Commodities tax compliance challenges: Dodd‐Frank and beyond

Abstract

Purpose

The purpose of this paper is to highlight the continuing diligence required of the tax compliance function of any investment vehicle that holds commodities contracts. In addition to monitoring Congressional developments that are likely to pick up where 2010's Dodd‐Frank Act left off, with the globalization of commodities trading, contracts traded on foreign exchanges are being added to the list of “Section 1256” contracts, which have special beneficial tax treatment under current law.

Design/methodology/approach

This technical paper describes new technical rules applicable to the tax returns for taxpayers who trade in commodities contracts, as well as the need to be alert to future developments, whose likely parameters are provided.

Findings

After a period of low levels of new developments, commodities taxation has come to the fore in Washington and an increasing tempo of developments is expected.

Originality/value

This paper provides timely guidance from an expert on tax issues relating to tax planning and tax return preparation from commodities traders.

Citation

Lorence, R.D. (2011), "Commodities tax compliance challenges: Dodd‐Frank and beyond", Journal of Investment Compliance, Vol. 12 No. 1, pp. 44-49. https://doi.org/10.1108/15285811111122056