Instructions For Form 8886 - Reportable Transaction Disclosure Statement printable pdf download

Department of the Treasury

Instructions for Form 8886

Internal Revenue Service

(Rev. March 2010)

(Use with the December 2007 revision of Form 8886.)

Reportable Transaction Disclosure Statement

obtain the same or similar types of tax

Section references are to the Internal

Participation in a

Revenue Code unless otherwise noted.

consequences and is either factually

Reportable Transaction

similar or based on the same or similar

General Instructions

tax strategy. Receipt of an opinion

A reportable transaction is a transaction

regarding the tax consequences of the

described in one or more of the

Purpose of Form

transaction is not relevant to the

following categories.

determination of whether the

Use Form 8886 to disclose information

Listed Transactions

transaction is the same as or

for each reportable transaction in which

substantially similar to another

you participated. See Participation in a

A listed transaction is a transaction that

Reportable Transaction, below, to

transaction. Further, the term

is the same as or substantially similar to

determine if you participated in a

substantially similar must be broadly

one of the types of transactions that the

reportable transaction. For more

construed in favor of disclosure. See

IRS has determined to be a tax

information on the disclosure rules, see

avoidance transaction. These

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

Regulations section 1.6011-4.

transactions are identified by notice,

examples.

regulation, or other form of published

Generally, you must file a separate

guidance as a listed transaction. For

Form 8886 for each reportable

Tax Benefit

existing guidance see Notice 2009-59,

transaction. However, you may report

2009-31 I.R.B. 170, available at www.

A tax benefit includes deductions,

more than one transaction on one form

irs.gov/pub/irs-irbs/irb09-31.pdf. For

exclusions from gross income,

if the transactions are the same or

updates to this list, go to the IRS web

substantially similar. See the definition

nonrecognition of gain, tax credits,

page at

of substantially similar below.

adjustments (or the absence of

corporations and click on Abusive Tax

adjustments) to the basis of property,

The fact that a transaction must be

Shelters and Transactions. The listed

status as an entity exempt from federal

reported on this form does not mean

transactions will also be periodically

income taxation, and any other tax

the tax benefits from the transaction will

updated in future issues of the Internal

consequences that may reduce a

be disallowed.

Revenue Bulletin. You can find a notice

taxpayer’s federal tax liability by

or ruling in the Internal Revenue

Prohibited tax shelter transactions.

affecting the amount, timing, character,

Bulletin at

Generally, the term ‘‘prohibited tax

or source of any item of income, gain,

irbXX-YY.pdf, where XX is the two-digit

shelter transaction’’ means listed

expense, loss, or credit.

year and YY is the two-digit bulletin

transactions, transactions with

number. For example, you can find

contractual protection, or confidential

Notice 2009-59, 2009-31 I.R.B. 170, at

transactions. See the definition of these

Tax Structure

irb09-31.pdf.

categories below. There may be

The tax structure of a transaction is any

additional disclosure requirements for

You have participated in a listed

fact that may be relevant to

tax-exempt entities with respect to

transaction if any of the following

understanding the purported or claimed

these types of transactions. If you are a

applies.

•

federal income tax treatment of the

tax-exempt entity and you are a party to

Your tax return reflects tax

a prohibited tax shelter transaction, you

transaction.

consequences or a tax strategy

may be required to file Form 8886-T,

described in published guidance that

Disclosure by Tax-Exempt Entity

lists the transaction.

•

Regarding Prohibited Tax Shelter

Who Must File

You know or have reason to know

Transaction, in addition to filing Form

that tax benefits reflected on your tax

Any taxpayer, including an individual,

8886. For more information, see the

return are derived directly or indirectly

trust, estate, partnership, S corporation,

Instructions for Form 8886-T.

from such tax consequences or tax

or other corporation, that participates in

strategy.

Definitions

a reportable transaction and is required

•

You are in a type or class of

to file a federal tax return or information

individuals or entities that published

return must file Form 8886. However, a

Transaction

guidance treats as participants in a

regulated investment company (RIC)

listed transaction.

A transaction includes all of the factual

(as defined in section 851) or an

elements relevant to the expected tax

Exception. If you participated in a

investment vehicle that is at least 95%

treatment of any investment, entity,

transaction that is the same as or

owned by one or more RICs at all times

plan, or arrangement and it includes

substantially similar to the transaction

during the course of a transaction is not

any series of steps carried out as part

described in Notice 2002-35, 2002-21

required to file Form 8886 for any

of a plan.

I.R.B. 992, available at

transaction other than a listed

pub/irs-irbs/irb02-21.pdf (tax avoidance

Substantially Similar

transaction (as defined below) or a

using notional principal contracts) solely

transaction of interest (as defined on

A transaction is substantially similar to

as a result of your direct or indirect

page 3).

another transaction if it is expected to

interest in a pass-through entity, you

Cat. No. 34911S

Instructions For Form 8886 - Reportable Transaction Disclosure Statement

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