118 STAT. 1578 PUBLIC LAW 108–357—OCT. 22, 2004 ‘‘(A) any listed transaction, and ‘‘(B) any reportable transaction (other than a listed transaction) if a significant purpose of such transaction is the avoidance or evasion of Federal income tax. ‘‘(c) HIGHER PENALTY FOR NONDISCLOSED LISTED AND OTHER AVOIDANCE TRANSACTIONS.—Subsection (a) shall be applied by sub stituting ‘30 percent’ for ‘20 percent’ with respect to the portion of any reportable transaction understatement with respect to which the requirement of section 6664(d)(2)(A) is not met. ‘‘(d) DEFINITIONS OF REPORTABLE AND LISTED TRANSACTIONS.— For purposes of this section, the terms ‘reportable transaction’ and ‘listed transaction’ have the respective meanings given to such terms by section 6707A(c). ‘‘(e) SPECIAL RULES.— ‘‘(1) COORDINATION WITH PENALTIES, ETC., ON OTHER UNDER STATEMENTS.—In the case of an understatement (as defined in section 6662(d)(2))— ‘‘(A) the amount of such understatement (determined without regard to this paragraph) shall be increased by the aggregate amount of reportable transaction understate ments for purposes of determining whether such under statement is a substantial understatement under section 6662(d)(1), and ‘‘(B) the addition to tax under section 6662(a) shall apply only to the excess of the amount of the substantial understatement (if any) after the application of subpara graph (A) over the aggregate amount of reportable trans action understatements. ‘‘(2) COORDINATION WITH OTHER PENALTIES.— ‘‘(A) APPLICATION OF FRAUD PENALTY.—References to an underpayment in section 6663 shall be treated as including references to a reportable transaction understate ment. ‘‘(B) NO DOUBLE PENALTY.—This section shall not apply to any portion of an understatement on which a penalty is imposed under section 6663. ‘‘(C) COORDINATION WITH VALUATION PENALTIES.— ‘‘(i) SECTION 6662(e).—Section 6662(e) shall not apply to any portion of an understatement on which a penalty is imposed under this section. ‘‘(ii) SECTION 6662(h).—This section shall not apply to any portion of an understatement on which a penalty is imposed under section 6662(h). ‘‘(3) SPECIAL RULE FOR AMENDED RETURNS.—Except as pro vided in regulations, in no event shall any tax treatment included with an amendment or supplement to a return of tax be taken into account in determining the amount of any reportable transaction understatement if the amendment or supplement is filed after the earlier of the date the taxpayer is first contacted by the Secretary regarding the examination of the return or such other date as is specified by the Sec retary.’’. (b) DETERMINATION OF OTHER UNDERSTATEMENTS.—Subpara graph (A) of section 6662(d)(2) is amended by adding at the end the following flush sentence: Applicability. Applicability.
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