Basis-shifting transaction-of-interest regulations to be removed

Treasury and the IRS, in Notice 2025-23, announced the intent to remove basis-shifting transaction-of-interest (TOI) regulations. The notice, published Thursday, also provides immediate relief from penalties under Secs. 6707A(a), 6707(a), and 6708 for any failure by participants or material advisers to file disclosure statements or maintain lists required by the regulations.

The notice stated that it withdraws proposed regulations to address partnership related-party basis-shifting transactions that it had announced in Notice 2024-54.

The government plans to remove the Regs. Sec. 1.6011-18 basis-shifting TOI regulations issued in January that identified several types of partnership related-party basis-adjustment transactions as TOIs.

The notice said that taxpayers and their material advisers have criticized the basis-shifting TOI regulations “as imposing complex, burdensome, and retroactive disclosure obligations on many ordinary-course and tax-compliant business activities, creating costly compliance obligations and uncertainty for businesses.”

The notice cited a February executive order from President Donald Trump that directs agencies to initiate a review process for the identification and removal of certain regulations and other guidance that “undermine the national interest.”

— To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.