Mixed Straddle Account Election

§ 1092. Straddles(a) Recognition of loss in case of straddles, etc.(1) Limitation on recognition of loss(A) In generalAny loss with respect to 1 or more positions shall be taken into account for any taxable year only to the extent that the amount of such loss exceeds the unrecognized gain (if any) with respect to 1 or more positions which were offsetting positions with respect to 1 or more positions from which the loss arose. (B) Carryover of lossAny loss which may not be taken into account under subparagraph (A) for any taxable year shall, subject to the limitations under subparagraph (A), be treated as sustained in the succeeding taxable year. (2) Special rule for identified straddles(A) In generalIn the case of any straddle which is an identified straddle—(i) paragraph (1) shall not apply with respect to positions comprising the identified straddle, (ii) if there is any loss with respect to any position of the identified straddle, the basis of each of the offsetting positions in the identified straddle shall be increased by an amount which bears the same ratio to the loss as the unrecognized gain with respect to such offsetting position bears to the aggregate unrecognized gain with respect to all such offsetting positions, (iii) if the application of clause (ii) does not result in an increase in the basis of any offsetting position in the identified straddle, the basis of each of the offsetting positions in the identified straddle shall be increased in a manner which—(I) is reasonable, consistent with the purposes of this paragraph, and consistently applied by the taxpayer, and (II) results in an aggregate increase in the basis of such offsetting positions which is equal to the loss described in clause (ii), and (iv) any loss described in clause (ii) shall not otherwise be taken into account for purposes of this title. (B) Identified straddleThe term “identified straddle” means any straddle—(i) which is clearly identified on the taxpayer’s records as an identified straddle before the earlier of—(I) the close of the day on which the straddle is acquired, or (II) such time as the Secretary may prescribe by regulations. (ii) to the extent provided by regulations, the value of each position of which (in the hands of the taxpayer immediately before the creation of the straddle) is not less than the basis of such position in the hands of the taxpayer at the time the straddle is created, and (iii) which is not part of a larger straddle. A straddle shall be treated as clearly identified for purposes of clause (i) only if such identification includes an identification of the positions in the straddle which are offsetting with respect to other positions in the straddle.