SECTION 4. APPLICATION

.01 If a redemption is within the scope of section 3 of this revenue procedure and results in a de minimis loss, the IRS will not treat such redemption as part of a wash sale. Therefore, § 1091(a) will not disallow the deduction for the resulting de min- imis loss in the year realized and § 1091(d) will not cause the basis of any property to be determined by reference to the basis of the redeemed shares.

.02 Solely for purposes of section 4.01 of this revenue procedure, the term de min- imis loss means a loss realized upon a redemption of a share of stock of an MMF the amount of which (expressed as a positive number) is not more than one half of one percent (0.5%) of the taxpayer’s basis in that share.

.03 In determining whether a loss is a de minimis loss within the meaning of section 4.02 of this revenue procedure, a taxpayer must use the same basis determination method and lot selection method under § 1012 and the regulations thereunder that the taxpayer uses to determine the amount of its gain or loss for purposes of calculating taxable income.

EXAMPLES

.01 Example 1 . (1) Fund is an MMF that meets the requirements of Rule 2a–7 under the 1940 Act and holds itself out to the public as an MMF. Fund is a floating-NAV MMF at all times during year 1. Before September 1 of year 1, Taxpayer, a domestic corporation that is taxable under subchapter C of Chapter 1 of the Internal Revenue Code, holds no shares of Fund. On September 1 of year 1, Taxpayer invests $1,000,000.00 in Fund when Fund’s price per share is $1.0000, receiving in return 1,000,000 shares of Fund. On October 1 of year 1, Taxpayer invests an additional $250,000.00 in Fund when Fund’s price per share is $1.0005, receiving in return 249,875.06 shares, which Taxpayer holds in the same

2013–31 I.R.B. 122 July 29, 2013