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Tax News
Should the Reduction in a Listed Option Premium for an Estimated Dividend be Treated as a Dividend Equivalent Payment under 871(m)?
Should the Reduction in a Listed Option Premium for an Estimated Dividend be Treated as a Dividend Equivalent Payment under 871(m)?
The 2013 871(m) proposed regulations have left many in the hedge fund, trading and securities industries up in arms. I recently pointed out here that the regulations as drafted would subject some single stock futures to withholding.  I did not focus on listed options, but I recently read a great comment by the U.S. Securities Markets Coalition which basically highlights the same problem for options.  In this blog entry, I’d like to lay out my 2c on this issue. What is the problem? The problem is that the formula for calculating the premium on listed options includes an estimate for...
March 10, 2014 read more