shall be taken into account for purposes of this title at the time of the payment, and (B) proper adjustment shall be made in the amount of any subsequent gain or loss for items taken into account by reason of subparagraph (A). This paragraph shall not apply to a payment in connection with a taxable event. (2) Rules relating to character and source of gain or loss In the case of any item of income, deduction, gain, or loss with respect to payments described in paragraph (1)— (A) the rules of subsection (b)(1)(A) shall apply in determining the character of such item, and (B) except as provided in section 871(m), the rule of subsection (b)(1)(B) shall apply in determining the source of such item. (e) Suspension of holding period while underlying investment part of hedging unit For purposes of section 1222, in the case of any underlying investment which is part of an investment hedging unit, the holding period for such investment shall not include any period during which the underlying investment is part of such unit. (f) Applicable financial statement For purposes of this part, the term applicable financial statement means— (1) a financial statement which is certified as being prepared in accordance with generally accepted accounting principles and which is— (A) a 10–K (or successor form), or annual statement to shareholders, required to be filed by the taxpayer with the United States Securities and Exchange Commission, (B) an audited financial statement of the taxpayer which is used for— (i) credit purposes, (ii) reporting to shareholders, partners, or other proprietors, or to beneficiaries, or (iii) any other substantial nontax purpose, but only if there is no statement of the taxpayer described in subparagraph (A), or (C) filed by the taxpayer with any other Federal agency for purposes other than Federal tax purposes, but only if there is no statement of the taxpayer described in subparagraph (A) or (B), (2) a financial statement which is made on the basis of international financial reporting standards and is