Proposed Treasury Regulations Regarding Swaps and Other Notional
Mondaq Business Briefing › United States Law Articles in English (2011)
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Proposed Treasury Regulations Regarding Swaps and Other Notional
On Thursday, September 15, the Treasury Department and the Internal Revenue Service issued proposed regulations that affect swaps and other notional principal contracts. The proposed regulations are proposed to be effective for contracts entered into on or after the date the final regulations are published in the Federal Register.
I. Summary of the Proposed Regulations Credit Default Swaps Treated as Notional Principal Contracts. The proposed regulations treat credit default swaps as notional principal contracts for federal income tax purposes, even if they permit or require physical delivery of the underlying debt instrument. This aspect of the proposed regulations, while helpful in eliminating some uncertainty regarding the taxation of credit default swaps, raises a number of questions, which are discussed below in Part II.B. Significant Limitation on the Scope of "Bullet Swaps." Proposed regulations issued in 2004 provide that a ...See the full content of this document
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