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August 2000

Editor: Scott Gottlieb, CPA
Assistant editor: Susan A. Maffetone, CPA

"Son of Boss" Abusive Tax Shelters shut down by Treasury

On August 11, 2000, the Treasury Department and the Internal Revenue Service issued a notice to shut down another abusive tax shelter that is being marketed and sold. This new scheme is similar in design to the so-called Bond and Option Sales Strategy, or BOSS tax shelter, which the Treasury and IRS shut down last December with Notice 99-59.

As in the BOSS shelter, this new scheme uses a series of contrived steps (in this case involving interests in a partnership) to generate artificial tax losses designed to offset income from other transactions.

In one scenerio a taxpayer purchases a call option and simultaneously writes a similar offsetting call option. The offsetting option positions are then transferred to a partnership. Under the position advanced by the promoters of this arrangement, the taxpayer purports to have a positive basis in the partnership interest equal to the cost of the purchased call options, even though the taxpayer's net economic outlay to acquire the partnership interest and the value of the partnership interest are nominal or zero.

To find out more visit the website of the U.S. Treasury.

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