[Code of Federal Regulations]
[Title 26, Volume 11]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.1287-1]

[Page 590-591]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.1287-1  Denial of capital gains treatment for gains on 
registration-required obligations not in registered form.

    (a) In general. Except as provided in paragraph (c) of this section, 
any gain on the sale or other disposition of a registration-required 
obligation held after December 31, 1982, that is not in registered form 
shall be treated as ordinary income unless the issuance of the 
obligation was subject to tax under section 4701. The term registration-
required obligation has the meaning given to that term in section 
163(f)(2), except that clause (iv) of subparagraph (A) thereof shall not 
apply. Therefore, although an obligation that is not in registered form 
is described in Sec. 1.163-5(c)(1), the holder of such an obligation 
shall be required to treat the gain on the sale or other disposition of 
such obligation as ordinary income. The term holder means the person 
that would be denied a loss deduction under section 165(j)(1) or denied 
capital gain treatment under section 1287(a).
    (b) Registered form--(1) Obligations issued after September 21, 
1984. With respect to any obligation originally issued after September 
21, 1984, the term registered form has the meaning given that term in 
section 103(j)(3) and the regulations thereunder. Therefore,

[[Page 591]]

an obligation that would otherwise be in registered form is not 
considered to be in registered form if it can be transferred at that 
time or at any time until its maturity by any means not described in 
Sec. 5f.103-1(c). An obligation that, as of a particular time, is not 
considered to be in registered form because it can be transferred by any 
means not described in Sec. 5f.103-1(c) is considered to be in 
registered form at all times during the period beginning with a later 
time and ending with the maturity of the obligation in which the 
obligation can be transferred only by a means described in Sec. 5f.103-
1(c).
    (2) Obligations issued after December 31, 1982, and on or before 
September 21, 1984. With respect to any obligation originally issued 
after December 31, 1982, and on or before September 21, 1984, or an 
obligation originally issued after September 21, 1984, pursuant to the 
exercise of a warrant or the conversion of a convertible obligation, 
which warrant or obligation (including conversion privilege) was issued 
after December 31, 1982, and on or before September 21, 1984, that 
obligation will be considered to be in registered form if it satisfied 
Sec. 5f.163-1 or the proposed regulations provided in Sec. 1.163.-5(c) 
and published in the Federal Register on September 2, 1983 (48 FR 
39953).
    (c) Registration-required obligations not in registered form which 
are not subject to section 1287(c). Notwithstanding the fact than an 
obligation is a registration-required obligation that is not in 
registered form, the holder will not be subject to section 1287(a) if 
the holder meets the conditions of Sec. 1.165-12(c).
    (d) Effective date. These regulations apply generally to obligations 
issued after January 20, 1987. However, a taxpayer may choose to apply 
the rules of Sec. 1.1287-1 with respect to an obligation issued after 
December 31, 1982, and on or before January 20, 1987, which obligation 
is held after January 20, 1987.

[T.D. 8110, 51 FR 45461, Dec. 19, 1986]