What’s in a name?

It is by no means the case that the label attached to a transaction will always determine its tax treatment. Stephen Edge of Slaughter and May examines the Ensign principle and reminds the tax adviser that one of his or her most important tasks is to establish the critical difference in terms of legal analysis or legal relationship between one transaction and another and to make sure that it survives all the stages of documenting a deal.

Some tax questions are really straightforward to answer.

Why is a finance lease not a loan? – because it is a finance lease. Why is the incremental amount above the issue price payable on the redemption of commercial paper issued at a discount not interest? – because it is discount profit. Why is a repo not a stock loan? – because it is a repo.