On January 24, the House Committee on Ways & Means released a discussion draft of legislative provisions (the “Draft”) that would make fundamental changes in the taxation of certain financial products, including the treatment of derivatives held by non-dealers by requiring that they be marked to market annually with gain or loss treated as ordinary income or loss.  These changes would likely be controversial.  The Draft also proposes changes to the tax code eliminating cancellation of debt income for certain debt exchanges and modifying the taxation of market discount on distressed debt that would likely be welcomed by the business community.  Click here to read the full Tax Law Update.