5. Documentation Required
Only a handful of provisions incorporate the [section] 267 or [section] 318 attribution rules by reference and actually include an identification or documentation requirement. For instance, to obtain the (now expired) first-time homebuyer credit in [section] 36, a taxpayer must file Form 5405, which requires the taxpayer to certify that her home was not purchased from a related person. (223) The taxpayer is also required by statute to attach to her return a copy of the executed settlement statement relating to the purchase as a prerequisite to obtaining the credit. (224) In addition, the installment sale rules of [section] 453 contain antiabuse rules targeted at potentially manipulative sales of property between related persons. (225) A taxpayer reporting gain on the installment method must file Form 6252, which contains a section that specifically addresses related party installment sales. The first line of this section requires the taxpayer to identify the name, address, and taxpayer identification number of the related purchaser of the property. (226) And [section] 1031(f) contains an antiabuse rule that is designed to prevent related persons from engaging in a like-kind exchange in order to shift the basis of properties prior to an anticipated sale. (227) The IRS requires taxpayers to make relatively detailed reports regarding such related party exchanges, including documenting the identity of the related party to the exchange. (228)
B. Other Attribution Rules
Though [section][section] 267 and 318 are the most commonly encountered attribution rules in the Code, there are a few provisions with their own unique attribution rules. In this section, I briefly describe these attribution rules and their attendant identification and documentation requirements (if any). I first describe generally applicable attribution rules and then address rules that apply only to married different-sex couples. The identification and documentation requirements in these attribution rules share the same haphazard quality as the family tax provisions discussed in Part II of this Article.
3. General Attribution Rules
Section 541 imposes a personal holding company tax on the undistributed, generally passive income of corporations. As originally conceived, the personal holding company tax targeted corporations that functioned as incorporated pocketbooks, incorporated talents, or incorporated yachts or country estates to provide their shareholders a means of avoiding taxation at the (then higher) graduated rates that applied to individuals. (229) To be classified as a personal holding company, a corporation must meet both an income test and an ownership test. (230) The ownership test requires that more than 50% of the value of the corporation's stock must be held by five or fewer individuals. (231) For purposes of determining whether this ownership test has been satisfied, [section] 544 requires taxpayers to take into account its own special set of constructive ownership rules. (232) Given the central importance of the ownership requirement to classification as a personal holding company, it should not be surprising that there is a section of the personal holding company tax return that requires the corporation to identify the name and address of each of the shareholders who comprise the requisite five or fewer individuals who own more than 50% of the value of its stock. (233) Interestingly, this same stock ownership requirement is incorporated by reference in the at-risk rules of [section] 465 (including a modified version of the constructive ownership rules), and it there serves the important role of setting the outside parameters of the class of closely held corporations subject to those rules. (234) Yet, there is no requirement that corporate taxpayers document which shareholders cause them to be subject to the at-risk rules. (235) The same is true of the passive activity rules, which indirectly borrow the personal holding company stock ownership requirement by incorporating by reference the definition of closely held corporation from [section] 465. …