Today, Treasury and the IRS issued final and temporary regulations (T.D. 9719) amending the treatment of nonperiodic payments made or received pursuant to certain notional principal contracts (NPCs). These regulations provide that, with certain exceptions, an NPC with one or more nonperiodic payments, will be treated as two separate transactions consisting of an on-market, level payment swap and one or more loans. The temporary regulations under section 446 also simplify the embedded loan rule by eliminating its exception for non-significant nonperiodic payments. In addition, such regulations provide two independent exceptions to the embedded loan rule: (1) for a nonperiodic payment made under an NPC with a term of one year or less and (2) for certain NPCs with nonperiodic payments that are subject to prescribed margin or collateral requirements. The temporary regulations under section 956 provide an exception to the definition of United States property with respect to certain NPCs subject to margin or collateral requirements. The text of the temporary regulations serves as the text of concurrently issued proposed regulations (REG-102656-15). The final and temporary regulations are effective on May 8. Comments on the accompanying proposed rules are due by August 6.