Rev. Rul. 70-598

The purpose of this Revenue Ruling is to update and restate, under the current statute and regulations, the position set forth in I.T. 3705, C.B. 1945, 174.

The questions presented involve the determination of when the holding period begins and ends on a security purchased and sold by the taxpayer and whether such determination is affected by the intervention of a holiday between the date of purchase or sale and the date of payment or delivery.

The taxpayer purchased a security from a registered security exchange on Tuesday, December 24, 1968. He made payment for and received delivery of the security on Monday, December 30, 1968, and sold the security on Wednesday, June 25, 1969, making delivery of and receiving payment for the security on Monday, June 30, 1969.

Pursuant to the rules prescribed for registered security exchanges, payment and delivery, upon either a purchase or a sale of a security, are required to be made within the fifth business day after the date on which the purchase or sale is executed.

Section 1222(3) of the Internal Revenue Code of 1954 provides, in pertinent part, that the term "long-term capital gain" means gain from the sale or exchange of a capital asset held for more than six months.

It is well established that, in computing a period of "years" or "months" prescribed in a contract or statute, "from" or "after" a designated day, date, act, or other event, the day thus designated is excluded and the last day of the prescribed period is included. See Sheets v. Selden's Lessee, 69 U.S. (2 Wall.) 177 (1864). Also, see Revenue Ruling 66-97, C.B. 1966-1, 190, holding that the holding period for debentures acquired by purchase on a registered securities exchange is to be determined by excluding the "trade date" on which the debentures were acquired and including the "trade date" on which the debentures are sold.

Therefore, in determining whether a capital asset, a security in the instant case, has been held for more than six months, the day the security was purchased is excluded and the day the security was sold is included.

Accordingly, in applying this principle to the facts in the instant case, the holding period began on December 25, 1968, the day following the day of purchase, and ended on the day of sale, June 25, 1969, thereby satisfying the "more than six months" holding requirement necessary for long-term capital gain or loss treatment. The fact that the day following the day of purchase was a holiday does not affect this conclusion.

I.T. 3705 is superseded, since the position set forth therein is restated under current law in this Revenue Ruling.

¹ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.