IRS Asks Input on Netting Rules for Financial Deals
Published Date: 1/12/2026
Notice
Summary
The IRS wants your thoughts on a new rule about how certain financial deals are reported, called the Netting Rule for Conversion Transactions. This affects people and businesses involved in these deals by changing how they report info to the IRS, aiming to make things clearer and easier. Comments are open until March 13, 2026, so don’t miss your chance to weigh in!
Analyzed Economic Effects
2 provisions identified: 1 benefits, 1 costs, 0 mixed.
Netting relief for conversion gains
Treasury Regulation section 1.1258-1 allows certain gains and losses from conversion transactions to be netted when determining how much capital gain is recharacterized under Internal Revenue Code section 1258. If you are involved in conversion transactions, this netting rule changes how the amount recharacterized is calculated.
Recordkeeping required to get netting relief
To be eligible for netting relief, a taxpayer must identify on its books and records all positions that are part of the conversion transaction before the close of the day on which the positions become part of the conversion transaction. The IRS estimates 50,000 responses, about 6 minutes per respondent, and a total annual burden of 5,000 hours for this information collection.
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