We’re going to be entirely honest here, the strategies described in the Bloomberg article excerpted below are far beyond the pay grade of anyone around here but since some of you are tax professionals or genius financial wizards, we figured it would be good to pass it along.
At a little informative gathering held at KPMG’s NYC office today, Treasury officials wagged their large, disappointed fingers at certain aggressive planning strategies that are getting popular:
The strategies under scrutiny include so-called 351 conversions, box-spread exchange-traded funds, products that offset ordinary income, and funds that avoid dividend income by flipping between other ETFs. Speaking at a Wall Street Tax Association seminar, Kevin Salinger, deputy assistant secretary for tax policy at the Treasury, and Erika Nijenhuis, senior counsel, said the department has no wish to over-engineer rules, but it cannot ignore a market developing around transactions with results Congress did not appear to intend.
“We’re not here to be over-broad or disruptive, but we are also not prepared to turn the blind eye to aggressive planning,” Salinger said. “We do not want to act in a way that rewards taxpayers or promoters who have crossed lines that should not be crossed and disadvantages taxpayers who have stayed within the lines.”
It’s not the first time Treasury has expressed concern about these kinds of transactions.
Funny enough, Wall Street Journal just wrote about the strategy the other day: The Tax Strategy for People Suffering From Stock-Market Success.
A little piece of advice based on the ERC debacle: if aggressive salesmen pitching this start blowing up your phone like they’re trying to reach you about your car’s extended warranty, beware.
