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3 Fla. Tax Rev. 471 (1996-1998)
Issue 8

handle is hein.journals/ftaxr3 and id is 499 raw text is: FLORIDA TAX REVIEW VOLUME 3 1997 NUMBER 8 Towards Equal Tax Treatment of Economically Equivalent Financial Instruments: Proposals for Taxing Prepaid Forward Contracts, Equity Swaps, and Certain Contingent Debt Instruments David F. Levy' I. INTRODUCTION ........................ ........ 474 H. BACKGROUND ON DERIVATIVES .................... 476 A. Capital Assets in General ......................... 477 1. Income Generated by the Asset: Timing, Character, and Source ...................... 477 2. Sale: Timing, Character, and Source ............ 477 B. Forward Contracts .............................. 478 1. Introduction ............................. 478 2. Pricing of Forward Contracts ................. 481 3. Taxation of Forward Contracts ................ 483 a. Timing and Character ................ 483 b. Source ........................... 484 C. Options ...................................... 485 1. Rights and Obligations ..................... 485 2. Timing and Character of Income From Options .... 488 3. Source of Income From Options ............... 490 m. CONTINGENT DEBT INSTRUMENTS AND EQUITY SWAPS ... 490 A. Contingent Debt Instruments ....................... 491 1. Noncontingent Debt Instruments Generally ........ 491 2. Background on CDIs ....................... 492 3. Taxation of CDIs ......................... 495 * Associate, O'Melveny & Myers, Washington, DC. The author wishes to thank Hal Gann, Michael Schultz, and Sang Ji for their thoughts and suggestions. The author also wishes to thank his wife, Doreen, for her endless patience with this weekend-eating project. All of the mistakes in this article are those of the author.

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