IRC Section 267 is one of the quietest ways the tax code can undo an otherwise well-planned transaction.

There are no flashy penalties and no obvious red flags at first glance—just

deductions that vanish,

losses that don’t count, and

timing mismatches that surface long after the deal is done.

For taxpayers and advisors who underestimate its reach, the consequences can be costly.

At the center of these pitfalls are Section 267’s attribution rules.

These rules can turn indirect ownership, family relationships, and entity structures into deemed ownership that triggers disadvantaged related-party treatment—often when no one expects it.

Transactions that look arm’s length on paper may still be caught, disallowing losses or deferring deductions solely because of who the parties are deemed to be.

This guide breaks down how IRC Section 267’s attribution rules work, why they are so easy to trip over, and what planners and taxpayers can do to avoid unpleasant surprises. Understanding these rules before a transaction—not after—is the difference between a clean tax result and a deduction that never materializes. ... Log in to view full article.