International Bank Tax Newsletter Volume 5, June 2015

International Bank Tax Newsletter Volume 5, June 2015

In this issue, we discuss the New York Bank and Corporate Franchise Tax Reform and how it affects non U.S. banks and banks across the U.S.

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Final 1001 regulations for banks

The IRS issued new proposed regulations under § 871(m) this past December.1 These proposed regulations withdrew the regulations that were proposed in 20122 in favor of a delta-based approach. The delta of an instrument is the ratio between the change in the fair market value (FMV) of the instrument to the change in the FMV of the referenced property.3 The 2013 proposed regulations also expanded greatly the scope of instruments that are subject to § 871(m), covering, in addition to Notional Principal Contracts (NPCs), a new category of instruments referred to as equity-linked instruments (ELIs). ELIs are defined broadly to include any financial transaction that reference the value of one or more underlying U.S. equities, including forward contracts, futures contracts, options, exchange-traded notes, structured notes, debt instruments convertible into underlying securities, and debt instruments with payments linked to underlying securities.

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