SubChapter M Tax: irs private letter ruling 201024049 - collars and hedges

SubChapter M Tax: irs private letter ruling 201024049 - collars and hedges: "Taxpayer entered into a collar transaction (involving a series of puts and calls) which�you believe was designed to manage pricing risks associated with its inventory sales. �Though not identified as such, Taxpayer later claimed that the puts that it acquired were�hedging transactions under section 1221, but it contends that the calls were not�hedges. You are currently assisting Exam with the audit and evaluation of the call�options, including whether they were hedging transactions. You have also generally�inquired regarding Taxpayer’s tax accounting treatment of the call options. For purposes�of this email, it is assumed that facts will show the calls were qualifying section 1221�hedges but for Taxpayer’s failure to identify them as hedges."