SECTION 4. APPLICATION

.01 In general . The definition of a transaction with contractual protection includes references to “tax consequences” and “tax benefits.” For purposes of § 1.6011–4, “tax” is defined as “Federal income tax.” § 1.6011–4(c)(5). Accordingly, § 1.6011–4(b)(4) does not apply to transactions in which the refundable or contingent fees are based on the taxpayer’s liability for taxes other than federal income taxes.

.02 Exceptions . The following transactions are not taken into account in determining whether a transaction is a transaction with contractual protection under § 1.6011–4(b)(4):

(1) Transactions in which the refundable or contingent fee is related to the work opportunity credit under § 51 of the Internal Revenue Code.

(2) Transactions in which the refundable or contingent fee is related to the welfare-to-work credit under § 51A.

(3) Transactions in which the refundable or contingent fee is related to the Indian employment credit under § 45A(a).