Treasury Provides Guidance On Abusive 'SILO' Arrangements

The Treasury Department and the Internal Revenue Service on Monday issued guidance that designates "sale-in/lease-out" or "SILO" arrangements as abusive tax avoidance transactions.

SILO arrangements are designed to exploit the tax law by shifting tax benefits from a tax‑indifferent party that cannot use them to a taxpayer that can. Taxpayers entering into SILO arrangements cannot claim tax benefits as the purported owners of property subject to the lease because they do not acquire tax ownership of the property.

In the American Jobs Creation Act of 2004, Congress enacted limitations on the deductibility of losses from future SILO transactions.

The Notice informs taxpayers that the IRS will challenge the purported tax benefits claimed by taxpayers entering into earlier SILO transactions on a number of grounds. It further states that SILOs are considered "listed transactions." Taxpayers who enter into SILOs and who are required to file tax returns must disclose their participation to the IRS. In addition, promoters of listed transactions must keep lists of investors and, in certain cases, register those transactions with the IRS.


Already a member? log in here.

Editor's Choice

Upcoming CPE Webinars

Dec 3The materials discuss the concepts and principles in the AICPA’s new special purpose framework.
Dec 8Kristen Rampe will cover how to diffuse the tension in challenging situations in this one-hour webinar.
Dec 9A key component to improving your firm’s workflow efficiency while enhancing your profitability at the same time is how you leverage emerging technologies.
Dec 16Kristen Rampe will give tips on how to bring confidence into the room and build a valuable network.