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IRS Issues Temporary and Proposed Regulations on the Treatment of Dividend Equivalent Payments

January 30, 2012

By ANDREW M. SHORT & DAVID MAKSO

This alert describes recently released regulations that provide guidance on dividend equivalents (i.e., payments under certain types of financial transactions that are determined by reference to US source dividends) under Section 871(m) of the Code. Most significantly, these new rules expand the definition of "specified notional principal contracts" beginning January 1, 2013 and provide guidance on other issues that arise under Section 871(m) including withholding obligations.

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Image: David Makso
David Makso
Partner, Tax Department