II
112th CONGRESS
2d Session
S. 2033
IN THE SENATE OF THE UNITED STATES
January 23, 2012
Mr. Levin introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to end the costly derivatives blended rate loophole, and for other purposes.
Short title
This Act may be cited as
the Closing the Derivatives Blended
Rate Loophole Act
.
Modifications to treatment of section 1256 contracts
Elimination of blended capital gain or loss treatment in favor of short-Term capital gain or loss
In general
Paragraph (3) of section 1256(a) of the Internal Revenue Code of 1986 is amended to read as follows:
any gain or loss with respect to a section 1256 contract shall be treated as short-term capital gain or loss, and
.
Conforming amendments
Subsection (f) of section 1256 of such Code is amended by striking paragraphs (2), (3), and (4) and by redesignating paragraph (5) as paragraph (2).
Conforming amendments
Clause (iv) of section 988(c)(1)(E) of the Internal Revenue Code of 1986 is amended to read as follows:
Treatment of certain currency contracts
Except as provided in regulations, in the case of a qualified fund, any bank forward contract, any foreign currency futures contract traded on a foreign exchange, or to the extent provided in regulations any similar instrument, which is not otherwise a section 1256 contract shall be treated as a section 1256 contract for purposes of section 1256.
.
Subparagraph (A)
of section 1212(c)(1) of such Code is amended by striking preceding
taxable year
and all that follows and inserting preceding
taxable year, the amount so allowed shall be treated as short-term capital loss
from section 1256 contracts.
.
Subparagraph (A)
of section 1212(c)(6) of such Code is amended by striking preceding
taxable year
and all that follows and inserting preceding
taxable year, the amount allowed as a carryback shall be treated as short-term
gain for the loss year.
.
Subparagraph (B)
of section 1212(c)(6) of such Code is amended by striking or
long-term
.
Subsection (f) of section 1256 of such Code is amended by striking paragraphs (3) and (4) and by redesignating paragraph (5) as paragraph (3).
Effective dates
In general
Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Conforming amendments
The amendments made by paragraphs (2), (3), and (4) of subsection (b) shall apply to losses for taxable years beginning after the date of the enactment of this Act.
Modifications to treatment of dealers in securities and commodities
Modification of definition of security
Paragraph (2) of section 475(c) of the Internal Revenue Code of 1986 is amended by striking the second sentence.
Required mark to market for dealers in commodities
Subsection (e) of section 475 of the Internal Revenue Code of 1986 is amended—
by striking
In the case of a dealer in commodities who elects the application of
this subsection, this section shall apply to commodities held by such
dealer
in paragraph (1) and inserting This section shall apply
to commodities held by a dealer in commodities
, and
by striking paragraph (3).
Commodities derivatives dealers
Clause (i) of section 1221(b)(1)(B) of the
Internal Revenue Code of 1986 is amended by striking a note, bond, or
other evidence of indebtedness, or a section 1256 contract (as defined in
section 1256(b))
and inserting or a note, bond, or other
evidence of indebtedness)
.
Technical amendment
Paragraph (1) of section 1402(i) of the Internal
Revenue Code of 1986 is amended by striking subsection (a)(3)(A)
and inserting subsection (a)(3)
.
Effective date
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.