
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC1236]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
                 Subchapter P--Capital Gains and Losses
 
     PART IV--SPECIAL RULES FOR DETERMINING CAPITAL GAINS AND LOSSES
 
Sec. 1236. Dealers in securities


(a) Capital gains

    Gain by a dealer in securities from the sale or exchange of any 
security shall in no event be considered as gain from the sale or 
exchange of a capital asset unless--
        (1) the security was, before the close of the day on which it 
    was acquired (or such earlier time as the Secretary may prescribe by 
    regulations), clearly identified in the dealer's records as a 
    security held for investment; and
        (2) the security was not, at any time after the close of such 
    day (or such earlier time), held by such dealer primarily for sale 
    to customers in the ordinary course of his trade or business.

(b) Ordinary losses

    Loss by a dealer in securities from the sale or exchange of any 
security shall, except as otherwise provided in section 582(c), 
(relating to bond, etc., losses of banks), in no event be considered as 
ordinary loss if at any time after November 19, 1951, the security was 
clearly identified in the dealer's records as a security held for 
investment.

(c) Definition of security

    For purposes of this section, the term ``security'' means any share 
of stock in any corporation, certificate of stock or interest in any 
corporation, note, bond, debenture, or evidence of indebtedness, or any 
evidence of an interest in or right to subscribe to or purchase any of 
the foregoing.

(d) Special rule for floor specialists

                           (1) In general

        In the case of a floor specialist (but only with respect to 
    acquisitions, in connection with his duties on an exchange, of stock 
    in which the specialist is registered with the exchange), subsection 
    (a) shall be applied--
            (A) by inserting ``the 7th business day following'' before 
        ``the day'' the first place it appears in paragraph (1) and by 
        inserting ``7th business'' before ``day'' in paragraph (2), and
            (B) by striking the parenthetical phrase in paragraph (1).

                        (2) Floor specialist

        The term ``floor specialist'' means a person who is--
            (A) a member of a national securities exchange,
            (B) is registered as a specialist with the exchange, and
            (C) meets the requirements for specialists established by 
        the Securities and Exchange Commission.

(e) Special rule for options

    For purposes of subsection (a), any security acquired by a dealer 
pursuant to an option held by such dealer may be treated as held for 
investment only if the dealer, before the close of the day on which the 
option was acquired, clearly identified the option on his records as 
held for investment. For purposes of the preceding sentence, the term 
``option'' includes the right to subscribe to or purchase any security.

(Aug. 16, 1954, ch. 736, 68A Stat. 330; Pub. L. 94-455, title XIX, 
Sec. 1901(b)(3)(E), Oct. 4, 1976, 90 Stat. 1793; Pub. L. 97-34, title V, 
Sec. 506, Aug. 13, 1981, 95 Stat. 332; Pub. L. 97-448, title I, 
Sec. 105(d)(1), Jan. 12, 1983, 96 Stat. 2387; Pub. L. 98-369, div. A, 
title I, Sec. 107(b), July 18, 1984, 98 Stat. 630.)


                               Amendments

    1984--Subsec. (a)(1). Pub. L. 98-369, Sec. 107(b)(1), substituted 
``the security was, before the close of the day on which it was acquired 
(or such earlier time as the Secretary may prescribe by regulations), 
clearly identified in the dealer's records as a security held for 
investment; and'' for ``the security was, before the close of the day on 
which it was acquired (before the close of the following day in the case 
of an acquisition before January 1, 1982), clearly identified in the 
dealer's records as a security held for investment or if acquired before 
October 20, 1951, was so identified before November 20, 1951; and''.
    Subsec. (a)(2). Pub. L. 98-369, Sec. 107(b)(2), inserted ``(or such 
earlier time)'' after ``such day''.
    1983--Subsec. (e). Pub. L. 97-448 added subsec. (e).
    1981--Subsec. (a). Pub. L. 97-34, Sec. 506(a), substituted ``before 
the close of the day on which it was acquired (before the close of the 
following day in the case of an acquisition before January 1, 1982)'' 
for ``before the expiration of the 30th day after the date of its 
acquisition'' in par. (1) and ``close of such day'' for ``expiration of 
such 30th day'' in par. (2).
    Subsec. (d). Pub. L. 97-34, Sec. 506(b), added subsec. (d).
    1976--Subsec. (b). Pub. L. 94-455 substituted ``ordinary loss'' for 
``loss from the sale or exchange of property which is not a capital 
asset''.


                    Effective Date of 1984 Amendment

    Amendment by Pub. L. 98-369 applicable to positions entered into 
after July 18, 1984, in taxable years ending after that date, see 
section 107(e) of Pub. L. 98-369, set out as a note under section 1092 
of this title.


                    Effective Date of 1983 Amendment

    Section 105(d)(2) of Pub. L. 97-448 provided that: ``The amendment 
made by paragraph (1) [amending this section] shall apply to securities 
acquired after September 22, 1982, in taxable years ending after such 
date.''


                    Effective Date of 1981 Amendment

    Amendment by Pub. L. 97-34 applicable to property acquired by the 
taxpayer after Aug. 13, 1981, in taxable years ending after such date, 
and applicable when so elected with respect to property held on June 23, 
1981, see section 508 of Pub. L. 97-34, set out as an Effective Date 
note under section 1092 of this title.


                    Effective Date of 1976 Amendment

    Amendment by Pub. L. 94-455 applicable with respect to taxable years 
beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, 
set out as a note under section 2 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 475, 512, 1058, 1233 of this 
title.
