§1058 — Transfers of securities under certain agreements
16 cases·1 followed·3 distinguished·2 questioned·2 overruled·8 cited—6% support
Statute Text — 26 U.S.C. §1058
In the case of a taxpayer who transfers securities (as defined in section 1236(c)) pursuant to an agreement which meets the requirements of subsection (b), no gain or loss shall be recognized on the exchange of such securities by the taxpayer for an obligation under such agreement, or on the exchange of rights under such agreement by that taxpayer for securities identical to the securities transferred by that taxpayer.
In order to meet the requirements of this subsection, an agreement shall—
provide for the return to the transferor of securities identical to the securities transferred;
require that payments shall be made to the transferor of amounts equivalent to all interest, dividends, and other distributions which the owner of the securities is entitled to receive during the period beginning with the transfer of the securities by the transferor and ending with the transfer of identical securities back to the transferor;
not reduce the risk of loss or opportunity for gain of the transferor of the securities in the securities transferred; and
meet such other requirements as the Secretary may by regulation prescribe.
Property acquired by a taxpayer described in subsection (a), in a transaction described in that subsection, shall have the same basis as the property transferred by that taxpayer.
16 Citing Cases
-We read nothing in the statute or in its history that reveals that Congress intended to overrule that firmly established law by-enacting sections 512(a)-(5)(B) and 1058(b)(3) .
unlike the taxpayer in the ruling, TAC never stated to DLJ that it intended to cover thecPVFCs with the shares pledged as collateral . Petitioners concurrently argue that the SLAs are not curren t sales . Petitioners point to longstanding caselaw that has held share lending not.'to be current sales and contend that Congress' enactment of section 1058 in 1997 reaffirms the tax-free nature of share-lending transactions 42 - Petitioners contend that the SLAB at issue satisfy the requirements of se
Petitioners treated the Transaction as a securities lending arrangement subject to section 1058, the provisions of which we set forth in an appendix.
Petitioners point to longstanding caselaw that has held share lending not to be current sales and contend that Congress’ enactment of section 1058 in 1997 reaffirms the tax-free nature of share-lending transactions.
ny given time during the 3-year period. At the same time petitioner bore no risk of loss in the event that the stock’s value decreased. In 1978 Congress codified and clarified the then-existing law represented by Rev. Rul. 57-451, supra, by enacting section 1058. Section 1058(a) provides for nonrecognition of gain or loss when securities are transferred under certain agreements as follows: In the case of a taxpayer who transfers securities * * * pursuant to an agreement which meets the requireme
heoretical "options", to establish the fair market value thereof. Additionally, the Raifmans argue that they are entitled to a step-up in basis because the Derivium transaction did not constitute a literal sale but rather a "constructive sale" under sec. 1058. Because we decide the issue oftheft on the existence ofintent, we decline to explore these aspects ofthe Raifmans' claim. We observe, however, that respondent's initial determination with respect to the proper tax treatment ofthe Derivium
claim that section 1058.; saves.