The options version exploits holders who fail to exercise deep in-the-money calls before an ex-dividend date when exercising is worth more than the remaining time value. A trader long the stock and long puts can capture the dividend while remaining hedged, profiting from assignment patterns.
The tax version involves moving shares across an ex-date between holders facing different withholding treatment, splitting the difference. Aggressive variants of this, notably the cum-ex and cum-cum schemes in Europe, led to criminal prosecutions and multi-billion-euro recoveries, since some involved reclaiming tax that had never been paid.
The distinction between legitimate tax-aware structuring and abuse is a legal question, and one that authorities have redrawn retrospectively. See assignment and dividend.
Related: assignment, dividend, exercise, withholding-tax-drag, call-option, arbitrage