Fillable Form 8886

What is Form 8886?

Form 8886, Reportable Transaction Disclosure Statement, is an Internal Revenue Service (IRS) form used to disclose information for each reportable transaction an individual participated in.

Use Tax Form 8887 to disclose information for each reportable transaction in which you participated. Generally, you must file a separate Form 8886 for each reportable transaction. However, you may report more than one transaction on one form if the transactions are the same or substantially similar.

A transaction is substantially similar to another transaction if it is expected to obtain the same or similar types of tax consequences and is either factually similar or based on the same or similar tax strategy.

The fact that a transaction must be reported on this form does not mean the tax benefits from the transaction will be disallowed.

Any taxpayer, including an individual, trust, estate, partnership, S corporation, or other corporation, that participates in a reportable transaction and is required to file a federal tax return or information return must file Form 8886 IRS. However, a regulated investment company (RIC) (as defined in section 851) or an investment vehicle that is at least 95% owned by one or more RICs at all times during the course of a transaction is not required to file Form 8886 for any transaction other than a listed transaction or a transaction of interest.

Attach Form 8886 to your income tax return or information return (including a partnership, S corporation, or trust return), including amended returns, for each tax year in which you participated in a reportable transaction. If a reportable transaction results in a loss or credit carried back to a prior tax year, attach Form 8886 to Form 1045, Application for Tentative Refund, or Form 1139, Corporation Application for Tentative Refund.

If this is an initial year filing of Form 8886, send an exact copy of the form to the Office of Tax Shelter Analysis (OTSA) at the following address when you file the form with your tax return:

Internal Revenue Service

OTSA Mail Stop 4915

1973 Rulon White Blvd.

Ogden, Utah 84201

If you file your income tax return electronically, the copy sent to the Office of Tax Shelter Analysis (OTSA) must show exactly the same information, word for word, provided with the electronically filed return and it must be provided on the official IRS Form 8886 or an exact copy of the form. If you use a computer-generated or substitute Form 8886, it must be an exact copy of the official IRS form. See the instructions for your income tax return for information on electronic filing and substitute forms.

How to fill out Form 8886?

Filling out Form 8886 is quick and simple. You can download and print a PDF copy of Form 8886 from the Internal Revenue Service (IRS) website that you can manually complete. But for your convenience, you can also fill out Form 8886 electronically on PDFRun. By following the instructions below, you can accomplish the form in minutes.

Name(s) shown on return

Enter the name shown on your return, following the format: Last Name, First Name, Middle Initial.

Identifying number

Enter your employer identification number (EIN) or your social security number (SSN), including hyphens.

Number, street, and room or suite no.

Enter your address, including number, street, and room or suite number.

City or town

Enter your residential city or town.

State

Select your state from the drop-down list.

ZIP code

Enter your ZIP code.

Item A

If you file more than one Form 8886 with your return, sequentially number each of these forms and enter the statement number for this Form 8886 (for example, statement number 1 of 3).

Item B

Enter the form number and the year of the tax return with which this Form 8886 is filed (for example, Form 1040).

If the tax return has a calendar tax year, enter the year shown on the return (for example, 2007). If it is a fiscal year return, enter the date the fiscal year ends following the format: MM/DD/YYYY (for example, 06/30/2008).

Mark the appropriate box if this Form 8886 is being filed with an amended tax return. You may select:

• Yes
• No

Item C

Mark the boxes that apply. You may select:

• Initial Year Filer – If this is the first year that you are filing a Form 8886 to disclose this transaction, mark this box and file a duplicate copy of the form with the Office of Tax Shelter Analysis (OTSA).
• Protective Disclosure – You may indicate that you are filing on a protective basis by marking this box (under the option provided in Regulations section 1.6011-4(f)). Generally, the Internal Revenue Service (IRS) will not treat a Form 8886 filed on a protective basis any differently from other Forms 8886. An incomplete form containing a statement that information will be provided on request is not a complete disclosure statement. For a protective disclosure to be effective, you must properly complete and file Form 8886 and provide all required information.

Line 1a

Enter the name, if any, by which the transaction is known or commonly referred to. If no name exists, provide a short identifying description of this transaction that distinguishes it from other reportable transactions in which you have participated (or may participate in the future).

If you are reporting more than one transaction and the transactions have different names, enter all names in the space provided. If additional space is needed, write “See Additional List” and attach a list.

If you are filing Form 8886 to disclose a transaction with a significant book-tax difference that was due prior to January 6, 2006, write “book-tax difference” in parentheses after the name of the reportable transaction. If any other disclosure category also applies, mark the appropriate boxes on line 2.

Line 1b

Enter the first year that you participated in this transaction following the year format (YYYY). If you are reporting for more than one transaction, enter all initial years in the space provided. If additional space is needed, write “See Additional List” and attach a list.

Note that this may not be the same as the year for which you are disclosing a reportable transaction.

Line 1c

Enter the 9-digit and/or 11-digit number provided to you. This number may be referred to as a registration number or reportable transaction number and may begin with the letters “MA.”

Reportable transactions can have more than one number. If you have more than one number for this transaction, include all numbers in the space provided. If additional space is needed, write “See Additional List” and attach a list.

Reportable transaction numbers (formerly known as tax shelter registration numbers or registration numbers) are issued to material advisors who file a statement disclosing a reportable transaction under section 6111. Material advisors are required to provide this number to investors or advisees.

Line 2

Mark the boxes for all categories that apply to the transaction being reported. You may select:

• Listed – A listed transaction is a transaction that is the same as or substantially similar to one of the types of transactions that the Internal Revenue Service (IRS) has determined to be a tax avoidance transaction. You have participated in a listed transaction if any of the following applies:
  • Your tax return reflects tax consequences or a tax strategy described in published guidance that lists the transaction.
  • You know or have reason to know that tax benefits reflected on your tax return are derived directly or indirectly from such tax consequences or tax strategies.
  • You are in a type or class of individuals or entities that published guidance treats as participants in a listed transaction.
• Confidential – A confidential transaction is a transaction that is offered to you or a related party (as described in section 267(b) or 707(b)) under conditions of confidentiality and for which you or a related party paid an advisor a minimum fee. A transaction is considered to be offered under conditions of confidentiality if the advisor places a limitation on your disclosure of the tax treatment or tax structure of the transaction and the limitation on disclosure protects the confidentiality of the advisor’s tax strategies. The transaction is treated as confidential even if the conditions of confidentiality are not legally binding on you.
• Contractual Protection – A transaction with contractual protection is a transaction for which you have, or a related party (as described in section 267(b) or 707(b)) has, the right to a full refund or partial refund of fees if all or part of the intended tax consequences from the transaction is not sustained. It also includes a transaction for which fees are contingent on your realization of tax benefits from the transaction. You have participated in a transaction with contractual protection if your tax return reflects a tax benefit from the transaction and, as described earlier, you have the right to a full or partial refund of fees or the fees are contingent.
• Loss – A loss transaction is a transaction that results in your claiming a loss under section 165 if the amount of the section 165 loss is as follows:
  • For individuals, at least $2 million in any single tax year or $4 million in any combination of tax years. (At least $50,000 for a single tax year if the loss arose from a section 988 transaction defined in section 988(c)(1) (relating to foreign currency transactions), whether or not the loss flows through from an S corporation or partnership).
  • For corporations (excluding S corporations), at least $10 million in any single tax year or $20 million in any combination of tax years.
  • For partnerships with only corporations (excluding S corporations) as partners (looking through any partners that are also partnerships), at least $10 million in any single tax year or $20 million in any combination of tax years, whether or not any losses flow through to one or more partners.
  • For all other partnerships and S corporations, at least $2 million in any single tax year or $4 million in any combination of tax years, whether or not any losses flow through to one or more partners or shareholders.
  • For trusts, at least $2 million in any single tax year or $4 million in any combination of tax years, whether or not any losses flow through to one or more beneficiaries. (At least $50,000 for a single tax year if the loss arose from a section 988 transaction defined in section 988(c)(1) (relating to foreign currency transactions), whether or not the loss flows through from an S corporation or partnership).
• Transaction of Interest – A transaction of interest is a transaction that is the same as or substantially similar to one of the types of transactions that the Internal Revenue Service (IRS) has identified by notice, regulation, or other forms of published guidance as a transaction of interest. It is a transaction that the IRS and Treasury Department believe has a potential for tax avoidance or evasion, but for which there is not enough information to determine if the transaction should be identified as a tax avoidance transaction. You have participated in a transaction of interest if you are one of the types or classes of individuals or entities identified as participants in the transaction in the published guidance describing the transaction of interest.

Line 3

If you marked box 2a or 2e, enter the notice, revenue ruling, regulation, announcement, or other published guidance that identified the transaction as a listed transaction or a transaction of interest.

Line 4

Enter the number of “same as or substantially similar” transactions reported on this form.

Do not report more than one transaction on this form unless the transactions are the same or substantially similar.

Line 5a

If you participated in this reportable transaction through other entities, mark the applicable boxes. You may select:

• Partnership
• S corporation
• Trust.
• Foreign

Line 5b

Enter the full name of the entity.

Line 5c

Enter the entity’s employer identification number (EIN), if known. Use hyphens when entering the EIN.

Line 5d

Enter the date you received the Schedule K-1 from the entity. Enter “none” if Schedule K-1 was not received.

If you are reporting more than one entity, use a separate column for each entity. Attach additional sheets for more than two entities.

Line 6

Enter the name and address, including number, street, room or suite number, city or town, and ZIP code, and select the state from the drop-down list, for each individual or entity to whom you paid a fee with regard to the transaction if that individual or entity promoted, solicited, or recommended your participation in the transaction, or provided tax advice related to the transaction.

Enter the social security number (SSN) or employer identification number (EIN), if known. Also, enter the approximate fees paid to each of the individuals or entities. These fees include payment in whatever form, whether in cash or in kind, for a tax strategy or for advice (whether or not tax advice). Fees also include consideration for services to:

• Analyze the transaction (whether or not related to the tax consequences of the transaction).
• Implement the transaction.
• Document the transaction.
• Prepare tax returns to the extent that the return preparation fees are unreasonable.

Line 7a

Mark the applicable boxes representing the type of tax benefit the transaction will reflect on your tax return. You may select:

• Deductions
• Capital loss
• Ordinary loss
• Exclusions from gross income
• Nonrecognition of gain
• Adjustments to basis
• Absence of adjustments to basis
• Deferral
• Tax credits
• Other – Specify in the space provided.

Line 7b

Enter the total dollar amount of your tax benefits identified in line 7a.

Tax benefits from the transaction are the total anticipated dollar amount of all items checked in line 7a, over the entire anticipated life of the transaction.

Line 7c

Enter the number of tax years you anticipate it will take for you to claim the above total tax benefits from this transaction.

Line 7d

Enter your total investment or basis in the transaction.

Total investment or basis in the transaction is the total of the amounts you paid related to this transaction which includes cash, the fair market value of property or services transferred or acquired, adjustments to basis, valuation of notes, obligations, shares, or other securities.

Line 7e

Enter a detailed description of the reportable transaction you entered into and the relevant facts and tax benefits for all affected years that caused the transaction to be reportable.

Describe each step of the transaction including all information known to you. Include in your description other parties to the transaction and, if known, assumptions of liabilities or other obligations, the satisfaction of liabilities or obligations, sales of property or interests in property, the formation and dissolution of entities, and any agreements between or among parties to the transaction.

Also, describe any tax result protection with respect to the transaction. The term “tax result protection” includes insurance company and other third-party products commonly described as tax result insurance. Include, if known, the relevant dates and the amounts involved in the steps described. Amounts involved include cash, the fair market value of property or services transferred or acquired, adjustments to basis, valuation of notes, obligations, shares, or other securities. Describe, if known, the relationship between the steps of the transaction and how each step relates to why the transaction is reportable.

Your description should include the relevance, if known, of any party (including but not limited to participants in the transaction) listed in line 8. Describe the economic and business reasons for the transaction and its structure. Describe market or business conditions creating the tax benefits or consequences and the transaction’s financial reporting, if known.

If you marked box 2b, explain how your disclosure of information concerning the transaction was limited (for example, by contract or verbal agreement) and the nature and extent of the disclosure limitations.

If you marked box 2c, describe the terms of the contractual protection.

If you marked box 2d, explain how you calculated the basis of the asset for which there was a loss.

If the information required exceeds the space provided, complete as much information as possible in the available space and attach the remaining information on additional sheets. The additional sheets must be in the same order as the lines to which they correspond. You must also include your name and identifying number at the top of each additional sheet. Do not write “See Attached” on the form and provide all the information on an attached statement.

Line 8

List all individuals and entities involved in the transaction.

Mark the applicable boxes for the type of entity. You may select:

• Tax-exempt
• Foreign
• Related

Enter all information, including the name, employer identification number (EIN) or social security number (SSN) (include hyphens), and address, including street address, city, state, and ZIP code, if known.

Enter a brief description of each listed individual’s and each entity’s involvement in the transaction (for example, purchaser, lender, seller, or broker).

Enter the country of incorporation or existence for each foreign entity, if known. Describe the relationship between you and any related entity and between or among any related entities (as described in section 267(b) or 707(b)).

Attach additional sheets where appropriate.