High Line Advisors LLC

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Tax Notes: Analyzing the Equity Swap Legislation

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Mike Gaffney, Tax Partner at PricewaterhouseCoopers, has written an article on new tax legislation and its impact on equity financing transactions. A PDF is available here.

Mike Gaffney is a partner in the New York City office of PricewaterhouseCoopers LLP and was formerly the co-head of global tax at Merrill Lynch. The views expressed herein are the author’s own and do not necessarily reflect the views of PricewaterhouseCoopers LLP. The author wishes to thank Kevin Dolan and Jeff Penney for their substantial input and review.

This article examines how recently enacted legislation will alter the equity finance business over U.S. equities, and in light of the history of nonresident withholding tax, it examines the burden that the changes place on the IRS, Treasury, and market participants, and questions whether it is time to consider scrapping the outbound dividend withholding tax. The article also analyzes the IRS Tier I examinations and the burdens placed on both the IRS in light of the existing regulations and on dealers in effectively proving that they were following guidelines designed to ensure swaps are not subject to recharacterization as an inbound securities loan, sale and repurchase agreement, or agency transaction.

Copyright 2010 Mike Gaffney. All rights reserved.

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Written by highlineadvisors

July 24, 2010 at 7:44 am

Posted in Equities, Prime Brokerage

Tagged with , ,

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