SECTION 2. SECTION 6038B — Internal Revenue Bulletin 1998-11

REPORTING FOR TRANSFERS MADE AFTER AUGUST 5, 1997 AND BEFORE JANUARY 1, 1998

Section 721 contributions to foreign partnerships made after August 5, 1997 and before January 1, 1998 and required to be reported under section 6038B shall be reported by the filing of Form 926 with Part I of the form completed and the information required in this Section 2 attached. Form 926 and its attachments must be filed with the transferor’s tax return or information return for the taxable year that includes the date of transfer. The notation “Filed under Notice 98–17” should be marked at the top of the form.

A U.S. person that contributes to a foreign partnership appreciated property subject to the allocation rules of section 704(c) (property with built-in gain), or any intangible property, in a transfer subject to section 6038B, must separately identify the property (except to the extent that the property is permitted to be aggregated in making allocations under section 704(c)). A U.S. person that contributes built-in gain property must also indicate the foreign partnership’s method of allo

March 16, 1998 6 1998–11 I.R.B.

1494 and Notice 97–18. Taxpayers need not report such transfers to avoid penalties under section 1494(c). However, in such cases, at their option, taxpayers may file a Form 926 with the notation “Filed under Notice 98–17—no reportable transfers” at the top of the form.

This Notice does not affect any obligation under section 1494 to report transfers to foreign entities other than foreign partnerships. Also, if a transfer to a foreign partnership was subject to the excise tax under section 1491, the tax must still be paid and the transfer reported on Form 926. If the excise tax does not otherwise apply by reason of section 1492, the taxpayer must still comply with all applicable requirements of that section. Finally, a U.S. person that is required to report under section 1494 and does not comply with the reporting requirements of this Notice remains subject to penalties under section 1494(c).