What is a hedged executory contract? A “hedged executory contract” is another type of transaction that is eligible for integration under Code Section 988(d). A hedged executory contract results when a taxpayer enters into an...more
6/12/2024
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Capital Gains ,
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Financial Transactions ,
Foreign Currency ,
Foreign Entities ,
Hedges ,
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Internal Revenue Code (IRC) ,
IRS ,
Securities ,
Tax Planning
Are there special hedging provisions for section 988 transactions? Yes. In addition to the business hedging rules I address in our earlier Q&A with Andie series, a special hedging provision is available at Code section 988(d)...more
6/5/2024
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Capital Gains ,
Capital Losses ,
Financial Transactions ,
Foreign Currency ,
Foreign Entities ,
Hedges ,
Hedging ,
Internal Revenue Code (IRC) ,
IRS ,
Tax Planning
Do the tax hedge rules apply to consolidated tax groups? Yes. The Treasury Regulations treat members of a consolidated corporate group as divisions of a single entity. As a single entity, the risks and positions of all group...more
5/3/2024
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Capital Gains ,
Capital Losses ,
Corporate Taxes ,
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What are the tax accounting rules for hedges? Whether or not a qualified tax hedge is properly identified, it must be tax accounted for under a method that clearly reflects income. The timing of gains and losses on hedges...more
When must a hedge be identified and accounted for tax purposes? Taxpayers must identity each hedging transaction and the item it hedges. A taxpayer must clearly identify a hedging transaction “before the close of the day on...more
What is the “tax character” of a hedge? A taxpayer receives ordinary gain or loss on qualified hedges that have been properly identified in accordance with Treasury Regulation § 1.1221-2. This allows a taxpayer to ensure that...more
4/12/2024
/ Asset Management ,
Business Taxes ,
Capital Losses ,
Corporate Taxes ,
Debt ,
Hedges ,
Hedging ,
Interest Rates ,
Internal Revenue Code (IRC) ,
Investment ,
Reporting Requirements ,
Risk Management ,
Tax Planning
Enterprise Risk Management is widely used in many industries and businesses. Risk managers use increasingly sophisticated approaches, methods, analytics, and frameworks to manage complex, interrelated, and interconnected...more
It is a common practice for businesses to manage their business price risks by entering into derivative contracts. Because their business activities generate ordinary income and loss, they want to obtain ordinary tax...more