Prepaid Forward Contracts and Similar Arrangements
Published on:
June 9, 2008
The Committee on the Federal Taxation of the Securities Industry of SIFMA provides comments to the Internal Revenue Service (IRS) on the timing, character, source and other issues respecting prepaid forward contracts and similar arrangements that do not constitute debt instruments under the law, IRS Notice 2008-2. SIFMA argues that the current tax law is based on fundamental U.S. tax principles and should not be replaced. SIFMA writes that some prepaid forward contracts are taxed favorably and some are taxed unfavorably, so the contracts meet a financial need beyond tax considerations.