JPMorgan AMJB notes tax update and counsel view (NYSE: AMJB)

Rhea-AI Filing Summary

JPMorgan Chase Financial Company LLC filed an amendment to the pricing supplement for its Capped Accelerated Barrier Notes linked to the State Street® Industrial Select Sector SPDR® ETF, due December 16, 2027, restating the Tax Treatment section.

The amendment replaces the prior tax section and states that, in the opinion of special tax counsel Davis Polk & Wardwell LLP, the notes are reasonably treated as open transactions (not debt) for U.S. federal income tax purposes; if respected, gains held >1 year should be long-term capital gain. The amendment also warns the constructive ownership rules under Section 1260 could apply and that the IRS might disagree. It notes a January 1, 2027 exclusion referenced in recent IRS guidance and states counsel’s view that Section 871(m) should not apply to Non-U.S. Holders, while cautioning the IRS could challenge that determination.

Insights

Tax Counsel

Amendment replaces Tax Treatment with counsel opinion favoring "open transaction" characterization.

The filing republishes the tax analysis as the authoritative statement from Davis Polk & Wardwell LLP, concluding the notes are reasonably treated as open transactions rather than debt for U.S. federal income tax purposes. This characterization drives whether gains are treated as long-term capital gains when held over one year.

The filing preserves key qualifiers: possible application of Section 1260 (constructive ownership) and the risk the IRS or courts could disagree. Holders should note the referenced January 1, 2027 IRS notice excluding certain pre-2027 instruments and the counsel view on Section 871(m); these are factual statements, not binding IRS rulings.

Structured Products Analyst

Tax characterization materially affects investor tax timing and character but is presented with standard legal caveats.

The amendment ties the notes’ tax treatment to the prepaid financial contract / open transaction framework, which implies capital gain treatment for qualifying U.S. Holders after a one-year holding period. This affects after-tax return profiles for buy-and-hold investors.

Risks remain: constructive ownership rules under Section 1260 could convert excess gain to ordinary income and impose a notional interest charge, and the IRS might challenge the issuer’s determinations. Subsequent Treasury/IRS guidance could change outcomes, possibly with retroactive effect.

Key Figures

CUSIP: 46661CV94 Maturity: due December 16, 2027 Pricing supplement date: June 12, 2026 +3 more

6 metrics

CUSIP 46661CV94 notes linked to Industrial Select Sector SPDR ETF

Maturity due December 16, 2027 notes described in pricing supplement

Pricing supplement date June 12, 2026 pricing supplement amended by this filing

Product/prospectus dates April 17, 2026 product supplement and prospectus dates

Registration Statement Nos. 333-293684 and 333-293684-01 filing identifiers on amendment cover

IRS guidance date referenced January 1, 2027 exclusion mentioned for certain instruments

Key Terms

open transactions, constructive ownership (Section 1260), Section 871(m), prepaid forward contracts, +1 more

5 terms

open transactions financial

"treated as “open transactions” that are not debt instruments"

constructive ownership (Section 1260) regulatory

"could be treated as “constructive ownership transactions” within the meaning of Section 1260"

Section 871(m) regulatory

"Section 871(m) of the Code and Treasury regulations promulgated thereunder"

A U.S. tax rule that treats certain payments from financial contracts (like options, swaps, and other instruments that mimic stock dividends) to non-U.S. investors as if they were direct dividends, requiring U.S. withholding tax. It matters to investors because it can reduce net returns on offshore trades that replicate U.S. equity income and may change pricing or counterparty behavior—think of it as a hidden sales tax that applies when a substitute payment acts like a dividend.

prepaid forward contracts financial

"tax treatment of “prepaid forward contracts” and similar instruments"

delta of one financial

"instruments ... that do not have a delta of one with respect to underlying securities"

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Available on EDGAR 07/09/2026 - 06:04 AM Accepted by SEC EDGAR 07/08/2026 - 07:45 PM Learn about SEC filing dates

FAQ

What did JPMorgan amend for AMJB notes?

The amendment replaces the Tax Treatment section of the June 12, 2026 pricing supplement with a new annex. It restates counsel opinion on federal tax treatment and related risks for the notes due December 16, 2027.

How does counsel say the AMJB notes are taxed for U.S. Holders?

Counsel reasonably treats the notes as open transactions (not debt), so gains held more than one year would be long-term capital gain if this treatment is respected by the IRS or courts.

What is the risk from Section 1260 for AMJB holders?

Section 1260 (constructive ownership) could apply, converting gain above net underlying long-term capital gain to ordinary income and imposing a notional interest charge, per the amendment’s warning to investors.

Will Section 871(m) withholding apply to Non-U.S. Holders of AMJB notes?

Issuer determinations and counsel opinion state Section 871(m) should not apply to these notes for Non-U.S. Holders, but the filing notes the IRS could disagree with that conclusion.

Does the amendment reference recent IRS guidance affecting these notes?

Yes; the amendment cites an IRS notice and a carve-out for instruments issued prior to January 1, 2027, and it warns that future Treasury/IRS guidance could materially affect tax outcomes.

July 8, 2026 Registration Statement Nos. 333-293684 and 333-293684-01; Rule 424(b)(3)
Amendment no. 1 to pricing supplement dated June 12, 2026 to product supplement no. 3-I dated April 17, 2026 and the prospectus and
prospectus supplement, each dated April 17, 2026
JPMorgan Chase Financial Company LLC
Structured Investments
Capped Accelerated Barrier Notes Linked to the State Street®
Industrial Select Sector SPDR® ETF due December 16, 2027
Fully and Unconditionally Guaranteed by JPMorgan Chase & Co.
The section entitled “Tax Treatment” in the pricing supplement dated June 12, 2026, related to the notes referred to
above (the “pricing supplement”), is amended, restated and superseded in its entirety by the section entitled “Tax
Treatment” in Annex A to this amendment.
CUSIP: 46661CV94
Investing in the notes involves a number of risks. See “Risk Factors” beginning on page S-2 of the accompanying
prospectus supplement, “Risk Factors” beginning on page PS-12 of the accompanying product supplement and
“Selected Risk Considerations” beginning on page PS-4 of the pricing supplement.
Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved
of the notes or passed upon the accuracy or the adequacy of this amendment, the pricing supplement or the accompanying
product supplement, prospectus supplement and prospectus. Any representation to the contrary is a criminal offense.
The notes are not bank deposits, are not insured by the Federal Deposit Insurance Corporation or any other governmental agency
and are not obligations of, or guaranteed by, a bank.
You should read this amendment together with the pricing supplement and the related product supplement, prospectus
supplement and prospectus, each of which can be accessed via the hyperlinks below. Please also see “Additional Terms Specific
to the Notes” in the pricing supplement.
● Pricing supplement dated June 12, 2026:
http://www.sec.gov/Archives/edgar/data/19617/000121390026069346/ea0295049-01_424b2.htm
● Product supplement no. 3-I dated April 17, 2026:
http://www.sec.gov/Archives/edgar/data/19617/000121390026045198/ea0285802-20_424b2.pdf
● Prospectus supplement and prospectus, each dated April 17, 2026:
http://www.sec.gov/Archives/edgar/data/19617/000095010326005889/crt_dp245141-424b2.pdf

PS-1 | Structured Investments
Capped Accelerated Barrier Notes Linked to the State Street® Industrial
Select Sector SPDR® ETF
Annex A
Tax Treatment
You should review carefully the section entitled “United States Federal Taxation” in the accompanying prospectus supplement. The
following discussion, when read in combination with that section, constitutes the full opinion of our special tax counsel, Davis Polk &
Wardwell LLP, regarding the material U.S. federal income tax consequences of owning and disposing of notes.
Based on current market conditions, in the opinion of our special tax counsel it is reasonable to treat the notes as “open transactions”
that are not debt instruments for U.S. federal income tax purposes, as more fully described in “United States Federal Taxation — Tax
Consequences to U.S. Holders — Program Securities Treated as Prepaid Financial Contracts That are Open Transactions” in the
accompanying prospectus supplement. Assuming this treatment is respected, subject to the possible application of the “constructive
ownership” rules, the gain or loss on your notes should be treated as long-term capital gain or loss if you hold your notes for more than
a year, whether or not you are an initial purchaser of notes at the issue price. The notes could be treated as “constructive ownership
transactions” within the meaning of Section 1260 of the Code, in which case any gain recognized in respect of the notes that would
otherwise be long-term capital gain and that was in excess of the “net underlying long-term capital gain” (as defined in Section 1260)
would be treated as ordinary income, and a notional interest charge would apply as if that income had accrued for tax purposes at a
constant yield over your holding period for the notes. Our special tax counsel has not expressed an opinion with respect to whether the
constructive ownership rules apply to the notes. Accordingly, U.S. Holders should consult their tax advisers regarding the potential
application of the constructive ownership rules.
The IRS or a court may not respect the treatment of the notes described above, in which case the timing and character of any income
or loss on your notes could be materially and adversely affected. In addition, in 2007 Treasury and the IRS released a notice
requesting comments on the U.S. federal income tax treatment of “prepaid forward contracts” and similar instruments. The notice
focuses in particular on whether to require investors in these instruments to accrue income over the term of their investment. It also
asks for comments on a number of related topics, including the character of income or loss with respect to these instruments; the
relevance of factors such as the nature of the underlying property to which the instruments are linked; the degree, if any, to which
income (including any mandated accruals) realized by non-U.S. investors should be subject to withholding tax; and whether these
instruments are or should be subject to the constructive ownership regime described above. While the notice requests comments on
appropriate transition rules and effective dates, any Treasury regulations or other guidance promulgated after consideration of these
issues could materially and adversely affect the tax consequences of an investment in the notes, possibly with retroactive effect. You
should consult your tax adviser regarding the U.S. federal income tax consequences of an investment in the notes, including the
potential application of the constructive ownership rules, possible alternative treatments and the issues presented by this notice.
Section 871(m) of the Code and Treasury regulations promulgated thereunder (“Section 871(m)”) generally impose a 30% withholding
tax (unless an income tax treaty applies) on dividend equivalents paid or deemed paid to Non-U.S. Holders with respect to certain
financial instruments linked to U.S. equities or indices that include U.S. equities. Section 871(m) provides certain exceptions to this
withholding regime, including for instruments linked to certain broad-based indices that meet requirements set forth in the applicable
Treasury regulations. Additionally, a recent IRS notice excludes from the scope of Section 871(m) instruments issued prior to January
1, 2027 that do not have a delta of one with respect to underlying securities that could pay U.S.-source dividends for U.S. federal
income tax purposes (each an “Underlying Security”). Based on certain determinations made by us, our special tax counsel is of the
opinion that Section 871(m) should not apply to the notes with regard to Non-U.S. Holders. Our determination is not binding on the
IRS, and the IRS may disagree with this determination. Section 871(m) is complex and its application may depend on your particular
circumstances, including whether you enter into other transactions with respect to an Underlying Security. You should consult your tax
adviser regarding the potential application of Section 871(m) to the notes.