it to be a 
transaction with a significant book-tax difference if the statement 
concerns an item that gives rise to a book-tax difference described in 
Sec. 1.6011-4(b)(6) of this chapter.
    (F) Transactions involving a brief asset holding period. A tax 
statement relates to an aspect of a transaction involving a brief asset 
holding period if the statement concerns an item that gives rise to a 
tax credit described in Sec. 1.6011-4(b)(7) of this chapter.
    (iv) Exceptions--(A) Post-filing advice. A person will not be 
considered to be a material advisor with respect to a transaction if 
that person does not make or provide a tax statement regarding the 
transaction until after the first tax return reflecting tax benefit(s) 
of the transaction is filed with the IRS.
    (B) Publicly-filed statements. A tax statement with respect to a 
transaction that includes only information about the transaction 
contained in publicly-available documents filed with the Securities and 
Exchange Commission no later than the close of the transaction will not 
be considered a tax statement to or for the benefit of a person 
described in paragraph (c)(2)(i)(A) through (E) of this section.
    (3) Minimum fee--(i) In general. The minimum fee is $250,000 for a 
transaction if every person to whom or for whose benefit the potential 
material advisor makes or provides a tax statement with respect to the 
transaction is a corporation. The minimum fee is $50,000 for a 
transaction if any person to whom or for whose benefit a potential 
material advisor makes or provides a tax statement with respect to the 
transaction is a partnership or trust, unless all owners or 
beneficiaries are corporations (looking through any partners or 
beneficiaries that are themselves partnerships or trusts), in which case 
the minimum fee is $250,000. For all other transactions, the minimum fee 
is $50,000. For purposes of this paragraph (c)(3)(i) a corporation means 
a corporation other than an S corporation.
    (ii) Listed transactions. For listed transactions described in 
Sec. Sec. 1.6011-4(b)(2), 20.6011-4(a), 25.6011-4(a), 31.6011-4(a), 
53.6011-4(a), 54.6011-4(a), or 56.6011-4(a) of this chapter, the minimum 
fees in paragraph (c)(3)(i) of this section are reduced from $250,000 to 
$25,000 and from $50,000 to $10,000.
    (iii) Determination of fees. In determining whether the minimum fee 
threshold is satisfied, all fees for a tax strategy or for services for 
advice (whether or not tax advice) or for the implementation of a 
transaction that is a potentially abusive tax shelter are taken into 
account. For purposes of this section, the minimum fee threshold must be 
met independently for each

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transaction that is a potentially abusive tax shelter and aggregation of 
fees among transactions is not required. Fees include consideration in 
whatever form paid, whether in cash or in kind, for services to analyze 
the transaction (whether or not related to the tax consequences of the 
transaction), for services to implement the transaction, for services to 
document the transaction, and for services to prepare tax returns to the 
extent return preparation fees are unreasonable in light of all of the 
facts and circumstances. A fee does not include amounts paid to a 
person, including an advisor, in that person's capacity as a party to 
the transaction. For example, a fee does not include reasonable charges 
for the use of capital or the sale or use of property. The IRS will 
scrutinize carefully all of the facts and circumstances in determining 
whether consideration received in connection with a transaction that is 
a potentially abusive tax shelter constitutes fees for purposes of this 
section.
    (d) Definitions. For purposes of this section, the following terms 
are defined as follows:
    (1) Interest. The term interest includes, but is not limited to, any 
right to participate in a transaction by reason of a partnership 
interest, a shareholder interest, or a beneficial interest in a trust; 
any interest in property (including a leasehold interest); the entry 
into a leasing arrangement or a consulting, management or other 
agreement for the performance of services; or any interest in any other 
investment, entity, plan, or arrangement. The term interest includes any 
interest that purportedly entitles the direct or indirect holder of the 
interest to any tax consequence (including, but not limited to, a 
deduction, loss, or adjustment to tax basis in an asset) arising from 
the transaction. An interest also includes information or services 
regarding the organization or structure of the transaction if the 
information or services are relevant to the potential tax consequences 
of the transaction.
    (2) Substantially similar. The term substantially similar includes 
any transaction that is expected to obtain the same or similar types of 
tax consequences and that is either factually similar or based on the 
same or similar tax strategy. Receipt of an opinion regarding the tax 
consequences of the transaction is not relevant to the determination of 
whether the transaction is the same as or substantially similar to 
another transaction. Further, the term substantially similar must be 
broadly construed in favor of list maintenance.
    (3) Person. The term person means any person described in section 
7701(a)(1), including an affiliated group of corporations that join in 
the filing of a consolidated return under section 1501.
    (4) Related party. A person is a related party with respect to 
another person if such person bears a relationship to such other person 
described in section 267 or 707.
    (5) Tax. For purposes of this section, the term tax means Federal 
tax.
    (6) Tax benefit. A tax benefit includes deductions, exclusions from 
gross income, nonrecognition of gain, tax credits, adjustments (or the 
absence of adjustments) to the basis of property, status as an entity 
exempt from Federal income taxation, and any other tax consequences that 
may reduce a taxpayer's Federal tax liability by affecting the amount, 
timing, character, or source of any item of income, gain, expense, loss, 
or credit.
    (7) Tax return. For purposes of this section, the term tax return 
means a Federal tax return and a Federal information return.
    (8) Tax treatment. The tax treatment of a transaction is the 
purported or claimed Federal tax treatment of the transaction.
    (9) Tax structure. The tax structure of a transaction is any fact 
that may be relevant to understanding the purported or claimed Federal 
tax treatment of the transaction.
    (e) Preparation and maintenance of lists--(1) In general. A separate 
list of persons must be prepared and maintained for each transaction 
that is a potentially abusive tax shelter. However, one list must be 
maintained for substantially similar transactions that are potentially 
abusive tax shelters. A list may be maintained on paper, card file, 
magnetic media, or in any other

[[Page 144]]

form, provided the method of maintaining the list enables the IRS to 
determine without undue delay or difficulty the information required in 
paragraph (e)(3) of this section.
    (2) Persons required to be included on lists--(i) In general. A 
material advisor is required to list each person described in paragraphs 
(c)(2)(i)(A) through (D) of this section to whom (or for whose benefit) 
the material advisor makes or provides a tax statement with respect to a 
transaction that is a potentially abusive tax shelter. However, a 
material advisor is not required to list a person described in paragraph 
(c)(2)(i)(A) of this section if that person entered into, or acquired an 
interest in, a listed transaction more than 6 years before the 
transaction was listed.
    (ii) Subsequent participant. A material advisor must list any 
subsequent participant if the material advisor knows the identity of 
that subsequent participant, and the material advisor knows that the 
subsequent participant either entered into a transaction that must be 
disclosed under Sec. 1.6011-4(b) of this chapter or sold or transferred 
to another subsequent participant an interest in that type of 
transaction.
    (iii) Section 6111 registrant. A material advisor required to 
register a transaction under section 6111 also must list each person who 
purchases (or otherwise acquires) an interest in the transaction.
    (iv) Examples. The following examples illustrate the provisions of 
this section:

    Example 1. An investment firm provides a tax statement as to a type 
of transaction to three taxpayers: Corporation X, Corporation Y, and 
Corporation Z (all of which are C corporations). Each taxpayer agrees to 
pay the investment firm $300,000 in connection with the transaction, and 
each taxpayer engages in a separate transaction (transaction X, 
transaction Y, and transaction Z, respectively). At the time the 
transactions are entered into, the investment firm knows or reasonably 
expects that the transactions will result in a single taxable year loss 
of $9 million for Corporation X, $15 million for Corporation Y, and $12 
million for Corporation Z. The transactions do not satisfy the 
definitions of a reportable transaction under Sec. 1.6011-4(b)(2), (3), 
(4), (6) or (7) of this chapter.
    (i) Transaction X. At the time transaction X is entered into, the 
investment firm does not know or reasonably expect that the transaction 
is a reportable transaction, because the $9 million loss associated 
solely with transaction X does not satisfy the $10 million threshold 
under Sec. 1.6011-4(b)(5) of this chapter (relating to loss 
transactions). Accordingly, transaction X is not a potentially abusive 
tax shelter. The investment firm is not required to maintain a list with 
respect to transaction X.
    (ii) Transactions Y and Z. The investment firm satisfies the 
requirements for being a material advisor with respect to transaction Y 
and transaction Z. First, both of the transactions are potentially 
abusive tax shelters with respect to the investment firm because the 
investment firm knows, or reasonably expects, at the time the 
transactions are entered into, that the losses for each of Corporation Y 
and Z will exceed the $10 million threshold and, thus, the investment 
firm knows or reasonably expects that the transactions are or will 
become reportable transactions under Sec. 1.6011-4(b)(5) of this 
chapter (relating to loss transactions). Second, the investment firm 
provides a tax statement to Corporation Y and Corporation Z as to the 
transactions. Third, the investment firm receives $300,000 in connection 
with each transaction (viewed independently of each other and without 
regard to any other transaction), which exceeds the minimum fee with 
respect to each transaction ($250,000). Accordingly, the investment firm 
must maintain a list with respect to transactions Y and Z. Because 
transactions Y and Z are based on the same or similar tax strategy, 
transactions Y and Z are substantially similar transactions, and the 
investment firm must keep one list with respect to both transactions. 
The list must contain information about Corporation Y and Corporation Z 
(see paragraph (e)(2)(i) of this section).
    Example 2. (i) Corporation M provides a tax statement to Corporation 
N (a C corporation) describing the potential loss from a type of 
transaction. Corporation N pays Corporation M $300,000 for the 
information about that type of transaction. Corporation M knows that 
Corporation N will sell the information to Taxpayer O (a C corporation) 
and Taxpayer P (an individual), and that Taxpayer O and Taxpayer P will 
participate in transactions of the type that Corporation M described to 
Corporation N. Corporation N, in turn, provides a tax statement as to 
that type of transaction to Taxpayer O and Taxpayer P. Each taxpayer 
agrees to pay Corporation N $250,000 in connection with its transaction, 
and each taxpayer engages in a separate transaction (transaction O and 
transaction P, respectively). At the time the transactions are entered 
into, both Corporation M and Corporation N know that the transactions 
are or will become reportable transactions under Sec. 1.6011-4(b)(5) of 
this chapter.

[[Page 145]]

    (ii) Corporation N is a material advisor with respect to transaction 
O and transaction P. First, at the time the transactions are entered 
into, Corporation N knows that the transactions are reportable 
transactions. Thus, the transactions are potentially abusive tax 
shelters. Second, Corporation N provides a tax statement to Taxpayer O 
and Taxpayer P as to the transactions. Third, Corporation N receives 
$250,000 in connection with transaction O and transaction P (each viewed 
independently of any other transaction), which equals or exceeds the 
minimum fee for those transactions ($50,000 and $250,000, respectively). 
Accordingly, Corporation N must keep a list with respect to transaction 
O and transaction P. The list must contain information about Taxpayer P 
(see paragraph (e)(2)(i) of this section). Because transactions O and P 
are based on the same or similar tax strategy, transactions O and P are 
substantially similar transactions, and Corporation N must keep one list 
with respect to both transactions. The list must contain information 
about Taxpayer O and Taxpayer P (see (e)(2)(i) of this section).
    (iii) Corporation M's tax statement to Corporation N constitutes a 
potentially abusive tax shelter under paragraph (b)(2)(C) of this 
section. Corporation M transferred information to Corporation N 
regarding the potential tax consequences of a type of transaction that, 
if entered into and if the relevant thresholds are met, would be a 
reportable transaction described in Sec. 1.6011-4(b)(5). In addition, 
Corporation M knew that Corporation N would transfer that information to 
another person. Corporation M is a material advisor with respect to that 
potentially abusive tax shelter. Corporation M made a tax statement to 
Corporation N and Corporation M received $300,000 in connection with the 
potentially abusive tax shelter, which exceeds the minimum fee for that 
transaction ($250,000). Accordingly, Corporation M must keep a list with 
respect to that potentially abusive tax shelter. The list must contain 
information with respect to Corporation N (see paragraph (e)(2)(i) of 
this section). The list must also contain information about Taxpayer O 
and Taxpayer P because Corporation M knows the identity of Taxpayer O 
and Taxpayer P, and Corporation M knows that Taxpayer O and Taxpayer P 
entered into transaction O and transaction P, respectively (see 
paragraph (e)(2)(ii) of this section).

    (3) Contents--(i) In general. Each list must contain the following 
information--
    (A) The name of each transaction that is a potentially abusive tax 
shelter and the registration number, if any, obtained under section 
6111;
    (B) The TIN (as defined in section 7701(a)(41)), if any, of each 
transaction;
    (C) The name, address, and TIN of each person required to be on the 
list;
    (D) If applicable, the number of units (i.e., percentage of profits, 
number of shares, etc.) acquired by each person required to be included 
on the list, if known by the material advisor;
    (E) The date on which each person required to be included on the 
list entered into each transaction, if known by the material advisor;
    (F) The amount invested in each transaction by each person required 
to be included on the list, if known by the material advisor;
    (G) A detailed description of each transaction that describes both 
the tax structure and its expected tax treatment;
    (H) A summary or schedule of the tax treatment that each person is 
intended or expected to derive from participation in each transaction, 
if known by the material advisor;
    (I) Copies of any additional written materials, including tax 
analyses or opinions, relating to each transaction that are material to 
an understanding of the purported tax treatment or tax structure of the 
transaction that have been shown or provided to any person who acquired 
or may acquire an interest in the transactions, or to their 
representatives, tax advisors, or agents, by the material advisor or any 
related party or agent of the material advisor. However, a material 
advisor is not required to retain earlier drafts of a document provided 
the material advisor retains a copy of the final document (or, if there 
is no final document, the most recent draft of the document) and the 
final document (or most recent draft) contains all the information in 
the earlier drafts of such document that is material to an understanding 
of the purported tax treatment or the tax structure of the transaction; 
and
    (J) For each person required to be on the list, if the interest in 
the transaction was not acquired from the material advisor maintaining 
the list, the name of the person from whom the interest was acquired.
    (ii) [Reserved]

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    (f) Retention of lists. Each material advisor must maintain the list 
described in paragraph (e) of this section for seven years following the 
earlier of the date on which the material advisor last made a tax 
statement relating to the transaction, or the date the transaction was 
entered into, if known. If the material advisor required to prepare, 
maintain, and furnish the list is a corporation, partnership, or other 
entity (entity) that has dissolved or liquidated before completion of 
the seven-year period, the person responsible under state law for 
winding up the affairs of the entity must prepare, maintain and furnish 
the list on behalf of the entity, unless the entity submits the list to 
the Office of Tax Shelter Analysis (OTSA) within 60 days after the 
dissolution or liquidation. If state law does not specify any person as 
responsible for winding up the affairs, then each of the directors of 
the corporation, the general partners of the partnership, or the 
trustees, owners, or members of the entity are responsible for 
preparing, maintaining and furnishing the list on behalf of the entity, 
unless the entity submits the list to the Office of Tax Shelter Analysis 
(OTSA) within 60 days after the dissolution or liquidation. The 
responsible person must also provide notice to OTSA of such dissolution 
or liquidation within 60 days after the dissolution or liquidation. The 
list and the notice provided to OTSA may be sent to: IRS LM:PFTG:OTSA, 
Large & Mid-Size Business Division, 1111 Constitution Ave., NW., 
Washington, DC 20224, or to such other address as provided by the 
Commissioner.
    (g) Furnishing of lists--(1) In general. Each material advisor and 
person responsible for maintaining a list of persons must, upon written 
request by the IRS, furnish the list to the IRS within 20 days from the 
day on which the request is provided. The request is not required to be 
in the form of an administrative summons. The list may be furnished to 
the IRS on paper, card file, magnetic media, or in any other form, 
provided the method of furnishing the list enables the IRS to determine 
without undue delay or difficulty the information required in paragraph 
(e)(3) of this section.
    (2) Claims of privilege--(i) In any case in which an attorney or 
federally authorized tax practitioner within the meaning of section 7525 
is required to maintain a list with respect to a transaction that is a 
potentially abusive tax shelter, and that person has a reasonable belief 
that information specified in paragraph (e)(3)(i)(I) required to be 
furnished under this paragraph (g) is protected by the attorney-client 
privilege or by the confidentiality privilege of section 7525(a), the 
attorney or federally authorized tax practitioner must still maintain 
the list of persons pursuant to the requirements of this section. When 
the list is requested by the IRS, as provided in paragraph (g)(1) of 
this section, the material advisor may assert a privilege claim as to 
the information specified in paragraph (e)(3)(i)(I) subject to the 
requirements of this paragraph (g)(2).
    (ii) The claimed privilege must be supported by a statement that is 
signed by the attorney or federally authorized tax practitioner under 
penalties of perjury, must identify and describe (as set forth in this 
paragraph (g)(2)) the nature of each document that is not produced which 
will allow the IRS to determine the applicability of the privilege or 
protection claimed, without revealing the privileged information itself, 
and must include the following representations with respect to each 
document for which the privilege is claimed--
    (A) Specifically represent that the information was a confidential 
practitioner-client communication and, in the case of information which 
a federally authorized tax practitioner claims is privileged under 
section 7525, that the omitted information was not part of tax advice 
that constituted the promotion of the direct or indirect participation 
of a corporation in any tax shelter (as defined in section 
6662(d)(2)(C)(iii)); and
    (B) Specifically represent that to the best of such person's 
knowledge and belief, that the person and all others in possession of 
the omitted information did not disclose the omitted information to any 
person whose receipt of such information would result in a waiver of the 
privilege.

[[Page 147]]

    (iii) Identification and description of a document includes, but is 
not limited to--
    (A) The date appearing on such document or, if it has no date, the 
date or approximate date that such document was created;
    (B) The general nature, description and purpose of such document and 
the identity of the person who signed such document, and, if it was not 
signed, the identity of each person who prepared it; and
    (C) The identity of each person to whom such document was addressed 
and the identity of each person, other than such addressee, to whom such 
document, or a copy thereof, was given or sent.
    (h) Designation agreements. If more than one material advisor is 
required to maintain a list of persons, in accordance with paragraph (e) 
of this section, for a potentially abusive tax shelter, the material 
advisors may designate by written agreement a single material advisor to 
maintain the list or a portion of the list. The designation of one 
material advisor to maintain the list does not relieve the other 
material advisors from their obligation to furnish the list to the IRS 
in accordance with paragraph (g)(1) of this section, if the designated 
material advisor fails to furnish the list to the IRS in a timely 
manner. A material advisor is not relieved from the requirement of this 
section because a material advisor is unable to obtain the list from 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.
    (i) Procedure for obtaining rulings. A person may submit a request 
to the IRS for a ruling as to whether a specific transaction will be 
considered a potentially abusive tax shelter for purposes of this 
section and whether that person is a material advisor with respect to 
that transaction. If the request fully discloses all relevant facts 
relating to the transaction (including all facts relevant to the 
person's relationship to such transaction), then the requirement to 
maintain a list shall be suspended for that person during the period 
that the ruling request is pending and for 60 days thereafter; however, 
if it is ultimately determined that the transaction is a potentially 
abusive tax shelter and that the person is a material advisor with 
respect to that transaction, the pendency of such a ruling request shall 
not affect the requirement to maintain the list, nor shall it affect the 
persons required to be included on the list (including persons who 
acquired interests in the potentially abusive tax shelter prior to and 
during the pendency of the ruling request), or the other information 
required to be included as part of the list.
    (j) Effective date. This section applies to any transaction that is 
a potentially abusive tax shelter entered into, or any interest acquired 
therein, on or after February 28, 2003. However, this section shall 
apply to any transaction that was entered into, or in which an interest 
was acquired, after February 28, 2000, if the transaction becomes a 
potentially abusive tax shelter on or after February 28, 2003 because it 
is a listed transaction as defined in Sec. 1.6011-4 of this chapter, 
and is subject to disclosure under Sec. 1.6011-4 of this chapter. This 
section also shall apply to any transaction that was entered into, or in 
which an interest was acquired, after January 1, 2003, if the 
transaction becomes a listed transaction as defined in Sec. 1.6011-4 of 
this chapter and is subject to disclosure under Sec. Sec. 20.6011-4, 
25.6011-4, 31.6011-4, 53.6011-4, 54.6011-4 or 56.6011-4 of this chapter. 
The rules in Sec. 301.6112-1T as contained in 2002-45 I.R.B. 826 (see 
Sec. 601.601(d)(2) of this chapter) apply only to a transaction entered 
into, or an interest acquired therein, on or after January 1, 2003, and 
before February 28, 2003, if the transaction is a listed transaction as 
defined in Sec. 1.6011-4 of this chapter or a section 6111 tax shelter. 
Otherwise, the rules that apply with respect to any transaction that is 
a potentially abusive tax shelter entered into, or any interest acquired 
therein, before January 1, 2003, are contained in Sec. 301.6112-1T in 
effect prior to January 1, 2003 (see 26 CFR part 301 revised as of April 
1, 2002). Additionally, the IRS will not ask to inspect any list for a 
potentially abusive tax shelter that is entered into, or any interest 
acquired therein, on or after

[[Page 148]]

January 1, 2003, until June 1, 2003, unless the potentially abusive tax 
shelter is a listed transaction as defined in Sec. 1.6011-4 of this 
chapter or a transaction that is a section 6111 tax shelter.

[T.D. 9046, 68 FR 10173, Mar. 4, 2003, as amended by T.D. 9108, 68 FR 
75130, Dec. 30, 2003]