Instructions For Form 8275 (1992)- Disclosure Statement (Page 2 of 2) in pdf

Negligence or Disregard of Rules

Part I

partnership or other entity, plan, or

arrangement, whose principal purpose is

If you disclose a position taken on your

Column (a).—Enter a complete

to avoid or evade Federal income tax.

return by filing a properly completed

description of the item(s) you are

A tax shelter item is any item of

disclosure statement, you can avoid the

disclosing. The description must identify

income, gain, loss, deduction, or credit

negligence or disregard of rules portion

the item and its location on the return.

which is directly or indirectly attributable

of the accuracy-related penalty.

If you claim the same tax treatment

to the principal purpose of the tax

However, your disclosure must be

for a group of similar items in the same

shelter to avoid or evade Federal income

complete and specifically identify the

tax year, enter a description for the

tax.

item or position which is being

group of items rather than a separate

disclosed.

Income Tax Return Preparer

description of each item within the

Your position will not be considered

group.

Penalties

sufficiently disclosed by just completing

If any item you disclose is from a

A preparer who files an income tax

and filing a form, schedule, or line item

pass-through entity, you must identify

return or claim for refund is subject to a

according to the applicable instructions.

the item as such. If you disclose items

$250 penalty for taking a position which

from more than one pass-through entity,

Substantial Understatement

understates any part of the liability if:

you must complete a separate Form

The position has no realistic possibility

There is a substantial understatement of

8275 for each entity. Also, see How To

of being sustained on its merits, and

income tax if the amount of the

File on page 1.

understatement for any tax year exceeds

The preparer knew (or reasonably

the greater of 10% of the tax required to

should have known) of the position, and

Part II

be shown on the return for the tax year,

The position is frivolous or not

Your disclosure must include:

or $5,000 ($10,000 for a corporation

adequately disclosed on the return or on

other than an S corporation or a

A description of the relevant facts

the appropriate disclosure statement.

personal holding company as defined in

affecting the tax treatment of the item

The penalty will not apply if it can be

section 542).

and the nature of the potential

shown that there was reasonable cause

controversy concerning the tax

An understatement is the excess of:

for the understatement and that the

treatment of the item, or

The amount of tax required to be

preparer acted in good faith.

A concise description of the legal

shown on the return for the taxable year;

In cases where any part of the

issues presented by these facts.

over

understatement of liability is due to a

In addition, if you are disclosing a

The amount of tax shown on the

willful attempt by the return preparer to

position contrary to a rule (such as a

return for the taxable year, reduced by

understate the liability, or if the

statutory position or IRS revenue ruling),

any rebates.

understatement is due to reckless or

you must identify the rule.

intentional disregard of rules or

For purposes of the substantial

regulations by the preparer, the preparer

Note: Disclosure will not be considered

understatement portion of the

is subject to a $1,000 penalty.

adequate unless the above information

accuracy-related penalty, the amount of

reasonably identifies the item, its

the understatement will be reduced by

As with the negligence or disregard of

amount, the location of the item(s) on

the part that is attributable to:

rules or regulations and the substantial

your retur n, and the nature of the

understatement portions of the

An item (other than a tax shelter item),

potential controversy to which the

accuracy-related penalty, the preparer

for which there was substantial authority

disclosure relates. For example, if

penalties under section 6694 generally

for the treatment claimed at the time the

instead of supplying the information

may be avoided if a position is

return was filed or on the last day of the

asked for above, you attach a copy of an

sufficiently disclosed and is not frivolous.

taxable year to which the return relates.

acquisition agreement to your return to

Note: For more information about the

An item (other than a tax shelter item)

disclose the issues involved in

accuracy-related penalty and preparer

that is adequately disclosed on this

deter mining the basis of certain acquired

penalties, and disclosure as a means of

form.

assets, your disclosure generally will not

avoiding these penalties, see Regulations

A tax shelter item, if (1) there was

be considered adequate.

sections 1.6662, 1.6664, and 1.6694.

substantial authority for the treatment

claimed at the time the return was filed

Part III

Specific Instructions

or on the last day of the taxable year to

Line 4.—Contact your pass-through

which the return relates, and (2) you

Be sure to supply all of the information

entity if you do not know where its

held the reasonable belief that the tax

requested in Parts I and II, and, if

return was filed. However, for partners

treatment of the item was more likely

applicable, Part III. Your disclosure will

and S corporation shareholders,

than not the proper tax treatment.

be considered adequate if you supply

information for line 4 can be found on

Tax Shelter Items.—A tax shelter, for

the information requested in detail.

the Schedule K-1 (Form 1065) or on the

purposes of the substantial

Schedule K-1 (Form 1120S) that you

understatement portion of the

received from the partnership or

accuracy-related penalty, is a

S corporation.

Page 2

Instructions For Form 8275 (1992)- Disclosure Statement Page 2

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