Out-of-the-Money: The IRS Designates Basket Options as Listed Transactions and Transactions of Interest
24 July 2015
Mayer Brown Legal Update
The Internal Revenue Service has upped the ante for taxpayers that have written and entered into basket options and basket transactions. Specifically, it has just issued Notice 2015-47 and Notice 2015-48, which make basket options “listed transactions” and other basket transactions “transactions of interest.” The IRS has taken the extraordinary step of imposing reporting and disclosure requirements on the financial institutions that wrote these contracts as well on the taxpayers that purchased them. The attached Mayer Brown Legal Update, prepared jointly by the Tax Controversy and Tax Transaction teams, provides more details on the operation of these Notices.