One Washington lawyer who will play a key behind-the-scenes role in 1994 is David C. Garlock. As a legal focal point for the mortgage banking industry, he'll seek to broaden the impact of a June Tax Court ruling that facilitates the use of mortgage derivatives as hedging tools. He is an outside counsel for Fannie Mae as a partner in Dewey, Ballantine, and will be a participant in the mortgage banking industry's continuing talks with the Internal Revenue Service aimed at providing favorable tax treatment for hedging instruments.
The issue is important because if the court had accepted the IRS' position, users of hedging tools would have had to pay taxes on so-called "phantom income." Now, the industry will seek to build on its June court victory in continuing talks with the IRS.