Description
Understand the relevant tax issues that apply to derivatives and how market participants are classified.There is no uniform set of U.S. federal income tax rules for the treatment of derivatives and market participants. In addition, the character and timing of income vary depending on the type of derivative and the status of the market participant. This presentation will explain how the U.S. federal income tax rules treat derivatives and market participants and provide you with working knowledge of what you need to consider when entering into a derivative transaction. After attending, you will be able to spot the relevant tax issues that apply to derivatives and understand how market participants are classified and what the consequences of that classification are.
Date: 2022-12-06 Start Time: End Time:
Learning Objectives
Financial Products Tax Analysis
• Character of Income and Timing Issues – Why They Matter
• Status of a Taxpayer (i.e., Hedger, Dealer, etc.) and Why It Matters
• What Options Do Taxpayers Have Vis-a-Vis Elections or Identifications to Impact the Timing and Character of a Derivative Transaction
Types of Products
• There Is No Uniform Set of Tax Rules for the Treatment of Derivatives – Character and Timing Depend on the Type of Derivative Transaction
• Distinguishing Between a Forward Contract, a Futures Contract, and an Option Contract
• Understanding When a Product Constitutes a 1256 Contract and What This Means
• Understanding How Swaps (i.e., Notional Principal Contracts) Are Taxed
Types of Taxpayers
• Understanding What It Means to Be an Investor and the Federal Tax Impact of Such a Classification
• Understanding What It Means to Be a Trader and the Federal Tax Impact of Such a Classification
• Understanding What It Means to Be a Dealer and the Federal Tax Impact of Such a Classification
• Understanding What It Means to Be a Hedger and the Federal Tax Impact of Such a Classification
Straddle Transactions
• Definition of a Straddle – Offsetting Positions With Respect to Actively Traded Personal Property
• Consequences of a Straddle – Loss Deferral and Capitalization of Costs
• Exceptions to Straddle Rules
Special Rules for Hedgers and Dealers
• What Is a Qualified Hedging Transaction for Federal Income Tax Purposes?
• Dealers in Securities and Commodities and the Relevant Character and Timing Issues
Foreign Currency Transactions
• What Is a Nonfunctional Currency Transaction, and How Are They Treated for Federal Income Tax Purposes?
• What Elections Are Available for Nonfunctional Currency Transactions?
• What Are the Relevant Hedging Rules for Nonfunctional Currency Transactions?
AIPB ,CLE (Please check the Detailed Credit Information page for states that have already been approved) ,Additional credit may be available upon request. Contact Lorman at 866-352-9540 for further information.
Nicholas C. Mowbray-Baker & Hostetler LLP
