Specific Instructions

How To Complete Form 8886

In order to be considered complete, Form 8886 must be completed in its entirety with all required attachments. To be considered complete, the information provided on the form must describe the expected tax treatment and all potential tax benefits expected to result from the transaction, describe any tax result protection with respect to the transaction, and identify and describe the transaction in sufficient detail for the IRS to be able to understand the tax structure of the reportable transaction and identify all parties involved in the transaction. A Form 8886 containing a statement that information will be provided upon request is not considered a complete disclosure statement. If Form 8886 is not completed in accordance with these instructions and Regulations section 1.6011-4, you will not be considered to have complied with the disclosure requirements. If you receive one or more reportable transaction numbers for a reportable transaction, you must include the reportable transaction numbers on Form 8886.

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.

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 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 using the MM/DD/YYYY format (for example, 06/30/2008).

Item C

Check all the box(es) that apply.

Initial year filer.   If this is the first year that you are filing a Form 8886 to disclose this transaction, check this box and file a duplicate copy of the form with OTSA (see When and How To File above).

Protective disclosure.   You may indicate that you are filing on a protective basis by checking this box (under the option provided in Regulations section 1.6011-4(f)). Generally, the IRS will not treat a Form 8886 filed on a protective basis any differently than 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. See How To Complete Form 8886 above.

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 transaction on line 1a. If any other disclosure category also applies, check the appropriate box(es) on line 2.

Line 1b

Enter the first year that you participated in this transaction in 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.

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/advisees.

Line 2

Check the box(es) for all categories that apply to the transaction being reported. The reportable transaction categories are described under Participation in a Reportable Transaction on page 1.

Note.

The category for significant book-tax difference transactions has been eliminated by Notice 2006-6. Transactions with a significant book-tax difference that would have been required to be disclosed after January 5, 2006, are no longer reportable transactions.

However, if the transaction is also a transaction described in any of the remaining reportable transaction categories, it must still be disclosed and the box for all appropriate categories (that is, a, b, c, d, or e) must be checked.

For more details, see Transactions With a Significant Book-Tax Difference on page 3 and Notice 2006-6.

Note.

The category for brief-asset holding period has been eliminated for transactions entered into on or after August 3, 2007. However, this does not relieve taxpayers of any disclosure obligations for brief asset holding transactions that were entered into before August 3, 2007. The rules for brief asset holding period reportable transactions entered into before August 3, 2007, are contained in Regulations section 1.6011-4 in effect prior to August 3, 2007. For more details, seeTransactions With a Brief Asset Holding Period on page 3.

If the transaction is a listed transaction or transaction of interest, you must check the listed transaction box or transaction of interest box in addition to any others that may apply.

Line 3

Identify the notice, revenue ruling, regulation, announcement, or other published guidance that identified the transaction as a listed transaction or a transaction of interest. For listed transactions, identify the guidance as shown in Notice 2009-59, or later IRS guidance.

Line 4

Do not report more than one transaction on this form unless the transactions are the same or substantially similar. See Substantially Similar on page 1.

Line 5

If you participated in the transaction through other entities, indicate whether each entity is a partnership, S corporation, or trust. In addition, if the entity is foreign, check the box for “Foreign.” On line 5b, provide the full name of the entity. On line 5c, enter the entity's EIN (if known). Use hyphens when entering the EIN. On 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, address, and social security number (SSN) or EIN (if known) 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. 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, or

  • Prepare tax returns to the extent the return preparation fees are unreasonable.

You are also treated as paying fees to an advisor if you know or should know that an amount you paid will be paid indirectly to the advisor, such as through a referral fee or fee-sharing arrangement. A fee does not include amounts paid to a person, including an advisor, in that person's capacity as a party to the transaction.

Line 7a

Please check the box representing the type of tax benefit the transaction will reflect on your tax return. There may be more than one tax benefit to your transaction. A tax benefit includes but is not limited to the following: deductions, exclusions from gross income, nonrecognition of gain, tax credits, adjustments (or absence of adjustments) to the basis of property, status as an entity exempt from federal income taxation, and any other tax consequences that may reduce a taxpayer's federal income tax liability by affecting the amount, timing, character, or source of any item of income, gain, expense, loss, or credit. Check the “Other” box for tax benefits not specifically identified by a box and identify the tax benefits in the space provided (for example, status as an entity exempt from federal income taxation). If you need more space, follow the instructions under How To Complete Form 8886 on page 5.

Line 7b

Describe 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, 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, 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 benefit(s) or consequence(s) and the transaction's financial reporting if known.

If you checked 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. See Regulations section 1.6011-4(b)(3) for more details.

If you checked box 2c, describe the terms of the contractual protection. See Regulations section 1.6011-4(b)(4) for more details.

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

If you need more space, follow the instructions under How To Complete Form 8886 on page 5.

Line 8

List all individuals involved in the transaction. List all tax-exempt, foreign, or related entities involved in the transaction. Check the applicable box(es) for the type of entity. Attach additional sheets where appropriate. Provide all information, including the name, EIN or SSN (include hyphens), and address, if known.

Include a brief description of each listed individual's and each entity's involvement in the transaction (purchaser, lender, seller, broker, etc.). Provide 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)).


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