3. For taxpayers who take futures positions in, or who have transactions in, commodities connected with their business as part of their business operations, the trading in such futures or commodities creates fully taxable profits or fully allowable losses on account of income (hereinafter called "income treatment'). For example, this includes distillers who use certain grains in their business and also take futures positions in those grains.
4. Also accorded income treatment for tax purposes are transactions in commodity futures or commodities by taxpayers who, while not carrying on a business that utilizes a particular commodity, have access to special (insider) information about the commodity which they use to their benefit in one or more such transactions. ...
5. Corporate taxpayers whose prime or only business activity is trading in items to which the comments in this bulletin apply are subject to the income treatment.
SPECULATORS
6. In this bulletin, a "speculator" is a taxpayer who takes one or more futures positions or acquires a commodity other than in the circumstances described in 3, 4 and 5 above.
7. As a general rule, it is acceptable for speculators to report all their gains and losses from transactions in commodity futures or in commodities as capital gains and losses...provided such reporting is followed consistently from year to year.*
8. If a speculator prefers to use the income treatment in reporting gains and losses in commodity futures or commodities, it may be done provided this reporting practice is followed consistently from year to year.
