This course will present an in-depth analysis of the federal income taxation of financial instruments and transactions, with a focus on both the taxation and business aspects. In addition, we will explore selected relevant tax policy issues which the U.S. Congress, Treasury Department, and Internal Revenue Service recently have considered pertaining to financial instruments. Topics covered will include: the fundamentals of debt instruments and derivatives; basic interest and original issue discount rules; market discount and premium; variable rate and contingent debt instruments; mortgage-backed securities; taxation of derivatives (options, forwards, futures, swaps and collars); hedging transactions; and cross-border aspects of financial instruments. A pre-requisite for the course is 747 Taxation of Individuals or instructor’s permission.