There exists a tax reduction technique called “Stock-buying Middleman.” We have previously cautioned against the transaction but have since learned that this type of transaction is “listed” by the IRS. To quote from IRS Notice 2001-16:
“The Service may challenge certain transactions in which the assets of a corporation are sold following the purported sale of the corporation’s stock to an intermediary. Such transactions are designated as ‘listed transactions’ for purposes of sections 1.6011-4T(b)(2) and 301.6111-2T of the regulations.”
In short, the IRS warns taxpayers that this type of transaction does not conform to tax law, and parties involved in it may be subject to penalties or other disciplinary action.
For more information, see IRS Notice 2001-16 or call us to supply you with a copy.
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Acquisition Advisors is a business unit of DL Perkins, LLC. To learn more about Acquisition Advisors, go to www.AcquisitionAdvisors.com.
This content is intended to provide general information on the subject matters covered. It is distributed with the understanding that neither the publisher nor any distributor or advertiser is engaged in providing legal, tax, insurance, investment or other professional advice. The advice of a qualified professional should be sought before any reader applies a concept presented herein to his or her particular situation or business.
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