The IRS issued temporary regulations in mid-November requiring such reporting. The regulations are retroactive to transactions occurring after December 31, 2001. Reports are to be filed by attaching a Form 8806 to the income tax return that a corporation files for the year. Reports must be made by any domestic corporation participating in such a transaction.
Two types of transactions must be reported. One is an “acquisition of control of a corporation.” This occurs whenever stock representing control of a target company is distributed by its parent or such stock is acquired by another corporation for cash, stock or other property. “Control” means at least 50% by vote or value.
The other transaction that must be reported is any “substantial change in capital structure.” Examples of such transactions are a recapitalization, a merger, or a change in identity, form or place of organization.
Transactions do not have to be reported if they are within affiliated groups or the amount of cash and property provided to shareholders of the target corporation is less than $100 million.