Tax Facts

7602 / How do the conversion transaction rules apply in determining how a tax straddle is taxed?

A portion of any gain recognized upon disposition or other termination of a straddle that is part of a conversion transaction (see Q 7615) may be treated as ordinary income. A straddle will be subject to these rules if substantially all of the taxpayer’s expected return from the investment is attributable to the time value of the taxpayer’s net investment in the transaction.1 See Q 7615 and Q 7616 for the definition and tax treatment of conversion transactions.

1.   IRC § 1258(c).

|
Tax Facts Premium Tools
Calculators
100+ calculators specifically designed to help you easily assist clients with specific planning situations and calculations.
Practice Guidance
Designed to help you discover new ways for which to build and maintain client relationships.
Concepts Illustrated
Specifically designed to help you easily assist clients with specific planning situations and calculations.
Tax Facts Archives
Access to the entire library of Tax Facts dating back to 2012 allowing you to look up the exact tax figures from prior years.