MODIFICATION OF SUBSTANTIAL UNDERSTATEMENT PENALTY FOR CORPORATIONS PARTICIPATING IN TAX SHELTERS.

SEC. 744. MODIFICATION OF SUBSTANTIAL UNDERSTATEMENT PENALTY FOR CORPORATIONS PARTICIPATING IN TAX SHELTERS. (a) In General.—Subparagraph (C) of section 6662(d)(2) (relating to special rules in cases involving tax shelters) is amended by redesignating clause (ii) as clause (iii) and by inserting after clause (i) the following new clause: “(ii) Subparagraph (b) not to apply to corporations.—Subparagraph (B) shall not apply to any item of a corporation which is attributable to a tax shelter.” (b) Technical Amendments.— (1) Clause (i) of section 6662(d)(2)(C) is amended by striking “In the case of any item” and inserting “In the case of any item of a taxpayer other than a corporation which is”. (2) Clause (iii) of section 6662(d)(2)(C), as redesignated by subsection (a), is amended by striking “clause (i)” and inserting “this subparagraph”. (c) Effective Date.—The amendments made by this section shall apply to items related to transactions occurring after the date of the enactment of this Act.