Form 8806 - Information Return For Acquisition Of Control Or Substantial Change In Capital Structure Page 2
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Form 8806 (Rev. 12-2011)
Page
What's New
Corporations Not Required
such corporation pursuant to the change
in capital structure, as of the date or
To File
The IRS has created a page on IRS.gov
dates on which the cash or other
for information about Form 8806 and its
Do not file Form 8806:
property is provided, is $100 million or
instructions at
more. Generally, a corporation has a
• For transactions that were properly
Information about any future
change in capital structure if:
reported under section 6043(a); or
developments affecting Form 8806 (such
1. The corporation in a transaction or
• If the reporting corporation reasonably
as legislation enacted after we release it)
series of transactions:
determines that all of its shareholders
will be posted on that page.
• Merges, consolidates, or otherwise
who receive cash, stock, or other
General Instructions
combines with another corporation or
property related to the acquisition of
control or substantial change in capital
transfers all or substantially all of its
Section references are to the Internal
structure are exempt recipients under
assets to one or more corporations;
Revenue Code unless otherwise noted.
Regulations section 1.6043-4(b)(5).
• Transfers all or part of its assets to
Purpose of Form
another corporation in a Title 11 or
When To File
similar case and, in pursuance of the
A reporting corporation must file Form
File Form 8806, within 45 days after the
plan, distributes stock or securities of
8806 to report an acquisition of control
transaction, or if earlier by January 5th
that corporation; or
or a substantial change in the capital
of the calendar year following the year in
• Changes its identity, form, or place of
structure of a domestic corporation. The
which the acquisition of control or
organization; and
reporting corporation or any shareholder
substantial change in capital structure
is required to recognize gain (if any)
2. The corporation or any shareholder
occurred.
under section 367(a) and the related
is required to recognize gain (if any)
Where To File
under section 367(a) and the related
regulations as a result of the transaction.
regulations, as a result of the
Definitions
Mail Form 8806 to:
transaction.
Internal Revenue Service
Receipt of property. A shareholder is
Acquisition of Control of a
Large Business and International Division
treated as receiving property (or as
Corporation
Attention: PFTS
having property provided to it) related to
1111 Constitution Ave., NW
Generally, an acquisition of control of a
an acquisition of control or a substantial
Washington, DC 20224
corporation (first corporation) occurs if,
change in capital structure if a liability of
in a transaction or series of related
the shareholder is assumed in the
Penalties for Failure To File
transactions:
transaction and, as a result of the
▲
transaction, an amount is realized by the
• Before an acquisition of stock of the
Form 8806 and all Forms
!
shareholder from the sale or exchange
first corporation (directly or indirectly) by
1099-CAP, Changes in
of stock.
Corporate Control and
the second corporation, the second
CAUTION
Capital Structure, required to
corporation does not have control of the
Reporting Corporation
be filed under Regulations sections
first corporation;
A reporting corporation is a corporation
1.6043-4(a) and (b) will be considered as
• After the acquisition, the second
whose stock was acquired in an
one return for purposes of the failure to
corporation has control of the first
acquisition of control or that had a
file penalty under section 6652(l).
corporation;
substantial change in its capital
If a correct Form 8806 is not filed by
• The fair market value of the stock
structure.
the due date of the corporation’s income
acquired in the transaction and in any
tax return, including extensions, it may
Acquiring Corporation
related transactions as of the date or
be penalized $500 for each day the
dates on which such stock was acquired
The acquiring corporation is any
return is late, up to a maximum of
is $100 million or more;
corporation that acquired control of the
$100,000. The penalty will not be
• The shareholders of the first
reporting corporation or received assets
imposed if the corporation can show
corporation receive stock or other
from the reporting corporation pursuant
that the failure to file on time was due to
property pursuant to the acquisition; and
to a substantial change in capital
reasonable cause. See the corporation's
structure of the reporting corporation.
• The first corporation or any
income tax return for information on
shareholder of the first corporation is
reasonable cause.
Who Must File
required to recognize gain (if any) under
Additional penalties may apply under
section 367(a) and the related
A reporting corporation is required to file
sections 7203, 7206, and 7207.
regulations, as a result of the
Form 8806 if the reporting corporation or
Note. Failure to file also includes the
transaction.
any shareholder is required to recognize
requirement to file on magnetic media as
Control. Control means the ownership
gain (if any) as a result of the application
required by section 6011(e) and
of stock possessing at least 50% of the
of section 367(a) to the transaction.
Regulations section 1.6011-2.
total combined voting power of all
If the reporting corporation transfers
Information Returns
classes of stock entitled to vote or at
all or substantially all of its assets to an
least 50% of the total value of shares of
Regarding Shareholders
acquiring corporation in a transaction
all classes of stock.
that constitutes a substantial change in
A corporation required to file Form 8806
the capital structure of the reporting
Substantial Change in Capital
also must file Form 1099-CAP for certain
corporation and the reporting
Structure of a Corporation
shareholders of record who receive cash
corporation does not file Form 8806,
or other property (including stock) in
A corporation has a substantial change
then the acquiring corporation must file
exchange for their stock in the reporting
in capital structure if it has a change in
Form 8806. If neither corporation files
corporation due to the acquisition of
capital structure and the amount of any
Form 8806, both corporations are jointly
control or the substantial change in
cash and the fair market value of any
and severally liable for any applicable
capital structure. See Form 1099-CAP
other property (including the value of any
penalties. See Penalties for Failure To
for more information.
stock) provided to the shareholders of
File below.
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