A transaction includes all of the factual elements relevant to the expected tax treatment of any investment, entity, plan, or arrangement and it includes any series of steps carried out as part of a plan.

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. Receipt of an opinion regarding the tax consequences of the transaction is not relevant to the determination of whether the transaction is the same as or substantially similar to another transaction. Further, the term substantially similar must be broadly construed in favor of disclosure. See Regulations section 1.6011-4(c)(4) for examples.

This category includes transactions that are the same as or substantially similar to one of the types of transactions that the IRS has determined to be a tax avoidance transaction. These transactions are identified by notice, regulation, or other form of published guidance as a listed transaction. For existing guidance see:

The listed transactions in the above notices and rulings will be updated in future issues of the Internal Revenue Bulletin. You can find a notice or ruling in the Internal Revenue Bulletin at www.irs.gov/pub/irs-irbs/irbXX-YY.pdf, where XX is the two-digit year and YY is the two-digit bulletin number. For example, you can find Notice 2001-51, 2001-34 I.R.B. 190, at www.irs.gov/pub/irs-irbs/irb01-34.pdf.

You have participated in a listed transaction if your tax return reflects tax consequences or a tax strategy described in the published guidance that lists the transaction or if 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 strategy.

This category includes transactions that are offered to you under conditions of confidentiality. Generally, the transaction is considered offered under conditions of confidentiality if:

A transaction is not considered offered under conditions of confidentiality if limits on disclosure of the tax treatment or tax structure of the transaction are reasonably necessary to comply with securities laws and disclosure is not otherwise limited. For an exception in the case of certain mergers and acquisitions, see Regulations section 1.6011-4(b)(3)(ii)(B).

You have participated in a confidential transaction if your tax return reflects a tax benefit from the transaction. If disclosure by a pass-through entity (partnership, S corporation, or trust) is limited, but disclosure by the partner, shareholder, or beneficiary is not limited, then the pass-through entity (but not the partner, shareholder, or beneficiary) has participated in the confidential transaction.

This category includes transactions for which you have, or a related party (as described in sections 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 are not sustained. It also includes a transaction for which fees are contingent on your realization of tax benefits from the transaction. For exceptions and other details, see Regulations section 1.6011-4(b)(4).

You have participated in a transaction with contractual protection if your tax return reflects a tax benefit from the transaction. If a pass-through entity (partnership, S corporation, or trust) has the right to a full or partial refund of fees or has a contingent fee arrangement, but the partner, shareholder, or beneficiary individually does not, then the pass-through entity (but not the partner, shareholder, or beneficiary) has participated in the transaction with contractual protection.

This category includes transactions that result in your claiming a loss under section 165 (described below) if the gross amount of the loss (before netting any gain against it) is:

This category includes transactions that result in book-tax differences of more than $10 million in any tax year. This category applies only to:

The book-tax difference is the amount by which the amount of any income, gain, expense, or loss item from the transaction for Federal income tax purposes differs on a gross basis from the amount of the item for book purposes in any tax year. Determine the book-tax difference resulting from the transaction without netting any items. Generally, book income is determined by using U.S. generally accepted accounting principles (GAAP) for worldwide income. However, for a taxpayer that does not use U.S. GAAP for any purpose (including reports to shareholders, creditors, or regulators), the taxpayer may determine the amount of a book item by using the taxpayer's books, if the books use the same method consistently from year to year. For special rules that apply to consolidated returns, foreign persons, owners of disregarded entities, and partners of partnerships, see Regulations section 1.6011-4(b)(6)(ii).

Disregard the following items in determining whether a transaction has a significant book-tax difference.

You have participated in a transaction with a significant book-tax difference if your tax treatment of an item from the transaction differs from the book treatment of that item by more than $10 million in the tax year. Do not take into account differences that arise solely because a subsidiary of the taxpayer is consolidated with the taxpayer, in whole or in part, for book purposes, but not for tax purposes.

This category includes transactions that result in your claiming a tax credit (including a foreign tax credit) of more than $250,000 if the asset giving rise to the credit was held by you for 45 days or less. For purposes of determining the holding period of the asset, the principles of section 246(c)(3) and (c)(4) apply. Disregard any transactions generating a foreign tax credit for withholding taxes or other taxes imposed on a dividend that are not disallowed under section 901(k) (including transactions eligible for the exception for security dealers under section 901(k)(4)).

You have participated in a transaction involving a brief asset holding period if your tax return reflects items giving rise to a tax credit of more than $250,000. If you are a partner, shareholder, or beneficiary of a pass-through entity (partnership, S corporation, or trust), you have participated in such a transaction if you are claiming a tax credit on your tax return from the pass-through entity (disregarding netting at the entity level) of more than $250,000.

A transaction is not considered a reportable transaction if the IRS makes a determination in published guidance or in a private letter ruling that it is not subject to the reporting requirements. However, a private letter ruling may be relied upon only by the taxpayer to whom it was issued. This includes a transaction that would otherwise be included in any of the above reportable transaction categories.

Customary leasing transactions involving tangible personal property that are exempt from the tax shelter registration requirements and the list maintenance requirements under Notice 2001-18, 2001-9 I.R.B. 731, are not required to be reported on Form 8886 unless the transaction is a listed transaction.