The IRS has recently been taking a much more aggressive stand with respect to certain "tax shelters" and other tax motivated transactions which the IRS has viewed as abusive or excessive. As part of this overall program, the IRS recently issued temporary and proposed Regulations under Section 83 of the Code, as well as Notice 2003-47. The effect of these pronouncements is to shut down a type of transaction being promoted to and used by taxpayers to avoid or evade federal income and employment taxes related to compensatory stock options. The guidance alerts taxpayers and their representatives that the tax benefits purportedly generated by these transactions are not considered by the IRS to be allowable for federal income tax purposes and will be challenged. The notice also identifies some of these transactions as listed transactions and alerts taxpayers and their representatives to certain responsibilities that may arise from participating in these transactions.
THE ABOVE ADVICE WAS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED, BY YOU FOR THE PURPOSE OF (1) AVOIDING ANY PENALTY THAT MAY BE IMPOSED BY THE INTERNAL REVENUE SERVICE OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TRANSACTION OR MATTER ADDRESSED HEREIN. IF YOU DESIRE SUCH AN OPINION, PLEASE SO ADVISE.