PUBLIC LAW 109–222—MAY 17, 2006
120 STAT. 369
a tax for such taxable year in the amount determined under subsection (b)(1). ‘‘(2) ENTITY MANAGER.—If any entity manager of a taxexempt entity approves such entity as (or otherwise causes such entity to be) a party to a prohibited tax shelter transaction at any time during the taxable year and knows or has reason to know that the transaction is a prohibited tax shelter transaction, such manager shall pay a tax for such taxable year in the amount determined under subsection (b)(2). ‘‘(b) AMOUNT OF TAX.— ‘‘(1) ENTITY.—In the case of a tax-exempt entity— ‘‘(A) IN GENERAL.—Except as provided in subparagraph (B), the amount of the tax imposed under subsection (a)(1) with respect to any transaction for a taxable year shall be an amount equal to the product of the highest rate of tax under section 11, and the greater of— ‘‘(i) the entity’s net income (after taking into account any tax imposed by this subtitle (other than by this section) with respect to such transaction) for such taxable year which— ‘‘(I) in the case of a prohibited tax shelter transaction (other than a subsequently listed transaction), is attributable to such transaction, or ‘‘(II) in the case of a subsequently listed transaction, is attributable to such transaction and which is properly allocable to the period beginning on the later of the date such transaction is identified by guidance as a listed transaction by the Secretary or the first day of the taxable year, or ‘‘(ii) 75 percent of the proceeds received by the entity for the taxable year which— ‘‘(I) in the case of a prohibited tax shelter transaction (other than a subsequently listed transaction), are attributable to such transaction, or ‘‘(II) in the case of a subsequently listed transaction, are attributable to such transaction and which are properly allocable to the period beginning on the later of the date such transaction is identified by guidance as a listed transaction by the Secretary or the first day of the taxable year. ‘‘(B) INCREASE IN TAX FOR CERTAIN KNOWING TRANSACTIONS.—In the case of a tax-exempt entity which knew, or had reason to know, a transaction was a prohibited tax shelter transaction at the time the entity became a party to the transaction, the amount of the tax imposed under subsection (a)(1)(A) with respect to any transaction for a taxable year shall be the greater of— ‘‘(i) 100 percent of the entity’s net income (after taking into account any tax imposed by this subtitle (other than by this section) with respect to the prohibited tax shelter transaction) for such taxable year which is attributable to the prohibited tax shelter transaction, or
VerDate 14-DEC-2004
10:20 Jul 12, 2007
Jkt 059194
PO 00001
Frm 00367
Fmt 6580
Sfmt 6581
E:\PUBLAW\PUBL001.109
APPS06
PsN: PUBL001
�
