Page:United States Statutes at Large Volume 98 Part 1.djvu/675

 PUBLIC LAW 98-369—JULY 18, 1984 apply to any stock option or stock acquired on or before the 60th day after the date of the enactment of this Act. (i) DEFINITIONS.—For purposes of subsections (g) and (h)— (1) SECTION 1256 CONTRACT.—The term "section 1256 contract" has the meaning given to such term by section 1256(b) of the Internal Revenue Code of 1954 (as amended by this section). (2) STOCK OPTION.—The term "stock option" means any option to buy or sell stock. SEC. 103. REGULATIONS UNDER SECTION 1092(b). (a) GENERAL RULE.—Subsection (b) of section 1092 (relating to character of gain or loss; wash sales) is amended to read as follows:

98 STAT. 627

26 USC 1256 "ote. Ante, p. 620. ,v.. 26 USC 1092.

"(b) REGULATIONS.—

"(1) IN GENERAL.—The Secretary shall prescribe such regulations with respect to gain or loss on positions which are a part of a straddle as may be appropriate to carry out the purposes of this section and section 263(g). To the extent consistent with such purposes, such regulations shall include rules applying the principles of subsections (a) and (d) of section 1091 and of subsections (b) and (d) of section 1233.

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"(2) REGULATIONS RELATING TO MIXED STRADDLES.— "(A) ELECTIVE PROVISIONS IN LIEU OF SECTION 1233(d)

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PRINCIPLES.—The regulations prescribed under paragraph (1) shall provide that— "(i) the taxpayer may offset gains and losses from positions which are part of mixed straddles— "(I) by straddle-by-straddle identification, or "(II) by the establishment (with respect to any class of activities) of a mixed straddle account for which gains and losses would be recognized (and offset) on a periodic basis, "(ii) such offsetting will occur before the application of section 1256, and section 1256(a)(3) will only apply to net gain or net loss attributable to section 1256 contracts, and "(iii) the principles of section 1233(d) shall not apply with respect to any straddle identified under clause (i)(I) or part of an account established under clause (i)(II). "(B) LIMITATION ON NET GAIN OR NET LOSS FROM MIXED

STRADDLE ACCOUNT.—In the case of any mixed straddle account referred to in subparagraph (A)(i)(II)— "(i) NOT MORE THAN 50 PERCENT OF NET GAIN MAY BE TREATED AS LONG-TERM CAPITAL GAIN.—In nO e v e n t

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shall more than 50 percent of the net gain from such account for any taxable year be treated as long-term capital gain, "(ii) NOT MORE THAN 40 PERCENT OF NET LOSS MAY BE TREATED AS SHORT-TERM CAPITAL LOSS.—In nO e v e n t

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shall more than 40 percent of the net loss from such account for any taxable year be treated as short-term capital loss. "(C)

AUTHORITY TO TREAT CERTAIN POSITIONS AS MIXED

STRADDLES.—The regulations prescribed under paragraph (1) may treat as a mixed straddle positions not described in section 1256(d)(4)."

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