An unwind of a transaction was respected by the IRS.
A US corporation sold part of its ownership stake in a foreign limited liability company to a foreign corporation, thereby turning the LLC into a partnership for US tax purposes.
The transaction was rescinded by the parties in the same year. The IRS said in a private ruling made public in late October that the rescission was valid. The key was that the parties put themselves back in the same position economically as if the transaction had never occurred and the transaction was unwound in the same tax year. The ruling is Private Letter Ruling 200843001.