MODIFICATIONS TO PENALTY FOR PROMOTING ABUSIVE TAX SHELTERS, ETC.

SEC. 7734. MODIFICATIONS TO PENALTY FOR PROMOTING ABUSIVE TAX SHELTERS, ETC. (a) General Rule.—Subsection (a) of section 6700 is amended— (1) by inserting “(directly or indirectly)” after “participates” in paragraph (1)(B), (2) by inserting “or causes another person to make or furnish” after “makes or furnishes” in paragraph (2), and (3) by striking the material following paragraph (2) and inserting the following: “shall pay, with respect to each activity described in paragraph (1), a penalty equal to the $1,000 or, if the person establishes that it is lesser, 100 percent of the gross income derived (or to be derived) by such person from such activity. For purposes of the preceding sentence, activities described in paragraph (1)(A) with respect to each entity or arrangement shall be treated as a separate activity and participation in each sale described in paragraph (1)(B) shall be so treated.” (b) Effective Date.—The amendment made by subsection (a) shall apply to activities after December 31, 1989.