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Department of the Treasury
Internal Revenue Service
Instructions for Form 8275-R

(Rev. November 2024)
Regulation Disclosure Statement

Section references are to the Internal Revenue Code represents a good-faith challenge to the validity of the
unless otherwise noted. regulation and has a reasonable basis.
Future Developments Instead of Form 8275-R, use Form 8275, Disclosure
Statement, for the disclosure of items or positions which
For the latest information about developments related to
are not contrary to regulations but which are not otherwise
Form 8275-R and its instructions, such as legislation
adequately disclosed.
enacted after they were published, go to IRS.gov/
Form8275R. Who Should File
Form 8275-R is filed by individuals, corporations,
General Instructions pass-through entities, and tax return preparers.
Purpose of Form For items attributable to a pass-through entity,
disclosure should be made on the tax return of the entity. If
Form 8275-R is used by taxpayers and tax return
the entity doesn’t make the disclosure, the partner (or
preparers to disclose positions taken on a tax return that
shareholder, etc.) can make adequate disclosure of these
are contrary to Treasury regulations. The form is filed to
items.
avoid the portions of the accuracy-related penalty due to
disregard of regulations or to a substantial How To File
understatement of income tax for non-tax shelter items if
When a return position is contrary to regulations, you must
the return position has a reasonable basis. It can also be
file Form 8275-R. File all Forms 8275-R with your original
used for disclosures relating to the economic substance
tax return. Keep a copy for your records. You may also be
penalty and the preparer penalties for tax
able to file Forms 8275-R with an amended return. See
understatements due to positions taken contrary to
Regulations sections 1.6662-4(f)(1) and 1.6664-2(c)(3) for
regulations.
more information.
The portion of the accuracy-related penalty
To adequately disclose items reported by a
! attributable to the following types of misconduct pass-through entity, you must complete and file a separate
CAUTION cannot be avoided by disclosure on Form 8275-R.
Form 8275-R for items reported by each entity.
• Negligence. To adequately disclose a position or positions related to
• Disregard of rules (other than regulations). more than one foreign entity, you must complete and file a
• Any substantial understatement of income tax on a tax separate Form 8275-R for each foreign entity.
shelter item.
• Any substantial or gross valuation misstatement Carryovers, carrybacks, and recurring items.
(including misstatements attributable to non-arm's length Carryover items must be disclosed in the tax year in which
prices) under chapter 1. they originated. You don’t have to file another Form
• Any substantial overstatement of pension liabilities. 8275-R for those items for the tax years in which the
• Any substantial estate or gift tax valuation carryover is taken into account.
understatements. Carryback items must be disclosed for the tax year in
• Any claim of tax benefits from a transaction lacking which they originated. You don’t have to file another Form
economic substance (within the meaning of section 8275-R for those items for the tax years in which the
7701(o)) or failing to meet the requirements of any similar carryback is taken into account.
rule of law. However, if you disclose items that are of a recurring
• Any otherwise undisclosed foreign financial asset nature (such as depreciation expense), you must file Form
understatement. 8275-R for each tax year in which the item occurs.
• Any inconsistent estate basis.
If you are disclosing a position that is contrary to a
• Any overstatement of the deduction provided in section
regulation, and the position relates to a reportable
170(p).
transaction, as defined in Regulations section
• Any disallowance of a deduction because of section
1.6011-4(b), you must also make the disclosure, as
170(h)(7).
indicated in Regulations section 1.6011-4(d). See Form
Because of the importance to the self-assessment 8886, Reportable Transaction Disclosure Statement, and
system of disclosing positions contrary to regulations, the its instructions; Notice 2006-6, 2006-5 I.R.B. 385,
requirements for making such disclosures are stringent. available at IRS.gov/irb/2006-05_IRB/ar10.html; and
• The disclosure is adequate only if it is made separately Notice 2010-62, 2010-40 I.R.B. 411, available at
on a Form 8275-R. IRS.gov/irb/2010-40_IRB/ar09.html.
• The penalty for reckless or intentional disregard of a
regulation can be avoided by disclosure only if the position

Oct 7, 2024 Cat. No. 14317I

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Accuracy-Related Penalty                                        If you failed to keep proper books and records or failed 
                                                              to properly substantiate items, you cannot avoid the 
Generally, the accuracy-related penalty is 20% of any         penalty by disclosure.
portion of a tax underpayment attributable to:
 1. Negligence or disregard of rules or regulations;          Adequate disclosure.  Generally, you can avoid the 
                                                              disregard of regulations and substantial understatement 
 2. Any substantial understatement of income tax;             portions of the accuracy-related penalty if the position is 
 3. Any substantial valuation misstatement under              adequately disclosed and the position has at least a 
chapter 1 of the Internal Revenue Code;                       reasonable basis. To avoid the disregard of regulations 
 4. Any substantial overstatement of pension liabilities;     portion of the accuracy-related penalty, the position taken 
                                                              must also represent a good-faith challenge to the validity 
 5. Any substantial estate or gift tax valuation 
                                                              of the regulation. See Regulations section 1.6662-3(c)(1).
understatement;
                                                                Reasonable basis.   Reasonable basis is a relatively 
 6. Any claim of tax benefits from a transaction lacking      high standard of tax reporting that is significantly higher 
economic substance, as defined by section 7701(o), or         than not frivolous or not patently improper. The 
failing to meet the requirements of any similar rule of law.  reasonable basis standard isn’t satisfied by a return 
 7. Any undisclosed foreign financial asset                   position that is merely arguable.
understatement;                                                 If the return position is reasonably based on one of the 
 8. Any inconsistent estate basis;                            authorities set forth in Regulations section 1.6662-4(d)(3)
 9. Any overstatement of the deduction provided in            (iii) (taking into account the relevance and persuasiveness 
section 170(p); or                                            of the authorities, and subsequent developments), the 
                                                              return position will generally satisfy the reasonable basis 
 10. Any disallowance of a deduction because of section 
                                                              standard even though it may not satisfy the substantial 
170(h)(7).
                                                              authority standard, as defined in Regulations section 
 The penalty is 40% of any portion of a tax                   1.6662-4(d)(2). For details, see Regulations sections 
underpayment attributable to one or more gross valuation      1.6662-4(d) and 1.6662-3(b)(3).
misstatements in (3), (4), (5), or (10) above if the            If you failed to keep proper books and records or failed 
applicable dollar limitation under section 6662(h)(2) is      to properly substantiate the items, you cannot avoid the 
met. The penalty also increases to 40% for failing to         penalty by disclosure.
adequately disclose a transaction that lacks economic 
substance in (6) above. See Economic substance, below.        Substantial Understatement
The penalty is 40% of any portion of an underpayment          An understatement is the excess of:
that is attributable to any undisclosed foreign financial 
asset understatement in (7) above. The penalty is 50% of        1. The amount of tax required to be shown on the 
any portion of an underpayment attributable to one or         return for the tax year, over
more overstatements of the deduction provided in section        2. The amount of tax imposed which is shown on the 
170(p) in (9) above.                                          return for the tax year, reduced by any rebates.
Economic substance.      To satisfy the disclosure              There is a substantial understatement of income tax if 
requirements under section 6662(i), you may adequately        the amount of the understatement for any year exceeds 
disclose with a timely filed original return (determined with the greater of:
regard to extensions) or a qualified amended return (as         1. 10% of the tax required to be shown on the return 
defined under Regulations section 1.6664-2(c)(3)) the         for the tax year, or
relevant facts affecting the tax treatment of the 
                                                                2. $5,000.
transaction.
                                                                An understatement of a corporation (other than an S 
Note. If you filed a Schedule UTP (Form 1120), Uncertain      corporation or a personal holding company, as defined in 
Tax Position Statement, you may not need to file Form         section 542) is substantial if it exceeds in any year the 
8275-R to satisfy the disclosure requirements of section      lesser of:
6662(i). For more information, see the Instructions for 
                                                                1. 10% of the tax required to be shown on the return 
Schedule UTP (Form 1120), Uncertain Tax Position 
                                                              for the tax year (or, if greater, $10,000), or
Statement.
                                                                2. $10 million.
Reasonable cause exception. Generally, no 
accuracy-related penalty will be imposed on any portion of    Reduction of understatement.        The amount of the 
an underpayment if you show that there was reasonable         understatement will be reduced by the part that is 
cause for that portion and that you acted in good faith with  attributable to the following items.
respect to that portion.                                      • An item (other than a tax shelter item) for which there 
        The reasonable cause and good faith exception         was substantial authority for the treatment claimed at the 
                                                              time the return was filed or on the last day of the tax year 
 !      doesn’t apply to any portion of an underpayment       to which the return relates.
CAUTION attributable to a transaction that lacks economic 
substance under section 7701(o).                              • An item (other than a tax shelter item) that is adequately 
                                                              disclosed on this form if there is a reasonable basis for the 
                                                              tax treatment of the item. (In no event will a corporation be 
                                                              treated as having a reasonable basis for its tax treatment 

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of an item attributable to a multi-party financing these penalties, see the regulations under sections 6662,
transaction entered into after August 5, 1997, if the 6664, and 6694.
treatment doesn’t clearly reflect the income of the
corporation.
Specific Instructions
For corporate tax shelter transactions (and for tax
shelter items of other taxpayers for tax years ending after Be sure to provide all of the information requested in Parts
October 22, 2004), the only exception to the substantial I, II, and III (if applicable). Your disclosure will be
understatement portion of the accuracy-related penalty is considered adequate if you file Form 8275-R and provide
the reasonable cause exception. For more details, see the required information in detail.
Reasonable cause exception, earlier; section 6662(d); Use Part IV on page 2 if you need more space for Parts
and Regulations section 1.6664-4. I and/or II. Include the corresponding part and line number
Tax shelter items. A tax shelter, for purposes of the from page 1. You can use a continuation sheet(s) if you
substantial understatement portion of the need additional space. Be sure to put your name and
accuracy-related penalty, is a partnership or other entity, identifying number on each sheet.
plan, or arrangement, with a significant purpose to avoid Reference ID number. If you are filing Form 8275-R to
or evade federal income tax. For transactions on or before disclose a position related to a foreign entity for which an
August 5, 1997, a tax shelter is a partnership or other information return (such as Form 5471, Information Return
entity, plan, or arrangement, whose principal purpose is to of U.S. Persons With Respect to Certain Foreign
avoid or evade federal income tax. Corporations) is filed, enter on Form 8275-R the same
A tax shelter item is any item of income, gain, loss, reference ID number for the foreign entity that is entered
deduction, or credit that is directly or indirectly attributable on the information return.
to the principal or significant purpose of the tax shelter to If you are filing Form 8275-R to report a position or
avoid or evade federal income tax. positions related to multiple foreign entities, file a separate
Tax Return Preparer Penalties Form 8275-R for each foreign entity.

A preparer who files a return or claim for refund is subject Part I
to a penalty in an amount equal to the greater of $1,000 or
50% of the income derived (or to be derived) by the tax Column (a). Enter the full citation for each regulation for
return preparer, with respect to the return or claim, for which you have taken a contrary position. The citation
taking a position which the preparer knew or reasonably should specify the section number, including all
should have known would understate any part of the designations of smaller units (lettered or numbered
liability if: subsections, paragraphs, subparagraphs, and clauses) to
• There is or was no substantial authority for the position; which the contrary position relates. For example, enter
• The position is a tax shelter (as defined in section “1.482-7(d)(1)(iii)” instead of “482 regs” or “1.482-7”.
6662(d)(2)(C)(ii)) or a reportable transaction to which Column (b). Identify the item by name.
section 6662A applies and it wasn’t reasonable to believe If any item you disclose is from a pass-through entity,
that the position would more likely than not be sustained you must identify the item as such. If you disclose items
on its merits; or from more than one pass-through entity, you must
• The position disclosed, as provided in section 6662(d) complete a separate Form 8275-R for each entity. Also,
(2)(B)(ii), isn’t a tax shelter or a reportable transaction to see How To File, earlier.
which section 6662A applies, and there was no
reasonable basis for the position. Column (c). Enter a complete description of the item(s)
you are disclosing.
The penalty won’t apply if it can be shown that there
was reasonable cause for the understatement and that the Example. If you are reporting entertainment expenses
preparer acted in good faith. in column (b), then you must list the items for
entertainment expenses in column (c), such as “theater
In cases where any part of the understatement of the tickets, catering expenses, and banquet hall rentals.”
liability is due to a willful attempt by the return preparer to
If you claim the same tax treatment for a group of
understate the liability, or if the understatement is due to
similar items in the same tax year, enter a description
reckless or intentional disregard of rules or regulations by
identifying the group of items you are disclosing rather
the preparer, the preparer is subject to a penalty equal to
than a separate description of each item within the group.
the greater of $5,000 or 75% of the income derived (or to
be derived) by the tax return preparer with respect to the Columns (d) through (f). Enter the location of the
return or claim. This penalty shall be reduced by the item(s) by identifying the form number or schedule in
amount of the penalty paid by such person for taking an column (d), the line number in column (e), and the amount
unreasonable position, or a position with no reasonable of the item(s) in column (f).
basis, as described immediately above.
Part II
A preparer isn’t considered to have recklessly or
Your disclosure must include the following.
intentionally disregarded a rule if a position is adequately
disclosed and has a reasonable basis. 1. A description of the relevant facts affecting the tax
treatment of the item. To satisfy this requirement, you must
Note. For more information about the accuracy-related include information that can reasonably be expected to
penalty and preparer penalties, and the means of avoiding apprise the IRS of the identity of the item, its amount, and

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the nature of the controversy or potential controversy.     or disregard of regulations, or to avoid certain preparer 
Information concerning the nature of the controversy can    penalties. We need it to ensure that you are complying 
include a description of the legal issues presented by the  with these laws and to allow us to figure and collect the 
facts.                                                      right amount of tax.
 2. A statement explaining why you believe this             You are not required to provide the information 
regulation to be invalid.                                   requested on a form that is subject to the Paperwork 
        Unless provided otherwise in the General            Reduction Act unless the form displays a valid OMB 
                                                            control number. Books or records relating to a form or its 
 !      Instructions, earlier, your disclosure won’t be     instructions must be retained as long as their contents 
CAUTION considered adequate unless (1) and (2) above are 
provided using Form 8275-R. For example, your               may become material in the administration of any Internal 
disclosure won’t be considered adequate if you attach a     Revenue law. Generally, tax returns and return information 
copy of an acquisition agreement to your tax return to      are confidential, as required by section 6103.
disclose the issues involved in determining the basis of    The time needed to complete and file this form will vary 
certain acquired assets. If Form 8275-R isn’t completed     depending on individual circumstances. The estimated 
and attached to the return, the disclosure won’t be         burden for individual taxpayers filing this form is approved 
considered valid even if the information in (1) and (2)     under OMB control number 1545-0074 and is included in 
above is provided using another method, such as a           the estimates shown in the instructions for their individual 
different form or an attached letter.                       income tax return. The estimated burden for all other 
                                                            taxpayers who file this form is shown below.
Part III
Line 4. Contact your pass-through entity if you don’t       Recordkeeping. . . . . . . . . . . . . . . . .    3 hr., 35 min.
know where its return was filed. However, for partners and  Learning about the law or the 
S corporation shareholders, information for line 4 can be   form. . . . . . . . . . . . . . . . . . . . . . .            53 min.
found on the Schedule K-1 that you received from the        Preparing and sending the form to 
partnership or S corporation.                               the IRS. . . . . . . . . . . . . . . . . . . . .             59 min.
 If the pass-through entity filed its return electronically 
using e-file, enter “e-file” on line 4.
                                                            If you have comments concerning the accuracy of 
Paperwork Reduction Act Notice.        We ask for the       these time estimates or suggestions for making this form 
information on this form to carry out the Internal Revenue  simpler, we would be happy to hear from you. See the 
laws of the United States. You are required to give us the  instructions for the tax return with which this form is filed.
information if you wish to use this form to make adequate 
disclosure to avoid the portion of the accuracy-related 
penalty due to a substantial understatement of income tax 

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