SECTION 1. PURPOSE

This notice clarifies Notice 2002–35, 2002–1 C.B. 992, by illustrating certain transactions that are not the same as or substantially similar to the transaction described in Notice 2002–35, and thus are not “listed transactions” for purposes of §§ 6111 and 6112 of the Internal Revenue Code (Code) and § 1.6011–4(b)(2) of the Income Tax Regulations. This notice also modifies Notice 2002–35 by providing a safe harbor from the disclosure requirement otherwise imposed by § 1.6011–4 for taxpayers that have, solely as a result of their direct or indirect interest in a pass-through entity, participated in a transaction that is the same as or substantially similar to the transaction described in Notice 2002–35 (as clarified by section 3.01 of this notice).

This notice responds to concerns expressed by commentators that the difficulty in identifying transactions that are the same as or substantially similar to the transaction described in Notice 2002–35 has caused taxpayers to file large numbers of disclosure statements on Form 8886, Reportable Transaction Disclosure State- ment, for common transactions, such as total return swaps, that are entered into for bona fide non-tax purposes. This notice is intended to narrow the scope of reportable transactions that might be perceived to be substantially similar to the transaction described in Notice 2002–35, and is intended to reduce the number of Form 8886 filings. This notice should not be construed as expanding the scope or potential application of Notice 2002–35 in any way. Specifically, no inference is intended regarding whether transactions not described in Section 3.01 are or are not required to be reported under Notice 2002–35.