Washington (Dec. 5, 2003) -- The Treasury Department and the Internal Revenue Service have issued guidance to bar transactions in which taxpayers dispose of a pair of offsetting options, claiming a loss on one of the options but contending that they never have to recognize the corresponding gain on the other. These transactions are now "listed transactions." Taxpayers who have entered into these transactions must disclose them to the IRS, and advisors promoting their use will be required to maintain lists of participating taxpayers.
"This is another step in our ongoing efforts to stop abusive tax avoidance transactions," stated the Treasury assistant secretary for tax policy Pam Olson. "We have given taxpayers notice that if they assign an option in one of these transactions they must recognize the gain. If they fail to do so, they will have to disclose their transaction to the IRS."
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