104 STAT. 1388-454 PUBLIC LAW 101-508 —NOV. 5, 1990 SEC. 11312. ACCURACY-RELATED PENALTY TO APPLY TO SECTION 482 ADJUSTMENTS. (a) GENERAL RULE.— Subsection (e) of section 6662 (defining substantial valuation overstatement under chapter 1) is amended to read as follows: "(e) SUBSTANTIAL VALUATION MISSTATEMENT UNDER CHAPTER 1.— "(1) IN GENERAL.—For purposes of this section, there is a substantial valuation misstatement under chapter 1 if— "(A) the value of any property (or the adjusted basis of any property) claimed on any return of tax imposed by chapter 1 is 200 percent or more of the amount determined to be the correct amount of such valuation or adjusted basis (as the case may be), or "(B)(i) the price for any property or services (or for the use of property) claimed on any such return in connection with any transaction between persons described in section 482 is 200 percent or more (or 50 percent or less) of the amount determined under section 482 to be the correct amount of such price, or "(ii) the net section 482 transfer price adjustment for the taxable year exceeds $10,000,000. "(2) LIMITATION.—No penalty shall be imposed by reason of subsection (b)(3) unless the portion of the underpayment for the taxable year attributable to substantial valuation misstatements under chapter 1 exceeds $5,000 ($10,000 in the case of a corporation other than an S corporation or a personal holding company (as defined in section 542)). "(3) NET SECTION 482 TRANSFER PRICE ADJUSTMENT. —For purposes of this subsection— "(A) IN GENERAL.— The term 'net section 482 transfer price adjustment' means, with respect to any taxable year, the net increase in taxable income for the taxable year (determined without regard to any amount carried to such taxable year from another taxable year) resulting from adjustments under section 482 in the price for any property or services (or for the use of property). "(B) CERTAIN ADJUSTMENTS EXCLUDED IN DETERMINING THRESHOLD. —For purposes of determining whether the $10,000,000 threshold requirement of paragraph (IXBXii) is met, there shall be excluded— "(i) any portion of the net increase in taxable income referred to in subparagraph (A) which is attributable to any redetermination of a price if it is shown that there was a reasonable cause for the taxpayer's determination of such price and that the taxpayer acted in good faith with respect to such price, and "(ii) any portion of such net increase which is attributable to any transaction solely between foreign corporations unless, in the case of any of such corporations, the treatment of such transaction affects the determination of income from sources within the United States or taxable income effectively connected with the conduct of a trade or business within the United States. "(C) SPECIAL RULE. —If the regular tax (as defined in section 55(c)) imposed by chapter 1 on the taxpayer is
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