IRS News Release  
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 Budget bill.

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 provisions.

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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