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Loss Importation Transaction

October 15, 2007

LMSB-04-09-07-61

MEMORANDUM FOR COMMISSIONER, SMALL BUSINESS/SELF-EMPLOYED
                                        DIVISION
                                        LMSB INDUSTRY AND FIELD SPECIALISTS DIRECTORS
                                        DIRECTOR, INTERNATIONAL COMPLIANCE,     
                                        STRATEGY AND POLICY    

FROM:                            Frank Y. Ng  /s/ Frank Y. Ng
                                        Commissioner, Large and Mid-Size Business Division

SUBJECT:                      Coordinated Issue for All Industries:  Loss Importation Transaction

Pursuant to IRM 4.51.2.5, the transaction described in Notice 2007-57 (Loss Importation Transaction) should be treated as a coordinated issue, effective June 20, 2007. 

Notice 2007-57 (attached) describes a transaction 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. 

  • The notice alerts taxpayers and their representatives that these transactions are tax avoidance transactions and identifies these transactions, and substantially similar transactions, as listed transactions for purposes of Treas. Reg. § 1.6011-4(b)(2) and IRC §§ 6111 and 6112, effective June 20, 2007. 
  • The notice also alerts persons involved with these transactions to certain responsibilities that may arise from their involvement with these transactions.
  • The notice provides that the Service may assert:  (1) one or a combination of arguments in challenging these transactions including, but not limited to, arguments under IRC §§ 165, 269, 482, and 988; and (2) that the transaction fails one or more judicial doctrines, such as the economic substance doctrine. 

If this transaction surfaces during an examination, it must be raised as an issue following the guidance position set forth in the listing notice.  Examiners should contact the Technical Advisor listed below and provide the name of the taxpayer, taxable period(s) involved, type of listed transaction, and the name of the promoter, if known.  LMSB examiners should include the names and phone numbers of the Team Manager and Team Coordinator.  SB/SE examiners should include the name and phone number of their Group Manager.  The initial contact may be via e-mail (utilizing secure messaging), fax or telephone.

In addition, examiners should consult with the Technical Advisor and local area Counsel on the development of the issue.  Examiners must secure the concurrence of the Technical Advisor if their examination deviates from any mandated specific examination techniques proposed for issue development, or their proposal for adjustment deviates from any stated legal positions.  Examiners must also consult with and secure the concurrence of the Technical Advisor and Counsel before proposing any resolution other than full concession of the issue by the taxpayer.  No proposals can be made without the concurrence of the Issue Champion listed below.

The Issue Champion and technical contacts for this issue are:

  • Issue Champion:
    Kathy Robbins, Director Field Operations, Financial Services
    (212) 298-2112

  • Technical Advisor:
    Ron Calewarts, Foreign Joint Ventures, Partnerships & Check-the-Box Technical Advisor
    Phone:  (414) 727-5482
    FAX:  (414) 727-4062
    e-mail:  ronald.l.calewarts@irs.gov

  • Area Counsel:
    Roland Barral 
    (917) 421-4667

  • Issue Counsel: 
    Michele Gormley 
    (617) 565-7858

This memorandum is not a Coordinated Issue Paper within the meaning of IRM 4.51.2.4 and should not be cited as such.

If you have any questions, please contact me, or a member of your staff may contact   Ron Calewarts, Foreign Joint Ventures, Partnerships & Check-the-Box Technical Advisor, at (414) 727-5482.

Attachment

Page Last Reviewed or Updated: 10-Feb-2014