PUBLIC LAW 106-170—DEC. 17, 1999 113 STAT. 1933 "(1) IN GENERAL.—The taxpayer shall be treated as having entered into a constructive ownership transaction with respect to any financial asset if the taxpayer— "(A) holds a long position under a notional principal contract with respect to the financial asset, "(B) enters into a forward or futures contract to acquire the financial asset, "(C) is the holder of a call option, and is the grantor of a put option, with respect to the financial asset and such options have substantially eciual strike prices and substantially contemporaneous matuirity dates, or "(D) to the extent provided in regulations prescribed by the Secretary, enters into one or more other transactions (or acquires one or more positions) that have substantially the same effect as a transaction described in any of the preceding subparagraphs. " (2) EXCEPTION FOR POSITIONS WJHICH ARE MARKED TO MARKET.— Th is section shall not apply to any constructive ownership transaction if all of the positions which are part of such transaction are marked to markiet under any provision of this title or the regulations thereunder. " (3) LONG POSITION UNDER NOTIONAL PRINCIPAL CON- TRACT. — A person shall be treated as liolding a long position under a notional principal contract with respect to any financial asset if such person— "(A) has the right to be paid (or receive credit for) all or substantially all of the investment yield (including appreciation) on such financial asscit for a specified period, and "(B) is obligated to reimburse (or provide credit for) all or substantially all of any decline in the value of such financial asset. "(4) FORWARD CONTRACT.— The term 'forward contract' means any contract to acquire in the; future (or provide or receive credit for the future value of) any financial asset. "(e) NET UNDERLYING LONG-TERM CAPITAL GAIN. — For purposes of this section, in the case of any constructive ownership transaction with respect to any financial asset, the term 'net underlying longterm capital gain' means the aggregate nest capital gain that the taxpayer would have had if— "(1) the financial asset had been acquired for fair market value on the date such transaction was opened and sold for fair market value on the date such transaction was closed, and "(2) only gains and losses that would have resulted from the deemed ownership under paragraph (1) were taken into account. The amount of the net underlying long-term capital gain with respect to any financial asset shall be treated as zero unless the amount thereof is established by clear and convincing evidence. "(f) SPECIAL RULE WHERE TAXPAYER TAKES DELIVERY.— Except as provided in regulations prescribed by the Secretary, if a constructive ownership transaction is closed by reason of taking delivery, this section shall be applied as if the tajcpayer had sold all the contracts, options, or other positions which are part of such transaction for fair market value on the closing date. The amount of gain recognized under the preceding sentence shall not exceed the
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