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TREAS/IRS RIN: 1545-BB90 Publication ID: Fall 2004 
Title: Guidance Regarding Mark-to-Market Valuation for Certain Securities 
Abstract: Section 475(a) requires that dealers in securities mark their securities to market. If the security is inventory, the dealer must include that security at fair market value. Taxpayers must treat any securities that are not inventory as if they were sold for its fair market value on the last business day of the year. While the legal definition of the term "fair market value" has long been settled, the statute is silent as to what valuation methodology should be used to determine fair market value of any particular security. Many of the securities subject to section 475 raise difficult valuation issues. An advanced notice of proposed rulemaking (ANPRM) was issued on May 5, 2003, and asked for comments on a possible financial statement-tax conformity safe harbor approach for valuing certain securities under section 475 for which the determination of actual fair market value is administratively difficult. The ANPRM asked for comments on: (1) the securities to which this approach applies; (2) the taxpayers who may elect this approach; (3) the election into the approach; (4) the applicable financial statements to be used; (5) the recordkeeping, retention, and availability requirements for verification of financial statement-tax conformity; and (6) what approach will apply if the election for financial statement-tax conformity is not made. A notice of proposed rulemaking is being drafted currently based upon comments received from the ANPRM. 
Agency: Department of the Treasury(TREAS)  Priority: Substantive, Nonsignificant 
RIN Status: Previously published in the Unified Agenda Agenda Stage of Rulemaking: Proposed Rule Stage 
Major: No  Unfunded Mandates: No 
CFR Citation: 26 CFR 1   
Legal Authority: 26 USC 7805    26 USC 475    26 USC 446   
Legal Deadline:  None
Timetable:
Action Date FR Cite
NPRM  12/00/2004    
Additional Information: REG-100420-03 Drafting attorney: Marsha A. Sabin (202) 622-3950 or John W. Rogers (202) 622-3950 Reviewing attorney: Robert Williams (202) 622-3960 Treasury attorneys: Michael Novey (202) 622-1339 and Viva Hammer (202) 622-0869 CC:FIP
Regulatory Flexibility Analysis Required: Undetermined  Government Levels Affected: None 
Small Entities Affected: No  Federalism: No 
Included in the Regulatory Plan: No 
Agency Contact:
Marsha A. Sabin
Department of the Treasury
Internal Revenue Service
1111 Constitution Avenue NW., Room 3547,
Washington, DC 20224
Phone:202 317-6945
Fax:855 574-9025
Email: marsha.a.sabin@irscounsel.treas.gov