[Code of Federal Regulations]
[Title 26, Volume 6]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.475(b)-4]

[Page 558-559]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.475(b)-4  Exemptions--transitional issues.

    (a) Transitional identification--(1) Certain securities previously 
identified under section 1236. If, as of the close of the last taxable 
year ending before December 31, 1993, a security was identified under 
section 1236 as a security held for investment, the security is treated 
as being identified as held for investment for purposes of section 
475(b).
    (2) Consistency requirement for other securities. In the case of a 
security (including a security described in section 475(c)(2)(F)) that 
is not described in paragraph (a)(1) of this section and that was held 
by the taxpayer as of the close of the last taxable year ending before 
December 31, 1993, the security is treated as having been properly 
identified under section 475(b)(2) or 475(c)(2)(F)(iii) if the 
information contained in the dealer's books and records as of the close 
of that year supports the identification. If there is any ambiguity in 
those records, the taxpayer must, no later than January 31, 1994, place 
in its records a statement resolving this ambiguity and indicating 
unambiguously which securities

[[Page 559]]

are to be treated as properly identified. Any information that supports 
treating a security as having been properly identified under section 
475(b)(2) or (c)(2)(F)(iii) must be applied consistently from one 
security to another.
    (b) Corrections on or before January 31, 1994--(1) Purpose. This 
paragraph (b) allows a taxpayer to add or remove certain identifications 
covered by Sec. 1.475(b)-1.
    (2) To conform to Sec. 1.475(b)-1(a)--(i) Added identifications. To 
the extent permitted by paragraph (b)(2)(ii) of this section, a taxpayer 
may identify as being described in section 475(b)(1) (A) or (B)--
    (A) A security that was held for immediate sale but was not held 
primarily for sale to customers in the ordinary course of the taxpayer's 
trade or business (for example, a trading security); or
    (B) An evidence of indebtedness that was not held for sale to 
customers in the ordinary course of the taxpayer's trade or business and 
that the taxpayer intended to hold for less than one year.
    (ii) Limitations. An identification described in paragraph (b)(2)(i) 
of this section is permitted only if--
    (A) Prior to December 28, 1993, the taxpayer did not identify as 
being described in section 475(b)(1) (A) or (B) any of the securities 
described in paragraph (b)(2)(i) of this section;
    (B) The taxpayer identifies every security described in paragraph 
(b)(2)(i) of this section for which a timely identification of the 
security under section 475(b)(2) cannot be made after the date on which 
the taxpayer makes these added identifications; and
    (C) The identification is made on or before January 31, 1994.
    (3) To conform to Sec. 1.475(b)-1(c). On or before January 31, 
1994, a taxpayer described in Sec. 1.475(b)-1(e)(2)(i)(B) may remove an 
identification under section 475(b)(1)(A) of a security described in 
Sec. 1.475(b)-1(e)(2)(i)(A).
    (c) Effect of corrections. An identification added under paragraph 
(a)(2) or (b)(2) of this section is timely for purposes of section 
475(b)(2) or (c)(2)(F)(iii). An identification removed under paragraph 
(a)(2) or (b)(3) of this section does not subject the taxpayer to the 
provisions of section 475(d)(2).

[T.D. 8700, 61 FR 67722, Dec. 24, 1996]