Latest episode of The Albatross...
IRS on "solid ground" going after suspicious §351 transactions
I speak with Bob Elwood and Ray Holst, Partners at Practus, a law firm that has structured more than 100 ETF seedings using IRC Section 351 about Treasury's new Notice and Revenue Ruling.
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Last week, Treasury released Notice 2026-62 and Rev. Rul. 2026-20. The Ruling says that one kind of §351 ETF conversion is taxable as a direct exchange between an investor and the ETF's trading party, called an authorized participant.
If you're getting up to speed, start with the TL;DR covering the Notice and Ruling... and then go a bit deeper with Abusive §351 is dead, long live routine §351.
The Ruling mentioned a 1940 case called Portland Oil Co. v. Commissioner, 109 F.2d 479 (1st Cir. 1940), The case is full of tax shenanigans, and it may explain the reasoning behind today's §351 guidance.