118 STAT. 1642 PUBLIC LAW 108–357—OCT. 22, 2004 (b) EFFECTIVE DATE.—The amendment made by this section shall take effect on the date of the enactment of this Act. SEC. 888. MODIFICATION OF STRADDLE RULES. (a) RULES RELATING TO IDENTIFIED STRADDLES.— (1) IN GENERAL.—Subparagraph (A) of section 1092(a)(2) (relating to special rule for identified straddles) is amended to read as follows: ‘‘(A) IN GENERAL.—In the case of any straddle which is an identified straddle— ‘‘(i) paragraph (1) shall not apply with respect to identified positions comprising the identified straddle, ‘‘(ii) if there is any loss with respect to any identi fied position of the identified straddle, the basis of each of the identified offsetting positions in the identi fied straddle shall be increased by an amount which bears the same ratio to the loss as the unrecognized gain with respect to such offsetting position bears to the aggregate unrecognized gain with respect to all such offsetting positions, and ‘‘(iii) any loss described in clause (ii) shall not otherwise be taken into account for purposes of this title.’’. (2) IDENTIFIED STRADDLE.—Section 1092(a)(2)(B) (defining identified straddle) is amended— (A) by striking clause (ii) and inserting the following: ‘‘(ii) to the extent provided by regulations, the value of each position of which (in the hands of the taxpayer immediately before the creation of the straddle) is not less than the basis of such position in the hands of the taxpayer at the time the straddle is created, and’’, and (B) by adding at the end the following new flush sen tence: ‘‘The Secretary shall prescribe regulations which specify the proper methods for clearly identifying a straddle as an identified straddle (and the positions comprising such straddle), which specify the rules for the application of this section for a taxpayer which fails to properly identify the positions of an identified straddle, and which specify the ordering rules in cases where a taxpayer disposes of less than an entire position which is part of an identified straddle.’’. (3) UNRECOGNIZED GAIN.—Section 1092(a)(3) (defining unrecognized gain) is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph: ‘‘(B) SPECIAL RULE FOR IDENTIFIED STRADDLES.—For purposes of paragraph (2)(A)(ii), the unrecognized gain with respect to any identified offsetting position shall be the excess of the fair market value of the position at the time of the determination over the fair market value of the position at the time the taxpayer identified the position as a position in an identified straddle.’’. Regulations. 26 USC 6331 note.
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