September 02, 1993
WASHINGTON - The IRS today issued a notice that gives
financial institutions and other securities dealers until October
31, 1993, to identify certain investment assets under the
mark-to-market provisions that were enacted last month in the 1993
The congressional committee reports for these provisions of the
bill anticipated that loans and other securities held on August 10,
1993, would be identified as being excepted from the provisions by
September 9, 1993. Because many taxpayers are having difficulties
in complying, the IRS is extending this date to October 31, 1993.
In addition, for any loan or other security that is acquired by a
taxpayer at any time between August 10, 1993 and October 31, 1993.
The IRS also said that the mark-to-market provisions apply to
many financial institutions that have not traditionally thought of
themselves as securities dealers. For instance, as discussed in the
Congressional committee report language, any bank, thrift, or other
taxpayer that makes and then regularly sells loans is affected and
must mark to market at year-end all of its loans and other
securities that are not covered by an exception.
The most important exceptions are for certain loans not held
for sale and for other securities held for investment for tax
purposes. The Congressional committee report language provides that
whether a loan or security is covered by an exception for tax
purposes is not necessarily controlled by financial accounting
If taxpayers properly identify loans and securities as being
excepted from the mark-to-market provisions, these loans and
securities may be carried at cost. Taxpayers either may identify
the loans and securities that are excepted or may identify all loans
and securities as being excepted unless the taxpayer affirmatively
indicates that a loan or security is subject to mark-to-market.
Notice 93-45 is attached and will appear in I.R.B. 1993-29,
which will be published on September 20, 1993.
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