“Taxation of Hybrid Instruments,” Derivatives and Financial Instruments, IBFD, November/December 1999 DFI 1999-11 Hybrids
I. Introduction
Corporate instruments are created to serve many purposes, and so may have characteristics that make them difficult to fit into a particular character box. There are many motivations for including various characteristics in an instrument, such as balancing the minority and majority interests in a corporation, as well as the debt and stakeholder. Increasingly, hybrids have proven to be versatile tools in adapting to various regulatory regimes, including Securities and Exchange Commission requirements, Financial Standards Accounting Board guidelines, and federal and state income tax rules.