CCA 200923032: Loss importation transaction did not trigger listed-transaction exception

Plain-English summary

Chief Counsel considered whether a loss importation transaction fell within the listed-transaction exception to section 6404(g). A transaction's listed status is determined on the date the IRS provides the section 6404 notice. Here, the transaction became listed only after an April 2007 letter, so only adjustments in a later 30-day letter could potentially qualify. But section 6707A defines a listed transaction through the disclosure rules, and neither the taxpayers nor their S corporation had been required to disclose this transaction under the applicable regulations. The advice therefore concludes that the transaction was not a listed transaction for these taxpayers and the section 6404(g)(2)(E) exception did not apply.

Ruling snapshot

• Question: Did the taxpayers' loss importation transaction qualify as a listed transaction for the section 6404(g) exception?
• Outcome: Advice given, the exception did not apply
• Key authorities: IRC §§ 6011, 6404(g)(2)(E), and 6707A(c); Temp. Treas. Reg. § 301.6404-4T(b)(5)(i); Notice 2007-57

Full text (IRS public release)

ID: CCA-210230-09 Number: 200923032
Release Date: 6/5/2009
Office: ----------------------------
UILC: 9300.43-00, 6404.00-00

From: --------------------
Sent: Tuesday, February 10, 2009 2:30 PM
To: --------------------
Cc: -------------------------------------------------------------------------------------

Subject: RE: Protest Comments

First, pursuant to 301.6404-4T(b)(5)(i), whether a transaction is a listed transaction for purposes of section 6404(g) is determined on the date the Service provides the 6404 notice to the taxpayer. In this case, the transaction was listed after the 4/20/07 letter. So the only possible adjustments it could have applied to were the ones in the 30-day letter issued 5/2008. However, in this case the transaction was not a listed transaction for these taxpayers. For purposes of section 6404(g)(2)(E), listed transaction is defined in section 6707A(c). Section 6707A(c)(2) provides: The term "listed transaction" means a reportable transaction that is the same as, or substantially similar to, a transaction specifically identified by the Secretary as a tax avoidance transaction for purposes of section 6011. Under section 6707A(c)(1), a reportable transaction is "any transaction with respect to which information is required to be included with a return or statement because, as determined under regulations prescribed under section 6011, such transaction is of a type which the Secretary determines as having a potential for tax avoidance or evasion." The tax years involved are ------- and -------. The taxpayers entered into the transaction in -------. Although the transaction was listed in ------- pursuant to Notice 2007-57, neither the taxpayers nor the S Corp were required to disclose the transaction under the applicable disclosure regulations. Therefore, the transaction does not qualify as a listed transaction under section 6707A(c) and the exception under section 6404(g)(2)(E) does not apply.

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