26 U.S. Code § 1233 - Gains and losses from short sales
For purposes of this subtitle, gain or loss from the short sale of property shall be considered as gain or loss from the sale or exchange of a capital asset to the extent that the property, including a commodity future, used to close the short sale constitutes a capital asset in the hands of the taxpayer.
Subsection (b) shall not include an option to sell property at a fixed price acquired on the same day on which the property identified as intended to be used in exercising such option is acquired and which, if exercised, is exercised through the sale of the property so identified. If the option is not exercised, the cost of the option shall be added to the basis of the property with which the option is identified. This subsection shall apply only to options acquired after August 16, 1954.
If on the date of such short sale substantially identical property has been held by the taxpayer for more than 1 year, any loss on the closing of such short sale shall be considered as a loss on the sale or exchange of a capital asset held for more than 1 year (notwithstanding the period of time any property used to close such short sale has been held, and notwithstanding section 1234).
This section shall not apply in the case of a hedging transaction in commodity futures.
2002—Subsec. (e)(2)(E). Pub. L. 107–147 added subpar. (E).
2000—Subsec. (e)(2)(D). Pub. L. 106–554 added subpar. (D).
1997—Subsec. (h). Pub. L. 105–34 added subsec. (h).
1984—Subsecs. (b), (d), (e)(4)(A)(i). Pub. L. 98–369 substituted “6 months” for “1 year” wherever appearing, applicable to property acquired after June 22, 1984, and before Jan. 1, 1988. See Effective Date of 1984 Amendment note below.
1981—Subsec. (e)(2)(A). Pub. L. 97–34 inserted “, but does not include any position to which section 1092(b) applies” after “taxpayer”.
1976—Subsec. (b). Pub. L. 94–455, § 1402(b)(2), provided that “9 months” would be changed to “1 year”.
Pub. L. 94–455, § 1402(b)(1)(T), (2), provided that “6 months” would be changed to “9 months” for taxable years beginning in 1977.
Subsec. (c). Pub. L. 94–455, § 1901(a)(137), substituted “August 16, 1954” for “the date of enactment of this title”.
Subsecs. (d), (e)(4)(A)(i). Pub. L. 94–455, § 1402(b)(2), provided that “9 months” would be changed to “1 year”.
Pub. L. 94–455, § 1402(b)(1)(T), provided that “6 months” would be changed to “9 months” for taxable years beginning in 1977.
1958—Subsec. (a). Pub. L. 85–866, § 52(b), struck out “, other than a hedging transaction in commodity futures,” after “sale of property”.
Subsec. (e)(4). Pub. L. 85–866, § 52(a), added par. (4).
Subsec. (g). Pub. L. 85–866, § 52(b), added subsec. (g).
1955—Subsec. (f). Act Aug. 12, 1955, added subsec. (f).
Amendment by Pub. L. 107–147 effective as if included in the provisions of the Community Renewal Tax Relief Act of 2000 [H.R. 5662, as enacted by Pub. L. 106–554], to which such amendment relates, see section 412(e) of Pub. L. 107–147, set out as a note under section 151 of this title.
Amendment by Pub. L. 97–34 applicable to property acquired and positions established by the taxpayer after June 23, 1981, in taxable years ending after such date, and applicable when so elected with respect to property held on June 23, 1981, see section 508 of Pub. L. 97–34, set out as an Effective Date note under section 1092 of this title.
Amendment by section 1901(a)(137) of Pub. L. 94–455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title.
Amendment by section 52(b) of Pub. L. 85–866 applicable to taxable years beginning after Dec. 31, 1953, and ending after Aug. 16, 1954, see section 1(c)(1) of Pub. L. 85–866, set out as a note under section 165 of this title.
Act Aug. 12, 1955, ch. 871, § 2, 69 Stat. 718, provided that:
Written determinations for this section
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- Maximum Capital Gains Rate : 2011-02-04
- Adjusted Basis for Determining Gain or Loss : 2011-02-04
- Short Term Gains and Holding Periods : 2011-02-04
- Limitation : 2011-02-04
- Gains and Losses from Short Sales : 2004-10-01
- Gains and Losses from Short Sales : 2003-08-29
- Treatment of Certain Liabilities : 1999-04-02
- Gains and Losses from Short Sales : 1999-04-02
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