US tax proposal targets derivatives' 'phantom income'

Capitol Hill in Washington DC
Tax demands from the House of Representatives

A tax proposal released by the US House of Representatives would require investors to determine the fair market value of their derivatives holdings once a year and pay tax on any gains at ordinary income rates.

The discussion draft, which was released by the Committee on Ways and Means on January 24, seeks to "modernise the country's tax code" and "minimise Wall Street's ability to hide and disguise potentially significant risks through the abuse of derivatives", according to a press release

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