Foreign Banks Complain to IRS about Tax Policy on Hedging

By Kraus, James R. | American Banker, October 26, 1993 | Go to article overview
Save to active project

Foreign Banks Complain to IRS about Tax Policy on Hedging


Kraus, James R., American Banker


NEW YORK - U.S. tax policy on currency and rate hedging may discourage foreign banks from participating in capital markets activity here, said an association that represents those banks.

IRS treatment of interbranch transactions result in severe tax distortions for international banks with U.S. trading operations, according to a recently released position paper from the New York-based Institute of International Bankers.

The institute represents foreign banks in the United States.

"If left unaddressed, this approach would seriously impede further participation of international banks in the U.S. financial markets and adversely affect the depth and competitive strength of U.S. markets," the position paper said.

The position paper, which focuses on what it terms "the adverse economic impact of these distortions on the banks and U.S. financial markets," follows a technical memorandum submitted by the institute to the Treasury Department and the Internal Revenue Service in February.

The paper was drafted and released in response to an IRS ruling that, according to the institute, does not "properly measure the income derived by an international bank's U.S. branches from cross-border trading in certain financial instruments."

The IRS ruling mainly affects foreign currency and interest rate hedge transactions between the U.S. branches of foreign banks and their home offices:

The IRS does not recognize the branch as a separate entity from the parent company and therefore excludes any gains or losses on trading transactions with the bank's home office when calculating tax due on income derived in the United States.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Foreign Banks Complain to IRS about Tax Policy on Hedging
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?