SILOs and Other Sale-Leasebacks (with Economic Defeasance)
IRS Notice 2005-13

Listed Transaction (LT #32)

SILOs

Other Sale-Leasebacks (with Economic Defeasance)

IRS Notice 2005-13

The IRS has learned of transactions in which a taxpayer enters into a purported sale-leaseback with a tax-indifferent person, in which substantially all of the tax-indifferent person’s payment obligations are economically defeased and the taxpayer’s risk of loss from a decline, and opportunity for profit from an increase, in the value of the leased property are limited. In IRS Notice 2005-13, the IRS has identified these type of transactions (sometimes referred to as SILOs) as “tax avoidance transactions” and therefore such transactions and those substantially similar thereto are “listed transactions” for purposes of Sections 6111 (tax return reporting for “material advisors”) and 6112 (list maintenance rules).