New Tax Rules for Transfer and Assignment of Derivative Contracts


As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, certain books of derivative contracts must be transferred to other dealers.

For US federal income tax purposes, gain or loss is recognised upon the exchange of property for other property differing materially either in kind or extent. Therefore, the non-assigning counter-party to any derivative contracts subject to a transfer may be treated as recognising gain or loss.

Since existing US Treasury regulations only address the transfer and assignment of derivatives that qualify as “notional principal contracts” for US federal income tax purposes, many in the public domain have commented that such regulations were too narrowly drawn, especially for the post-Dodd Frank world.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP | Attorney Advertising

Written by:


Morrison & Foerster LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.