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Character of Income, Deduction, Gain, or Loss From Notional Principal Contracts, Bullet Swaps, and Forwards Is Addressed in Proposed Regulations  

Author:  Linda E. Carlisle.; Geoffrey B. Lanning.

Source: Volume 21, Number 04, Summer 2004 , pp.339-349(11)

Journal of Taxation of Investments

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On February 25, 2004, the Treasury Department and the IRS published proposed regulations addressing the timing of income, deductions, gains, and losses arising from notional principal contracts (“NPCs”) that contain “contingent nonperiodic payments” (the “Proposed Regulations”). The primary focus of the Proposed Regulations is the timing of income and deductions attributable to contingent nonperiodic payments under NPCs. The Proposed Regulations, however, also address the character of income, deductions, gains, and losses from NPCs, “bullet swaps,” and forward contracts. This article focuses on the character issues addressed under the Proposed Regulations.

Keywords: Section 1222; Section 1234A

Affiliations:  1: White & Case LLP; 2: White & Case LLP.

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