# Prop. Treas. Reg. § 1.475(e)-1: [Redesignated as Sec. 1.475(g)-1]

Proposed regulation, not in force. REG-104924-98, 64 FR 4374, published 1999-01-28 <https://www.federalregister.gov/documents/1999/01/28/99-1787/mark-to-market-accounting-for-dealers-in-commodities-and-traders-in-securities-or-commodities>. Interprets 26 U.S.C. § 475.

Par. 6. Section 1.475(e)-1 is redesignated as Sec. 1.475(g)-1.

Par. 7. New Sec. 1.475(e)-1 and Secs. 1.475(f)-1 and 1.475(f)-2 are added to read as follows:

(a) Time and manner of making election. An election under section 475(e)(1) must be made in the time and manner prescribed by the Commissioner.

(b) Application of securities dealer rules to electing commodities dealers. Except as otherwise provided in this

[[Page 4378]]

section or in other guidance prescribed by the Commissioner, the rules and administrative interpretations under section 475 for dealers in securities apply to dealers in commodities that make an election under section 475(e)(1).

(c) Commodity derivatives deemed not held for investment--(1) In general. Except as otherwise determined by the Commissioner in a revenue ruling, revenue procedure, or letter ruling, if a dealer in commodities that made an election under section 475(e)(1) holds a commodity described in section 475(e)(2)(B) or (C) (describing certain notional principal contracts and commodity derivatives), section 475(b)(1)(A) (exempting from mark-to-market accounting certain positions that are held for investment) does not apply to that commodity.

(2) Character of commodity derivatives required to be marked to market. If a commodity is required to be marked to market because of the application of paragraph (c)(1) of this section, the gain or loss with respect to that commodity is ordinary.

(d) Same day identification. An identification of a commodity as exempt from mark-to-market accounting under section 475(b)(2) is not effective unless it is made before the close of the day on which the commodity was acquired, originated, or entered into.