Par. 5. Section 1.954-2 is amended by: 1. Revising paragraph (h)(3)(i). 2. Adding paragraph (h)(3)(iii). The revision and addition read as follows:
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(3) Notional principal contracts —(i) In general. Income equivalent to interest includes income from notional principal contracts (as defined in § 1.446-3(c)) denominated in the functional currency of the taxpayer (or a qualified business unit of the taxpayer, as defined in section 989(a)), the value of which is determined solely by reference to interest rates or interest rate indices, to the extent that the income from such transactions accrues on or after August 14, 1989.
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(iii) Effective/applicability date. The rules of paragraph (h)(3) of this section apply to notional principal contracts as defined in § 1.446-3(c) that are entered into on or after the date of publication of a Treasury decision adopting these rules as final regulations in the Federal Register . Section 1.954-2(h)(3) as contained in 26 CFR part 1 revised April 1, 2011, continues to apply to notional principal contracts entered into before the date of publication of a Treasury decision adopting these rules as final regulations in the Federal Register .
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