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Withholding Tax on Dividend-Related Payments on Notional Principal Contracts and Other Equity-Linked Instruments  

Author:  Matthew A.  Stevens.; Petya V.  Kirilova.

Source: Volume 30, Number 04, Summer 2013 , pp.51-69(19)

Journal of Taxation of Investments

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This article discusses the scope of new Section 871(m) as reflected in the statute and in the Temporary and Proposed Regulations thereunder. The article also discusses the U.S. withholding tax consequences that arise under the statute and that are likely to arise under the Temporary and Proposed regulations (if finalized in their current form) with respect to total return swaps, such as plain vanilla equity and basket swaps, as well as with respect to securities futures contracts.

Keywords: IRC Sec. 871(m); dividend equivalent payments; total return swaps; specified notional principal contract; seven-factor test

Affiliations:  1: Ernst & Young LLP; 2: Ernst & Young LLP.

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