CCA 1138039: One section 6707A penalty applies to an after-listed transaction
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This page covers one taxpayer's ruling from 2011, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.
Plain-English summary
Chief Counsel Advice addressed the penalty under IRC § 6707A for an after-listed transaction. The advice stated that there is one reporting obligation and therefore one penalty for the transaction. The penalty amount is computed by adding the decrease in tax from all participation years that should have been reported when the transaction became listed. The advice concluded that only one minimum and one maximum apply on the facts presented, although the maximum did not affect the result because the combined decrease was below the statutory maximum for an individual with a listed transaction.
Ruling snapshot
- Question: How many section 6707A penalties apply to an after-listed transaction, and how is the amount calculated?
- Outcome: advice given
- Key authorities: IRC § 6707A
Full text (IRS public release)
ID: CCA_2011072513000659 Number: 201138039
Release Date: 9/23/2011
Office: --------------
UILC: 6707A.00-00
From: ---------------------------
Sent: Monday, July 25, 2011 1:00:08 PM
To: ---------------------
Cc: -------------------------------------------------------------------------------
Subject: RE: ------- 6707A 30 day letter for approval
The exam team correctly computed the 6707A penalty. For after-listed transactions, like the one here,
there's only one reporting obligation and, therefore, only one penalty. To compute the amount of that
penalty, add up the decrease in tax from all of the years of participation that should have been reported at
the time that the transaction became a listed transaction. Here, that would be the sum of the decrease in
tax from ------- and -------. Note that after-listed transactions are a special case and that, in other
situations, you would not sum the decrease in tax from multiple years.
It's our position that there would only be one min and one max applied in your case, but it doesn't matter,
since the sum of the decrease in tax from both years is less than the $100,000 maximum for an individual
with a listed transaction.
Hope this helps. Please let me know if you have any questions.
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