For U.S. federal income tax purposes, the current treasury rules define a fictitious master contract as “a financial instrument providing for the payment of sums by one party to another, at certain intervals, which, by referring to a given index, refers to a notional nominal amount in exchange for a given consideration or promise to pay similar amounts, are calculated”. ( Treas. Reg. § 1.446-3 (c) (1) (i)).  It is not defined in the internal income code itself. Section 1.446-3 contains detailed and detailed rules regarding the taxation of CPNs in the United States. While the treasury rules contain examples of contracts treated as NPC, including “Interest rate swaps, money swaps, base swaps, interest rate caps, interest rate caps, commodity swaps, stock swaps and other similar arrangements”. ( Treas. Reg. § 1.446-3 (c) (1) (i)) there are significant restrictions for the types of contracts that can be treated as NPC, in particular contracts providing for actual delivery of the underlying amount.
The affiliation requirements are objective, non-discriminatory and proportionate and generally apply to all banks (credit institutions) and payment institutions in the SEPA area with a plan to access payment transactions carried out by the NPC system in one or more of the currencies of the NCPs. All Scheme members are required to sign an adhesion agreement for an NPC programme either within one year of membership or within one year of the conclusion of a scheme. The notion of a fictitious master contract (NPC) is an art notion used by U.S. federal income tax experts for contracts based on an underlying nominal amount (other financial services experts refer to these NPCs under the more general title “Swaps,” although not all swaps are NPLs). The reason the underlying amount is “nominal” is that none of the parts of the CPN is required to actually hold the asset that includes the underlying amount. PNPC consists of two parties who contractually agree to pay each other amounts at specified times, based on the underlying nominal amount. The simplest example of an NPC is what is called an interest rate swap, in which one party (part A) of the other party (part B) pays a quarterly amount by multiplying a market-determined variable interest rate (for example.B. LIBOR) is determined with the nominal amount; and Part B pays Part A on the same day an amount determined by multiplying a fixed interest rate and the nominal amount.
In addition, the Nordic banking federations of Denmark, Finland, Norway (Bits) and Sweden are founding members of the NPC. Membership in the programme is open to any legal person which has been legally established and which has legal personality in accordance with the laws and practices of its country of origin and is as follows: all persons received under a PNPC must be recognised by the taxable person in accordance with the rules for the recognition of such payments in the cash flow rules. that may terminate the taxable person`s normal method of accounting for U.S. federal income tax purposes. ( Treas. Reg. § 1.446-3 (e) (2) (i)). Generally, amounts paid or received in respect of a CPN are considered ordinary income (not a capital gain) for the United States. . . .