Except as provided in paragraph (2), the term “appreciated financial position” means any position with respect to any stock, debt instrument, or partnership interest if there would be gain were such position sold, assigned, or otherwise terminated at its fair market value.
The term “position” means an interest, including a futures or forward contract, short sale, or option.
A taxpayer shall not be treated as having made a constructive sale solely because the taxpayer enters into a contract for sale of any stock, debt instrument, or partnership interest which is not a marketable security (as defined in section 453(f)) if the contract settles within 1 year after the date such contract is entered into.
The term “forward contract” means a contract to deliver a substantially fixed amount of property (including cash) for a substantially fixed price.
If a taxpayer holds multiple positions in property, the determination of whether a specific transaction is a constructive sale and, if so, which appreciated financial position is deemed sold shall be made in the same manner as actual sales.
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.