(SERIES): Introduction to the Taxation of Financial Instruments Series (October 2 and 9)

Date & Time: Thursday, October 2, 2014 from 6:00 pm to 9:15 pm

CLE Credit: Yes

Event Description
Credit: 6.0 Total Credit Hours; 3.0 Credit Hours Per Session

This series provides tax practitioners with a practical introduction to the taxation of financial instruments, including debt instruments, derivatives, and special rules and regimes that apply to the taxation of financial transactions. Using real-world examples and problems, our faculty panelists help you master the tax treatment of financial instruments, including the timing and character of items of income, gain, deduction, and loss derived from such instruments. The economics of various financial instruments are explained in a practical manner to help you understand how and why these instruments are used. Finally, the class focuses on special rules and regimes applicable to the taxation of financial transactions.    


Part 1: Fundamentals of Taxation of Debt Instruments and Derivatives (Thursday, October 2)

This session will begin with a brief explanation of the business reasons for using financial instruments and an introduction to the tax rules that govern such instruments and transactions. You will then learn the fundamentals of the taxation of debt instruments, including the accrual and determination of original issue discount (OID), as well as the rules relating to market discount and premium. The application of the rules governing variable rate debt instruments (VRDIs) and contingent payment debt instruments(CPDIs) will be explained and demonstrated.  

The second half of this session will provide you with a practical explanation of the economics and taxation of a variety of derivatives, including options, notional principal contracts (swaps), forward contracts, and futures. Short sales and securities lending transactions also will be addressed. Finally, you will learn about the application of mark-to-market rules of §1256 of the Internal Revenue Code (IRC), as well as the rules governing the settlement of derivatives (e.g., IRC §1234A).


Faculty: David Cubeta, Miller & Chevalier Chartered; Craig Gibian, Deloitte, LLC (Faculty Chair); Eileen Marshall, Wilson, Sonsini, Goodrich & Rosati


Part 2: Special Rules and Regimes Applicable to the Taxation of Financial Transactions (Thursday, October 9)

Part 2 addresses a variety of special rules that apply to the taxation of financial transactions. Learn about the application and consequences of the straddle rules found in IRC §1092. Rules applicable to “constructive sales” of appreciated financial positions under IRC §1259 and the constructive ownership rules of §1260 also are explained.  


In the second half of this session, find out about three special regimes that apply to the taxation of certain financial transactions:

1. The application and consequences of mark-to-market rules of IRC §475 for dealers in securities.

2. The hedging rules designed to match the character and timing of income and deductions for hedging transactions.

3. The rules of IRC §988 governing currency transactions.


Faculty: Craig Gibian, Deloitte, LLC (Faculty Chair); Michael Shulman, Shearman & Sterling LLP; Michael Yaghmour, PricewaterhouseCoopers LLP

D.C. Bar Conference Center
1101 K Street NW
(Nearest Metro Stop: Metro Center 12th Street)
Washington DC 20005
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Contact Information
CLE Program
Phone: 202-626-3488
Fax: 202-942-9750


  • David Cubeta, Miller & Chevalier Chartered
  • Craig Gibian, Deloitte Tax LLP
  • Eileen Marshall, Wilson Sonsini Goodrich & Rosati P.C.
  • Michael Shulman, Shearman & Sterling LLP
  • Michael Yaghmour, PricewaterhouseCoopers LLP


D.C. Bar Members


Government Attorneys




Taxation Section


Printable registration form