Ray, a high-net worth individual, is a new client of your CPA firm during tax season in the spring of 20X1. Ray tells you about an investment of his during 20X0. When you tell Ray that his investment is a listed transaction, he is not happy about disclosing it to the IRS. What are Ray’s consequences of failing to disclose the listed transaction to the IRS? Ray further tells you that he is considering entering a transaction with a group whose President guarantees a refund of any fees if Ray does not achieve the desired tax losses. What should you advise Ray regarding this potential transaction?
