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:
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—Rose Wilder Lane (1886–1968)
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—John Kenneth Galbraith (b. 1908)
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—Helen Prejean (b. 1940)