With Jill Darrow, Valentina Famparska, Zvi Hahn, Matthew Hinderman, Robert Loewy, Saul Rudo
Internal Revenue Service (IRS) recently released Advice Memorandum 2010-005 (the AM), in which it held that a so-called barrier option or "knock-out option," as described below, would not be respected as an option for U.S. federal income tax purposes and would cause the optionholder to be treated as the owner of the "optioned" securities.