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Internal Revenue Bulletin:  2015-30 

July 27, 2015 

INCOME TAX


Notice 2015–47Notice 2015–47

The Listing Notice applies to a type of structured financial transaction in which a taxpayer attempts to defer and treat ordinary income and short-term capital gain as long-term capital gain. The contract is denominated as an option contract that references a basket of actively traded personal property (i.e., securities). The contract allows the taxpayer to trade the securities referenced in the contract while the contract purportedly remains open, and the taxpayer does so. Consequently, option treatment is not warranted, and the income deferral and conversion to long-term capital gain is improper. The transaction described in the Listing Notice is similar to a transaction described in a companion Transaction of Interest Notice (Notice 2015–48); each of the Notices makes it clear that if a transaction is identified by both Notices, it is treated as a Listed Transaction.

Notice 2015–48Notice 2015–48

The Transaction of Interest Notice applies to a type of structured financial transaction in which a taxpayer attempts to defer and treat ordinary income and short-term capital gain as long-term capital gain. The transaction may be denominated as an option, notional principal contract, or forward contract. The contract may reference assets that are not actively traded, such as interests in hedge funds, and the taxpayer has the right to change the assets in the referenced basket. The taxpayer’s ability to control the assets in the basket raises the issue of whether the form of the transaction should be respected, and, thus, whether the income deferral and conversion to long-term capital gain is improper. The transaction described in the notice is similar to a transaction described in a companion Listing Notice (Notice 2015–47); each of the Notices makes it clear that if a transaction is identified by both Notices, it is treated as a Listed Transaction.


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