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Irs 1040x Forms

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Irs 1040x Forms

Irs 1040x forms Publication 544 - Additional Material Table of Contents Tax Publications for Business TaxpayersSee How To Get Tax Help for a variety of ways to get publications, including by computer, phone, and mail. Irs 1040x forms General Guides 1 Your Rights as a Taxpayer 17 Your Federal Income Tax (For Individuals) 334 Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ) 509 Tax Calendars 910 IRS Guide to Free Tax Services Employer's Guides 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits 51 (Circular A), Agricultural Employer's Tax Guide 80 (Circular SS), Federal Tax Guide For Employers in the U. Irs 1040x forms S. Irs 1040x forms Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands 926 Household Employer's Tax Guide Specialized Publications 225 Farmer's Tax Guide 463 Travel, Entertainment, Gift, and Car Expenses 505 Tax Withholding and Estimated Tax 510 Excise Taxes (Including Fuel Tax Credits and Refunds) 515 Withholding of Tax on Nonresident Aliens and Foreign Entities 517 Social Security and Other Information for Members of the Clergy and Religious Workers 527 Residential Rental Property 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 537 Installment Sales 538 Accounting Periods and Methods 541 Partnerships 542 Corporations 544 Sales and Other Dispositions of Assets 551 Basis of Assets 556 Examination of Returns, Appeal Rights, and Claims for Refund 560 Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) 561 Determining the Value of Donated Property 583 Starting a Business and Keeping Records 587 Business Use of Your Home (Including Use by Daycare Providers) 594 What You Should Know About The IRS Collection Process 595 Capital Construction Fund for Commercial Fishermen 597 Information on the United States-Canada Income Tax Treaty 598 Tax on Unrelated Business Income of Exempt Organizations 686 Certification for Reduced Tax Rates in Tax Treaty Countries 901 U. Irs 1040x forms S. Irs 1040x forms Tax Treaties 908 Bankruptcy Tax Guide 925 Passive Activity and At-Risk Rules 946 How To Depreciate Property 947 Practice Before the IRS and Power of Attorney 1544 Reporting Cash Payments of Over $10,000 (Received in a Trade or Business) 1546 Taxpayer Advocate Service - Your Voice at the IRS Spanish Language Publications 1SP Derechos del Contribuyente 179 (Circular PR), Guía Contributiva Federal Para Patronos Puertorriqueños 579SP Cómo Preparar la Declaración de Impuesto Federal 594SP Qué es lo Debemos Saber Sobre El Proceso de Cobro del IRS 850 English-Spanish Glossary of Words and Phrases Used in Publications Issued by the Internal Revenue Service 1544SP Informe de Pagos en Efectivo en Exceso de $10,000 (Recibidos en una Ocupación o Negocio) Commonly Used Tax FormsSee How To Get Tax Help for a variety of ways to get forms, including by computer, phone, and mail. Irs 1040x forms Form Number and Form Title W-2 Wage and Tax Statement W-4 Employee's Withholding Allowance Certificate 940 Employer's Annual Federal Unemployment (FUTA) Tax Return 941 Employer's QUARTERLY Federal Tax Return 944 Employer's ANNUAL Federal Tax Return 1040 U. Irs 1040x forms S. Irs 1040x forms Individual Income Tax Return Sch. Irs 1040x forms A & B Itemized Deductions & Interest and Ordinary Dividends Sch. Irs 1040x forms C Profit or Loss From Business Sch. Irs 1040x forms C-EZ Net Profit From Business Sch. Irs 1040x forms D Capital Gains and Losses Sch. Irs 1040x forms E Supplemental Income and Loss Sch. Irs 1040x forms F Profit or Loss From Farming Sch. Irs 1040x forms H Household Employment Taxes Sch. Irs 1040x forms J Income Averaging for Farmers and Fishermen Sch. Irs 1040x forms R Credit for the Elderly or the Disabled Sch. Irs 1040x forms SE Self-Employment Tax 1040-ES Estimated Tax for Individuals 1040X Amended U. Irs 1040x forms S. Irs 1040x forms Individual Income Tax Return 1065 U. Irs 1040x forms S. Irs 1040x forms Return of Partnership Income Sch. Irs 1040x forms D Capital Gains and Losses Sch. Irs 1040x forms K-1 Partner's Share of Income, Deductions, Credits, etc. Irs 1040x forms 1120 U. Irs 1040x forms S. Irs 1040x forms Corporation Income Tax Return Sch. Irs 1040x forms D Capital Gains and Losses 1120S U. Irs 1040x forms S. Irs 1040x forms Income Tax Return for an S Corporation Sch. Irs 1040x forms D Capital Gains and Losses and Built-In Gains Sch. Irs 1040x forms K-1 Shareholder's Share of Income, Deductions, Credits, etc. Irs 1040x forms 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 2210 Underpayment of Estimated Tax by Individuals, Estates, and Trusts 2441 Child and Dependent Care Expenses 2848 Power of Attorney and Declaration of Representative 3800 General Business Credit 3903 Moving Expenses 4562 Depreciation and Amortization 4797 Sales of Business Property 4868 Application for Automatic Extension of Time To File U. Irs 1040x forms S. Irs 1040x forms Individual Income Tax Return 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts 6252 Installment Sale Income 7004 Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns 8283 Noncash Charitable Contributions 8300 Report of Cash Payments Over $10,000 Received in a Trade or Business 8582 Passive Activity Loss Limitations 8606 Nondeductible IRAs 8822 Change of Address 8829 Expenses for Business Use of Your Home 8949 Sales and Other Dispositions of Capital Assets Prev  Up  Next   Home   More Online Publications

Topic 304 - Extensions of Time to File Your Tax Return

There are three ways you can request an automatic extension of time to file a U.S. individual income tax return: (1) you can electronically file Form 4868 (PDF), Application For Automatic Extension of Time To File U.S. Individual Tax Return; (2) you can pay all or part of your estimated income tax due using a credit or debit card or by using the Electronic Federal Tax Payment System (EFTPS); or (3) you can file a paper Form 4868 by mail.

If you file your Form 4868 electronically you will receive an acknowledgement or confirmation number for your records and you do not need to mail in Form 4868. If you need to pay additional taxes when filing Form 4868 electronically, you may do so through the outside service provider or through e-file. You can refer to your tax software or tax professional for ways to file electronically using e-file services. Several companies offer free filing of Form 4868 through the Free File program that you can access on the IRS.gov website. If you wish to file electronically, be sure to have a copy of last year's tax return. You will be asked to provide the adjusted gross income (AGI) from the return for taxpayer verification.

A second way of requesting an automatic extension of time to file your individual income tax return is to pay part or your entire estimated income tax due by credit card or debit card or by using EFTPS. You may pay by phone or Internet through one of the service providers listed on Form 4868. Each service provider will charge a convenience fee based on the amount of the tax payment. At the completion of the transaction, you will receive a confirmation number for your records.

Finally, you can request an automatic extension of time to file your individual income tax return by completing paper Form 4868 and mailing it to the appropriate address provided on the form.

Please be aware that an extension of time to file is NOT an extension of time to pay.

For information regarding State Government filing, visit State Government Websites.

Page Last Reviewed or Updated: January 22, 2014

The Irs 1040x Forms

Irs 1040x forms 2. Irs 1040x 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. Irs 1040x 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. Irs 1040x 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. Irs 1040x forms Those cases are called “abusive tax shelters. Irs 1040x forms ” An investment that is considered a tax shelter is subject to restrictions, including the requirement that it be disclosed, as discussed later. Irs 1040x forms Topics - This chapter discusses: Abusive Tax Shelters , Rules To Curb Abusive Tax Shelters , Investor Reporting , Penalties , and Whether To Invest . Irs 1040x 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. Irs 1040x forms Abusive Tax Shelters Abusive tax shelters are marketing schemes involving artificial transactions with little or no economic reality. Irs 1040x 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. Irs 1040x forms Despite appearances to the contrary, the taxpayer generally risks little. Irs 1040x 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. Irs 1040x 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. Irs 1040x forms (But see the appraisal requirements discussed under Rules To Curb Abusive Tax Shelters , later. Irs 1040x forms ) They are commonly marketed in terms of the ratio of tax deductions allegedly available to each dollar invested. Irs 1040x forms This ratio (or “write-off”) is frequently said to be several times greater than one-to-one. Irs 1040x 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. Irs 1040x forms However, you should ask the following questions, which might provide a clue to the abusive nature of the plan. Irs 1040x 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. Irs 1040x forms These provisions include the following. Irs 1040x forms Disclosure of reportable transactions. Irs 1040x forms   You must disclose information for each reportable transaction in which you participate. Irs 1040x forms See Reportable Transaction Disclosure Statement , later. Irs 1040x forms   Material advisors with respect to any reportable transaction must disclose information about the transaction on Form 8918, Material Advisor Disclosure Statement. Irs 1040x forms To determine whether you are a material advisor to a transaction, see the Instructions for Form 8918. Irs 1040x forms   Material advisors will receive a reportable transaction number for the disclosed reportable transaction. Irs 1040x forms They must provide this number to all persons to whom they acted as a material advisor. Irs 1040x forms They must provide the number at the time the transaction is entered into. Irs 1040x 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. Irs 1040x forms For information on penalties for failure to disclose and failure to maintain lists, see Internal Revenue Code sections 6707, 6707A, and 6708. Irs 1040x forms Requirement to maintain list. Irs 1040x forms   Material advisors must maintain a list of persons to whom they provide material aid, assistance, or advice on any reportable transaction. Irs 1040x 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. Irs 1040x forms See Regulations section 301. Irs 1040x forms 6112-1 for more information (including what information is required to be included on the list). Irs 1040x forms Confidentiality privilege. Irs 1040x 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. Irs 1040x forms Appraisal requirement for donated property. Irs 1040x 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. Irs 1040x 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. Irs 1040x forms If you file electronically, see Form 8453, U. Irs 1040x forms S. Irs 1040x forms Individual Income Tax Transmittal for an IRS e-file Return, and its instructions. Irs 1040x forms For more information about appraisals, including exceptions, see Publication 561. Irs 1040x forms Passive activity loss and credit limits. Irs 1040x 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. Irs 1040x forms For more detailed information about determining and reporting income, losses, and credits from passive activities, see Publication 925. Irs 1040x forms Interest on penalties. Irs 1040x 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. Irs 1040x forms Accounting method restriction. Irs 1040x forms   Tax shelters generally cannot use the cash method of accounting. Irs 1040x forms Uniform capitalization rules. Irs 1040x forms   The uniform capitalization rules generally apply to producing property or acquiring it for resale. Irs 1040x forms Under those rules, the direct cost and part of the indirect cost of the property must be capitalized or included in inventory. Irs 1040x forms For more information, see Publication 538. Irs 1040x forms Denial of deduction for interest on an underpayment due to a reportable transaction. Irs 1040x 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. Irs 1040x forms This rule applies to reportable transactions entered into in tax years beginning after October 22, 2004. Irs 1040x 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. Irs 1040x forms The guidance is the conclusion of the IRS on how the law is applied to a particular set of facts. Irs 1040x forms Guidance is published in the Internal Revenue Bulletin for taxpayers' information and also for use by IRS officials. Irs 1040x 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. Irs 1040x 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. Irs 1040x 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. Irs 1040x forms Investor Reporting You may be required to file a reportable transaction disclosure statement. Irs 1040x forms Reportable Transaction Disclosure Statement Use Form 8886 to disclose information for each reportable transaction (discussed later) in which you participated. Irs 1040x forms Generally, you must attach Form 8886 to your return for each tax year in which you participated in the transaction. Irs 1040x 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). Irs 1040x 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. Irs 1040x 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. Irs 1040x forms If you use a computer-generated or substitute Form 8886, it must be an exact copy of the official IRS form. Irs 1040x 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. Irs 1040x forms See Penalty for failure to disclose a reportable transaction , later under Penalties. Irs 1040x forms The following discussion briefly describes reportable transactions. Irs 1040x forms For more details, see the Instructions for Form 8886. Irs 1040x forms Reportable transaction. Irs 1040x forms   A reportable transaction is any of the following. Irs 1040x forms A listed transaction. Irs 1040x forms A confidential transaction. Irs 1040x forms A transaction with contractual protection. Irs 1040x forms A loss transaction. Irs 1040x forms A transaction of interest entered into after November 1, 2006. Irs 1040x forms Note. Irs 1040x forms Transactions with a brief asset holding period were removed from the definition of reportable transaction for transactions entered into after August 2, 2007. Irs 1040x forms Listed transaction. Irs 1040x 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. Irs 1040x forms These transactions have been identified in notices, regulations, and other published guidance issued by the IRS. Irs 1040x forms For a list of existing guidance, see Notice 2009-59 in Internal Revenue Bulletin 2009-31, available at www. Irs 1040x forms irs. Irs 1040x forms gov/irb/2009-31_IRB/ar07. Irs 1040x forms html. Irs 1040x forms Confidential transaction. Irs 1040x forms   A confidential transaction is offered to you under conditions of confidentiality and for which you have paid an advisor a minimum fee. Irs 1040x 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. Irs 1040x forms The transaction is treated as confidential even if the conditions of confidentiality are not legally binding on you. Irs 1040x forms Transaction with contractual protection. Irs 1040x 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. Irs 1040x forms For information on exceptions, see Revenue Procedure 2007-20 in Internal Revenue Bulletin 2007-7, available at www. Irs 1040x forms irs. Irs 1040x forms gov/irb/2007-07_IRB/ar15. Irs 1040x forms html. Irs 1040x forms Loss transaction. Irs 1040x 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. Irs 1040x 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. Irs 1040x 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. Irs 1040x 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. Irs 1040x forms irs. Irs 1040x forms gov/irb/2004-50_IRB/ar11. Irs 1040x forms html. Irs 1040x forms Transaction of interest. Irs 1040x 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. Irs 1040x forms The IRS has identified the following transactions of interest. Irs 1040x forms “Toggling” grantor trusts as described in Notice 2007-73, 2007-36 I. Irs 1040x forms R. Irs 1040x forms B. Irs 1040x forms 545, available at www. Irs 1040x forms irs. Irs 1040x forms gov/irb/2007-36_IRB/ar20. Irs 1040x forms html. Irs 1040x forms Certain transactions involving contributions of a successor member interest in a limited liability company as described in Notice 2007-72, 2007-36 I. Irs 1040x forms R. Irs 1040x forms B. Irs 1040x forms 544, available at www. Irs 1040x forms irs. Irs 1040x forms gov/irb/2007-36_IRB/ar19. Irs 1040x forms html. Irs 1040x 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. Irs 1040x forms R. Irs 1040x forms B. Irs 1040x forms 1194, available at www. Irs 1040x forms irs. Irs 1040x forms gov/irb/2008-47_IRB/ar11. Irs 1040x forms html. Irs 1040x forms Certain transactions involving a U. Irs 1040x forms S. Irs 1040x 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. Irs 1040x forms R. Irs 1040x forms B. Irs 1040x forms 312, available at www. Irs 1040x forms irs. Irs 1040x forms gov/irb/2009-03_IRB/ar10. Irs 1040x forms html. Irs 1040x forms   For updates to this list, go to www. Irs 1040x forms irs. Irs 1040x forms gov/Businesses/Corporations/Abusive-Tax-Shelters-and-Transactions. Irs 1040x forms Penalties Investing in an abusive tax shelter may lead to substantial expenses. Irs 1040x forms First, the promoter generally charges a substantial fee. Irs 1040x 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. Irs 1040x forms You may also be subject to the penalty for failure to pay tax. Irs 1040x forms These penalties are explained in the following paragraphs. Irs 1040x forms Accuracy-related penalties. Irs 1040x 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). Irs 1040x 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. Irs 1040x forms Your failure to disclose a reportable transaction is a strong indication that you failed to act in good faith. Irs 1040x 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. Irs 1040x forms   The 20% penalties do not apply to any underpayment attributable to a reportable transaction understatement subject to an accuracy-related penalty (discussed later). Irs 1040x forms Negligence or disregard of rules or regulations. Irs 1040x 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. Irs 1040x 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. Irs 1040x forms    Negligence includes any failure to make a reasonable attempt to comply with the provisions of the Internal Revenue Code. Irs 1040x forms It also includes any failure to keep adequate books and records. Irs 1040x forms A return position that has a reasonable basis is not negligence. Irs 1040x forms   Disregard includes any careless, reckless, or intentional disregard of rules or regulations. Irs 1040x forms   The penalty for disregard of rules and regulations can be avoided if all the following are true. Irs 1040x forms You keep adequate books and records. Irs 1040x forms You have a reasonable basis for your position on the tax issue. Irs 1040x forms You make an adequate disclosure of your position. Irs 1040x forms Use Form 8275 to make your disclosure and attach it to your return. Irs 1040x forms To disclose a position contrary to a regulation, use Form 8275-R. Irs 1040x forms Use Form 8886 to disclose a reportable transaction (discussed earlier). Irs 1040x forms Substantial understatement of tax. Irs 1040x 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. Irs 1040x 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. Irs 1040x 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. Irs 1040x 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. Irs 1040x forms In that way, you can avoid the substantial understatement penalty if you have a reasonable basis for your position on the tax issue. Irs 1040x forms Disclosure of the tax shelter item on a tax return does not reduce the amount of the understatement. Irs 1040x 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. Irs 1040x 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. Irs 1040x forms Substantial valuation misstatement. Irs 1040x forms   In general, you are liable for a 20% penalty for a substantial valuation misstatement if all the following are true. Irs 1040x forms The value or adjusted basis of any property claimed on the return is 150% or more of the correct amount. Irs 1040x forms You underpaid your tax by more than $5,000 because of the misstatement. Irs 1040x forms You cannot establish that you had reasonable cause for the underpayment and that you acted in good faith. Irs 1040x forms   You may be assessed a penalty of 40% for a gross valuation misstatement. Irs 1040x 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. Irs 1040x forms The penalty rate is also 40% if the property's correct value or adjusted basis is zero. Irs 1040x forms Transaction lacking economic substance. Irs 1040x 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. Irs 1040x 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. Irs 1040x 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. Irs 1040x 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. Irs 1040x 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. Irs 1040x forms Relevant facts include any facts affecting the tax treatment of the transaction. Irs 1040x 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. Irs 1040x forms Undisclosed foreign financial asset understatement. Irs 1040x 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. Irs 1040x 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. Irs 1040x forms The penalty applies to any part of an underpayment related to the following undisclosed foreign financial assets. Irs 1040x forms Any foreign business you control, reportable on Form 5471, Information Return of U. Irs 1040x forms S. Irs 1040x forms Persons With Respect To Certain Foreign Corporations, or Form 8865, Return of U. Irs 1040x forms S. Irs 1040x forms Persons With Respect to Certain Foreign Partnerships. Irs 1040x forms Certain transfers of property to a foreign corporation or partnership, reportable on Form 926, Return by a U. Irs 1040x forms S. Irs 1040x forms Transferor of Property to a Foreign Corporation, or certain distributions to a foreign person, reportable on Form 8865. Irs 1040x forms Your ownership interest in certain foreign financial assets, temporarily reportable on Form 8275 or 8275-R. Irs 1040x 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. Irs 1040x forms See the Instructions for Form 8938 for details. Irs 1040x forms    Your acquisition, disposition, or substantial change in ownership interest in a foreign partnership, reportable on Form 8865. Irs 1040x 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. Irs 1040x forms Penalty for incorrect appraisals. Irs 1040x 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. Irs 1040x forms For details on the penalty amount and exceptions, see Publication 561. Irs 1040x forms Penalty for failure to disclose a reportable transaction. Irs 1040x 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). Irs 1040x forms For an individual, the minimum penalty is $5,000 and the maximum is $10,000 (or $100,000 for a listed transaction). Irs 1040x forms This penalty is in addition to any other penalty that may be imposed. Irs 1040x 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. Irs 1040x forms For information on rescission, see Revenue Procedure 2007-21 in Internal Revenue Bulletin 2007-9 available at www. Irs 1040x forms irs. Irs 1040x forms gov/irb/2007-09_IRB/ar12. Irs 1040x forms html. Irs 1040x forms Accuracy-related penalty for a reportable transaction understatement. Irs 1040x forms   If you have a reportable transaction understatement, you may have to pay a penalty equal to 20% of the amount of that understatement. Irs 1040x 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. Irs 1040x forms The penalty is 30% rather than 20% for the part of any reportable transaction understatement if the transaction was not properly disclosed. Irs 1040x forms You may not have to pay the 20% penalty if you meet the strengthened reasonable cause and good faith exception. Irs 1040x 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. Irs 1040x 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. Irs 1040x forms Civil fraud penalty. Irs 1040x 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. Irs 1040x forms Joint return. Irs 1040x 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. Irs 1040x forms Failure to pay tax. Irs 1040x 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. Irs 1040x 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. Irs 1040x forms Prev  Up  Next   Home   More Online Publications