26 U.S.C. § 1058 — Transfers of securities under certain agreements

(a) General rule For a taxpayer^* who transfers securities (as defined in section 1236(c)) under an agreement which meets the requirements of subsection (b), no gain or loss must be recognized on the exchange of such securities by the taxpayer for an obligation under such agreement, or on the exchange of rights under such agreement by that taxpayer for securities identical to the securities transferred by that taxpayer.

(b) Agreement requirements In order to meet the requirements of this subsection, an agreement must—
(1) provide for the return to the transferor of securities identical to the securities transferred;
(2) require that payments must be made to the transferor of amounts equivalent to all interest, dividends, and other distributions which the owner of the securities is entitled to receive during the period beginning with the transfer of the securities by the transferor and ending with the transfer of identical securities back to the transferor;
(3) not reduce the risk of loss or opportunity for gain of the transferor of the securities in the securities transferred; and
(4) meet such other requirements as the Secretary^* may by regulation prescribe.

(c) Basis Property acquired by a taxpayer described in subsection (a), in a transaction described in that subsection, must have the same basis as the property transferred by that taxpayer.