PUBLIC LAW 105-34—AUG. 5, 1997 111 STAT. 907 Proper adjustment shall be made in the amount of any gain or loss subsequently realized for gain or loss taken into account under the preceding sentence. The Secretary may provide by regulations for the application of this subparagraph at times other than the times provided in this subparagraph. "(B) EXCEPTION.— Subparagraph (A) shall not apply to any security— "(i) which is established to the satisfaction of the Secretary as having no connection to the activities of such person as a trader, and "(ii) which is clearly identified in such person's records as being described in clause (i) before the close of the day on which it was acquired, originated, or entered into (or such other time as the Secretary may by regulations prescribe). If a security ceases to be described in clause (i) at gmy time after it was identified as such under clause (ii), subparagraph (A) shall apply to any changes in value of the security occurring after the cessation. "(C) COORDINATION WITH SECTION 1259. —Any security to which subparagraph (A) applies and which was acquired in the normal course of the taxpayer's activities as a trader in securities shall not be taken into account in applying section 1259 to any position to which subparagraph (A) does not apply. "(D) OTHER RULES TO APPLY.—Rules similar to the rules of subsections (b)(4) and (d) shall apply to securities held by a person in any trade or business with respect to which an election under this paragraph is in effect. "(2) TRADERS IN COMMODITIES.— In the case of a person who is engaged in a trade or business as a trader in commodities and who elects to have this paragraph apply to such trade or business, paragraph (1) shall apply to commodities held by such trader in connection with such trade or business in the same manner as paragraph (1) applies to securities held by a trader in securities. "(3) ELECTION. — The elections under paragraphs (1) and (2) may be made separately for each trade or business and without the consent of the Secretary. Such an election, once made, shall apply to the teixable year for which made and all subsequent taxable years unless revoked with the consent of the Secretary.". (c) CLERICAL AMENDMENT.—The table of sections for part IV of subchapter P of chapter 1 is amended by adding at the end the following new item: "Sec. 1259. Constructive sales treatment for appreciated financial positions.". (d) EFFECTIVE DATES. — 26 USC 475 note. (1) IN GENERAL.— Except as otherwise provided in this subsection, the amendments made by this section shall apply to any constructive sale after June 8, 1997. (2) EXCEPTION FOR SALES OF POSITIONS, ETC. HELD BEFORE JUNE 9, 1997.—If — (A) before June 9, 1997, the taxpayer entered into any transaction which is a constructive sale of any appreciated financial position, and
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