Senate Committee on Finance: Use of Collars, Forwards, Swaps and Other Derivatives Decrease Taxpayer Equity
The Senate Committee on Finance came out with a report a few days ago titled “How Tax Pros Make the Code Less Fair and Efficient: Several New Strategies and Solutions.” In the report, the Committee outlines various uses of derivatives that according to the Committee make the Code unfair to the average Joe. The report takes the form of a comparison of the taxes that a middle class American family earning $100k would pay and the taxes a sophisticated party with a derivative market counterparty connection would pay. You would guess what the drift of the report is. Average Joe...
March 05, 2015 read more
The Tax Treatment of Credit Default Swaps is Finally Clarified
One of the major frustrations I’ve had with the taxation of derivative instruments, such as swaps, is the unsettled state of the pertinent law, including some basic issues like characterization for tax purposes and related definitions. Until now, the tax characterization of Credit Default Swaps (CDS) represented some of the more striking examples of this type of a problem. If I have to summarize the issue, the major problem with figuring out how to tax CDS was that they do not fit too well in any of the closely related categories of instruments for which there is already published...
September 26, 2011 read more