Course | Columbia Law School

After exploring the tax treatment of familiar investments such as common stock and fixed-rate debt, and of traditional derivatives such as options and forwards, the course considers the host of new financial instruments emerging in the markets in recent years, including contingent debt, contingent swaps, mandatory exchangeable securities and so on. These innovative instruments have attracted considerable attention from the tax bar because they raise novel tax questions while offering taxpayers new ways to reduce tax liability. The government has responded with new rules that close some loopholes, but frequently establish new and unique tax regimes, adding considerable complexity to the law. The course will survey this evolving body of tax law, as well as the basic economics and current uses of new financial instruments. In addition, the course will explore broader questions of tax and regulatory policy, including efficiency and equity issues that arise in taxing investments, and the ability of the government to respond effectively to financial innovation.