40168 Federal Register / Vol. 87, No. 128 / Wednesday, July 6, 2022 / Proposed Rules 

August 5, 2022. Further, each notice of 

intention to participate must be in the 

form prescribed in 21 CFR 1316.48. No 

person who has previously filed a 

request for hearing need now file a 

notice of intention to participate. 

Signing Authority 

This document of the Drug 

Enforcement Administration was signed 

on June 30, 2022, by Administrator 

Anne Milgram. That document with the 

original signature and date is 

maintained by DEA. For administrative 

purposes only, and in compliance with 

requirements of the Office of the Federal 

Register, the undersigned DEA Federal 

Register Liaison Officer has been 

authorized to sign and submit the 

document in electronic format for 

publication, as an official document of 

DEA. This administrative process in no 

way alters the legal effect of this 

document upon publication in the 

Federal Register. 

Heather Achbach, 

Federal Register Liaison Officer, Drug 

Enforcement Administration. 

[FR Doc. 2022–14372 Filed 7–5–22; 8:45 am] 

BILLING CODE 4410–09–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–130675–17] 

RIN 1545–BO06 

Definition of Foreign Currency 

Contract Under Section 1256 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This document contains 

proposed regulations that define the 

term ‘‘foreign currency contract’’ under 

section 1256 of the Internal Revenue 

Code (the ‘‘Code’’) to include only 

foreign currency forward contracts. The 

proposed regulations affect certain 

holders of foreign currency options. 

DATES: Written or electronic comments 

and requests for a public hearing must 

be received by September 6, 2022. 

ADDRESSES: Commenters are strongly 

encouraged to submit public comments 

electronically. Submit electronic 

submissions via the Federal 

eRulemaking Portal at 

www.regulations.gov (indicate IRS and 

REG–130675–17) by following the 

online instructions for submitting 

comments. Once submitted to the 

Federal eRulemaking Portal, comments 

cannot be edited or withdrawn. The IRS 

expects to have limited personnel 

available to process public comments 

that are submitted on paper through 

mail. Until further notice, any 

comments submitted on paper will be 

considered to the extent practicable. 

The Department of the Treasury 

(‘‘Treasury Department’’) and the IRS 

will publish for public availability any 

comment submitted electronically, and 

to the extent practicable on paper, to its 

public docket. 

Send paper submissions to: 

CC:PA:LPD:PR (REG–130675–17), room 

5203, Internal Revenue Service, P.O. 

Box 7604, Ben Franklin Station, 

Washington, DC 20044. 

A public hearing will be scheduled if 

requested in writing by any person that 

timely submits written comments. If a 

public hearing is scheduled, notice of 

the date, time, and place for the public 

hearing will be published in the Federal 

Register. For those requesting to speak 

during the hearing, send an outline of 

topic submissions electronically via the 

Federal eRulemaking Portal at 

www.regulations.gov (indicate IRS and 

REG–130675–17). 

FOR FURTHER INFORMATION CONTACT: 

Concerning the regulations, D. Peter 

Merkel or Karen Walny at (202) 317– 

6938; concerning submissions of 

comments or requests for a public 

hearing, Regina L. Johnson at (202) 317– 

5177 (not toll-free numbers) or by 

sending an email to publichearings@

irs.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

This document contains proposed 

regulations that would provide that the 

term foreign currency contract as 

defined in section 1256(g)(2) of the Code 

applies only to a foreign currency 

forward contract. 

I. Statutory Development of Section 

1256 

A. Section 1256 Generally 

Section 1256(a)(1) provides that each 

section 1256 contract held by a taxpayer 

at the close of the taxable year is treated 

as sold for its fair market value on the 

last business day of that taxable year 

(and any gain or loss is taken into 

account for the taxable year). Section 

1256(a)(2) provides that proper 

adjustment must be made in the amount 

of any gain or loss subsequently realized 

to take into account the gain or loss 

previously recognized under section 

1256(a)(1). Generally, section 1256(a)(3) 

provides that any gain or loss on a 

section 1256 contract is treated as 60 

percent long-term capital gain or loss 

and 40 percent short-term capital gain 

or loss (‘‘60/40 treatment’’). 

Section 1256(b)(1) defines a section 

1256 contract as any regulated futures 

contract, any foreign currency contract, 

any nonequity option, any dealer equity 

option, and any dealer securities futures 

contract. Section 1256(b)(2) excludes 

the following contracts from the 

definition of a section 1256 contract: (1) 

any securities futures contract or option 

on such a contract unless it is a dealer 

securities futures contract, or (2) any 

interest rate swap, currency swap, basis 

swap, interest rate cap, interest rate 

floor, commodity swap, equity swap, 

equity index swap, credit default swap, 

or similar agreement. 

Section 1256(g)(2)(A) defines the term 

foreign currency contract as a contract 

that (1) requires delivery of, or the 

settlement of which depends on the 

value of, a foreign currency which is a 

currency in which positions are also 

traded through regulated futures 

contracts, (2) is traded in the interbank 

market, and (3) is entered into at arm’s 

length at a price determined by 

reference to the price in the interbank 

market. Section 1256(g)(2)(B) grants the 

Secretary authority to prescribe 

regulations as may be necessary or 

appropriate to carry out the purposes of 

the foreign currency contract definition, 

including the authority to exclude any 

contract or type of contract from that 

definition if it would be inconsistent 

with those purposes. 

Section 1256(g)(3) defines the term 

nonequity option as any listed option 

(generally, an option traded on or 

subject to the rules of a qualified board 

or exchange) that is not an equity 

option. 

Section 1256(f)(2) provides that 60/40 

treatment does not apply to gain or loss 

that otherwise would be ordinary. 

Section 988(a)(1) provides that if a 

futures contract, forward contract, 

option, or similar financial instrument 

is a section 988 transaction, the gains 

and losses from the transaction are 

treated as ordinary, absent an election 

for certain transactions. However, 

regulated futures contracts and 

nonequity options that are marked-tomarket under section 1256 are not 

section 988 transactions unless a 

taxpayer makes an election to treat the 

contract as a section 988 transaction. 

See section 988(c)(1)(D)(i) and (ii). 

B. Scope of Section 1256 When Enacted 

in 1981 

When it was enacted in 1981, section 

1256 applied only to regulated futures 

contracts, including regulated futures 

contracts involving foreign currency. 


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See Economic Recovery Tax Act of 1981 

(‘‘ERTA’’), Public Law 97–34 (95 Stat. 

172, section 503(a) (1981)). One of the 

hallmarks of regulated futures contracts 

is the daily cash settlement, mark-tomarket system employed by U.S. futures 

exchanges to determine margin 

requirements. In contrast to U.S. futures 

exchanges, the interbank market and 

other over-the-counter (‘‘OTC’’) markets 

did not employ a daily cash settlement, 

mark-to-market system for margin 

requirements. 

C. Technical Corrections Act of 1982 

As originally enacted, section 1256 

applied to regulated futures contracts 

requiring the delivery of foreign 

currency, but not to similar foreign 

currency forward contracts that were 

traded in the OTC market rather than on 

an exchange. In 1983, Congress 

extended the application of the statute 

to foreign currency contracts traded in 

the interbank market and provided a 

definition in section 1256(g)(1) for the 

term foreign currency contract. See 

Technical Corrections Act of 1982, 

Public Law 97–448, section 105(c)(5)(B) 

and (C) (96 Stat. 2365 (1983)). In adding 

section 1256(g)(1), Congress specified 

that the term foreign currency contract 

included only a contract that requires 

delivery of the foreign currency. 

The legislative history explains that 

this expansion was grounded in the 

economic comparability of trading 

foreign currency through forward 

contracts in the interbank market to 

trading foreign currency through 

regulated futures contracts and the 

interchangeability of the two types of 

contracts by traders. H.R. Rep. No. 97– 

794, at 23 (1982). In addition, the 

pricing of these foreign currency 

forward contracts was readily available 

because they trade through the larger, 

liquid interbank market. Id. Nothing in 

the statute or legislative history 

indicates Congress intended to include 

option contracts, which are not 

generally economically comparable to 

regulated futures contracts. Moreover, 

while the definition of foreign currency 

contract enacted in 1983 required the 

delivery of foreign currency, option 

contracts will not always result in 

settlement (either by physical delivery 

or delivery of the cash equivalent 

value). 

D. Deficit Reduction Act of 1984 

In 1984, Congress further expanded 

the types of contracts to which section 

1256 applied to include nonequity 

options and dealer equity options. See 

Deficit Reduction Act of 1984, Public 

Law 98–369 at section 102(a)(3) (98 Stat. 

494 (1984)). It also amended the 

definition of a foreign currency contract 

to allow for cash settlement. Id. The 

Deficit Reduction Act of 1984 also 

added section 1256(g)(2)(B), which 

provides the Treasury Department with 

authority to issue regulations that are 

necessary or appropriate to carry out the 

purposes of the foreign currency 

contract definition. Id. 

Before this 1984 amendment, the term 

foreign currency contract applied only 

to contracts that required the physical 

delivery of the foreign currency. 

However, the futures contract and 

forward contract market had developed 

in a manner that no longer required 

physical delivery. Instead, contracts 

permitted the parties to settle contracts 

for their cash equivalent value. The 

definition of regulated futures contract 

was amended in 1983 to remove the 

requirement of delivery of personal 

property. See H.R. Conf. Rep. 97–986, at 

26–27 (1982). The amendment to the 

definition of foreign currency contract 

in 1984 was intended similarly to treat 

the delivery requirement as met where 

the contract provides for a settlement 

determined by reference to the value of 

foreign currency. Specifically, the 

House Report explained the reason for 

the 1984 amendment as follows: 

Present Law 

The Technical Corrections Act of 1982 

provided that certain foreign currency 

contracts entered into after May 11, 1982 (or 

earlier, if certain elections were made) will 

be treated as regulated futures contracts and 

therefore be taxed on the marked-to-market 

system with a maximum tax rate of 32 

percent. In order for a contract to qualify as 

a foreign currency contract, the contract must 

require delivery of a foreign currency which 

is a currency in which positions are also 

traded through regulated futures contracts. 

Explanation of Provision 

Because certain contracts may call for a 

cash settlement by reference to the value of 

the foreign currency rather than actual 

delivery of the currency, the bill provides 

that the delivery of a foreign currency 

requirement is met where the contract 

provides for a settlement determined by 

reference to the value of the foreign currency. 

H.R. Rep. 98–432 Part 2, at 1646 

(1984). At the same time, Congress 

addressed foreign currency options by 

adding nonequity options to the list of 

section 1256 contracts, as described 

above. Consequently, listed foreign 

currency options became subject to 

section 1256 by explicit Congressional 

action. While the legislative history 

expressly stated that Congress amended 

the definition of a foreign currency 

contract to include cash-settled foreign 

currency forward contracts, the 

legislative history does not indicate that 

Congress intended also to expand the 

scope of section 1256 to include OTC 

foreign currency options regardless of 

whether they may be cash-settled. 

E. Technical and Miscellaneous 

Revenue Act of 1988 

The legislative history with respect to 

a 1988 amendment to section 988 also 

indicates that Congress understood that 

a foreign currency contract, as defined 

by section 1256(g)(2), does not include 

a foreign currency option. Section 988 

generally applies to forward contracts, 

futures contracts, options, and similar 

financial instruments if the amount that 

a taxpayer is entitled to receive or is 

required to pay is denominated in terms 

of a nonfunctional currency or 

determined by reference to the value of 

one or more nonfunctional currencies. 

See section 988(c)(1)(A) and (B)(iii); see 

also section 988(c)(1)(D) (providing an 

exception to section 988(c)(1)(B)(iii) for 

certain regulated futures contracts and 

nonequity options). In 1988, Congress 

amended section 988 to add section 

988(c)(1)(E). Technical and 

Miscellaneous Revenue Act of 1988, 

Public Law 100–647, at section 6130(b) 

(102 Stat. 3342 (1988)). Section 

988(c)(1)(E) provides that any 

instrument described in section 

988(c)(1)(B)(iii) (that is, any forward 

contract, futures contract, option, or 

similar financial instrument) is not a 

section 988 transaction if it is held by 

certain partnerships (each, a ‘‘qualified 

fund’’) and would be marked to market 

under section 1256. Section 

988(c)(1)(E)(iv)(I) further provides that 

any bank forward contract, any foreign 

currency futures contract traded on a 

foreign exchange, or any similar 

instrument to the extent provided in 

regulations that is not otherwise a 

section 1256 contract is treated as a 

section 1256 contract for purposes of 

section 1256 when held by a qualified 

fund. 

The legislative history indicates that 

Congress believed that the term foreign 

currency contract generally meant bank 

forward contracts on foreign currency, 

and that OTC foreign currency options 

were not already section 1256 contracts. 

See H.R. Conf. Rep. No. 100–1104 (Vol. 

2), at 189, reprinted in 1988–3 C.B. 473, 

679 (‘‘[T]he [conference] agreement 

expands the definition of section 1256 

contracts to generally include . . . bank 

forwards: that is, foreign currency 

contracts (as that term is defined in 

section 1256(g)(2) of the Code), and 

[certain other contracts] . . . . [T]he 

[conference] agreement provides the 

Treasury with regulatory authority to 

treat other similar instruments (for 

example, options) held by qualified 


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funds as section 1256 contracts.’’) 

(emphasis added). 

II. Listed Transactions Using Offsetting 

Foreign Currency Options 

Taxpayers entered into tax avoidance 

transactions that relied upon treating 

OTC foreign currency options, in a 

currency in which regulated futures 

were traded, as section 1256(g)(2) 

foreign currency contracts. On 

December 22, 2003, the IRS published 

Notice 2003–81, 2003–51 I.R.B. 1223, 

which identified a tax avoidance 

transaction involving offsetting foreign 

currency options. This transaction is 

often referred to as a ‘‘major-minor’’ 

transaction because it involved the 

taxpayer purchasing call and put 

options in a ‘‘major’’ foreign currency 

(one in which regulated futures 

contracts traded) and writing call and 

put options in a ‘‘minor’’ currency (one 

in which regulated futures contracts 

were not traded). The purchased and 

written foreign currency options were in 

two different currencies that historically 

had a high positive correlation, such 

that the taxpayer could be reasonably 

certain to have offsetting gains and 

losses in the options. The taxpayer 

treated its major currency options as 

foreign currency contracts under section 

1256(g)(2) and treated its options on the 

minor currency as not subject to section 

1256. When there was unrecognized 

gain and loss on the options, the 

taxpayer assigned the purchased major 

currency option with a loss to a charity, 

and the charity assumed the offsetting 

written minor currency option from the 

taxpayer (the taxpayer, however, 

retained the premium received on the 

written option). The taxpayer treated the 

assignment of the major currency option 

as a mark-to-market recognition event 

under section 1256(c), claiming a loss 

upon the assignment. However, the 

taxpayer did not report the recognition 

of gain on the offsetting minor currency 

option assumed by the charity because 

the option was a non-section 1256 

contract and the taxpayer treated the 

assumption as a non-recognition event. 

The ‘‘Facts’’ section of Notice 2003–81 

stated, without legal analysis, that the 

purchased major currency options were 

foreign currency contracts within the 

meaning of section 1256(g)(2)(A) 

because the major currency was traded 

through regulated futures contracts. 

Notice 2003–81 identified this 

transaction as a listed transaction and 

indicated that the taxpayer would be 

required under the Code to account for 

the gain attributable to the premium 

originally received by the taxpayer for 

writing the minor currency option. 

On August 27, 2007, the IRS 

published Notice 2007–71 (2007–35 

I.R.B. 472), which modified and 

supplemented Notice 2003–81. Notice 

2007–71 explained that ‘‘foreign 

currency options, whether or not the 

underlying currency is one in which 

positions are traded through regulated 

futures contracts, are [not] foreign 

currency contracts as defined in 

§ 1256(g)(2).’’ Notice 2007–71 explained 

that the ‘‘Facts’’ section of Notice 2003– 

81 included ‘‘an erroneous conclusion 

of law.’’ Notice 2007–71 corrected this 

error in the ‘‘Facts’’ section of Notice 

2003–81, stating that the pertinent 

sentence should have read as follows: 

‘‘ ‘The taxpayer takes the position that 

the purchased options are ‘foreign 

currency contracts’ within the meaning 

of § 1256(g)(2)(A) of the Internal 

Revenue Code and § 1256 contracts 

within the meaning of § 1256(b).’ ’’ 

III. Judicial Interpretations of Section 

1256(g)(2) 

The IRS challenged taxpayers’ 

characterization of the major-minor 

transactions in several cases before the 

United States Tax Court (‘‘Tax Court’’). 

In a series of rulings on motions for 

partial summary judgment, the Tax 

Court held that foreign currency options 

were not ‘‘foreign currency contracts’’ 

under section 1256. In one case, 

however, the Sixth Circuit disagreed 

and held that a foreign currency option 

could be a foreign currency contract. 

A. Summitt v. Commissioner 

The IRS successfully challenged the 

listed transactions described in Notice 

2003–81 in Summitt v. Commissioner, 

134 T.C. 248 (2010). The Tax Court held 

that a foreign currency option is not a 

foreign currency contract as defined by 

section 1256(g)(2). 

Explaining that the plain meaning of 

the statutory language controls the 

decision, the Tax Court held that the 

term foreign currency contract does not 

include an option contract and that the 

major currency option was not subject 

to the mark-to-market rules of section 

1256. Id. at 264, 266. The court noted 

that forwards and options confer 

different rights and obligations to the 

parties to these contracts. Id. at 264. The 

court found that it was clear that the 

words ‘‘or the settlement of which 

depends on the value of’’ in section 

1256(g)(2)(A)(i) meant that a foreign 

currency contract must require 

settlement at expiration and that the 

reference in the statute to settlements 

was included to permit a foreign 

currency contract to be physically 

settled or cash-settled. Id. at 265. In 

contrast, an option may expire without 

any settlement occurring. The court 

further observed that ‘‘[t]here is no 

evidence in the legislative history that a 

literal reading of the statute will defeat 

Congress’ purpose in enacting it.’’ Id. 

Subsequently, the Tax Court followed 

its decision in Summitt in two other 

cases. See Garcia v. Commissioner, T.C. 

Memo. 2011–85; Wright v. 

Commissioner, T.C. Memo. 2011–292. In 

both cases, the Tax Court noted that the 

taxpayers did not show a material 

factual difference between their cases 

and the earlier Tax Court opinion on the 

same issue. Garcia, T.C. Memo. 2011– 

85; Wright, T.C. Memo. 2011–292. 

B. Wright v. Commissioner 

The taxpayer appealed the Tax 

Court’s decision in Wright. The Sixth 

Circuit reversed the Tax Court, holding 

that a foreign currency option could be 

a foreign currency contract based on the 

plain meaning of section 1256(g)(2). 

Wright v. Commissioner, 809 F.3d 877, 

885 (6th Cir. 2016). Specifically, the 

Sixth Circuit found that the plain 

language of section 1256(g)(2)(A)(i) 

(‘‘which requires delivery of, or the 

settlement of which depends on the 

value of, a foreign currency which is a 

currency in which positions are also 

traded through regulated futures 

contracts’’) does not require settlement. 

Id. at 883. The court reasoned that the 

plain meaning of section 1256(g)(2)(A)(i) 

provides that a ‘‘foreign currency 

contract’’ is ‘‘(1) ‘a contract . . . which 

requires delivery of . . . a foreign 

currency’ or (2) ‘a contract . . . the 

settlement of which depends on the 

value of . . . a foreign currency.’ ’’ Id. 

Therefore, it found that a contract is a 

‘‘foreign currency contract’’ if the 

settlement of the contract depends on 

the value of a foreign currency, even if 

the contract does not mandate 

settlement. Id. In concluding that the 

statutory language in section 

1256(g)(2)(A) was unambiguous, the 

Sixth Circuit noted that the Treasury 

Department and the IRS had express 

authority to change this result for future 

taxpayers. Id. at 885. 

Explanation of Provisions 

Under the authority of section 

1256(g)(2)(B), and to carry out the 

purposes of section 1256(g)(2)(A), these 

proposed regulations provide that only 

a forward contract on foreign currency 

is a ‘‘foreign currency contract’’ as 

defined in section 1256(g)(2). The 

legislative history to section 1256, as 

discussed in part I of this preamble, 

indicates that Congress’s purpose in 

amending the definition of foreign 

currency contract in 1984 was merely to 

include cash-settled foreign currency 


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forward contracts within the definition 

of foreign currency contract. It would be 

inconsistent with this purpose to 

construe the term foreign currency 

contract as including options or other 

derivatives. 

These proposed regulations do not 

change the status of foreign currency 

options that otherwise qualify as section 

1256 contracts. Specifically, nonequity 

options are separately listed as section 

1256 contracts in section 1256(b)(1)(C). 

Section 1256(g)(3) provides that a 

nonequity option is any listed option 

which is not an equity option. Section 

1256(g)(5) defines a listed option as 

‘‘any option . . . which is traded on (or 

subject to the rules of) a qualified board 

or exchange.’’ Therefore, a foreign 

currency option that is listed on a 

qualified board or exchange is a 

‘‘nonequity option’’ and remains subject 

to section 1256. 

These proposed regulations do not 

define the term forward contract. For 

purposes of these proposed regulations, 

whether a derivative contract is 

properly characterized as a forward 

contract for U.S. federal income tax 

purposes is determined under current 

law. In addition, the IRS may consider 

applying existing anti-abuse rules and 

judicial doctrines to a contract and any 

related transactions in order to evaluate 

whether a transaction is properly 

characterized as a forward contract or 

whether a transaction characterized as 

some other type of derivative contract 

should be treated as a forward contract. 

Proposed Applicability Date 

These proposed rules are proposed to 

apply to contracts entered into on or 

after the date that is 30 days after the 

date of publication of the Treasury 

decision adopting these proposed rules 

as final regulations in the Federal 

Register (the ‘‘proposed applicability 

date’’). This proposed applicability date 

is intended to provide taxpayers in the 

Sixth Circuit with time to transition 

from the holding in Wright v. 

Commissioner to the rule described in 

these proposed regulations. However, 

for contracts entered into before the 

proposed applicability date by taxpayers 

in other circuits, the IRS intends to 

continue to adhere to its prior published 

position that foreign currency options 

are not foreign currency contracts under 

section 1256(g)(2). See Notice 2007–71, 

2007–35 I.R.B. 472. A taxpayer may rely 

on these proposed regulations for 

taxable years ending on or after July 6, 

2022, provided the taxpayer and its 

related parties, within the meaning of 

sections 267(b) (determined without 

regard to section 267(c)(3)) and 

707(b)(1), consistently follow the 

proposed regulations for all contracts 

entered into during the taxable year 

ending on or after July 6, 2022 through 

the proposed applicability date of the 

final regulations. 

Special Analyses 

I. Regulatory Planning and Review— 

Economic Analysis 

This regulation is not subject to 

review under section 6(b) of Executive 

Order 12866 pursuant to the 

Memorandum of Agreement (April 11, 

2018) between the Department of the 

Treasury and the Office of Management 

and Budget regarding review of tax 

regulations. 

II. Regulatory Flexibility Act 

The proposed rule affects any 

taxpayer that enters into a foreign 

currency option contract in the 

interbank market and that would 

otherwise treat the option as a ‘‘foreign 

currency contract’’ within the meaning 

of section 1256(g), contrary to the 

position set forth by the IRS in Notice 

2007–71. No data is available about the 

number of small entities that are taking 

such a position. However, the Secretary 

has determined that the economic 

impact on any small entities affected by 

the proposed rule would not be 

significant. 

The proposed rule clarifies that a 

‘‘foreign currency contract’’ as defined 

in section 1256(g)(2) means only a 

foreign currency forward contract (and 

not a foreign currency option contract). 

The proposed rule does not require 

taxpayers to collect additional 

information to determine whether 

section 1256 applies to the taxpayer’s 

option contracts. Taxpayers that would 

have otherwise reported these over-thecounter foreign currency options on IRS 

Form 6781 (Gains and Losses from 

Section 1256 Contracts and Straddles) 

as section 1256 contracts may collect 

less information under the proposed 

rule since the options will not be treated 

as section 1256 contracts. In addition, 

the proposed rule does not impose any 

new costs on taxpayers since it reaffirms 

the IRS’s published position that overthe-counter foreign currency options are 

not ‘‘foreign currency contracts’’ within 

the meaning of section 1256(g). 

Similarly, the proposed rule does not 

affect a taxpayer’s reporting obligation 

with respect to over-the-counter foreign 

currency options since the same amount 

of information is required to be 

reported. 

In accordance with the Regulatory 

Flexibility Act (5 U.S.C. 601 et seq.) the 

Secretary hereby certifies that this 

proposed rule, if adopted, will not have 

a significant economic impact on a 

substantial number of small entities. 

The Treasury Department and the IRS 

invite comment from members of the 

public about potential impacts on small 

entities. 

III. Section 7805(f) 

Pursuant to section 7805(f), this 

notice of proposed rulemaking has been 

submitted to the Chief Counsel for 

Advocacy of the Small Business 

Administration for comment on its 

impact on small business. 

IV. Unfunded Mandates Reform Act 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 

(‘‘UMRA’’) requires that agencies assess 

anticipated costs and benefits and take 

certain other actions before issuing a 

final rule that includes any Federal 

mandate that may result in expenditures 

in any one year by a state, local, or tribal 

government, in the aggregate, or by the 

private sector, of $100 million in 1995 

dollars, updated annually for inflation. 

This proposed rule does not include any 

Federal mandate that may result in 

expenditures by state, local, or tribal 

governments, or by the private sector in 

excess of that threshold. 

V. Executive Order 13132: Federalism 

Executive Order 13132 (entitled 

‘‘Federalism’’) prohibits an agency from 

publishing any rule that has federalism 

implications if the rule either imposes 

substantial, direct compliance costs on 

state and local governments, and is not 

required by statute, or preempts state 

law, unless the agency meets the 

consultation and funding requirements 

of section 6 of the Executive order. 

These proposed regulations do not have 

federalism implications and do not 

impose substantial direct compliance 

costs on state and local governments or 

preempt state law within the meaning of 

the Executive order. 

Statement of Availability of IRS 

Documents 

IRS notices and other guidance cited 

in this preamble are published in the 

Internal Revenue Bulletin (or 

Cumulative Bulletin) and are available 

from the Superintendent of Documents, 

U.S. Government Publishing Office, 

Washington, DC 20402, or by visiting 

the IRS website at http://www/irs.gov. 

Comments and Request for Public 

Hearing 

Before these proposed regulations are 

adopted as final regulations, 

consideration will be given to any 

comments that are submitted timely to 

the IRS as prescribed in this preamble 


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40172 Federal Register / Vol. 87, No. 128 / Wednesday, July 6, 2022 / Proposed Rules 

under the ADDRESSES heading. The 

Treasury Department and the IRS 

request comments on all aspects of the 

proposed rules. Any electronic 

comments submitted, and to the extent 

practicable any paper comments 

submitted, will be made available at 

www.regulations.gov or upon request. 

A public hearing will be scheduled if 

requested in writing by any person that 

timely submits electronic or written 

comments. Requests for a public hearing 

are also encouraged to be made 

electronically by sending an email to 

publichearings@irs.gov. If a public 

hearing is scheduled, notice of the date 

and time for the public hearing will be 

published in the Federal Register. 

Announcement 2020–4, 2020–17 

I.R.B. 667 (April 20, 2020), provides that 

until further notice, public hearings 

conducted by the IRS will be held 

telephonically. Any telephonic hearing 

will be made accessible to people with 

disabilities. 

Drafting Information 

The principal authors of these 

regulations are D. Peter Merkel and 

Karen Walny of the Office of Chief 

Counsel (International). However, other 

personnel from the Treasury 

Department and the IRS participated in 

their development. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Proposed Amendments to the 

Regulations 

Accordingly, the Treasury Department 

and the IRS propose to amend 26 CFR 

part 1 as follows: 

PART 1—INCOME TAXES 

■ Paragraph 1. The authority citation 

for part 1 is amended by adding an entry 

in numerical order to read in part as 

follows: 

Authority: 26 U.S.C. 7805 * * * 

* * * * * 

Section 1.1256(g)–2 also issued under 26 

U.S.C. 1256(g)(2)(B). 

* * * * * 

■ Par. 2. Section 1.1256(g)–2 is added to 

read as follows: 

§ 1.1256(g)–2 Foreign currency contract 

defined. 

(a) Foreign currency contract. For 

purposes of section 1256, the term 

foreign currency contract means a 

forward contract that— 

(1) Requires delivery of, or the 

settlement of which depends on the 

value of, a foreign currency that is a 

currency in which positions are also 

traded through regulated futures 

contracts; 

(2) Is traded in the interbank market; 

and 

(3) Is entered into at arm’s length at 

a price determined by reference to the 

price in the interbank market. 

(b) Applicability date. This section 

applies to contracts entered into on or 

after [date 30 days after date of 

publication of the final rule in the 

Federal Register]. 

Paul J. Mamo, 

Acting Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. 2022–14318 Filed 7–5–22; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE INTERIOR 

Fish and Wildlife Service 

50 CFR Part 17 

[FF09E21000 FXES1111090FEDR 223] 

Endangered and Threatened Wildlife 

and Plants; Three Species Not 

Warranted for Listing as Endangered 

or Threatened Species 

AGENCY: Fish and Wildlife Service, 

Interior. 

ACTION: Notification of findings. 

SUMMARY: We, the U.S. Fish and 

Wildlife Service (Service), announce 

findings that three species are not 

warranted for listing as endangered or 

threatened species under the 

Endangered Species Act of 1973, as 

amended (Act). After a thorough review 

of the best available scientific and 

commercial information, we find that it 

is not warranted at this time to list the 

evening fieldslug (Deroceras 

hesperium), Mammoth Spring crayfish 

(Faxonius marchandi), and Weber’s 

Whitlow grass (Draba weberi). However, 

we ask the public to submit to us at any 

time any new information relevant to 

the status of any of the species 

mentioned above or their habitats. 

DATES: The findings in this document 

were made on July 6, 2022. 

ADDRESSES: Detailed descriptions of the 

bases for these findings are available on 

the internet at https://

www.regulations.gov under the 

following docket numbers: 

Species Docket No. 

Evening fieldslug ............................................................................................................................................................. FWS–R1–ES–2022–0058 

Mammoth Spring crayfish ............................................................................................................................................... FWS–R3–ES–2022–0059 

Weber’s Whitlow grass ................................................................................................................................................... FWS–R6–ES–2022–0060 

Those descriptions are also available 

by contacting the appropriate person as 

specified under FOR FURTHER

INFORMATION CONTACT. Please submit any 

new information, materials, comments, 

or questions concerning this finding to 

the appropriate person, as specified 

under FOR FURTHER INFORMATION

CONTACT. 

FOR FURTHER INFORMATION CONTACT: 

Species Contact information 

Evening fieldslug ................................................. Brad Thompson, Field Supervisor, Washington Fish and Wildlife Office, brad_thompson@

fws.gov, (360)–753–9440. 

Mammoth Spring crayfish ................................... Karen Herrington, Field Supervisor, Missouri Ecological Services Field Office, 

karen_herrington@fws.gov, (573)–234–2132. 

Weber’s Whitlow grass ........................................ Ann Timberman, Field Supervisor, Colorado Field Office, ann_timberman@fws.gov, (970)– 

ndash;7181. 

Individuals in the United States who 

are deaf, deafblind, hard of hearing, or 

have a speech disability may dial 711 

(TTY, TDD, or TeleBraille) to access 

telecommunications relay services. 

Individuals outside the United States 


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