I. Introduction
A. Recent Guidance Provides Relief

Chief among the federal government’s supports for the alternative energy industry is the section 45 production tax credit (PTC). Alone, the PTC is not sufficient to spur the production of wind energy, but partnerships between wind energy producers and financial institutions have transformed the tax credit into the major catalyst for growth in wind energy production.

“U.S. Taxation of Contingent Convertible Bonds,”  Derivatives & Financial Instruments, IBFD, Vol. 13, No. 3, May/June 2011 2011-5 IBFD CoCos

1. Background

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act) authorizes the Federal Reserve to require bank and non-financial holding companies “to maintain a minimum amount of contingent capital that is
convertible to equity in times of financial stress”. The Basel Committee and the related Financial Stability Board also have reviewed additional measures that might include capital surcharges, contingent capital, and “bail-in” debt. On 13 January 2011, the Basel Committee issued a
notice setting out requirements in this area for banking institutions to follow. In the notice, it directed that “all non-common Tier 1 and Tier 2 instruments” issued by any “internationally active bank” must provide that, at the option of the local banking authority, the instrument will be written off or converted into common equity in the event the local banking authority determines the bank would otherwise become “non-viable”.

“No one would give my wife a job,” Marty Ginsburg announced, with fresh outrage, at our first meeting.

That wife was Ruth Bader Ginsburg, who had graduated law school 50 years earlier without a job, and had become a U.S. Supreme Court judge 15 years before the day her husband and I met. And as fresh as his indignation at the bigots who had refused to employ the top-rated graduate because of her gender was his glee at the final reckoning: Who among those chauvinist men had reached her exalted post?

“1256 and Currency Contracts: It’s a Mess Inside,” in the compendium “Examining the Straddle Rules after 25 Years,” Tax Notes, Dec. 21, 2009 TNT 2009-12 Straddle FX

The decree of mark-to-market was imposed on futures contracts as an alternative to the balanced position rule, which was Congress’s primary weapon against the straddle shelters. The industry was outraged at the idea.
To forestall mutiny, Congress offered exchange-traded contracts governed by market-to-market a character advantage so attractive that immediately after enactment of the legislation, some non-exchange-traded contracts
clamored to come under the law as well. Observers present when mark-to-market was expanded claim that Congress intended the expansion to cover only foreign currency (FX) forwards. But modern readers of section
1256(g)(2) find no indication that one type of FX derivative should be treated differently from any other —whether it be a forward, option, or swap. And so out of the debates between tax archeologists and strict constructionists is born the beautiful mess of the taxation of FX derivatives

“Evolution of Safe Harbor Rules under Section 475,” (with Ann Singer) Derivatives & Financial Instruments, IBFD, Vol. 10, No. 3, May/June 2008, reproduced in Chartered Accountant Practice Journal, Vol. 24, Part 5, December 2008 DFI 2008-7 MTM

On 12 June 2007, the IRS published long-anticipated final safe harbour rules for the valuation of securities and commodities for Sec. 475 mark-to-market accounting purposes. The final regulations are culmination of a process that formally began in 2003 and involved significant industry participation

This article explores the rule-making process by examining the original stated objective of the IRS and the Treasury Department and considers industry input regarding the business and accounting practices of the taxpayers involved. The final regulations implementing the original objectives, as refined by public comment, are discussed as well

This article explores ways to avoid audit risk in connection with a company’s financial activities, and will describe effective methods for dealing with the Internal Revenue Service when it begins examining financial transactions. As conflicts with the IRS can sometimes be prevented or curtailed through effective communications with the other institutions involved in the tax universe, the article also considers the workings of the IRS, the relationship between the IRS Chief Counsel, the Office of Tax Policy at the Department of the Treasury and various Congressional bodies creating the tax law.

“Review of Current Financial Literature,” Derivatives and Financial Instruments, IBFD, November/December 2003 Review financial lit

We are so blessed with financial literature today, that the biggest problem is how to decide what to use. When considering what I will include in my library, I look for a number of things: a good table of contents, a comprehensive index, and the number of references. Then I read the preface to see whether the author is a financial geek, but failed English, I flip through the text to see if there is a good organizing principle and I want to see if there are meaty examples and computer applications. In this review, I will consider two-book, as well as one article, and see whether they measure up to the standards I have set

“Taxation of Index Options,” Derivatives and Financial Instruments, IBFD, January/February 2000 DFI 2000-1 Index Options

I. INTRODUCTION

This article provides an overview of the federal income tax treatment of the proceeds arising from certain types of index options, both in the hands of the holder and in the hands of the writer. The contracts covered by this article include index options, Asian options, end-end options, cliquet options, multi-cliquet options, look-back options, lock-in options, and step-up options. Before analyzing the tax treatment of these various options, it is important to understand the general tax treatment of basic equity options.