“Exchange-Traded Notes: IRS Fires a Shot Across the Bow of ‘Wait and See’ Taxation
Thomas Humphreys and Remmelt Reigersman
On December 7, 2007 the Internal Revenue Service (“IRS”) and the Treasury Department (“Treasury”) published Revenue Ruling 2008-1 (“Ruling”)  and Notice 2008-2 (“Notice”)  addressing the U.S. federal income tax treatment of prepaid forward contracts which include certain exchange-traded notes (“ETNs”).
Viewed together, the Ruling and the Notice serve as a warning that the IRS is focused on whether the market’s “wait and see” accounting system for ETNs and similar instruments is appropriate. However, the immediate impact will only be on a narrow class of single currency-linked ETNs.”
Fairview Fund Administration