Abusive Tax Shelters
Listed Transactions

Listed Transaction #11  (MIDCO Deals)

MIDCO Deals (Agency & Intermediary Corp. Abuses)
IRS Notice 2001-16
(as modified by IRS Notice

Here, the IRS is concerned about principles of agency (i.e., whether Midco (M) is really acting as agent for either X or Y, nothing more than an intermediary). 


On December 1, 2008, the Internal Revenue Service released Notice 2008-111 which clarifies Notice 2001-16 that identified and described the intermediary transaction tax shelter as a listed transaction and supersedes Notice 2008-20 (2008-6 I.R.B. 406).

The revised guidance defines an intermediary transaction in terms of its plan and of more objective components. Under the guidance, a transaction is treated as an intermediary transaction for a particular person only if that person engages in the transaction as pursuant to a plan (as defined in sections 2 and 4), the transaction contains the four objective components indicative of an intermediary transaction set forth in section 3; and no safe harbor exception in section 5 applies to that person. A transaction must have all four components to be the same or substantially similar to the listed transaction described in Notice 2001-16, even if the transaction is engaged in as part of a plan. The guidance specifies when a person is engaged in a transaction as part of a plan and clarifies that a transaction may be an intermediary transaction for one person and not another.

If you believe that you may have engaged in a transaction that is the same or substantially similar to the transaction described above, Federal law may require you to disclose your and other parties’ participation in any such “listed transaction” on IRS Form 8886. For more information about Federal law requirements, please contact us.