SECTION 5. EFFECTIVE DATE

[RESERVED]

reporting obligations for transactions in floating-NAV MMF shares.

.02 Wash Sale Rules

(1) Section 1091(a) disallows a loss realized by a taxpayer on a sale or other disposition of shares of stock or securities if, within a period beginning 30 days before and ending 30 days after the date of such sale or disposition, the taxpayer acquires (by purchase or by an exchange on which the entire amount of gain or loss is recognized by law), or enters into a contract or option to so acquire, substantially identical stock or securities (unless the taxpayer is a dealer in stock or securities and the loss is sustained in a transaction made in the ordinary course of such business).

(2) Under § 1091(d), a taxpayer’s basis in the property the acquisition of which resulted in the nondeductibility of a loss under § 1091(a) equals the basis of the stock or securities disposed of, increased or decreased to take into account any difference between the price at which the replacement property was acquired and the price at which the original stock or securities were disposed of.

(3) A shareholder that redeems shares in a floating-NAV MMF may realize a loss on the redemption. Moreover, because many MMF shareholders engage in frequent purchases of MMF shares (including purchases made as a result of sweep arrangements and reinvestments of distributions), a shareholder that realizes a loss on a redemption of MMF shares will often acquire shares in that MMF within 30 days before or after the redemption.

(4) Redemptions of shares of MMFs, which have relatively stable values even when share prices float, do not give rise to the concern that § 1091 is meant to address. Moreover, given the expected volume of transactions in MMF shares, tracking wash sales of MMF shares will present shareholders of floating-NAV MMFs with significant practical challenges. Therefore, it is in the interest of sound tax administration to prescribe circumstances in which the IRS will not treat a redemption of these MMF shares as part of a wash sale under § 1091. Those circumstances are set forth in sections 3 and 4 of this revenue procedure.