IRS scrutinizes banks' equity swaps

01/21/2010 | NYTimes.com

The Internal Revenue Service is looking into whether banks are using equity swaps to avoid collecting dividend withholding taxes by masking the true ownership of the instruments' underlying shares. "The audit guidelines reflect suspicion that all cross-border equity swaps are tax-avoidance transactions, even though the IRS' own regulations treated these transactions favorably," said Mark H. Leeds, a lawyer at Greenberg Traurig.

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