Passive Activities: The Technical Explanation, Page 44, further states that the new law "clarifies that the election to mark to market
an interest in a passive activity does not result in the deduction of suspended losses by reason of section 469(g)(1)(A).
All derivatives in a category must be accounted for in the same manner: mark to market
through equity or deferral as a basis adjustment.
Herz underscored the importance of neutral, independent standard setting to capital market investors, and noted that after gathering extensive input about fair value from a diversity of capital market participants, the prevailing view urged the FASB not to suspend or weaken mark to market
While these assets and liabilities may fluctuate in value from quarter to quarter, the income impact should be minimal if companies are able to either apply hedge accounting, elect the normal purchases and sales exception, or if they can mark to market
a balanced portfolio.
Following the re-evaluation, the Company, together with its independent accountants, concluded that hedge accounting was not appropriate for these transactions and accordingly, the Company implemented the use of mark to market
7 billion in mark to market
exposure under its second lien collateral structure.
As a dealer, a taxpayer must mark to market
all securities, unless otherwise identified as exempt from Sec.
Since forecasted transactions have not yet occurred, there is nothing to mark to market
4 million after-tax unrealized charge was recorded as a result of applying mark to market
accounting treatment for interest rate caps and swaptions written by the company.
There would be no requirement to mark to market
the ensuing options (known as the "cold S&P right"--the right to payments based on the following years increase in the S&P index) at the close of a year.
A sensitivity analysis was provided to Fitch, which indicated the mark to market
values of the swaps under various interest rate scenarios.
He sums it up with, "Right now, my goal is getting mark to market
treatment for debt and equity securities and measuring loan losses by using a discount rate linked to current market rates.