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Use Form 8886 to disclose information for each reportable transaction in which participation has occurred. Generally, Form 8886 must be attached to the tax return for each tax year in which participation in a reportable transaction has occurred.
Purpose of Form Use Form 8886 to disclose information for each reportable transaction in which you participated. See Participation in a Reportable Transaction, later, to determine if you participated in a reportable transaction.
A reportable transaction is any transaction for which the IRS requires information to be included with a return or statement because the Service has determined, pursuant to the regulations under Sec. 6011, that the transaction is of a type that has the potential for tax avoidance or evasion (Sec. 6707A(c)(1)).
When a taxpayer participates in certain transactions in which the IRS has deemed the type of transaction prone to illegal tax avoidance it is is referred to as a Reportable Transaction and The taxpayer may have to file a form 8886 to report the transaction.
A listed transaction is a transaction that is 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.