Estate of McKelvey v. Commissioner tax planning opportunity or a trap for the unwary ? Mark Fichtenbaum and Robert Gordon
By: Fichtenbaum, Mark
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Material type: 
ArticlePublisher: 2017Subject(s): IMPUESTOS | PLANIFICACION FISCAL | ESTADOS UNIDOS | JURISPRUDENCIA | SOCIEDADES
In:
Journal of Taxation of Investments v. 34, n. 4, Summer 2017, p. 25-30Summary: In a highly unexpected result, the Tax Court in Estate of McKelveyv. Commissioner ruled that the extension in maturity of a profitableprepaid variable forward contract (PPVF) was not a taxable event. If this case could be relied upon, a hedger who is Rolling over a profi table PPVF could avoid realizing gain on the PPVF bysimply extending the maturity of the contract. Although tempting, the authors think this procedure could turn out to be disastrousif the case is overturned. Commenters have speculated that this decision could also delay the crystallization of profi ts on an optionthat one had sold, though this avenue may carry much less bite if the Tax Court is reversed.
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| IEF | OP 235/2017/34/4-2 (Browse shelf) | Available | OP 235/2017/34/4-2 |
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| OP 235/2017/34/3-2 The European Commission's application of the state aid rules to tax | OP 235/2017/34/3-3 Treasury's passive activity interest abuse of power | OP 235/2017/34/4-1 New regulations raise critical issues concerning a partner's share of liabilities and partnership disguised sales | OP 235/2017/34/4-2 Estate of McKelvey v. Commissioner | OP 235/2017/34/4-3 Section 355 and the suffering of closely held corporations | OP 235/2017/34/4-4 Securitization of our nation's forests | OP 235/2017/34/4-5 International investors and corporate taxation |
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In a highly unexpected result, the Tax Court in Estate of McKelveyv. Commissioner ruled that the extension in maturity of a profitableprepaid variable forward contract (PPVF) was not a taxable event. If this case could be relied upon, a hedger who is Rolling over a profi table PPVF could avoid realizing gain on the PPVF bysimply extending the maturity of the contract. Although tempting, the authors think this procedure could turn out to be disastrousif the case is overturned. Commenters have speculated that this decision could also delay the crystallization of profi ts on an optionthat one had sold, though this avenue may carry much less bite if the Tax Court is reversed.
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