Home      Login

Abstract: 

This article examines tax policy issues raised by the current controversy over the proper treatment, for U.S. federal income tax purposes, of exchange traded notes (“ETNs”). Both proponents and opponents of the current tax regime governing ETNs have made arguments in this debate that are fully grounded in tax policy. Specifically, the issue of horizontal equity has been central to the controversy surrounding the taxation of ETNs. Horizontal equity is the tax policy principle which addresses the fundamental concept of fairness and stands for the proposition that taxpayers in similar circumstances should be taxed similarly. In addition to horizontal equity, issues of efficiency and administrability have also been raised in the debate over the taxation of ETNs.

Keywords: Exchange traded notes; prepaid forward contracts

Affiliations:  1: Dewey & LeBoeuf LLP.