7 Int'l Tax J. 449 (1980-1981)
Using Commodity Straddles to Circumvent FIRPTA

handle is hein.journals/intaxjo7 and id is 449 raw text is: / 449

Using Commodity Straddles to
Circumvent FIRPTA
DANIEL J. PARKS
and
JAMES WM. CLEMENT
In the relatively short time since FIRPTA was enacted,' numerous articles2
have described the complexities of the new statute3 and speculated as to
investment techniques that would avoid taxation under FIRPTA. A prin-
cipal exception in the new legislation provides that U.S. tax treaties will
override FIRPTA until December 31, 1984.1 A commonly mentioned tech-
nique utilizing this FIRPTA exception is the Dutch Sandwich, which
employs a provision of the tax treaty between the United States and the
Netherlands. This article examines the Dutch Sandwich and a commodity
straddle alternative.
DANIEL J. PARKS is a principal in the San Francisco firm of Breen & Parks Law Corporation.
Mr. Parks received his J.D. from the Hastings College of The Law.
JAMES WM. CLEMENT is a research assistant for Breen & Parks Law Corporation and a
third-year student at The Hastings College of The Law.
I.   Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), P.L. No. 96-499,
Secs. 1121-1125, 94 Stat. 1599 [Sec. 861(a)(5), 897, 6039C, 6652(g)].
2.   See, generally, A. Feder and M. Rabinowitz, Foreign Investment in U.S. Real Estate:
Revised Strategies and Tax Planning Under the Foreign Investors in Real Property Tax
Act of 1980 (1980); Olsen, Jr., Analysis of the Foreign Investment in Real Property
Tax Act of 1980, 7 Int'l Tax J. 262 (1981); Nauheim and Cass, Tax on Foreigners
Investing in United States Real Estate, 7 Tax Planning Int'l Rev. 3 (1981); Feder
Planning Under the Foreign Investment in Real Property Tax Act of 1980, 59 Taxes
81 (1981); Klein, An Analysis of the Foreign Investment in Real Property Tax Act of
1980: How it Works, 54 Tax. 202 (1981); Feder and Parker, The Foreign Invest-
ment in Real Property Tax Act of 1980, 34 Tax Law. 545 (1981).
3. -Sec. 897(c).
4.   FIRPTA Sec. 1125(c).

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