Part III. Administrative, Procedural, and Miscellaneous

Listing Notice–Basket Option Contracts

Notice 2015–73

The Treasury Department and the Internal Revenue Service (the “IRS”) are aware of a type of structured financial transaction, described below, in which a taxpayer attempts to defer income recognition and convert short-term capital gain and ordinary income to long-term capital gain using a contract denominated as an option contract. The Treasury Department and the IRS believe this transaction (the “basket option contract”) is a tax avoidance transaction. Notice 2015–47, 2015–30 I.R.B. 76, identified the basket option contract and substantially similar transactions as listed transactions for purposes of § 1.6011–4(b)(2) of the Income Tax Regulations and §§ 6111 and 6112 of the Internal Revenue Code (“the Code”). Notice 2015–47 also alerted persons involved in these transactions about certain responsibilities that may arise from their involvement with these transactions.

Commenters expressed concern that difficulty in identifying transactions that are the same as, or substantially similar to, the transaction described in Notice 2015–47 may cause taxpayers to file disclosures for transactions that are not intended to be treated as listed transactions at this time. This notice revokes Notice 2015–47. Section 2 of this notice provides additional details on the types of transactions that are the same as, or substantially similar to, the transaction described in this notice, and thus listed transactions for purposes of § 1.6011– 4(b)(2) and §§ 6111 and 6112 of the Code. Section 3.06 of this notice provides procedures for taxpayers to change their method of accounting for transactions within the scope of this notice.

Section 2.04 of this notice more specifically describes the tax benefits that identify the transaction described in this notice as a listed transaction. No inference is intended regarding the appropriate treatment of transactions not described in

this notice. The IRS may challenge, including by asserting judicial doctrines, claimed tax benefits under §§ 871, 881 and 882 or other provisions of the Code, and assert failures to comply with reporting obligations associated with investments in passive foreign investment companies and withholding and reporting obligations under Chapters 3 and 4 of the Code.