California Disclosure Obligations

There are rules regarding reporting a reportable transaction (including a listed transaction) to the IRS. The Franchise Tax Board wants to get the word out that there are rules about reporting such items to the FTB, too. This impacts both taxpayers involved in such transactions and material advisors.

For a California taxpayer, the FTB reminds us,

The general rule for California purposes is that Form 8886 must be attached to the taxpayer’s original or amended tax return for each taxable year for which the taxpayer participates in a reportable transaction, including listed transactions. Additionally, only for Form 8886s filed for the initial year of participation, the taxpayer must also mail a copy of that disclosure to FTB’s Abusive Tax Shelter Unit (ATSU) at the address shown below. It does not matter whether the taxpayer files a paper return or e-files. California listed transactions entered into prior to September 2, 2003, are not required to be disclosed unless the transaction meets one of the other categories of reportable transactions defined under Treasury Regulation 1.6011-4(b).

Full details on this are available on the FTB’s website.

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