Instructions For Form 8918 - Material Advisor Disclosure Statement

the transaction are not sustained. It also

as a deemed capital loss under section

significant book-tax difference

includes a transaction for which fees are

1212.

transactions that should have been

contingent on the taxpayer's realization of

disclosed on a return with a due date prior

To determine if a transaction results in

tax benefits from the transaction. See

to January 6, 2006. See Notice 2006-06.

a taxpayer claiming a loss that meets the

Regulations section 1.6011-4(b)(4) and

threshold amounts over a combination of

Rev. Proc. 2007-20 for the latest

Exceptions to Reportable

tax years, only losses claimed in the tax

information and guidance.

year the transaction is entered into and the

Transaction Categories, Published

5 succeeding tax years are combined.

Guidance

Loss Transactions

The types of losses included in this

A transaction is not considered a

category are section 165 losses (including

A loss transaction is a transaction that

reportable transaction if the IRS makes a

amounts deductible under a provision that

results in the taxpayer claiming a

loss

determination in published guidance that it

treats a transaction as a sale or other

under section 165

(described later) if the

is not subject to the reporting

disposition or otherwise results in a

amount of the section 165 loss is as

requirements. For more information, see

deduction under section 165). However,

follows.

the following.

this category does not include losses

For individuals, at least $2 million in any

Rev. Proc. 2004-67;

described in Rev. Proc. 2013-11 (or future

single tax year or $4 million in any

Rev. Proc. 2004-68;

published guidance).

combination of tax years. (At least

Rev. Proc. 2007-20; and

$50,000 for a single tax year if the loss

Rev. Proc. 2013-11.

arose from a section 988 transaction

Transactions of Interest

defined in section 988(c)(1) (relating to

The IRS may also determine by

A transaction of interest is a transaction

foreign currency transactions), whether or

individual letter ruling that an individual

that is the same as or substantially similar

not the loss flows through from an S

letter ruling request satisfies the reporting

to one of the types of transactions that the

corporation or partnership).

requirements. See

Request for Ruling

IRS has identified by notice, regulation, or

For corporations (excluding S

below for more details on submitting a

other form of published guidance as a

corporations), at least $10 million in any

letter ruling request.

transaction of interest. It is a transaction

single tax year or $20 million in any

that the IRS and Treasury Department

Request for Ruling

combination of tax years.

believe has a potential for tax avoidance

For partnerships with only corporations

You may request a ruling from the IRS to

or evasion, but for which there is not

(excluding S corporations) as partners

determine whether a specific transaction

enough information to determine if the

(looking through any partners that are also

is a reportable transaction. The potential

transaction should be identified as a tax

partnerships), at least $10 million in any

obligation of a material advisor and the

avoidance transaction. The requirement to

single tax year or $20 million in any

taxpayer to disclose the transaction will

disclose transactions of interest applies to

combination of tax years, whether or not

not be suspended during the period that

transactions of interest entered into after

any losses flow through to one or more

the ruling request is pending. Therefore,

November 1, 2006. See Notice 2009-55,

partners.

even if you have a ruling request with the

Notice 2016-66, and Notice 2017-08 for

For all other partnerships and S

IRS, you must still complete and file this

the latest information and guidance. The

corporations, at least $2 million in any

form in order to avoid potential penalties.

IRS may issue a new or update an existing

single tax year or $4 million in any

See Rev. Proc. 2017-1 for information on

notice, regulation, or other form of

combination of tax years, whether or not

ruling requests.

guidance that identifies a transaction as a

any losses flow through to one or more

transaction of interest.

When To File

partners or shareholders.

For trusts, at least $2 million in any

The material advisor's disclosure

Eliminated Categories

single tax year or $4 million in any

statement must be filed with the Office of

combination of tax years, whether or not

Tax Shelter Analysis (OTSA) by the last

Transactions with a brief asset holding

any losses flow through to one or more

day of the month that follows the end of

period. The disclosure requirement for

beneficiaries. (At least $50,000 for a single

the calendar quarter in which the advisor

this category has been eliminated for

tax year if the loss arose from a section

became a material advisor with respect to

transactions entered into after August 2,

988 transaction defined in section 988(c)

the reportable transaction or in which

2007. However, this does not relieve

(1) (relating to foreign currency

circumstances occur to require an

taxpayers of any disclosure obligations for

transactions), whether or not the loss

amended disclosure statement. See

Date

brief asset holding transactions that were

flows through from an S corporation or

you became a material

advisor., earlier.

entered into before August 3, 2007. The

partnership).

Where To File

rules for brief asset holding period

Section 165 loss. For this purpose, a

reportable transactions entered into

In order to file, mail your completed Form

section 165 loss is adjusted for any

before August 3, 2007, are contained in

8918 to:

salvage value and for any other insurance

Regulations section 1.6011-4 in effect

compensation received. However, a

prior to August 3, 2007.

Internal Revenue Service

section 165 loss does not include

OTSA Mail Stop 4915

Transactions with a significant

offsetting gains, other income or

1973 Rulon White Blvd.

book-tax difference. The disclosure

limitations. The full amount of a section

Ogden, Utah 84201

requirement for this category has been

165 loss is included in the year it occurred,

eliminated. Transactions with a significant

regardless of whether all or part of it is

Furnishing a Reportable

book-tax difference that would have been

included in computing a net operating loss

required to be disclosed with returns due

Transaction Number

(under section 172) or a net capital loss

on dates (including extensions) after

(under section 1212) that is a carryback or

Receipt of a reportable transaction

January 5, 2006, are no longer reportable

carryover to another year. A section 165

number does not indicate that the IRS has

transactions.

loss does not include any portion of a loss

reviewed, examined, or approved the

attributable to a capital loss carryback or

However, this does not relieve

transaction.

carryover from another year that is treated

taxpayers of any disclosure obligations for

Instructions for Form 8918 Rev. 06-2017

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Instructions For Form 8918 - Material Advisor Disclosure Statement - 2017 Page 3

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