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Page 2 of 3 Fileid: … I1099CAP/201909/A/XML/Cycle03/source 16:23 - 10-Sep-2019
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
• Any shareholder from whom the corporation has Substantial Change in Capital Structure
received a properly completed exemption certificate.
A change in capital structure occurs if:
• Any one of the following.
• The amount of cash or other property provided to its
1. A corporation, except a subchapter S corporation. shareholders is $100 million or more and the corporation
2. A tax-exempt organization. in a transaction or series of transactions merges,
3. An individual retirement account (IRA). consolidates, or otherwise combines with another
corporation or transfers all or substantially all of its assets
4. The U.S. Government or a state. to one or more corporations;
5. A foreign government, an international organization, • Transfers all or part of its assets to another corporation
or a foreign central bank of issue. under bankruptcy proceedings including distributing its
6. A real estate investment trust (REIT). stock or securities; or
7. A regulated investment company (RIC). • Changes its identity, form, or place of organization; and
• The corporation or any of its shareholders is required to
8. A securities or commodities dealer. recognize gain under section 367(a) as a result of the
9. An entity registered under the Investment Company transaction.
Act of 1940.
10. A common trust fund. When To File
11. A financial institution such as a bank, savings and See part C in the current General Instructions for Certain
loan, credit union, or similar organization. Information Returns and its Guide to Information Returns
• Any foreign person the corporation associates with a for filing and furnishing dates. But see the separate
valid Form W-8BEN, Certificate of Foreign Status of guidance for clearing organizations in Special reporting
Beneficial Owner for United States Tax Withholding, or date–clearing organizations next.
other documentation upon which the corporation relies in Special reporting date–clearing organizations. A
order to treat the shareholder as a foreign beneficial corporation must file Form 1099-CAP and furnish a copy
owner or foreign payee. See Regulations section to each of its shareholders who receives any stock or
1.6049-5(c) for more information. other consideration in the transaction and who is not an
exempt recipient. A clearing organization, such as the
Corporations are not relieved of their withholding DTC, is not an exempt recipient. The corporation is
! obligations on nonresident aliens under section therefore required to file and furnish a copy of Form
CAUTION 1441. 1099-CAP to a clearing organization with respect to
shares held by the clearing organization unless it makes a
Acquisition of Control consent election, as discussed below. Furnish Form
1099-CAP to the clearing organization by the due date
An acquisition of control of a corporation (first corporation) shown in the current General Instructions for Certain
occurs if, in a transaction or series of related transactions, Information Returns. If you are furnishing the DTC with
before an acquisition of stock of the first corporation Forms 1099-CAP, see Notice 2004-9, 2004-04 I.R.B. 334,
(directly or indirectly) by a second corporation, the second available at IRS.gov/irb/2004-04_IRB#NOT-2004-9.
corporation does not have control of the first corporation;
after the acquisition, the second corporation has control of Penalties for Failure To File
the first corporation; the FMV of the stock acquired in the The penalties under section 6652(l) for failure to file
transaction and in any related transactions as of the date information returns under section 6043(c) apply. For
or dates on which the stock was acquired is $100 million purposes of the section 6652(l) penalty, Form 8806 and
or more; the shareholders of the first corporation receive all Forms 1099-CAP required to be filed are treated as
stock or other property pursuant to the acquisition; and one return. Thus, the penalty will not exceed $500 for
the first corporation or any of its shareholders is required each day the failure continues, up to a maximum of
to recognize gain under section 367(a) as a result of the $100,000, for any acquisition of control or any substantial
transaction. change in capital structure. If a corporation (transferor)
transfers all or substantially all of its assets to another
For these purposes, control is defined as the ownership
entity (transferee) and is required to file Form 1099-CAP,
of stock possessing at least 50% of the total combined
the transferor must satisfy the reporting requirements. If
voting power of all classes of stock entitled to vote, or at
the transferor fails to file Form 1099-CAP, then the
least 50% of the total value of shares of all classes of
transferee must meet the filing requirements. If the filing
stock.
requirements are not met by either the transferor or
See Form 8806 and Regulations section 1.6043-4 for transferee, then both are jointly and severally liable for the
details and special rules with respect to constructive applicable penalties.
ownership of stock. Failure to file Forms 1099-CAP also includes the
Section 338 election. An acquisition of stock of a requirement to file electronically. For more information on
corporation under which a section 338 election is made is penalties for failure to file electronically, see part F in the
treated as an acquisition of stock and not as an current General Instructions for Certain Information
acquisition of the assets of the corporation. Returns.
-2- Instructions for Form 1099-CAP (Rev. 9-2019)
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