Form 8886 (Rev. December 2019) – Checklist
What Form 8886 Requires
Taxpayers use Form 8886 to report their participation in specific transactions the IRS designates as reportable for the 2019 tax year. The form captures three essential elements: the category of transaction, the tax benefits you claimed, and the advisors who promoted or facilitated your involvement.
The December 2019 revision preserves existing reporting protocols for transactions initiated in 2019 or carried forward from earlier years. You must attach Form 8886 to your federal tax return for every year you participate in a reportable transaction.
Filing Procedure
Step 1: Verify Reportable Transaction Status
Confirm the transaction matches one of five reportable transaction categories defined in the 2019 instructions. The categories include listed transactions, confidential transactions, contractual protection transactions, loss transactions, and transactions of interest.
Document the initial year you participated in the transaction. The IRS defines participation broadly to include any reflection of tax consequences on your return.
Step 2: Complete Basic Information
Enter the correct tax return form number on Form 8886. Valid forms include Form 1040, Form 1040-SR, Form 1120, Form 1120-S, Form 1065, or other entity returns filed with the IRS.
Specify 2019 as the tax year and indicate whether the form attaches to an original or amended return. Mark the amendment box only if you are amending a prior-year return that reported the same transaction.
Step 3: Identify Transaction Type
Complete Section 2 by checking all applicable transaction-type boxes.
- Check box 2a for listed transactions if the transaction appears on the IRS published list for 2019.
- Check box 2e for transactions of interest if the IRS issued guidance identifying the transaction as potentially abusive.
You may check multiple boxes if the transaction qualifies under more than one category.
Step 4: Enter Published Guidance Number
Obtain the published guidance number from the 2019 IRS guidance documents if you checked box 2a or 2e. Enter this number on line 3 of the form. Verify the guidance number corresponds to actual IRS pronouncements issued in 2019 or earlier years, including notices, regulations, or memoranda.
Step 5: Report Transaction Count
Report all transactions that are the same as or substantially similar to the reportable transaction on line 4. Count transactions by transaction structure rather than by number of occurrences.
Disclose all qualifying transactions entered into during 2019 or prior years if they continue into 2019.
Step 6: Identify Pass-Through Entities
List all pass-through entities through which you held the transaction on line 5.
- Include partnerships, S corporations, trusts, and foreign entities.
- Provide the entity name, employer identification number if known, and the date you received Schedule K-1.
- Enter “none” on line 5d if you did not receive a Schedule K-1.
- For foreign entities, include the country of incorporation or existence as required by the 2019 instructions.
Step 7: List Advisors and Promoters
Identify all promoters, tax advisors, and transaction facilitators who received fees related to the transaction.
- Include individuals or entities who promoted, solicited, recommended participation, or provided tax advice.
- Report the name, identifying number if known, and dollar amount of fees paid.
- List promoters separately from tax counsel if both roles apply to the transaction.
Step 8: Describe Transaction Structure
Describe the complete transaction structure in Section 7e with sufficient detail for the IRS to understand the tax consequences.
- Detail each step that generated the claimed tax benefit.
- Specify the type of benefit claimed, including deductions, credits, losses, exclusions, deferrals, nonrecognition events, basis adjustments, or other favorable tax consequences.
- Include the anticipated duration of benefits, total investment amount, and any contractual protection agreement that limits your tax risk.
Special Filing Requirements for 2019
Transaction-of-Interest Category
Box 2e identifies transactions that the IRS designated as potentially abusive through published guidance. Filers must cross-reference published 2019 notices and memoranda to determine whether their transaction qualifies. The definition requires the transaction to be the same as or substantially similar to types identified in IRS guidance.
Foreign Entity Reporting Standards
The 2019 instructions require filers to report the country of incorporation or existence for all foreign entities involved in reportable transactions. This requirement applies to all foreign partnerships, S corporations, trusts, and other foreign entities listed in Section 5. You must provide this information even if the foreign entity did not issue a Schedule K-1.
Protective Disclosure Option
You may file Form 8886 on a protective basis by checking the protective disclosure box in Item C. Protective disclosure preserves your rights under the reasonable cause exception for reportable transaction understatements under Section 6664(d).
The form must include all required information to qualify as a complete disclosure statement. You must attach the form contemporaneously to your original tax return to establish adequate disclosure.
Schedule K-1 Timing Rules
The 60-day OTSA extension applies to partners, shareholders, and beneficiaries who receive a timely Schedule K-1 less than 10 calendar days before their return due date (including extensions).
- Form 8886 will not be considered late if you file it with the Office of Tax Shelter Analysis within 60 days after your return due date.
- This extension applies only when you determine reportable transaction participation based on the late-received Schedule K-1.
- If the pass-through entity has not issued a Schedule K-1 by your filing deadline, enter "none" on line 5d.
Filing Locations and Procedures
Attach Form 8886 to your income tax return for each tax year in which you participated in a reportable transaction. If this is your initial year filing Form 8886 for this transaction, send an exact copy to the Office of Tax Shelter Analysis at the following address:
Internal Revenue Service
OTSA Mail Stop 4915
1973 Rulon White Blvd.
Ogden, Utah 84201
Electronic filers must ensure the copy sent to OTSA shows the same information provided with the electronically filed return. Computer-generated or substitute forms must be exact copies of the official IRS Form 8886.
Penalties and Compliance
Section 6707A imposes monetary penalties for failure to include required information on Form 8886.
- The penalty applies separately for failure to attach the form, failure to file with OTSA when required, or submission of incomplete or incorrect information.
- The form must be completed in its entirety with all required attachments to avoid penalties.
- Section 6662A imposes accuracy-related penalties for reportable transaction understatements when disclosure is inadequate, or the transaction lacks substantial authority.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
