On Tue, 15 Jan 2008 09:25:00 EST, Drew Edmundson
<drewsbeagles[at]hotmail.com> wrote:

- quote -

I received an email from the OP. In the future I request
that she/he reply only in the newsgroup. Reg. 1.988-3 are
the rules for the election. Except for the regulation I
know of no other official guidance. So whether sending the
election in a sealed envelope, e-mail, etc. will work or not
will depend on all the facts and circumstances. The
Regulation follows:

(a) In general. The character of exchange gain or loss
recognized on a section 988 transaction is governed by
section 988 and this section. Except as otherwise provided
in section 988(c)(1)(E), section 1092, §1.988-5 and this
section, exchange gain or loss realized with respect to a
section 988 transaction (including a section 1256 contract
that is also a section 988 transaction) shall be
characterized as ordinary gain or loss. Accordingly, unless
a valid election is made under paragraph (b) of this
section, any section providing special rules for capital
gain or loss treatment, such as sections 1233, 1234, 1234A,
1236 and 1256(f)(3), shall not apply.

(b) Election to characterize exchange gain or loss on
certain identified forward contracts, futures contracts and
option contracts as capital gain or loss.

(1) In general. Except as provided in paragraph (b)(2) of
this section, a taxpayer may elect, subject to the
requirements of paragraph (b)(3) of this section, to treat
any gain or loss recognized on a contract described in
§1.988-2(d)(1) as capital gain or loss. but only if the
contract—

(i) Is a capital asset in the hands of the taxpayer;

(ii) Is not part of a straddle within the meaning of section
1092(c) (without regard to subsections (c)(4) or (e)); and

(iii) Is not a regulated futures contract or nonequity
option with respect to which an election under section
988(c)(1)(D)(ii) is in effect.

If a valid election under this paragraph (b) is made with
respect to a section 1256 contract, section 1256 shall
govern the character of any gain or loss recognized on such
contract.

(2) Special rule for contracts that become part of a
straddle after an election is made. If a contract which is
the subject of an election under paragraph (b)(1) of this
section becomes part of a straddle within the meaning of
section 1092(c) (without regard to subsections (c)(4) or
(e)) after the date of the election, the election shall be
invalid with respect to gains from such contract and the
Commissioner, in his sole discretion, may invalidate the
election with respect to losses.

(3) Requirements for making the election. A taxpayer elects
to treat gain or loss on a transaction described in
paragraph (b)(1) of this section as capital gain or loss by
clearly identifying such transaction on its books and
records on the date the transaction is entered into. No
specific language or account is necessary for identifying a
transaction referred to in the preceding sentence. However,
the method of identification must be consistently applied
and must clearly identify the pertinent transaction as
subject to the section 988(a)(1)(B) election. The
Commissioner, in his sole discretion, may invalidate any
purported election that does not comply with the preceding
sentence.

(4) Verification. A taxpayer that has made an election
under §1.988-3(b)(3) must attach to his income tax return a
statement which sets forth the following:

(i) A description and the date of each election made by the
taxpayer during the taxpayer's taxable year;

(ii) A statement that each election made during the taxable
year was made before the close of the date the transaction
was entered into;

(iii) A description of any contract for which an election
was in effect and the date such contract expired or was
otherwise sold or exchanged during the taxable year;

(iv) A statement that the contract was never part of a
straddle as defined in section 1092; and

(v) A statement that all transactions subject to the
election are included on the statement attached to the
taxpayer's income tax return.

In addition to any penalty that may otherwise apply, the
Commissioner, in his sole discretion, may invalidate any or
all elections made during the taxable year under
§1.988-3(b)(1) if the taxpayer fails to verify each election
as provided in this §1.988- 3(b)(4). The preceding sentence
shall not apply if the taxpayer's failure to verify each
election was due to reasonable cause or bona fide mistake.
The burden of proof to show reasonable cause or bona fide
mistake made in good faith is on the taxpayer.

(5) Independent verification.

(i) Effect of independent verification. If the taxpayer
receives independent verification of the election in
paragraph (b)(3) of this section, the taxpayer shall be
presumed to have satisfied the requirements of paragraphs
(b)(3) and (4) of this section. A contract that is a part of
a straddle as defined in section 1092 may not be
independently verified and shall be subject to the rules of
paragraph (b)(2) of this section.

(ii) Requirements far independent verification. A taxpayer
receives independent verification of the election in
paragraph (b)(3) of this section if—

(A) The taxpayer establishes a separate account(s) with an
unrelated broker(s) or dealer(s) through which all
transactions to be independently verified pursuant to this
paragraph (b)(5) are conducted and reported.

(B) Only transactions entered into on or after the date the
taxpayer establishes such account may be recorded in the
account.

(C) Transactions subject to the election of paragraph (b)(3)
of this section are entered into such account on the date
such transactions are entered into.

(D) The broker or dealer provides the taxpayer a statement
detailing the transactions conducted through such account
and includes on such statement the following: “Each
transaction identified in this account is subject to the
election set forth in section 988(a)(1)(B).”

(iii) Special effective date for independent verification.
The rules of this paragraph (b)(5) shall be effective for
transactions entered into after March 17, 1992.

(6) Effective date. Except as otherwise provided, this
paragraph (b) is effective for taxable years beginning on or
after September 21, 1989. For prior taxable years, any
reasonable contemporaneous election meeting the requirements
of section 988(a)(1)(B) shall satisfy this paragraph (b).

(c) Exchange gain or loss treated as interest.

(1) In general. Except as provided in this paragraph
(c)(1), exchange gain or loss realized on a section 988
transaction shall not be treated as interest income or
expense. Exchange gain or loss realized on a section 988
transaction shall be treated as interest income or expense
as provided in paragraph (c)(2) of this section with regard
to tax exempt bonds, §1.988-2(e)(2)(ii)(B), §1.988-5, and in
administrative pronouncements. See §1.861-9T(b), providing
rules for the allocation of certain items of exchange gain
or loss in the same manner as interest expense.

(2) Exchange loss realized by the holder on nonfunctional
currency tax exempt bonds. Exchange loss realized by the
holder of a debt instrument the interest on which is
excluded from gross income under section 103(a) or any
similar provision of law shall be treated as an offset to
and reduce total interest income received or accrued with
respect to such instrument. Therefore, to the extent of
total interest income, no exchange loss shall be recognized.
This paragraph (c)(2) shall be effective with respect to
debt instruments acquired on or after June 24, 1987.

(d) Effective date. Except as otherwise provided in this
section, this section shall be effective for taxable years
beginning after December 31, 1986. Thus, except as otherwise
provided in this section, any payments made or received with
respect to a section 988 transaction in taxable years
beginning after December 31, 1986, are subject to this
section. Thus, for example, a payment made prior to January
1, 1987, under a forward contract that results in the
deferral of a loss under section 1092 to a taxable year
beginning after December 31, 1986, is not characterized as
an ordinary loss by virtue of paragraph (a) of this section
because payment was made prior to January 1, 1987.


--
Drew Edmundson, CPA
Cary, NC

--
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On Jan 14, 3:58 pm, white_zombie69 <suresh...[at]gmail.com> wrote:
- quote -


ask your CPA/tax professional who prepares your 1040




<<< Benjamin Yazersky, CPA [NJ & NY] > > -----> real address on hobokeni or hobokenx <-----





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may be
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On Mon, 14 Jan 2008 15:58:08 EST, white_zombie69
<suresh420[at]gmail.com> wrote:

- quote -

See Reg 1.988-3 for the rules.

--
Drew Edmundson, CPA
Cary, NC

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Hi,

If I am trading currencies/forex, Ihow to elect out of section 988 to
get favorable treatment as section 1256 contracts ?

- quote -

send an email to yourself with the election, some say send a sealed
envelope with election.
All these methods can be beaten and don't look like bulletproof.

Can somebody tell me how to elect ou of 988 ? I am interested in a CPA
who can do this
for me on my behalf and vouch for it incase IRS comes after me for
money later on.

Can somebody answer me please ?

Thanks!

-White

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >