In December 2013, the Internal Revenue Service released final and proposed regulations addressing the taxation of dividend equivalents paid or embedded in notional principal contracts (swaps) and equity-linked instruments. At that time, Mayer Brown released a White Paper discussing certain aspects of the new guidance. Mark Leeds of the New York office of Mayer Brown has expanded the original White Paper to provide an in-depth look at the potentially far-reaching impact of this guidance. In addition, the attached expanded White Paper addresses additional operational challenges that the new guidance is likely to pose for financial institutions and other market participants in the swap and structured note area.
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