IRS Counsel: ‘Futurization’ of Swaps Seen Differently by IRS, Other Agencies

Changes to the swap market brought on in part by the Dodd-Frank Wall Street Reform and Consumer Protection Act have led to the “futurization” of swaps, which affects derivatives’ tax treatment, officials said at the American Bar Association Sections of Taxation and Real Property Fall CLE Meeting in San Francisco.

Differences between reporting requirements and the liquidation horizon have led some newer futures contracts to resemble swap contracts, panel member Erika Nijenhuis, partner at Cleary Gottlieb Steen & Hamilton LLP, said Sept. 20.

Swaps are being converted into futures contracts and new products are being developed in the futures market ...