Page:United States Statutes at Large Volume 98 Part 1.djvu/665

 PUBLIC LAW 98-369—JULY 18, 1984 i - :

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98 STAT. 617

"(i) such option is traded on a national securities exchange which is registered with the Securities and Exchange Commission or other market which the Secretary determines has rules adequate to carry out the purposes of this paragraph, .• c i A i "(ii) such option is granted more than 30 days before the day on which the option expires, "(iii) such option is not a deep-in-the-money option, "(iv) such option is not granted by an options dealer (within the meaning of section 1256(g)(8)) in connection Post, p. 620. with his activity of dealing in options, and "(v) gain or loss with respect to such option is not ordinary income or loss. "(C) DEEP-IN-THE-MONEY OPTION.—For purposes of subparagraph (B), the term 'deep-in-the-money option' means an option having a strike price lower than the lowest qualified bench mark. "(D) LOWEST QUALIFIED BENCH MARK.—

"(i) IN GENERAL.—Except as otherwise provided in this subparagraph, for purposes of subparagraph (C), the term 'lowest qualified bench mark' means the highest available strike price which is less than the applicable stock price.

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"(ii) SPECIAL RULE WHERE OPTION IS FOR PERIOD MORE

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THAN 90 DAYS AND STRIKE PRICE EXCEEDS $50.—In the

case of an option— "(I) which is granted more than 90 days before the date on which such option expires, and* "(II) with respect to which the strike price is more than $50, the lowest qualified bench mark is the second highest available strike price which is less than the applicable stock price.



"(iii) 85 PERCENT RULE WHERE APPLICABLE STOCK PRICE $25 OR LESS.—If—

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"(I) the applicable stock price is $25 or less, and "(II) but for this clause, the lowest qualified bench mark would be less than 85 percent of the applicable stock price, the lowest qualified bench mark shall be treated as equal to 85 percent of the applicable stock price. "(iv) LIMITATION WHERE APPLICABLE STOCK PRICE $ 1 5 0 OR LESS.—If—

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"(I) the applicable stock price is $150 or less, and "(II) but for this clause, the lowest qualified bench mark would be less than the applicable stock price reduced by $10, the lowest qualified bench mark shall be treated as equal to the applicable stock price reduced by $10. "(E) SPECIAL YEAR-END RULE.—Subparagraph (A) shall not apply to any straddle for purposes of section 1092(a) if— "(i) the qualified covered call options referred to in such subparagraph are closed during any taxable year, "(ii) gain on disposition of the stock to be purchased from the taxpayer under such options is includible in gross income for a later taxable year, and

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