SIA Submits Comments to the US Department of Treasury and the IRS Regarding the President’s Dividends Exclusion Proposal

The Securities Industry Association (SIA)* provides comments totheTaxPolicy Dividends Exclusion Team of theU.S. Department ofTreasury and the Internal Revenue Service (IRS)regarding dividends received by securities firms with respect to securities that are inventory under the President’s dividends exclusion proposal. SIA believes the holding period requirements of section 246 (c) and 1059 would effectively disallow the loss by reducing the basis of the stock. SIA suggests a limited exception from the application of these rules for otherwise excludable dividends received in respect of inventory to the extent not in excess of a cap. The purpose of this exception would be to give dealers credit for taxable gains arising from their ownership and disposition of such stock prior to the relevant excludable dividend payment dates.

*SIFMA is the product of a merger between the Securities Industry Association and The Bond Market Association (TBMA) in 2006.