IRS Issues CIP Regarding Certain Straddle Transactions Involving S Corporations

The CIP describes a typical ‘ Notice 2002-65 transaction‘ and sets forth a number of legal theories and conclusions. Among other things, the CIP concludes that the corporation used in the transaction should not be treated as an S corporation because the ‘promoter‘ of the transaction should be treated as a shareholder and the promoter was not an eligible shareholder.