Taxes
For tax purposes Reverse convertible notes are considered to have two components: a debt portion and a put option. At maturity, the option component is taxed as a short-term capital gain if the investor receives the cash settlement. In the case of physical delivery, the option component will reduce the tax basis of the Reference Shares delivered to their accounts.
Read more about this topic: Reverse Convertible Securities
Famous quotes containing the word taxes:
“The law before us, my lords, seems to be the effect of that practice of which it is intended likewise to be the cause, and to be dictated by the liquor of which it so effectually promotes the use; for surely it never before was conceived by any man entrusted with the administration of public affairs, to raise taxes by the destruction of the people.”
—Philip Dormer Stanhope, 4th Earl Chesterfield (1694–1773)
“I thought that’s what this war was about. Making people pay taxes when they didn’t have no say so about it.”
—Lamar Trotti (1898–1952)
“As I went about with my father when he collected taxes, I knew that when taxes were laid some one had to work to earn the money to pay them.”
—Calvin Coolidge (1872–1933)