JPMorgan (NYSE: JPM) restates tax treatment for Salesforce-linked notes, flags 30% withholding

Rhea-AI Filing Summary

JPMorgan Chase Financial Company LLC amends the Tax Treatment section of its pricing supplement for Auto Callable Contingent Interest Notes linked to the common stock of Salesforce, Inc. The amendment restates the “Tax Treatment” section in Annex A and addresses U.S. federal income tax characterization, withholding for Non-U.S. Holders, and the potential application of Section 871(m). The issuer states it intends to treat the notes as prepaid forward contracts with associated contingent coupons and to treat Contingent Interest Payments as ordinary income, but acknowledges alternate treatments may be asserted by the IRS or a court. The amendment notes possible future Treasury/IRS guidance and highlights withholding risks for Non-U.S. Holders, including a 30% withholding practice and a referenced exclusion for certain instruments issued prior to January 1, 2027.

Insights

Tax Counsel

Restatement clarifies issuer’s tax position and flags regulatory uncertainty.

The amendment restates the Tax Treatment language, saying the issuer intends to treat the notes as prepaid forward contracts with contingent coupons and to treat Contingent Interest Payments as ordinary income. This reflects the issuer’s view based on advice from counsel, not a binding IRS determination.

The amendment explicitly cites potential Treasury/IRS rulemaking and a prior notice on prepaid forwards; subsequent guidance could alter timing or character of income. Investors should note the issuer’s stated withholding approach for Non-U.S. Holders and the referenced 30% withholding practice.

Cross-border Tax Specialist

Non-U.S. Holders face withholding risk despite issuer views on Section 871(m).

The amendment states withholding agents will generally withhold at 30% on Contingent Interest Payments to Non-U.S. Holders absent valid documentation. The issuer expresses an opinion that Section 871(m) should not apply to these notes for Non-U.S. Holders, relying on determinations including an exclusion for instruments issued prior to January 1, 2027.

Practical consequence: Non-U.S. Holders must supply appropriate documentation to seek treaty relief or refunds. Timing and availability of refunds depend on future IRS positions and procedures.

Key Figures

CUSIP: 46660TDE7 Withholding rate: 30% Issue linked underlying: Common Stock of Salesforce, Inc. +2 more

5 metrics

CUSIP 46660TDE7 Notes linked to Salesforce, Inc.

Withholding rate 30% Withholding on Contingent Interest Payments to Non-U.S. Holders

Issue linked underlying Common Stock of Salesforce, Inc. Underlying security for the notes

Maturity date April 27, 2028 Maturity of the Auto Callable Contingent Interest Notes

Regulatory exclusion date January 1, 2027 Referenced IRS notice exclusion for certain instruments under Section 871(m)

Key Terms

prepaid forward contracts, Contingent Interest Payments, Section 871(m), delta of one

4 terms

prepaid forward contracts financial

"treat the notes for U.S. federal income tax purposes as prepaid forward contracts"

Contingent Interest Payments financial

"treat any Contingent Interest Payments as ordinary income"

Contingent interest payments are interest amounts a borrower only pays if certain conditions are met, such as hitting revenue targets, completing a sale, or reaching a cash threshold. For investors, these payments change the timing and size of expected cash flows—like a loan whose extra charges kick in only if a business performs a certain way—so they affect risk, valuation and how much cash a company has available for growth or dividends.

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.

delta of one financial

"instruments issued prior to January 1, 2027 that do not have a delta of one"

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

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Accepted by SEC EDGAR 05/11/2026 - 04:27 PM Learn about SEC filing dates

FAQ

What tax position does JPMorgan state for the Salesforce-linked notes (JPM)?

The issuer intends to treat the notes as prepaid forward contracts with associated contingent coupons and to treat Contingent Interest Payments as ordinary income, per counsel advice.

Will Non-U.S. Holders face U.S. withholding on contingent interest for these notes?

Withholding agents are expected to withhold at 30% on Contingent Interest Payments to Non-U.S. Holders unless reduced by a tax treaty and appropriate documentation is provided.

Does Section 871(m) apply to these notes for Non-U.S. Holders?

The issuer and special tax counsel state their view that Section 871(m) should not apply to these notes, citing determinations including an exclusion for certain instruments issued before January 1, 2027.

Could IRS or Treasury guidance change the tax treatment of these notes?

Yes. The amendment notes prior Treasury/IRS guidance activity and warns that future regulations could materially affect timing and character of income, possibly with retroactive effect.

What should Non-U.S. Holders do to avoid withholding or seek refunds?

Non-U.S. Holders must provide required certification (e.g., a valid Form W-8) to claim treaty relief; refunds and withholding procedures depend on IRS positions and are not guaranteed.

May 11, 2026 Registration Statement Nos. 333-293684 and 333-293684-01; Rule 424(b)(3)
Amendment no. 1 to pricing supplement dated April 24, 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
Auto Callable Contingent Interest Notes Linked to the
Common Stock of Salesforce, Inc. due April 27, 2028
Fully and Unconditionally Guaranteed by JPMorgan Chase & Co.
The section entitled “Tax Treatment” in the pricing supplement dated April 24, 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: 46660TDE7
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-5 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 April 24, 2026:
http://www.sec.gov/Archives/edgar/data/19617/000121390026048675/ea0288095-01_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
Auto Callable Contingent Interest Notes Linked to the Common Stock of
Salesforce, Inc.
Annex A
Tax Treatment
You should review carefully the section entitled “United States Federal Taxation” in the accompanying prospectus supplement. In
determining our reporting responsibilities we intend to treat (i) the notes for U.S. federal income tax purposes as prepaid forward
contracts with associated contingent coupons and (ii) any Contingent Interest Payments as ordinary income, as described in the section
entitled “United States Federal Taxation — Tax Consequences to U.S. Holders — Program Securities Treated as Prepaid Financial
Contracts with Associated Coupons” in the accompanying prospectus supplement. Based on the advice of Davis Polk & Wardwell LLP,
our special tax counsel, we believe that this is a reasonable treatment, but that there are other reasonable treatments that the IRS or a
court may adopt, in which case the timing and character of any income or loss on the notes could be materially 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 and the relevance of factors such as the nature of the underlying property to which the
instruments are linked. 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 affect the tax consequences of an
investment in the notes, possibly with retroactive effect. The discussions above and in the accompanying prospectus supplement do
not address the consequences to taxpayers subject to special tax accounting rules under Section 451(b) of the Code. You should
consult your tax adviser regarding the U.S. federal income tax consequences of an investment in the notes, including possible
alternative treatments and the issues presented by the notice described above.
Non-U.S. Holders — Tax Considerations. The U.S. federal income tax treatment of Contingent Interest Payments is uncertain, and
although we believe it is reasonable to take a position that Contingent Interest Payments are not subject to U.S. withholding tax (at least
if an applicable Form W-8 is provided), it is expected that withholding agents will (and we, if we are the withholding agent, intend to)
withhold on any Contingent Interest Payment paid to a Non-U.S. Holder generally at a rate of 30% or at a reduced rate specified by an
applicable income tax treaty under an “other income” or similar provision. We will not be required to pay any additional amounts with
respect to amounts withheld. In order to claim an exemption from, or a reduction in, the 30% withholding tax, a Non-U.S. Holder of the
notes must comply with certification requirements to establish that it is not a U.S. person and is eligible for such an exemption or
reduction under an applicable tax treaty. If you are a Non-U.S. Holder, you should consult your tax adviser regarding the tax treatment
of the notes, including the possibility of obtaining a refund of any withholding tax and the certification requirement described above.
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.
In the event of any withholding on the notes, we will not be required to pay any additional amounts with respect to amounts so withheld.