mark to market for derivatives

Feb 7, 2013 by

Representative Dave Camp, the Michigan Republican and chairman of the House Ways and Means Committee, recently released a discussion draft of proposed legislation that would tax most financial derivatives on a “mark-to-market” basis. This means that at the end of each year, derivative holders would estimate the market value of the derivative, recognizing tax gains and losses each year rather than waiting until they sell the instrument.The proposed legislation is an important first step toward a more sensible approach to taxing financial instruments, an area of the tax code plagued by complexity, inconsistency and opportunities for gamesmanship.While Mr. Camp’s proposal has some imperfections, he should be commended for putting forward a smart piece of legislation. It not only closes some loopholes, it finally presents a fundamental and sensible response to the development of modern financial instruments.

via A Sensible Change in Taxing Derivatives –

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