Instructions for Form 8264 |
2006 Tax Year |
This is archived information that pertains only to the 2006 Tax Year. If you are looking for information for the current tax year, go to the Tax Prep Help Area.
Organizers of certain tax shelters, including confidential corporate tax shelters in which interests were offered after February
28, 2000, are
required to file Form 8264 to register the tax shelters with the IRS. Organizers of tax shelters under section 6111(c) must
complete Parts I, II, and
III of Form 8264. Organizers of a confidential corporate tax shelter must complete Parts I and IV of Form 8264. If a confidential
corporate tax
shelter also meets the definition of a tax shelter under section 6111(c), the organizer must complete all parts of the form.
Organizers filing a
properly completed Form 8264 will receive a tax shelter registration number from the IRS. They must furnish the tax shelter
registration number to
investors in the tax shelter. Investors must report the tax shelter registration number on their tax returns using Form 8271, Investor
Reporting of Tax Shelter Registration Number.
For purposes of the registration requirement for tax shelters under section 6111(c) and confidential corporate tax shelters,
the term organizer
includes any person who participates in the organization, management, or sale of the tax shelter. See Who Is Required To Register a Tax
Shelter? below. For purposes of this form, “promoter” as defined under section 6111 and the regulations will be referred to as
“organizer.”
Tax Shelters Under Section 6111(c)
An investment that meets the following two requirements is considered a tax shelter under section 6111(c) for registration
purposes, regardless of
whether it is marketed or customarily designated as a tax shelter.
1.
The investment is one with respect to which a person could reasonably infer from representations made or to be made
in connection with the offering
for sale of an interest in the investment that the tax shelter ratio (defined on page 5) may be greater than 2 to 1 for any
investor at the close of
any of the first 5 years ending after the date on which the investment is offered for sale; and
2.
The investment is one that is required to be registered under a Federal or state law regulating securities, or that
is sold under an exemption from
registration requiring the filing of a notice with a Federal or state agency regulating the offering or sale of securities,
or that is a substantial
investment (defined on page 4).
Confidential Corporate Tax Shelters
An investment that meets each of the following three requirements is considered a “confidential corporate tax shelter” under section 6111(d).
1.
A significant purpose of the structure of the investment is the avoidance or evasion of Federal income tax for a direct
or indirect corporate
participant. Avoidance or evasion of tax is considered a significant purpose if the investment consists of either of the following:
-
Listed transactions. This category includes transactions (defined on page 5) 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 identified by notice, regulation,
or other form of
published guidance as a listed transaction. See Regulations section 301.6111-2(b)(2). There may be subsequent guidance identifying
additional tax
avoidance transactions. For existing guidance see Notice 2003-76, 2003-49 I.R.B. 1181.
-
Other tax-structured transactions. Generally, this includes transactions (a) that are structured to produce Federal
income tax benefits as an important part of the intended results of the transaction and (b) that the organizer or other persons responsible
for registration reasonably expect to be presented to more than one potential participant in the same or substantially similar
form. See
Exception for confidential corporate tax shelters on page 2.
2.
The investment is offered to any potential participant under conditions of confidentiality. Generally, an offer is
considered confidential if:
-
An offeree's disclosure of the structure or tax aspects of the transaction is limited in any way by express or implied understanding
or
agreement (whether or not legally binding) with or for the benefit of the organizer or
-
The organizer knows or has reason to know that the offeree's use or disclosure of information relating to the structure or
tax aspect of the
transaction is limited for the benefit of any person other than the offeree.
3.
Fees in excess of $100,000 (in the aggregate) may be received by organizers of the tax shelter and any person related
to such person under
sections 267 and 707. For this purpose, substantially similar transactions are treated as part of the same tax shelter and
the fees from the
transaction must be combined. The fees include all consideration such persons may receive, including contingent fees, equity
interests, and fees for
other transactions received as consideration for promoting the tax shelter.
See Regulations sections 301.6111-2(b), (c), and (d) for details.
An investment may be a tax shelter under section 6111(c), a confidential corporate tax shelter, or both.
Who Is Required To Register a Tax Shelter?
Generally, tax shelters under section 6111(c) and confidential corporate tax shelters (under section 6111(d)) must be registered
by a tax shelter
organizer. If a principal organizer, defined on page 4, does not register the shelter by the day interests in the shelter are first offered
for sale, any of the following persons may be treated as a tax shelter organizer.
-
A person who participated in the organization of the shelter.
-
A person who participates in the management of the shelter when it is not properly registered.
-
A person who participates in the sale of the shelter at a time when that person knows, or has reason to know, that the shelter
has not been
properly registered.
Note:
If all organizers of a confidential corporate tax shelter are foreign persons, any person who discusses participation in the
transaction may be
required to register the tax shelter (see Regulations section 301.6111-2(g)(2) for details).
A group of persons who may be treated as tax shelter organizers may enter into a written agreement designating one person
to be responsible for
registering the tax shelter. This designated organizer must have participated in the organization of the tax shelter and may not be a
resident of a foreign country. Those who sign the agreement, other than the designated organizer, will not be subject to a
penalty unless they know or
have reason to know that the designated organizer has failed to register the tax shelter as required. In that case, a person,
other than the
designated organizer, will be subject to a penalty if he or she does not register the tax shelter as soon as practicable.
For more detailed
information concerning designation agreements and their consequences, see A-34 through A-39 of Temporary Regulations section
301.6111-1T.
If a tax shelter is not registered on time and there is no designation agreement, each person required to register the tax
shelter will be subject
to a penalty unless he or she has reasonable cause for failure to file a registration statement. For information about the
applicable penalty and the
circumstances in which a person required to register has reasonable cause for failure to register, see Penalties on page 4, and Temporary
Regulations section 301.6707-1T, relating to penalties for failure to furnish information regarding tax shelters.
Exemptions From Registration
Exemptions for tax shelters under section 6111(c).
The following investments are not subject to tax shelter registration under section 6111(c). These exceptions do not apply to
confidential corporate tax shelters.
1.
Sales of residences primarily to persons who are expected to use the residences as their principal place of residence.
2.
Sales or leases of tangible personal property (other than master sound recordings, motion picture or television films,
videotapes, lithograph
plates, or other property relating to a literary, musical, or artistic composition) by the manufacturer of the property (or
a member of an affiliated
group, within the meaning of section 1502, including the manufacturer) primarily to persons who are expected to use the property
in their principal
active trade or business.
3.
Sales or leases of tangible personal property (other than collectibles, master sound recordings, motion picture or
television films, videotapes,
lithograph plates, or other property that includes or relates to a literary, musical, or artistic composition) by a person
in the ordinary course of
that person's trade or business will be exempt if the purchaser or lessee is reasonably expected to use the property either
for a personal use or in
the purchaser's or lessee's principal active trade or business.
4.
Performance of services in connection with the recipient's principal active trade or business or for the recipient's
personal use.
See A-24 and A-24A of Temporary Regulations section 301.6111-1T for additional information on investments exempt from
registration as a section
6111(c) tax shelter.
Exception for confidential corporate tax shelters.
Generally, if the organizer of a confidential corporate tax shelter reasonably determines that there is no reasonable
basis under Federal tax law
for denial of any significant portion of the expected income tax benefits from the transaction, tax avoidance or evasion of
taxes is not considered a
significant purpose of the structure of the transaction and registration is not required. This exception does not apply to
transactions that are the
same as or substantially similar to listed transactions. See Regulations sections 301.6111-2(b)(3) and (4) for details.
Registration is not required if the IRS makes a determination by published guidance that the transaction is not subject
to the registration
requirements.
The taxpayer may request the IRS make a determination by individual ruling that a specific transaction is not subject
to the registration
requirements. See Request for Ruling beginning on page 3.
Suspension of Registration Requirements for Projected Income Investments
Note:
These rules apply only to section 6111(c) tax shelters.
The registration requirements may be suspended for a tax shelter if investors are told in a written statement made in good
faith and based on
reasonable economic and business assumptions that their investment is expected to produce net income and not to provide net
tax benefits (a
projected income investment). A tax shelter does not qualify for suspension if there is a projection (whether oral or written) of a net loss or
other tax benefit (determined on a cumulative basis) in any of its first 5 years or if the tax shelter invests beyond an incidental
amount in any
interest in a collectible (as defined in section 408(m)(2)), a master sound recording, motion picture or television film,
videotape, lithograph plate,
copyright, or a literary, musical, or artistic composition.
The suspension ends if the tax shelter subsequently reduces the cumulative tax liability of an investor during the 5-year
period. In that case, the
tax shelter must be registered within 30 days after the end of the tax shelter's year in which the reduction is generated
and before a Schedule K-1 or
similar form is sent to the investor. Once the tax shelter is registered, registration numbers must be provided to investors.
For more detailed information concerning the suspension of the registration requirements as a section 6111(c) tax shelter
for projected income
investments, see A-57A through A-57J of Temporary Regulations section 301.6111-1T.
In general, file Form 8264 no later than the day on which an interest in the tax shelter is first offered for sale.
Special rules for confidential corporate tax shelters.
If a transaction becomes subject to the registration requirements as a confidential corporate tax shelter after its
first offering of sale (e.g.,
because of a change in the law or factual circumstances), it must be registered by the date of its next offering for sale.
If a transaction becomes a
listed transaction after its first offering, it was not previously required to be registered, and interests were offered for
sale within the previous
6 years, the confidential corporate tax shelter must be registered within 60 days of the published guidance identifying it
as a listed transaction.
See Regulations section 301.6111-2(e)(ii) for details.
File Form 8264 with the Internal Revenue Service Center, Ogden, UT 84201.
Furnishing a Tax Shelter Registration Number
In general, any person who sells (or otherwise transfers) an interest in a tax shelter must furnish that tax shelter's registration
number to each
investor. For purposes of furnishing tax shelter registration numbers, the term investors includes both original purchasers of tax shelter
interests and persons who acquire their interests from prior purchasers.
The registration number must be furnished to the investor at the time of sale or transfer of the interest. If the seller or
transferor has not
received the registration number at this time, a written statement must be given to the investor stating that the number has
been applied for and will
be furnished when available. It then must be given to the investor within 20 days after the seller or transferor receives
it.
For information about furnishing the number, the required content of the written statement, and the required legend stating
that the tax shelter
has not been approved, etc., by the Internal Revenue Service, see A-51 through A-54 of Temporary Regulations section 301.6111-1T.
The registration number must be included on any return on which an investor claims any deduction, loss, credit, or other tax
benefit, or reports
any income relating to the tax shelter.
Requirement to Keep Lists
Generally, each material advisor (defined below) must prepare and maintain a list of certain persons to whom (or for whose
benefit) the material
advisor makes or provides a tax statement with respect to a transaction that is a potentially abusive tax shelter. A separate
list must be maintained
for each transaction or group of substantially similar transactions. The lists must be maintained for 7 years and, upon written
request, must be
furnished to the IRS within 20 days. See Regulations section 301.6112-1 for more information.
Material advisor.
A material advisor is (a) any person required to register the transaction under section 6111 or (b) any person who receives
or expects to receive a minimum fee (defined below) with respect to the transaction and makes a tax statement (defined below)
to or for the benefit of
any of the following:
1.
A taxpayer who is required to disclose the transaction because it is a listed transaction under Regulations sections
1.6011-4, 20.6011-4,
25.6011-4, 31.6011-4, 53.6011-4, 54.6011-4, or 56.6011-4 or who would have been required to disclose the transaction if it
had become a listed
transaction within the statute of limitation period;
2.
A taxpayer whom the potential material advisor (at the time the transaction is entered into) knows is or reasonably
expects to be required to
disclose the transaction because it is or is reasonably expected to become a reportable transaction under Regulations section
1.6011-4(b)(3) through
(7);
3.
A person who is required to register the transaction under section 6111;
4.
A person who purchases (or otherwise acquires) an interest in a section 6111 tax shelter; or
5.
A transferee of an interest in a transaction if the potential material advisor knows or reasonably expects that (a) the interest will be
sold or transferred to a subsequent participant and (b) it is either a listed transaction or a reportable transaction under Regulations
section 1.6011-4(b)(3) through (7) if the relevant thresholds are met.
Note:
A material advisor does not include a person who makes a tax statement solely in the person's capacity as an employee, shareholder,
partner, or
agent of another person. However, a person that forms or avails of an entity with the purpose of avoiding the rules of section
6111 or 6112 or the
penalties under section 6707 or 6708 will be treated as a material advisor.
Minimum fee.
The minimum fee is $250,000 for a transaction if each person to whom or for whom a tax statement is made is a corporation
(other than an S
corporation). The minimum fee is $50,000 if the tax statement is made to a partnership or trust (unless all owners or beneficiaries
are corporations
in which case the fee is $250,000). The minimum fee for all other transactions is $50,000. In the case of listed transactions,
the minimum fee is
reduced from $250,000 to $25,000 and from $50,000 to $10,000. The minimum fee threshold must be met independently by each
transaction (fees from other
transactions are not aggregated) and includes all fees for a tax strategy or for services for advice or for the implementation
of a transaction that
is a potentially abusive tax shelter. See Regulations section 301.6112-1(c)(3) for more details.
Tax statement.
A tax statement is any statement, either written or oral, that relates to a tax aspect of a transaction that causes
the transaction to be a
reportable transaction as defined in Regulations section 1.6011-4(b) or a tax shelter as described in section 6111.
Potentially abusive tax shelter.
For purposes of the requirement to keep lists, potentially abusive tax shelters include any transaction that is required
to be registered under
section 6111 or any transaction that has a potential for tax avoidance or evasion. Transactions that have a potential for
tax avoidance or evasion
include:
-
Any listed transaction,
-
Any transaction that a potential material advisor (at the time the transaction is entered into) knows is or reasonably expects
will become a
reportable transaction under Regulations section 1.6011-4(b)(3) through (7), and
-
Any transaction with respect to which an interest has been transferred and the transferor knows or reasonably expects that
(a)
the interest will be sold or transferred to a subsequent participant and (b) it is either a listed transaction or a reportable transaction
under Regulations section 1.6011-4(b)(3) through (7) if the relevant thresholds are met.
Persons required to be on lists.
The term person includes an individual, trust, estate, partnership, association, company, corporation, or affiliated
group of corporations that
join in filing a consolidated return. A material advisor is required to list.
-
Each person described in items 1 through 4 in the definition of material advisor (above) to whom (or for whose benefit) the
material advisor
made a statement with respect to a transaction that is a potentially abusive tax shelter.
-
Any subsequent investor in a transaction that must be disclosed under Regulations section 1.6011-4(b) if the material advisor
knows the
identity of that person.
-
Each person that purchases an interest in a transaction that the material advisor is required to register.
Contents of the list.
Each list must contain the following information.
-
The name, registration number (if any), and identifying number (if any) of the transaction.
-
The name, address, and identifying number of each person required to be on the list.
-
The number of units acquired by each person (if known by the material advisor).
-
The date each person entered into the transaction (if known by the material advisor).
-
The amount invested by each person in the transaction (if known by the material advisor).
-
A detailed description of the transaction that describes both the tax structure and its expected tax treatment.
-
A summary or schedule of the tax treatment that each person is intended or expected to derive from participation in the transaction
(if
known by the material advisor).
-
For each person required to be on the list, the name of the person from whom the interest was acquired (if other than the
material
advisor).
-
Copies of any additional written materials, including tax analyses or opinions related to the transaction that are material
to an
understanding of the purported tax treatment or tax structure of the transaction, that have been shown or provided to any
person who acquired or may
acquire an interest in the transaction (or to their representatives, tax advisors, or agents) by the material advisor or any
related party or agent of
the material advisor.
A tax shelter organizer, or other person responsible for registration or maintaining a list, may request a ruling from the
IRS to determine whether
a transaction must be registered as a confidential corporate tax shelter or is subject to the list keeping requirements. The
request for ruling must
be submitted to the IRS on or before the date registration is otherwise required. Send the request to Internal Revenue Service,
Attn: CC:PA:LPD:DRU,
P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. However, if a private delivery service is used, send the request
to Internal Revenue
Service, Attn: CC:PA:LPD:DRU, Room 5336, 1111 Constitution Avenue, NW, Washington, DC 20224. See Rev. Proc. 2004-1, 2004-1
I.R.B. 1 or subsequent IRS
guidance for more details. If the request fully discloses all relevant facts relating to the transaction, the potential obligation
to register the
transaction or to maintain the list is suspended during the period the ruling is pending. If the IRS determines that the transaction
is a confidential
corporate tax shelter subject to registration, the due date for registration is extended for sixty days from the date of the
ruling or the date of the
withdrawal of the ruling request. The requirement to make lists available for inspection is suspended for sixty days from
the date of the ruling or
the date of the withdrawal of the ruling request. However, if the transaction is found to be subject to the list keeping requirements,
then the
pending of the ruling request shall not affect the persons required to be on the list (even those who acquired interest during
the pending of the
ruling request). See Regulations sections 301.6111-2(b)(5) and 301.6112-1(i) for details.
If a tax shelter organizer is required to register a tax shelter under section 6111(c) and fails to do so when required, or
files false or
incomplete information, a penalty may be charged equal to the greater of $500 or 1% of the aggregate amount invested in the
shelter. No penalty will
be charged if the organizer has reasonable cause for failing to comply with the registration requirements.
If a confidential corporate tax shelter organizer required to register fails to do so when required, or files false or incomplete
information, a
penalty may be charged equal to the greater of $10,000 or 50% of the fees paid to all organizers before the date the shelter
is registered. In the
case of an intentional disregard of the requirement to register a confidential corporate tax shelter, the penalty is increased
to 75% of the fees. No
penalty will be charged if the organizer has reasonable cause for failing to comply with the registration requirements.
Any person who is required to furnish a tax shelter registration number to investors in the tax shelter and who fails to do
so will be charged a
penalty of $100 for each failure.
A person required to keep a list may be charged a penalty for each investor who is required to be on the list but is omitted.
The penalty is $50
for each omission, limited to a maximum of $100,000 per year per shelter. No penalty will be charged if the omission was due
to reasonable cause and
not due to willful neglect.
An additional civil penalty is imposed against any person who directly or indirectly organizes, participates in the sale of,
or promotes an abusive
tax shelter. The penalty also applies to persons who cause other parties to make or furnish false or fraudulent statements
or gross valuation
overstatements that promote the abusive tax shelter. The penalty is equal to the lesser of $1,000 or 100% of the gross income
derived (or to be
derived) by that person from that activity.
Penalties are also imposed against persons who knowingly aid and abet in the understatement of the tax liability of another
person. The penalty is
$1,000 ($10,000 for corporate tax returns and documents).
Criminal penalties for failure to file on time and for filing a false or fraudulent return are provided by sections 7203,
7206, and 7207.
A registration number may not be issued if an incomplete application is filed. You must make an entry on Form 8264 whenever
an item is applicable.
If you need more space, attach a statement or use the Explanation of Items in Part V of the form. You may incorporate information contained
in other documents. If you do, attach copies of the documents and specify the page number of the incorporated material. When
dollar amounts are called
for, use whole dollar amounts.
Note:
If an item does not apply or you do not know the requested information, leave the item blank and explain in Part V of the
form why it does not
apply or why you do not know the requested information.
If a single Form 8264 is filed with respect to an aggregated confidential corporate tax shelter, an amended Form 8264 must
be filed to reflect
material changes and to include any additional or revised written materials presented in connection with an offer to participate
in the shelter (see
Regulations section 301.6111-2(e)(2) for details). Otherwise, amendments may be made to Form 8264 in certain cases. If there
is any material change in
facts occurring after the initial registration, you may, but are not required to, file an amended form. The following are
examples of a material
change in facts.
-
A change in the identifying information relating to the tax shelter or tax shelter organizer.
-
The acquisition or construction of a principal asset not reported on the initial application for registration.
-
A change in the method of financing a minimum investment unit.
-
A change in the principal business activity.
-
A change in any tax shelter ratio reported on the initial application for registration that increases or decreases the reciprocal
of the tax
shelter ratio by 50% or more. The reciprocal of the ratio is the fraction in which the amount of the applicable investment
base is the numerator and
the amount of the applicable deductions and credits is the denominator. For example, if the tax shelter ratio changes from
2 to 1 to 4 to 1, the
reciprocal of the tax shelter ratio decreases from ½ to ¼, a 50% decrease. Similarly, if the tax shelter ratio changes
from 6 to 1 to 4 to 1, the reciprocal of the tax shelter ratio increases from ⅙ to ¼, a 50% increase. Both examples
would be a material change in facts.
-
A tax shelter transaction is the same or substantially similar to a listed transaction that was identified by the IRS after
the initial
application was filed (see Listed transactions on page 1).
To amend Form 8264, enter in the space provided above Part I the tax shelter registration number previously issued to the
tax shelter. If the tax
shelter has not yet received the registration number, enter “Applied for” in the space. Complete the top portion of Part I above Item 1a, but
only show in the remainder of Parts I through Part IV the information that has changed since the tax shelter was registered.
In addition, you should
include any other information that you did not know at the time the tax shelter was registered but have since learned. Complete
the signature area on
page 2. For further information, see A-45A of Temporary Regulations section 301.6111-1T.
Note:
The filing of an amended application will not affect the determination whether the initial application would be subject to
any applicable penalty.
In addition, if the initial application was timely filed and contained complete and accurate information, the penalty under
section 6707 will not be
imposed as a result of the information in an amended application.
Principal organizer.
A person principally responsible for organizing a tax shelter is any person who discovers, creates, investigates,
or initiates the investment,
devises the business or financial plans for the investment, or carries out those plans through negotiations or transactions
with others.
Participation in the organization of a tax shelter.
Participation in the organization of a tax shelter includes the performance of any act (directly or through an agent)
related to the establishment
of the tax shelter.
Participation in the management of a tax shelter.
Participation in the management of a tax shelter includes managing the assets of the tax shelter or directing or having
supervisory authority for
its business activities.
Participation in the sale of a tax shelter.
Participation in the sale of a tax shelter includes any marketing activities (directly or through an agent) with respect
to an investment.
For more detailed information concerning the terms defined above, see A-25 through A-33 of Temporary Regulations section
301.6111-1T.
Substantial investment.
A substantial investment is one in which the total amount that may be offered for sale to all investors exceeds $250,000
and at least five
investors are expected. The total amount offered for sale is the total amount to be received from the sale of interests in
the investment. It includes
all cash, fair market value of property contributed, and indebtedness received in exchange for interests. For the purpose
of determining whether five
or more investors are expected in an investment involving real property (and related personal property) used as a farm for
farming purposes, interests
in the investment expected to be held by a husband and wife, their children and parents, and the spouses of their children
will be treated as held by
one investor.
Aggregation of similar plans or arrangements.
Generally, for purposes of determining whether investments are parts of a substantial investment, investments offered
by the same person or related
persons that involve similar business assets and similar plans or arrangements are aggregated. However, investments exempt
from registration (see
paragraphs 3 and 4 under Exemptions for tax shelters under section 6111(c) on page 2) because they are sold or leased
to or involve rendition of services to persons who are reasonably expected to use the property or services for either personal
use or in their
principal active trade or business are not aggregated with similar investments by persons who are expected to use the property
or services for other
purposes. See A-22 and A-24A of Temporary Regulations section 301.6111-1T.
Tax shelter ratio.
The tax shelter ratio with respect to any year for any investor is the ratio that the aggregate amount of deductions
and 350% of the credits that
are represented or that will be represented as potentially allowable to an investor under subtitle A of the Internal Revenue
Code, for all periods up
to (and including) the close of the year, bears to the investment base for the investor as of the close of the year. Use the
Tax Shelter Ratio
Computation on page 2 of Form 8264 to compute tax shelter ratios.
For purposes of computing the tax shelter ratio for a year, general partners in a limited partnership will not be
treated as investors in the
partnership if the general partners' aggregate interest in each item of partnership income, gain, loss, deduction, and credit
for the year is not
expected to exceed 2%. For purposes other than the computation of the tax shelter ratio, however, general partners will be
treated as investors.
The term year means the tax year of a tax shelter, or if the tax shelter has no tax year, the calendar year.
Potentially allowable deduction or credit.
A deduction or credit is considered to be represented as being potentially allowable to an investor if any oral or
written statement is made in
connection with the offering for sale of an interest in an investment indicating that a tax deduction or credit is available
or may be used to reduce
Federal taxable income or Federal income tax. Representations may be made, for example, as advertisements, written offering
materials, prospectuses,
or tax opinions, and include general representations that tax benefits are available. For example, an advertisement stating
that “ purchase of a
restaurant includes trade fixtures (5-year write-off)” is considered an explicit representation of tax benefits. In addition, if any explicit
representation is made regarding any tax benefit, all deductions or credits typically associated with the investment will
be treated as having been
represented as potentially allowable. See A-8 through A-12 of Temporary Regulations section 301.6111-1T and the instructions
for Part III
for additional information about potentially allowable deductions or credits.
Investment base.
The investment base for any year is the cumulative amount of money and the adjusted basis of other property (reduced
by any liability to which the
other property is subject) that is unconditionally required to be contributed or paid directly to the tax shelter by the investor
before the close of
the year. Amounts which reduce the investment base are listed in the instructions on page 7 for line 24 of Part III.
Transaction.
A transaction includes all of the factual elements relevant to the expected tax treatment of any investment, entity,
plan, or arrangement, and
includes any series of steps carried out as part of a plan. See Regulations sections 301.6111-2(a)(3) and 301.6112-1(b) for
details.
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