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Title 86 Part 100 Section 100.5060 Reportable Transactions Illinois Department of Revenue
Regulations

Title 86 Part 100 Section 100.5060 Reportable Transactions




TITLE 86: REVENUE

PART 100
INCOME TAX


Section 100.5060 Reportable Transactions

a)
Requirement to Disclose Participation in Reportable Transactions

1)
In general. For each taxable year in which a taxpayer is required to make a
disclosure statement under Treasury Regulations Section 1.6011-4 (26 CFR
1.6011.4 (2004)) with respect to a reportable transaction in which the taxpayer
participated in a taxable year for which a return is required under IITA Section
502, the taxpayer shall file a copy of such disclosure with the Department. (IITA
Section 501(b)) A copy of such disclosure shall be filed at the time and in the
manner provided under subsection (b) of this Section.

2)
Definitions. For purposes of this Section:

A)
Reportable Transaction. A "reportable transaction" is any transaction that
must be disclosed under Treasury Regulations Section 1.6011-4 and
shall include any listed transaction that is required to be disclosed under
Treasury Regulation Section 1.6011-4T or 1.6011-4 as of the earlier of
the date disclosure is required under subsection (b)(1) of this Section or
the date the taxpayer files its return to which such disclosure would need
to be attached.

B)
Listed Transaction. A "listed transaction" is any transaction entered into
after February 28, 2000 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 listed transaction and
that is required to be disclosed under Treasury Regulation Section
1.6011-4T or 1.6011-4.

b)
Time and Manner for Making Disclosure

1)
Time for Making Disclosure. Disclosure under this Section must be made by the
due date (including extensions) of the return to which the disclosure statement
must be attached as provided in this subsection (b), unless the date in which
disclosure is required for federal income tax purposes for the same transaction
is later, in which case disclosure must be made no later than the date in which
disclosure is required for federal income tax purposes.
2)
General Manner for Making Disclosure

A)
Taxable years ending before December 31, 2004. In the case of a
reportable transaction as to which disclosure is required for federal
income tax purposes on a return filed for a taxable year ending before
December 31, 2004:

i)
In general. A copy of the federal income tax disclosure shall be
attached to the return required under IITA Section 502 for the first
taxable year for which a return is due (without regard to
extensions) on or after July 30, 2004. The taxpayer may elect to
attach a copy of the disclosure to the return for an earlier taxable
year. In addition, a second copy of the federal income tax
disclosure must be sent to the Department at an address
designated by the Department for this purpose at the same time
that disclosure is filed as required in this Section. In any case
where disclosure is attached to a return and the disclosure relates
to a transaction disclosed for federal income tax purposes for a
taxable year other than the taxable year for which the Illinois return
is made, the taxpayer must indicate on the disclosure the taxable
year for which the disclosure was made for federal income tax
purposes.

ii)
When No Return is Due on or after July 30, 2004. If no return is
required to be filed under Section 502 on or after July 30, 2004, the
taxpayer shall file a copy of the federal income tax disclosure no
later than the due date (including extensions) for the first return it
would have been required to file (without regard to extensions) on
or after July 30, 2004, had it continued to be required to file returns
and continued using the same taxable year it used when it was last
required to file an Illinois return. In addition, a second copy of the
federal income tax disclosure must be sent to the Department at an
address designated by the Department for this purpose at the
same time that disclosure is filed as required in this Section.

EXAMPLE: Corporation A was required under Treasury Regulations Section
1.6011-4 to disclose reportable transactions by attaching Form 8886 and
Schedule M-3 to its federal income tax return for its taxable year ending March
31, 2003. Corporation A may elect to attach copies of the Form 8886 and the
Schedule M-3 to its Illinois income tax return for its taxable year ending March
31, 2004 and send a second copy of the Form 8886 and Schedule M-3 to the
address designated by the Department. If it does not make this election,
Corporation A is required to attach copies of the Form 8886 and the Schedule
M-3 to its Illinois income tax return for the taxable year ending March 31, 2005,
which is the first return for which the unextended due date falls on or after July
30, 2004. At the same time, Corporation A must send a second copy of the Form
8886 and Schedule M-3 to the address designated by the Department. In either
case, Corporation A must indicate that the Form 8886 and the Schedule M-3
relate to its March 31, 2003 taxable year.
If Corporation A is not required to file an Illinois income tax return due on or after
July 30, 2004, then it must file copies of its Form 8886 and Schedule M-3 with
the Department by the due date (including extensions) that its March 31, 2005
return would have been required to be filed. Corporation A should indicate that
the Form 8886 and Schedule M-3 relate to its March 31, 2003 taxable year.

B)
Taxable years ending on and after December 31, 2004. In the case of a
reportable transaction as to which disclosure is required for federal
income tax purposes on a return filed for a taxable year ending on and
after December 31, 2004, a copy of such disclosure shall be attached to
the taxpayers return required under IITA Section 502 for the same
taxable year. In addition, a second copy of the federal income tax
disclosure must be sent to the Department at an address designated by
the Department for this purpose at the same time that disclosure is filed
as required in this Section.

3)
Special Rules for Making Disclosure of Certain Listed Transactions

A)
If a return is not required under IITA Section 502 for a taxable year in
which a disclosure statement is required to be attached to a return
pursuant to the special rule for listed transactions under Treasury
Regulations Section 1.6011-4(e)(2), the taxpayer must file a copy of the
disclosure with the Department if disclosure would have been required
under IITA Section 501(b) and this Section if the transaction had been
listed at the time the taxpayer filed its return reflecting either the tax
consequences or a tax strategy described in the published guidance
listing the transaction (or a tax benefit derived from tax consequences or
a tax strategy described in the published guidance listing the transaction).
A copy of the disclosure must be filed no later than the due date
(including extensions) for the first return the taxpayer would have been
required to file (without regard to extensions) on or after the date the
transaction became a listed transaction, had the taxpayer continued to be
required to file returns and continued using the same taxable year it used
when it was last required to file an Illinois return.

B)
If a return is not required under Section 502 for a taxable year in which a
disclosure statement is required to be attached to a return pursuant to
Treasury Regulations Section 1.6011-4T with respect to a transaction that
becomes a listed transaction on or after the date the taxpayer has filed its
return for the first taxable year for which the transaction affected the
taxpayers or a partners or a shareholders Federal income tax liability,
the taxpayer must file a copy of the disclosure with the Department if
disclosure would have been required under IITA Section 501(b) and this
Section if the transaction had been listed at the time the taxpayer filed its
return for a taxable year for which the transaction affected the taxpayers
or a partners or shareholders Federal income tax liability. A copy of the
disclosure must be filed no later than the due date (including extensions)
for the first return the taxpayer would have been required to file (without
regard to extensions) on or after the date the transaction became a listed
transaction, had the taxpayer continued to be required to file returns and continued using the same taxable year it used when it was last required to
file an Illinois return.

4)
Making Disclosure of Items Disclosed under Treasury Regulations Section
1.6011-4(f)(1). If the Internal Revenue Service determines that a taxpayers
submission of a request for ruling under Treasury Regulations Section 1.6011-
4(f)(1) satisfies the disclosure rules, the submission shall also satisfy the
requirements of IITA Section 501(b) if the taxpayer provides the Department with
a copy of the Internal Revenue Service ruling by the later of the date on which
disclosure is otherwise required under this Section or