SECTION 4. APPLICATION

.01 In general. In determining whether a transaction has a significant book-tax difference in any taxable year, the taxpayer must first identify the transaction and then determine which items of income, gain, expense, or loss result from that transaction. If the book-tax difference for all of the items resulting from the transaction (as determined under § 1.6011–4(b)(6) without netting) exceeds $10 million in any taxable year, the transaction is a reportable transaction under § 1.6011–4(b)(6). For example, if the taxpayer participates in

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(22) Inside buildup, death benefits, or cash surrender value of life insurance or annuity contracts.

(23) Life insurance reserves determined under § 807 and non-life insurance reserves determined under § 832(b).

(24) Capitalization of policy acquisition expenses of insurance companies.

(25) Imputed interest income or deductions under §§ 483, 1274, 7872, or 1.1275–4. (26) Gains and losses arising under §§ 986(c), 987, and 988.

(27) Items excluded under § 883, § 921, or an applicable treaty from a foreign corporation’s income that would otherwise be subject to tax under § 882.

(28) Section 481 adjustments. (29) Inventory valuation differences. (30) Section 198 deductions for environmental remediation costs.

(31) Items resulting from the treatment of a group of mortgages as a single asset for book purposes but as multiple assets for tax purposes.

(32) Items that are reported on a gross basis for tax and on a net basis for book, or on a net basis for tax and a gross basis for book, if the differing reporting produces no net book-tax difference for the taxable period; for example, in situations in which the amount reported for book purposes by a holder of a mortgage pass-through certificate is equal to the gross interest reported for tax purposes reduced by the holder’s separate tax deduction for mortgage servicing fees.

(33) Any item resulting from the use of different book and tax treatment of original issue discount, market discount, acquisition discount, de minimis original issue discount, qualified stated interest, amortizable bond premium, bond issuance premium, or debt issuance costs.

(34) Items resulting from the application of specialized accounting methods for capital expenditures under § 263A, Rev. Proc. 2001–46, 2001–2 C.B. 263, or Rev. Proc. 2002–65, 2002–2 C.B. 700.

(35) Items resulting from adjustments to taxable income under § 833(b).