Current Options
Disclosure Document
(PDF Format) 

 


Securities Future 
Disclosure Document
(PDF Format) 


 

 

Twenty-First
Securities Corporation

780 Third Avenue
New York, NY 10017
212.418.6000
info@twenty-first.com


   Proposed Tax Reform of Financial Products
January 25, 2013

The House Ways and Means Committee has come out with a draft proposal for the reform of tax laws dealing with financial products. The proposals are wide sweeping; issues most important to our clients include the following:

1 – Financial derivatives entered into for speculative purposes would no longer give rise to capital gains or losses. Instead all gains and losses on derivatives would be treated as ordinary income and loss. Derivatives would include options, future contracts, forwards, swaps, short sales or other similar financial instruments.

2- In addition, these instruments will be marked to the market at year

  For more information on marked to market taxation, refer to our article: Marked-to-market Gains At Year-End?

 end. All unrealized gains and losses at year end will be recognized for tax purposes. In the subsequent year of disposition, an adjustment will be made for any gain or loss recognized due to the mark to market.  Losses will be treated as ordinary losses and may be carried back and forward in the same manner as net operating losses.

3 – Currently investors can use specific lot identification to identify the securities they sell when they dispose a portion of the securities that they hold. Under the proposal, the investor would have to use an average cost in all of the securities held in computing the gain or loss on a disposition of a portion of the securities.

4 – The proposal would add a related party rule to the current wash sale rule. Therefore, under the proposal if an investor sold securities at a loss and substantially identical securities were repurchased within 30 days of such sale by any of the following entities the loss would be disallowed and in effect be added to the basis of the purchased securities. The related parties would be: the investor’s spouse, any dependant of the taxpayer, any individual, corporation, trust, partnership, or estate which controls or is controlled by the taxpayer (within Sec. 954(d)(3)), any IRA, Archer MSA, health savings account of the investor and various other tax deferred accounts controlled by the investor.

Click below for the Ways and Means release containing the:

 




 



     

 

Receive our quarterly newsletter and breaking news by registering your e-mail address:

 

 

© Twenty-First Securities Corporation

Privacy Policy / Verification of Customer Identity  |   Business Continuity

Powered by