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Category Archives: Notable Decisions

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Tax Court Rules that Extensions of Variable Prepaid Forward Contracts Do Not Result in Taxable Exchanges

Last week, in McKelvey v. Commissioner¸[1] the U.S. Tax Court held that the extension of a typical variable prepaid forward contract (“VPFC”) did not give rise to a taxable exchange to the obligor because a VPFC is solely an obligation, and not property, within the meaning of section 1001 of the Internal Revenue Code. The … Continue Reading

IRS Eliminates Requirement to Submit Copy of Section 83(b) Elections with Tax Return

The IRS adopted final regulations that no longer require taxpayers who have made Internal Revenue Code §83(b) elections to attach a copy of the election to their annual federal income tax return. Under §83, restricted stock granted in connection with the performance of services generally becomes taxable as ordinary income compensation when it is no … Continue Reading

Sun Capital Court Finds Co-Investing Funds Part of Controlled Group and Liable for Portfolio Company’s Pension Liabilities

In a decision that could have far-reaching implications for private investment funds, a District Court held that co-investing funds were part of a portfolio company’s controlled group and that the funds were thus liable for that portfolio company’s multiemployer plan withdrawal liability. The District Court essentially substituted the statutory 80% ownership threshold for controlled group … Continue Reading

Federal Appellate Court Rules that Certain Foreign Currency Options Are Subject to the Section 1256 Mark-to-Market Regime

Recently, in Wright v. Commissioner, the United States Court of Appeals for the Sixth Circuit has reopened the question of the application of Section 1256[1] to foreign currency options (and also, possibly, to foreign currency swaps or other, similar foreign currency derivatives). Section 1256 requires a taxpayer to treat certain types of derivative contracts held … Continue Reading
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