Daily Tax Update - May 18, 2016: Senator Ron Wyden Releases Draft Bill Addressing Tax Treatment of Derivatives

Senator Ron Wyden Releases Draft Bill Addressing Tax Treatment of Derivatives:  Today, Senate Finance Committee Ranking Member Ron Wyden (D-OR) released a discussion draft of a new regime for the taxation of derivatives.  The Modernization of Derivatives Tax Act (MODA) is intended to prevent  the use of derivatives by taxpayers to avoid taxes.  The bill would require mark to market and ordinary income tax treatment for all derivative contracts and would source gains and losses to the taxpayer’s country of residence.  The bill would deny taxpayers the ability to choose between various options by prescribing specific rules for treatment and consolidating those rules into a new Part IV of subchapter E for derivatives of the Tax Code.  

A summary of Senator Wyden’s legislation is available here and a section-by-section of the bill is available here

Senate Finance Committee to Hold Second Hearing on Corporate Integration Considerations:  Senate Finance Committee Chairman Orrin Hatch (R-UT) announced that the committee will hold a hearing on Tuesday, May 24 at 10 a.m. titled “Debt versus Equity: Corporate Integration Considerations,” to examine how corporate integration could make the Tax Code neutral in regards to financing with debt or with equity.  The following witnesses are scheduled to testify:

  • Mr. John Buckley
    Former Chief Tax Counsel, Committee on Ways and Means United States House of Representatives
  • Ms. Jody K. Lurie
    CFA Vice President, Corporate Credit Analyst, Fixed Income Strategy and Research Janney Montgomery Scott LLC
  • Mr. John McDonald
    Partner, Baker & McKenzie LLP
  • Mr. Alvin C. Warren, Jr. 
    Ropes & Gray Professor of Law, Harvard Law School