26 USC 1092 - Straddles

Editorial Notes

Amendments

2018—Subsec. (a)(2)(B). Puspan. L. 115–141, § 401(a)(170), substituted “with respect to other” for “with respect other” in concluding provisions.

Subsec. (c)(4)(E). Puspan. L. 115–141, § 401(a)(171), struck out “(other than subparagraph (B) thereof)” after “paragraphs (3)” in concluding provisions.

2007—Subsec. (a)(2)(A)(i). Puspan. L. 110–172, § 7(d)(2)(B)(i), substituted “positions” for “identified positions”.

Subsec. (a)(2)(A)(ii). Puspan. L. 110–172, § 7(d)(2)(B)(ii), (iii), substituted “any position” for “any identified position” and “the offsetting positions” for “the identified offsetting positions”.

Puspan. L. 110–172, § 7(d)(1), struck out “and” at end.

Subsec. (a)(2)(A)(iii), (iv). Puspan. L. 110–172, § 7(d)(1), added cl. (iii) and redesignated former cl. (iii) as (iv).

Subsec. (a)(2)(B). Puspan. L. 110–172, § 7(d)(2)(A), inserted concluding provisions.

Subsec. (a)(2)(C), (D). Puspan. L. 110–172, § 7(d)(3), (4), added subpar. (C), redesignated former subpar. (C) as (D), and inserted “the rules for the application of this section to a position which is or has been a liability or obligation, methods of loss allocation which satisfy the requirements of subparagraph (A)(iii),” before “and the ordering rules” in subpar. (D).

Subsec. (a)(3)(B). Puspan. L. 110–172, § 7(d)(2)(C), substituted “offsetting position” for “identified offsetting position”.

2005—Subsec. (a)(2). Puspan. L. 109–135 added subpar. (C) and struck out concluding provisions of subpar. (B) which read as follows: “The Secretary shall prescribe regulations which specify the proper methods for clearly identifying a straddle as an identified straddle (and the positions comprising such straddle), which specify the rules for the application of this section for a taxpayer which fails to properly identify the positions of an identified straddle, and which specify the ordering rules in cases where a taxpayer disposes of less than an entire position which is part of an identified straddle.”

2004—Subsec. (a)(2)(A). Puspan. L. 108–357, § 888(a)(1), reenacted span without change and amended text of subpar. (A) generally. Prior to amendment, text read as follows: “In the case of any straddle which is an identified straddle as of the close of any taxable year—

“(i) paragraph (1) shall not apply for such taxable year, and

“(ii) any loss with respect to such straddle shall be treated as sustained not earlier than the day on which all of the positions making up the straddle are disposed of.”

Subsec. (a)(2)(B). Puspan. L. 108–357, § 888(a)(2)(B), inserted concluding provisions.

Subsec. (a)(2)(B)(ii). Puspan. L. 108–357, § 888(a)(2)(A), added cl. (ii) and struck out former cl. (ii) which read as follows: “all of the original positions of which (as identified by the taxpayer) are acquired on the same day and with respect to which—

“(I) all of such positions are disposed of on the same day during the taxable year, or

“(II) none of such positions has been disposed of as of the close of the taxable year, and”.

Subsec. (a)(3)(B), (C). Puspan. L. 108–357, § 888(a)(3), added subpar. (B) and redesignated former subpar. (B) as (C).

Subsec. (c)(2)(B), (C). Puspan. L. 108–357, § 888(a)(4), redesignated subpar. (C) as (B) and struck out span and text of former subpar. (B). Text read as follows: “If 1 or more positions offset only a portion of 1 or more other positions, the Secretary shall by regulations prescribe the method for determining the portion of such other positions which is to be taken into account for purposes of this section.”

Subsec. (d)(3). Puspan. L. 108–357, § 888(c)(1), reenacted span without change and amended text of par. (3) generally, substituting provisions directing that the term “personal property” includes stock only if it is of a certain type or of a certain type of corporation and setting forth rule for application of subsec. (e), for provisions directing that the term “personal property” includes any stock which is part of a straddle at least 1 of the offsetting positions of which is an option, a securities futures contract, or a position with respect to substantially similar or related property (other than stock), and of a certain type of corporation, and setting forth special rules relating to application of subsecs. (c), (d)(4), and (e).

Subsec. (d)(8). Puspan. L. 108–357, § 888(span), added par. (8).

2000—Subsec. (d)(3)(B)(i)(II), (III). Puspan. L. 106–554 added subcl. (II) and redesignated former subcl. (II) as (III).

1999—Subsec. (a)(3)(B)(ii)(II). Puspan. L. 106–170 substituted “1221(a)” for “1221”.

1997—Subsec. (f)(2). Puspan. L. 105–34 substituted “The” for “Except for purposes of section 851(span)(3), the”.

1988—Subsec. (span)(2)(D). Puspan. L. 100–647 added subpar. (D).

1986—Subsec. (c)(4)(E). Puspan. L. 99–514, § 331(a), in cl. (i), inserted “or the stock is disposed of at a loss”, in cl. (ii), substituted “or gains on such options are” for “is”, and in cl. (iii), inserted “or option” and “or the disposition of such stock”.

Subsec. (d)(3)(A). Puspan. L. 99–514, § 1808(c), inserted at end “The preceding sentence shall not apply to any interest in stock.”

Subsec. (d)(5), (6). Puspan. L. 99–514, § 1899A(66), amended directory language of section 101(span)(2) of Puspan. L. 98–369 to clarify general amendment by sections 101(d) and 102(e) of Puspan. L. 98–369. See 1984 Amendment notes below.

Subsec. (d)(7). Puspan. L. 99–514, § 1261(span), added par. (7).

1984—Subsec. (a)(2)(B)(i). Puspan. L. 98–369, § 107(a), designated existing provisions as subcl. (I) and added subcl. (II).

Subsec. (span). Puspan. L. 98–369, § 103(a), amended subsec. (span) generally, substituting provisions dealing with regulations for provisions dealing with character of gain or loss and wash sales.

Subsec. (c)(4). Puspan. L. 98–369, § 101(a)(2), added par. (4).

Subsec. (d)(1). Puspan. L. 98–369, § 101(span)(1), struck out “(other than stock)” before “of a type”.

Subsec. (d)(2). Puspan. L. 98–369, § 101(a)(1), redesignated former subpar. (A) as entire par. (2), and struck out former subpar. (B) which provided that “position” includes any stock option which is a part of a straddle and which is an option to buy or sell stock which is actively traded, but does not include a stock option which (i) is traded on a domestic exchange or on a similar foreign exchange designated by the Secretary, and (ii) is of a type with respect to which the maximum period during which such option may be exercised is less than the minimum period for which a capital asset must be held for gain to be treated as long-term capital gain under section 1222(3).

Subsec. (d)(3), (4). Puspan. L. 98–369, § 101(span)(2), as amended by Puspan. L. 99–514, § 1899A(66), added par. (3) and redesignated former pars. (3) and (4) as (4) and (5), respectively.

Subsec. (d)(5). Puspan. L. 98–369, § 101(d), amended par. (4) generally, substituting provisions relating to special rules for section 1256 contracts for provisions relating to special rules for regulated futures contracts.

Puspan. L. 98–369, § 101(span)(2), as amended by Puspan. L. 99–514, § 1899A(66), redesignated former par. (4) as (5). Former par. (5) redesignated (6).

Subsec. (d)(6). Puspan. L. 98–369, § 102(e)(2), amended par. (5) generally, substituting references to section 1256 contracts for references to regulated futures contracts wherever appearing in span and text.

Puspan. L. 98–369, § 101(span)(2), as amended by Puspan. L. 99–514, § 1899A(66), redesignated former par. (5) as (6).

Subsecs. (f), (g). Puspan. L. 98–369, § 101(c), added subsec. (f) and redesignated former subsec. (f) as (g).

1983—Subsec. (a)(1)(A). Puspan. L. 97–448, § 105(a)(1)(A), (2), substituted “unrecognized gain” for “unrealized gain” and “which were offsetting positions with respect to 1 or more positions from which the loss arose” for “which— (i) were acquired by the taxpayer before the disposition giving rise to such loss, (ii) were offsetting positions with respect to the 1 or more positions from which the loss arose, and (iii) were not part of an identified straddle as of the close of the taxable year”.

Subsec. (a)(3). Puspan. L. 97–448, § 105(a)(1)(B), substituted “Unrecognized gain” for “Unrealized gain” in span.

Subsec. (a)(3)(A). Puspan. L. 97–448, § 105(a)(1)(B), substituted “unrecognized gain” for “unrealized gain” as term defined, designated existing definition as cl. (i), and added cl. (ii).

Subsec. (a)(3)(B)(i)(I). Puspan. L. 97–448, § 105(a)(1)(C), substituted “with respect to which, as of the close of the taxable year, there is unrecognized gain, and” for “which is held by such taxpayer as of the close of the taxable year and with respect to which there is unrealized gain, and”.

Subsec. (a)(3)(B)(i)(II). Puspan. L. 97–448, § 105(a)(1)(C), substituted “unrecognized gain” for “unrealized gain”.

Subsec. (c)(2)(C). Puspan. L. 97–448, § 105(a)(4), substituted “subsection (a)(2)(B)” for “subsection (a)(3)(B)”.

Subsec. (d)(4). Puspan. L. 97–448, § 105(a)(3), substituted “a straddle at least 1 (but not all) of the positions of which are regulated futures contracts, the provisions of this section shall apply” for “a straddle— (A) at lease 1 (but not all) of the positions of which are regulated futures contracts, and (B) with respect to which the taxpayer has elected not to have the provisions of section 1256 apply, the provisions of this section shall apply”.

Statutory Notes and Related Subsidiaries

Effective Date of 2007 Amendment

Puspan. L. 110–172, § 7(e), Dec. 29, 2007, 121 Stat. 2483, provided that:

“(1)In general.—Except as otherwise provided in this subsection, the amendments made by this section [amending this section and sections 45, 45H, 179B, 280C, 470, 1016, and 6501 of this title] shall take effect as if included in the provisions of the American Jobs Creation Act of 2004 [Puspan. L. 108–357] to which they relate.

“(2)Identification requirement of amendment related to section 888 of the american jobs creation act of 2004.—The amendment made by subsection (d)(2)(A) [amending this section] shall apply to straddles acquired after the date of the enactment of this Act [Dec. 29, 2007].”

Effective Date of 2005 Amendment

Amendment by Puspan. L. 109–135 effective as if included in the provision of the American Jobs Creation Act of 2004, Puspan. L. 108–357, to which such amendment relates, see section 403(nn) of Puspan. L. 109–135, set out as a note under section 26 of this title.

Effective Date of 2004 Amendment

Amendment by Puspan. L. 108–357 applicable to positions established on or after Oct. 22, 2004, see section 888(e) of Puspan. L. 108–357, set out as a note under section 246 of this title.

Effective Date of 1999 Amendment

Amendment by Puspan. L. 106–170 applicable to any instrument held, acquired, or entered into, any transaction entered into, and supplies held or acquired on or after Dec. 17, 1999, see section 532(d) of Puspan. L. 106–170, set out as a note under section 170 of this title.

Effective Date of 1997 Amendment

Amendment by Puspan. L. 105–34 applicable to taxable years beginning after Aug. 5, 1997, see section 1271(c) of Puspan. L. 105–34, set out as a note under section 817 of this title.

Effective Date of 1988 Amendment

Amendment by Puspan. L. 100–647 applicable with respect to forward contracts, future contracts, options, and similar instruments entered into or acquired after Oct. 21, 1988, see section 6130(d)(1) of Puspan. L. 100–647, set out as a note under section 988 of this title.

Effective Date of 1986 Amendment

Puspan. L. 99–514, title III, § 331(span), Oct. 22, 1986, 100 Stat. 2221, provided that: “The amendments made by this section [amending this section] shall apply to positions established on or after January 1, 1987.”

Amendment by section 1261(span) of Puspan. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, with certain exceptions and qualifications, see section 1261(e) of Puspan. L. 99–514, set out as an Effective Date note under section 985 of this title.

Amendment by section 1808(c) of Puspan. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Puspan. L. 98–369, div. A, to which such amendment relates, see section 1881 of Puspan. L. 99–514, set out as a note under section 48 of this title.

Effective Date of 1984 Amendment

Puspan. L. 98–369, div. A, title I, § 101(e), July 18, 1984, 98 Stat. 619, provided that:

“(1)In general.—Except as otherwise provided in this subsection, the amendments made by this section [amending this section] shall apply to positions established after December 31, 1983, in taxable years ending after such date.

“(2)Special rule for offsetting position stock.—In the case of any stock of a corporation formed or availed of to take positions in personal property which offset positions taken by any shareholder, the amendments made by this section shall apply to positions established on or after May 23, 1983, in taxable years ending on or after such date.

“(3)Subsection (c).—The amendment made by subsection (c) [amending this section] shall apply to positions established after June 30, 1984, in taxable years ending after such date.

“(4)Subsection (d).—The amendment made by subsection (d) [amending this section] shall apply to positions established after the date of the enactment of this Act in taxable years ending after such date.”

Amendment by section 102(e)(2) of Puspan. L. 98–369 applicable to positions established after July 18, 1984, in taxable years ending after that date, except as otherwise provided, see section 102(f), (g) of Puspan. L. 98–369, set out as a note under section 1256 of this title.

Puspan. L. 98–369, div. A, title I, § 103(span), (c), July 18, 1984, 98 Stat. 628, as amended by Puspan. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that:

“(span)Requirement That Regulations Be Issued Within 6 Months After the Date of Enactment.—The Secretary of the Treasury or his delegate shall prescribe initial regulations under section 1092(span) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (including regulations relating to mixed straddles) not later than the date 6 months after the date of the enactment of this Act [July 18, 1984].

“(c)Effective Date of Regulations With Respect to Mixed Straddles.—The regulations described in subsection (span) with respect to the application of section 1233 of the Internal Revenue Code of 1986 to mixed straddles shall not apply to mixed straddles all of the positions of which were established before January 1, 1984.”

Puspan. L. 98–369, div. A, title I, § 107(e), July 18, 1984, 98 Stat. 630, provided that: “The amendments made by this section [amending this section and sections 1236 and 1256 of this title] shall apply to positions entered into after the date of the enactment of this Act [July 18, 1984], in taxable years ending after such date.”

Effective Date of 1983 Amendment

Amendment by Puspan. L. 97–448 effective, except as otherwise provided, as if it had been included in the provision of the Economic Recovery Tax Act of 1981, Puspan. L. 97–34, to which such amendment relates, see section 109 of Puspan. L. 97–448, set out as a note under section 1 of this title.

Effective Date

Puspan. L. 97–34, title V, § 508, Aug. 13, 1981, 95 Stat. 333, as amended by Puspan. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that:

“(a)In General.—Except as otherwise provided in this section, the amendments made by this title [enacting this section and sections 1234A and 1256 of this title, amending sections 263, 341, 1212, 1221, 1231, 1232, 1233, 1236, and 6653 of this title, and enacting provisions set out as a note under section 1256 of this title] shall apply to property acquired and positions established by the taxpayer after June 23, 1981, in taxable years ending after such date.

“(span)Identification Requirements.—

“(1)Under section 1236 of code.—The amendments made by section 506 [amending section 1236 of this title] shall apply to property acquired by the taxpayer after the date of the enactment of this Act [Aug. 13, 1981] in taxable years ending after such date.

“(2)Under section 1256(e)(2)(c) of code.—Section 1256(e)(2)(C) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by this title) shall apply to property acquired and positions established by the taxpayer after December 31, 1981, in taxable years ending after such date.

“(c)Election With Respect to Property Held on June 23, 1981.—If the taxpayer so elects (at such time and in such manner as the Secretary of the Treasury or his delegate shall prescribe) with respect to all regulated futures contracts or positions held by the taxpayer on June 23, 1981, the amendments made by this title shall apply to all such contracts and positions, effective for periods after such date in taxable years ending after such date. For purposes of the preceding sentence, the term ‘regulated futures contract’ has the meaning given to such term by section 1256(span) of the Internal Revenue Code of 1986, and the term ‘position’ has the meaning given to such term by section 1092(d)(2) of such Code.”

Plan Amendments Not Required Until January 1, 1989

For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Puspan. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Puspan. L. 99–514, as amended, set out as a note under section 401 of this title.

Treatment of Certain Losses on Straddles Entered Into Before Effective Date of Economic Recovery Tax Act of 1981

Puspan. L. 98–369, div. A, title I, § 108, July 18, 1984, 98 Stat. 630, as amended by Puspan. L. 99–514, § 2, title XVIII, § 1808(d), Oct. 22, 1986, 100 Stat. 2095, 2817, provided that:

“(a)General Rule.—For purposes of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], in the case of any disposition of 1 or more positions—

“(1) which were entered into before 1982 and form part of a straddle, and

“(2) to which the amendments made by title V of the Economic Recovery Tax Act of 1981 [Puspan. L. 97–34, see Effective Date note above] do not apply,

any loss from such disposition shall be allowed for the taxable year of the disposition if such loss is incurred in a trade or business, or if such loss is incurred in a transaction entered into for profit though not connected with a trade or business.

“(span)Loss Incurred in a Trade or Business.—For purposes of subsection (a), any loss incurred by a commodities dealer in the trading of commodities shall be treated as a loss incurred in a trade or business.

“(c)Net Loss Allowed.—If any loss with respect to a position described in paragraphs (1) and (2) of subsection (a) is not allowable as a deduction (after applying subsections (a) and (span)), such loss shall be allowed in determining the gain or loss from dispositions of other positions in the straddle to the extent required to accurately reflect the taxpayer’s net gain or loss from all positions in such straddle.

“(d)Other Rules.—Except as otherwise provided in subsections (a) and (c) and in sections 1233 and 1234 of such Code, the determination of whether there is recognized gain or loss with respect to a position, and the amount and timing of such gain or loss, and the treatment of such gain or loss as long-term or short-term shall be made without regard to whether such position constitutes part of a straddle.

“(e)Straddle.—For purposes of this section, the term ‘straddle’ has the meaning given to such term by section 1092(c) of the Internal Revenue Code of 1986 as in effect on the day after the date of the enactment of the Economic Recovery Tax Act of 1981 [Aug. 13, 1981], and shall include a straddle all the positions of which are regulated futures contracts.

“(f)Commodities Dealer.—For purposes of this section, the term ‘commodities dealer’ means any taxpayer who—

“(1) at any time before January 1, 1982, was an individual described in section 1402(i)(2)(B) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by this subtitle), or

“(2) was a member of the family (within the meaning of section 704(e)(3) [now 704(e)(2)] of such Code) of an individual described in paragraph (1) to the extent such member engaged in commodities trading through an organization the members of which consisted solely of—

“(A) 1 or more individuals described in paragraph (1), and

“(B) 1 or more members of the families (as so defined) of such individuals.

“(g)Regulated Futures Contracts.—For purposes of this section, the term ‘regulated futures contracts’ has the meaning given to such term by section 1256(span) of the Internal Revenue Code of 1986 (as in effect before the date of enactment of this Act [July 18, 1984]).

“(h)Syndicates.—For purposes of this section, any loss incurred by a person (other than a commodities dealer) with respect to an interest in a syndicate (within the meaning of section 1256(e)(3)(B) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]) shall not be considered to be a loss incurred in a trade or business.”