Son of Boss Settlement Initiative FAQs - Section 4(b), Required Procedures for Electing Participants: Additional Information and Documentation


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Q-4b.1. The announcement states that taxpayers will be notified of eligibility and additional information will be requested. Will taxpayers be notified if they are not eligible for the settlement initiative?

A-4b.1. Yes, taxpayers will be informed whether they are eligible or ineligible to participate in the settlement initiative.

Q-4b.2. The announcement states that taxpayers will be notified of eligibility and additional information will be requested. What additional information and documentation will be requested?

A-4b.2. The Service has created forms that will be sent to the taxpayer for completion and are available on this site. These forms indicate what taxpayers are asked to provide. Taxpayers must provide, within 60 days, specific information on Form 13586 (PDF 100K) as to all the losses claimed, whether they were ordinary or capital, the entities with respect to which the losses were denied and the line items of the return on which they were claimed. They are also asked to provide specific information regarding their net out-of-pocket costs (discussed below), the cash contributed, cost of property contributed, the amount of liability assumed, and cash and fair market value of property distributed. They must provide the names, TINs and type of return for all entities used for the transaction. A Form 13586 will be required for each year any benefit was claimed, including any years barred by the statute of limitations.

Q-4b.3. Which information will be requested regarding out-of-pocket expenses?

A-4b.3. Taxpayers will use Form 13586-A (PDF 38K) to attest, under penalties of perjury, to the total losses claimed, the net out-of-pocket costs claimed, and whether they elect to treat the out-of-pocket costs as a long-term capital loss or an ordinary loss. Taxpayers will be asked to provide the amount of net out-of-pocket costs and fees related to the Son of Boss transaction, the tax year in which the taxpayer paid or accrued those costs and fees, and the manner and year in which the taxpayer claimed those costs and fees for tax purposes. They will be asked to provide specific information regarding fees paid to financial advisors, accountants, attorneys, and others, the identity of parties to whom the fees were paid, and any refund or reimbursement of costs or fees. In addition, specific documentation to support the fees paid, including promotional materials in the taxpayer’s possession, if not previously provided, may be requested.

Q-4b.4. What is the period for providing additional information and documentation? Under what circumstances will an extension of this period be granted to the taxpayer to submit requested information and documentation under Section 4 of Announcement 2004-46?

A-4b.4. Announcement 2004-46 allows the taxpayer 60 days for submission. Only under unusual circumstances will an extension of this period be granted. Any extensions granted must be approved by the revenue agent’s manager. Extensions will not be automatic and the taxpayer must explain to the satisfaction of the Service the reasons an extension is being requested. The Service has the discretion to grant or to refuse an extension.

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