The accrual of interest on derivative instruments: where do we go from here?

Article Abstract:

The best approach for the tax treatment of accrual of interest on derivative instruments is a combination of traditional and modern approaches. The modern approach has evolved in conjunction with the introduction of newer instruments such as interest rate, equity, commodity and foreign currency swaps and may be useful in determining accrual timing and amounts. However, the traditional approach should be used by the Treasury Dept to determine the existence of actual loans and appropriate interest.

Monetary Interest, Swaps (Finance)

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The Euro and the situs of the borrower rule

Article Abstract:

The IRS may treat many or all euro currency countries as a single situs for purposes of the transfer pricing 'situs of the borrower rule'. The rule concerns the applicable interest rate for loans between related parties. The likely rule change should result in favorable tax administration and planning, but could result in unfavorable tax treatment in cases of intercompany loans which may no longer fall under the rule's protection.

Tax Law, Public Finance Activities, European Union, Analysis, Euro (Currency), Transfer pricing, Loans, Domicile in taxation, Domicile (Taxation)

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Reconsidering the accrual of interest income

Article Abstract:

The author examines the proposal to expand original issue discount rules to derivative financial instruments and the impact of interest income accrual calculations.

Discount (Finance)

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