Form 8806 - Information Return For Acquisition Of Control Or Substantial Change In Capital Structure Page 2
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Form 8806 (Rev. 10-2016)
Page
Future Developments
Corporations Not Required
the corporation pursuant to the change
in capital structure, as of the date or
To File
For the latest information about
dates on which the cash or other
developments related to Form 8806 and
Do not file Form 8806:
property is provided, is $100 million or
its instructions, such as legislation
more. Generally, a corporation has a
• For transactions that were properly
enacted after they were published, go to
change in capital structure if:
reported under section 6043(a); or
1. The corporation in a transaction or
• If the reporting corporation reasonably
General Instructions
series of transactions:
determines that all of its shareholders
• Merges, consolidates, or otherwise
who receive cash, stock, or other
Section references are to the Internal
combines with another corporation or
property related to the acquisition of
Revenue Code unless otherwise noted.
control or substantial change in capital
transfers all or substantially all of its
structure are exempt recipients under
assets to one or more corporations;
Purpose of Form
Regulations section 1.6043-4(b)(5).
• Transfers all or part of its assets to
A reporting corporation must file Form
another corporation in a Title 11 or
When To File
8806 to report an acquisition of control
similar case and, in pursuance of the
or a substantial change in the capital
File Form 8806, within 45 days after the
plan, distributes stock or securities of
structure of a domestic corporation. The
transaction, or if earlier by January 5th
that corporation; or
reporting corporation or any shareholder
of the year following the calendar year in
• Changes its identity, form, or place of
is required to recognize gain (if any)
which the acquisition of control or
organization; and
under section 367(a) and the related
substantial change in capital structure
regulations as a result of the transaction.
2. The corporation or any shareholder
occurred.
is required to recognize gain (if any)
Definitions
Where To File
under section 367(a) and the related
regulations, as a result of the transaction.
Acquisition of Control of a
Mail Form 8806 to:
Receipt of property. A shareholder is
Corporation
Internal Revenue Service
treated as receiving property (or as
Large Business and International Division
Generally, an acquisition of control of a
having property provided to it) related to
Attention: PFTS
corporation (first corporation) occurs if,
an acquisition of control or a substantial
1111 Constitution Ave., NW
in a transaction or series of related
change in capital structure if a liability of
Washington, DC 20224
transactions:
the shareholder is assumed in the
transaction and, as a result of the
• Before an acquisition of stock of the
Penalties for Failure To File
transaction, an amount is realized by the
first corporation (directly or indirectly) by
Form 8806 and all Forms
▲
shareholder from the sale or exchange
the second corporation, the second
!
1099-CAP, Changes in
of stock.
corporation does not have control of the
Corporate Control and
first corporation;
Reporting Corporation
CAUTION
Capital Structure, required to
• After the acquisition, the second
be filed under Regulations sections
A reporting corporation is a corporation
corporation has control of the first
1.6043-4(a) and (b) will be considered as
whose stock was acquired in an
corporation;
one return for purposes of the failure to
acquisition of control or that had a
• The fair market value of the stock
file penalty under section 6652(l).
substantial change in its capital
acquired in the transaction and in any
structure.
If a correct Form 8806 is not filed by
related transactions as of the date or
the due date of the corporation’s income
Acquiring Corporation
dates on which such stock was acquired
tax return, including extensions, it may
is $100 million or more;
The acquiring corporation is any
be penalized $500 for each day the
corporation that acquired control of the
• The shareholders of the first
return is late, up to a maximum of
reporting corporation or received assets
corporation receive stock or other
$100,000. The penalty will not be
from the reporting corporation pursuant
property pursuant to the acquisition; and
imposed if the corporation can show
to a substantial change in capital
that the failure to file on time was due to
• The first corporation or any
structure of the reporting corporation.
reasonable cause. See the corporation’s
shareholder of the first corporation is
income tax return for information on
required to recognize gain (if any) under
Who Must File
reasonable cause.
section 367(a) and the related
A reporting corporation is required to file
regulations, as a result of the
Additional penalties may apply under
Form 8806 if the reporting corporation or
transaction.
sections 7203, 7206, and 7207.
any shareholder is required to recognize
Control. Control means the ownership
Note: Failure to file also includes the
gain (if any) as a result of the application
of stock possessing at least 50% of the
requirement to file on magnetic media
of section 367(a) to the transaction.
total combined voting power of all
(such as electronic filing) as required by
If the reporting corporation transfers
classes of stock entitled to vote or at
section 6011(e) and Regulations section
all or substantially all of its assets to an
least 50% of the total value of shares of
301.6011-2.
acquiring corporation in a transaction
all classes of stock.
Information Returns
that constitutes a substantial change in
Substantial Change in Capital
the capital structure of the reporting
Regarding Shareholders
Structure of a Corporation
corporation and the reporting
A corporation required to file Form 8806
corporation does not file Form 8806,
A corporation has a substantial change
also must file Form 1099-CAP for certain
then the acquiring corporation must file
in capital structure if it has a change in
shareholders of record who receive cash
Form 8806. If neither corporation files
capital structure and the amount of any
or other property (including stock) in
Form 8806, both corporations are jointly
cash and the fair market value of any
exchange for their stock in the reporting
and severally liable for any applicable
other property (including the value of any
corporation due to the acquisition of
penalties. See Penalties for Failure To
stock) provided to the shareholders of
control or the substantial change in
File below.
capital structure. See Form 1099-CAP
for more information.
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