Tax News

CCH (cch.taxgroup.com) reports:

The Treasury Department and the IRS have designated the first two "transactions of interest," published under recently released Reg. §1.6011-4(b)(6), concerning reportable transactions (TAXDAY, 2007/08/01, I.3). The Treasury and the IRS believe these transactions of interest have the potential for abuse, but lack sufficient information to determine whether they should be identified as tax avoidance transactions. Persons involved with such transactions of interest have certain disclosure and other responsibilities, and may be subject to penalties for failing to comply with such obligations. In addition, participants in such transactions may be subject to other penalties, including the accuracy-related penalty under Code Secs. 6662 or 6662A.
Contributions of Successor Member Interest Transactions (Notice 2007-72)
One transaction of interest involves taxpayers who purchase a remainder interest or similar successor member interest directly or indirectly in real property and then transfer such interest to a tax-exempt organization, claiming a charitable contribution deduction significantly higher than the amount paid for the interest. The Treasury and IRS are concerned that taxpayers may be utilizing the contribution of such successor member interests to generate an excessive deduction
Toggling Grantor Trust Transactions (Notice 2007-73)
Another transaction of interest involves certain transactions in which trust grantors attempt to avoid recognizing gain or claiming a tax loss greater than the actual economic loss by purportedly terminating ("toggling off") and then reestablishing ("toggling on") the grantor status of the trust. These terminations and reestablishments usually occur within a brief period of time.
IR-2007-143, 2007FED ¶46,585
Notice 2007-72, 2007FED ¶46,586
Notice 2007-73, 2007FED ¶46,587
Other References:
Code Sec. 6111
CCH Reference - 2007FED ¶37,002.021
Code Sec. 6112
CCH Reference - 2007FED ¶37,022.023
Tax Research Consultant
CCH Reference - TRC FILEBUS: 3,052.20
CCH Reference - TRC FILEBUS: 3,052.25
CCH Reference - TRC FILEBUS: 9,410.05
CCH Reference - TRC FILEBUS: 9,452
CCH Reference - TRC FILEBUS: 9,454
CCH Reference - TRC PENALTY: 3,252
CCH Reference - TRC PENALTY: 3,254
CCH Reference - TRC PENALTY: 3,254.05