§1256. Section 1256 contracts marked to market — Inbound Citations
26 U.S.C. § 1256
Cited by 55 provisions in release 119-102.
Citations to 26 U.S.C. § 1256 as a whole
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(i) Clause (iii) of subparagraph (B) shall not apply to any regulated futures contract or nonequity option which would be marked to market under section 1256 if held on the last day of the taxable year.
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(i) In the case of a qualified fund, clause (iii) of subparagraph (B) shall not apply to any instrument which would be marked to market under section 1256 if held on the last day of the taxable year (determined after the application of clause (iv)).
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(I) Except as provided in regulations, in the case of a qualified fund, any bank forward contract, any foreign currency futures contract traded on a foreign exchange, or to the extent provided in regulations any similar instrument, which is not otherwise a section 1256 contract shall be treated as a section 1256 contract for purposes of section 1256.
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(II) In the case of any instrument treated as a section 1256 contract under subclause (I), subparagraph (A) of section 1256(a)(3) shall be applied by substituting “100 percent” for “40 percent” (and subparagraph (B) of such section shall not apply).
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(1) To the extent provided in regulations, if any section 988 transaction is part of a 988 hedging transaction, all transactions which are part of such 988 hedging transaction shall be integrated and treated as a single transaction or otherwise treated consistently for purposes of this subtitle. For purposes of the preceding sentence, the determination of whether any transaction is a section 988 transaction shall be determined without regard to whether such transaction would otherwise be marked-to-market under section 475 or 1256 and such term shall not include any transaction with respect to which an election is made under subsection (a)(1)(B). Sections 475, 1092, and 1256 shall not apply to a transaction covered by this subsection.
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(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
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(A) In the case of a straddle at least 1 (but not all) of the positions of which are section 1256 contracts, the provisions of this section shall apply to any section 1256 contract and any other position making up such straddle.
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(B) For purposes of subsection (a)(2) (relating to identified straddles), subparagraph (A) and section 1256(a)(4) shall not apply to a straddle all of the offsetting positions of which consist of section 1256 contracts.
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(6) The term “section 1256 contract” has the meaning given such term by section 1256(b).
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(1) If a taxpayer (other than a corporation) has a net section 1256 contracts loss for the taxable year and elects to have this subsection apply to such taxable year, the amount of such net section 1256 contracts loss—(A) shall be a carryback to each of the 3 taxable years preceding the loss year, and(B) to the extent that, after the application of paragraphs (2) and (3), such loss is allowed as a carryback to any such preceding taxable year—(i) 40 percent of the amount so allowed shall be treated as a short-term capital loss from section 1256 contracts, and(ii) 60 percent of the amount so allowed shall be treated as a long-term capital loss from section 1256 contracts.
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(i) 40 percent of the amount so allowed shall be treated as a short-term capital loss from section 1256 contracts, and
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(ii) 60 percent of the amount so allowed shall be treated as a long-term capital loss from section 1256 contracts.
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(2) The entire amount of the net section 1256 contracts loss for any taxable year shall be carried to the earliest of the taxable years to which such loss may be carried back under paragraph (1). The portion of such loss which shall be carried to each of the 2 other taxable years to which such loss may be carried back shall be the excess (if any) of such loss over the portion of such loss which, after the application of paragraph (3), was allowed as a carryback for any prior taxable year.
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(A) such amount does not exceed the net section 1256 contract gain for such year, and
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(4) For purposes of paragraph (1), the term “net section 1256 contracts loss” means the lesser of—(A) the net capital loss for the taxable year determined by taking into account only gains and losses from section 1256 contracts, or(B) the sum of the amounts which, but for paragraph (6)(A), would be treated as capital losses in the succeeding taxable year under subparagraphs (A) and (B) of subsection (b)(1).
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(A) the net capital loss for the taxable year determined by taking into account only gains and losses from section 1256 contracts, or
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(A) The term “net section 1256 contract gain” means the lesser of—(i) the capital gain net income for the taxable year determined by taking into account only gains and losses from section 1256 contracts, or(ii) the capital gain net income for the taxable year.
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(i) the capital gain net income for the taxable year determined by taking into account only gains and losses from section 1256 contracts, or
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(B) The net section 1256 contract gain for any taxable year before the loss year shall be computed without regard to the net section 1256 contracts loss for the loss year or for any taxable year thereafter.
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(A) For purposes of applying subsection (b)(1), if any portion of the net section 1256 contracts loss for any taxable year is allowed as a carryback under paragraph (1) to any preceding taxable year—(i) 40 percent of the amount allowed as a carryback shall be treated as a short-term capital gain for the loss year, and(ii) 60 percent of the amount allowed as a carryback shall be treated as a long-term capital gain for the loss year.
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(B) Any amount carried forward as a short-term or long-term capital loss to any taxable year under subsection (b)(1) (after the application of subparagraph (A)) shall, to the extent attributable to losses from section 1256 contracts, be treated as loss from section 1256 contracts for such taxable year.
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(A) The term “section 1256 contract” means any section 1256 contract (as defined in section 1256(b)) to which section 1256 applies.
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(i) The term “commodities derivative financial instrument” means any contract or financial instrument with respect to commodities (other than a share of stock in a corporation, a beneficial interest in a partnership or trust, a note, bond, debenture, or other evidence of indebtedness, or a section 1256 contract (as defined in section 1256(b))), the value or settlement price of which is calculated by or determined by reference to a specified index.
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(7) In determining the period for which the taxpayer has held a commodity acquired in satisfaction of a commodity futures contract (other than a commodity futures contract to which section 1256 applies) there shall be included the period for which he held the commodity futures contract if such commodity futures contract was a capital asset in his hands.
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(14) If the security to which a securities futures contract (as defined in section 1234B) relates (other than a contract to which section 1256 applies) is acquired in satisfaction of such contract, in determining the period for which the taxpayer has held such security, there shall be included the period for which the taxpayer held such contract if such contract was a capital asset in the hands of the taxpayer.
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(1) Gain or loss shall be recognized on the exercise of an option on a section 1256 contract (within the meaning of section 1256(b)).
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(2) a section 1256 contract (as defined in section 1256) not described in paragraph (1) which is a capital asset in the hands of the taxpayer,
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(ii) of a commodities trader in the normal course of the trader’s trade or business of trading section 1256 contracts.
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(1) Notwithstanding subsection (a)(3)(A), in determining the net earnings from self-employment of any options dealer or commodities dealer, there shall not be excluded any gain or loss (in the normal course of the taxpayer’s activity of dealing in or trading section 1256 contracts) from section 1256 contracts or property related to such contracts.
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(B) 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.
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(C) The term “section 1256 contract” has the meaning given to such term by section 1256(b).
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(B) For purposes of this paragraph, the term “specified mark to market provision” means sections 1256 and 1296 and any other provision of this title (or regulations thereunder) which treats property as disposed of on the last day of the taxable year or which determines income by reference to the value of an item on the last day of the taxable year.
Citations to §1256(a)
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(2) The term “security” means any—(A) share of stock in a corporation;(B) partnership or beneficial ownership interest in a widely held or publicly traded partnership or trust;(C) note, bond, debenture, or other evidence of indebtedness;(E) evidence of an interest in, or a derivative financial instrument in, any security described in subparagraph (A), (B), (C), or (D), or any currency, including any option, forward contract, short position, and any similar financial instrument in such a security or currency; and(F) position which—(ii) is a hedge with respect to such a security, and(iii) is clearly identified in the dealer’s records as being described in this subparagraph before the close of the day on which it was acquired or entered into (or such other time as the Secretary may by regulations prescribe).Subparagraph (E) shall not include any contract to which section 1256(a) applies.
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(1) The rules of sections 263(g), 263A, and 1256(a) shall not apply to securities to which subsection (a) applies, and section 1091 shall not apply (and section 1092 shall apply) to any loss recognized under subsection (a).
Citations to §1256(a)(3)
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(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
Citations to §1256(a)(3)(A)
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(II) In the case of any instrument treated as a section 1256 contract under subclause (I), subparagraph (A) of section 1256(a)(3) shall be applied by substituting “100 percent” for “40 percent” (and subparagraph (B) of such section shall not apply).
Citations to §1256(a)(4)
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(B) For purposes of subsection (a)(2) (relating to identified straddles), subparagraph (A) and section 1256(a)(4) shall not apply to a straddle all of the offsetting positions of which consist of section 1256 contracts.
Citations to §1256(b)
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(6) The term “section 1256 contract” has the meaning given such term by section 1256(b).
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(A) The term “section 1256 contract” means any section 1256 contract (as defined in section 1256(b)) to which section 1256 applies.
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(i) The term “commodities derivative financial instrument” means any contract or financial instrument with respect to commodities (other than a share of stock in a corporation, a beneficial interest in a partnership or trust, a note, bond, debenture, or other evidence of indebtedness, or a section 1256 contract (as defined in section 1256(b))), the value or settlement price of which is calculated by or determined by reference to a specified index.
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(1) Gain or loss shall be recognized on the exercise of an option on a section 1256 contract (within the meaning of section 1256(b)).
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(C) The term “section 1256 contract” has the meaning given to such term by section 1256(b).
Citations to §1256(d)(4)
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(C) The regulations prescribed under paragraph (1) may treat as a mixed straddle positions not described in section 1256(d)(4).
Citations to §1256(e)
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(3) This subsection shall not apply in the case of any hedging transaction (as defined in section 1256(e)).
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(II) to any position which, with respect to the taxpayer, is property described in paragraph (1) or (2) of section 1221(a) or to any position which is part of a hedging transaction (as defined in section 1256(e)), or
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(e) This section shall not apply in the case of any hedging transaction (as defined in section 1256(e)).
Citations to §1256(e)(2)
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(E) is identified by the taxpayer under section 1256(e)(2) as being part of a hedging transaction, or
Citations to §1256(e)(3)(B)
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(B) any syndicate (within the meaning of section 1256(e)(3)(B)), and
Citations to §1256(g)(1)
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(II) for which regulated futures contracts (as defined in section 1256(g)(1)) are traded on a qualified board or exchange (as defined in section 1256(g)(7)).
Citations to §1256(g)(6)
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(c) For purposes of this section, the term “securities futures contract” means any security future (as defined in section 3(a)(55)(A) of the Securities Exchange Act of 1934, as in effect on the date of the enactment of this section). The Secretary may prescribe regulations regarding the status of contracts the values of which are determined directly or indirectly by reference to any index which becomes (or ceases to be) a narrow-based security index (as defined for purposes of section 1256(g)(6)).
Citations to §1256(g)(7)
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(A) Any nongovernmental entity which exercises self-regulatory powers (including imposing sanctions) in connection with a qualified board or exchange (as defined in section 1256(g)(7)).
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(II) for which regulated futures contracts (as defined in section 1256(g)(1)) are traded on a qualified board or exchange (as defined in section 1256(g)(7)).
Citations to §1256(g)(8)
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(iv) such option is not granted by an options dealer (within the meaning of section 1256(g)(8)) in connection with his activity of dealing in options, and
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(i) The term “options dealer” has the meaning given such term by section 1256(g)(8).
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(A) The term “options dealer” has the meaning given such term by section 1256(g)(8).