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Can Variable Prepaid Forward Contracts’ Settlement Dates Be Extended Without Having to Recognize Gain?  


Author:  Kevin A. Diehl.


Source: Volume 30, Number 04, Summer 2017 , pp.55-58(4)




Journal of Taxation and Regulation of Financial Institutions

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Abstract: 

This article analyzes the Tax Court’s holding in Estate of McKelvey, the first case to consider whether extensions of variable prepaid forward contracts (VPFCs) close transactions that are otherwise deemed to be open under Revenue Ruling 2003-7. The author then offers planning tips for forward sellers of VPFCs based on the current state of the law.

Keywords: Variable prepaid forward contracts, Estate of McKelvey v. Commissioner, Revenue Ruling 2003-7, IRC Section 1259, obligation vs. property

Affiliations:  1: Western Illinois University.

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