Proposed regulations under section 6011 concerning disclosure of
reportable transactions, which include the new category of “transactions
of interest,” have been finalized. In general, the final regulations
apply to transactions entered into on or after Aug. 3. However, the
provision regarding transactions of interest applies to transactions
entered into on or after Nov. 2, 2006. The IRS defines a transaction of
interest as one it believes has a potential for abuse, but about which
it lacks sufficient information to designate it a tax-avoidance tactic.
On Aug. 14, in notices 2007-72 and 2007-73, the IRS identified its first
two transactions of interest. In one, charitable contributions of
real-estate interests are valued significantly beyond the interests’
purchase price and normal appreciation. In the other, grantor trusts
cancel out gains and recognize losses as they “toggle” grantor status
off and on.