Ill STAT. 928 PUBLIC LAW 105-34—AUG. 5, 1997 the date such shelter is registered under section 6111, or "(ii) $10,000. Clause (i) shall be applied by substituting 75 percent' for *50 percent' in the case of an intentional failure or act described in paragraph (1). " (B) SPECIAL RULE FOR PARTICIPANTS REQUIRED TO REG- ISTER SHELTER. —In the case of a person required to register such a tax shelter by reason of section 6111(d)(3)— "(i) such person shall be required to pay the penalty under paragraph (1) only if such person actually participated in such shelter, "(ii) the amount of such penalty shall be determined by taking into account under subparagraph (A)(i) only the fees paid by such person, and "(iii) such penalty shall be in addition to the penalty imposed on any other person for failing to register such shelter.". (c) MODIFICATIONS TO SUBSTANTIAL UNDERSTATEMENT PEN- ALTY.— (1) RESTRICTION ON REASONABLE BASIS FOR CORPORATE UNDERSTATEMENT OF INCOME TAX. —Subparagraph (B) of section 6662(d)(2) is amended by adding at the end the following new flush sentence: "For purposes of clause (ii)(II), in no event shall a corporation be treated as having a reasonable basis for its tax treatment of an item attributable to a multiple-party financing transaction if such treatment does not clearly reflect the income of the corporation.". (2) MODIFICATION TO DEFINITION OF TAX SHELTER.— Clause (iii) of section 6662(d)(2)(C) is amended by striking "the principal purpose" and inserting "a significant purpose". (d) CONFORMING AMENDMENTS.— (1) Paragraph (2) of section 6707(a) is amended by striking "The penalty^' and inserting "Except as provided in paragraph (3), the penalty". (2) Subparagraph (A) of section 6707(a)(1) is amended by striking "paragraph (2)" and inserting "paragraph (2) or (3), as the case may be". 26 USC 6111 (e) EFFECTIVE DATE. — note. (1) IN GENERAL.— Except as provided in paragraph (2), the amendments made by this section shall apply to any tax shelter (as defined in section 6111(d) of the Internal Revenue Code of 1986, as amended by this section) interests in which are offered to potential participants after the Secretary of the Treasury prescribes guidance with respect to meeting requirements added by such amendments. (2) MODIFICATIONS TO SUBSTANTIAL UNDERSTATEMENT PEN- ALTY.— The amendments made by subsection (c) shall apply to items with respect to transactions entered into after the date of the enactment of this Act.
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