Derivatives continue to present tax-planning opportunities for cross-border investments

Article Abstract:

Derivative financial instruments are ideal for international and domestic investors, but they require proper planning to address inherent timing, character, and treaty-related issues. Derivatives may be exempt from withholding taxes, depending on how the income is sourced. Moreover, they provide investors with flexibility and risk management. Investors can put money into derivatives without directly investing in underlying property, as in a futures contract. Securities lending transactions, contingent payment debt instruments, notational principal contracts, and equity swaps are among the instruments discussed.

Personal Investing, Methods, Personal finance, International aspects, Tax planning, Investments, Derivatives (Financial instruments), international

---

NPCs and contingent debt instruments have the same economics, but different rules

Article Abstract:

Notional principal contracts (NPCs) in the form of equity, commodity, currency and interest rate swaps or interest rate collars, caps or floors have similar economics to contingent debt instruments. However, these and hybrid debt instruments which have many of the features of NPCs are not treated uniformly by the IRC. Consistent treatment may be guaranteed by stipulating that all instruments meeting the NPC definition in Proposed Regulation 1.446-3(c)(1) are treated in accordance with that Section rather than Proposed Regulation Section 1.1275-4 which deals with contingent payment debt instruments.

Financial instruments, Debt equity conversion, Hybrid instruments (Finance), Hybrid instruments (Securities), Interest rate swaps, Swaps (Finance), Commodity swaps

---

Tax treatment of substitute payments under securities lending and sale repurchase transactions

Article Abstract:

The final 1997 regulations on taxation of substitute dividend and interest, i.e., payments made in conjunction with securities lending and sale-repurchase transactions, include foreign payment sourcing and characterization rules. The IRS is seeking to prevent withholding tax abuses and tax base erosion. A foreign person who receives payments considered to be this type of substitute dividends or interest should realize that these payments are subject to the applicable withholding taxes.

Dividend Income of Persons, Interpretation and construction, Dividends, Securities, Securities law, Interest, Interest (Finance), Securities taxes

Similar abstracts:

• Abstracts: Viatical settlements: new opportunities for wealthy individuals and business owners. Lawmakers and the Administration finally agree on financial services reform
• Abstracts: Discrimination probe planned; House committee to investigate environmental racism. Residents want 'justice,' the EPA offers 'equity.' (Unequal Protection: The Racial Divide in Environmental Law)
• Abstracts: Seattle's no. 1 firm prospers. San Francisco firm reels from murder of lawyers, others. Belli partners sue to split firm
• Abstracts: Restrictive trade practices. Changes to the Trade Practices Act. The access regime gets a good "going over." (third party access, restrictive trade practices) (Australia)
• Abstracts: Changes at the top: proposal for new ABA leadership structure draws mixed reviews. Slicing the pie; sections seek greater role in ABA governance

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.