Treasury Regulations (26 C.F.R.)
26 CFR § 1.7872-5
Exempted loans.
# (a)
In general—(1) General rule. Except as provided in paragraph (a)(2) of this section, notwithstanding any other provision of section 7872 and the regulations under that section, section 7872 does not apply to the loans listed in paragraph (b) of this section because the interest arrangements do not have a significant effect on the Federal tax liability of the borrower or the lender.
(2) No exemption for tax avoidance loans. If a taxpayer structures a transaction to be a loan described in paragraph (b) of this section and one of the principal purposes of so structuring the transaction is the avoidance of Federal tax, then the transaction will be recharacterized as a tax avoidance loan as defined in section 7872(c)(1)(D).
# (b) List of exemptions.
Except as provided in paragraph (a) of this section, the following transactions are exempt from section 7872:
(1) through (15) [Reserved] For further guidance, see § 1.7872-5T(b)(1) through (15).
(16) An exchange facilitator loan (within the meaning of § 1.468B-6(c)(1)) if the amount of the exchange funds (as defined in § 1.468B-6(b)(2)) treated as loaned does not exceed $2,000,000 and the duration of the loan is 6 months or less. The Commissioner may increase this $2,000,000 loan exemption amount in published guidance of general applicability, see § 601.601(d)(2) of this chapter.
(17) See § 1.139E-1(d)(6) for rules for a loan from an Indian Tribal Government to a Tribal Program Participant pursuant to an Indian Tribal Government Program within the meaning of § 1.139E-1(c). See § 1.139E-1(h) for the applicability date of this paragraph (b)(17).
# (c)
[Reserved] For further guidance, see § 1.7872-5T(c).
# (d) Effective/applicability date.
This section applies to exchange facilitator loans issued on or after October 8, 2008.
[T.D. 9413, 73 FR 39622, July 10, 2008, as amended by T.D. 10040, 90 FR 58405, Dec. 16, 2025]
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In this part (40 sections)
- 1.7519-3T · Effective date (temporary).
- 1.7520-1 · Valuation of annuities, unitrust interests, interests for…
- 1.7520-2 · Valuation of charitable interests.
- 1.7520-3 · Limitation on the application of section 7520.
- 1.7520-4 · Transitional rules.
- 1.7701-1 · Definitions; spouse, husband and wife, husband, wife,…
- 1.7701(l)-0 · (l)-0 Table of contents.
- 1.7701(l)-1 · (l)-1 Conduit financing arrangements.
- 1.7701(l)-3 · (l)-3 Recharacterizing financing arrangements involving…
- 1.7701(l)-4 · (l)-4 Rules regarding inversion transactions.
- 1.7702-0 · Table of contents.
- 1.7702-2 · Attained age of the insured under a life insurance contract.
- 1.7702B-1 · Consumer protection provisions.
- 1.7702B-2 · Special rules for pre-1997 long-term care insurance…
- 1.7703-1 · Determination of marital status.
- 1.7704-1 · Publicly traded partnerships.
- 1.7704-2 · Transition provisions.
- 1.7704-3 · Qualifying income.
- 1.7704-4 · Qualifying income—mineral and natural resources.
- 1.7872-1 - 1.7872-4 · §§ 1.7872-1-1.7872-4 [Reserved]
- 1.7872-5 · Exempted loans.
- 1.7872-5T · Exempted loans (temporary).
- 1.7872-15 · Split-dollar loans.
- 1.7872-16 · Loans to an exchange facilitator under § 1.468B-6.
- 1.7874-1 · Disregard of affiliate-owned stock.
- 1.7874-2 · Surrogate foreign corporation.
- 1.7874-3 · Substantial business activities.
- 1.7874-4 · Disregard of certain stock related to the domestic entity…
- 1.7874-5 · Effect of certain transfers of stock related to the…
- 1.7874-6 · Stock transferred by members of the EAG.
- 1.7874-7 · Disregard of certain stock attributable to passive assets.
- 1.7874-8 · Disregard of certain stock attributable to serial…
- 1.7874-9 · Disregard of certain stock in third-country transactions.
- 1.7874-10 · Disregard of certain distributions.
- 1.7874-11 · Rules regarding inversion gain.
- 1.7874-12 · Definitions.
- 1.9000-1 · Statutory provisions.
- 1.9000-2 · Effect of repeal in general.
- 1.9000-3 · Requirement of statement showing increase in tax liability.
- 1.9000-4 · Form and content of statement.