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How to Modify the Taxation of Notional Principal Contracts to Eliminate the Whipsaws on Both Sides  


Author:  Edward Dougherty.


Source: Volume 30, Number 03, Spring 2013 , pp.53-76(24)




Journal of Taxation of Investments

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Abstract: 

This article explores the history of taxation of swap contracts, including several iterations of Proposed Regulations, and seeks to provide an alternative regime which provides better certainty for taxpayers that trade in swaps while eliminating both the potential for whipsaw treatment by the IRS and character electivity by taxpayers.

Keywords: swap, notional principal contract, periodic payment, mark to market, realization of income

Affiliations:  1: Deloitte Tax LLP.

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