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Abstract: 

On October 22, 2004, the American Jobs Creation Act was enacted.1 The Act made significant changes to U.S. tax law with major provisions relating to businesses and international taxation. Among the changes, the Act revised the straddle rules of Section 1092 in several respects. The revisions include a deletion of IRS “balancing regulations” authority in light of the failure of the IRS to issue regulations under authority granted when the rules were first enacted in 1981, a loosening of the requirements for identified straddle eligibility, a new special mechanical basis adjustment rule for identified straddles, general elimination of the last vestiges of the straddle exemption for stock, new rules regarding the treatment of physical settlement of straddle positions, and clarification of straddle related consequences under the holding period rules for the corporate dividends received deduction. This article summarizes these recently enacted revisions to the straddle rules.

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Affiliations:  1: sole practitioner.