IRS Issues Notice Re Intermediary Transaction Tax Shelters

The IRS issued Notice 2008-111, which clarifies Notice 2001-16, 2001-1 C.B. 730, and supersedes Notice 2008-20, 2008-6 I.R.B. 406, regarding Intermediary Transaction Tax Shelters ("Intermediary Transaction").  Notice 2001-16 identified the Intermediary Transaction as a listed transaction under § 1.6011-4(b)(2) of the Income Tax Regulations.   Notice 2008-111 defines an Intermediary Transaction in terms of its plan and in terms of more objective components.  A transaction is treated as an Intermediary Transaction with respect to a particular person only if that person engages in the transaction pursuant to a plan, the transaction contains the four objective components indicative of an Intermediary Transaction, and no safe harbor exception applies to that person.  Notice 2008-111 will appear in Internal Revenue Bulletin 2008-51, dated December 22, 2008.