Using Market Risk Concepts to Refactor Tax Shelters

Jun 14 2012 | 4:29pm ET

Original publication date: Jun 11, 2012
Author(s): G2 FinTech

In order to compute accurate portfolio tax liabilities, tax professionals and compliance officers must comply with the following sections of the U.S. tax code: wash sales, straddles, constructive sales, qualified dividends, and short sales. However, vague and poorly defined tax code verbiage makes abiding by these sections very taxing. This paper offers guidelines based on ideas from the Economic Substance Doctrine and market risk management to facilitate compliance with these sections. In addition, we offer a more concrete, alternative definition of the term “substantially identical.” Lastly, the paper proposes that “substantially identical” and “offsetting positions” share enough in common and should be combined into a single term. We suggest this consolidation in order to make it easier for taxpayers to understand and more readily comply with the tax code.


Back to All Library Documents

Videos

Editor's Note

    Must Attend Hedge Fund Charity Events For October

    Sep 30 2014 | 9:29am ET

    The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…

 

Futures Magazine

September 2014 Cover

High frequency market making

High frequency trading is not evil, it is not a conspiracy and it really is not new; it is the natural evolution of the professional trading community making markets, providing liquidity and hopefully...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.