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Treasury Regulations · 26 CFR

§ 1.7872-5. Exempted loans.

In effect eCFR current as of October 15, 2026

Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).

Regulation under 26 U.S.C. § 7872

Cite as 26 CFR § 1.7872-5

At a glance

Read from the text and its source citation. Not part of the regulation.

Status
In the current eCFR
Issued
July 10, 2008 by T.D. 9413
Last amended
December 16, 2025 by T.D. 10040
Issued under
26 U.S.C. § 7872
Length
328 words · about 1 min to read
Cross-references
cites 1 Code section and 3 regulations; cited by 3
(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]

Other regulations under § 7872

Cross-references

Computed from the citations in the text of 26 CFR.

Code sections it cites

Regulations it cites

Cited by 3 other regulations

Amendment history

From the source citation at the end of the section, newest first. T.D. is a Treasury decision; FR is the Federal Register.

  1. Amended by T.D. 10040 (90 FR 58405)
  2. Issued by T.D. 9413 (73 FR 39622)

Where it sits in 26 CFR

  1. Subchapter A Income tax
  2. Part 1 Income taxes
  3. General actuarial valuations

Nearby sections