Bloomberg Tax Portfolio: The Federal Taxation of Structured Notes

Tax partner Vadim Novik published a Tax Management Portfolio on Bloomberg Tax, titled "The Federal Taxation of Structured Notes," that addresses the US federal income and estate taxation of US and non-US holders of structured notes. Structured notes are a multi trillion-dollar asset class, and this portfolio serves as a resource on the US taxation of this product.

The portfolio discusses how various types of structured notes should be characterized for US federal income tax purposes, whether a particular structured note is "principal protected" as well as the tax rules appliable to US holders of principal protected structured notes and the taxation of US holders of principal at risk structured notes. The portfolio also covers important special US tax issues as limitations on recognizing long term capital gain, the basket contract rules, and the treatment of physical settlements, and discusses issues relevant to US holders of both principal at risk and principal protected structured notes, such as the PFIC rules and certain reporting rules that apply to foreign assets. Lastly, the portfolio discusses the US taxation of non US holders of structured notes, addressing both income tax and estate tax considerations.

Read the portfolio here.

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