View Rule

View EO 12866 Meetings

Printer-Friendly Version Download RIN Data in XML

TREAS/IRS

RIN: 1545-BB90

Publication ID: Fall 2006

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 security that is not inventory as if it 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. On May 24, 2005, a notice of proposed rulemaking was issued. The NPRM provided an elective safe harbor for dealers in securities, dealers in commodities and traders in securities and commodities. The safe harbor permits these taxpayers to make an election pursuant to which the values of the positions reported on certain financial statements are used as the fair market value of those positions for purposes of section 475, if certain conditions are met. Those conditions and limitations are to ensure consistency with fair market value tax principles. The NPRM also asked for specific comments relating to certain aspects of the rules.
Agency: Department of the Treasury(TREAS)	Priority: Substantive, Nonsignificant
RIN Status: Previously published in the Unified Agenda	Agenda Stage of Rulemaking: Final 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	05/24/2005	70 FR 29663
NPRM Comment Period End	08/22/2005
Public Hearing	09/15/2005
Final Action	12/00/2006

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: No	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