§ 1092(d)(3)(A)(i)

clause (i): actively traded stock, offset by a position in such stock or substantially similar or related property

UNDECIDED

0 of 9 settled

  1. 1

    § 1092(d)(3)(A)(i)

    ANY OF
    “at least 1 of the positions offsetting such stock is a position with respect to such stock or substantially similar or related property” Opening words

    “Substantially similar or related property” is defined in Reg. § 1.1092(d)-2(a).

    “such stock is of a type which is actively traded” Opening words

    An established financial market is enough, Reg. § 1.1092(d)-1(a)

    “at least 1 of the positions offsetting such stock is a position with respect to such stock”
    “substantially similar or related property”

    “Substantially similar or related property” is defined in Reg. § 1.1092(d)-2(a).

    Reg. § 1.1092(d)-2(a), written in 1995 for former § 1092(d)(3)(B), defines the term by Reg. § 1.246-5 (other than (b)(3)) and adds “(other than stock)”, words the current clause lacks

    Step 2 substantially similar or related property under Reg. § 1.246-5: the general rule, (b)(1), the portfolio rule, (c)(1)(ii), or the anti-abuse rule, (c)(1)(vi) UNDECIDED

  2. 2

    Reg. § 1.246-5 Ambiguous

    substantially similar or related property under Reg. § 1.246-5: the general rule, (b)(1), the portfolio rule, (c)(1)(ii), or the anti-abuse rule, (c)(1)(vi)

    ANY OF

    Reg. § 1.246-5 states no single test; this gate joins the general rule, (b)(1), for nonportfolio positions, the portfolio rule, (c)(1)(ii), and the anti-abuse rule, (c)(1)(vi), across paragraphs. Conversion rights, (c)(2)(ii), guarantees, (c)(4), pass-through entities, (c)(6), and notional principal contracts, (c)(7), deem a diminished risk of loss rather than define the term; they are drawn at Reg. § 1.246-5(a) and (c)

    “In general, property is substantially similar or related to stock when” Reg. § 1.246-5(b)(1) unless Step 6 the position reflects a portfolio: stocks of 20 or more unrelated issuers UNDECIDED

    “Facts and circumstances” is the law's own test. Cited by Reg. § 1.246-5(c)(1)(ii), Reg. § 1.246-5(c)(2)(ii), Reg. § 1.246-5(d)

    The general rule, clauses (i) and (ii) of (b)(1). Not for a portfolio position: (c)(1)(ii) applies notwithstanding (b)(1); nonportfolio positions in more than one stock are separate positions in each stock, (c)(1)(v)

    Step 3 substantially similar or related property (general rule) UNDECIDED

    “a position reflecting the value of a portfolio of stocks is substantially similar or related to the stocks held by the taxpayer only if the position and the taxpayer's holdings substantially overlap as of the most recent testing date” Reg. § 1.246-5(c)(1)(ii)

    “Substantially overlap” is set out in Reg. § 1.246-5(c)(1)(iii).

    A portfolio is 20 or more unrelated issuers, (c)(1)(i); the overlapping percentage is substantially similar or related to the Subportfolio, (c)(1)(iii)(C)

    Step 5 the portfolio rule, (c)(1)(ii): a portfolio position that substantially overlaps the holdings UNDECIDED

    “a position that reflects the value of more than one stock is a position in substantially similar or related property to the appropriate portion of the taxpayer's stock holdings” Reg. § 1.246-5(c)(1)(vi)

    “Substantially similar or related property”: facts and circumstances, Reg. § 1.246-5(b)(1).

    The anti-abuse rule, clauses (A) and (B), applying notwithstanding (c)(1)(i) through (v)

    Step 9 the anti-abuse rule applies UNDECIDED

  3. 3

    Reg. § 1.246-5(b)(1)

    substantially similar or related property (general rule)

    ALL OF

    Substantially similar or related property. The term substantially similar or related property is applied according to the facts and circumstances in each case. In general, property is substantially similar or related to stock when—

    “(i) The fair market values of the stock and the property primarily reflect the performance of— (A) A single firm or enterprise; (B) The same industry or industries; or (C) The same economic factor or factors such as (but not limited to) interest rates, commodity prices, or foreign-currency exchange rates; and” Reg. § 1.246-5(b)(1)(i)

    Step 4 clause (i): the values primarily reflect the same performance UNDECIDED

    “(ii) Changes in the fair market value of the stock are reasonably expected to approximate, directly or inversely, changes in the fair market value of the property, a fraction of the fair market value of the property, or a multiple of the fair market value of the property.” Reg. § 1.246-5(b)(1)(ii)

    “Reasonably expected”: facts and circumstances, Reg. § 1.246-5(b)(4).

  4. 4

    Reg. § 1.246-5(b)(1)(i)

    clause (i): the values primarily reflect the same performance

    ANY OF
    “The fair market values of the stock and the property primarily reflect the performance of” Opening words
    “A single firm or enterprise” Reg. § 1.246-5(b)(1)(i)(A)
    “The same industry or industries” Reg. § 1.246-5(b)(1)(i)(B)
    “The same economic factor or factors such as (but not limited to) interest rates, commodity prices, or foreign-currency exchange rates” Reg. § 1.246-5(b)(1)(i)(C)
  5. 5

    Reg. § 1.246-5(c)(1)

    the portfolio rule, (c)(1)(ii): a portfolio position that substantially overlaps the holdings

    ALL OF
    “a position reflecting the value of a portfolio of stocks” Reg. § 1.246-5(c)(1)(ii)

    A portfolio is 20 or more unrelated issuers, (c)(1)(i). A position in more than one stock but not a portfolio is instead a separate position in each stock, (c)(1)(v), tested under the general rule, (b)(1)

    Step 6 the position reflects a portfolio: stocks of 20 or more unrelated issuers UNDECIDED

    “the position and the taxpayer's holdings substantially overlap as of the most recent testing date” Reg. § 1.246-5(c)(1)(ii)

    “Substantially overlap” is set out in Reg. § 1.246-5(c)(1)(iii).

    Step Two tests the whole position; Step Three the largest percentage of it, (c)(1)(iii)(C). Testing dates: (c)(1)(iv)

    Step 7 substantial overlap: Step Two, for the whole position or the largest percentage of it that overlaps (Step Three) UNDECIDED

  6. 6

    Reg. § 1.246-5(c)(1)(i)

    the position reflects a portfolio: stocks of 20 or more unrelated issuers

    ALL OF
    “any group of stocks of 20 or more unrelated issuers”
  7. 7

    Reg. § 1.246-5(c)(1)(iii)

    substantial overlap: Step Two, for the whole position or the largest percentage of it that overlaps (Step Three)

    ALL OF
    “the fair market value of the Subportfolio is equal to or greater than 70 percent of the fair market value of the stocks represented in the position” Reg. § 1.246-5(c)(1)(iii)(B)

    Step One builds the Subportfolio: for each stock in the position, the lesser of its value in the position and in the holdings, (c)(1)(iii)(A). Short of 70 percent, Step Three repeats Steps One and Two on a smaller position; the largest percentage that overlaps is substantially similar or related to its Subportfolio, (c)(1)(iii)(C)

    Step 8 substantial overlap UNDECIDED

  8. 8

    Reg. § 1.246-5(c)(1)(iii)(B)

    substantial overlap

    ALL OF
    “the fair market value of the Subportfolio is equal to or greater than 70 percent of the fair market value of the stocks represented in the position”

    Subportfolio: Step One, (c)(1)(iii)(A). Short of 70 percent, Step Three tests a smaller part of the position, (c)(1)(iii)(C)

  9. 9

    Reg. § 1.246-5(c)(1)(vi)

    the anti-abuse rule applies

    ALL OF
    “a position that reflects the value of more than one stock” Opening words
    “Changes in the value of the position or the stocks reflected in the position are reasonably expected to virtually track (directly or inversely) changes in the value of the taxpayer's stock holdings, or any portion of the taxpayer's stock holdings and other positions of the taxpayer” Reg. § 1.246-5(c)(1)(vi)(A)

    “Reasonably expected”: facts and circumstances, Reg. § 1.246-5(b)(4).

    “The position is acquired or held as part of a plan a principal purpose of which is to obtain tax savings (including by deferring tax) the value of which is significantly in excess of the expected pre-tax economic profits from the plan” Reg. § 1.246-5(c)(1)(vi)(B)