variable prepaid forward contract

Definition

A controversial strategy used by investors with large stock positions to generate liquidity without incurring current taxes by contracting with a brokerage firm to deliver the shares of stock at some future date In return for a cash payment equal to 90% of its current value. The deferred tax treatment, currently being challenged by the IRS, is based on the assertion that an actual transfer of shares has not yet occurred.
Browse Definitions by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
variable payment plan variable price limit