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Author: Frank J. Fabozzi, CFA
Publisher: John Wiley & Sons
ISBN: 9781883249557
Category : Business & Economics
Languages : en
Pages : 320
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Book Description
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.
Author: Frank J. Fabozzi, CFA
Publisher: John Wiley & Sons
ISBN: 9781883249557
Category : Business & Economics
Languages : en
Pages : 320
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Book Description
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.
Author: David M. Schizer
Publisher:
ISBN:
Category :
Languages : en
Pages : 84
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Book Description
By now, it is well understood that aggressive tax planning among high-income individuals and corporations represents a grave threat to the U.S. tax system, and that derivatives are staples of this planning. In response, the usual recommendation is consistency, which means that the same tax treatment should apply to economically comparable bets, regardless of what form is used. Yet because consistency is unattainable, this Article develops an alternative theory: Policymakers should strive instead for balance. This means that for each risky position, the treatment of gains should match the treatment of losses. For example, if the government bears 15% of losses, it has to share in 15% of gains. On a different derivative, if the government bears 35% of losses, it should share in 35% of gains. As long as this matching is achieved across the board for all risky bets, the admittedly counterintuitive reality is that taxpayers need not prefer, or engage in planning to attain, a low effective rate. A low rate obviously is appealing for gains, but it is correspondingly unappealing for losses (i.e., since deducting the loss is less valuable). Moreover, even if a low rate is desired, taxpayers can get the same aftertax return by increasing the size of their bet. The main advantage of this reform agenda is flexibility. To prove this point, this Article outlines three ways to match gains and losses on derivatives: mark-to-market accounting; a novel reform called the stated-term approach, in which gains and losses are deferred until the scheduled maturity date of the derivative, even if the contract is terminated earlier; and a zero tax rate. The provocative conclusion is that these thoroughly inconsistent approaches can coexist for economically comparable derivatives, without prompting planning. Yet this flexibility is not free, so the limitations of this reform agenda are considered as well, along with implications for cutting edge problems in the taxation of derivatives, including the timing and character rules for swaps, Section 1032, and the wash sale rules.
Author: Julian Ghosh
Publisher:
ISBN: 9781405747165
Category :
Languages : en
Pages : 800
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Book Description
Offering invaluable tax planning help for the tax specialist, Taxation of Corporate Debt and Derivatives is a highly practical publication, ideal for the busy tax practitioner and lawyer. Debt and Treasury management occupies an increasing proportion of the work of tax practitioners. With considerable legislation to get to grips with, this publication, updated twice per annum, offers a concise and comprehensive version of the law in this area. This publication examines, in detail, each of the regimes involving: * Foreign exchange transactions * Financial instruments (such as options, debt contracts, currency swaps) * Corporate debt, i.e. the loan relationship provisions * Anti-avoidance provisions including thin capitalisation, funding bonds etc
Author: Risk Conferences
Publisher:
ISBN:
Category : Derivative securities
Languages : en
Pages :
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Book Description
Author: Antti Laukkanen
Publisher: IBFD
ISBN: 9087220227
Category : Bonds
Languages : en
Pages : 487
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Book Description
This dissertation aims to provide a comprehensive overview of the taxation of investment derivatives and the relationship between the derivatives and the accrual and realization methods. Investment derivatives, such as convertible bonds, include an initial investment and a derivative (an option) to buy or sell or to participate in the value movements of some underlying property. The principal focus of this study is on three universal tax issues, namely valuation, timing and the taxation of unrealized gains. As a common principle, interest income and capital gains are treated more similarly in corporate taxation than in individual taxation. Moreover, the taxation of financial instruments is currently in a turn-around phase in several countries, not least because of the implementation of the IFRS rules in accounting and the related fair value principle. The obligation to use fair values in accounting apparently motivates tax legislators to strive to use the same principles in taxation as well. The comparative method plays a major role in this study by examining the tax legislations and the tax practices of different countries. An in-depth analysis of the similarities and differences of tax laws and practices in the United States, the United Kingdom, Germany, Finland and Sweden is provided. This is of particular interest as the underlying components, single and often specified financial derivatives, are basically identical. While this study does not deal with individual tax treaties or bilateral transactions, the OECD Model is scrutinized in order to highlight the underlying principles of the given recommendations, especially with respect to interest income and capital gains. Due to the increasing importance of IFRS rules in accounting, the study is not limited to tax law, but also looks at issues from the perspective of finance, accounting and economics.
Author: United States. Congressional Budget Office
Publisher:
ISBN:
Category : Budget
Languages : en
Pages : 240
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Book Description
Author: Mark J. P. Anson
Publisher: John Wiley & Sons
ISBN: 9781883249694
Category : Business & Economics
Languages : en
Pages : 202
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Book Description
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.
Author: David M. Schizer
Publisher:
ISBN:
Category :
Languages : en
Pages : 88
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Book Description
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.
Author: U.s. Government Accountability Office
Publisher:
ISBN: 9781974644797
Category :
Languages : en
Pages : 64
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Book Description
"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."
Author: Oktavia Weidmann
Publisher: Kluwer Law International B.V.
ISBN: 9041159835
Category : Law
Languages : en
Pages : 439
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Book Description
The exploding use of derivatives in the last two decades has created a major challenge for tax authorities, who had to develop appropriate derivatives taxation rules that strike a balance between allowing capital markets to function effectively by removing artificial tax barriers and at the same time protecting their countries' tax base from tax avoidance schemes that utilise these instruments. Derivatives exist in a vast variety and complexity and new forms or combinations of existing forms appear ad hoc as new risk categories emerge and companies seek to invest in or hedge these risks. This very thorough book discusses and analyses taxation issues posed by derivatives used in domestic as well as in cross-border transactions. In great detail the author presents approaches that can be adopted by tax legislators to solve these problems, clarifying her solutions with specific reference to components of the two most important domestic tax systems in relation to derivatives in Europe, those of the United Kingdom and Germany. Examples of derivatives transactions and arbitrage schemes greatly elucidate the nature of derivatives and how they can be effectively taxed. The following aspects of the subject and more are covered: – basic economic concepts in the context of derivatives such as replication, put-call-parity, hedging and leverage; - designing a suitable definition of derivatives in domestic tax law; - achieving coherence in domestic tax rules by applying a 'special regime approach' versus an 'integrative approach' and the distinction of income and capital, equity and debt; - alignment of accounting standards and taxation rules and the application of fair value accounting for tax purposes; - how to tax hedged positions and post-tax hedging schemes; - taxation of structured financial products and hybrid instruments with focus on bifurcation and integration approaches and the recent BEPS discussion drafts on hybrid mismatch arrangements; - refining the 'beneficial ownership' – concept in domestic law and in tax treaties and an analysis of recent case law; - withholding taxes in the context of domestic and cross-border dividend tax arbitrage schemes; and - tackling derivatives tax arbitrage effectively in anti-avoidance legislation. By providing an in-depth analysis of corporate taxation issues that arise in domestic as well as in cross-border derivatives transactions, this book is not only timely but of lasting value in the day-to-day work of tax lawyers and tax professionals in companies, banks and funds, and is sure to be of interest to government officials, academics and researchers involved with financial instruments taxation.