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2011 Federal Tax Forms

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2011 Federal Tax Forms

2011 federal tax forms Index A Abandonments, Abandonments Annuities, Insurance Policies and Annuities Asset classification Capital, Capital Assets Noncapital, Noncapital Assets Assistance (see Tax help) Assumption of liabilities, Assumption of liabilities. 2011 federal tax forms , Liabilities. 2011 federal tax forms B Basis Adjusted, Adjusted basis. 2011 federal tax forms Original, Basis. 2011 federal tax forms Bonds, U. 2011 federal tax forms S. 2011 federal tax forms Treasury, U. 2011 federal tax forms S. 2011 federal tax forms Treasury Notes or Bonds Business, sold, Sale of a Business C Canceled Debt, Cancellation of debt. 2011 federal tax forms Lease, Cancellation of a lease. 2011 federal tax forms Real property sale, Canceling a sale of real property. 2011 federal tax forms Capital assets defined, Capital Assets Capital gains and losses Figuring, Long and Short Term Holding period, Holding period. 2011 federal tax forms Long term, Long and Short Term Short term, Long and Short Term Treatment of capital losses, Treatment of Capital Losses Casualties, Section 1231 transactions. 2011 federal tax forms Charitable organization Bargain sale to, Bargain sales to charity. 2011 federal tax forms , Bargain sale to charity. 2011 federal tax forms Gift to, Gift to charitable organization. 2011 federal tax forms Classes of assets, Classes of assets. 2011 federal tax forms Coal, Coal and Iron Ore Coins, Precious Metals and Stones, Stamps, and Coins Comments, Comments and suggestions. 2011 federal tax forms Commodities derivative financial instruments, Commodities derivative financial instrument. 2011 federal tax forms Condemnations, Condemnations, Section 1231 transactions. 2011 federal tax forms Conversion transactions, Conversion Transactions Copyrights, Copyright. 2011 federal tax forms , Copyrights. 2011 federal tax forms Covenant not to compete, Covenant not to compete. 2011 federal tax forms D Debt cancellation, Cancellation of debt. 2011 federal tax forms , Cancellation of debt. 2011 federal tax forms Deferred exchange, Deferred Exchange Depreciable property Real, Depreciable real property. 2011 federal tax forms Records, Depreciation Recapture Section 1245, Section 1245 property defined. 2011 federal tax forms , Like-Kind Exchanges and Involuntary Conversions Section 1250, Section 1250 property defined. 2011 federal tax forms Depreciation recapture Personal property, Section 1245 Property Real property, Section 1250 property defined. 2011 federal tax forms E Easement, Easement. 2011 federal tax forms Exchanges Deferred, Deferred Exchange Involuntary, Involuntary Conversions Like-kind, Like-Kind Exchanges, Like-Kind Exchanges and Involuntary Conversions Nontaxable, Nontaxable Exchanges Related persons, Related persons. 2011 federal tax forms U. 2011 federal tax forms S. 2011 federal tax forms Treasury notes or bonds, U. 2011 federal tax forms S. 2011 federal tax forms Treasury Notes or Bonds F Fair market value, Fair market value. 2011 federal tax forms Foreclosure, Foreclosures and Repossessions Form 1040 (Sch. 2011 federal tax forms D), Schedule D and Form 8949 1099-A, Forms 1099-A and 1099-C. 2011 federal tax forms , Forms 1099-A and 1099-C. 2011 federal tax forms 1099-B, Form 1099-B. 2011 federal tax forms 1099-C, Forms 1099-A and 1099-C. 2011 federal tax forms , Forms 1099-A and 1099-C. 2011 federal tax forms 1099-S, Form 1099-S. 2011 federal tax forms 4797, Business property. 2011 federal tax forms , Reporting the exchange. 2011 federal tax forms , Form 4797 8594, Reporting requirement. 2011 federal tax forms 8824, Reporting the exchange. 2011 federal tax forms 8949, Forms to file. 2011 federal tax forms , Personal-use property. 2011 federal tax forms , Reporting the exchange. 2011 federal tax forms , More information. 2011 federal tax forms , Timber, Introduction, Form 1099-B. 2011 federal tax forms , Personal-use property. 2011 federal tax forms , Mark-to-market election. 2011 federal tax forms Franchise, Franchise, Trademark, or Trade Name Free tax services, Free help with your tax return. 2011 federal tax forms G Gains and losses Bargain sale, Bargain Sale Business property, Ordinary or Capital Gain or Loss for Business Property Defined, Gain or Loss From Sales and Exchanges Form 4797, Form 4797 Ordinary or capital, Ordinary or Capital Gain or Loss Property changed to business or rental use, Property Changed to Business or Rental Use Property used partly for rental, Property Used Partly for Business or Rental Reporting, Reporting Gains and Losses Gifts of property, Gifts, Gift. 2011 federal tax forms Gold, Precious Metals and Stones, Stamps, and Coins H Hedging transactions, Hedging transaction. 2011 federal tax forms Help (see Tax help) Holding period, Holding period. 2011 federal tax forms Housing, low income, Low-income housing. 2011 federal tax forms , Low-Income Housing With Two or More Elements I Indirect ownership of stock, Ownership of stock or partnership interests. 2011 federal tax forms Information returns, Information Returns Inherited property, Inherited property. 2011 federal tax forms Installment sales, Installment Sales, Installment sale. 2011 federal tax forms Insurance policies, Insurance Policies and Annuities Intangible property, Dispositions of Intangible Property Involuntary conversion Defined, Involuntary Conversions Depreciable property, Like-Kind Exchanges and Involuntary Conversions Iron ore, Coal and Iron Ore L Land Release of restriction, Release of restriction on land. 2011 federal tax forms Subdivision, Subdivision of Land Lease, cancellation of, Cancellation of a lease. 2011 federal tax forms Liabilities, assumption, Liabilities. 2011 federal tax forms Like-kind exchanges Deferred, Deferred Exchange Liabilities, assumed, Assumption of liabilities. 2011 federal tax forms Like-class property, Like-Kind Property Like-kind property, Like-Kind Property Multiple parties, Multiple-party transactions. 2011 federal tax forms Multiple property, Multiple Property Exchanges Partnership interests, Partnership Interests Qualifying property, Qualifying Property Related persons, Like-Kind Exchanges Between Related Persons Low-income housing, Low-income housing. 2011 federal tax forms M Multiple property exchanges, Multiple Property Exchanges N Noncapital assets defined, Noncapital Assets Nontaxable exchanges Like-kind, Like-Kind Exchanges Other nontaxable exchanges, Other Nontaxable Exchanges Partially, Partially Nontaxable Exchanges Property exchanged for stock, Property Exchanged for Stock Notes, U. 2011 federal tax forms S. 2011 federal tax forms Treasury, U. 2011 federal tax forms S. 2011 federal tax forms Treasury Notes or Bonds O Ordinary or capital gain, Ordinary or Capital Gain or Loss P Partially nontaxable exchanges, Partially Nontaxable Exchanges Partnership Controlled, Controlled partnership transaction. 2011 federal tax forms Related persons, Related persons. 2011 federal tax forms , Controlled entity. 2011 federal tax forms Sale or exchange of interest, Partnership Interests, Partnership interests. 2011 federal tax forms , Partnership interests. 2011 federal tax forms Patents, Patents Personal property Depreciable, Like-Kind Exchanges and Involuntary Conversions Gains and losses, Personal-use property. 2011 federal tax forms Transfer at death, Transfers at Death Precious metals and stones, Precious Metals and Stones, Stamps, and Coins Property used partly for business or rental, Property Used Partly for Business or Rental, Part business or rental. 2011 federal tax forms Publications (see Tax help) Publicly traded securities, rollover of gain from, Rollover of Gain From Publicly Traded Securities R Real property Depreciable, Depreciable real property. 2011 federal tax forms Transfer at death, Transfers at Death Related persons, Sales and Exchanges Between Related Persons Condemned property replacement, bought from, Buying replacement property from a related person. 2011 federal tax forms Gain on sale of property, Sales and Exchanges Between Related Persons Like-kind exchanges between, Like-Kind Exchanges Between Related Persons List, Related persons. 2011 federal tax forms Loss on sale of property, Nondeductible Loss Patent transferred to, Related persons. 2011 federal tax forms Replacement property, Replacement property. 2011 federal tax forms , Replacement property to be produced. 2011 federal tax forms Repossession, Foreclosures and Repossessions, Repossession. 2011 federal tax forms Residual method, sale of business, Residual method. 2011 federal tax forms Rollover of gain, Rollover of Gain From Publicly Traded Securities S Sale of a business, Sale of a Business Sales Bargain, charitable organization, Bargain sales to charity. 2011 federal tax forms , Bargain sale to charity. 2011 federal tax forms Installment, Installment Sales, Installment sale. 2011 federal tax forms Property changed to business or rental use, Property Changed to Business or Rental Use Related persons, Sales and Exchanges Between Related Persons, Related persons. 2011 federal tax forms Section 1231 gains and losses, Section 1231 Gains and Losses Section 1245 property Defined, Section 1245 Property Gain, ordinary income, Gain Treated as Ordinary Income Multiple asset accounts, Multiple asset accounts. 2011 federal tax forms Section 1250 property Additional depreciation, Additional Depreciation Defined, Section 1250 property defined. 2011 federal tax forms Foreclosure, Foreclosure. 2011 federal tax forms Gain, ordinary income, Gain Treated as Ordinary Income Nonresidential, Nonresidential real property. 2011 federal tax forms Residential, Residential rental property. 2011 federal tax forms Section 197 intangibles, Section 197 Intangibles Severance damages, Severance damages. 2011 federal tax forms Silver, Precious Metals and Stones, Stamps, and Coins Small business stock, Gains on Sales of Qualified Small Business Stock Specialized small business investment company (SSBIC), rollover of gain into, Rollover of Gain From Publicly Traded Securities Stamps, Precious Metals and Stones, Stamps, and Coins Stock Capital asset, Capital Assets Controlling interest, corporation, Controlling interest in a corporation. 2011 federal tax forms Indirect ownership, Ownership of stock or partnership interests. 2011 federal tax forms Property exchanged for, Property Exchanged for Stock Publicly traded securities, Rollover of Gain From Publicly Traded Securities Small business, Gains on Sales of Qualified Small Business Stock Suggestions, Comments and suggestions. 2011 federal tax forms T Tax help, How To Get Tax Help Tax rates, capital gain, Capital Gains Tax Rates Thefts, Section 1231 transactions. 2011 federal tax forms Timber, Timber, Section 1231 transactions. 2011 federal tax forms Trade name, Franchise, Trademark, or Trade Name Trademark, Franchise, Trademark, or Trade Name Transfers to spouse, Transfers to Spouse U U. 2011 federal tax forms S. 2011 federal tax forms Treasury bonds, U. 2011 federal tax forms S. 2011 federal tax forms Treasury Notes or Bonds Unharvested crops, Section 1231 transactions. 2011 federal tax forms Prev  Up     Home   More Online Publications
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The 2011 Federal Tax Forms

2011 federal tax forms 2. 2011 federal tax forms   Tax Shelters and Other Reportable Transactions Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Abusive Tax SheltersRules To Curb Abusive Tax Shelters Investor Reporting Penalties Whether To Invest Introduction Investments that yield tax benefits are sometimes called “tax shelters. 2011 federal tax forms ” In some cases, Congress has concluded that the loss of revenue is an acceptable side effect of special tax provisions designed to encourage taxpayers to make certain types of investments. 2011 federal tax forms In many cases, however, losses from tax shelters produce little or no benefit to society, or the tax benefits are exaggerated beyond those intended. 2011 federal tax forms Those cases are called “abusive tax shelters. 2011 federal tax forms ” An investment that is considered a tax shelter is subject to restrictions, including the requirement that it be disclosed, as discussed later. 2011 federal tax forms Topics - This chapter discusses: Abusive Tax Shelters , Rules To Curb Abusive Tax Shelters , Investor Reporting , Penalties , and Whether To Invest . 2011 federal tax forms Useful Items - You may want to see: Publication 538 Accounting Periods and Methods 556 Examination of Returns, Appeal Rights, and Claims for Refund 561 Determining the Value of Donated Property 925 Passive Activity and At-Risk Rules Form (and Instructions) 8275 Disclosure Statement 8275-R Regulation Disclosure Statement 8283 Noncash Charitable Contributions 8886 Reportable Transaction Disclosure Statement See chapter 5, How To Get Tax Help , for information about getting these publications and forms. 2011 federal tax forms Abusive Tax Shelters Abusive tax shelters are marketing schemes involving artificial transactions with little or no economic reality. 2011 federal tax forms They often make use of unrealistic allocations, inflated appraisals, losses in connection with nonrecourse loans, mismatching of income and deductions, financing techniques that do not conform to standard commercial business practices, or mischaracterization of the substance of the transaction. 2011 federal tax forms Despite appearances to the contrary, the taxpayer generally risks little. 2011 federal tax forms Abusive tax shelters commonly involve package deals designed from the start to generate losses, deductions, or credits that will be far more than present or future investment. 2011 federal tax forms Or, they may promise investors from the start that future inflated appraisals will enable them, for example, to reap charitable contribution deductions based on those appraisals. 2011 federal tax forms (But see the appraisal requirements discussed under Rules To Curb Abusive Tax Shelters , later. 2011 federal tax forms ) They are commonly marketed in terms of the ratio of tax deductions allegedly available to each dollar invested. 2011 federal tax forms This ratio (or “write-off”) is frequently said to be several times greater than one-to-one. 2011 federal tax forms Because there are many abusive tax shelters, it is not possible to list all the factors you should consider in determining whether an offering is an abusive tax shelter. 2011 federal tax forms However, you should ask the following questions, which might provide a clue to the abusive nature of the plan. 2011 federal tax forms Do the tax benefits far outweigh the economic benefits? Is this a transaction you would seriously consider, apart from the tax benefits, if you hoped to make a profit? Do shelter assets really exist and, if so, are they insured for less than their purchase price? Is there a nontax justification for the way profits and losses are allocated to partners? Do the facts and supporting documents make economic sense? In that connection, are there sales and resales of the tax shelter property at ever increasing prices? Does the investment plan involve a gimmick, device, or sham to hide the economic reality of the transaction? Does the promoter offer to backdate documents after the close of the year? Are you instructed to backdate checks covering your investment? Is your debt a real debt or are you assured by the promoter that you will never have to pay it? Does this transaction involve laundering United States source income through foreign corporations incorporated in a tax haven and owned by United States shareholders? Rules To Curb Abusive Tax Shelters Congress has enacted a series of income tax laws designed to halt the growth of abusive tax shelters. 2011 federal tax forms These provisions include the following. 2011 federal tax forms Disclosure of reportable transactions. 2011 federal tax forms   You must disclose information for each reportable transaction in which you participate. 2011 federal tax forms See Reportable Transaction Disclosure Statement , later. 2011 federal tax forms   Material advisors with respect to any reportable transaction must disclose information about the transaction on Form 8918, Material Advisor Disclosure Statement. 2011 federal tax forms To determine whether you are a material advisor to a transaction, see the Instructions for Form 8918. 2011 federal tax forms   Material advisors will receive a reportable transaction number for the disclosed reportable transaction. 2011 federal tax forms They must provide this number to all persons to whom they acted as a material advisor. 2011 federal tax forms They must provide the number at the time the transaction is entered into. 2011 federal tax forms If they do not have the number at that time, they must provide it within 60 days from the date the number is mailed to them. 2011 federal tax forms For information on penalties for failure to disclose and failure to maintain lists, see Internal Revenue Code sections 6707, 6707A, and 6708. 2011 federal tax forms Requirement to maintain list. 2011 federal tax forms   Material advisors must maintain a list of persons to whom they provide material aid, assistance, or advice on any reportable transaction. 2011 federal tax forms The list must be available for inspection by the IRS, and the information required to be included on the list generally must be kept for 7 years. 2011 federal tax forms See Regulations section 301. 2011 federal tax forms 6112-1 for more information (including what information is required to be included on the list). 2011 federal tax forms Confidentiality privilege. 2011 federal tax forms   The confidentiality privilege between you and a federally authorized tax practitioner does not apply to written communications made after October 21, 2004, regarding the promotion of your direct or indirect participation in any tax shelter. 2011 federal tax forms Appraisal requirement for donated property. 2011 federal tax forms   If you claim a deduction of more than $5,000 for an item or group of similar items of donated property, you generally must get a qualified appraisal from a qualified appraiser and complete and attach section B of Form 8283 to your return. 2011 federal tax forms If you claim a deduction of more than $500,000 for the donated property, you generally must attach the qualified appraisal to your return. 2011 federal tax forms If you file electronically, see Form 8453, U. 2011 federal tax forms S. 2011 federal tax forms Individual Income Tax Transmittal for an IRS e-file Return, and its instructions. 2011 federal tax forms For more information about appraisals, including exceptions, see Publication 561. 2011 federal tax forms Passive activity loss and credit limits. 2011 federal tax forms   The passive activity loss and credit rules limit the amount of losses and credits that can be claimed from passive activities and limit the amount that can offset nonpassive income, such as certain portfolio income from investments. 2011 federal tax forms For more detailed information about determining and reporting income, losses, and credits from passive activities, see Publication 925. 2011 federal tax forms Interest on penalties. 2011 federal tax forms   If you are assessed an accuracy-related or civil fraud penalty (as discussed under Penalties , later), interest will be imposed on the amount of the penalty from the due date of the return (including any extensions) to the date you pay the penalty. 2011 federal tax forms Accounting method restriction. 2011 federal tax forms   Tax shelters generally cannot use the cash method of accounting. 2011 federal tax forms Uniform capitalization rules. 2011 federal tax forms   The uniform capitalization rules generally apply to producing property or acquiring it for resale. 2011 federal tax forms Under those rules, the direct cost and part of the indirect cost of the property must be capitalized or included in inventory. 2011 federal tax forms For more information, see Publication 538. 2011 federal tax forms Denial of deduction for interest on an underpayment due to a reportable transaction. 2011 federal tax forms   You cannot deduct any interest you paid or accrued on any part of an underpayment of tax due to an understatement arising from a reportable transaction (discussed later) if the relevant facts affecting the tax treatment of the item are not adequately disclosed. 2011 federal tax forms This rule applies to reportable transactions entered into in tax years beginning after October 22, 2004. 2011 federal tax forms Authority for Disallowance of Tax Benefits The IRS has published guidance concluding that the claimed tax benefits of various abusive tax shelters should be disallowed. 2011 federal tax forms The guidance is the conclusion of the IRS on how the law is applied to a particular set of facts. 2011 federal tax forms Guidance is published in the Internal Revenue Bulletin for taxpayers' information and also for use by IRS officials. 2011 federal tax forms So, if your return is examined and an abusive tax shelter is identified and challenged, published guidance dealing with that type of shelter, which disallows certain claimed tax shelter benefits, could serve as the basis for the examining official's challenge of the tax benefits you claimed. 2011 federal tax forms In such a case, the examiner will not compromise even if you or your representative believes you have authority for the positions taken on your tax return. 2011 federal tax forms The courts have generally been unsympathetic to taxpayers involved in abusive tax shelter schemes and have ruled in favor of the IRS in the majority of the cases in which these shelters have been challenged. 2011 federal tax forms Investor Reporting You may be required to file a reportable transaction disclosure statement. 2011 federal tax forms Reportable Transaction Disclosure Statement Use Form 8886 to disclose information for each reportable transaction (discussed later) in which you participated. 2011 federal tax forms Generally, you must attach Form 8886 to your return for each tax year in which you participated in the transaction. 2011 federal tax forms Under certain circumstances, a transaction must be disclosed within 90 days of the transaction being identified as a listed transaction or a transaction of interest (discussed later). 2011 federal tax forms In addition, for the first year Form 8886 is attached to your return, you must send a copy of the form to: Internal Revenue Service OTSA Mail Stop 4915 1973 North Rulon White Blvd. 2011 federal tax forms  Ogden, UT 84404 If you file your return electronically, the copy sent to OTSA must show exactly the same information, word for word, provided with the electronically filed return and it must be provided on the official IRS Form 8886 or an exact copy of the form. 2011 federal tax forms If you use a computer-generated or substitute Form 8886, it must be an exact copy of the official IRS form. 2011 federal tax forms If you fail to file Form 8886 as required or fail to include any required information on the form, you may have to pay a penalty. 2011 federal tax forms See Penalty for failure to disclose a reportable transaction , later under Penalties. 2011 federal tax forms The following discussion briefly describes reportable transactions. 2011 federal tax forms For more details, see the Instructions for Form 8886. 2011 federal tax forms Reportable transaction. 2011 federal tax forms   A reportable transaction is any of the following. 2011 federal tax forms A listed transaction. 2011 federal tax forms A confidential transaction. 2011 federal tax forms A transaction with contractual protection. 2011 federal tax forms A loss transaction. 2011 federal tax forms A transaction of interest entered into after November 1, 2006. 2011 federal tax forms Note. 2011 federal tax forms Transactions with a brief asset holding period were removed from the definition of reportable transaction for transactions entered into after August 2, 2007. 2011 federal tax forms Listed transaction. 2011 federal tax forms   A listed transaction is the same as, or substantially similar to, one of the types of transactions the IRS has determined to be a tax-avoidance transaction. 2011 federal tax forms These transactions have been identified in notices, regulations, and other published guidance issued by the IRS. 2011 federal tax forms For a list of existing guidance, see Notice 2009-59 in Internal Revenue Bulletin 2009-31, available at www. 2011 federal tax forms irs. 2011 federal tax forms gov/irb/2009-31_IRB/ar07. 2011 federal tax forms html. 2011 federal tax forms Confidential transaction. 2011 federal tax forms   A confidential transaction is offered to you under conditions of confidentiality and for which you have paid an advisor a minimum fee. 2011 federal tax forms A transaction is offered under conditions of confidentiality if the advisor who is paid the fee places a limit on your disclosure of the tax treatment or tax structure of the transaction and the limit protects the confidentiality of the advisor's tax strategies. 2011 federal tax forms The transaction is treated as confidential even if the conditions of confidentiality are not legally binding on you. 2011 federal tax forms Transaction with contractual protection. 2011 federal tax forms   Generally, a transaction with contractual protection is one in which you or a related party has the right to a full or partial refund of fees if all or part of the intended tax consequences of the transaction are not sustained, or a transaction for which the fees are contingent on your realizing the tax benefits from the transaction. 2011 federal tax forms For information on exceptions, see Revenue Procedure 2007-20 in Internal Revenue Bulletin 2007-7, available at www. 2011 federal tax forms irs. 2011 federal tax forms gov/irb/2007-07_IRB/ar15. 2011 federal tax forms html. 2011 federal tax forms Loss transaction. 2011 federal tax forms   For individuals, a loss transaction is one that results in a deductible loss if the gross amount of the loss is at least $2 million in a single tax year or $4 million in any combination of tax years. 2011 federal tax forms A loss from a foreign currency transaction under Internal Revenue Code section 988 is a loss transaction if the gross amount of the loss is at least $50,000 in a single tax year, whether or not the loss flows through from an S corporation or partnership. 2011 federal tax forms   Certain losses (such as losses from casualties, thefts, and condemnations) are excepted from this category and do not have to be reported on Form 8886. 2011 federal tax forms For information on other exceptions, see Revenue Procedure 2004-66 in Internal Revenue Bulletin 2004-50, as modified and superseded by Revenue Procedure 2013-11, (or future published guidance) available at www. 2011 federal tax forms irs. 2011 federal tax forms gov/irb/2004-50_IRB/ar11. 2011 federal tax forms html. 2011 federal tax forms Transaction of interest. 2011 federal tax forms   A transaction of interest is a transaction entered into after November 1, 2006, that is the same as, or substantially similar to, one of the types of transactions that the IRS has identified by notice, regulation, or other form of published guidance as a transaction of interest. 2011 federal tax forms The IRS has identified the following transactions of interest. 2011 federal tax forms “Toggling” grantor trusts as described in Notice 2007-73, 2007-36 I. 2011 federal tax forms R. 2011 federal tax forms B. 2011 federal tax forms 545, available at www. 2011 federal tax forms irs. 2011 federal tax forms gov/irb/2007-36_IRB/ar20. 2011 federal tax forms html. 2011 federal tax forms Certain transactions involving contributions of a successor member interest in a limited liability company as described in Notice 2007-72, 2007-36 I. 2011 federal tax forms R. 2011 federal tax forms B. 2011 federal tax forms 544, available at www. 2011 federal tax forms irs. 2011 federal tax forms gov/irb/2007-36_IRB/ar19. 2011 federal tax forms html. 2011 federal tax forms Certain transactions involving the sale or other disposition of all interests in a charitable remainder trust and claiming little or no taxable gain as described in Notice 2008-99, 2008-47 I. 2011 federal tax forms R. 2011 federal tax forms B. 2011 federal tax forms 1194, available at www. 2011 federal tax forms irs. 2011 federal tax forms gov/irb/2008-47_IRB/ar11. 2011 federal tax forms html. 2011 federal tax forms Certain transactions involving a U. 2011 federal tax forms S. 2011 federal tax forms taxpayer owning controlled foreign corporations (CFCs) that hold stock of a lower-tier CFC through a domestic partnership to avoid reporting income as described in Notice 2009-7, 2009-3 I. 2011 federal tax forms R. 2011 federal tax forms B. 2011 federal tax forms 312, available at www. 2011 federal tax forms irs. 2011 federal tax forms gov/irb/2009-03_IRB/ar10. 2011 federal tax forms html. 2011 federal tax forms   For updates to this list, go to www. 2011 federal tax forms irs. 2011 federal tax forms gov/Businesses/Corporations/Abusive-Tax-Shelters-and-Transactions. 2011 federal tax forms Penalties Investing in an abusive tax shelter may lead to substantial expenses. 2011 federal tax forms First, the promoter generally charges a substantial fee. 2011 federal tax forms If your return is examined by the IRS and a tax deficiency is determined, you will be faced with payment of more tax, interest on the underpayment, possibly a 20%, 30%, or even 40% accuracy-related penalty, or a 75% civil fraud penalty. 2011 federal tax forms You may also be subject to the penalty for failure to pay tax. 2011 federal tax forms These penalties are explained in the following paragraphs. 2011 federal tax forms Accuracy-related penalties. 2011 federal tax forms   An accuracy-related penalty of 20% can be imposed for underpayments of tax due to: Negligence or disregard of rules or regulations, Substantial understatement of tax, Substantial valuation misstatement (increased to 40% for gross valuation misstatement), Transaction lacking economic substance (increased to 40% for undisclosed transaction lacking economic substance), or Undisclosed foreign financial asset understatement (40% in all cases). 2011 federal tax forms Except for a transaction lacking economic substance, this penalty will not be imposed if you can show you had reasonable cause for any understatement of tax and that you acted in good faith. 2011 federal tax forms Your failure to disclose a reportable transaction is a strong indication that you failed to act in good faith. 2011 federal tax forms   If you are charged an accuracy-related penalty, interest will be imposed on the amount of the penalty from the due date of the return (including extensions) to the date you pay the penalty. 2011 federal tax forms   The 20% penalties do not apply to any underpayment attributable to a reportable transaction understatement subject to an accuracy-related penalty (discussed later). 2011 federal tax forms Negligence or disregard of rules or regulations. 2011 federal tax forms   The penalty for negligence or disregard of rules or regulations is imposed only on the part of the underpayment due to negligence or disregard of rules or regulations. 2011 federal tax forms The penalty will not be charged if you can show you had reasonable cause for understating your tax and that you acted in good faith. 2011 federal tax forms    Negligence includes any failure to make a reasonable attempt to comply with the provisions of the Internal Revenue Code. 2011 federal tax forms It also includes any failure to keep adequate books and records. 2011 federal tax forms A return position that has a reasonable basis is not negligence. 2011 federal tax forms   Disregard includes any careless, reckless, or intentional disregard of rules or regulations. 2011 federal tax forms   The penalty for disregard of rules and regulations can be avoided if all the following are true. 2011 federal tax forms You keep adequate books and records. 2011 federal tax forms You have a reasonable basis for your position on the tax issue. 2011 federal tax forms You make an adequate disclosure of your position. 2011 federal tax forms Use Form 8275 to make your disclosure and attach it to your return. 2011 federal tax forms To disclose a position contrary to a regulation, use Form 8275-R. 2011 federal tax forms Use Form 8886 to disclose a reportable transaction (discussed earlier). 2011 federal tax forms Substantial understatement of tax. 2011 federal tax forms   An understatement is considered to be substantial if it is more than the greater of: 10% of the tax required to be shown on the return, or $5,000. 2011 federal tax forms An “understatement” is the amount of tax required to be shown on your return for a tax year minus the amount of tax shown on the return, reduced by any rebates. 2011 federal tax forms The term “rebate” generally means a decrease in the tax shown on your original return as the result of your filing an amended return or claim for refund. 2011 federal tax forms   For items other than tax shelters, you can file Form 8275 or Form 8275-R to disclose items that could cause a substantial understatement of income tax. 2011 federal tax forms In that way, you can avoid the substantial understatement penalty if you have a reasonable basis for your position on the tax issue. 2011 federal tax forms Disclosure of the tax shelter item on a tax return does not reduce the amount of the understatement. 2011 federal tax forms   Also, the understatement penalty will not be imposed if you can show there was reasonable cause for the underpayment caused by the understatement and that you acted in good faith. 2011 federal tax forms An important factor in establishing reasonable cause and good faith will be the extent of your effort to determine your proper tax liability under the law. 2011 federal tax forms Substantial valuation misstatement. 2011 federal tax forms   In general, you are liable for a 20% penalty for a substantial valuation misstatement if all the following are true. 2011 federal tax forms The value or adjusted basis of any property claimed on the return is 150% or more of the correct amount. 2011 federal tax forms You underpaid your tax by more than $5,000 because of the misstatement. 2011 federal tax forms You cannot establish that you had reasonable cause for the underpayment and that you acted in good faith. 2011 federal tax forms   You may be assessed a penalty of 40% for a gross valuation misstatement. 2011 federal tax forms If you misstate the value or the adjusted basis of property by 200% or more of the amount determined to be correct, you will be assessed a penalty of 40%, instead of 20%, of the amount you underpaid because of the gross valuation misstatement. 2011 federal tax forms The penalty rate is also 40% if the property's correct value or adjusted basis is zero. 2011 federal tax forms Transaction lacking economic substance. 2011 federal tax forms   The economic substance doctrine only applies to an individual that entered into a transaction in connection with a trade or business or an activity engaged in for the production of income. 2011 federal tax forms For transactions entered into after March 30, 2010, a transaction has economic substance for you as an individual taxpayer only if: The transaction changes your economic position in a meaningful way (apart from federal income tax effects), or You have a substantial purpose (apart from federal income tax effects) for entering into the transaction. 2011 federal tax forms   For purposes of determining whether economic substance exists, a transaction's profit potential will only be taken into account if the present value of the reasonably expected pre-tax profit from the transaction is substantial compared to the present value of the expected net tax benefits that would be allowed if the transaction were respected. 2011 federal tax forms   If any part of your underpayment is due to any disallowance of claimed tax benefits by reason of a transaction lacking economic substance or failing to meet the requirements of any similar rule of law, that part of your underpayment will be subject to the 20% accuracy-related penalty even if you had a reasonable cause and acted in good faith concerning that part. 2011 federal tax forms   Additionally, the penalty increases to 40% if you do not adequately disclose on your return or in a statement attached to your return the relevant facts affecting the tax treatment of a transaction that lacks economic substance. 2011 federal tax forms Relevant facts include any facts affecting the tax treatment of the transaction. 2011 federal tax forms    Any excessive amount of an erroneous claim for an income tax refund or credit (other than a refund or credit related to the earned income credit) that results from a transaction found to be lacking economic substance will not be treated as having a reasonable basis and could be subject to a 20% penalty. 2011 federal tax forms Undisclosed foreign financial asset understatement. 2011 federal tax forms   For tax years beginning after March 18, 2010, you may be liable for a 40% penalty for an understatement of your tax liability due to an undisclosed foreign financial asset. 2011 federal tax forms An undisclosed foreign financial asset is any asset for which an information return, required to be provided under Internal Revenue Code section 6038, 6038B, 6038D, 6046A, or 6048 for any taxable year, is not provided. 2011 federal tax forms The penalty applies to any part of an underpayment related to the following undisclosed foreign financial assets. 2011 federal tax forms Any foreign business you control, reportable on Form 5471, Information Return of U. 2011 federal tax forms S. 2011 federal tax forms Persons With Respect To Certain Foreign Corporations, or Form 8865, Return of U. 2011 federal tax forms S. 2011 federal tax forms Persons With Respect to Certain Foreign Partnerships. 2011 federal tax forms Certain transfers of property to a foreign corporation or partnership, reportable on Form 926, Return by a U. 2011 federal tax forms S. 2011 federal tax forms Transferor of Property to a Foreign Corporation, or certain distributions to a foreign person, reportable on Form 8865. 2011 federal tax forms Your ownership interest in certain foreign financial assets, temporarily reportable on Form 8275 or 8275-R. 2011 federal tax forms    Instead of, or in addition to, Form 8275 or 8275-R, you may have to file Form 8938, Statement of Specified Foreign Financial Assets, with your tax return. 2011 federal tax forms See the Instructions for Form 8938 for details. 2011 federal tax forms    Your acquisition, disposition, or substantial change in ownership interest in a foreign partnership, reportable on Form 8865. 2011 federal tax forms Creation or transfer of money or property to certain foreign trusts, reportable on Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. 2011 federal tax forms Penalty for incorrect appraisals. 2011 federal tax forms   The person who prepares an appraisal of the value of property may have to pay a penalty if: He or she knows, or reasonably should have known, that the appraisal would be used in connection with a return or claim for refund; and The claimed value of the property on a return or claim for refund based on that appraisal results in a substantial valuation misstatement or a gross valuation misstatement as discussed earlier. 2011 federal tax forms For details on the penalty amount and exceptions, see Publication 561. 2011 federal tax forms Penalty for failure to disclose a reportable transaction. 2011 federal tax forms   If you fail to include any required information regarding a reportable transaction (discussed earlier) on a return or statement, you may have to pay a penalty of 75% of the decrease in tax shown on your return as a result of such transaction (or that would have resulted if the transaction were respected for federal tax purposes). 2011 federal tax forms For an individual, the minimum penalty is $5,000 and the maximum is $10,000 (or $100,000 for a listed transaction). 2011 federal tax forms This penalty is in addition to any other penalty that may be imposed. 2011 federal tax forms   The IRS may rescind or abate the penalty for failing to disclose a reportable transaction under certain limited circumstances but cannot rescind the penalty for failing to disclose a listed transaction. 2011 federal tax forms For information on rescission, see Revenue Procedure 2007-21 in Internal Revenue Bulletin 2007-9 available at www. 2011 federal tax forms irs. 2011 federal tax forms gov/irb/2007-09_IRB/ar12. 2011 federal tax forms html. 2011 federal tax forms Accuracy-related penalty for a reportable transaction understatement. 2011 federal tax forms   If you have a reportable transaction understatement, you may have to pay a penalty equal to 20% of the amount of that understatement. 2011 federal tax forms This applies to any item due to a listed transaction or other reportable transaction with a significant purpose of avoiding or evading federal income tax. 2011 federal tax forms The penalty is 30% rather than 20% for the part of any reportable transaction understatement if the transaction was not properly disclosed. 2011 federal tax forms You may not have to pay the 20% penalty if you meet the strengthened reasonable cause and good faith exception. 2011 federal tax forms The reasonable cause and good faith exception does not apply to any part of a reportable transaction understatement attributable to one or more transactions that lack economic substance. 2011 federal tax forms   This penalty does not apply to the part of an understatement on which the fraud penalty, gross valuation misstatement penalty, or penalty for nondisclosure of noneconomic substance transactions is imposed. 2011 federal tax forms Civil fraud penalty. 2011 federal tax forms   If any underpayment of tax on your return is due to fraud, a penalty of 75% of the underpayment will be added to your tax. 2011 federal tax forms Joint return. 2011 federal tax forms   The fraud penalty on a joint return applies to a spouse only if some part of the underpayment is due to the fraud of that spouse. 2011 federal tax forms Failure to pay tax. 2011 federal tax forms   If a deficiency is assessed and is not paid within 10 days of the demand for payment, an investor can be penalized with up to a 25% addition to tax if the failure to pay continues. 2011 federal tax forms Whether To Invest In light of the adverse tax consequences and the substantial amount of penalties and interest that will result if the claimed tax benefits are disallowed, you should consider tax shelter investments carefully and seek competent legal and financial advice. 2011 federal tax forms Prev  Up  Next   Home   More Online Publications