After the Internal Revenue Service lost a key case, on June 17, 1993, Federal National Mortgage Association v. Commissioner,1 the IRS position that futures market transactions involving the purchase of puts (short hedges) were not hedges and were to be treated as capital assets was demolished.2 The Department of the Treasury agreed that gains and losses from most hedging transactions were to be treated as ordinary gains and losses and immediately commenced a major effort to rewrite the regulations governing futures transactions to reflect that position. The proposed regulations were issued four months later3 and final regulations were promulgated in October of 1994.4