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Taxation of Financial Institutions and Products Conference Draws Big Names and Numbers

The Taxation of Financial Institutions and Products Committee procured several acclaimed speakers for its annual conference on Jan. 14 at the New York Helmsley Hotel. The slate of speakers drew high praise from the more than 100 attendees, the biggest attendance in years, making the conference a huge success.

Professionals in the tax field and representatives from large accounting firms, investment banks and hedge funds traveled from as far as Boston, Dallas and Washington state to attend the conference.

Steven C. Kaplan, a senior manager with Deloitte & Touche and this year’s conference chairman, was pleased with the attendance.

“I had hoped that we would surpass 60 attendees, but to surpass 100 really was terrific. I think the large number of attendees was due both to the quality of the program and the caliber of the speakers,” Kaplan said.

Speakers included some well-known figures in the tax arena, such as Viva Hammer, from the Department of the Treasury; Andrea Kramer, from McDermott, Will & Emery; Ed Kleinbard, from Cleary, Gottlieb, Steen & Hamilton; and Lee Sheppard, from Tax Notes.

Hammer opened the session with a discussion about legislation proposed by Congress to expand the scope of section 163(l) and proposals related to the tax straddle rules. She discussed recently issued Notice 2003-81, saying that the Internal Revenue Service now viewed foreign currency options that trade on an exchange as section 1256 contracts, a large departure from the prior position taken by the IRS.

Maury Cartine, a partner with Rothstein Kass & Company, continued the conference by covering the application of tax shelter disclosure rules to investment partnerships.

The next session featured a panel discussion among committee member Janice Johnson, Mark Fichtenbaum, from Twenty-First Securities, and Richard Shapiro, from Ernst & Young. The panelists focused on strategies to take advantage of the lower dividend and capital gains rates resulting from the Jobs and Growth Tax Relief Reconciliation Act of 2003.

After IRS Director of Payor Compliance William Conlon’s luncheon address about the IRS K-1 Matching Program, Leon Metzger, vice chairman of Paloma Partners Management Company and chairman of the Taxation of Financial Institutions and Products Committee, asked the attendees to consider joining the committee. The response to that request has been positive, with several new members joining.

Following lunch, the attendees were treated to a presentation by Kramer, who is perhaps best known as the author of “Financial Products: Taxation, Regulation and Design,” a treatise on financial products tax law. Kramer described how to analyze new financial products by using weather derivatives as a case study. Her presentation provided attendees, no matter what their experience level, with a framework for analyzing new financial products.

In the next session, moderated by Hal Lux, director of research at Paloma Partners Management Company, Sheppard and Kleinbard faced off on a variety of current developments, including the Bank One case, Feline Prides and contingent convertibles. The audience seemed to enjoy the witty and barbed exchanges.

Ted Dougherty, a tax partner, and Anthony Donadio, a tax director, both with Deloitte & Touche, rounded out the conference with a discussion on tax issues surrounding distressed debt. In the final session of the conference, Larry Weinblatt covered the tax treatment of civil fines and penalties paid to the Securities and Exchange Commission and other regulatory agencies, and Metzger addressed some current developments.

Save the date for next year’s conference, scheduled for Jan. 15, 2005.