Mr. Cope monitors the development of U.S. tax law daily through postings on government websites, daily tax publications, monthly tax journals, tax newsletters, tax conferences and meetings of professionals organizations in New York and Washington. Each month he publishes the Tax Insights Blog, which describes and analyzes significant U.S. tax developments (e.g., judicial decisions, regulations, proposed tax legislation) having cross-border tax consequences. The blog's content should be of interest to U.S. businesses with foreign operations and businesses headquarted outside the United States with U.S. investments or U.S. operations.
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U.S. Senate’s Hearing Illuminates Taxation of “Basket Options”
The U.S. Senate’s Permanent Subcommittee on Investigations of the Committee on Homeland Security and Governmental Affairs (the “Subcommittee”) issued a report on July 22, 2104 entitled Abuse of Structured Financial Products: Misusing Basket Options to Avoid Taxes and Leverage Limits (the “Report”). The Report is the result of an extensive inquiry by the Subcommittee’s members and staff, including a public hearing held on July 22, into transactions in the form of options contracts entered into by Deutsche Bank AG (“Deutsche Bank”) and Barclays Public Limited Company (“Barclays”) with certain hedge funds. Although such transactions are no longer offered by these banks, the amount of tax at issue appears to be significant (although many of the tax years may be closed). The Report is another illustration of the strategy of the Subcommittee to publicize significant tax-aggressive transactions in an effort to discourage other large taxpayers from taking aggressive tax positions in the future.