JPMorgan Chase & Co. Notes May Be Treated as 'Open Transactions' for Tax Purposes

The JPMorgan Chase & Co. notes have been issued and are now available for purchase. According to the accompanying prospectus supplement, investors should review the section entitled 'United States Federal Taxation' carefully.

In a statement, Davis Polk & Wardwell LLP, the special tax counsel, noted that based on current market conditions, it is reasonable to treat the notes as 'open transactions' that are not debt instruments for U.S. federal income tax purposes.

This treatment would result in long-term capital gains or losses if held for more than a year, regardless of whether the investor was an initial purchaser at the issue price.

The IRS or a court may disagree with this treatment, which could materially and adversely affect the timing and character of any income or loss on the notes.