Introduction

Investments that yield tax benefits are sometimes called “tax shelters.” 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. In many cases,

38 Chapter 2 Tax Shelters and Other Reportable

Transactions

Publication 550 (2025)

however, losses from tax shelters produce little or no benefit to society, or the tax benefits are exaggerated beyond those intended. Those cases are called “abusive tax shelters.” An investment that is considered a tax shelter is subject to restrictions, including the requirement that it be disclosed. See Disclosure of reportable transactions, later.

Topics This chapter discusses:

• Abusive Tax Shelters ,

• Rules To Curb Abusive Tax Shelters ,

• Investor Reporting,

• Penalties, and

• Whether To Invest .

Useful Items You may want to see:

Publication

538

561

925

538 Accounting Periods and Methods

561 Determining the Value of Donated Property

925 Passive Activity and At-Risk Rules

Form (and Instructions)

8275

8275 Disclosure Statement

8275-R

8275- R egulation Disclosure Statement

8283

8865

8886

8918

8938

8283 Noncash Charitable Contributions

8865 Return of U.S. Persons With Respect to Certain Foreign Partnerships

8886 Reportable Transaction Disclosure Statement

8918 Material Advisor Disclosure Statement

8938 Statement of Specified Foreign Financial Assets

See chapter 5, How To Get Tax Help , for information about getting these publications and forms.