What is a "transactions of interest" and which transactions currently meet that definition? What is a "potentially abusive transaction"? How will the Service's proposed changes to Regulation §1.6011-4 affect reporting requirements for patented transactions? E. Lynn Nichols, CPA, and William L. Raby, PhD, CPA, answer all these questions and more as they bring us up-to-date on recent court decisions, Treasury regulations, and IRS guidance.

Note: Reporting of CPE credit to a CPA's state board is the responsibility of the CPA. Subscribers to CPE Network Tax Report or the Bisk Audio Tax Report may not receive duplicate credit for this material, which previously aired in the January 2008 editions of those programs.

Chapter 1 includes an interview with Bill Raby and Lynn Nichols on Reportable "Transactions of Interest."

Information Release 2007-143 explained the issuance of two Notices that identify the first two "transactions of interest" published under the recently finalized regulations on reportable transactions. Notice 2007-72 identifies as potentially abusive, a transaction in which the taxpayer acquires a successor interest in an LLC. After holding it for one year, the taxpayer contributes the property to charity and claims a charitable contribution deduction substantially in excess of what was paid to acquire the interest. Notice 2007-73 adds a type of transaction that uses a grantor trust and the purported termination of its grantor status, followed by the re-qualification of that status, to claim an excessive tax loss or avoid recognition of gain. Proposed changes to Regulation §1.6011-4 add patented transactions to the list of transactions required to be reported by taxpayers and material advisers. Bill Raby and Lynn Nichols discuss the compliance requirements for transactions of interest. Bill expresses concern for the affect of these more stringent rules on practitioners, while Lynn embraces these new requirements.

Chapter 2 contains supplemental materials, including Information Release 2007-143, Treasury Decision 9350, and Notices 2007-72 and 2007-73.

Chapter 3 contains a case study.

E. Lynn Nichols, CPA (PA), a practicing CPA for more than 35 years, is the founder of Mares Nichols CPE, Inc., a developer of continuing education programs and practice aids for CPAs. He is a regular contributor to CPE Network, a member of the Board of Visitors of the School of Accounting in the College of Business of the University of Oklahoma and a former member of the Editorial Board of the Ohio CPA Journal. In 2005, Mr. Nichols was honored by the Ohio Society of CPAs with its Gold Medal for Meritorious Service to the Accounting Profession. Mr. Nichols serves as an advisor to CPA firms across the U.S. on matters of federal income taxation, litigation services, and IRS procedures. He has authored more than 20 highly-rated tax CPE programs and his Current Federal Tax Developments program is always among the highest rated in the nation.

William L. Raby, PhD, CPA, is a special consultant on tax matters with the law firm of Burgess Raby in Tempe, Arizona, and the former National Director of Tax Services for Touche Ross, as well as a past chairman of the AICPA's Federal Tax Division. Dr. Raby also served as the chair of the Arizona State Board of Tax Appeals. He is a Professor Emeritus at Arizona State University.