NEWS
BYTES
August 2000
Editor:
Scott Gottlieb, CPA
Assistant editor: Susan A. Maffetone, CPA
"Son
of Boss" Abusive Tax Shelters shut down by Treasury
On
August 11, 2000, the Treasury Department and the Internal Revenue
Service issued a notice to shut down another abusive tax shelter
that is being marketed and sold. This new scheme is similar
in design to the so-called Bond and Option Sales Strategy, or
BOSS tax shelter, which the Treasury and IRS shut down last
December with Notice 99-59.
As
in the BOSS shelter, this new scheme uses a series of contrived
steps (in this case involving interests in a partnership) to
generate artificial tax losses designed to offset income from
other transactions.
In
one scenerio a taxpayer purchases a call option and simultaneously
writes a similar offsetting call option. The offsetting option
positions are then transferred to a partnership. Under the position
advanced by the promoters of this arrangement, the taxpayer
purports to have a positive basis in the partnership interest
equal to the cost of the purchased call options, even though
the taxpayer's net economic outlay to acquire the partnership
interest and the value of the partnership interest are nominal
or zero.
To
find out more visit the website of the U.S.
Treasury.
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