Page:United States Statutes at Large Volume 98 Part 1.djvu/671

 PUBLIC LAW 98-369—JULY 18, 1984 "(C) The term 'section 1256 contracts' has the meaning given to such term by section 1256(b) of such Code."

98 STAT. 623 Ante, p. 620.

(d) TREATMENT UNDER SUBCHAPTER S OF OPTIONS AND COMMODITIES DEALERS.— (1) TAX IMPOSED ON CERTAIN CAPITAL GAINS NOT TO APPLY.—

Subsection (c) of section 1374 (relating to tax imposed on certain capital gains) is amended by adding at the end thereof the following new paragraph: "(4) TREATMENT OF CERTAIN GAINS OF OPTIONS AND COMMOD-

26 USC 1374. .':ji(n om fiu

ITIES DEALERS.— "(A) EXCLUSION OF CERTAIN CAPITAL GAINS.—For

purposes of this section, the net capital gain of any options dealer or \ f' commodities dealer shall be determined by not taking into ' account any gain or loss (in the normal course of the taxpayer's activity of dealing in or trading section 1256 contracts) from any section 1256 contract or property i. related to such a contract. "(B) DEFINITIONS.—For purposes of this paragraph— T' "(i) OPTIONS DEALER.—The term 'options dealer' has the meaning given to such term by section 1256(g)(8). Ante, p. 620. "(ii) COMMODITIES DEALER.—The term 'commodities dealer' means a person who is actively engaged in trading section 1256 contracts and is registered with a domestic board of trade which is designated as a contract market by the Commodities Futures Trading -; Commission. "(iii) SECTION 1256 CONTRACTS.—The term 'section e^fiR)! '. j^256 contracts' has the meaning given to such term by section 1256(b)." Ante, p. 620. (2) CERTAIN GAINS NOT TREATED AS PASSIVE INVESTMENT

INCOME.—Subparagraph (D) of section 1362(d)(3) (defining pas- 26 USC 1362. sive investment income) is amended by adding at the end thereof the following new clause: "(v) SPECIAL RULE FOR OPTIONS AND COMMODITIES

4

DEALERS.—In the case of any options or commodities dealer, passive investment income shall be determined by not taking into account any gain or loss described in section 1374(c)(4)(A)." (3) SUBCHAPTER S ELECTION.—If a commodities dealer or an

J

Supra. 26 USC 1362

note. options dealer— (A) becomes a small business corporation (as defined in section 1361(b) of the Internal Revenue Code of 1954) at any time before the close of the 75th day after the date of the enactment of this Act, and (B) makes the election under section 1362(a) of such Code before the close of such 75th day, then such dealer shall be treated as having received approval for and adopted a taxable year beginning on the first day during 1984 on which it was a small business corporation (as so defined) and ending on the date determined under section 1378 of such Code and such election shall be effective for such taxable year. (e) TECHNICAL AND CONFORMING AMENDMENTS.—

(1) Subsection (c) of section 1256 (relating to terminations, etc.) is amended— (A) by striking out "by taking or making delivery," in paragraph (1) and inserting in lieu thereof "by taking or

�