Sec. 6045B reporting requirements.

• Author: Anderson, Kevin D.

The Energy Improvement and Extension Act of 2008, P.L. 110-343, added Sec. 6045B to the Code. This section requires an issuer of a specified security to report certain information to the IRS and to its shareholders following an organizational action that affects the basis of a specified security. Sec. 6045B was enacted along with the cost-basis reporting rules under Sec. 6045 that require brokers to report the adjusted basis in securities to the investors. The purpose of both provisions is to improve tax compliance regarding the proper determination of the basis of securities held by taxpayers.

The reporting requirements of Sec. 6045B first applied to organizational actions on or after Jan. 1, 2011. In January 2012, the IRS issued the final version of Form 8937, Report of Organizational Actions Affecting Basis of Securities, for this purpose. The two key terms that establish the scope of the reporting requirement are "specified security" and "organizational action."

Note: Because Form 8937 was released only a few days before its Jan. 17 due date, the IRS has announced it will not impose penalties for reporting incorrect information on issuers who are required to file Form 8937 and furnish statements to shareholders under Sec. 6045B, provided they make good-faith efforts to post Form 8937 (or the required information) on their website or file accurate Forms 8937 and furnish corresponding issuer statements (Notice 2012-11).

Specified Security

A specified security under Sec. 6045B is any share of stock in an entity classified as a corporation, whether foreign or domestic (or any interest treated as stock, including an American depositary receipt). For this purpose, a security classified as stock by the issuer is treated as stock. Accordingly, the reporting requirement does not apply to entities classified as partnerships for federal income tax purposes or to securities other than stock. The requirement to file Form 8937 applies to both domestic and foreign issuers of securities if the security is owned by U.S. taxpayers.

Notwithstanding the potentially broad scope of this definition, the regulations clarify that an issuer is not required to provide information to any person who would be an exempt recipient under other information-reporting rules. Thus, an issuer is not required to provide a statement to an organization that is tax-exempt. Similarly, a statement is not required to be provided to a corporation, the U.S. government, a state, a...