Page 171

107 STAT. 482 PUBLIC LAW 103-66—AUG. 10, 1993 **(1) IN GENERAL.—Subsection (a) shall not apply to— "(A) any security held for investment, "(BXi) any securitv described in subsection (cX2XC) which is acquired (including originated) by the taxpayer in the ordinary course of a trade or business of the taxpayer and which is not held for sale, and (ii) any obligation to acquire a security described in clause (i) if such obliga- tion is entered into in the ordinary course of such trade or business and is not held for sale, and "(C) any security which is a hedge with respect to— "(i) a security to which subsection (a) does not apply, or "(ii) a position, right to income, or a liability which is not a security in the hands of the taxpayer. To the extent provided in regulations, subparagraph (C) shall not apply to any security held by a person in its capacity as a dealer in securities. "(2) IDENTIFICATION REQUIRED.—A security shall not be treated as described in subparagraph (A), (B), or (C) of para- graph (1), as the case may be, unless such security is clearlv identified in the dealer's records as being descril>ed in such subparagraph before the close of the day on which it was acquired, originated, or entered into (or such other time as the Secretary may by regulations prescribe). "(3) SECURITIES SUBSEQUENTLY NOT EXEMPT.—If a security ceases to be described in paragraph (1) at any time after it was identified as such under paragraph (2), subsection (a) shall apply to any changes in value of tne security occurring after the cessation. "(4) SPECIAL RULE FOR PROPERTY HELD FOR INVESTMENT.— To the extent provided in regulations, subparagraph (A) of paragraph (1) shall not apply to any security described in subparagraph (D) or (E) of subsection (cX2) which is held by a dealer in such securities. "(c) DEFINITIONS.—For piuposes of this section— "(1) DEALER IN SECURITIES DEFINED.—The term 'dealer in securities' means a taxpayer who— "(A) regularly purchases securities firom or sells securi- ties to customers in the ordinary course of a trade or business; or "(B) regularly offers to enter into, assume, offset, assign or otherwise terminate positions in securities with cus- tomers in the ordinary course of a trade or business. "(2) SECURITY DEFINED.—^The term 'security* means any— "(A) share of stock in a corporation; "(B) partnership or beneficial ownership interest in a widelv held or publiclv traded partnershi]) or trust; "(C) note, bond, debenture, or other evidence of indebt- edness; "(D) interest rate, currency, or equity notional principal contract; "(E) evidence of an interest in, or a derivativie financial instrument in, any security described in subparagraph (A), (B), (C), or (D), or any currency, including any option, forward contract, short position, and any similar financial instrument in such a security or currency; £ind "(F) position which—