Page:United States Statutes at Large Volume 98 Part 1.djvu/669

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 621

which is traded on (or subject to the rules of) a qualified board or exchange. "(6) EQUITY OPTION.—

"(A) IN GENERAL.—Except as provided in subparagraph (B), the term 'equity option' means any option— "(i) to buy or sell stock, or "(ii) the value of which is determined directly or indirectly by reference to any stock (or group of stocks) or stock index.

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«^g^ EXCEPTION FOR CERTAIN OPTIONS REGULATED BY COMMODITIES FUTURES TRADING COMMISSION.—The term 'equity

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option' does not include any option with respect to any group of stocks or stock index if— "(i) there is in effect a designation by the CommodI ities Futures Trading Commission of a contract market for a contract based on such group of stocks, or index, or "(ii) the Secretary determines that such option meets the requirements of law for such a designation. "(7) QUALIFIED BOARD OR EXCHANGE.—The term 'qualified board or exchange' means— "(A) a national securities exchange which is registered with the Securities and Exchange Commission, "(B) a domestic board of trade designated as a contract market by the Commodity Futures Trading Commission, or j^;, "(C) any other exchange, board of trade, or other market which the Secretary determines has rules adequate to carry out the purposes of this section. tjfl' g "(8) OPTIONS DEALER.— "(A) IN GENERAL.—The term 'options dealer' means any person registered with an appropriate national securities exchange as a market maker or specialist in listed options. "(B) PERSONS TRADING IN OTHER MARKETS.—In any case in which the Secretary makes a determination under subparagraph (C) of paragraph (7), the term 'options dealer' also includes any person whom the Secretary determines perit forms functions similar to the persons described in subparagraph (A). Such determinations shall be made to the extent appropriate to carry out the purposes of this section."

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(b) CAPITAL GAIN TREATMENT FOR TRADERS IN SECTION 1256 CON-

TRACTS.—Subsection (f) of section 1256 (relating to special rules) is amended by adding at the end thereof the following new paragraphs:

26 USC 1256.

"(3) CAPITAL GAIN TREATMENT FOR TRADERS IN SECTION 1256 CONTRACTS.—

"(A) IN GENERAL.—For purposes of this title, gain or loss from trading of section 1256 contracts shall be treated as gain or loss from the sale or exchange of a capital asset.

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"(B) EXCEPTION FOR CERTAIN HEDGING TRANSACTIONS.—

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Subparagraph (A) shall not apply to any section 1256 contract to the extent such contract is held for purposes of hedging property if any loss with respect to such property in the hands of the taxpayer would be ordinary loss. "(C) TREATMENT OF UNDERLYING PROPERTY.—For purposes of determining whether gain or loss with respect to any property is ordinary income or loss, the fact that the taxpayer is actively engaged in dealing in or trading section

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