# Prop. Treas. Reg. § 1.263(g)-1: Treatment of interest and carrying charges in the case of straddles; in general. Proposed regulation, not in force. REG-105801-00, 66 FR 4746, published 2001-01-18 . Interprets 26 U.S.C. § 263. Par. 2. Sections 1.263(g)-1, 1.263(g)-2, 1.263(g)-3, 1.263(g)-4, and 1.263(g)-5 are added to read as follows: (a) Under section 263(g), no deduction is allowed for interest and carrying charges allocable to personal property that is part of a straddle (as defined in section 1092(c)). The purpose of section 263(g) is to coordinate the character and the timing of items of income and loss attributable to a taxpayer's positions that are part of a straddle. In order to prevent payments or accruals related to a straddle transaction from giving rise to recognition of deductions or losses before related income is recognized and to prevent the items of loss and income from having different character, no deduction is allowed for interest and carrying charges properly allocable to personal property that is part of a straddle. Rather, such amounts are chargeable to the capital account of the personal property to which the interest and carrying charges are properly allocable. (b) Section 263(g) does not apply if none of the taxpayer's positions that are part of the straddle are personal property. Section 263(g) also does not apply to hedging transactions as defined in section 1256(e) (see section 263(g)(3)) or to securities to which the mark-to-market accounting method provided by section 475 applies (see section 475(d)(1)). (c) Section 1.263(g)-2 provides a definition of personal property for purposes of section 263(g) and §§ 1.263(g)-1 through 1.263(g)-5. Section 1.263(g)-3 provides a definition of interest and carrying charges for purposes of section 263(g), section 1092, §§ 1.263(g)-1 through 1.263(g)-5, and § 1.1092(b)-4T. Section 1.263(g)-4 provides a set of allocation rules governing the capitalization of amounts to which section 263(g) applies.