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taxpayer has participated in a listed transaction Loss transactions
if the taxpayer’s return reflects, or the taxpayer A loss transaction under Sec. 165 is a reportable
knows or has reason to know, that the taxpayer’s transaction if the taxpayer engaging in it claims a
tax benefits are derived directly or indirectly from loss of at least:
tax consequences or a tax strategy described in ■ $10 million in a single tax year or $20 million in
IRS guidance as a listed transaction (Regs. Sec. any combination of tax years for corporations;
1.6011-4(c)(3)(i)(A)). ■ $10 million in any single tax year or $20 million
in any combination of tax years for partnerships
Confidential transactions that have only corporations as partners, whether
A confidential transaction is a transaction that or not any losses flow through to one or more
is offered to a taxpayer under conditions of partners;
confidentiality and for which the taxpayer has ■ $2 million in any single tax year or $4 million
paid an adviser (promoter) a minimum fee (Regs. in any combination of tax years for all other
Sec. 1.6011-4(b)(3)). partnerships, whether or not any losses flow
through to one or more partners;
Transactions with contractual protection ■ $2 million in any single tax year or $4 million in
Transactions with contractual protection are trans- any combination of tax years for individuals,
actions for which taxpayers or related parties (Sec. S corporations, or trusts, whether or not any
267(b) or Sec. 707(b)) have contractual protection losses flow through to one or more shareholders
(including contingent fees) that provide for a full or beneficiaries; or
or partial refund (rights to reimbursements) if the ■ $50,000 in any single tax year for individuals
intended tax consequences are not achieved. or trusts if the loss arises in a foreign currency
transaction (as defined in Sec. 988(c)(1)) (Regs.
Sec. 1.6011-4(b)(5)(i)).
Only losses claimed in the tax year in which the
AICPA RESOURCES transaction is entered into and the five succeeding tax
years are combined to meet the cumulative threshold
The Tax Adviser and Tax Section amounts. Rev. Proc. 2013-11 lists a number of losses
that are not taken into account in determining
AICPA Tax Section members receive a subscription to The Tax Adviser whether a transaction is a loss transaction.
digital issues in addition to access to a tax resource library, member-only
newsletter, and four free webcasts. The Tax Section is leading tax forward Transactions of interest
with the latest news, tools, webcasts, client support, and more. Learn more
at us.aicpa.org/tax-section. The current issue of The Tax Adviser and many Transactions of interest are transactions identi-
other resources are also available at thetaxadviser.com. fied by the IRS in a notice, regulation, or other
published guidance as a transaction of interest, such

IN BRIEF of confidentiality; transactions ■ The penalty for failing to disclose
with contractual protection if tax a reportable transaction is equal
■ Taxpayers participating in a “reportable consequences are not realized; certain to 75% of the decrease in tax that
transaction” must disclose it to the IRS, “loss transactions”; and IRS-designated resulted from the transaction or
and material advisers with respect to “transactions of interest.” would have resulted if the transaction
these transactions must maintain a list ■ Form 8886, Reportable Transaction were respected for tax purposes. The
of advisees. Disclosure Statement, must be maximum penalty is increased for
■ Reportable transactions include those attached to the return with all failing to report a listed transaction,
designated as listed transactions; required information. Taxpayers and other penalties may apply. A
transactions for which a taxpayer has may request a ruling from the IRS separate penalty may be imposed
paid an adviser a fee and received whether a transaction is subject to the against a material adviser.
information under an agreement requirements.

To comment on this article or to suggest an idea for another article, contact Paul Bonner, a JofA senior editor, at
Paul.Bonner@aicpa-cima.com or 919-402-4434.

26 | Journal of Accountancy February 2022