Introduction to Taxation of Financial Products (AFP9A)

Venue: Baker & McKenzie Conference Center

Location: Chicago, Illinois, United States

Event Date/Time: Apr 20, 2009 End Date/Time: Apr 21, 2009
Registration Date: Apr 20, 2009
Early Registration Date: Mar 20, 2009
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Introduction to Taxation of
Financial Products & Derivatives

The Prudential Building
Baker & McKenzie Conference Center
Chicago, IL
April 20 & 21, 2009

Chairpersons: Robert Walton, Baker & McKenzie, Chicago, IL
David Golden, Ernst & Young LLP, Washington, DC

Monday, April 20, 2009
7:30 am Registration and Continental Breakfast

8:45 am Opening Remarks

9:00 am Overview - Basic Building Blocks
• Description of the basic instruments used in developing financial products: forwards, options and notional principal contracts
• What are the economics of these instruments?
• What is the taxation of these instruments?
• Special rules for business hedges
• Mark-to-market taxation
• Hot Products
David Golden, Ernst & Young LLP, Washington, DC

11:00 am Break for Refreshments
11:15 am Taxation of Debt Instruments
• OID and imputed interest
• Convertible debt and investment units
• Contingent debt instruments
• Limitations on interest deductions
David C. Garlock, Ernst & Young LLP, Washington, DC

12:00 am Lunch

1:15pm Hot Products
• Feline PRIDES
• Contingent Convertible Debt
• Convertible debt with hedge and warrants
• Debt with forward subscription agreement
David C. Garlock, Ernst & Young LLP, Washington, DC

2:00 pm International Financing and Financial Transactions of Foreign Persons
• Withholding
• Foreign Tax Credit
• Subpart F
David Golden, Ernst & Young LLP, Washington, DC
3:15 pm Break for Refreshments

3:30 pm Tax Traps
• Section 1256 Contracts
• Wash Sales
• Straddles
• Securities Traders
• Conversion Transactions
William Pomierski, McDermott, Will & Emery, Chicago, IL

4:45 pm Summary and Q&A

5:00 pm Conference Adjourns for the Day

Tuesday, April 21, 2009

8:00 am Continental Breakfast

8:20 am Chairperson’s Review of Day One and Preview of Day Two

8:30 am Accounting for Derivatives and Hedging
• Understanding the principles of FAS 133 for derivatives and hedging
• Managing GAAP/tax differences caused by the FAS 133 rules
David Golden, Ernst & Young LLP, Washington, DC

9:45 am Refreshment Break

10:00 am Tax Controversies
• Will the recent IRS victories change the behavior of the IRS, taxpayers, or the market?
• How can taxpayers best support and defend their financial transactions?
• Preserving privilege on financial products transactions while living in the glass house of FIN 48
• How to respond to requests for electronic documents?
Paul Schick, Baker & McKenzie, Chicago, IL
Rob Walton, Baker & McKenzie, Chicago, IL

11:00 am Qualified Business Units, Functional Currency, and Section 988 Foreign Currency Transactions
• Basic rules
• Foreign currency hedges
• Foreign currency instruments
Peter Daub, Baker & McKenzie, Washington, DC

12:00 pm Lunch

1:00 pm Disparate Tax Treatment of Economically Equivalent Investment Tools
• Various investment “tools” achieve economically equivalent results.
• Tax treatment of these tools is disparate.
• Opportunity-select the tool that should deliver the optimal tax result.
• This is free “tax alpha” for sophisticated, well-advised investors.
• Real world applications: single stock concentration risk management, portfolio hedging, structured products.
• Vital implications for fiduciaries under the Uniform Prudent Investor Act.
Bob Gordon, Twenty-First Securities Corp., New York, NY

2:45 pm Summary and Question & Answer Session

3:00 pm Conference concludes


130 East Randolph Street
United States