[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(e)-1] [Page 563-565] TITLE 26--INTERNAL REVENUE CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY (CONTINUED) PART 1_INCOME TAXES--Table of Contents Sec. 1.475(e)-1 Effective dates. (a)-(b) [Reserved] (c) Section 1.475(a)-3 (concerning acquisition by a dealer of a security with a substituted basis) applies to securities acquired, originated, or entered into on or after January 4, 1995. [[Page 564]] (d) Except as provided elsewhere in this paragraph (d), Sec. 1.475(b)-1 (concerning the scope of exemptions from the mark-to-market requirement) applies to taxable years ending on or after December 31, 1993. (1) Section 1.475(b)-1(b) applies as follows: (i) Section 1.475(b)-1(b)(1)(i) (concerning equity interests issued by a related person) applies beginning June 19, 1996. If, on June 18, 1996, a security is subject to mark-to-market accounting and, on June 19, 1996, Sec. 1.475(b)-1(b)(1) begins to apply to the security solely because of the effective dates in this paragraph (d) (rather than because of a change in facts), then the rules of Sec. 1.475(b)- 1(b)(4)(i)(A) (concerning the prohibition against marking) apply, but Sec. 1.475(b)-1(b)(4)(i)(B) (imposing a mark-to-market on the day before the onset of the prohibition) does not apply. (ii) Section 1.475(b)-1(b)(2) (concerning relevant relationships for purposes of determining whether equity interests in related persons are prohibited from being marked to market) applies beginning June 19, 1996. (iii) Section 1.475(b)-1(b)(3) (concerning certain actively traded securities) applies beginning June 19, 1996, to securities held on or after that date, except for securities described in Sec. 1.475(b)- 1(e)(1)(i) (concerning equity interests issued by controlled entities). If a security is described in Sec. 1.475(b)-1(e)(1)(i), Sec. 1.475(b)- 1(b)(3) applies only on or after January 23, 1997 if the security is held on or after that date. If Sec. 1.475(b)-1(b)(1) ceases to apply to a security by virtue of the operation of this paragraph (d)(1)(iii), the rules of Sec. 1.475(b)-1(b)(4)(ii) apply to the cessation. (iv) Except to the extent provided in paragraph (d)(1) of this section, Sec. 1.475(b)-1(b)(4) (concerning changes in status) applies beginning June 19, 1996. (2) Section 1.475(b)-1(c) (concerning securities deemed not held for investment by dealers in notional principal contracts and derivatives) applies to securities acquired on or after January 23, 1997. (3) Section 1.475(b)-1(d) (concerning the special rule for hedges of another member's risk) is effective for securities acquired, originated, or entered into on or after January 23, 1997. (e) Section 1.475(b)-2 (concerning identification of securities that are exempt from mark-to-market treatment) applies as follows: (1) Section 1.475(b)-2(a) (concerning the general rules for identification of basis for exemption from mark to market treatment) applies to identifications made on or after July 1, 1997. (2) Section 1.475(b)-2(b) (concerning time for identifying a security with a substituted basis) applies to securities acquired, originated, or entered into on or after January 4, 1995. (3) Section 1.475(b)-2(c) (concerning identification in the context of integrated transactions under Sec. 1.1275-6) applies on and after August 13, 1996 (the effective date of Sec. 1.1275-6). (f) [Reserved] (g) Section 1.475(b)-4 (concerning transitional issues relating to exemptions) applies to taxable years ending on or after December 31, 1993. (h) Section 1.475(c)-1 applies as follows: (1) Except as otherwise provided in this paragraph (h)(1), Sec. 1.475(c)-1(a) (concerning the dealer-customer relationship) applies to taxable years beginning on or after January 1, 1995. (i) [Reserved] (ii) Section 1.475(c)-1(a)(2)(ii) (illustrating rules concerning the dealer-customer relationship) applies to taxable years beginning on or after June 20, 1996. (iii)(A) Section 1.475(c)-1(a)(3) applies to taxable years beginning on or after June 20, 1996, except for transactions between members of the same consolidated group. (B) For transactions between members of the same consolidated group, paragraph Sec. 1.475(c)-1(a)(3) applies to taxable years beginning on or after December 24, 1996. (2) Section 1.475(c)-1(b) (concerning sellers of nonfinancial goods and services) applies to taxable years ending on or after December 31, 1993. (3) Except as otherwise provided in this paragraph (h)(3), section 1.475(c)-1(c) (concerning taxpayers that purchase securities but engage in no more than negligible sales of the securities) [[Page 565]] applies to taxable years ending on or after December 31, 1993. (i) Section 1.475(c)-1(c)(3) (special rules for members of a consolidated group) is effective for taxable years beginning on or after December 24, 1996. (ii) A taxpayer may rely on the rules set out in Sec. 1.475(c)- 1T(b) (as contained in 26 CFR part 1 revised April 1, 1996) for taxable years beginning before January 23, 1997, provided the taxpayer applies that paragraph reasonably and consistently. (4) Section 1.475(c)-1(d) (concerning the issuance of life insurance products) applies to taxable years beginning on or after January 1, 1995. (i) Section 1.475(c)-2 (concerning the definition of security) applies to taxable years ending on or after December 31, 1993. By its terms, however, Sec. 1.475(c)-2(a)(3) applies only to residual interests or to interests or arrangements that are acquired on or after January 4, 1995; and the integrated transactions that are referred to in Sec. Sec. 1.475(c)-2(a)(2) and 1.475(c)-2(b) exist only after August 13, 1996 (the effective date of Sec. 1.1275-6). (j) Section 1.475(d)-1 (concerning the character of gain or loss) applies to taxable years ending on or after December 31, 1993. [T.D. 8700, 61 FR 67725, Dec. 24, 1996] Adjustments