When must a hedge be identified and accounted for tax purposes? Taxpayers must identity each hedging transaction and the item it hedges. A taxpayer must clearly identify a hedging transaction “before the close of the day on...more
What is the “tax character” of a hedge? A taxpayer receives ordinary gain or loss on qualified hedges that have been properly identified in accordance with Treasury Regulation § 1.1221-2. This allows a taxpayer to ensure that...more
4/12/2024
/ Asset Management ,
Business Taxes ,
Capital Losses ,
Corporate Taxes ,
Debt ,
Hedges ,
Hedging ,
Interest Rates ,
Internal Revenue Code (IRC) ,
Investment ,
Reporting Requirements ,
Risk Management ,
Tax Planning
Enterprise Risk Management is widely used in many industries and businesses. Risk managers use increasingly sophisticated approaches, methods, analytics, and frameworks to manage complex, interrelated, and interconnected...more
Are there differences in the way in which weather derivatives and weather insurance are taxed? Yes. Weather insurance products, including parametric insurance, are taxed as insurance; and derivatives are taxed in accordance...more
3/27/2024
/ Business Expenses ,
Business Interruption ,
Business Losses ,
Climate Change ,
Derivatives ,
Insurance Industry ,
Internal Revenue Code (IRC) ,
Policy Terms ,
Popular ,
Property Damage ,
Risk Management ,
Severe Weather
Are there differences in the way in which derivatives and insurance contracts are regulated? Yes. Weather derivatives and insurance contracts are subject to totally different regulatory regimes. Derivatives are subject to the...more
3/22/2024
/ Casualty Insurance ,
CFTC ,
Climate Change ,
Commodity Exchange Act (CEA) ,
Derivatives ,
Dodd-Frank ,
Insurance Contracts ,
Insurance Industry ,
Property Insurance ,
Risk Management ,
Safe Harbors ,
Severe Weather ,
Swaps
In Part I of this series on weather and climate risk management, I reviewed the context within which organizations seek to manage climate and weather-related risks. With extreme weather events becoming more common, there are...more
3/20/2024
/ Business Interruption ,
Climate Change ,
Environmental Social & Governance (ESG) ,
Indemnity Insurance ,
Insurance Industry ,
Natural Disasters ,
Over The Counter Derivatives (OTC) ,
Policy Terms ,
Risk Management ,
Risk Mitigation ,
Severe Weather
2023 was the hottest year on record. Not only the hottest since U.S. meteorological recordkeeping began in 1850, but according to Scientific American, 2023 was also “the hottest temperature that our planet has experienced in...more
Businesses often manage their price risks by hedging those risks with financial derivative contracts. Because businesses generate ordinary income and loss on their normal business activities, they want to be sure their...more
It is a common practice for businesses to manage their business price risks by entering into derivative contracts. Because their business activities generate ordinary income and loss, they want to obtain ordinary tax...more