Modifications of Certain Derivative Contracts, 66639-66641 [2013-26575]

Download as PDF Federal Register / Vol. 78, No. 215 / Wednesday, November 6, 2013 / Rules and Regulations meet the criteria for a significant regulatory action under Executive Order 12866, as supplemented by Executive Order 13563. Therefore, OMB did not review it. We also determined that this final rule meets the plain language requirement of Executive Order 12866. Regulatory Flexibility Act We certify that this final rule will not have a significant economic impact on a substantial number of small entities because it affects individuals only. Therefore, the Regulatory Flexibility Act, as amended, does not require us to prepare a regulatory flexibility analysis. Paperwork Reduction Act § 404.1615 Making disability determinations. Final regulations and removal of temporary regulations. ACTION: * * * * * (c) * * * (3) A State agency disability examiner alone if the claim is adjudicated under the quick disability determination process (see § 404.1619) or the compassionate allowance process (see § 404.1602), and the initial or reconsidered determination is fully favorable to you. This paragraph will no longer be effective on November 14, 2014 unless we terminate it earlier or extend it beyond that date by publication of a final rule in the Federal Register; or * * * * * This final rule does not create any new or affect any existing collections and, therefore, does not require OMB approval under the Paperwork Reduction Act. PART 416—SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND DISABLED (Catalog of Federal Domestic Assistance Program Nos. 96.001, Social Security— Disability Insurance; 96.002, Social Security—Retirement Insurance; 96.004, Social Security—Survivors Insurance; 96.006, Supplemental Security Income.) ■ Subpart J—[Amended] 3. The authority citation for subpart J continues to read as follows: Authority: Secs. 702(a)(5), 1614, 1631, and 1633 of the Social Security Act (42 U.S.C. 902(a)(5), 1382c, 1383, and 1383b). List of Subjects 4. Amend § 416.1015 by revising paragraph (c)(3) to read as follows: 20 CFR Part 404 § 416.1015 Making disability determinations. Administrative practice and procedure; Blind, Disability benefits; Old-age, Survivors and Disability Insurance; Reporting and recordkeeping requirements; Social security. * ■ 20 CFR Part 416 Administrative practice and procedure; Reporting and recordkeeping requirements; Supplemental Security Income (SSI). Dated: October 30, 2013. Carolyn W. Colvin, Acting Commissioner of Social Security. For the reasons stated in the preamble, we are amending subpart Q of part 404 and subpart J of part 416 of title 20 of the Code of Federal Regulations as set forth below: * * * * (c) * * * (3) A State agency disability examiner alone if you are not a child (a person who has not attained age 18), and the claim is adjudicated under the quick disability determination process (see § 416.1019) or the compassionate allowance process (see § 416.1002), and the initial or reconsidered determination is fully favorable to you. This paragraph will no longer be effective on November 14, 2014 unless we terminate it earlier or extend it beyond that date by publication of a final rule in the Federal Register; or * * * * * [FR Doc. 2013–26524 Filed 11–5–13; 8:45 am] BILLING CODE 4191–02–P DEPARTMENT OF THE TREASURY Subpart Q—[Amended] pmangrum on DSK3VPTVN1PROD with RULES PART 404—FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE (1950–ll) 26 CFR Part 1 1. The authority citation for subpart Q of part 404 continues to read as follows: [TD 9639] Internal Revenue Service ■ Authority: Secs. 205(a), 221, and 702(a)(5) of the Social Security Act (42 U.S.C. 405(a), 421, and 902(a)(5)). 2. Amend § 404.1615 by revising paragraph (c)(3) to read as follows: ■ VerDate Mar<15>2010 15:05 Nov 05, 2013 Jkt 232001 RIN 1545–BK13 Modifications of Certain Derivative Contracts Internal Revenue Service (IRS), Treasury. AGENCY: PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 66639 This document contains final regulations relating to the transfer or assignment of certain derivative contracts. The final regulations provide guidance to the nonassigning counterparty to a derivative contract and an assignee on certain notional principal contracts that are derivative contracts. The final regulations provide that the nonassigning counterparty does not have an exchange for purposes of § 1.1001–1(a) when certain derivative contracts are transferred or assigned and clarify that the embedded loan rules of § 1.446–3(g)(4) do not apply to such transactions. SUMMARY: Effective Date: These regulations are effective on November 6, 2013. Applicability Date: For the date of applicability, see § 1.1001–4(d). FOR FURTHER INFORMATION CONTACT: Andrea M. Hoffenson, (202) 622–3920 (not a toll-free number). SUPPLEMENTARY INFORMATION: DATES: Background This document contains amendments to 26 CFR part 1. On July 22, 2011, temporary regulations (TD 9538) relating to the effect of the transfer or assignment of certain derivative contracts under section 1001 of the Internal Revenue Code (Code) were published in the Federal Register (76 FR 43892). A notice of proposed rulemaking (REG–109006–11) crossreferencing the temporary regulations was published in the Federal Register for the same day (76 FR 43957). A correction to the temporary regulations was published on August 19, 2011, in the Federal Register (76 FR 51878). No public hearing was requested or held. No written or electronic comments responding to the notice of proposed rulemaking were received. The proposed regulations are adopted as amended by this Treasury decision, and the corresponding temporary regulations are removed. Section 1001 provides rules for the computation and recognition of gain or loss from a sale or other disposition of property. For purposes of section 1001, § 1.1001–1(a) of the Income Tax Regulations generally provides that gain or loss is realized upon an exchange of property for other property differing materially either in kind or in extent. As a general matter, the assignment of a derivative contract is treated as a taxable disposition to a nonassigning counterparty if the resulting contract differs materially either in kind or in extent. See Cottage Savings Association E:\FR\FM\06NOR1.SGM 06NOR1 66640 Federal Register / Vol. 78, No. 215 / Wednesday, November 6, 2013 / Rules and Regulations pmangrum on DSK3VPTVN1PROD with RULES v. Commissioner, 499 U.S. 554, 566 (1991) [1991–2 CB 34, 38] (‘‘Under [the Court’s] interpretation of [section] 1001(a), an exchange of property gives rise to a realization event so long as the exchanged properties are ‘materially different’—that is, so long as they embody legally distinct entitlements.’’). The temporary regulations provide, however, that the transfer or assignment of a derivative contract by a dealer or clearinghouse to another dealer or clearinghouse is not treated as a deemed exchange of the contract by the nonassigning counterparty for purposes of § 1.1001–1(a) provided that the transfer or assignment is permitted by the terms of the contract and the terms of the contract are not otherwise modified. Explanation of Revisions The final regulations adopt the general rule in the temporary regulations providing that a transfer or assignment of a derivative contract that satisfies the conditions specified in the regulations is generally not treated by the nonassigning counterparty as a deemed exchange of the original contract under § 1.1001–1(a). As explained below, a sentence has been added to the final regulations to clarify that a loan is not created when a notional principal contract (NPC) is transferred or assigned under the conditions specified in these final regulations. In general, § 1.446–3(h) provides rules that prescribe the treatment of a termination payment made or received by the assignor or assignee pursuant to an assignment of an NPC, while the consequences to the nonassigning counterparty are governed by section 1001. A termination payment made or received on an NPC is treated by the assignee as a nonperiodic payment under § 1.446–3(h)(3). See § 1.446– 3(h)(5), Example 2. In addition, § 1.446– 3(h)(3) makes the special rules of § 1.446–3(g)(4) applicable to a termination payment made pursuant to an NPC. Section 1.446–3(g)(4) generally provides that a swap with significant nonperiodic payments is treated as two transactions, an on-market, level payment swap and a loan. These final regulations expressly provide that a payment between the party transferring or assigning its rights and obligations under the contract and the party to which the rights and obligations are transferred or assigned pursuant to the transfer or assignment of an NPC that meets the conditions specified in these regulations is not subject to the embedded loan rules in § 1.446–3(g)(4). Thus, neither the VerDate Mar<15>2010 15:05 Nov 05, 2013 Jkt 232001 assignee nor the nonassigning counterparty is treated as having an embedded loan under § 1.446–3(g)(4) as a result of a payment made between the assignor and the assignee of an NPC pursuant to a transfer or assignment that satisfies the requirements of § 1.1001– 4(a). The Treasury Department and the IRS believe that it would be inconsistent for an embedded loan to result from such a payment in circumstances in which the general rule in § 1.1001–4(a) treats the transfer or assignment of an NPC as not creating a taxable event for the nonassigning counterparty. Special Analyses It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13563. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business, and no comments were received. Drafting Information The principal author of these regulations is Andrea M. Hoffenson, Office of Associate Chief Counsel (Financial Institutions and Products). However, other personnel from the IRS and the Treasury Department participated in their development. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Adoption of Amendments to the Regulations Accordingly, 26 CFR part 1 is amended as follows: PART 1—INCOME TAXES Paragraph 1. The authority citation for part 1 continues to read in part as follows: ■ Authority: 26 U.S.C. 7805 * * * Par. 2. Section 1.1001–4 is revised to read as follows: ■ PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 § 1.1001–4 Modifications of certain derivative contracts. (a) Certain assignments. For purposes of § 1.1001–1(a), the transfer or assignment of a derivative contract is not treated by the nonassigning counterparty as a deemed exchange of the original contract for a modified contract that differs materially either in kind or in extent if— (1) Both the party transferring or assigning its rights and obligations under the derivative contract and the party to which the rights and obligations are transferred or assigned are either a dealer or a clearinghouse; (2) The terms of the derivative contract permit the transfer or assignment of the contract, whether or not the consent of the nonassigning counterparty is required for the transfer or assignment to be effective; and (3) The terms of the derivative contract are not otherwise modified in a manner that results in a taxable exchange under section 1001. (b) Definitions—(1) Dealer. For purposes of this section, a dealer is a taxpayer who meets the definition of a dealer in securities in section 475(c)(1) or is a dealer in commodities derivative contracts. (2) Clearinghouse. For purposes of this section, a clearinghouse is a derivatives clearing organization (as such term is defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a)) or a clearing agency (as such term is defined in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))) that is registered, or exempt from registration, under each respective Act. (3) Derivative contract. For purposes of this section, a derivative contract is a contract described in— (i) Section 475(c)(2)(D), 475(c)(2)(E), or 475(c)(2)(F) without regard to the last sentence of section 475(c)(2) referencing section 1256; (ii) Section 475(e)(2)(B), 475(e)(2)(C), or 475(e)(2)(D); or (iii) Section 1.446–3(c)(1). (c) Consideration for the assignment. Any payment between a party transferring or assigning its rights and obligations under the contract and the party to which the rights and obligations are transferred or assigned pursuant to a transfer or assignment described in paragraph (a) of this section will not affect the treatment of the nonassigning counterparty for purposes of this section. A payment described in the preceding sentence made or received to transfer or assign rights and obligations under a notional principal contract (as defined in § 1.446–3(c)(1)) is not subject to § 1.446–3(g)(4). E:\FR\FM\06NOR1.SGM 06NOR1 Federal Register / Vol. 78, No. 215 / Wednesday, November 6, 2013 / Rules and Regulations (d) Effective/applicability date. This section applies to transfers or assignments of derivative contracts on or after July 22, 2011. § 1.1001–4T ■ [Removed] Par. 3. Section 1.1001–4T is removed. Heather C. Maloy, Acting Deputy Commissioner for Services and Enforcement. Approved: October 29, 2013. Mark Mazur, Assistant Secretary of the Treasury (Tax Policy). [FR Doc. 2013–26575 Filed 11–5–13; 8:45 am] BILLING CODE 4830–01–P DEPARTMENT OF LABOR Occupational Safety and Health Administration 29 CFR Parts 1910 and 1926 [Docket No. OSHA–2013–0005] RIN 1218–AC77 Incorporation by Reference; Accident Prevention Signs and Tags; Correction Occupational Safety and Health Administration (OSHA), Department of Labor. ACTION: Correcting amendments. AGENCY: This document contains corrections to the final regulations, which were published in the Federal Register of Thursday, June 13, 2013 (78 FR 35559). The regulations update OSHA’s general industry and construction signage standards by adding references to the latest American National Standards Institute (ANSI) standards on specifications for accident prevention signs and tags. DATES: Effective on November 6, 2013. FOR FURTHER INFORMATION CONTACT: General information and press inquiries: Frank Meilinger, OSHA Office of Communications, Room N–3647, U.S. Department of Labor, 200 Constitution Ave. NW., Washington, DC 20210; telephone: (202) 693–1999; email: meilinger.francis2@dol.gov. Technical inquiries: Kenneth Stevanus, Directorate of Standards and Guidance, Room N–3609, OSHA, U.S. Department of Labor, 200 Constitution Ave. NW., Washington, DC 20210; telephone: (202) 693–2260; fax: (202) 693–1663; email: stevanus.ken@dol.gov. SUPPLEMENTARY INFORMATION: pmangrum on DSK3VPTVN1PROD with RULES SUMMARY: Background The final regulations that are the subject of these corrections superseded VerDate Mar<15>2010 15:05 Nov 05, 2013 Jkt 232001 their predecessor regulations in 29 CFR parts 1910 and 1926 on the effective date, and affect employers required to use accident prevention signs and tags under the specified standards. Need for Correction As published, the final regulations contain errors that may prove to be misleading and ambiguous references to illustrative figures in incorporated-byreference ANSI standards. Specifically, the incorporation-by-reference provisions in 29 CFR 1910.6(e)(66) and (e)(67) and 1926.6(h)(28)–(h)(30) misidentify the vendors and locations where the public can purchase the updated ANSI Z535 standards. In addition, the references in 29 CFR 1926.200(b) and (c), ‘‘Accident prevention signs and tags,’’ to figures in ANSI Z535.2–2011 are ambiguous. These references need to be clarified because the figures they denote illustrate sign specifications that employers have the option of following. List of Subjects in 29 CFR Parts 1910 and 1926 Construction, General industry, Incorporation by reference, Safety, Signs, Tags. Accordingly, 29 CFR parts 1910 and 1926 are corrected by making the following correcting amendments: 66641 Street, 4th Floor, New York, NY 10036; telephone: 212–642–4980; Web site: http://webstore.ansi.org/; (ii) IHS Standards Store, 15 Inverness Way East, Englewood, CO 80112; telephone: 877–413–5184; Web site: www.global.ihs.com; or (iii) TechStreet Store, 3916 Ranchero Dr., Ann Arbor, MI 48108; telephone: 877–699–9277; Web site: www.techstreet.com. (67) ANSI Z535.2–2011, Environmental and Facility Safety Signs, published September 15, 2011; IBR approved for § 1910.261(c). Copies available for purchase from the: (i) American National Standards Institute’s e-Standards Store, 25 W 43rd Street, 4th Floor, New York, NY 10036; telephone: 212–642–4980; Web site: http://webstore.ansi.org/; (ii) IHS Standards Store, 15 Inverness Way East, Englewood, CO 80112; telephone: 877–413–5184; Web site: www.global.ihs.com; or (iii) TechStreet Store, 3916 Ranchero Dr., Ann Arbor, MI 48108; telephone: 877–699–9277; Web site: www.techstreet.com. * * * * * PART 1926—SAFETY AND HEALTH REGULATIONS FOR CONSTRUCTION Subpart A—General PART 1910—OCCUPATIONAL SAFETY AND HEALTH STANDARDS ■ Subpart A—General Authority: 40 U.S.C. 333; 29 U.S.C. 653, 655, 657; Secretary of Labor’s Order No. 12– 71 (36 FR 8754), 8–76 (41 FR 25059), 9–83 (48 FR 35736), 6–96 (62 FR 111), 5–2007 (72 FR 31160), 4–2010 (75 FR 55355), or 1–2012 (77 FR 3912), as applicable; and 29 CFR part 1911. 1. The authority citation for subpart A continues to read as follows: ■ Authority: 29 U.S.C. 653, 655, 657; Secretary of Labor’s Order No. 12–71 (36 FR 8754), 8–76 (41 FR 25059), 9–83 (48 FR 35736), 1–90 (55 FR 9033), 6–96 (62 FR 111), 3–2000 (65 FR 50017), 5–2002 (67 FR 65008), 5–2007 (72 FR 31159), 4–2010 (75 FR 55355), or 1–2012 (77 FR 3912), as applicable. Sections 1910.6, 1910.7, 1910.8 and 1910.9 also issued under 29 CFR 1911. Section 1910.7(f) also issued under 31 U.S.C. 9701, 29 U.S.C. 9a, 5 U.S.C. 553; Public Law 106– 113 (113 Stat. 1501A–222); Pub. L. 11–8 and 111–317; and OMB Circular A–25 (dated July 8, 1993) (58 FR 38142, July 15, 1993). 2. In § 1910.6, revise paragraphs (e)(66) and (e)(67) to read as follows: ■ § 1910.6 Incorporation by reference. * * * * * (e) * * * (66) ANSI Z535.1–2006 (R2011), Safety Colors, reaffirmed July 19, 2011; IBR approved for §§ 1910.97(a) and 1910.145(d). Copies available for purchase from the: (i) American National Standards Institute’s e-Standards Store, 25 W 43rd PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 3. The authority citation for subpart A continues to read as follows: 4. In § 1926.6, revise paragraphs (h)(28), (h)(29), and (h)(30) to read as follows: ■ § 1926.6 Incorporation by reference. * * * * * (h) * * * (28) ANSI Z535.1–2006 (R2011), Safety Colors, reaffirmed July 19, 2011; IBR approved for § 1926.200(c). Copies available for purchase from the: (i) American National Standards Institute’s e-Standards Store, 25 W 43rd Street, 4th Floor, New York, NY 10036; telephone: 212–642–4980; Web site: http://webstore.ansi.org/; (ii) IHS Standards Store, 15 Inverness Way East, Englewood, CO 80112; telephone: 877–413–5184; Web site: www.global.ihs.com; or (iii) TechStreet Store, 3916 Ranchero Dr., Ann Arbor, MI 48108; telephone: 877–699–9277; Web site: www.techstreet.com. E:\FR\FM\06NOR1.SGM 06NOR1

Agencies

[Federal Register Volume 78, Number 215 (Wednesday, November 6, 2013)]
[Rules and Regulations]
[Pages 66639-66641]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-26575]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9639]
RIN 1545-BK13


Modifications of Certain Derivative Contracts

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations and removal of temporary regulations.

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

SUMMARY: This document contains final regulations relating to the 
transfer or assignment of certain derivative contracts. The final 
regulations provide guidance to the nonassigning counterparty to a 
derivative contract and an assignee on certain notional principal 
contracts that are derivative contracts. The final regulations provide 
that the nonassigning counterparty does not have an exchange for 
purposes of Sec.  1.1001-1(a) when certain derivative contracts are 
transferred or assigned and clarify that the embedded loan rules of 
Sec.  1.446-3(g)(4) do not apply to such transactions.

DATES: Effective Date: These regulations are effective on November 6, 
2013.
    Applicability Date: For the date of applicability, see Sec.  
1.1001-4(d).

FOR FURTHER INFORMATION CONTACT: Andrea M. Hoffenson, (202) 622-3920 
(not a toll-free number).

SUPPLEMENTARY INFORMATION: 

Background

    This document contains amendments to 26 CFR part 1. On July 22, 
2011, temporary regulations (TD 9538) relating to the effect of the 
transfer or assignment of certain derivative contracts under section 
1001 of the Internal Revenue Code (Code) were published in the Federal 
Register (76 FR 43892). A notice of proposed rulemaking (REG-109006-11) 
cross-referencing the temporary regulations was published in the 
Federal Register for the same day (76 FR 43957). A correction to the 
temporary regulations was published on August 19, 2011, in the Federal 
Register (76 FR 51878). No public hearing was requested or held. No 
written or electronic comments responding to the notice of proposed 
rulemaking were received. The proposed regulations are adopted as 
amended by this Treasury decision, and the corresponding temporary 
regulations are removed.
    Section 1001 provides rules for the computation and recognition of 
gain or loss from a sale or other disposition of property. For purposes 
of section 1001, Sec.  1.1001-1(a) of the Income Tax Regulations 
generally provides that gain or loss is realized upon an exchange of 
property for other property differing materially either in kind or in 
extent. As a general matter, the assignment of a derivative contract is 
treated as a taxable disposition to a nonassigning counterparty if the 
resulting contract differs materially either in kind or in extent. See 
Cottage Savings Association

[[Page 66640]]

v. Commissioner, 499 U.S. 554, 566 (1991) [1991-2 CB 34, 38] (``Under 
[the Court's] interpretation of [section] 1001(a), an exchange of 
property gives rise to a realization event so long as the exchanged 
properties are `materially different'--that is, so long as they embody 
legally distinct entitlements.''). The temporary regulations provide, 
however, that the transfer or assignment of a derivative contract by a 
dealer or clearinghouse to another dealer or clearinghouse is not 
treated as a deemed exchange of the contract by the nonassigning 
counterparty for purposes of Sec.  1.1001-1(a) provided that the 
transfer or assignment is permitted by the terms of the contract and 
the terms of the contract are not otherwise modified.

Explanation of Revisions

    The final regulations adopt the general rule in the temporary 
regulations providing that a transfer or assignment of a derivative 
contract that satisfies the conditions specified in the regulations is 
generally not treated by the nonassigning counterparty as a deemed 
exchange of the original contract under Sec.  1.1001-1(a). As explained 
below, a sentence has been added to the final regulations to clarify 
that a loan is not created when a notional principal contract (NPC) is 
transferred or assigned under the conditions specified in these final 
regulations.
    In general, Sec.  1.446-3(h) provides rules that prescribe the 
treatment of a termination payment made or received by the assignor or 
assignee pursuant to an assignment of an NPC, while the consequences to 
the nonassigning counterparty are governed by section 1001. A 
termination payment made or received on an NPC is treated by the 
assignee as a nonperiodic payment under Sec.  1.446-3(h)(3). See Sec.  
1.446-3(h)(5), Example 2. In addition, Sec.  1.446-3(h)(3) makes the 
special rules of Sec.  1.446-3(g)(4) applicable to a termination 
payment made pursuant to an NPC. Section 1.446-3(g)(4) generally 
provides that a swap with significant nonperiodic payments is treated 
as two transactions, an on-market, level payment swap and a loan.
    These final regulations expressly provide that a payment between 
the party transferring or assigning its rights and obligations under 
the contract and the party to which the rights and obligations are 
transferred or assigned pursuant to the transfer or assignment of an 
NPC that meets the conditions specified in these regulations is not 
subject to the embedded loan rules in Sec.  1.446-3(g)(4). Thus, 
neither the assignee nor the nonassigning counterparty is treated as 
having an embedded loan under Sec.  1.446-3(g)(4) as a result of a 
payment made between the assignor and the assignee of an NPC pursuant 
to a transfer or assignment that satisfies the requirements of Sec.  
1.1001-4(a). The Treasury Department and the IRS believe that it would 
be inconsistent for an embedded loan to result from such a payment in 
circumstances in which the general rule in Sec.  1.1001-4(a) treats the 
transfer or assignment of an NPC as not creating a taxable event for 
the nonassigning counterparty.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in Executive Order 12866, as 
supplemented by Executive Order 13563. Therefore, a regulatory 
assessment is not required. It has also been determined that section 
553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does 
not apply to these regulations, and because the regulations do not 
impose a collection of information on small entities, the Regulatory 
Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to 
section 7805(f) of the Code, these regulations have been submitted to 
the Chief Counsel for Advocacy of the Small Business Administration for 
comment on its impact on small business, and no comments were received.

Drafting Information

    The principal author of these regulations is Andrea M. Hoffenson, 
Office of Associate Chief Counsel (Financial Institutions and 
Products). However, other personnel from the IRS and the Treasury 
Department participated in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR part 1 is amended as follows:

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 1.1001-4 is revised to read as follows:


Sec.  1.1001-4  Modifications of certain derivative contracts.

    (a) Certain assignments. For purposes of Sec.  1.1001-1(a), the 
transfer or assignment of a derivative contract is not treated by the 
nonassigning counterparty as a deemed exchange of the original contract 
for a modified contract that differs materially either in kind or in 
extent if--
    (1) Both the party transferring or assigning its rights and 
obligations under the derivative contract and the party to which the 
rights and obligations are transferred or assigned are either a dealer 
or a clearinghouse;
    (2) The terms of the derivative contract permit the transfer or 
assignment of the contract, whether or not the consent of the 
nonassigning counterparty is required for the transfer or assignment to 
be effective; and
    (3) The terms of the derivative contract are not otherwise modified 
in a manner that results in a taxable exchange under section 1001.
    (b) Definitions--(1) Dealer. For purposes of this section, a dealer 
is a taxpayer who meets the definition of a dealer in securities in 
section 475(c)(1) or is a dealer in commodities derivative contracts.
    (2) Clearinghouse. For purposes of this section, a clearinghouse is 
a derivatives clearing organization (as such term is defined in section 
1a of the Commodity Exchange Act (7 U.S.C. 1a)) or a clearing agency 
(as such term is defined in section 3 of the Securities Exchange Act of 
1934 (15 U.S.C. 78c(a))) that is registered, or exempt from 
registration, under each respective Act.
    (3) Derivative contract. For purposes of this section, a derivative 
contract is a contract described in--
    (i) Section 475(c)(2)(D), 475(c)(2)(E), or 475(c)(2)(F) without 
regard to the last sentence of section 475(c)(2) referencing section 
1256;
    (ii) Section 475(e)(2)(B), 475(e)(2)(C), or 475(e)(2)(D); or
    (iii) Section 1.446-3(c)(1).
    (c) Consideration for the assignment. Any payment between a party 
transferring or assigning its rights and obligations under the contract 
and the party to which the rights and obligations are transferred or 
assigned pursuant to a transfer or assignment described in paragraph 
(a) of this section will not affect the treatment of the nonassigning 
counterparty for purposes of this section. A payment described in the 
preceding sentence made or received to transfer or assign rights and 
obligations under a notional principal contract (as defined in Sec.  
1.446-3(c)(1)) is not subject to Sec.  1.446-3(g)(4).

[[Page 66641]]

    (d) Effective/applicability date. This section applies to transfers 
or assignments of derivative contracts on or after July 22, 2011.


Sec.  1.1001-4T  [Removed]

0
Par. 3. Section 1.1001-4T is removed.

Heather C. Maloy,
Acting Deputy Commissioner for Services and Enforcement.
    Approved: October 29, 2013.
Mark Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2013-26575 Filed 11-5-13; 8:45 am]
BILLING CODE 4830-01-P