Download Free Tax Exempt Derivatives Book in PDF and EPUB Free Download. You can read online Tax Exempt Derivatives and write the review.

The Use of Derivatives in Tax Planning provides insightful and in-depth coverage of timely issues including: tax treatments of notional principal contracts, taxation of credit derivatives, derivative tax planning applications for fixed-income instruments, using derivatives to shift income, enhancing after-tax returns, working with the straddle rules of tax code sections 1092 and 263(g), derivatives in the charitable world, using OTC equity derivatives for high-net-worth individuals, corporate applications of derivatives, synthetic exchangeables and convertibles, and structures and selected tax issues.

Derivatives

United States. Congress. House. Committee on Ways and Means. Subcommittee on Select Revenue Measures

Published: 2011

Total Pages: 96


Get eBook

... reviews the U.S. federal income taxation of derivative transactions other than equity derivatives. The taxation of equity derivatives is reviewed in a separate portfolio. See 188 T.M., Taxation of Equity Derivatives. This Portfolio is divided into eight main parts.
Derivatives and credit derivatives have emerged as significant areas of interest in portfolio planning and risk management.In this book, Mark Anson examines the accounting and taxation implications of these instruments, including the new accounting rules for derivative instruments promulgated by the financial Accounting Standards in the United States, the Accounting Standards Board in Great Britain, and the International Accounting Standards Committee. Regulatory requirements for disclosing derivatives and tax considerations for derivative instruments are discussed (including TRA-97.) Additionally, the book reviews the regulatory accounting deadlines introduced by the Securities and Exchange Commission and the Commodity Futures Trading Commission.
Complex quot;derivativequot; financial instruments are often used in aggressive tax planning. In response, the government has implemented mark-to-market type reforms, but only partially. Considered in isolation, these incremental reforms are likely to seem well advised in measuring income more accurately. However, there is an important quot;second bestquot; cost, emphasized in this Article: the ability of well-advised taxpayers either to avoid the new rule or to turn it to their advantage (here called quot;defensivequot; and quot;offensivequot; planning options, respectively). This Article uses two case studies to identify how these effects arise and to suggest ways of combating them. The first case study, Section 475, requires securities dealers to use mark-to-market accounting. Although this rule curtails tax planning by securities dealers themselves, it enables dealers to serve as accommodation parties for their clients' tax planning: Once exempted from generally applicable rules, dealers can offer clients a tax benefit (e.g., accelerated losses) without experiencing a corresponding tax cost (e.g., accelerated income). The second case study, the contingent debt regulations, requires lenders and borrowers to report pre-realization gains and losses based on assumed annual returns. Although this reform seems to accelerate the lender's interest income, the rule's narrow scope allows tax-sensitive lenders to avoid this result. Accordingly, the new rule is likely to apply only when tax-exempt entities lend to tax-sensitive borrowers, who enjoy the regulations' accelerated interest deductions. This Article offers ways to remedy these reforms, as well as general guidance about how to implement incremental mark-to-market reforms without exacerbating the planning option.
"Recently, concerns have arisen about the use of certain financial derivatives to avoid or evade tax obligations. As requested, this report (1) identifies and evaluates how financial derivatives can be used to avoid or evade tax liability or achieve differing tax results in economically similar situations, (2) evaluates Internal Revenue Service (IRS) actions to address the tax effects of investments in financial derivatives through guidance, and (3) evaluates IRS actions to identify financial derivative products and trends through information from other agencies. GAO reviewed research and IRS documents and interviewed IRS and, Department of the Treasury (Treasury) officials and other experts. GAO analyzed the completion of financial derivative projects on the agencies' Priority Guidance Plans (PGP) from 1996 to 2010."