Last Updated : January 14, 2009
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8886

Form 8886

Reportable Transaction Disclosure Statement

PURPOSE OF THE FORM :
Use form 8886 to disclose information for each reportable transaction in which the taxpayer participated.
Generally, the taxpayer needs to file a seperate form 8886 for each reportable transaction. However, the taxpayermay report more than one transaction on one form if the transactions are the same or substantially similiar.
The fact that a transaction must be reported on this form doesnot mean the tax benefits from the transaction will be disallowed.

WHO MUST FILE :
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 income tax return or information return must file FORM 8886.
However, a regulated investment company or an investment vehicle that is at least 95% owned by one or more RICs at all times during the course of the transaction is not required to file FORM 8886 for any transaction other than a listed transaction.

PENALTIES:
The penalty for failure to include information with respect to a reportable transaction, other than a listed transaction, is $10000 in the case of a natural person , and $50000 in any other case. The penalty for failure to include information with respect to a listed transaction is $100000 in the case of a natural person and $200000 in any other case. this penalty is in addition to any other penalty that may be imposed.

Personal Information :
Enter on this line name and address of the person who has entered into the reportable transaction.

Line A:
Enter the form number and year of tax return with which this form 8886 is filed (for example: FORM 1040). If the tax return has a calender tax year , enter the year shown on the return. If it is a fiscal year return, enter the date the fiscal year ends using the MM/DD/YYYY.

Line B:
Check the checkbox YES If this is an amended return you are filing . otherwise check the checkbox NO.

Line C:

Initial year Filer :
If this is the first year that the taxpayer is filing a FORM 8886 to disclose this transaction, check the checkbox and file a duplicate copy of the form with OTSA.

Protective Disclosure :
Check this checkbox manually if the taxpayer wants to indicate that he is filing on a Protective basis.

Line 1a:
Enter the name, if any, by which the transaction is known or commonly refered to. If no name exists , provide a short identifying description of this transaction that distingusihes it from other reportable transactions in which the taxpayer has participated.

Line 1b:
Enter the first year that the taxpayer participated in this transaction in year format (YYYY). if the taxpayer is reporting for more than one transaction, enter all initial years in front of its description on line 1a.

Line 1c:
Enter on this line the material advisor registeration number and / or tax shelter registeration numbers, if any. If the taxpayer is reporting either of these numbers for more than one transactions then enter the numbers in corresponding to its description on line 1a.

Line 2:
Check the checkbox for all categories that apply to the transaction being reported.

Line 3:
Enter the published Guidance number as issued by IRS which applies to the reportable transaction.

Line 4:
Enter the total number of transactions that are reported on this form. Donot report more than 1 transaction on this form unless the transactions are the same or substantially similiar.

Line 5:
If the taxpayer invested in the transaction through another entities, such as partnership, an S corporation , a foreign corporation, or a trust complete details on one particulat line for each of them . If the taxpayer is reporting more than 1 entity , give seperate information for each of them in one line providing all its details.
Details of the entity include his name, EIN , date when investment was done and type of entity whether it is a partnership firm , S corporation , trust or a foreign entity.

Line 6:
Enter on this line the name & address of each person to whom fees has been paid for the services provided by him with regard to promotion , solicitation or recommendation of the transaction reported on this form.

Line 7:
Check the appropiate checkboxes based on the transaction for which the form is filed with reference to the benefits enjoyed by entering such transaction. Tax benefits include deduction , exclusions from gross income , non recognition of gain , tax credits , adjustments to the basis of the property , status as a tax exempt organisation or any other tax consequences that may reduce the federal income tax liability by affecting amount, timing , character, or source of any other item of income, gain, loss, expense, or credit.

For listed transactions entered on line 2a , also give details of name , address and nature of involvement of all parties to the transaction.

Line 8:
Enter on this line in brief the details of transaction entered into with reference to its name , transaction ID , its address ,description in brief and its type whether it is tax exempt , foreign or related party transaction.

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