SECTION 2. BACKGROUND

.01 Section 1.6011–4 requires a taxpayer that participates in a reportable transaction to disclose the transaction in accordance with the procedures provided in § 1.6011–4. Under § 1.6011–4(b), there are five categories of reportable transactions. One category of reportable transaction is a loss transaction. A loss transaction is defined in § 1.6011–4(b)(5). Generally, a loss transaction is any transaction resulting in the taxpayer claiming a loss under § 165 of the Internal Revenue Code of (i) at least $10 million in a single taxable year or $20 million in any combination of taxable years for corporations or partnerships with only corporations as partners (looking through any partners that are themselves partnerships), whether or not any losses flow through to one or more partners; (ii) at least $2 million in any single taxable year or $4 million in any combination of taxable years for all other partnerships, individuals, S corporations, and trusts, whether or not any losses flow through to one or more partners, shareholders, or beneficiaries; or (iii) at least $50,000 in any single taxable year for individuals or trusts, whether or not the loss flows through from an S corporation or partnership, if the loss is attributable to a § 988 transaction.

.02 Section 1.6011–4(b)(8)(i) provides that a transaction will not be considered a reportable transaction, or will be excluded from any individual category of reportable transaction, if the Commissioner makes a determination by published guidance that the transaction is not subject to the reporting requirements of § 1.6011–4.