Article:
Reed Shuldiner, A General Approach to the Taxation of Financial Instruments, 71 Texas L. Rev. 243 (1992).
 

Abstract:
Shuldiner argues that the present tax treatment of financial instruments has high social costs. He suggests that these problems could be avoided by abandoning the current realization system and adopting mark-to-market accounting for financial instruments. But since the adoption of such a system is unlikely, the author offers an alternative: expected value taxation. The Article develops a general framework for determining the timing of income with respect to financial instruments within the overall confines of realization-based accounting. The author recommends a set of uniform rules to account for financial instruments, including dividing instruments into their component parts and accruing income for tax purposes based on each part’s expected future value.