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Abstract: 

The Proposed Regulations will provide an elective safe harbor for dealers and traders in securities and commodities that will permit these taxpayers to use the “fair values” of their positions in securities and commodities, as reported on their financial statements, as the fair market values of those positions for purposes of Section 475, generally without risk of audit challenge to those valuations by the IRS. The Proposed Regulations thus implement the proposal to develop a mark-to-market valuation safe harbor based on “book-tax conformity” principles first out outlined by the Treasury and the IRS in Announcement 2003-35.

Keywords: Prop. Reg. 1.475(a)-4

Affiliations:  1: Cleary Gottlieb Steen & Hamilton; 2: Cleary Gottlieb Steen & Hamilton.