Final regulations under section 382 clarify taxation of options

Article Abstract:

The IRS has released final regulations under IRC section 382 that provide clearer guidance on when holding stock options may have the consequence of triggering the ownership change provisions of section 382. Under 382, a loss corporation's ability to use net operating losses is limited when a 50% ownership change occurs. Section 382 provides that the ability to gain ownership through exercise of the option may be equivalent to an ownership change. The final regulations establish three tests, ownership, control and income, to apply as well as creating several safe harbors.

Analysis, Laws, regulations and rules, Stocks, Options (Finance), Loss deductions

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Deciphering the taxation of credit derivatives

Article Abstract:

The expansion of the credit derivatives market will require new tax rules for tax questions not covered by existing derivatives tax treatment. These derivatives, which are tied to underlying assets or indices, help manage credit exposures by allowing investors to take on credit risk. Total return swaps, credit default swaps, credit options, and credit-linked notes are examples of credit derivatives. Hedge funds and insurance companies, as well as money center, investment, and regional banks, are the major investors in these derivatives.

Credit Management, Innovations, Finance, Derivatives (Financial instruments), Hedging (Finance), Financial instruments, Credit market, Credit markets

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Proposed regulations narrow consistency rules on stock and asset acquisitions.

Article Abstract:

Proposed IRS regulations concerning the consistency rules on stock and asset acquisition are discussed. The proposals simplify and shorten the existing regulations and make substantive changes. A purchase of stock counts as acquiring an asset if it can be characterized as the sale of one corporation to another for fair market value. The proposals simplify this characterization.

Assets (Accounting), Stock transfer

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