Sec. 1.1256(e)-1 Identification of hedging transactions.

(a) Identification and recordkeeping requirements. Under section 1256(e)(2), a taxpayer that enters into a hedging transaction must identify the transaction as a hedging transaction before the close of the day on which the taxpayer enters into the transaction.

(b) Requirements for identification. The identification of a hedging transaction for purposes of section 1256(e)(2) must satisfy the requirements of §1.1221-2(f)(1). Solely for purposes of section 1256(f)(1), however, an identification that does not satisfy all of the requirements of §1.1221-2(f)(1) is nevertheless treated as an identification under section 1256(e)(2).

(c) Consistency with §1.1221-2. Any identification for purposes of §1.1221-2(f)(1) is also an identification for purposes of this section. If a taxpayer satisfies the requirements of §1.1221-2(g)(1)(ii), the transaction is treated as if it were not identified as a hedging transaction for purposes of section 1256(e)(2).

(d) Effective date. The rules of this section apply to transactions entered into on or after March 20, 2002.

[T.D. 8555, 59 FR 36360-36367, July 18, 1994. Revised by T.D. 8985, 67 FR 12863-12871, Mar. 20, 2002.]