Page:United States Statutes at Large Volume 95.djvu/353

 PUBLIC LAW 97-34—AUG. 13, 1981

95 STAT. 327

(2) The heading for such part VII is amended to read as follows: "PART VII—WASH SALES; STRADDLES". (3) The table of parts for subchapter O of chapter 1 is amended by striking out the item relating to part VII and inserting in lieu thereof the following: "Part VII. Wash sales; straddles." SEC. 502. CAPITALIZATION OF CERTAIN INTEREST AND CARRYING CHARGES IN THE CASE OF STRADDLES.

Section 263 (relating to capital expenditures) is amended by adding 26 USC 263. at the end thereof the following new subsection: "(g) CERTAIN INTEREST AND CARRYING COSTS IN THE CASE OF STRADDLES.— "(1) GENERAL RULE.—No deduction shall be allowed for interest

and carrying charges properly allocable to personal property which is part of a straddle (as defined in section 1092(c)). Any Ante, p. 323. amount not allowed as a deduction by reason of the preceding sentence shall be chargeable to the capital account with respect to the personal property to which such amount relates. "(2) INTEREST AND CARRYING CHARGES DEFINED.—For purposes of paragraph (1), the term 'interest and carrying charges' means the excess of— "(A) the sum of— "(i) interest on indebtedness incurred or continued to purchase or carry the personal property, and "(ii) amounts paid or incurred to insure, store, or transport the personal property, over "(B) the sum of— "(i) the amount of interest (including original issue discount) includible in gross income for the taxable year with respect to the property described in subparagraph (A), and "(ii) any amount treated as ordinary income under section 1232(a)(4)(A) with respect to such property for Post, p. 331. the taxable year. "(3) EXCEPTION FOR HEDGING TRANSACTIONS.—This subsection shall not apply in the case of any hedging transaction (as defined in section 1256(e))."

SEC. 503. REGULATED FUTURES CONTRACTS MARKED TO MARKET.

(a) GENERAL RULE.—Part IV of subchapter P of chapter 1 (relating to special rules for determining capital gains and losses) is amended by adding at the end thereof the following new section: "SEC. 1256. REGULATED FUTURES CONTRACTS MARKED TO MARKET.

"(a) GENERAL RULE.—For purposes of this subtitle— "(1) each regulated futures contract held by the taxpayer at the close of the taxable year shall be treated as sold for its fair market value on the last business day of such taxable year (and any gain or loss shall be taken into account for the taxable year), "(2) proper adjustment shall be made in the amount of any gain or loss subsequently realized for gain or loss taken into account by reason of paragraph (1), "(3) any gain or loss with respect to a regulated futures contract shall be treated as—

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26 USC 1256.

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