IRS gives guidance on straddles

BY SALLY P. SCHREIBER, J.D.

Final rules clarify the treatment of an issuer’s obligation under a debt instrument.

The IRS provided guidance on when an issuer’s obligation under a debt instrument may be a position in actively traded personal property, in which case it can be part of a straddle. The final regulations adopt without substantive change temporary and proposed regulations on the treatment of debt instruments that may be part of a straddle that were issued in September 2013.

A straddle is defined in Sec. 1092 as offsetting positions with respect to personal property. Under the regulations, if a taxpayer is an obligor under a debt instrument on which one or more payments are linked to the value of personal property (or a position with respect to personal property), then the taxpayer’s obligation under the debt instrument is a position with respect to personal property and may be part of a straddle.

These final regulations apply to straddles established on or after Jan. 17, 2001, the date the first proposed regulations were published in the Federal Register, and may in certain instances apply to straddles established earlier. They remove the temporary regulations issued last year (T.D. 9635).

- T.D. 9691

By Sally P. Schreiber, J.D., a JofA senior editor.

SPONSORED REPORT

2018 financial reporting survey: Challenges and trends

Learn the top reporting challenges that emerged in a survey of more than 800 finance, accounting, and compliance professionals across the world, and compare them with your organization's obstacles.

PODCAST

How the skill set for today’s CFO is changing

Scott Simmons, a search expert for large-company CFOs, gives advice for the next generation of finance leaders and more, including which universities are regularly producing future CEOs and CFOs.