26 U.S. Code § 475 - Mark to market accounting method for dealers in securities
A security shall not be treated as described in subparagraph (A), (B), or (C) of paragraph (1), as the case may be, unless such security is clearly identified in the dealer’s records as being described in such subparagraph before the close of the day on which it was acquired, originated, or entered into (or such other time as the Secretary may by regulations prescribe).
If a security ceases to be described in paragraph (1) at any time after it was identified as such under paragraph (2), subsection (a) shall apply to any changes in value of the security occurring after the cessation.
The term “hedge” means any position which manages the dealer’s risk of interest rate or price changes or currency fluctuations, including any position which is reasonably expected to become a hedge within 60 days after the acquisition of the position.
The rules of sections 263(g), 263A, and 1256(a) shall not apply to securities to which subsection (a) applies, and section 1091 shall not apply (and section 1092 shall apply) to any loss recognized under subsection (a).
Any gain or loss with respect to a security under subsection (a)(2) shall be treated as ordinary income or loss.
In the case of a dealer in commodities who elects the application of this subsection, this section shall apply to commodities held by such dealer in the same manner as this section applies to securities held by a dealer in securities.
Any security to which subparagraph (A) applies and which was acquired in the normal course of the taxpayer’s activities as a trader in securities shall not be taken into account in applying section 1259 to any position to which subparagraph (A) does not apply.
Rules similar to the rules of subsections (b)(4) and (d) shall apply to securities held by a person in any trade or business with respect to which an election under this paragraph is in effect. Subsection (d)(3) shall not apply under the preceding sentence for purposes of applying sections 1402 and 7704.
In the case of a person who is engaged in a trade or business as a trader in commodities and who elects to have this paragraph apply to such trade or business, paragraph (1) shall apply to commodities held by such trader in connection with such trade or business in the same manner as paragraph (1) applies to securities held by a trader in securities.
The elections under paragraphs (1) and (2) may be made separately for each trade or business and without the consent of the Secretary. Such an election, once made, shall apply to the taxable year for which made and all subsequent taxable years unless revoked with the consent of the Secretary.
2002—Subsec. (g)(3). Pub. L. 107–147 substituted “described in section” for “described in sections”.
2000—Subsec. (g)(3). Pub. L. 106–554 substituted “267(b) or” for “267(b) of”.
1999—Subsec. (c)(3). Pub. L. 106–170 substituted “manages” for “reduces”.
1998—Subsec. (c)(4). Pub. L. 105–206, § 7003(a), added par. (4).
Subsec. (f)(1)(D). Pub. L. 105–206, § 6010(a)(3), inserted at end “Subsection (d)(3) shall not apply under the preceding sentence for purposes of applying sections 1402 and 7704.”
Subsec. (g)(3). Pub. L. 105–206, § 7003(b), added par. (3).
1997—Subsecs. (e) to (g). Pub. L. 105–34 added subsecs. (e) and (f) and redesignated former subsec. (e) as (g).
Amendment by Pub. L. 106–170 applicable to any instrument held, acquired, or entered into, any transaction entered into, and supplies held or acquired on or after Dec. 17, 1999, see section 532(d) of Pub. L. 106–170, set out as a note under section 170 of this title.
Amendment by section 6010(a)(3) of Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.
Written determinations for this section
These documents, sometimes referred to as "Private Letter Rulings", are taken from the IRS Written Determinations page; the IRS also publishes a fuller explanation of what they are and what they mean. The collection is updated (at our end) daily. It appears that the IRS updates their listing every Friday.
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- Definitions : 2015-07-17
- Identification Requirements : 2014-08-08
- Securities Traders : 2014-08-08
- Securities Held for Investment : 2014-06-06
- Treatment of Securities Marked to Market : 2013-04-05
- Definitions : 2012-09-21
- Commodities Dealers : 2011-08-12
- Definitions : 2011-07-15
- Definitions : 2011-02-04
- Adjusted Basis for Determining Gain or Loss : 2011-02-04
- Extension of Time for Making Certain Elections : 2010-12-03
- Securities Traders : 2010-12-03
- Accounting Methods : 2010-10-29
- Securities Traders : 2010-10-29
- Extension of Time for Making Certain Elections : 2010-04-09
- Securities Traders : 2010-04-09
- Extension of Time for Making Certain Elections : 2010-01-01
- Securities Traders : 2010-01-01
- Extension of Time for Making Certain Elections : 2009-12-25
- Extension of Time for Making Certain Elections : 2009-07-02
- Securities Traders : 2009-07-02
- Extension of Time for Making Certain Elections : 2008-07-25
- Securities Traders : 2008-07-25
- Securities Held for Investment : 2008-04-25
- Extension of Time for Making Certain Elections : 2007-09-07
- Securities Traders : 2007-09-07
- Identification Requirements : 2007-08-03
- Securities Held for Investment : 2007-08-03
- Improper Identification : 2007-08-03
- Business Hedges : 2007-04-27
- Hedges : 2007-04-27
- Extension of Time for Making Certain Elections : 2007-03-02
- Securities Traders : 2007-03-02
- Extension of Time for Making Certain Elections : 2004-07-16
- Securities Traders : 2004-07-16
- Securities Traders : 2004-06-04
- Extension of Time for Making Certain Elections : 2003-01-24
- Securities Traders : 2003-01-24
- Stock of Members : 2001-12-14
- Treatment of Securities Marked to Market : 2001-12-14
- Items that are not Securities : 2001-12-14
- Amount Realized : 2001-05-18
- Bad Debts : 2001-05-18
- Adjusted Basis for Determining Gain or Loss : 2001-05-18
- Loan or Mortgage v. Sale : 2001-05-18
- Market Discount Bond : 2001-05-18
- Market Discount : 2001-05-18
- Unrealized Receivables and Inventory Items : 2000-09-01
- Items that are not Securities : 2000-09-01
- Exceptions to Mark to Market Treatment : 2000-03-24
- Sellers of Nonfinancial Goods and Services : 2000-02-25
- Negligible Sales Exemption : 2000-02-25
- Treatment of Securities Marked to Market : 2000-01-07
- Notional Principal Contracts : 1999-11-05
- Definitions : 1999-09-03
- Bad Debts : 1999-03-05
- Amount Realized : 1999-03-05
- Certain Business Expenses : 1999-03-05
- Loan or Mortgage v. Sale : 1999-03-05
- Contracts : 1999-03-05
- Amortization of Goodwill Certain Other Intangibles : 1999-03-05
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