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Pension and Employee Benefits: Code, ERISA, & Regulations
This series provides an authoritative and comprehensive reference to the full text of benefits-related provisions of the Internal Revenue Code, the full text of ERISA, and related proposed and final regulations, as well as the official IRS and DOL preambles, and Committee Reports.
A transaction under which a couple set up a corporation, opened Roth IRA accounts, and then each directed their Roth IRA accounts to purchase 50% of the stock of the corporation constituted a reportable transaction, the IRS Chief Counsel has ruled in IRS Letter Ruling 200917030.
The transaction was ruled to be “the same as, or substantially similar to” the listed transactions described in IRS Notice 2004-8. In Notice 2004-8, the IRS identified as “listed transactions” transactions that seek to avoid the limitations on contributions to Roth IRAs by impermissibly shifting taxable income from an individual’s business into the Roth IRA, or otherwise disguising a contribution by shifting value into the Roth IRA.
Participation in a listed transaction creates a duty for the taxpayer to disclose the transaction. For the year in question, the regulations (IRS Reg. §1.6011-4-(d) ) provided that the disclosure must be made by the taxpayers on Form 8886 and include all the information required by the form.
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