Reference library
What They're Selling You
Twenty structures that get marketed to business owners, with what the pitch claims, where it breaks down, the controlling authority, and what the legitimate version actually looks like.
Some of what gets pitched is real. Cost segregation is real. Qualified small business stock is real. Captive insurance has been a legitimate risk-management tool for decades. And some of it is a product built to be sold, wearing the clothes of a strategy. This library exists to help you tell them apart.
Score a structure
Run the Seven Markers against whatever is in front of you. Three or more is a stop.
Reportability status board
Which designations actually bind right now, and which published lists are out of date.
Read this before using any published list
In December 2024 the IRS conceded that every listed-transaction notice issued after October 2004 is unenforceable for disclosure and penalty purposes. Its own published pages are now wrong in both directions: they over-include conceded notices and omit the regulations that actually control.
- B
Micro-Captive Insurance
A captive is an insurance company. If it never pays a claim, never underwrites a risk, and its premiums were set by asking you how much you wanted to deduct, it is not an insurance company, and two courts of appeals have now said so.
- A
Syndicated Conservation Easement
Two promoters got 25 and 23 years. Five CPAs who referred clients into these deals for commissions went to federal prison. The referral fee is what made them culpable.
- A
Charitable LLC
If you still control it, manage it, and can buy it back cheap, you did not give it away, and the IRS has now said so using three separate doctrines at once.
- A
Section 643(b) Spendthrift Trust
Any structure whose selling point is that income is never taxed by anyone is a fraud, not a trust. Four promoters were convicted in June 2026 and one is already serving 151 months.
- B
Employee Retention Credit Mills
If a firm told you everyone qualifies, took 20 percent of the refund, and would not sign the 941-X, you have a six-year statute and a two-year clock on any disallowance notice sitting in your file.
- B
R&D Credit Mills
Form 6765 Section G becomes mandatory for tax year 2026. Every weak study is about to have to name its business components in writing.
- A
Software / IP Right-to-Use Deals
If 62 percent of your money goes to fees and 25 percent buys the asset, the deduction was never the product. The fee was.
- B/C
Equipment Leasing for Bonus Depreciation
Four independent walls stand between this deduction and your S corp income, and the promoter's opinion letter usually addresses one of them.
- B
Oil & Gas Intangible Drilling Cost Programs
The nonpassive treatment is real, but it costs you unlimited liability. If the promoter is selling you LLC units, you cannot have both, and they know it.
- A/B/C
Solar and Energy Credit Promotions
The energy credit is a passive credit. If you are a W-2 earner or an active S corp owner without material participation, you cannot use it, and the pitch usually does not mention that.
- B
Cost Segregation Plus the STR Loophole
The seven-day rule gets you out of the automatic passive box. It does not get you into the nonpassive box. Two tax attorneys with an LL.M. between them lost this case in December 2025 on the time log alone.
- A
419 Welfare Benefit Plans
Notice 95-34 predates the 2004 statute, so unlike most listed-transaction notices it survived the IRS's 2024 concession. This one is still fully enforceable.
- B
412(e)(3) Fully Insured Plans
The plan type is real. Overfunding it and using springing-value policies is what got listed.
- C
IUL Infinite Banking and Premium Finance
The tax treatment is real. The illustration is the problem, and a lapse with a loan outstanding creates ordinary income in a year you have no cash.
- A
Monetized Installment Sale
If you walked away from closing with 93.5 percent of the money, you were paid. Calling the payment a loan does not change that, and the loan terminates on the same day the note does.
- B/C
Deferred Sales Trust
The design determines the answer. If you can direct how the trust invests your money, you constructively received it.
- B
Puerto Rico Act 60
Moving to Puerto Rico does not retroactively make your pre-move gain Puerto Rico source income. That single misunderstanding is the number one failure the IRS is auditing.
- A
Malta Pension Plans
The treaty protects a pension funded with cash out of a salary. It does not protect a container you dropped appreciated stock into.
- C
ROBS (Rollover for Business Startups)
The IRS does not call this abusive. It calls it questionable, and its own study found most of these businesses failed and took the retirement account with them.
- C
Family Management Company Fee Stripping
A management company that manages only your own money, for a fee you chose, is not a business. A CPA was permanently barred from federal practice for selling that structure.
Also worth knowing
Structures that come up often enough to recognize, without a full entry of their own.
CRAT basis-inflation scheme(A)
Enjoined and now a LISTED TRANSACTION under Reg. 1.6011-15 (T.D. 10051, July 9, 2026)
Promoters told clients they could avoid tax entirely on a property sale by transferring to a CRAT, falsely inflating cost basis, selling to fund a single premium immediate annuity, and not reporting the annuity payments as income. United States v. Schreiner and Columbia CPA Group LLC, W.D. Mo., May 3, 2024: permanent injunction, 400,000 dollar disgorgement, and the CPA was ALSO barred from promoting conservation easements and monetized installment sales. Earlier: Eickhoff et al., W.D. Mo. 2023, at least 70 CRATs, roughly 40,000,000 dollars unreported income, 1,500,000 dollar disgorgement. The legitimate CRAT/CRUT under Sec. 664 is a mainstream planning tool.
Roth IRA value shifting(A)
LISTED under Notice 2004-8 (pre-AJCA, survives AOD 2024-01)
Value shifted into a Roth through transactions involving businesses owned by the individual, including below-market sales of assets to a Roth-owned entity. The classic pitch: buy your founder shares inside a Roth at a nominal valuation before the raise. Consequences: Sec. 4973 excess contribution at 6 percent per year cumulative; Sec. 4975 prohibited transaction DISQUALIFYING THE ENTIRE IRA as of the first day of the year, making the whole account a taxable distribution; plus Sec. 6707A. Peek v. Commissioner, 140 T.C. 216 (2013): a personal guarantee of a loan to an IRA-owned entity is a prohibited transaction. NOTE the contrast: DISC and FSC Roth structures have LARGELY SURVIVED on appeal (Summa Holdings 6th Cir. 2017, Benenson 1st and 2d Cir., Mazzei 9th Cir. 2021 reversing the Tax Court), because those involved arm's-length commission pricing under actual statutory rules. That does not license stuffing undervalued shares into a Roth.
Abusive art donation(A)
Not designated. Dirty Dozen 2026 item 9.
Promoters get high-income taxpayers to purchase art at a discount, hold more than a year, then donate at a greatly inflated appraised value. Per IR-2023-185, promoters may suggest donating art annually and allow purchase of a quantity that GUARANTEES A SPECIFIC DEDUCTIBLE AMOUNT. IRS red flags: multiple works by the same artist with little market value outside promoter claims; the PROMOTER ARRANGES THE APPRAISER; appraisals that fail to address rarity, age, quality, condition, stature of the artist, price paid, and quantity. Substantiation ladder: 250 dollars requires a CWA; 500 to 5,000 requires Form 8283 Section A; over 5,000 requires Section B signed by appraiser and donee; 20,000 or more requires a COMPLETE COPY OF THE APPRAISAL ATTACHED TO THE RETURN. Buried technical point: Sec. 170(e)(1)(B)(i) RELATED USE. If the donee's use is unrelated to its exempt purpose, the deduction is LIMITED TO BASIS. A museum displaying it is related use; a hospital auctioning it is not. Enforcement: over 60 audits generating more than 5,000,000 dollars in additional tax, multiple promoter investigations active, and an IRS Art Advisory Panel of up to 25 experts that independently reviews claimed values.
Bogus Self-Employment Tax Credit(A)
Dirty Dozen 2025 and 2026
Social media promotion of a non-existent credit promising up to 32,000 dollars, a distortion of the expired 2020-2021 ARPA Form 7202 credits for sick and family leave for certain self-employed individuals.
Bogus limited partner SECA exclusion(B/C)
ACTIVE LB&I CAMPAIGN
Partners in service partnerships inappropriately claiming to qualify as limited partners to avoid self-employment tax under Sec. 1402(a)(13). The Tax Court has ruled for the IRS in the Soroban line of cases. Directly relevant to any client operating through an LP or LLC taxed as a partnership.
Abusive undistributed long-term capital gains claims(A)
NEW for 2026 Dirty Dozen
Fabricated or inflated Forms 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, claiming a refundable credit for tax paid at the RIC or REIT level, tied to organizations that are not legitimate investment funds or real estate trusts. This replaced the fuel tax credit item. The legitimate version is a genuine Form 2439 from an actual RIC or REIT, reported on Schedule 3 with basis increased by the undistributed gain net of the credit.
Aggressive Offer in Compromise marketing(A)
Dirty Dozen 2025 and 2026
OIC mills charging high fees to taxpayers who plainly do not qualify.
Basket contracts(A)
NOT currently enforceable
Notice 2015-73 was obsoleted by Notice 2025-22 in April 2025. Notice 2015-74 is post-AJCA and unenforceable under AOD 2024-01. Proposed Reg. 1.6011-16 (July 12, 2024) was never finalized but remains on the 2025-2026 Priority Guidance Plan. Relevant only to clients with hedge-fund-adjacent exposure. Note the merits are separate: the Tax Court sustained the IRS position in GWA, LLC.
Compiled 2026-08-26. Reportability verified as of the date shown on the status board.