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Abstract: 

Understanding how the straddle rules apply to stock is important in evaluating the tax consequences of risk management and diversification transactions. Many transactions that on their face would appear to be subject to the straddle rules are not actually subject to them because of various grandfather provisions and application of the rules. Financial institutions and other taxpayers that have held stock for long periods must always confirm the effective date before applying the straddle rules.

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Affiliations:  1: McDermott Will & Emery LLP.