(a) Capital gains Gain by a dealer in securities from the sale or exchange of any security shall in no event be considered as gain from the sale or exchange of a capital asset unless—
Amended 1981
- 1981 Pub. L. 97-34 Pub. L. 97–34, § 506(a), substituted “before the close of the day on which it was acquired (before the close of the following day in the case of an acquisition before January 1, 1982)” for “before the expiration of the 30th day after the date of its acquisition” in par. (1) and “close of such day” for “expiration of such 30th day” in par. (2).
Cases: Bradford v. United States, 444 F.2d 1133 (Ct. Cl. 1971); Nielsen v. United States, 333 F.2d 615 (6th Cir. 1964)
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(1) the security was, before the close of the day on which it was acquired (or such earlier time as the Secretary may prescribe by regulations), clearly identified in the dealer’s records as a security held for investment; and
Amended 1984
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 107(b)(1), substituted “the security was, before the close of the day on which it was acquired (or such earlier time as the Secretary may prescribe by regulations), clearly identified in the dealer’s records as a security held for investment; and” for “the security was, before the close of the day on which it was acquired (before the close of the following day in the case of an acquisition before January 1, 1982), clearly identified in the dealer’s records as a security held for investment or if acquired before October 20, 1951, was so identified before November 20, 1951; and”.
(2) the security was not, at any time after the close of such day (or such earlier time), held by such dealer primarily for sale to customers in the ordinary course of his trade or business.
Amended 1984
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 107(b)(2), inserted “(or such earlier time)” after “such day”.
(b) Ordinary losses Loss by a dealer in securities from the sale or exchange of any security shall, except as otherwise provided in section 582(c), (relating to bond, etc., losses of banks), in no event be considered as ordinary loss if at any time the security was clearly identified in the dealer’s records as a security held for investment.
Amended 1976, 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295 struck out “after November 19, 1951,” after “time”.
- 1976 Pub. L. 94-455 Pub. L. 94–455 substituted “ordinary loss” for “loss from the sale or exchange of property which is not a capital asset”.
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(c) Definition of security For purposes of this section, the term “security” means any share of stock in any corporation, certificate of stock or interest in any corporation, note, bond, debenture, or evidence of indebtedness, or any evidence of an interest in or right to subscribe to or purchase any of the foregoing.
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(d) Special rule for floor specialists
Amended 1981
- 1981 Pub. L. 97-34 Pub. L. 97–34, § 506(b), added subsec. (d).
(1) In general In the case of a floor specialist (but only with respect to acquisitions, in connection with his duties on an exchange, of stock in which the specialist is registered with the exchange), subsection (a) shall be applied—
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(A) by inserting “the 7th business day following” before “the day” the first place it appears in paragraph (1) and by inserting “7th business” before “day” in paragraph (2), and
(B) by striking the parenthetical phrase in paragraph (1).
(e) Special rule for options For purposes of subsection (a), any security acquired by a dealer pursuant to an option held by such dealer may be treated as held for investment only if the dealer, before the close of the day on which the option was acquired, clearly identified the option on his records as held for investment. For purposes of the preceding sentence, the term “option” includes the right to subscribe to or purchase any security.
Amended 1983
- 1983 Pub. L. 97-448 Pub. L. 97–448 added subsec. (e).