80 FR 61308 - Notional Principal Contracts; Swaps With Nonperiodic Payments

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 80, Issue 197 (October 13, 2015)

Page Range		61308-61308
FR Document		2015-25921

This document contains amendments to temporary regulations relating to guidance for the treatment of nonperiodic payments made or received pursuant to certain notional principal contracts. These amendments change the applicability date of the embedded loan rule for the treatment of nonperiodic payments from November 4, 2015, to the later of January 1, 2017, or six months after the date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register. The amendments to the temporary regulations provide guidance to taxpayers who are parties making and receiving nonperiodic payments under notional principal contracts.

Federal Register, Volume 80 Issue 197 (Tuesday, October 13, 2015)

[Federal Register Volume 80, Number 197 (Tuesday, October 13, 2015)]
[Rules and Regulations]
[Page 61308]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-25921]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9719]
RIN 1545-BM62


Notional Principal Contracts; Swaps With Nonperiodic Payments

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Temporary regulations; correcting amendments.

-----------------------------------------------------------------------

SUMMARY: This document contains amendments to temporary regulations 
relating to guidance for the treatment of nonperiodic payments made or 
received pursuant to certain notional principal contracts. These 
amendments change the applicability date of the embedded loan rule for 
the treatment of nonperiodic payments from November 4, 2015, to the 
later of January 1, 2017, or six months after the date of publication 
of the Treasury decision adopting these rules as final regulations in 
the Federal Register. The amendments to the temporary regulations 
provide guidance to taxpayers who are parties making and receiving 
nonperiodic payments under notional principal contracts.

DATES: Effective Date: These amendments are effective on October 13, 
2015.
    Applicability Date: For the date of applicability, see Sec.  1.446-
3T(j)(2), as corrected.

FOR FURTHER INFORMATION CONTACT: Alexa Dubert at (202) 317-6945 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    The temporary regulations that are the subject of these amendments 
are under section 446(b) of the Internal Revenue Code (Code). The 
temporary regulations (TD 9719) were published in the Federal Register 
on Friday, May 8, 2015 (80 FR 26437).

Need for Amendments

    Section 1.446-3T(g)(4)(i) of the temporary regulations provides 
that, subject to certain exceptions set forth in Sec.  1.446-
3T(g)(4)(ii), a notional principal contract with one or more 
nonperiodic payments is treated as two separate transactions consisting 
of an on-market, level payment swap and one or more loans (the embedded 
loan rule). Section 1.446-3T(g)(4)(i) eliminated the exception to the 
embedded loan rule for non-significant, nonperiodic payments set forth 
in the final regulations (TD 8491) published in the Federal Register on 
October 14, 1993 (58 FR 53125) (the 1993 Regulations). See Sec.  1.446-
3. Section 1.446-3T(g)(4)(i) applies to notional principal contracts 
entered into on or after November 4, 2015. After publication of the 
temporary regulations, the Treasury Department and the IRS received 
comments requesting the delay of the applicability date of the embedded 
loan rule set forth in the temporary regulations. In response to those 
comments, this document amends the applicability date to make Sec.  
1.446-3T(g)(4)(i) and Sec.  1.446-3T(g)(6) Example 2 apply to notional 
principal contracts entered into on or after the later of January 1, 
2017, or 180 days after the date of publication of the Treasury 
decision adopting these rules as final regulations in the Federal 
Register. Prior to the date of applicability of Sec.  1.446-
3T(g)(4)(i), as corrected, taxpayers may continue to apply the 1993 
Regulations that (except for purposes of section 956) limit the 
application of the embedded loan rule to nonperiodic payments that are 
significant.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Amendments to the Regulations

    Accordingly, 26 CFR part 1 is corrected by making the following 
correcting amendments:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

    Authority: 26 U.S.C. 7805 * * *


0
Par. 2. Section 1.446-3T is amended by revising paragraph (j)(2) to 
read as follows:


Sec.  1.446-3T  Notional principal contracts (temporary).

* * * * *
    (j) * * *
    (2) Application of Sec.  1.446-3T(g)(4). Paragraph (g)(4)(i) of 
this section and paragraph (g)(6) Example 2 of this section apply to 
notional principal contracts entered into on or after the later of 
January 1, 2017, or 180 days after the date of publication of the 
Treasury decision adopting these rules as final regulations in the 
Federal Register. Paragraph (g)(4)(ii) of this section applies to 
notional principal contracts entered into on or after May 8, 2015. 
However, before the later of January 1, 2017, or 180 days after the 
date of publication of the Treasury decision adopting paragraph 
(g)(4)(i) of this section as final regulations in the Federal Register, 
taxpayers may rely on the provision in Sec.  1.446-3(g)(4), as 
contained in 26 CFR part 1, revised April 1, 2015, which (except for 
purposes of section 956) limits the application of the embedded loan 
rule to nonperiodic payments that are significant, even if the 
requirements for the exceptions in paragraph (g)(4)(ii) of this section 
are not met. Taxpayers may apply paragraph (g)(4)(i) of this section, 
paragraph (g)(4)(ii) of this section, or both to notional principal 
contracts entered into before the dates set forth in this paragraph 
(j)(2).
* * * * *

Martin Franks,
Branch Chief, Publications & Regulations Branch, Legal Processing 
Division, Associate Chief Counsel (Procedure & Administration).
[FR Doc. 2015-25921 Filed 10-9-15; 8:45 am]
 BILLING CODE 4830-01-P

61308 Federal Register / Vol. 80, No. 197 / Tuesday, October 13, 2015 / Rules and Regulations

(B) [Reserved]. in the Federal Register. The to nonperiodic payments that are
(vi) AASHTO LRFD Movable amendments to the temporary significant.
Highway Bridge Design Specifications, regulations provide guidance to
2nd Edition, 2007, with: taxpayers who are parties making and List of Subjects in 26 CFR Part 1
(A) Interim Revisions, 2008, receiving nonperiodic payments under Income taxes, Reporting and
(B) Interim Revisions, 2010, notional principal contracts. recordkeeping requirements.
(C) Interim Revisions, 2011, DATES: Effective Date: These
(D) Interim Revisions, 2012, amendments are effective on October Amendments to the Regulations
(E) Interim Revisions, 2014, and 13, 2015.
(F) Interim Revisions, 2015 Accordingly, 26 CFR part 1 is
Applicability Date: For the date of corrected by making the following
(vii) AASHTO/AWS D1.5M/D1.5:
applicability, see § 1.446–3T(j)(2), as correcting amendments:
2010 Bridge Welding Code, 6th Edition,
corrected.
2010, with:
(A) Interim Revisions, 2011, and PART 1—INCOME TAXES
FOR FURTHER INFORMATION CONTACT:
(B) Interim Revisions, 2012 Alexa Dubert at (202) 317–6945 (not a
(viii) Standard Specifications for toll-free number). ■ Paragraph 1. The authority citation
Structural Supports for Highway Signs, for part 1 continues to read in part as
SUPPLEMENTARY INFORMATION: follows:
Luminaires and Traffic Signals, 6th
Edition, AASHTO 2013. Background Authority: 26 U.S.C. 7805 * * *
(2) American Welding Society (AWS), The temporary regulations that are the
8869 NW 36 Street, #130 Miami, FL ■ Par. 2. Section 1.446–3T is amended
subject of these amendments are under
33166–6672; www.aws.org; or (800) by revising paragraph (j)(2) to read as
section 446(b) of the Internal Revenue
443–9353 or (305) 443–9353. follows:
Code (Code). The temporary regulations
(i) D1.4/D1.4M: 2011 Structural (TD 9719) were published in the § 1.446–3T Notional principal contracts
Welding Code—Reinforcing Steel, 2011. Federal Register on Friday, May 8, 2015 (temporary).
(ii) [Reserved]. (80 FR 26437).
(e) The FHWA supports using, as * * * * *
design resources to achieve context Need for Amendments (j) * * *
sensitive designs, guides that national Section 1.446–3T(g)(4)(i) of the (2) Application of § 1.446–3T(g)(4).
organizations develop from peer- temporary regulations provides that, Paragraph (g)(4)(i) of this section and
reviewed research, or equivalent guides subject to certain exceptions set forth in paragraph (g)(6) Example 2 of this
that are developed in cooperation with § 1.446–3T(g)(4)(ii), a notional principal section apply to notional principal
State or local officials, when such contract with one or more nonperiodic contracts entered into on or after the
guides are not in conflict with Federal payments is treated as two separate later of January 1, 2017, or 180 days
laws and regulations. transactions consisting of an on-market, after the date of publication of the
[FR Doc. 2015–25931 Filed 10–9–15; 8:45 am] level payment swap and one or more Treasury decision adopting these rules
BILLING CODE 4910–22–P loans (the embedded loan rule). Section as final regulations in the Federal
1.446–3T(g)(4)(i) eliminated the Register. Paragraph (g)(4)(ii) of this
exception to the embedded loan rule for section applies to notional principal
DEPARTMENT OF THE TREASURY non-significant, nonperiodic payments contracts entered into on or after May 8,
set forth in the final regulations (TD 2015. However, before the later of
Internal Revenue Service 8491) published in the Federal Register January 1, 2017, or 180 days after the
on October 14, 1993 (58 FR 53125) (the date of publication of the Treasury
26 CFR Part 1 1993 Regulations). See § 1.446–3. decision adopting paragraph (g)(4)(i) of
[TD 9719] Section 1.446–3T(g)(4)(i) applies to this section as final regulations in the
notional principal contracts entered into Federal Register, taxpayers may rely on
RIN 1545–BM62 on or after November 4, 2015. After the provision in § 1.446–3(g)(4), as
publication of the temporary contained in 26 CFR part 1, revised
Notional Principal Contracts; Swaps April 1, 2015, which (except for
regulations, the Treasury Department
With Nonperiodic Payments purposes of section 956) limits the
and the IRS received comments
AGENCY: Internal Revenue Service (IRS), requesting the delay of the applicability application of the embedded loan rule
Treasury. date of the embedded loan rule set forth to nonperiodic payments that are
ACTION: Temporary regulations; in the temporary regulations. In significant, even if the requirements for
correcting amendments. response to those comments, this the exceptions in paragraph (g)(4)(ii) of
document amends the applicability date this section are not met. Taxpayers may
SUMMARY: This document contains to make § 1.446–3T(g)(4)(i) and § 1.446– apply paragraph (g)(4)(i) of this section,
amendments to temporary regulations 3T(g)(6) Example 2 apply to notional paragraph (g)(4)(ii) of this section, or
relating to guidance for the treatment of principal contracts entered into on or both to notional principal contracts
nonperiodic payments made or received after the later of January 1, 2017, or 180 entered into before the dates set forth in
pursuant to certain notional principal days after the date of publication of the this paragraph (j)(2).
asabaliauskas on DSK5VPTVN1PROD with RULES

contracts. These amendments change Treasury decision adopting these rules * * * * *
the applicability date of the embedded as final regulations in the Federal
loan rule for the treatment of Register. Prior to the date of Martin Franks,
nonperiodic payments from November applicability of § 1.446–3T(g)(4)(i), as Branch Chief, Publications & Regulations
4, 2015, to the later of January 1, 2017, corrected, taxpayers may continue to Branch, Legal Processing Division, Associate
or six months after the date of apply the 1993 Regulations that (except Chief Counsel (Procedure & Administration).
publication of the Treasury decision for purposes of section 956) limit the [FR Doc. 2015–25921 Filed 10–9–15; 8:45 am]
adopting these rules as final regulations application of the embedded loan rule BILLING CODE 4830–01–P

VerDate Sep<11>2014 17:03 Oct 09, 2015 Jkt 238001 PO 00000 Frm 00032 Fmt 4700 Sfmt 9990 E:\FR\FM\13OCR1.SGM 13OCR1

Document Created: 2018-02-27 08:47:43
Document Modified: 2018-02-27 08:47:43

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Rules and Regulations
Action		Temporary regulations; correcting amendments.
Dates		Effective Date: These amendments are effective on October 13, 2015.
Contact		Alexa Dubert at (202) 317-6945 (not a toll-free number).
FR Citation		80 FR 61308
RIN Number		1545-BM62
CFR Associated		Income Taxes and Reporting and Recordkeeping Requirements

80 FR 61308 - Notional Principal Contracts; Swaps With Nonperiodic Payments

DEPARTMENT OF THE TREASURYInternal Revenue Service

Federal Register Volume 80, Issue 197 (October 13, 2015)

DEPARTMENT OF THE TREASURY
Internal Revenue Service