Since settlement is not required with options, a foreign currency option
would therefore not meet the definition of a foreign currency contract.
With a foreign currency option
, it operates in the same manner as a stop loss.
The petitioner, Michael Napoliello, entered into two pairs of offsetting long and short foreign currency option
contracts held by an LLC of which he was the sole member.
During the fourth quarter of 2002, the company recorded an unrealized loss on derivative instruments relating to foreign currency option
contracts expiring in 2003 and entered into prior to year-end 2002.
"Foreign Currency Option
Values," Journal of International Money and Finance, 2, 1983, pp.
Subsequently, the Commodity Futures Trading Commission (CFTC) commenced these proceedings alleging that the defendants were deceiving investors and causing them to receive false reports of their account status.(29) The district court granted CFTC's request for a temporary equity receiver(30) over defendants' argument that under the Treasury Amendment, the CFTC had no power to regulate OTC options in foreign currency.(31) When the district court ruled that Dunn's foreign currency option
trades were subject to CFTC regulation, Dunn brought an interlocutory appeal to the Second Circuit.(32)
dollar receivables or payables is a type of transaction risk which can be hedged using forward foreign exchange or foreign currency option
1256 and, thus, a foreign currency option
could be a foreign currency contract.
Thus an unrealized loss existing on the date that a foreign currency option
was transferred to a charity was disallowed.
dollar/U.K, pound exchange rate and decides to manage that risk by purchasing a foreign currency option
directly from a U.S.
(For the underlying decision in the latter case, see 100 AFTR2d 2007-5591 and "Tax Matters: Economic Substance Prevails Against Another Son of BOSS," JofA, March 08, page 71.) Both cases involved foreign currency option
spreads that the IRS deemed tax-avoidance shams.
* Notice 2003-81 offsetting foreign currency option
contracts: A party claims a loss on the assignment of a Sec.