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ARTICLE · 26 SEPTEMBER 2014

IRS Issues Regulations Related To Straddle Rules’ Application To Debt

Grant Thornton LLP
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The IRS issued final regulations (T.D. 9691) on Aug. 27, 2014, related to the application of Section 1092 and the regulations thereunder to debt instruments.

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Mel Schwarz
Mel Schwarz
Dustin Stamper
Dustin Stamper
Shamik Trivedi
Shamik Trivedi
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The IRS issued final regulations (T.D. 9691) on Aug. 27, 2014, related to the application of Section 1092 and the regulations thereunder to debt instruments.

Those regulations, known as the "straddle rules," may defer recognition of loss attributed to offsetting positions with respect to personal property that is actively traded. Actively traded personal property includes any personal property for which there is an established financial market, like publicly traded stock, bonds, commodities and foreign currencies.

Section 1092(d)(7) provides that an obligor's interest in a nonfunctional currency denominated debt obligation is treated as a position in a nonfunctional currency.

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