File Form 1099-CAP with the IRS by February 28, 2008 (March 31, 2008, if filed electronically); furnish the statement to shareholders by January 31, 2008.

Special reporting date-clearing organizations.   A corporation must file Form 1099-CAP and furnish a copy to each of its shareholders who receives any stock or other consideration in the transaction and who is not an exempt recipient. A clearing organization, such as the Depository Trust Company (DTC), is not an exempt recipient. The corporation is therefore required to file and furnish a copy of Form 1099-CAP to a clearing organization with respect to shares held by the clearing organization unless it makes a consent election, as discussed below. Furnish Form 1099-CAP to the clearing organization on or before January 5 of the year following the calendar year in which the transaction took place. If you are furnishing the DTC with Forms 1099-CAP, see Notice 2004-9, which is on page 334 of Internal Revenue Bulletin 2004-4 at www.irs.gov/pub/irs-irbs/irb04-04.pdf.

A domestic corporation that is required to file Form 8806, Information Return for Acquisition of Control or Substantial Change in Capital Structure, must file Form 1099-CAP with the IRS and furnish a copy to each shareholder who receives cash, stock, or other property as a result of the acquisition of control or substantial change in capital structure and who is not an exempt recipient. However, if the corporation can reasonably determine that the receipt of such stock would not cause the shareholder to recognize gain, then the corporation is not required to report the fair market value of any stock provided to a shareholder. Corporations do not file Form 1099-CAP under one of the following conditions:

An acquisition of control of a corporation (first corporation) occurs if, in a transaction or series of related transactions, before an acquisition of stock of the first corporation (directly or indirectly) by a second corporation, the second corporation does not have control of the first corporation; after the acquisition, the second corporation has control of the first corporation; the FMV of the stock acquired in the transaction and in any related transactions as of the date or dates on which the stock was acquired is $100 million or more; the shareholders of the first corporation receive stock or other property pursuant to the acquisition; and, the first corporation or any of its shareholders is required to recognize gain under section 367(a) as a result of the transaction.

For these purposes, control is defined as the ownership of stock possessing at least 50 percent of the total combined voting power of all classes of stock entitled to vote, or at least 50 percent of the total value of shares of all classes of stock.

See Form 8806 and Regulations section 1.6043-4 for details and special rules with respect to constructive ownership of stock.

A change in capital structure occurs if:

The penalties under section 6652(l) for failure to file information returns under section 6043(c) apply. For purposes of the section 6652(l) penalty, Form 8806 and all Forms 1099-CAP required to be filed are treated as one return. Thus, the penalty will not exceed $500 for each day the failure continues, up to a maximum of $100,000, for any acquisition of control or any substantial change in capital structure. If a corporation (transferor) transfers all or substantially all of its assets to another entity (transferee) and is required to file Form 1099-CAP, the transferor must satisfy the reporting requirements. If the transferor fails to file Form 1099-CAP, then the transferee must meet the filing requirements. If the filing requirements are not met by either the transferor or transferee, then both are jointly and severally liable for the applicable penalties.

Failure to file Forms 1099-CAP also includes the requirement to file on magnetic media or electronically. For more information on penalties for failure to file electronically/magnetically, see part F in the 2007 General Instructions for Forms 1099, 1098, 5498, and W-2G.

If required to file Form 1099-CAP, you must provide a statement to the shareholder. For more information about the requirement to furnish a statement to the shareholder, see part M in the 2007 General Instructions for Forms 1099, 1098, 5498, and W-2G.

The account number is required if you have multiple accounts for a recipient for whom you are filing more than one Form 1099-CAP. Additionally, the IRS encourages you to designate an account number for all Forms 1099-CAP that you file. See part L in the 2007 General Instructions for Forms 1099, 1098, 5498, and W-2G.

Generally, this will be the reporting corporation's information and employer identification number (EIN).

Enter the trade date of the sale or exchange, actually or constructively received.

Enter the aggregate amount of cash and the fair market value of any stock and other property received in exchange for the number of shares exchanged in the reporting corporation.

Enter the number of shares the shareholder exchanged in the reporting corporation for cash or other property received.

Enter the class or classes of stock (for example, preferred, common, etc.) exchanged in the reporting corporation for cash or other property received. Abbreviate the class to fit the entry. For example, you may enter “C” for common stock, “P” for preferred, or “O” for other. Also, abbreviate any subclasses.

This box must be checked if the reporting corporation reasonably determines that the exchange is part of a transaction described in section 367(a) for which shareholders are required to recognize gain (if any) but are not allowed to claim a loss.