Instructions For Form 8886 printable pdf download

Department of the Treasury

Instructions for Form 8886

Internal Revenue Service

(Rev. June 2004)

Reportable Transaction Disclosure Statement

Section references are to the Internal Revenue Code unless otherwise noted.

Definitions

You have participated in a listed

What’s New

transaction if any of the following applies.

•

Your tax return reflects tax consequences

Transaction

The confidential transactions category

or a tax strategy described in published

has been revised to reflect recent changes

A transaction includes all of the factual

guidance that lists the transaction.

in the regulations. See Confidential

•

elements relevant to the expected tax

You know or have reason to know that tax

Transactions below and Regulations section

treatment of any investment, entity, plan, or

benefits reflected on your tax return are

1.6011-4(b)(3) for more details.

arrangement and it includes any series of

derived directly or indirectly from such tax

•

steps carried out as part of a plan.

There are additional reporting

consequences or tax strategy.

•

requirements for listed transactions. You are

You are in a class of persons that

Substantially Similar

now required to identify all parties to the

published guidance treats as participants in

A transaction is substantially similar to

transaction. See the instructions for Line 7

a listed transaction.

another transaction if it is expected to obtain

on page 3 for more details.

Confidential Transactions

the same or similar types of tax

consequences and is either factually similar

General Instructions

This category includes transactions that are

or based on the same or similar tax strategy.

offered to you under conditions of

Receipt of an opinion regarding the tax

confidentiality and for which you paid an

Purpose of Form

consequences of the transaction is not

advisor a minimum fee (defined below). A

relevant to the determination of whether the

transaction is considered to be offered

Use Form 8886 to disclose information for

transaction is the same as or substantially

under conditions of confidentiality if the

each reportable transaction in which you

similar to another transaction. Further, the

advisor places a limitation on your

participated. See Participation in a

term substantially similar must be broadly

disclosure of the tax treatment or tax

Reportable Transaction below to determine

construed in favor of disclosure. See

structure of the transaction and the limitation

if you participated in a reportable

Regulations section 1.6011-4(c)(4) for

on disclosure protects the confidentiality of

transaction.

examples.

the advisor’s tax strategies. The transaction

is treated as confidential even if the

The form applies to transactions entered

Participation in a

conditions of confidentiality are not legally

into after December 31, 2002. However,

binding on you. See Regulations section

Reportable Transaction

these instructions are based on Regulations

1.6011-4(b)(3) for more information.

section 1.6011-4, which applies to

A reportable transaction is a transaction

Minimum fee. For a corporation, or a

transactions entered into after February 27,

described in one or more of the following six

partnership or trust in which all of the

2003. For transactions entered into after

categories.

owners or beneficiaries are corporations, the

December 31, 2002, and before February

minimum fee is $250,000. For all others, the

Listed Transactions

28, 2003, you may either follow these

minimum fee is $50,000. The minimum fee

instructions or the rules of Temporary

This category includes transactions that are

includes all fees paid directly or indirectly for

Regulations section 1.6011-4T (T.D. 9017,

the same as or substantially similar to one of

the tax strategy, advice or analysis of the

2002-45 I.R.B. 815). For transactions

the types of transactions that the IRS has

transaction (whether or not related to the tax

determined to be a tax avoidance

entered into prior to January 1, 2003, see

consequences of the transaction),

transaction. These transactions are

your tax return instructions for the disclosure

implementation and documentation of the

identified by notice, regulation, or other form

requirements.

transaction, and tax preparation fees to the

of published guidance as a listed

extent they exceed customary return

Generally, you must file a separate Form

transaction. For existing guidance see:

preparation fees. Fees do not include

•

8886 for each reportable transaction.

Notice 2003-76, 2003-49 I.R.B. 1181

amounts paid to a person, including an

•

However, you may report more than one

Notice 2003-77, 2003-49 I.R.B. 1182

advisor, in that person’s capacity as a party

•

Notice 2003-81, 2003-51 I.R.B. 1223

transaction on one form if the transactions

to the transaction.

•

Notice 2004-8, 2004-4 I.R.B. 333

are the same or substantially similar. See

•

You have participated in a confidential

Rev. Rul. 2004-4, 2004-6 I.R.B. 414

the definition of substantially similar below.

•

transaction if your tax return reflects a tax

Rev. Rul. 2004-20, 2004-10 I.R.B. 546

•

benefit from the transaction. If disclosure by

Notice 2004-19, 2004-11 I.R.B. 606,

The fact that a transaction must be

a pass-through entity (partnership, S

withdrew Notice 98-5 from the list of listed

reported on this form does not mean the tax

corporation, or trust) is limited, but

transactions.

benefits from the transaction will be

•

disclosure by the partner, shareholder, or

Notice 2004-20, 2004-11 I.R.B. 608

disallowed.

•

beneficiary is not limited, then the

Notice 2004-30, 2004-17 I.R.B. 828

•

pass-through entity (but not the partner,

Who Must File

Notice 2004-31, 2004-17 I.R.B. 830

shareholder, or beneficiary) has participated

For updates to this list go to the IRS web

Any taxpayer, including an individual, trust,

in the confidential transaction.

page at

estate, partnership, S corporation, or other

corporations and click on Abusive Tax

Transactions With Contractual

corporation, that participates in a reportable

Shelters and Transactions. The listed

Protection

transaction and is required to file a federal

transactions in the above notices and rulings

income tax return or information return must

will also be periodically updated in future

This category includes transactions for

file Form 8886. However, a regulated

issues of the Internal Revenue Bulletin. You

which you have, or a related party (as

investment company (RIC) (as defined in

can find a notice or ruling in the Internal

described in sections 267(b) or 707(b)) has,

section 851) or an investment vehicle that is

Revenue Bulletin at

the right to a full refund or partial refund of

at least 95% owned by one or more RICs at

irs-irbs/irbXX-YY.pdf, where XX is the

fees if all or part of the intended tax

all times during the course of a transaction

two-digit year and YY is the two-digit bulletin

consequences from the transaction are not

is not required to file Form 8886 for any

number. For example, you can find Notice

sustained. It also includes a transaction for

transaction other than a listed transaction

2003-76, 2003-49 I.R.B. 1181, at

which fees are contingent on your

(as defined below).

irs-irbs/irb03-49.pdf.

realization of tax benefits from the

Cat. No. 34911S

Instructions For Form 8886

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