RT Journal Article
SR Electronic
T1 FAS 133 Raises Complex Tax Issues for Corporate Treasurers
JF Special Issues
FD Institutional Investor Journals
SP 34
OP 38
VO 2001
IS 1
A1 Peter J. Connors
YR 2001
UL https://pm-research.com/content/2001/1/34.abstract
AB Treasury must consider the tax issues associated with hedging transactions as new strategies are developed to comply with FAS 133. Transactions that are improperly identified as hedges may fall prey to straddle rules, in which hedging losses (but not gains) produce capital losses. While tax hedges need not satisfy the effectiveness standard required by FAS 133, under current regulations (subject to change) those hedges must meet a reduction standard that is similar to the enterprise risk reduction standard that was contained in FAS 80. The tax accounting for hedging transactions varies depending on whether partial or full integration hedge treatment applies. In many cases, the book accounting and tax accounting for a transaction do not match; developing a systems capability to identify the differences and create appropriate tax entries is critical.