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Circuit Court Rules IRS Needed to Comply With APA for Listed Transaction Guidance

March 16, 2022
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Circuit Court Rules IRS Needed to Comply With APA in Issuing Listed-Transaction Notice
The Sixth Circuit Court of Appeals, in Mann Construction Inc., overturned a district court decision and held that the IRS violated the Administrative Procedure Act’s notice-and-comment provisions when it promulgated Notice 2007-83, which identified various “listed” and “reportable” transactions and triggered reporting requirements tied to them. Therefore, the appeals court refused to enforce the reportable transaction penalties the IRS assessed against the taxpayer.

DOL Releases Compliance Assistance on 401(k) Plan Investments in Cryptocurrencies
The DOL has issued guidance, Compliance Assistance Release No. 2022-01, on adding investments in cryptocurrencies to 401(k) plans as potential investment options for plan participants. Stating that direct investments in cryptocurrencies, or other products whose value is tied to cryptocurrencies, present significant risks and challenges to participants’ retirement accounts, including significant risks of fraud, theft and loss, the DOL cautioned plan fiduciaries to exercise extreme care when considering adding such an option.

IRS Rules on Partnership Interests; Registered Form
The IRS issued Private Letter Ruling 202210018 regarding a taxpayer that is a limited liability company under state law and classified as a partnership for federal income tax purposes. Taxpayer’s principal assets are pass-through certificates. Interests in the taxpayer are transferable only pursuant to procedures described in Treasury Regulation Section 5f.103-1(c)(1) and, therefore, are in registered form within the meaning of that regulation. The IRS ruled that under such facts, interests in the taxpayer are “similar evidence of interest in a similar pooled fund” within the meaning of Treasury Regulation Section 1.163-5T(d)(1) and that, if the requirements of Treasury Regulation Section 5f.103-1(c)(1) are satisfied, the interests in the taxpayer are considered obligations in registered form.

Information contained in this publication should not be construed as legal advice or opinion or as a substitute for the advice of counsel. The articles by these authors may have first appeared in other publications. The content provided is for educational and informational purposes for the use of clients and others who may be interested in the subject matter. We recommend that readers seek specific advice from counsel about particular matters of interest.

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