Par. 2. Section 1.446-4 is amended by adding the text of paragraph (e)(9) to read as follows:
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(e) * * *
(9) Hedging by members of a consolidated group--(i) General rule. In general, a member of a consolidated group that hedges the risk of another member must account for its hedging transactions as if all of the members were separate divisions of a single corporation. Thus, the timing of the income, deduction, gain, or loss on a hedging transaction must be matched with the timing of income, deduction, gain, or loss from the item or items being hedged rather than with an intercompany transaction.
(ii) Separate-entity election. If a consolidated group makes an election under Sec. 1.1221-2(d)(2), each member of the consolidated group must account for its hedging transactions (including its intercompany transactions that are treated as hedging transactions) in a manner that meets the requirements of paragraph (b) of this section. Thus, each member of the group must comply with this section for its hedging transactions without regard to the fact that the taxpayer is a member of a consolidated group.
(iii) Definitions. For definitions of consolidated group, member of a consolidated group, and intercompany transaction, see section 1502 and the regulations thereunder.
(iv) Effective date. This paragraph (e)(9) applies to transactions entered into on or after the date 60 days after publication of final regulations on this subject in the Federal Register.