### Question
How does the law define commodities derivative financial instrument?


### Answer
Under *26 U.S.C. § 1221*, **commodities derivative financial instrument** is defined as:

> any contract or financial instrument with respect to commodities (other than a share of stock in a corporation, a beneficial interest in a partnership or trust, a note, bond, debenture, or other evidence of indebtedness, or a section 1256 contract (as defined in section 1256(b))), the value or settlement price of which is calculated by or determined by reference to a specified index

#### Citation:
  - *26 U.S.C. § 1221*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter P-Capital Gains and Losses > PART III-GENERAL RULES FOR DETERMINING CAPITAL GAINS AND LOSSES**

