Instructions For Form 8886 - Reportable Transaction Disclosure Statement (Page 3 of 7) in pdf

are a partner, shareholder, or

more information, see the instructions

beneficiary of a pass-through entity

for line 2 on page 6.

Rev. Proc. 2004-68; and Rev. Proc.

2007-20. The IRS may also determine

(partnership, S corporation, or trust),

However, Notice 2006-6 does not

by individual letter ruling that an

you have participated in a loss

relieve taxpayers of any disclosure

individual letter ruling request satisfies

transaction if your tax return reflects a

obligations for significant book-tax

the reporting requirements. See

section 165 loss allocable to you from

difference transactions that should have

Request for Ruling below for more

the pass-through entity (disregarding

been disclosed on a return with a due

information on submitting a letter ruling

netting at the entity level) that equals or

date prior to January 6, 2006. If you are

request.

exceeds the applicable threshold

filing Form 8886 to disclose a

amount. For this purpose, a tax return

transaction with a significant book-tax

Shareholders of Foreign

is deemed to reflect the full amount of

difference that was due prior to January

Corporations

the section 165 loss allocable to the

6, 2006, write “book-tax difference” in

taxpayer, regardless of whether all or

Special rules apply to determine

parentheses after the name of the

part of the loss enters in the

whether a reporting shareholder of a

transaction on line 1a. If any other

computation of a net operating loss

foreign corporation participated in a

disclosure category also applies, check

under section 172 or net capital loss

reportable transaction. A reporting

the appropriate box(es) on line 2. For

under section 1212 that the taxpayer

shareholder means a U.S. shareholder

more information on book-tax difference

may carry back or carry over to another

in a controlled foreign corporation, or a

transactions, see Regulations section

year.

10% shareholder (by vote or value) of a

1.6011-4 in effect before August 3,

qualified electing fund. For all

2007, and the instructions for Form

Transactions of Interest

categories of reportable transactions

8886 for the year in which the

except transactions of interest, a

transaction should have been

A transaction of interest is a transaction

reporting shareholder participates in a

disclosed.

that is the same as or substantially

reportable transaction if the foreign

similar to one of the types of

Transactions With a Brief Asset

corporation would be considered to

transactions that the IRS has identified

Holding Period

participate in the transaction if it were a

by notice, regulation, or other form of

domestic corporation filing a tax return

The disclosure requirement for this

published guidance as a transaction of

reflecting items from the transaction. A

category has been eliminated for

interest. It is a transaction that the IRS

reporting shareholder of a foreign

transactions entered into on or after

and Treasury Department believe has a

corporation participates in a transaction

August 3, 2007. However, this does not

potential for tax avoidance or evasion,

of interest if the published guidance

relieve taxpayers of any disclosure

but for which there is not enough

identifying the transaction includes the

obligations for brief asset holding

information to determine if the

reporting shareholder among the types

transactions that were entered into

transaction should be identified as a tax

or classes of individuals or entities

before August 3, 2007. The rules for

avoidance transaction. The requirement

identified as participants. See

brief asset holding period reportable

to disclose transactions of interest

Regulations section 1.6011-4(c)(3)(i)(G)

transactions entered into before August

applies to transactions of interest

for details.

3, 2007, are contained in Regulations

entered into after November 1, 2006.

section 1.6011-4 in effect prior to

For existing guidance, see Notice

Request for Ruling

August 3, 2007.

2009-55, 2009-31 I.R.B. 170, available

You may request a ruling from the IRS

This category includes transactions

The IRS may issue a new, or update

to determine whether a transaction

that result in your claiming a tax credit

the existing, notice, regulation, or other

must be disclosed. The request for a

(including a foreign tax credit) of more

form of guidance that identifies a

ruling must be submitted to the IRS by

than $250,000 if the asset giving rise to

transaction as a transaction of interest.

the date Form 8886 would otherwise be

the credit was held by you for 45 days

required to be filed. See Regulations

or less. For purposes of determining the

You have participated in a

section 1.6011-4(f). For more

holding period of the asset, the

transaction of interest if you are one of

information on requesting a ruling, see

principles of section 246(c)(3) and

the types or classes of individuals or

Rev. Proc. 2009-1, 2009-1 I.R.B. 1,

(c)(4) apply. Disregard any transactions

entities identified as participants in the

available at

generating a foreign tax credit for

transaction in the published guidance

irb09-01.pdf, or subsequent IRS

withholding taxes or other taxes

describing the transaction of interest.

guidance. The potential obligation of

imposed on a dividend that are not

the taxpayer to disclose the transaction

disallowed under section 901(k)

Eliminated Categories

will not be suspended during the period

(including transactions eligible for the

that the ruling request is pending.

exception for security dealers under

Transactions With a Significant

section 901(k)(4)). See Rev. Proc.

Book-Tax Difference

Recordkeeping

2004-68, 2004-50 I.R.B. 969, available

The disclosure requirement for this

at irb04-50.pdf,

You must keep a copy of all documents

category has been eliminated by Notice

for a list of exceptions for this category

and other records related to a

2006-6, 2006-5 I.R.B. 385, available at

of reportable transaction.

reportable transaction. See Regulations

irb06-05.pdf.

section 1.6011-4(g) for more details.

Exceptions to Reportable

Transactions with a significant book-tax

Transaction Categories,

difference are no longer reportable

When and How To File

transactions. These transactions do not

Published Guidance

Attach Form 8886 to your income tax

need to be disclosed on Form 8886.

A transaction is not considered a

return or information return (including a

For more details, see Notice 2006-6.

reportable transaction if the IRS makes

partnership, S corporation, or trust

If the significant book-tax difference

a determination in published guidance

return), including amended returns, for

transaction is also a transaction

that it is not subject to the reporting

each tax year in which you participated

described in any of the remaining

requirements. For more information see

in a reportable transaction. If a

reportable transaction categories, the

Rev. Proc. 2004-66; Rev. Proc.

reportable transaction results in a loss

transaction must still be disclosed. For

2004-67, 2004-50 I.R.B. 967, available

or credit carried back to a prior tax

-3-

Instructions for Form 8886 (Rev. 3-2010)

Instructions For Form 8886 - Reportable Transaction Disclosure Statement Page 3

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