This expanded scrutiny follows a recent Revenue Ruling that banned prearranged Section 351 ETF conversions, a practice Treasury Secretary Scott Bessent called abusive financial engineering. While the agencies are pursuing strategies designed to dodge taxes, they are not challenging ordinary ETF in-kind creation and redemption mechanics.
Tuesday, October 20, 2026
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IRS Targets Box Spreads and Straddles in Expanded Tax Notice
US Markets22 days ago
The US Treasury is broadening its campaign against Wall Street tax avoidance by targeting a new range of trades that use in-kind redemptions to manipulate federal tax liabilities. A new notice from the IRS specifically targets "novel" methods of handling assets to defer payments, including straddles and box spread strategies, which the government says may exploit the federal tax code.
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