### Question
How is the term hedging loss defined?


### Answer
The term **hedging loss** is defined in *26 U.S.C. § 1256* as the following:

> the excess of—



(i) the deductions allowable under this chapter for the taxable year attributable to hedging transactions (determined without regard to subparagraph (A)(i)), over



(ii) income received or accrued by the taxpayer during such taxable year from such transactions

#### Citation:
  - *26 U.S.C. § 1256*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter P-Capital Gains and Losses > PART IV-SPECIAL RULES FOR DETERMINING CAPITAL GAINS AND LOSSES**

