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.

Background

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.




©2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.


The KPMG logo and name are trademarks of KPMG International.


KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.


The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

Share this

Share this

Subscribe

Current and future KPMG clients may subscribe to TaxNewsFlash email alerts.


Email your contact information.

TaxNewsFlash-United States by year