Page:United States Statutes at Large Volume 120.djvu/1098

 PUBLIC LAW 109–280—AUG. 17, 2006

120 STAT. 1067

‘‘(i) IN GENERAL.—Subparagraph (A) shall apply only to the portion of a qualifying specified payment received or accrued by the controlling organization that exceeds the amount which would have been paid or accrued if such payment met the requirements prescribed under section 482. TO TAX FOR VALUATION ‘‘(ii) ADDITION MISSTATEMENTS.—The tax imposed by this chapter on the controlling organization shall be increased by an amount equal to 20 percent of the larger of— ‘‘(I) such excess determined without regard to any amendment or supplement to a return of tax, or ‘‘(II) such excess determined with regard to all such amendments and supplements. ‘‘(iii) QUALIFYING SPECIFIED PAYMENT.—The term ‘qualifying specified payment’ means a specified payment which is made pursuant to— ‘‘(I) a binding written contract in effect on the date of the enactment of this subparagraph, or ‘‘(II) a contract which is a renewal, under substantially similar terms, of a contract described in subclause (I). ‘‘(iv) TERMINATION.—This subparagraph shall not apply to payments received or accrued after December 31, 2007.’’. (b) REPORTING.— (1) IN GENERAL.—Section 6033 (relating to returns by exempt organizations) is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection: ‘‘(h) CONTROLLING ORGANIZATIONS.—Each controlling organization (within the meaning of section 512(b)(13)) which is subject to the requirements of subsection (a) shall include on the return required under subsection (a)— ‘‘(1) any interest, annuities, royalties, or rents received from each controlled entity (within the meaning of section 512(b)(13)), ‘‘(2) any loans made to each such controlled entity, and ‘‘(3) any transfers of funds between such controlling organization and each such controlled entity.’’. (2) REPORT TO CONGRESS.—Not later than January 1, 2009, the Secretary of the Treasury shall submit to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives a report on the effectiveness of the Internal Revenue Service in administering the amendments made by subsection (a) and on the extent to which payments by controlled entities (within the meaning of section 512(b)(13) of the Internal Revenue Code of 1986) to controlling organizations (within the meaning of section 512(b)(13) of such Code) meet the requirements under section 482 of such Code. Such report shall include the results of any audit of any controlling organization or controlled entity and recommendations relating to the tax treatment of payments from controlled entities to controlling organizations. (c) EFFECTIVE DATE.—

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Applicability.

26 USC 6033.

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