-159-
Daubert v. Merrell Dow Pharm. Inc., 509 U.S. 579, 592 n.10
(1993).
OPINION
I. Overview
These cases address the Federal income taxation of financial
derivatives. Congress has required for approximately the last 10
years that taxpayers participating in certain types of financial
derivatives report the value of those derivatives at their fair
market value. The taxpayers subject to this valuation
requirement are plentiful, and the tax dollars affected by this
requirement reach into the billions, if not the trillions.55
Congress chose cognizantly not to promulgate explicit rules
mandating valuation methods for this purpose. H. Conf. Rept.
103-213, at 616 (1993), 1993-3 C.B. 393, 494. Congress opted
instead to delegate to the Department of the Treasury (Treasury
Department) the authority to promulgate these rules while
advising the Treasury Department that “the conferees expect that
the Treasury Department will authorize the use of valuation
methods that will alleviate unnecessary compliance burdens for
55 As to the regularity of interest rate swap transactions,
it has been noted by the Court of Appeals for the Seventh
Circuit, the court to which an appeal of these cases would
typically lie, that “‘The swaps dealers--mostly banks--that
create, market, and broker these [interest rate swaps] deals have
made billions.’” Caisse Nationale de Credit Agricole v. CBI
Indus., Inc., 90 F.3d 1264, 1267 n.1 (7th Cir. 1996) (quoting
Greising, “Chicago’s Swaps Sweepstakes”, Business Week, June 14,
1993).
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