IRS Identifies Certain Tax Shelters Designed Solely For Tax Avoidance

1. Those 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;
   
   
2. Certain trust arrangements purported to qualify as multiple employer welfare benefit funds exempt from the rules for funded Welfare Benefit Plans;
   
   
3. Certain multiple party transactions that allow one party to realize rental or other income from property or service contracts while allowing another party to report deductions (often referred to as “lease strips”);
   
   
4. Transactions in which the reasonably expected economic return is insubstantial in comparison to the value of the expected foreign tax credits;
   
   
5. Transactions that involve contingent installment sales of securities by partnerships that accelerate and allocate income to a tax indifferent partner;
   
   
6. Transactions involving certain distributions from charitable remainder trusts;
   
   
7. Transactions in which a taxpayer leases property and then immediately subleases it back to the lessor, a practice known as lease-in / lease-out or Lilo;
   
   
8. Transactions involving the distribution of encumbered property in which the taxpayers claim tax losses for capital outlays that they have in fact recovered; and
   
   
9. Certain transactions involving acquisition of two debt instruments whose values are expected to change significantly, in opposite directions, at about the same time.