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Practitioners Voice Concerns Over Grantor Trust Proposal

As we previously reported, one of the House Ways and Means Committee’s tax proposals for the Build Back Better Act would treat transfers between grantor trusts and their deemed owners as taxable exchanges. This proposal could be detrimental to the structured finance industry, because many securitizations and other borrowing transactions are effected by (1) one or more taxpayers’ contribution of a pool of assets to a grantor trust in exchange for ownership certificates and (2) the grantor trust’s issuance of debt securities backed by the pool of assets.

A number of industry participants have taken note. Recently, the Structured Finance Association (in which Cadwalader tax partners participate) suggested including an exclusion in the proposed legislation for structured finance transactions.

Key Contacts

Adam Blakemore
T. +44 (0) 20 7170 8697

Linda Z. Swartz
T. +1 212 504 6062

Jon Brose
T. +1 212 504 6376

Andrew Carlon
T. +1 212 504 6378

Mark P. Howe
T. +1 202 862 2236

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