C-Corp stock sale by "middleman" is illegal.

 
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The May/June 2006 issue of this publication, The Business Owner Journal, page 9, contained an article titled "Selling a C-Corp? Try These Tax Strategies." Item 4 of the article described a tax reduction technique called "Stock-buying Middleman." We cautioned against the transaction but have since learned that this type of transaction is "listed" by the IRS. To quote from IRS Notice 2001-16:

"The Service may challenge certain transactions in which the assets of a corporation are sold following the purported sale of the corporation's stock to an intermediary. Such transactions are designated as 'listed transactions' for purposes of sections 1.6011-4T(b)(2) and...

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