This document contains proposed regulations relating to the character and timing of gain or loss from certain hedging transactions entered into by members of a consolidated group. These proposed regulations apply when one member of the group hedges the risk of another member or enters into a hedge with another member. The regulations are needed because related-party hedging is a common business practice and existing regulations treat as hedging transactions only hedges entered into by a taxpayer to reduce its own risk. This document also provides notice of a public hearing on these proposed regulations.