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Recognized Abusive and Listed Transactions

Listed Transactions in Chronological Order

1. Revenue Ruling 90-105 – Certain Accelerated Deductions for Contributions to a Qualified Cash or Deferred Arrangement or Matching Contributions to a Defined Contribution Plan
2. Notice 95-34 - Voluntary Employee Beneficiary Association
3. ASA Investering Partnership v. Commissioner -Transactions similar to that described in the ASA Investering litigation and in ACM Partnership v. Commissioner
4. Treasury Regulation § 1.643(a)-8 – Certain Distributions from Charitable Remainder Trusts
5. Notice 99-59 - Corporate Distributions of Encumbered Property (BOSS)
6. Step-Down Step Down Preferred/Fast Pay Stock §1.7701(1)-3
7. Revenue Ruling 2000-12 – Debt Straddles  
8. Notice 2000-44 – Inflated Partnership Basis Transactions (Son of Boss)
9. Notice 2000-60 Stock Compensation Stock Compensation Transactions
10. Notice 2000-61 – Guam Trust
11. Notice 2001-16 – Intermediary Transactions
12. Notice 2001-17 - §351 Contingent Liability
13. Notice 2001- 45 - §302 Basis-Shifting Transactions
14. Notice 2002-21 - Inflated Basis "CARDS" Transactions
15. Notice 2002-35 - Notional Principal Contracts
16. Common Trust Fund Straddles (Notice 2003-54), Pass-Through Entity Straddle (Notice 2002-50), and S Corporation Tax Shelter Transaction (Notice 2002-65)
17. Revenue Ruling 2002-69 - Lease In / Lease Out or LILO Transactions
18. Revenue Ruling 2003-6 - Abuses Associated with S Corp ESOPs
19. Notice 2003-22 - Offshore Deferred Compensation Arrangements
20. Notice 2003-24 - Certain Trust Arrangements Seeking to Qualify for Exception for Collectively Bargained Welfare Benefit Funds under § 419A(f)(5)
21. Notice 2003-47 - Transfers of Compensatory Stock Options to Related Persons
22. Notice 2003-55 - Accounting for Lease Strips and Other Stripping Transactions
23. Notice 2003-77 - Improper use of contested liability trusts to attempt to accelerate deductions for contested liabilities under IRC 461(f)
24. Notice 2003-81 - Major/Minor Tax Avoidance Using Offsetting Foreign currency Option Contracts
25. Notice 2004-8 - Abusive Roth IRA Transactions
26. Revenue Ruling 2004-4 - S Corporations ESOP
27. Revenue Ruling 2004-20 - Abusive Transactions Involving Insurance Policies in IRC 412(i) Retirement Plans
28. Notice 2004-20 - Abusive Foreign Tax Credit Transactions
29. Notice 2004-30 - S Corporation Tax Shelter Involving Shifting Income to Tax Exempt Organization
30. Notice 2004-31 - Intercompany Financing Through Partnerships
31. Notice 2005-13 - Sale-In Lease-Out transactions
32. Notice 2007-57 - Loss Importation Transaction
33.
34. Notice 2008-34 - Distressed Asset Trust (DAT) Transaction

 


Revenue Ruling 90-105 – Certain Accelerated Deductions for Contributions to a Qualified Cash or Deferred Arrangement or Matching Contributions to a Defined Contribution Plan (transactions in which taxpayers claim deductions for contributions to a qualified cash or deferred arrangement or matching contributions to a defined contribution plan where the contributions are attributable to compensation earned by plan participants after the end of the taxable year (identified as “listed transactions” on February 28, 2000)). See also Rev. Rul. 2002-46, 2002-2 C.B. 117 (result is the same, and transactions are substantially similar, even though the contributions are designated as satisfying a liability established before the end of the taxable year), modified by Rev. Rul. 2002-73, 2002-2 C.B. 805


Voluntary Employee Beneficiary Association

Notice 95-34 – Certain Trusts Purported to be Multiple Employer Welfare Funds Exempted from the Lists of §§ 419 and 419A (certain trust arrangements purported to qualify as multiple employer welfare benefit funds exempt from the limits of §§ 419 and 419A of the Internal Revenue Code (identified as “listed transactions” on February 28, 2000)). See also § 1.419A(f)(6)-1 of the Income Tax Regulations (10 or more employer plans)).


ASA Investering Partnership v. Commissioner -Transactions similar to that described in the ASA Investering litigation and in ACM Partnership v. Commissioner, 157 F.3d 231 (3rd Cir. 1998) (transactions involving contingent installment sales of securities by partnerships in order to accelerate and allocate income to a tax-indifferent partner, such as a tax-exempt entity or foreign person, and to allocate later losses to another partner (identified as “listed transactions” on February 28, 2000)).


Treasury Regulation § 1.643(a)-8 – Certain Distributions from Charitable Remainder Trusts (transactions involving distributions described in § 1.643(a)-8 from charitable remainder trusts (identified as “listed transactions” on February 28, 2000)).


Corporate Distributions of Encumbered Property (BOSS)

Notice 99-59 – Transactions involving the distributions of encumbered property in which losses claimed for capital outlays have been recovered (aka BOSS transactions) (transactions involving the distribution of encumbered property in which taxpayers claim tax losses for capital outlays that they have in fact recovered (identified as “listed transactions” on February 28, 2000)). See also § 1.301-1(g) of the Income Tax Regulations;


Step Down Preferred/Fast Pay Stock §1.7701(1)-3

Treasury Regulation § 1.7701(I)-3 – Fast Pay or Step-Down Preferred Transactions (transactions involving fast-pay arrangements as defined in § 1.7701(l)-3(b) (identified as “listed transactions” on February 28, 2000))


Revenue Ruling 2000-12 – Debt Straddles (certain transactions involving the acquisition of two debt instruments the values of which are expected to change significantly at about the same time in opposite directions (identified as “listed transactions” on February 28, 2000))


Notice 2000-44 – Inflated Partnership Basis Transactions (Son of Boss) (transactions generating losses resulting from artificially inflating the basis of partnership interests (identified as “listed transactions” on August 11, 2000)). See also § 1.752-6T of the temporary Income Tax Regulations and §§ 1.752-1(a) and 1.752-7 of the proposed Income Tax Regulations;

Son of Boss Settlement Initiative


Stock Compensation Transactions

Notice 2000-60 – Stock Compensation Transactions (transactions involving the purchase of a parent corporation’s stock by a subsidiary, a subsequent transfer of the purchased parent stock from the subsidiary to the parent’s employees, and the eventual liquidation or sale of the subsidiary (identified as “listed transactions” on November 16, 2000));


Notice 2000-61 – Guam Trust (transactions purporting to apply § 935 to Guamanian trusts (identified as “listed transactions” on November 21, 2000));


Notice 2001-16 – Intermediary Transactions (transactions involving the use of an intermediary to sell the assets of a corporation (identified as “listed transactions” on January 18, 2001));

  • Notice 2008-111 - (12/01/2008) – Clarifies Notice 2001-16 (2001-1 C.B. 730) that identified and described the intermediary transaction tax shelter as a listed transaction and supersedes Notice 2008-20 (2008-6 I.R.B. 406). The Notice defines an intermediary transaction in terms of its plan and of more objective components. Also, the Notice specifies when a person is engaged in a transaction as part of a plan and clarifies that a transaction may be an intermediary transaction for one person and not another.
  • LB&I Industry Director Guidance - Examination of Multiple Parties in Intermediary Transactions

Notice 2001-17 - §351 Contingent Liability (transactions involving a loss on the sale of stock acquired in a purported § 351 transfer of a high basis asset to a corporation and the corporation’s assumption of a liability that the transferor has not yet taken into account for federal income tax purposes (identified as “listed transactions” on January 18, 2001));


Notice 2001- 45 – §302 Basis-Shifting Transactions (certain redemptions of stock in transactions not subject to U.S. tax in which the basis of the redeemed stock is purported to shift to a U.S. taxpayer (identified as “listed transactions” on July 26, 2001));


Notice 2002-21 – Inflated Basis "CARDS" Transactions (transactions involving the use of a loan assumption agreement to inflate basis in assets acquired from another party to claim losses (identified as “listed transactions” on March 18, 2002));

  • Appeals Settlement Guidelines (redacted)

Notice 2002-35Notional Principal Contracts (transactions involving the use of a notional principal contract to claim current deductions for periodic payments made by a taxpayer while disregarding the accrual of a right to receive offsetting payments in the future (identified as “listed transactions” on May 6, 2002));


Common Trust Fund Straddles, Pass-Through Entity Straddle, and S Corporation Tax Shelter transaction

Notice 2002-50Partnership Straddle Tax Shelter (transactions involving the use of a straddle, a tiered partnership structure, a transitory partner, and the absence of a § 754 election to claim a permanent noneconomic loss (identified as “listed transactions” on June 25, 2002)); Notice 2002-65, 2002-2 C.B. 690 (transactions involving the use of a straddle, an S corporation or a partnership, and one or more transitory shareholders or partners to claim a loss while deferring an offsetting gain are substantially similar to transactions described in Notice 2002-50); and Notice 2003-54, 2003-33 I.R.B. 363 (transactions involving the use of economically offsetting positions, one or more tax indifferent parties, and the common trust fund accounting rules of § 584 to allow a taxpayer to claim a noneconomic loss are substantially similar to transactions described in Notice 2002-50 and Notice 2002-65);

Revenue Ruling 2002-69, Lease In / Lease Out or LILO Transactions (transactions in which a taxpayer purports to lease property and then purports to immediately sublease it back to the lessor (often referred to as lease-in/lease-out; or LILO transactions) (identified as listed transactions on February 28, 2000)

  • LILO/SILO SETTLEMENT INITIATIVE - On August 6, 2008, IRS Commissioner Douglas Shulman announced that settlements would be offered to taxpayers who participated in Lease-In/Lease-Out (LILO) and Sale-In/Sale-Out (SILO) transactions. IRS sent out letters giving taxpayers 30 days to make a decision on whether to accept the offer terms.

Revenue Ruling 2003-6, Abuses Associated with S Corp ESOPs (certain arrangements involving the transfer of employee stock ownership plans (ESOPs) that hold stock in an S corporation for the purpose of claiming eligibility for the delayed effective date of § 409(p) (identified as “listed transactions” on December 17, 2002));


Notice 2003-22 - Offshore Deferred Compensation Arrangements (certain arrangements involving leasing companies that have been used to avoid or evade federal income and employment taxes (identified as “listed transactions” on April 4, 2003));


Notice 2003-24 - Certain Trust Arrangements Seeking to Qualify for Exception for Collectively Bargained Welfare Benefit Funds under § 419A(f)(5) (certain arrangements that purportedly qualify as collectively-bargained welfare benefit funds excepted from the account limits of §§ 419 and 419A (identified as “listed transactions” on April 11, 2003));


Transfers of Compensatory Stock Options to Related Persons

Notice 2003-47 - Transfers of Compensatory Stock Options to Related Persons (transactions involving compensatory stock options and related persons to avoid or evade federal income and employment taxes (identified as “listed transactions” on July 1, 2003));


Notice 2003-55 - Accounting for Lease Strips and Other Stripping Transactions (transactions in which one participant claims to realize rental or other income from property or service contracts and another participant claims the deductions related to that income (often referred to as “lease strips”)), modifying and superseding Notice 95-53, 1995-2 C.B. 334 (identified as “listed transactions” on February 28, 2000);

  • Notice 95-53 – Lease Strips - Modified and superseded by Notice 2003-55 above

Notice 2003-77 - Improper use of contested liability trusts to attempt to accelerate deductions for contested liabilities under IRC 461(f) (certain transactions that use contested liability trusts improperly to accelerate deductions for contested liabilities under § 461(f) (identified as “listed transactions” on November 19, 2003)). See also § 1.461-2 of the Income Tax Regulations. See Rev. Proc. 2004-31, 2004-22 I.R.B. 986, for procedures which taxpayers must use to change their methods of accounting for deducting under § 461(f) amounts transferred to trusts in transactions described in Notice 2003-77.


Major/Minor Tax Avoidance Using Offsetting Foreign currency Option Contracts

Notice 2003-81 - Offsetting Foreign Currency Option Contracts (certain transactions in which a taxpayer claims a loss upon the assignment of a § 1256 contract to a charity but fails to report the recognition of gain when the taxpayer’s obligation under an offsetting non-section 1256 contract terminates (identified as “listed transactions” on December 4, 2003));

Notice 2004-8 - Abusive Roth IRA Transactions (certain transactions designed to avoid the limitations on contributions to Roth IRAs described in § 408A (identified as “listed transactions” on December 31, 2003));


S Corporations ESOP

Revenue Ruling 2004-04 - Prohibited Allocations of Securities in an S Corporation (transactions that involve segregating the business profits of an ESOP-owned S corporation in a qualified subchapter S subsidiary, so that rank-and-file employees do not benefit from participation in the ESOP (identified as “listed transactions” on January 23, 2004));


Revenue Ruling 2004-20 - Abusive Transactions Involving Insurance Policies in IRC 412(i) Retirement Plans (certain arrangements in which an employer deducts contributions to a qualified pension plan for premiums on life insurance contracts that provide for death benefits in excess of the participant’s death benefit, where under the terms of the plan, the balance of the death benefit proceeds revert to the plan as a return on investment) (identified as “listed transactions” on February 13, 2004)). See also Rev. Rul. 2004-21, 2004-10 I.R.B. 544, §§ 1.79-1(d)(3), 1.83-3(e) and 1.402(a)-1(a)(1) and (2) of the proposed Income Tax Regulations, and Rev. Proc. 2004-16, 2004-10 I.R.B. 559;


Notice 2004-20 - Abusive Foreign Tax Credit Transactions (transactions in which, pursuant to a prearranged plan, a domestic corporation purports to acquire stock in a foreign target corporation and to make an election under § 338 before selling all or substantially all of the target corporation’s assets in a preplanned transaction that generates a taxable gain for foreign tax purposes (but not for U.S. tax purposes) (identified as “listed transactions” on February 17, 2004));


 Notice 2004-30 - S Corporation Tax Shelter Involving Shifting Income to Tax Exempt Organization (transactions in which S corporation shareholders attempt to transfer the incidence of taxation on S corporation income by purportedly donating S corporation nonvoting stock to an exempt organization while retaining the economic benefits associated with that stock (identified as “listed transactions” on April 1, 2004));


Notice 2004-31 - Intercompany Financing Through Partnerships (transactions in which corporations claim inappropriate deductions for payments made through a partnership (identified as “listed transactions” on April 1, 2004)).


Notice 2005-13, Sale-In Lease-Out transactions


Notice 2007-57 - Loss Importation Transaction (IRB 2007-29) (transactions in which a U.S. taxpayer uses offsetting positions with respect to foreign currency or other property for the purpose of importing a loss, but not the corresponding gain, in determining U.S. taxable income (identified as “listed transactions” on July 16, 2007)).


Notice 2007-83 - Abusive Trust Arrangements Utilizing Cash Value Life Insurance Policies Purportedly to Provide Welfare Benefits - 2007-45 I.R.B. 1 (transactions in which certain trust arrangements claiming to be welfare benefit funds and involving cash value life insurance policies that are being promoted to and used by taxpayers to improperly claim federal income and employment tax benefits (identified as “listed transactions” on October 17, 2007)).


Notice 2008-34 - Distressed Asset Trust (DAT) Transaction - 2008-12 I.R.B. 1 (transactions in which a tax indifferent party, directly or indirectly, contributes one or more distressed assets (for example, a creditor’s interests in debt) with a high basis and low fair market value to a trust or series of trusts and sub-trusts, and a U.S. taxpayer acquires an interest in the trust (and/or series of trusts and/or sub-trusts) for the purpose of shifting a built-in loss from the tax indifferent party to the U.S. taxpayer that has not incurred the economic loss (identified as listed transactions on February 27, 2008)).


"De-Listed" Transactions

  • Notice 2004-65 - De-lists Producer Owned Reinsurance Companies (PORC) as a listed transaction
  • Notice 2004-64 Modification of exemption from tax for small property and casualty insurance companies.
  • Notice 2002-70 modified by Notice 2004-65.

 

Page Last Reviewed or Updated: 25-Mar-2014