4.64 is taxed in Year 1 and 4.86 is taxed in Year 2 (see Case RÅ 1994 ref 19).
Hänvisas från p. 6 (s. 120)
1.As illustrated in Section 5.2.4.1, the equity-index bond is, in substance, as. 120
2.combination of a zero-coupon bond and a European equity index-linked calls. 120
3.option. Thus applying bifurcation as a method of taxing the equity index-linkeds. 120
4.bond entails that the taxation is carried out on basis of the zero-coupon bond ands. 120
5.the call option. If the value of the bond is 150 at maturity, 9.5 would bes. 120
6.attributable to the zero-coupon bond and taxed as interest on an accrual basis.s. 120
7.The remaining payoff of 40.5 would be attributable to the call option and taxeds. 120
8.as a capital gain at maturity of the option. If the value of the bond is 100 ats. 120
9.maturity, 9.5 is taxed as interest and an equal amount is recognized as a capitals. 120
10.loss. However, as capital losses from equity index-linked options are nots. 120
11.possible to entirely offset against interest income, the tax treatment would entails. 120
12.the paying of taxes, although the net payoff from the equity index-linked bond iss. 120
13.zero.s. 120
14.There is a principle difference between expected-return taxation ands. 120
15.bifurcation: the latter method entails the taxation based on legal form, whereass. 120
16.the former is based on the economic substance of the payoff. Thus tax arbitrages. 120
17.opportunities resulting from the legal classification of the payoff from thes. 120
18.building blocks of a hybrid instrument cannot be addressed by bifurcation. Ins. 120
19.such cases, expected-return taxation appears to be the only suitable method.s. 120