What does NPC stand for?

For example, many interest rate swaps that taxpayers do not identify as hedges qualify as notional principal contracts (NPCs) (see Regs.

The total return swap qualifies as a notional principal contract (NPC) for U.

The Regulation provides that a notional contract is "a financial instrument that provides for the payment of amounts by one party to another at specified intervals calculated by reference to a specified index upon a notional principal amount in exchange for specified consideration or a promise to pay similar amounts" and that the source of notional principal contract income is the resident of the taxpayer [7,8].

Dividend Washing" Under current law, the source of any payments made pursuant to a notional principal contract (or swap) is determined by reference to the residence of the person receiving the payment.

Accordingly, the ETN allows the taxpayer to defer the recognition of income until the disposition of the contract and eliminates the ordinary interest income factor associated with normal debt and notional principal contracts.

446-4 do not generally override these notional principal contract regulations.

He is Chair of the American Bar Association Taxation Subcommittee on Notional Principal Contracts.

Specifically, any payments made to a non-US person pursuant to a notional principal contract that are contingent upon, or determined by reference to, the payment of a dividend from sources within the United States, or that are substantially similar thereto, would be subject to US withholding tax at a rate of 30% unless otherwise reduced by an applicable income tax treaty.