n-09-59.pdf

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Part III - Administrative, Procedural, and Miscellaneous

Listed Transactions

Notice 2009-59

SECTION 1. PURPOSE
This notice updates the list of transactions that have been determined by
the Internal Revenue Service to be “listed transactions” for purposes of § 1.6011-
4(b)(2) of the Income Tax Regulations and §§ 6111, 6112, 6662A, 6707, 6707A,
and 6708 of the Internal Revenue Code. This notice restates the list of “listed
transactions” in Notice 2004-67, 2004-2 C.B. 600, and updates the list by adding
transactions identified as “listed transactions” in notices and other guidance
released after September 24, 2004.
SECTION 2. CURRENT LISTED TRANSACTIONS
Transactions that are the same as or substantially similar to one of the
types of transactions described in the list below have been determined by the
Service to be tax avoidance transactions and are “listed transactions” for
purposes of § 1.6011-4(b)(2) and §§ 6111, 6112, 6662A, 6707, 6707A and 6708.
As a result, taxpayers may need to disclose their participation in these listed

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transactions as prescribed in § 1.6011-4, and material advisors may need to
disclose these transactions under § 301.6111-3 of the Procedure and
Administration Regulations. Taxpayers who fail to disclose may be subject to
penalties under §§ 6662A and 6707A. Material advisors who fail to disclose may
be subject to penalties under § 6707. In addition, material advisors must
maintain lists of advisees and other information with respect to these listed
transactions pursuant to § 301.6112-1. Material advisors who fail to furnish a list
as required under § 301.6112-1 may be subject to penalties under § 6708.
(1) Rev. Rul. 90-105, 1990-2 C.B. 69 (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;
(2) Notice 95-34, 1995-1 C.B. 309 (certain trust arrangements purported to
qualify as multiple employer welfare benefit funds exempt from the limits of
§§ 419 and 419A (identified as “listed transactions” on February 28, 2000)). See
also § 1.419A(f)(6)-1 (10 or more employer plans);
(3) Transactions substantially similar to those at issue in ASA Investerings
Partnership v. Commissioner, 201 F.3d 505 (D.C. Cir. 2000), and ACM

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Partnership v. Commissioner, 157 F.3d 231 (3d 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));
(4) Section 1.643(a)-8 (transactions involving distributions described in
§1.643(a)-8 from charitable remainder trusts (identified as “listed transactions” on
February 28, 2000));
(5) Notice 99-59, 1999-2 C.B. 761 (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);
(6) Section 1.7701(l)-3 (transactions involving fast-pay arrangements as
defined in § 1.7701(l)-3(b) (identified as “listed transactions” on February 28,
2000));
(7) Rev. Rul. 2000-12, 2000-1 C.B. 744 (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));
(8) Notice 2000-44, 2000-2 C.B. 255 (transactions generating losses
resulting from artificially inflating the basis of partnership interests (identified as
“listed transactions” on August 11, 2000)). See also
§§ 1.752-1(a), 1.752-6, and
1.752-7;

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(9) Notice 2000-60, 2000-2 C.B. 568 (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));
(10) Notice 2000-61, 2000-2 C.B. 569 (transactions purporting to apply
§ 935 to Guamanian trusts (identified as “listed transactions” on November 21,
2000));
(11) Notice 2001-16, 2001-1 C.B. 730 (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, 2008-51 I.R.B. 1299, clarifies Notice
2001-16 and supersedes Notice 2008-20, 2008-1 C.B. 406;
(12) Notice 2001-17, 2001-1 C.B. 730 (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));
(13) Notice 2001-45, 2001-2 C.B. 129 (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));

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(14) Notice 2002-21, 2002-1 C.B. 730 (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);
(15) Notice 2002-35, 2002-1 C.B. 992 (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)).
Notice 2006-16, 2006-1 C.B. 538, clarifies and modifies Notice 2002-35;
(16) Notice 2002-50, 2002-2 C.B. 98 (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, 2003-2 C.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);
(17) Rev. Rul. 2002-69, 2002-2 C.B. 760, modifying and superseding Rev.
Rul. 99-14, 1999-1 C.B. 835 (transactions in which a taxpayer purports to lease
property and then purports to immediately sublease it back to the lessor (often

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referred to as “lease-in/lease-out” or “LILO” transactions) (identified as “listed
transactions” on February 28, 2000));
(18) Rev. Rul. 2003-6, 2003-1 C.B. 286 (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));
(19) Notice 2003-22, 2003-1 C.B. 851 (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));
(20) Notice 2003-24, 2003-1 C.B. 853 (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));
(21) Notice 2003-47, 2003-2 C.B. 132 (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));
(22) Notice 2003-55, 2003-2 C.B. 395 (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);

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(23) Notice 2003-77, 2003-2 C.B. 1182 (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. See Rev. Proc. 2004-31, 2004-1 C.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;
(24) Notice 2003-81, 2003-2 C.B. 1223 (certain transactions in which a
taxpayer claims a loss upon the assignment of a purported § 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 2007-71, 2007-2 C.B. 472, modified
and supplemented Notice 2003-81;
(25) Notice 2004-8, 2004-1 C.B. 333 (certain transactions designed to
avoid the limitations on contributions to Roth IRAs described in § 408A (identified
as "listed transactions" on December 31, 2003));
(26) Rev. Rul. 2004-4, 2004-1 C.B. 414 (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));
(27) Situation 2 of Rev. Rul. 2004-20, 2004-1 C.B. 546, modifying and
superseding Rev. Rul. 55-748, 1955-2 C.B. 234 (certain arrangements in which

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an employer deducts contributions to a qualified pension plan used to pay
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, 2004-1 C.B. 544, §§ 1.79-1(d)(3), 1.83-3(e) and 1.402(a)-1(a)(1) and
(2), and Rev. Proc. 2005-25, 2005-1 C.B. 962, modifying and superseding Rev.
Proc. 2004-16, 2004-1 C.B. 559;
(28) Notice 2004-20, 2004-1 C.B. 608 (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));
(29) Notice 2004-30, 2004-1 C.B. 828 (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));
(30) Notice 2004-31, 2004-1 C.B. 830 (transactions in which corporations
claim inappropriate deductions for payments made through a partnership
(identified as “listed transactions” on April 1, 2004));

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(31) Notice 2005-13, 2005-1 C.B. 630 (transactions in which a taxpayer
enters into a purported sale-lease-back arrangement with a tax-indifferent person
in which substantially all of the tax-indifferent person’s payment obligations are
economically defeased and the taxpayer’s risk of loss from a decline, and
opportunity for profit from an increase, in the value of the leased property are
limited (often referred to as “sale-in/lease out” or “SILO” transactions) (identified
as “listed transactions” on February 11, 2005));
(32) Notice 2007-57, 2007-2 C.B. 87 (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 June 20,
2007));
(33) Notice 2007-83, 2007-2 C.B. 960 (certain arrangements involving a
trust or other fund described in § 419(e)(3) that is purportedly a welfare benefit
fund and pays premiums on one or more life insurance policies with respect to
which value is accumulated, where the employer has deducted contributions in
excess of specified amounts (identified as “listed transactions” on October 17,
2007));
(34) Notice 2008-34, 2008-12 I.R.B. 645 (transactions in which a tax
indifferent party contributes one or more distressed assets 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

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the U.S. taxpayer that has not incurred the economic loss (identified as “listed
transactions” on February 27, 2008)).
SECTION 3. TRANSACTIONS NO LONGER CONSIDERED TO BE LISTED
TRANSACTIONS
Transactions that are the same as, or substantially similar to, one of the
types of transactions described in the list below will no longer be considered
listed transactions for purposes of § 1.6011-4(b)(2) and §§ 6111 and 6112. No
inference is intended, however, as to whether such transactions are otherwise
subject to the disclosure requirements of § 6011, the disclosure requirements of
§ 6111, or the list maintenance requirements of § 6112.
(1) Transactions described in Part II of Notice 98-5, 1998-1 C.B. 334
(transactions in which the reasonably expected economic profit is insubstantial in
comparison to the value of the expected foreign tax credits (identified as “listed
transactions” on February 28, 2000)). Notice 2004-19, 2004-1 C.B. 606,
withdrew Notice 98-5. Effective for taxable years for which the due date of the
return (including extensions, whether or not actually requested) is after February
17, 2004, transactions will not be considered listed transactions for purposes of
§ 1.6011-4(b)(2) and § 6112 solely because they are the same as or substantially
similar to the transactions or arrangements described in Part II of Notice 98-5. In
addition, for offers made after February 17, 2004, transactions will not be
considered listed transactions for purposes of § 6111 solely because they are the
same as or substantially similar to the transactions or arrangements described in
Part II of Notice 98-5.

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(2) Transactions described in Notice 2002-70, 2002-2 C.B. 765
(transactions involving reinsurance arrangements between a taxpayer and the
taxpayer's own reinsurance company that is subject to little or no federal income
tax (identified as “listed transactions” on October 15, 2002)). Notice 2004-65,
2004-2 C.B. 599, modified Notice 2002-70 by removing the identification of
transactions that are the same as, or substantially similar to, transactions
described in Notice 2002-70 as listed transactions effective for taxable years for
which the due date of the return (including extensions, whether or not actually
requested) is after September 24, 2004.
SECTION 4. EFFECT ON OTHER NOTICES
Notice 2004-67 is supplemented and superseded. For updates to this list
go to the IRS web page at www.irs.gov/businesses/corporations
and click on
“Abusive Tax Shelters and Transactions.” Notices and other published guidance
will still be used to identify transactions that have been determined by the Service
to be "listed transactions."
DRAFTING INFORMATION
The principal authors of this notice are Eric P. Ingala and Michael H.
Beker of the Office of Associate Chief Counsel (Passthroughs & Special
Industries). For further information regarding this notice contact the authors at
(202) 622-3070 (not a toll-free call).