OPTIONS TO BUY OR SELL.

SEC. 53. OPTIONS TO BUY OR SELL.Section 1234 (relating to options to buy or sell) is amended to read as follows: “SEC. 1234. OPTIONS TO BUY OR SELL. “(a) Treatment of Gain or Loss.—Gain or loss attributable to the sale or exchange of, or loss attributable to failure to exercise, a privilege or option to buy or sell property shall be considered gain or loss from the sale or exchange of property which has the same character as the property to which the option or privilege relates has in the hands of the taxpayer (or would have in the hands of the taxpayer if acquired by him). “(b) Special Rule for Loss Attributable to Failure To Exercise Option.—For purposes of subsection (a), if loss is attributable to failure to exercise a privilege or option, the privilege or option shall be deemed to have been sold or exchanged on the day it expired. “(c) Non-Application of Section.— This section shall not apply “(1) a privilege or option which constitutes property described in paragraph (1) of section 1221; “(2) in the case of gain attributable to the sale or exchange of a privilege or option, any income derived in connection with such privilege or option which, without regard to this section, is treated as other than gain from the sale or exchange of a capital asset; “(3) a loss attributable to failure to exercise an option described in section 1233 (c); or “(4) gain attributable to the sale or exchange of a privilege or option acquired by the taxpayer before March 1, 1954, if in the hands of the taxpayer such privilege or option is a capital asset.”