# Prop. Treas. Reg. § 1.1256(b)-1: Section 1256 contract defined.

Proposed regulation, not in force. REG-111283-11, 76 FR 57684, published 2011-09-16 <https://www.federalregister.gov/documents/2011/09/16/2011-23665/swap-exclusion-for-section-1256-contracts>. Interprets 26 U.S.C. § 1256.

Par. 7. Section 1.1256(b)-1 is added to read as follows:

(a) General rule. A section 1256 contract does not include any contract, or option on such contract, that is a notional principal contract as defined in § 1.446-3(c). A contract that is defined as both a notional principal contract in § 1.446-3(c) and as a section 1256 contract in section 1256(b)(1) is treated as a notional principal contract and not as a section 1256 contract.

(b) Regulated futures contract. A regulated futures contract is a section 1256 contract only if the contract is a futures contract—

(1) With respect to which the amount required to be deposited and the amount which may be withdrawn depends on a system of marking to market;

(2) That is traded on or subject to the rules of a qualified board or exchange; and

(3) That is not required to be reported as a swap under the Commodity Exchange Act.

(c) Effective/applicability date. The rules of this section apply to contracts entered into on or after the date the final regulations are published in the Federal Register .