OCC鈥檚 Donohue warns of zombie tax reform
17 March 2017 Chicago
Image: Shutterstock
The US equity options market must stay alert and be ready to work with government to head off potentially damaging tax reforms on the horizon, according to OCC executive chair and CEO Craig Donohue.
In a recent blog post on the potential of tax reforms under President Donald Trump, Donohue highlighted that proposals offered by the previous administration 鈥渃ould make the use of listed equity options much less attractive to market participants than under current law鈥� if they were resurrected.
鈥淪ince the election, both President Trump and members of Congress leading the congressional tax committees have indicated that tax reform is a priority for 2017, and proposals are being drafted to ensure early introduction of bills to reform the tax code,鈥� Donohue explained.
The OCC CEO added that it's 鈥渓ikely that legislators and staff will refer back to prior financial products tax proposals鈥�.
鈥淭hese proposals would treat all listed equity options as sold at the end of the year, treat appreciated stock as sold if a taxpayer enters into an option to manage risk associated with owning the stock, and radically alter the tax treatment of stock while a related option position is outstanding.鈥�
鈥淓nacting these proposals would adversely affect individuals and other taxpayers using listed equity options to manage risks associated with investments in publicly traded stocks.鈥�
He went on to say: "It would discourage use of options鈥攄istorting rational economic and risk management decision making and replacing the well-established and relatively simple tax rules for listed equity options with a burdensome and overly complicated regime.鈥�
Donohue confirmed that OCC, in its capacity as an industry body, is 鈥減aying close attention to this issue鈥� and working closely with the US 麻豆传媒 Markets Coalition to ensure the best conclusion.
鈥淥CC and the coalition continue to meet with members of Congress and staff of these committees to reiterate our deep concerns on behalf of the options market about the previous proposals, on which we submitted extensive comments and held many meetings.鈥�
In a recent blog post on the potential of tax reforms under President Donald Trump, Donohue highlighted that proposals offered by the previous administration 鈥渃ould make the use of listed equity options much less attractive to market participants than under current law鈥� if they were resurrected.
鈥淪ince the election, both President Trump and members of Congress leading the congressional tax committees have indicated that tax reform is a priority for 2017, and proposals are being drafted to ensure early introduction of bills to reform the tax code,鈥� Donohue explained.
The OCC CEO added that it's 鈥渓ikely that legislators and staff will refer back to prior financial products tax proposals鈥�.
鈥淭hese proposals would treat all listed equity options as sold at the end of the year, treat appreciated stock as sold if a taxpayer enters into an option to manage risk associated with owning the stock, and radically alter the tax treatment of stock while a related option position is outstanding.鈥�
鈥淓nacting these proposals would adversely affect individuals and other taxpayers using listed equity options to manage risks associated with investments in publicly traded stocks.鈥�
He went on to say: "It would discourage use of options鈥攄istorting rational economic and risk management decision making and replacing the well-established and relatively simple tax rules for listed equity options with a burdensome and overly complicated regime.鈥�
Donohue confirmed that OCC, in its capacity as an industry body, is 鈥減aying close attention to this issue鈥� and working closely with the US 麻豆传媒 Markets Coalition to ensure the best conclusion.
鈥淥CC and the coalition continue to meet with members of Congress and staff of these committees to reiterate our deep concerns on behalf of the options market about the previous proposals, on which we submitted extensive comments and held many meetings.鈥�
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