26 U.S. Code § 1058 - Transfers of securities under certain agreements
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(a) General rule
In the case of a taxpayer who transfers securities (as defined in section 1236 (c)) pursuant to an agreement which meets the requirements of subsection (b), no gain or loss shall be recognized on the exchange of such securities by the taxpayer for an obligation under such agreement, or on the exchange of rights under such agreement by that taxpayer for securities identical to the securities transferred by that taxpayer.
(b) Agreement requirements
In order to meet the requirements of this subsection, an agreement shall—
(2) require that payments shall be made to the transferor of amounts equivalent to all interest, dividends, and other distributions which the owner of the securities is entitled to receive during the period beginning with the transfer of the securities by the transferor and ending with the transfer of identical securities back to the transferor;
(3) not reduce the risk of loss or opportunity for gain of the transferor of the securities in the securities transferred; and
Source(Added Pub. L. 95–345, § 2(d)(1),Aug. 15, 1978, 92 Stat. 482.)
Section applicable with respect to amounts received after Dec. 31, 1976, as payments with respect to securities loans (as defined in section 512 (a)(5) of this title), and transfers of securities, under agreements described in this section, occurring after such date, see section 2(e) ofPub. L. 95–345, set out as an Effective Date of 1978 Amendment note under section 509 of this title.