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:

For updates to this list go to the IRS web page at www.irs.gov/businesses/corporations and click on Abusive Tax Shelters and Transactions. The listed transactions in the above notices and rulings will also be periodically 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 2004-67, 2004-41 I.R.B. 600, at www.irs.gov/pub/irs-irbs/irb04-41.pdf.

You have participated in a listed transaction if any of the following applies.

This category includes transactions that are offered to you under conditions of confidentiality and for which you paid an advisor a minimum fee (defined below). 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. See Regulations section 1.6011-4(b)(3) for more information.

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:

The disclosure requirement for this category has been eliminated by Notice 2006-6. Transactions with a significant book-tax difference that would have been required to be disclosed on returns filed with due dates (including extensions) after January 5, 2006 are no longer reportable transactions. These transactions do not need to be disclosed on Form 8886. For more details, see Notice 2006-6, 2006-5 I.R.B. 385.

However, Notice 2006-6 does not relieve taxpayers of any disclosure obligations for significant book-tax difference transactions that should have been disclosed on a return with a due date prior to January 6, 2006. For more information on book-tax difference transactions, see Regulations section 1.6011-4 and the instructions for Form 8886 for the year in which the transaction should have been disclosed.

If the significant book-tax difference transaction is also a transaction described in any of the five remaining reportable transaction categories, the transaction must still be disclosed. For more information, see the instructions for line 2 on page 4.

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 that it is not subject to the reporting requirements. The IRS may also determine by individual letter ruling that an individual letter ruling request satisfies the reporting requirements. However, an individual letter ruling may be relied upon only by the taxpayer who requested the individual letter ruling. 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.

If you are required to disclose a listed transaction and fail to do so within the time and manner prescribed under section 6011 and the related regulations, then under section 6501(c)(10) the period of limitations to assess any tax with respect to the listed transaction will be extended beyond the normal assessment period until one year after the earlier of either:

Section 6501(c)(10) is effective for tax years with respect to which the limitations period on assessment did not expire prior to October 22, 2004. Section 6501(c)(10) does not revive an assessment period that expired prior to October 22, 2004. For more information, see Rev. Proc. 2005-26, 2005-17 I.R.B. 965.

If you are filing Form 8886 to disclose a previously undisclosed listed transaction for purposes of section 6501(c)(10), submit the form and a cover letter to the Internal Revenue Service Center where your original tax return was filed. Write across the top of page 1 of each Form 8886 the following statement: “Section 6501(c)(10) Disclosure” followed by the tax year and tax return to which the disclosure statement applies. For example, if the Form 8886 relates to your Form 1040 for the 2002 tax year, you must include the following statement: “Section 6501(c)(10) Disclosure; 2002 Form 1040” on the form. The cover letter must identify the tax return to which the disclosure statement relates and the following statement signed under penalties of perjury by the taxpayer and if applicable, the paid preparer of Form 8886: “Under penalties of perjury, I declare that I have examined this reportable transaction disclosure statement and, to the best of my knowledge and belief, this reportable transaction disclosure statement is true, correct, and complete. Declaration of preparer (other than the taxpayer) is based on all information of which the preparer has any knowledge.” Separate Forms 8886 and separate cover letters must be submitted for each tax year for which you participated in the undisclosed listed transaction. You must also submit a copy of the form and cover letter simultaneously to OTSA at the address indicated above. See Rev. Proc. 2005-26, 2005-17 I.R.B. 965 for additional guidance.