US Federal Income Taxation of Islamic Financing | Practical Law

US Federal Income Taxation of Islamic Financing | Practical Law

This Note analyzes the possible characterizations for US federal tax purposes of the two Islamic finance transactions that Sharia-compliant US corporations most commonly use: ijara and murabaha transactions.  This Note also includes a discussion of the substance-over-form doctrine and the classification of a conduit financing backed by the Islamic finance transaction as debt or equity.

US Federal Income Taxation of Islamic Financing

Practical Law Article 1-506-8305 (Approx. 13 pages)

US Federal Income Taxation of Islamic Financing

by Jiyeon Lee-Lim and Lisa Watts, Latham & Watkins LLP
Law stated as of 30 Sep 2014USA (National/Federal)
This Note analyzes the possible characterizations for US federal tax purposes of the two Islamic finance transactions that Sharia-compliant US corporations most commonly use: ijara and murabaha transactions. This Note also includes a discussion of the substance-over-form doctrine and the classification of a conduit financing backed by the Islamic finance transaction as debt or equity.