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State of California Franchise Tax Board

Due Date to File IRS Form 8886 Extended 45 Days

FTB Notice 2007-3 gave taxpayers 60 days from the date of the Notice to file an IRS Form 8886, Reportable Transaction Disclosure Statement, for each year that they participated in a reportable transaction. The last day to comply with this requirement was October 1, 2007. There has been some confusion among taxpayers over the categories of reportable transactions and whether they had a requirement to disclose their transaction. In particular, taxpayers have been confused over the Transactions with Contractual Protection category of reportable transactions found under Treasury Regulation section 1.6011-4(b)(4). A transaction with contractual protection is any transaction where the taxpayer has a right to a full or partial refund of fees paid in the event the tax treatment is not sustained, or where the fee is contingent upon the realization of tax benefits from the transaction.

Because of the confusion among taxpayers regarding their obligation to file IRS Form 8886, the Franchise Tax Board is going to allow an additional 45 days from the October 1, 2007 due date to file Form 8886. The Franchise Tax Board will soon issue a notice to advise taxpayers of the extended due date of November 15, 2007, and to clarify disclosure requirements with respect to reportable transactions.

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