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Reportable Transaction Disclosure Statement

Reportable Transaction Disclosure Statement Section references are to the Internal any series of steps carried out as part Participation in a Revenue Code unless otherwise noted. of a plan. Reportable Transaction Substantially Similar A reportable transaction is a transaction What’s New described in one or more of the A transaction is substantially similar to following categories. New rules apply to penalties assessed another transaction if it is expected to under section 6707A after December obtain the same or similar types of tax Listed Transactions 31, 2006. See Penalties on page 4 for consequences and is either factually A listed transaction is a transaction that details. similar or based on the same or similar is the same as or substantially similar to tax strategy. Receipt of an opinion one of the types of transactions that the regarding the tax consequences of the General Instructions IRS has determined to be a tax transaction is not relevant to the avoidance transaction. These determination of whether the transactions are identified by notice, Purpose of Form transaction is the same as or regulation, or other form of published substantially similar to another Use Form 8886 to disclose information guidance as a listed transaction. For transaction. Further, the term for each reportable transaction in which existing guidance see Notice 2009-59, substantially similar must be broadly you participated. See Participation in a 2009-31 I.R.B. 170, available at www. construed in favor of disclosure. See Reportable Transaction, below, to irs.gov/pub/irs-irbs/irb09-31.pdf. For Regulations section 1.6011-4(c)(4) for determine if you participated in a updates to this list, go to the IRS web examples. reportable transaction. For more page at www.irs.gov/businesses/ information on the disclosure rules, see corporations and click on Abusive Tax Regulations section 1.6011-4. Tax Benefit Shelters and Transactions. The listed Generally, you must file a separate A tax benefit includes deductions, transactions will also be periodically Form 8886 for each reportable exclusions from gross income, updated in future issues of the Internal nonrecognition of gain, tax credits, Revenue Bulletin. You can find a notice transaction. However, you may report more than one transaction on one form adjustments (or the absence of or ruling in the Internal Revenue adjustments) to the basis of property, Bulletin at www.irs.gov/pub/irs-irbs/ if the transactions are the same or status as an entity exempt from federal irbXX-YY.pdf, where XX is the two-digit substantially similar. See the definition income taxation, and any other tax year and YY is the two-digit bulletin of substantially similar below. consequences that may reduce a number. For example, you can find The fact that a transaction must be taxpayer’s federal tax liability by Notice 2009-59, 2009-31 I.R.B. 170, at reported on this form does not mean affecting the amount, timing, character, www.irs.gov/pub/irs-irbs/irb09-31.pdf. the tax benefits from the transaction will or source of any item of income, gain, You have participated in a listed be disallowed. expense, loss, or credit. transaction if any of the following Prohibited tax shelter transactions. applies. Generally, the term ‘‘prohibited tax Tax Structure • Your tax return reflects tax shelter transaction’’ means listed The tax structure of a transaction is any consequences or a tax strategy transactions, transactions with described in published guidance that fact that may be relevant to contractual protection, or confidential understanding the purported or claimed lists the transaction. transactions. See the definition of these federal income tax treatment of the • You know or have reason to know categories below. There may be that tax benefits reflected on your tax transaction. additional disclosure requirements for return are derived directly or indirectly tax-exempt entities with respect to from such tax consequences or tax these types of transactions. If you are a Who Must File strategy. tax-exempt entity and you are a party to Any taxpayer, including an individual, • You are in a type or class of a prohibited tax shelter transaction, you trust, estate, partnership, S corporation, individuals or entities that published may be required to file Form 8886-T, or other corporation, that participates in guidance treats as participants in a Disclosure by Tax-Exempt Entity listed transaction. a reportable transaction and is required Regarding Prohibited Tax Shelter to file a federal tax return or information Exception. If you participated in a Transaction, in addition to filing Form return must file Form 8886. However, a transaction that is the same as or 8886. For more information, see the regulated investment company (RIC) substantially similar to the transaction Instructions for Form 8886-T. (as defined in section 851) or an described in Notice 2002-35, 2002-21 investment vehicle that is at least 95% I.R.B. 992, available at www.irs.gov/ Definitions owned by one or more RICs at all times pub/irs-irbs/irb02-21.pdf (tax avoidance during the course of a transaction is not using notional principal contracts) solely Transaction required to file Form 8886 for any as a result of your direct or indirect A transaction includes all of the factual transaction other than a listed interest in a pass-through entity, you elements relevant to the expected tax transaction (as defined below) or a are not required to disclose the treatment of any investment, entity, transaction of interest (as defined on transaction on Form 8886. For more plan, or arrangement and it includes page 3). information, see Notice 2006-16,

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