§6038B Notice of Certain Transfers to Foreign Persons

Summary

Requires a United States person to tell the Treasury Department certain details when they transfer property to a foreign company or partnership or when they make a distribution to someone who is not a U.S. person. The rule covers transfers to a foreign corporation in exchanges described in sections 332, 351, 354, 355, 356, or 361, contributions to a foreign partnership described in section 721 or in other contributions the Secretary’s rules cover, and distributions described in section 336 to non‑U.S. persons. The report must be filed when and how the Secretary (Treasury) says. A transfer to a foreign partnership must be reported only if, right after the transfer, the U.S. person owns at least a 10‑percent interest (see section 6046A(d)) or if the value given, combined with related transfers in the prior 12 months, is more than $100,000 (value = fair market value when transferred). If a contribution is treated as made because of an adjustment under section 482 or similar, the Secretary can set the effective date. If someone fails to report, they pay a penalty equal to 10% of the property’s fair market value and, for contributions, must recognize gain as if sold for that value. The penalty won’t exceed $100,000 unless the failure was intentional. Reasonable cause (not willful neglect) avoids the penalty.