### Question
What is the definition of qualified derivative payment?


### Answer
The definition of **qualified derivative payment** is as follows in *26 U.S.C. § 59A*:

> any payment made by a taxpayer pursuant to a derivative with respect to which the taxpayer—


(i) recognizes gain or loss as if such derivative were sold for its fair market value on the last business day of the taxable year (and such additional times as required by this title or the taxpayer's method of accounting),


(ii) treats any gain or loss so recognized as ordinary, and


(iii) treats the character of all items of income, deduction, gain, or loss with respect to a payment pursuant to the derivative as ordinary

#### Citation:
  - *26 U.S.C. § 59A*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter A-Determination of Tax Liability > PART VII-BASE EROSION AND ANTI-ABUSE TAX**

