Under these rules, foreign exchange gain or
loss realized by a fund with respect to foreign currencies and certain futures and options thereon, foreign currency - denominated debt instruments, foreign currency forward contracts, and foreign currency - denominated payables and receivables will generally be treated as
ordinary income or
loss, although in some cases elections may be available that would alter this
treatment.
The Tax Reform Act of 1986 eliminated preferential capital gain
treatment so that all capital gains were taxed as
ordinary income, enacted «passive
loss» and «at risk» rules, and eliminated accelerated depreciation methods in favor of straight line depreciation consisting of 39 years for commercial property and 27.5 years for residential property.