113 STAT. 1930 PUBLIC LAW 106-170—DEC. 17, 1999 "(B) TREATMENT OF NONIDENTIFICATION OR IMPROPER Regulations. IDENTIFICATION OF HEDGING TRANSACTIONS.— Notwithstanding subsection (a)(7), the Secretary shall prescribe regulations to properly characterize any income, gain, expense, or loss arising from a transaction— "(i) which is a hedging transaction but which was not identified as such in accordance with subsection (a)(7), or "(ii) which was so identified but is not a hedging transaction. "(3) REGULATIONS.— The Secretary shall prescribe such regulations as are appropriate to carry out the purposes of paragraph (6) and (7) of subsection (a) in the case of transactions involving related parties.". (b) MANAGEMENT OF RISK. — 26 USC 475. (1) Section 475(c)(3) of such Code is amended by striking "reduces" and inserting "manages". 26 USC 871. (2) Section 871(h)(4)(C)(iv) of such Code is amended by striking "to reduce" and inserting "to manage". 26 USC 988. (3) Clauses (i) and (ii) of section 988(d)(2)(A) of such Code are each amended by striking "to reduce" and inserting "to manage". 26 USC 1256. (4) Paragraph (2) of section 1256(e) of such Code is amended to read as follows: "(2) DEFINITION OF HEDGING TRANSACTION. — For purposes of this subsection, the term 'hedging transaction' means any hedging transaction (as defined in section 1221(b)(2)(A)) if, before the close of the day on which such transaction was entered into (or such earlier time as the Secretary may prescribe by regulations), the taxpayer clearly identifies such transaction as being a hedging transaction.". (c) CONFORMING AMENDMENTS.— (1) Each of the following sections of such Code are amended by striking "section 1221" and inserting "section 1221(a)": 26 USC 170. (A) Section 170(e)(3)(A). (B) Section 170(e)(4)(B). 26 USC 367. (C) Section 367(a)(3)(B)(i). 26 USC 818. (D) Section 818(c)(3). 26 USC 865. (E) Section 865(i)( 1). 26 USC 1092. (F) Section 1092(a)(3)(B)(ii)(II). 26 USC 1231. (G) Subparagraphs (C) and (D) of section 1231(b)(l). 26 USC 1234. (H) Section 1234(a)(3)(A). (2) Each of the following sections of such Code are amended by striking "section 1221(1)" and inserting "section 1221(a)(l)": 26 USC 198. (A) Section 198(c)( l)(A)(i). 26 USC 263. (B) Section 263A(b)(2)(A). 26 USC 267. (C) Clauses (i) and (iii) of section 267(f)(3)(B). 26 USC 341. (D) Section 341(d)(3). 26 USC 543. (E) Section 543(a)( lXD)(i). 26 USC 751. (F) Section 75 l(d)( 1). 26 USC 775. (G) Section 775(c). 26 USC 856. (H) Section 856(c)(2)(D). (I) Section 856(c)(3)(C). (J) Section 856(e)(l). (K) Section 856( j)(2)(B). 26 USC 857. (L) Section 857(b)(4)(B)(i). (M) Section 857(b)(6)(B)(iii).
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