Effective date clarification - Regulations concerning “mixed straddle” using straddle-by-straddle identification 

October 25:  The Treasury Department and IRS today released for publication in the Federal Register corrections to August 2013 regulations concerning taxpayers electing to establish a “mixed straddle” using straddle-by-straddle identification.

Today’s temporary regulations correction [PDF 16 KB] and, by cross-reference, the proposed regulations correction [PDF 66 KB] amend the effective date of the August 2013 regulations, reflecting changes made in response to comments received.

As originally issued, the temporary regulations applied to all identified mixed straddles established after August 1, 2013. Under today’s release, the effective date is amended to apply to identified mixed straddles established after the date of publication of the final regulations in the Federal Register.


Temporary regulations (T.D. 9627) and, by cross-reference, proposed regulations (REG-112815-12) published in the Federal Register on August 2 by the Treasury Department and IRS provide guidance for taxpayers electing to establish a “mixed straddle” using straddle-by-straddle identification.

The temporary regulations provide that unrealized gain or loss on a position held by a taxpayer prior to the time the taxpayer establishes a “mixed straddle” using straddle-by-straddle identification will be taken into account at the time and will have the character that would apply if the mixed straddle had not been established. Straddle gains and losses will be governed by the rules applicable to identified mixed straddles.

Read a discussion of the regulations in TaxNewsFlash-United States: Follow-up - Regulations on accounting for unrealized gain, loss on a position held before establishing a “mixed straddle” using straddle-by-straddle identification

The new rules under Reg. section 1.1092(b)-6T (as originally released in August 2013) were to apply to all section 1092(b)(2) identified mixed straddles established after August 1, 2013, regardless of when any position that is a component of the section 1092(b)(2) identified mixed straddle was purchased or otherwise acquired.

The new rule for pre-straddle gain and losses did not apply to straddles established before August 1, 2013, even if the positions are still outstanding on August 2, 2013.

Revised effective date

According to today’s releases, Treasury and the IRS received comments and concerns about the immediate applicability date of the temporary regulations.

Today’s preamble states that in response to those comments, the temporary and proposed regulations are being amended to limit the application of the identified mixed straddle transaction rules in Reg. section 1.1092(b)-6T to section 1092(b)(2) identified mixed straddles established after the date of publication of the final regulations in the Federal Register.

Today’s correction also includes amendments to examples in the temporary regulations to reflect the change in the effective date and to clarify the determination of a holding period.

Today’s release concludes that Treasury and the IRS anticipate that the regulations will be finalized no later than the end of the current IRS Priority Guidance Plan year on June 30, 2014, and will as part of that process consider all comments received.

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