Many tax preparers may not often run into a reportable transaction situation, however most returns require disclosures about whether an entity does or doesn’t have an affected transaction to report. It’s important for all preparers to understand what transactions fall into the reportable category and when to disclose more information.
Reportable transactions are certain types of transactions that the IRS has identified as potentially abusive and require additional disclosure, specifically on the tax return itself.
The IRS has established five categories of reportable transactions:
