The U.S federal income tax treatment of CDS is uncertain (Nirenberg and Kopp 1997:1, Peaslee & Nirenberg 2008-07-21:129 and Brandes 2008). Commentators have suggested that, depending on how they are drafted, they are either notional principal contracts or options for tax purposes,(Peaslee & Nirenberg 2008-07-21:129). but this is not certain. There is a risk of having CDS recharacterized as different types of financial instruments because they resemble put options and credit guarantees. In particular, the degree of risk depends on the type of settlement (physical/cash and binary/FMV) and trigger (default only/any credit event) (Nirenberg & Kopp 1997:8). And, as noted below, the appropriate treatment for Naked CDS may be entirely different.