90 STAT. 1930
PUBLIC LAW 94-455—OCT. 4, 1976 to buy or sell property shall be considered gain or loss from the sale or exchange of property which has the same character as the property to which the option relates has i n the h and s of the taxpayer (or would have i n the hands of the taxpayer if acquired by h i m). " (2) SPECIAL RULE FOR LOSS ATTRIBUTABLE TO FAILURE TO EXERCISE OPTION".—For purposes of paragraph (1), if loss is attributable to failure to exercise an option, the option shall be deemed to have been sold or exchanged on the day it expired. " (3) NoNAppLiCATiON" OF SUBSECTION.—This subsection shall not apply to— " (A) a n option which constitutes property described in paragraph (1) of section 1221; " (B) i n the case of gain attributable to the sale o r exchange of an option, any income derived in connection with such option which, without regard to this subsection, is treated as other than gain from the sale or exchange of a capital asset; and " (C) a loss attributable to failure to exercise a n option described in section 1233(c).
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" (b) TREATMENT OF GRANTOR OF O P T I O N I N THE CASE or STOCK, SECURITIES, OR COMMODITIES.— " (1) GENERAL RULE. — I n the case of the g r a n to r of the option,
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gain or loss from any closing transaction with respect to, and gain on lapse of, an option i n property shall be treated as a gain or loss from the sale or exchange of a capital asset held not more than 6 months. " (2) DEFINITIONS. — For purposes of this subsection—
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"(A)
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26 USC 1234 note.
26 USC 852.
4f,
CLOSING TRANSACTION.—The term 'closing transac-
tion' means any termination of the taxpayer's obligation under an option in property other than through the exercise or lapse of the option. " (B) PROPERTY.—The term 'property' means stocks and securities (including stocks and securities dealt with on a 'when issued' basis), commodities, and commodity futures. " (3) NoNAPPLICATION OF SUBSECTION.—This subsection shall not apply to any option granted in the ordinary course of the taxpayer's trade or business of g r a n t i n g options. (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply to options granted after September 1, 1976. SEC. 2137. EXEMPT-INTEREST DIVIDENDS OF REGULATED INVESTMENT COMPANIES. (a) GENERAL.—Section 852(a)(1) (relating to regulated investment companies) is amended to read as follows: " (1) the deduction for dividends paid during the taxable year (as defined i n section 561, b u t without regard to capital gain dividends^ equals or exceeds the sum of— " (A) 90 percent of its investment company taxable income for the taxable year determined without regard to subsection (b)(2)(D); and " (B) 90 percent of the excess of (i) its interest income excludable from gross income under section 103(a)(1) over (ii) its deductions disallowed under sections 265, 171 (a)(2), and". (b) DIVIDENDS P A I D DEDUCTION.—Section 852(b)(2)(D)
to taxable income) is amended to read as follows:
(relating
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