View all text of Part IV [§ 1231 - § 1260]
§ 1234. Options to buy or sell
(a) Treatment of gain or loss in the case of the purchaser
(1) General rule
(2) Special rule for loss attributable to failure to exercise option
(3) Nonapplication of subsection
This subsection shall not apply to—
(A) an option which constitutes property described in paragraph (1) of section 1221(a);
(B) in the case of gain attributable to the sale or exchange of an option, any income derived in connection with such option which, without regard to this subsection, is treated as other than gain from the sale or exchange of a capital asset; and
(C) a loss attributable to failure to exercise an option described in section 1233(c).
(b) Treatment of grantor of option in the case of stock, securities, or commodities
(1) General rule
(2) Definitions
For purposes of this subsection—
(A) Closing transaction
(B) Property
(3) Nonapplication of subsection
(c) Treatment of options on section 1256 contracts and cash settlement options
(1) Section 1256 contracts
(2) Treatment of cash settlement options
(A) In general
(B) Cash settlement option
(Aug. 16, 1954, ch. 376, 68A Stat. 329; Pub. L. 85–866, title I, § 53, Sept. 2, 1958, 72 Stat. 1644; Pub. L. 89–809, title II, § 210(a), Nov. 13, 1966, 80 Stat. 1580; Pub. L. 94–455, title XIV, § 1402(b)(1)(U), (2), title XXI, § 2136(a), Oct. 4, 1976, 90 Stat. 1732, 1929; Pub. L. 98–369, div. A, title I, § 105(a), title X, § 1001(b)(18), (e), July 18, 1984, 98 Stat. 629, 1012; Pub. L. 106–170, title V, § 532(c)(1)(H), Dec. 17, 1999, 113 Stat. 1930.)