### Question
How is the term commodity hedging transaction defined?


### Answer
The term **commodity hedging transaction** is defined in *26 U.S.C. § 954* as the following:

> any transaction with respect to a commodity if such transaction—


(i) is a hedging transaction as defined in section 1221(b)(2), determined—


(I) without regard to subparagraph (A)(ii) thereof,


(II) by applying subparagraph (A)(i) thereof by substituting "ordinary property or property described in section 1231(b)" for "ordinary property", and


(III) by substituting "controlled foreign corporation" for "taxpayer" each place it appears, and


  

(ii) is clearly identified as such in accordance with section 1221(a)(7)

#### Citation:
  - *26 U.S.C. § 954*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter N-Tax Based on Income From Sources Within or Without the United States > PART III-INCOME FROM SOURCES WITHOUT THE UNITED STATES > Subpart F-Controlled Foreign Corporations**

